PROSPECTUS SUPPLEMENT
(to Prospectus dated July 26, 2007)

                                   $50,263,000
                                  (Approximate)

                                IndyMac MBS, Inc.
                                    Depositor

                           HSBC Securities (USA) Inc.
                               Sponsor and Seller

                 Residential Asset Securitization Trust 2007-R1
                                 Issuing Entity

        Distributions are payable monthly on the 25th day of each month,
                           beginning August 27, 2007

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

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

------------------------------------------------------------------------------------------------------------------------------
                         Initial Class           Pass-Through                             Initial Class           Pass-Through
      Class(2)      Certificate Balance(1)           Rate              Class(2)      Certificate Balance(1)           Rate
------------------------------------------------------------------------------------------------------------------------------
  Class A-1              $ 37,703,220                5.75%         Class A-3               $ 2,507,100                5.75%
------------------------------------------------------------------------------------------------------------------------------
  Class A-2              $ 10,052,580                6.25%         Class A-R               $       100                5.85%
------------------------------------------------------------------------------------------------------------------------------

(1)   The initial class certificate balances were calculated after distributions
      on July 25, 2007.

(2)   The classes of certificates offered by this prospectus supplement,
      together with their initial ratings, are listed in the tables under
      "Summary--Description of the Certificates" beginning on page S-8 of this
      prospectus supplement.

--------------------------------------------------------------------------------
      Consider carefully the risk factors beginning on page S-13 in this
prospectus supplement and on page 5 in the prospectus.

      The certificates represent obligations of the issuing entity only and do
not represent an interest in or obligation of IndyMac MBS, Inc., HSBC Securities
(USA) 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.
--------------------------------------------------------------------------------

      The assets of the issuing entity will consist primarily of an ownership
interest in one class of a series of previously issued mortgage pass-through
certificates representing a senior ownership interest in a pool of mortgage
loans.

      The servicer of the mortgage loans held in the underlying trust may
terminate the underlying trust on any underlying distribution date on which the
aggregate outstanding stated principal balance of the underlying mortgage loans
and any real estate owned by the underlying trust is less than 10% of the
aggregate cut-off date principal balance of those underlying mortgage loans. Any
termination of the underlying trust will terminate the issuing entity and result
in early prepayment of the offered certificates.

      The only credit enhancement for the offered certificates consists of the
credit enhancement available to the deposited underlying certificates.

      The offered certificates are not bank accounts and are not insured by the
FDIC or any other governmental entity.

      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 prospectus. Any
representation to the contrary is a criminal offense.

      HSBC Securities (USA) Inc. will offer the classes of certificates listed
above to the public at varying prices to be determined at the time of sale. The
proceeds to the depositor from the sale of the certificates to HSBC Securities
(USA) Inc., as underwriter, will consist of the underlying mortgage pass-through
certificates, which the depositor will receive from HSBC Securities (USA) Inc.,
as underlying certificate seller. See "Method of Distribution" in this
prospectus supplement. The offered certificates (other than the Class A-R
Certificates) will be available for delivery to investors on or about August 16,
2007 in book-entry form through the facilities of The Depository Trust Company
and, upon request, through Clearstream, Luxembourg or the Euroclear System.

                                   HSBC[Logo]

                                 August 16, 2007



                                TABLE OF CONTENTS

Prospectus Supplement                                                       Page
---------------------                                                       ----

Summary .................................................................    S-5
Summary of Transaction Parties ..........................................   S-12
Risk Factors ............................................................   S-13
Description of the Deposited Underlying Certificates ....................   S-19
      The Deposited Underlying Certificates .............................   S-19
      Assignment of the Deposited Underlying Certificates to
         the Issuing Entity; Representations and Warranties .............   S-19
      The Underlying Mortgage Loans .....................................   S-20
      Advances on the Underlying Mortgage Loans .........................   S-23
The Sponsor .............................................................   S-23
The Significant Obligor .................................................   S-23
Static Pool Data ........................................................   S-23
The Depositor ...........................................................   S-24
The Issuing Entity ......................................................   S-24
The Trustee .............................................................   S-24
Description of the Certificates .........................................   S-26
      General ...........................................................   S-26
      Calculation of Class Certificate Balance ..........................   S-27
      Book-Entry Certificates ...........................................   S-27
      Distributions on the Deposited Underlying
         Certificates; Accounts .........................................   S-31
      Investments of Amounts Held in Accounts ...........................   S-31
      Withdrawals From the Distribution Account .........................   S-31
      Distributions .....................................................   S-31
      Priority of Distributions Among Certificates ......................   S-31
      Interest ..........................................................   S-32
      Principal .........................................................   S-32
      Allocation of Losses ..............................................   S-33
      Statements to Certificateholders ..................................   S-33
      Structuring Assumptions ...........................................   S-33
      Voting Rights of the Certificates .................................   S-35
      Optional Termination of the Underlying Trust ......................   S-35
      Restrictions on Transfer of the Class A-R Certificates ............   S-35
Yield, Prepayment and Maturity Considerations ...........................   S-35
      Prepayment Considerations and Risks ...............................   S-35
      Weighted Average Lives of the Offered Certificates ................   S-36
      Decrement Tables ..................................................   S-37
      Final Scheduled Distribution Date .................................   S-39
Credit Enhancement ......................................................   S-39
      The Underlying Subordinated Certificates ..........................   S-39
Use of Proceeds .........................................................   S-39
Legal Proceedings .......................................................   S-40
Material Federal Income Tax Consequences ................................   S-40
      Taxation of the Residual Certificates .............................   S-40
      Other Taxes .......................................................   S-41
ERISA Considerations ....................................................   S-42
Method of Distribution ..................................................   S-43
Legal Matters ...........................................................   S-43
Ratings .................................................................   S-44
Index of Principal Terms ................................................   S-45
Appendix I  Mortgage Loan Characteristics of the Underlying
   Mortgage Loans as of the Reference Date ..............................   S-46


                                      S-2


Prospectus                                                                  Page
----------                                                                  ----

 Important Notice About Information in This Prospectus and
    Each Accompanying Prospectus Supplement .............................      4
 Risk Factors ...........................................................      5
      Limited Source of Payments -- No Recourse to Sellers,
         Depositor or Servicer ..........................................      5
      Credit Enhancement May Not Be Sufficient to Protect
         You from Losses ................................................      6
      Losses on Balloon Payment Mortgages Are Borne by You ..............      6
      Multifamily Lending ...............................................      6
      Junior Liens ......................................................      7
      Partially Unsecured Loans .........................................      8
      Home Equity Lines of Credit .......................................      8
      Nature of Mortgages ...............................................      9
      Your Risk of Loss May Be Higher Than You Expect If Your
         Securities Are Backed by Partially Unsecured Home
         Equity Loans ...................................................     13
      Impact of World Events ............................................     13
      You Could Be Adversely Affected by Violations of
         Environmental Laws..............................................     14
      Ratings of the Securities Do Not Assure Their Payment .............     14
      Book-Entry Registration ...........................................     15
      Pre-Funding Accounts Will Not Be Used to Cover Losses
         on the Loans ...................................................     16
      Unused Amounts on Deposit in Any Pre-Funding Account Will
         Be Paid as Principal to Securityholders ........................     16
      Secondary Market for the Securities May Not Exist .................     16
      Bankruptcy or Insolvency May Affect the Timing and Amount
         of Distributions on the Securities .............................     17
      Holders of Original Issue Discount Securities Are Required
         to Include Original Issue Discount in Ordinary
         Gross Income as It Accrues .....................................     18
      The Principal Amount of Securities May Exceed the Market
         Value of the Issuing Entity Assets .............................     18
 The Issuing Entity .....................................................     19
      The Mortgage Loans--General .......................................     20
      Agency Securities .................................................     26
      Private Mortgage-Backed Securities ................................     31
      Substitution of Issuing Entity Assets .............................     32
      Available Information .............................................     33
      Incorporation of Certain Documents by Reference;
         Reports Filed with the SEC .....................................     33
      Reports to Securityholders ........................................     34
 Use of Proceeds ........................................................     35
 The Depositor ..........................................................     35
 Mortgage Loan Program ..................................................     35
      Underwriting Standards ............................................     36
      Underwriting Process ..............................................     36
      Qualifications of Sellers .........................................     37
      Representations by Sellers; Repurchases ...........................     37
 Static Pool Data .......................................................     38
 Description of the Securities ..........................................     39
      General ...........................................................     40
      Distributions on Securities .......................................     41
      Advances ..........................................................     43
      Mandatory Auction .................................................     44
      Categories of Classes of Securities ...............................     44
      Indices Applicable to Floating Rate and Inverse
         Floating Rate Classes ..........................................     46
      Book-Entry Securities .............................................     50
      Global Clearance, Settlement And Tax Documentation Procedures .....     53
      Exchangeable Securities ...........................................     57
 Credit Enhancement .....................................................     59
      General ...........................................................     59
      Subordination .....................................................     59
      Letter of Credit ..................................................     60
      Mortgage Pool Insurance Policies ..................................     60
      Special Hazard Insurance Policies .................................     61
      Bankruptcy Bonds ..................................................     62
      Reserve Fund ......................................................     62
      Cross Support .....................................................     63
      Insurance Policies, Surety Bonds and Guaranties ...................     63
      Over-Collateralization ............................................     63
      Financial Instruments .............................................     64
      Deposit Agreements ................................................     64
 Yield and Prepayment Considerations ....................................     64
      Prepayment Standards or Models ....................................     67
      Yield .............................................................     67
 The Agreements .........................................................     67
      Assignment of Issuing Entity Assets ...............................     67
      Payments on Issuing Entity Assets; Deposits to
         Security Account ...............................................     70
      Pre-Funding Account ...............................................     72
      Collection Procedures .............................................     73
      The Surety Provider ...............................................     74
      Hazard Insurance ..................................................     74
      Realization upon Defaulted Mortgage Loans .........................     75
      Servicing and Other Compensation and Payment of Expenses ..........     78
      Evidence as to Compliance .........................................     79
      List of Securityholders ...........................................     79
      Certain Matters Regarding the Servicer and the Depositor ..........     80
      Events of Default .................................................     81
      Amendment .........................................................     83
      Termination; Optional Termination .................................     84
      The Trustee .......................................................     85
 Certain Legal Aspects of the Mortgage Loans ............................     85


                                      S-3


      General ...........................................................     86
      Foreclosure and Repossession ......................................     87
      Rights of Redemption ..............................................     88
      Anti-Deficiency Legislation and Other Limitations on Lenders ......     89
      Environmental Risks ...............................................     90
      Due-on-sale Clauses ...............................................     91
      Prepayment Charges ................................................     91
      Applicability of Usury Laws .......................................     91
      Servicemembers Civil Relief Act ...................................     92
 Material Federal Income Tax Consequences ...............................     92
      General ...........................................................     92
      Taxation of Debt Securities .......................................     93
      REMIC Securities ..................................................    100
      Tax Status as a Grantor Trust .....................................    107
      Final Trust Reporting Regulations .................................    115
      Tax Characterization of the Issuing Entity as a Partnership .......    115
      Tax Consequences to Holders of the Notes ..........................    115
      Tax Consequences to Holders of the Certificates ...................    117
 State Tax Considerations ...............................................    121
 ERISA Considerations ...................................................    121
      Exemptions Available to Debt Instruments ..........................    121
      Underwriter Exemption .............................................    122
 Legal Investment .......................................................    125
 Method of Distribution .................................................    126
 Legal Matters ..........................................................    127
 Financial Information ..................................................    127
 Rating .................................................................    127
Index of Principal Terms ................................................    128


                                      S-4


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

                                     Summary

o     This summary highlights selected information from this document and does
      not contain all of the information that you need to consider in making
      your investment decision. To understand all of the terms of an offering of
      the certificates, read carefully this entire document and the accompanying
      prospectus.

o     In order to make an investment decision regarding the certificates offered
      by this prospectus supplement, you must read carefully each of the
      following documents which are attached as exhibits to this prospectus
      supplement: (a) the prospectus supplement for the deposited underlying
      certificates, dated February 27, 2007, for IndyMac MBS, Inc., Residential
      Asset Securitization Trust 2007-A2, to the base prospectus dated February
      27, 2007, as supplemented by the supplement dated May 8, 2007, which
      describes the specific terms of the deposited underlying certificates, (b)
      the base prospectus for the offered certificates, dated July 26, 2007 and
      (c) the July 25, 2007 underlying distribution date monthly statement for
      the underlying trust.

o     Unless otherwise noted, all of the statistical calculations in this
      prospectus supplement are based on the information in the July 25, 2007
      underlying distribution date statement.

o     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

Residential Asset Securitization Trust 2007-R1, a common law trust formed under
the laws of the State of New York.

See "The Issuing Entity" in this prospectus supplement.

Depositor

IndyMac MBS, Inc., a Delaware corporation and a limited purpose finance
subsidiary of IndyMac Bank, F.S.B. Its address is 155 North Lake Avenue,
Pasadena, California 91101, and its telephone number is (800) 669-2300.

See "The Depositor" in this prospectus supplement and the prospectus.

Sponsor, Underlying Certificate Seller and Underwriter

HSBC Securities (USA) Inc. is a Delaware corporation. Its address is 452 Fifth
Avenue, New York, New York 10018, and its telephone number is (212) 525-5000.

See "The Sponsor" in this prospectus supplement.

Significant Obligor

Residential Asset Securitization Trust 2007-A2, a common law trust formed under
the laws of the State of New York, which is responsible for 100% of the assets
of the issuing entity

See "The Significant Obligor" in this prospectus supplement.

Trustee and Resecuritization Servicer

Deutsche Bank National Trust Company, a national banking association. The
corporate trust office of the trustee is located (i) for purposes of certificate
transfers, at DB Services Tennessee, 648 Grassmere Park Road, Nashville,
Tennessee 37211-3658, Attention: Transfer Unit and (ii) for all other purposes,
at 1761 East St. Andrew Place, Santa Ana, California 92705, Attention: Trust
Administration IN07R1, and its telephone number is (714) 247-6000.

See "The Trustee" in this prospectus supplement.

Trust Agreement

The trust agreement dated as of the closing date among the underlying
certificate seller, the depositor and the trustee, under which the issuing
entity will be formed.

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


                                      S-5


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

Closing Date

On or about August 16, 2007.

Reference Date

July 1, 2007.

Offered Certificates

Residential Asset Securitization Trust 2007-R1 will issue four classes of
certificates, all of which are being offered by this prospectus supplement and
the accompanying prospectus.

Issuing Entity Assets

The assets of Residential Asset Securitization Trust 2007-R1 will consist of a
100% percentage interest in the IndyMac MBS, Inc., Residential Asset
Securitization Trust 2007-A2, Mortgage Pass-Through Certificates, Series 2007-B,
Class 2-A-1 Certificates (referred to in this prospectus supplement as the
deposited underlying certificates), having a class certificate balance as of the
close of business on July 25, 2007 of approximately $50,263,000.

The deposited underlying certificates represent a senior ownership interest in
the underlying trust. The assets of the underlying trust consist primarily of a
pool of two loan groups of 20- and 30-year conventional, fixed-rate mortgage
loans secured by first liens on one-to four-family residential properties.

The deposited underlying certificates are "NAS" bonds, and are generally not
entitled to receive scheduled and unscheduled payments of principal on the
underlying mortgage loans to the extent described in the underlying prospectus
supplement. See "Description of the Certificates - Principal" in the underlying
prospectus supplement.

The underlying trust issued seventeen classes of senior certificates and six
classes of subordinated certificates. The classes of these senior certificates
other than the deposited underlying certificates are the Class 1-A-1, Class
1-A-2, Class 1-A-3, Class 1-A-4, Class 1-A-5, Class 1-A-6, Class 1-A-7, Class
1-A-8, Class 1-A-9, Class 2-A-2, Class 2-A-3, Class 2-A-4, Class 2-A-5, Class
PO, Class A-X and Class A-R Certificates. The subordinated certificates are the
Class B-1, Class B-2, Class B-3, Class B-4, Class B-5 and Class B-6
Certificates, and they provide credit enhancement to the senior certificates in
the underlying trust, including the deposited underlying certificates. As of
July 25, 2007, the aggregate class certificate balance of all of the
certificates in the underlying trust was approximately $651,175,597.

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

The Underlying Mortgage Loans

The mortgage rate on each underlying mortgage loan is fixed. The aggregate
stated principal balance of the underlying mortgage loans as of the reference
date is approximately $651,175,597.

See "The Mortgage Pool" in this prospectus supplement.

As of the reference date, the underlying mortgage loans in loan group 2 had the
following characteristics:

Aggregate Current Principal Balance      $248,711,933

Weighted Average Mortgage Rate           7.156%

Range of Mortgage Rates                  6.750% to 9.125%

Average Current Principal Balance        $585,205

Range of Outstanding Principal
   Balances                              $85,876 to
                                         $2,384,951

Weighted Average Original
   Loan-to-Value Ratio                   74.71%

Weighted Average Original Term to
   Maturity                              360 months

Weighted Average Remaining Term to
   Stated Maturity                       354 months

Weighted Average FICO Credit Score       701

Geographic Concentrations in excess
   of 10%:
   California                            35.19%

As of the reference date, the underlying mortgage loans in the aggregate had the
following characteristics:

Aggregate Current Principal Balance      $651,175,597

Weighted Average Mortgage Rate           6.666%

Range of Mortgage Rates                  5.250% to 9.125%

Average Current Principal Balance        $608,007

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


                                      S-6


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

Range of Outstanding Principal
   Balances                              $85,876 to
                                         $3,000,000

Weighted Average Original
   Loan-to-Value Ratio                   72.63%

Weighted Average Original Term to
   Maturity                              360 months

Weighted Average Remaining Term to
   Stated Maturity                       354 months

Weighted Average FICO Credit Score       717

Geographic Concentrations in excess
   of 10%:
   California                            50.71%

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


                                      S-7


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

Description of the Certificates

The issuing entity will issue the following classes of certificates, all of
which are offered by this prospectus supplement and the accompanying prospectus:



                 Initial Class
                  Certificate                                       Final Scheduled            Modeled Final         Initial Rating
    Class           Balance                    Type               Distribution Date (1)    Distribution Date (2)    (Fitch/ S&P) (3)
    -----        -------------                 ----               ---------------------    ---------------------    ----------------

A-1...........    $37,703,220       Senior/ Super Senior/ Fixed      April 25, 2037         February 25, 2037           AAA/AAA
                                         Pass-Through Rate
A-2...........    $10,052,580       Senior/ Super Senior/ Fixed      April 25, 2037         February 25, 2037           AAA/AAA
                                         Pass-Through Rate
A-3...........     $2,507,100         Senior/ Support/ Fixed         April 25, 2037         February 25, 2037           AAA/AAA
                                         Pass-Through Rate
A-R...........        $100             Senior/REMIC Residual         April 25, 2037           March 25, 2012            AAA/AAA


----------
(1)   The final scheduled distribution date is the final scheduled distribution
      date for the deposited underlying certificates.

(2)   The modeled final distribution date is based upon (a) an assumed rate of
      prepayments equal to 100% Prepayment Assumption, (b) the structuring
      assumptions described under "Description of the Certificates - Structuring
      Assumptions" in this prospectus supplement and (c) the assumption that the
      optional termination for the underlying trust is not exercised by the
      servicer.

(3)   The offered certificates will not be offered unless they are assigned the
      indicated ratings by Standard & Poor's, a division of The McGraw-Hill
      Companies, Inc. ("S&P") and Fitch, Inc. ("Fitch"). 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. The ratings are derived from the
      ratings on the deposited underlying certificates.

The certificates will also have the following characteristics:

                                           Interest               Interest
 Class        Pass-Through Rate         Accrual Period      Accrual Convention
 -----        -----------------         --------------      ------------------
  A-1               5.75%              calendar month(1)         30/360(2)
  A-2               6.25%              calendar month(1)         30/360(2)
  A-3               5.75%              calendar month(1)         30/360(2)
  A-R               5.85%              calendar month(1)         30/360(2)

(1)   The interest accrual period for any distribution date will be the
      immediately preceding calendar month.


(2)   Interest accrues at the rate specified in this table based on a 360-day
      year that consists of twelve 30-day months.

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


                                      S-8


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

Record Date

The record date for any class of certificates and (x) the first distribution
date is the closing date and (y) any other distribution date is the last
business day of the month immediately preceding the month of that distribution
date.

Denominations

Offered Certificates other than the Class A-R Certificates:

$25,000 and integral multiples of $1,000 in excess thereof.

Class A-R Certificates:

$100.

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 and upon
request, through 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 trust 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

Distributions on the deposited underlying certificates are made on the 25th day
of each month, or if the 25th day of a month is not a business day, then on the
next business day. We will make distributions on the offered certificates on the
same day. The first distribution on the offered certificates is scheduled for
August 27, 2007.

Interest Distributions

The related interest accrual period, interest accrual convention and
pass-through rate for each class of certificates is shown in the table on page
S-8. On each distribution date, to the extent funds are available, each class of
certificates will be entitled to receive:

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

o     any interest remaining unpaid from prior distribution dates

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

Principal Distributions

On each distribution date, certificateholders will only receive a distribution
of principal on their certificates if there is cash available from the deposited
underlying certificates on that date for the distribution of principal according
to the principal distribution rules described in this prospectus supplement.

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

Optional Termination of the Underlying Trust

Although there is no optional termination provision in Residential Asset
Securitization Trust 2007-R1, the servicer of the mortgage loans held in the
underlying trust may terminate the underlying trust on any underlying
distribution date on which the aggregate stated principal balance of the
underlying mortgage loans and any real estate owned by the underlying trust is
less than 10% of the aggregate stated principal balance of the underlying
mortgage loans as of the cut-off date for the underlying trust. Any termination
of the underlying trust will terminate the issuing entity and will result in
early prepayment of the offered certificates.

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

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


                                      S-9


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

Collection Account; Priority of Distributions

General

The amount available for distributions on the certificates on any distribution
date generally consists of the following:

o     available interest funds, which, with respect to any distribution date,
      will equal the aggregate of all previously undistributed amounts received
      by the trustee on or prior to that distribution date as distributions of
      interest on the deposited underlying certificates, and

o     available principal funds, which, with respect to any distribution date,
      will equal the aggregate of all previously undistributed amounts received
      by the trustee on or prior to that distribution date as distributions of
      principal on the deposited underlying certificates.

Fees and Expenses

The amounts available for distributions on any distribution date will generally
not include amounts reimbursed to the trustee and depositor for taxes and
expenses related to each REMIC created as part of the issuing entity. These
amounts will be paid by the underlying certificate seller, and will not be an
obligation of the issuing entity.

Priority of Distributions Among Certificates

On each distribution date, available funds will be distributed in the following
order:

o     from available interest funds, to interest on each interest-bearing class
      of offered certificates, and

o     from available principal funds, as principal in the following priority:

      (i)to the Class A-R Certificates, until its class certificate balance is
      reduced to zero; and

      (ii) concurrently, to the Class A-1, Class A-2 and Class A-3 Certificates,
      pro rata, until their respective class certificate balances are reduced to
      zero.

Credit Enhancement

The issuing entity does not include any credit enhancement mechanism. The only
credit enhancement available to the offered certificates consists of the credit
enhancement provided to the deposited underlying certificates.

Credit Enhancement of Underlying Trust

Subordination

In addition to issuing the deposited underlying certificates, the underlying
trust issued various other classes of certificates, including six classes of
certificates that are subordinated to the deposited underlying certificates.
These classes of underlying subordinated certificates provide credit enhancement
for the deposited underlying certificates as described in the underlying
prospectus supplement under the heading "Credit Enhancement--Subordination."
Credit enhancement is generally provided to the deposited underlying
certificates by allocation of realized losses to the subordinated certificates
issued by the underlying trust until the class certificate balances of such
subordinated certificates are reduced to zero. However, these subordinated
certificates will provide limited protection against certain categories of
realized losses such as special hazard losses, bankruptcy losses and fraud
losses that are in excess of coverage amounts specified in the underlying
prospectus supplement (referred to as excess losses) and described in this
prospectus supplement. Any such losses in excess of such amounts will be
allocated pro rata to all classes of certificates issued by the underlying trust
(other than the notional amount certificates) (including the deposited
underlying certificates), even if the aggregate class certificate balance of the
subordinated certificates issued by the underlying trust has not been reduced to
zero.

If any realized losses, other than excess losses, on the underlying mortgage
loans are allocated to the deposited underlying certificates, they will be
allocated first, to the Class A-3 Certificates until its class certificate
balance is reduced to zero, and second, concurrently to the Class A-1 and Class
A-2 Certificates, pro rata, based on their respective class certificate
balances, until their respective class certificate balances are reduced to zero.

Required Repurchase of Deposited Underlying Certificates and Required Purchase,
Repurchase or Substitutions of Underlying Mortgage Loans

The underlying certificate seller will make certain representations and
warranties relating to the deposited underlying certificates pursuant to the
trust agreement. If any of the representations and

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


                                      S-10


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

warranties are breached in any material respect as of the date made and notice
is received, on or prior to the distribution date in September 2007, the
underlying certificate seller will be obligated to cure such breach in all
material respects or, if such breach cannot be cured, repurchase such deposited
underlying certificates if so directed in writing by holders of at least 51% of
the percentage interests of each class of certificates.

The underlying seller made certain representations and warranties relating to
the underlying mortgage loans pursuant to the underlying agreement. If, with
respect to any underlying mortgage loan, any of the representations and
warranties are breached in any material respect as of the date made and such
breach materially and adversely affects the interests of holders of the
underlying certificates, the underlying seller will be obligated to repurchase
or substitute that underlying mortgage loan as further described in the
underlying prospectus supplement under "The Seller--Representations by Seller;
Repurchases, etc."

The underlying servicer is permitted to modify any underlying mortgage loan in
lieu of refinancing at the request of the related mortgagor, provided that the
underlying servicer purchases the underlying mortgage loan from the underlying
trust immediately preceding the modification. See "Servicing of Mortgage
Loans--Certain Modifications and Refinancings" in the underlying prospectus
supplement.

Tax Status

For federal income tax purposes, the issuing entity will comprise one REMIC,
referred to as the master REMIC. The master REMIC will hold the deposited
underlying certificates and will issue several classes of offered certificates,
which, other than the Class A-R Certificate, will represent the regular
interests in the master REMIC. The Class A-R Certificate will represent
ownership of the residual interest in the master REMIC.

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

ERISA Considerations

The offered certificates (other than the Class A-R Certificates) may be
purchased by a pension or other benefit 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 in the assets of such a
plan, so long as certain conditions are met.

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

Legal Investment

Each class of offered certificates will be "mortgage related securities" for
purposes of the Secondary Mortgage Market Enhancement Act of 1984 as long as
they are rated in one of the two highest rating categories by at least one
nationally recognized statistical rating organization.

See "Legal Investment" in the prospectus.

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


                                      S-11


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

                         Summary of Transaction Parties

                    ----------------------------------------
                           Underlying Issuing Entity
                           -------------------------
                        Residential Asset Securitization
                                 Trust 2007-A2

                               Underlying Trustee
                               ------------------
                          Deutsche Bank National Trust
                                    Company
                    ----------------------------------------
                                        |                Deposited
                                        |                Underlying
                                        V               Certificates
                    ----------------------------------------
                       Sponsor and Underlying Certificate
                       ----------------------------------
                                     Seller
                                     ------

                           HSBC Securities (USA) Inc.
                    ----------------------------------------
                                        |                Deposited
                                        |                Underlying
                                        V               Certificates
                            ------------------------
                                   Depositor
                                   ---------
                               IndyMac MBS, Inc.
                            ------------------------
                                        |                Deposited
                                        |                Underlying
                                        V               Certificates
                     -------------------------------------
                                 Issuing Entity
                                 --------------
                        Residential Asset Securitization
                                 Trust 2007-R1
                                    Trustee
                                    -------
                          Deutsche Bank National Trust
                                    Company
                     -------------------------------------
                                        |
                                        V       Distributions
                     -------------------------------------
                               Certificateholders
                     -------------------------------------


                                      S-12


                                  Risk Factors

The following information, which you should carefully consider, identifies
certain significant sources of risk associated with an investment in the offered
certificates. You should also carefully consider the information set forth under
"Risk Factors" in the prospectus. Because amounts payable on the offered
certificates are payable solely from amounts received in respect of the
deposited underlying certificates, you should carefully consider the information
set forth under "Risk Factors" in the prospectus supplement and the prospectus
for the deposited underlying certificates that is attached to this prospectus
supplement as Exhibit A.

Your Yield Will Be Affected By     Borrowers may, at their option, prepay the
How Borrowers Prepay Their         underlying mortgage loans in whole or in part
Mortgage Loans                     at any time. We cannot predict the rate at
                                   which borrowers will repay the underlying
                                   mortgage loans. A prepayment of an underlying
                                   mortgage loan, however, may result in the
                                   receipt of a principal payment on the
                                   deposited underlying certificates in
                                   accordance with the priority of principal
                                   distributions among the classes of mortgage
                                   pass-through certificates issued by the
                                   underlying trust. This, in turn, may result
                                   in a prepayment on the offered certificates.

                                   o   If you purchase your certificates at a
                                       discount and principal is repaid 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 faster
                                       than you anticipate, then your yield may
                                       be lower than you anticipate.

                                   See the discussions under the heading "Yield,
                                   Prepayment and Maturity Considerations" in
                                   this prospectus supplement and in the
                                   underlying prospectus supplement for a
                                   description of factors that may influence the
                                   rate and timing of payments on the underlying
                                   mortgage loans and the deposited underlying
                                   certificates.


Your Yield Will Be Affected By     The timing of principal distributions on the
How Distributions Are              offered certificates will be affected by a
Allocated to the Certificates      number of factors, including:

                                   o   the extent of prepayments on the
                                       underlying mortgage loans and how those
                                       payments are allocated among the
                                       certificates issued by the underlying
                                       trust, including the deposited underlying
                                       certificates,

                                   o   the allocation of distributions of
                                       principal among the deposited underlying
                                       certificates as specified under
                                       "Description of the
                                       Certificates--Principal" in the
                                       underlying prospectus supplement.

                                   o   whether the servicer exercises its right,
                                       in its sole discretion, to terminate the
                                       underlying trust,

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

                                   o   repurchases of the underlying mortgage
                                       loans for material breaches of
                                       representations and warranties or for
                                       modifications of the underlying mortgage
                                       loans in lieu of refinancing.


                                      S-13


                                   Because distributions on the offered
                                   certificates are dependent upon the
                                   distributions on the deposited underlying
                                   certificates, which in turn depend upon the
                                   payments on the underlying mortgage loans, we
                                   cannot guarantee the amount of any particular
                                   payment or the amount of time that will
                                   elapse before the issuing entity is
                                   terminated.

                                   See "Description of the Certificates --
                                   Principal," and "-- Optional Termination of
                                   the Underlying Trust" 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" and
                                   "--Representations by the Seller;
                                   Repurchases, etc." in the underlying
                                   prospectus supplement for more information
                                   regarding the repurchase or substitution of
                                   mortgage loans.


Credit Enhancement May Not Be      The offered certificates are not insured by
Sufficient to Protect              any financial guaranty insurance policy, and
Certificates from Losses           there is no credit enhancement mechanism of
                                   the issuing entity. The only protection
                                   against losses for the offered certificates
                                   is the protection afforded to the deposited
                                   underlying certificates by the subordinated
                                   certificates issued by the underlying trust.
                                   Thus, any shortfalls or losses on the
                                   deposited underlying certificates will be
                                   borne by the offered certificates. Credit
                                   enhancement is generally provided to the
                                   deposited underlying certificates by
                                   allocation of realized losses to the
                                   subordinated certificates issued by the
                                   underlying trust until the class certificate
                                   balances of such subordinated certificates
                                   are reduced to zero. Additionally, the
                                   deposited underlying certificates are a super
                                   senior class, and the related support class
                                   in the underlying trust will be allocated
                                   realized losses prior to the deposited
                                   underlying certificate. Investors in a super
                                   senior class should note that its original
                                   class certificate balance is substantially
                                   larger than the original class certificate
                                   balance of the senior support certificate. As
                                   a result, the senior support certificate will
                                   provide only limited protection for the
                                   classes of super senior certificates against
                                   realized losses. Likewise, the classes of
                                   subordinated certificates will provide
                                   limited protection against certain categories
                                   of realized losses such as special hazard
                                   losses, bankruptcy losses and fraud losses
                                   that are in excess of coverage amounts
                                   specified in the underlying prospectus
                                   supplement and described in this prospectus
                                   supplement. Any such losses in excess of such
                                   amounts will be allocated pro rata to all
                                   classes of certificates issued by the
                                   underlying trust (other than notional amount
                                   certificates) (including the deposited
                                   underlying certificates), even if the
                                   aggregate class certificate balance of the
                                   subordinated certificates issued by the
                                   underlying trust has not been reduced to
                                   zero.

                                   See "Description of the
                                   Certificates--Interest" and "--Allocation of
                                   Losses" in this prospectus supplement for a
                                   description of the application of realized
                                   losses to the offered certificates, and see
                                   "Risk Factors--Credit Enhancement May Not Be
                                   Sufficient to Protect Senior Certificates
                                   from Losses" in the underlying prospectus
                                   supplement for a description of the risks
                                   associated with the credit enhancement of the
                                   deposited underlying certificates.


                                      S-14


Interest Shortfalls Will           Net interest shortfalls on the underlying
Adversely Affect Your Yield        mortgage loans in a loan group will be
                                   allocated to all related classes of
                                   underlying certificates entitled to interest,
                                   including the deposited underlying
                                   certificates, on a pro rata basis. Any such
                                   net interest shortfalls allocated to the
                                   deposited underlying certificates will be
                                   allocated among the classes of offered
                                   certificates, pro rata, based on their
                                   respective interest entitlements. As
                                   described in the underlying prospectus
                                   supplement under "Risk Factors--Certain
                                   Interest Shortfalls Will Be Allocated to the
                                   Certificates," the underlying certificates,
                                   including the deposited underlying
                                   certificates, will be subject to certain
                                   shortfalls in interest collections resulting
                                   from the application of the Servicemembers
                                   Civil Relief Act and similar state and local
                                   laws (referred to in this prospectus
                                   supplement as the Relief Act). In addition,
                                   pursuant to the laws of various states, under
                                   certain circumstances, payments on mortgage
                                   loans by residents in those 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
                                   underlying servicer to foreclose on the
                                   related mortgaged property. This could result
                                   in delays or reductions in payment and
                                   increased losses on the underlying mortgage
                                   loans that would be borne by the holders of
                                   the underlying certificates, including the
                                   deposited underlying certificates. Such
                                   losses allocated to the deposited underlying
                                   certificates would be passed on to you. See
                                   "Risk Factors--Impact of World Events" in the
                                   prospectus.

The Ratings of the Offered         The ratings of the offered certificates by
Certificates Are Dependent         S&P and Fitch are based solely on the ratings
Solely on the Ratings of the       of the deposited underlying certificates by
Deposited Underlying               those rating agencies. Any negative change in
Certificates                       the ratings of the deposited underlying
                                   certificates will result in a negative change
                                   in the ratings of the offered certificates.


Certificates May Not Be            The offered certificates may not be an
Appropriate for Certain            appropriate investment for investors who do
Investors                          not have sufficient resources or expertise to
                                   evaluate the particular characteristics of
                                   the applicable class of offered certificates.
                                   This may be 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 rate of
                                       principal distributions on, and the
                                       weighted average lives of, the offered
                                       certificates.

                                   o   The rate of principal distributions on
                                       and the weighted average lives of the
                                       offered certificates will be sensitive to
                                       the rate and timing of principal
                                       distributions thereon which will be
                                       sensitive to the rate and timing of
                                       principal distributions on the deposited
                                       underlying certificates. The rate and
                                       timing of principal distributions on the
                                       deposited underlying certificates, in
                                       turn, will be sensitive to the uncertain
                                       rate and timing of principal prepayments
                                       on the underlying mortgage loans and the
                                       priority of principal distributions among
                                       the related classes of underlying
                                       certificates issued by the underlying
                                       trust. Accordingly, the offered
                                       certificates may be an inappropriate
                                       investment if you require a distribution
                                       of a


                                      S-15


                                       particular amount of principal on a
                                       specific date or an otherwise predictable
                                       stream of distributions.

                                   o   You may not be able to reinvest amounts
                                       distributed in respect of principal 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   A secondary market for the offered
                                       certificates may not develop or provide
                                       certificateholders with liquidity of
                                       investment.

                                   You should also carefully consider the
                                   further risks discussed above and under the
                                   heading "Yield, Prepayment and Maturity
                                   Considerations" in this prospectus supplement
                                   and in the underlying prospectus supplement,
                                   and under the heading "Risk Factors" in the
                                   underlying prospectus supplement and in the
                                   prospectus.

Relocation of the Servicer's       The servicer recently relocated its default
Default Management Services        management, collections, and loss mitigation
May Result in Increased            functions to Austin, Texas. Because of the
Delinquencies and Defaults         uncertainties associated with opening a new
Which May Adversely Affect the     office, the servicer's collection and default
Yield on the Certificates          management processes may be disrupted, which
                                   may result in an increase in delinquencies
                                   and defaults on the underlying mortgage
                                   loans. Although the servicer expects that any
                                   increase in delinquencies and defaults will
                                   be temporary, there can be no assurance as to
                                   the duration or severity of any disruption in
                                   the collection and default management
                                   processes or as to the resulting effects on
                                   the yields on the offered certificates.

Recent Developments in the         Recently, the residential mortgage market in
Residential Mortgage Market        the United States has experienced
May Adversely Affect the           difficulties and changed economic conditions
Performance and Market Value       that may adversely affect the performance and
of Your Certificates               market value of your certificates.
                                   Delinquencies and losses with respect to
                                   residential mortgage loans have generally
                                   increased in recent months and may continue
                                   to increase. The increases in delinquencies
                                   and losses have generally been more severe
                                   with respect to subprime mortgage loans and
                                   second-lien mortgage loans, although, more
                                   recently, delinquencies and losses have risen
                                   with respect to "alt-a" mortgage loans (such
                                   as the underlying mortgage loans). In
                                   addition, in recent months housing prices and
                                   appraised values in many states have declined
                                   or stopped appreciating, after extended
                                   periods of significant appreciation, and
                                   housing values are expected to stagnate or
                                   decrease during the near term. A continued
                                   decline or an extended flattening of housing
                                   values may result in additional increases in
                                   delinquencies and losses on residential
                                   mortgage loans.

                                   Another factor that may result in higher
                                   delinquency rates and losses in the future is
                                   the increase in monthly payments on interest
                                   only mortgage loans. Borrowers with interest
                                   only mortgage loans are exposed to higher
                                   monthly payments after the expiration of the
                                   interest only period when the monthly


                                      S-16


                                   payment is adjusted to a fully amortizing
                                   payment. These increases in borrowers'
                                   monthly payments may result in significantly
                                   higher monthly payments for borrowers with
                                   interest only mortgage loans.

                                   Borrowers seeking to avoid these increased
                                   monthly payments by refinancing their
                                   mortgage loans may no longer be able to find
                                   available replacement loans at comparably low
                                   interest rates. A decline in housing prices
                                   may also leave borrowers with insufficient
                                   equity in their homes to permit them to
                                   refinance. Furthermore, borrowers who intend
                                   to sell their homes on or before the
                                   expiration of the interest-only periods on
                                   their mortgage loans may find that they
                                   cannot sell their properties for an amount
                                   equal to or greater than the unpaid principal
                                   balance of their loans. These events, alone
                                   or in combination, may contribute to higher
                                   delinquency rates and losses on the
                                   underlying mortgage loans.

                                   Investors should note that delinquencies and
                                   losses generally have been increasing with
                                   respect to securitizations sponsored by
                                   IndyMac Bank, F.S.B. These increases in
                                   delinquencies and losses (as adjusted for
                                   loan age) are most pronounced for recent
                                   vintages and is especially pronounced for
                                   those securitized pools that include mortgage
                                   loans higher risk characteristics, including
                                   reduced documentation, higher loan-to-value
                                   ratios or lower credit scores. See "Static
                                   Pool Data" in the underlying prospectus
                                   supplement and the internet website
                                   referenced in that section for delinquency
                                   and loss information regarding certain prior
                                   securitized pools of IndyMac Bank, F.S.B. See
                                   also Appendix I to this prospectus
                                   supplement, which sets forth the
                                   characteristics of the underlying mortgage
                                   loans, and Exhibit B, which contains the most
                                   recent underlying distribution date statement
                                   for the deposited underlying certificates. In
                                   addition, numerous residential mortgage loan
                                   originators have recently experienced serious
                                   financial difficulties and, in some cases,
                                   bankruptcy. These difficulties may affect the
                                   market value of your certificates. The seller
                                   recently laid off 400 employees and said it
                                   could consider shutting down its conduit
                                   channel of origination.

                                   Numerous laws, regulations and rules related
                                   to the servicing of mortgage loans, including
                                   foreclosure actions, have been proposed
                                   recently by federal, state and local
                                   governmental authorities. If enacted, these
                                   proposed laws, regulations and rules may
                                   result in delays in the foreclosure process,
                                   reduced payments by borrowers or increased
                                   reimbursable servicing expenses, which are
                                   likely to result in delays and reductions in
                                   the distributions to be made to
                                   certificateholders. Certificateholders will
                                   bear the risk that these possible future
                                   regulatory and legislative developments will
                                   occur and result in losses on their
                                   certificates, whether due to delayed or
                                   reduced distributions or reduced market
                                   value.

Lack of Liquidity in the           The secondary mortgage markets are currently
Secondary Market May Adversely     experiencing severe disruptions resulting
Affect the Market Value of         from reduced investor demand for mortgage
Your Certificates                  loans and mortgage-backed securities and
                                   increased investor yield requirements for
                                   those loans and securities. As a result, the
                                   secondary market for mortgage-backed
                                   securities is experiencing extremely limited
                                   liquidity. These conditions may continue or
                                   worsen in the future.


                                      S-17


                                   Limited liquidity in the secondary market for
                                   mortgage-backed securities has had a severe
                                   adverse effect on the market value of
                                   mortgage-backed securities. Limited liquidity
                                   in the secondary market may continue to have
                                   a severe adverse effect on the market value
                                   of mortgage-backed securities, especially
                                   those that are more sensitive to prepayment,
                                   credit or interest rate risk, or that have
                                   been structured to meet the investment
                                   requirements of limited categories of
                                   investors. See "Risk Factors--Secondary
                                   Market For The Securities May Not Exist" in
                                   the prospectus.

Some of the 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 results. 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-18


              Description of the Deposited Underlying Certificates

The Deposited Underlying Certificates

      All of the information contained in this prospectus supplement with
respect to the Deposited Underlying Certificates (as defined below) is derived
from (i) information contained in the prospectus supplement and prospectus
related to the Deposited Underlying Certificates, and the supplement thereto,
together attached to this Prospectus Supplement as Exhibit A (the "Underlying
Prospectus Supplement") and (ii) information obtained from the monthly statement
provided by the Underlying Trustee (as defined below) in connection with the
July 25, 2007 Underlying Distribution Date (as defined below), attached to this
Prospectus Supplement as Exhibit B (the "Underlying Trust Monthly Statement").

      Unless otherwise noted, all of the statistical calculations in this
prospectus supplement are based on the information in the Underlying Trust
Monthly Statement.

      The assets of the Residential Asset Securitization Trust 2007-R1 (the
"Issuing Entity") will consist of a 100% percentage interest in the Residential
Asset Securitization Trust 2007-A2, Mortgage Pass-Through Certificates, Series
2007-B (the "Underlying Trust"), Class 2-A-1 (the "Deposited Underlying
Certificates"), issued pursuant to a pooling and servicing agreement, dated as
of February 1, 2007 (the "Underlying Agreement"), among IndyMac MBS, Inc., as
depositor, IndyMac Bank, F.S.B., as seller and as servicer (in such capacity,
the "Underlying Servicer"), and Deutsche Bank National Trust Company, as trustee
(in such capacity, the "Underlying Trustee").

      The Deposited Underlying Certificates evidence a senior interest in the
Underlying Trust created by the Underlying Agreement and were issued together
with certain other classes of senior certificates (collectively, the "Underlying
Senior Certificates"), certain classes of subordinated certificates (the
"Underlying Subordinated Certificates") and certain residual interests. The
deposited underlying certificates are "NAS" bonds, and are generally not
entitled to receive scheduled and unscheduled payments of principal on the
underlying mortgage loans to the extent described in the underlying prospectus
supplement. See "Description of the Certificates - Principal" in the underlying
prospectus supplement.

      The Underlying Trust consists primarily of a pool of two loan groups of
conventional, fixed-rate mortgage loans (the "Underlying Mortgage Loans")
secured by first liens on one- to four- family residential properties. The
aggregate outstanding stated principal balance of the Underlying Mortgage Loans
(the "Underlying Mortgage Pool Principal Balance") as reported in the Underlying
Trust Monthly Statement was approximately $651,175,597.

      After giving effect to the distributions made on the Distribution Date for
the Deposited Underlying Certificates on July 25, 2007, the Deposited Underlying
Certificates had a class certificate balance of approximately $50,263,000.

      In addition, after giving effect to the distributions on the Distribution
Date for the Deposited Underlying Certificates on July 25, 2007, the Underlying
Subordinated Certificates had an aggregate class certificate balance of
approximately $35,729,458, representing approximately 5.49% of the aggregate
class certificate balance of all certificates of the Underlying Trust. The
Underlying Subordinated Certificates provide credit enhancement for the
Underlying Senior Certificates as described in the Underlying Prospectus
Supplement under the heading "Credit Enhancement--Subordination."

      The Issuing Entity will be entitled to receive all distributions on the
Deposited Underlying Certificates due after July 25, 2007.

Assignment of the Deposited Underlying Certificates to the Issuing Entity;
Representations and Warranties

      On the Closing Date, HSBC Securities (USA) Inc. (the "Underlying
Certificate Seller"), pursuant to a bill of sale, will transfer the Deposited
Underlying Certificates, together with the right to receive all distributions
due thereon after July 25, 2007, to IndyMac MBS, Inc. (the "Depositor"). In
turn, the Depositor will, on the closing


                                      S-19


date, transfer the Deposited Underlying Certificates to Deutsche Bank National
Trust Company, as trustee (the "Trustee") under the Trust Agreement. The Trustee
will hold the Deposited Underlying Certificates through the book-entry
facilities of The Depository Trust Company ("DTC").

      The Underlying Certificate Seller will represent and warrant to the
Depositor and the Trustee in the Trust Agreement as of the closing date that (i)
the Underlying Certificate Seller was the sole owner of the Deposited Underlying
Certificates free and clear of any lien, pledge, charge or encumbrance of any
kind; (ii) the Underlying Certificate Seller had not assigned any interest in
any Deposited Underlying Certificates or any distributions thereon, except as
contemplated in the Trust Agreement; and (iii) the endorsements and other
documents furnished to the Trustee in connection with the Deposited Underlying
Certificates are sufficient to effect their transfer to the Trustee. Upon
discovery of a breach of any of the foregoing representations and warranties
that materially and adversely affects the interests of the Certificateholders in
the Deposited Underlying Certificates, the Underlying Certificate Seller, the
Depositor, or the Trustee shall give prompt written notice to the others and to
the Certificateholders. If such discovery and notice is given on or prior to the
Distribution Date in September 2007, the Underlying Certificate Seller will be
obligated to cure such breach in all material respects or, if such breach cannot
be cured, repurchase such Deposited Underlying Certificates if so directed in
writing by holders of at least 51% of the Percentage Interests of each class of
Offered Certificates. After that date, the Underlying Certificate Seller will
have no further obligations under the Trust Agreement. The "Percentage Interest"
for any class of Offered Certificates will equal the percentage obtained by
dividing the certificate balance of such Certificate by the Class Certificate
Balance of such class of certificates.

The Underlying Mortgage Loans

      All of the information contained in this prospectus supplement with
respect to the Underlying Mortgage Loans is based solely on (i) information
contained in the Underlying Prospectus Supplement and (ii) information obtained
from the Underlying Trust Monthly Statement.

      The tables in Appendix I to this prospectus supplement summarize certain
characteristics of the Underlying Mortgage Loans as of July 1, 2007 (the
"Reference Date"). The date as of which information regarding the Underlying
Mortgage Loans is provided in the Underlying Trust Monthly Statement is also the
Reference Date.

      The following table sets forth certain delinquency information with
respect to the Underlying Mortgage Loans as of the Reference Date, which has
been obtained from the Underlying Trust Monthly Statement. The information
contained in the following table may not be indicative of future delinquent
payment rates of the Underlying Mortgage Loans or reductions in the class
certificate balance of the Deposited Underlying Certificates.

      For additional information on the Underlying Mortgage Loans, prospective
investors should carefully review the Underlying Prospectus Supplement and the
Underlying Trust Monthly Statement.


                                      S-20


                            AGGREGATE MORTGAGE LOANS

            Underlying Mortgage Loan Delinquency Information from the
                       Underlying Trust Monthly Statement



------------------------------------------------------------------------------------------------------------------------------------
                                     Mortgage Loans Delinquent           Mortgage Loans Delinquent      Mortgage Loans Delinquent
   Underlying Mortgage Pool                  31-60 Days                          61-90 Days                      91 + Days
------------------------------------------------------------------------------------------------------------------------------------
  Principal                      Number of                         Number of                          Number of
Balance as of      Principal     Underlying                        Underlying                         Underlying
Original Issue   Balance as of    Mortgage    Principal             Mortgage    Principal              Mortgage    Principal
     Date        July 25, 2007     Loans      Balance(1)    %(2)     Loans      Balance(1)   %(2)       Loans      Balance(1)   %(2)
------------------------------------------------------------------------------------------------------------------------------------
 $683,787,666     $651,175,597      17       $9,041,640     1.39       8        $4,391,495   0.67        2          $980,000    0.15
------------------------------------------------------------------------------------------------------------------------------------




------------------------------------------------------------------------------------------------------------------------------------
                                              Mortgage Loans
   Underlying Mortgage Pool                    in Foreclosure                REO Mortgage Loans                Cumulative Losses
------------------------------------------------------------------------------------------------------------------------------------
  Principal                       Number of                              Number of
Balance as of      Principal      Underlying                            Underlying
Original Issue   Balance as of     Mortgage     Principal                Mortgage     Principal              Cumulative   Cumulative
     Date        July 25, 2007      Loans       Balance(1)   %(2)         Loans       Balance(1)    %(2)      Losses(1)    Losses %
------------------------------------------------------------------------------------------------------------------------------------
 $683,787,666     $651,175,597       10        $6,433,524    0.99           0             0           0          0           0
------------------------------------------------------------------------------------------------------------------------------------


----------
(1) Reflects the application of payments on the Underlying Mortgage Loans due on
or before July 1, 2007 and principal prepayments received on or before July 15,
2007.

(2) Delinquency, Foreclosure and REO Property percentages are represented as
percentages of the aggregate stated principal balance of the Underlying Mortgage
Loans as of July 1, 2007.


                                      S-21


                             GROUP 2 MORTGAGE LOANS

            Underlying Mortgage Loan Delinquency Information from the
                       Underlying Trust Monthly Statement



------------------------------------------------------------------------------------------------------------------------------------
                                     Mortgage Loans Delinquent           Mortgage Loans Delinquent      Mortgage Loans Delinquent
   Underlying Mortgage Pool                  31-60 Days                          61-90 Days                      91 + Days
------------------------------------------------------------------------------------------------------------------------------------
  Principal                      Number of                         Number of                          Number of
Balance as of      Principal     Underlying                        Underlying                         Underlying
Original Issue   Balance as of    Mortgage    Principal             Mortgage    Principal              Mortgage    Principal
     Date        July 25, 2007     Loans      Balance(1)    %(2)     Loans      Balance(1)   %(2)       Loans      Balance(1)   %(2)
------------------------------------------------------------------------------------------------------------------------------------
 $269,989,868    $248,711,933        13       $6,711,280    2.70       7        $3,959,495   1.59          2        $980,000    0.39
------------------------------------------------------------------------------------------------------------------------------------





-----------------------------------------------------------------------------------------------------------------------------------
                                               Mortgage Loans
   Underlying Mortgage Pool                     in Foreclosure               REO Mortgage Loans                Cumulative Losses
-----------------------------------------------------------------------------------------------------------------------------------
  Principal                        Number of                             Number of
Balance as of      Principal       Underlying                           Underlying
Original Issue   Balance as of      Mortgage     Principal               Mortgage     Principal             Cumulative   Cumulative
     Date        July 25, 2007       Loans       Balance(1)    %(2)       Loans       Balance(1)    %(2)     Losses(1)    Losses %
-----------------------------------------------------------------------------------------------------------------------------------
 $269,989,868    $248,711,933          9         $5,824,253    2.34         0              0         0           0           0
-----------------------------------------------------------------------------------------------------------------------------------


----------
(1) Reflects the application of payments on the Underlying Mortgage Loans due on
or before July 1, 2007 and principal prepayments received on or before July 15,
2007.

(2) Delinquency, Foreclosure and REO Property percentages are represented as
percentages of the aggregate stated principal balance of the Underlying Mortgage
Loans as of July 1, 2007.


                                      S-22


Advances on the Underlying Mortgage Loans

      As described further in the Underlying Prospectus Supplement under
"Servicing of the Mortgage Loans--Advances," the Underlying Servicer will be
required to advance certain amounts prior to each underlying Distribution Date.
An advance will be reimbursed from the payments on the Mortgage Loan with
respect to which the advance was made. If, however, an advance is determined to
be nonrecoverable and the Underlying Servicer delivers an officer's certificate
to the Underlying Trustee indicating that the advance is nonrecoverable, the
Underlying Servicer will be entitled to withdraw from the underlying Certificate
Account an amount equal to the nonrecoverable advance. Reimbursement for
advances and nonrecoverable advances will be paid prior to distributions on the
underlying certificates.

                                   The Sponsor

      The sponsor, HSBC Securities (USA) Inc. ("HSBC"), incorporated under the
laws of Delaware, is a wholly owned indirect subsidiary of HSBC Holdings plc.
Its principal executive office is located at 452 Fifth Avenue, New York, New
York 10018, and its telephone number is (212) 525-5000. HSBC is registered as a
broker-dealer and investment advisor with the Securities and Exchange
Commission, a futures commission merchant with the Commodity Futures Trading
Commission, and is a member of the New York Stock Exchange, the National
Association of Securities Dealers, the Chicago Mercantile Exchange, the Chicago
Board of Trade and various other stock and commodity exchanges. HSBC engages in
underwriting, dealing, and brokering a full range of debt and equity securities
and futures contracts and serves as a primary dealer in U.S. government and
federal agency securities.

      HSBC is acting as underwriter with respect to the offering of the Offered
Certificates, and was the underwriter for the Underlying Trust.

                             The Significant Obligor

      In connection with the issuance of the Deposited Underlying Certificates,
the Residential Asset Securitization Trust 2007-A2 (the "Underlying Trust"), a
common law trust created under the laws of the State of New York, was formed
pursuant to the Underlying Agreement. The fiscal year end of the Underlying
Trust is December 31.

      The Underlying Trust's activities are limited to the transactions and
activities entered into in connection with the securitization described in the
Underlying Prospectus Supplement, and except for those activities, the
Underlying Trust 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 Underlying Trust is not
permitted to hold any assets, or incur any liabilities, other than those
described in the Underlying Prospectus Supplement. Because the Underlying Trust
is created pursuant to the Underlying Agreement, the Underlying Trust and its
permissible activities can only be amended or modified by amending the
Underlying Agreement.

      Because the Underlying Trust 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 the Underlying Trust would be
characterized as a "business trust."

                                Static Pool Data

      Certain static pool data and delinquency, cumulative loss and prepayment
data for IndyMac Bank, F.S.B., the seller of the Underlying Mortgage Loans, is
available on the internet at http://regab.indymacbank.com/. Each securitization
is unique, and the characteristics of each securitized mortgage pool varies from
each other as well as from the Mortgage Loans to be included in the issuing
entity that issued the Underlying Certificates. In addition, the performance
information relating to the prior securitizations described above may have been
influenced by factors beyond the sponsor's control, such as housing prices and
market interest rates. Therefore, the performance of these prior securitizations
is unlikely to be indicative of the future performance of the Mortgage Loans.

      IndyMac Bank reports delinquency data for securitizations of pools of
mortgage loans under the "RAST" category consistent with the methodology used by
the Mortgage Bankers Association of America (the "MBA Method"). As defined


                                      S-23


in Standard & Poor's LEVELS(R) Glossary, under the MBA Method, a mortgage loan
is considered delinquent if a monthly payment has not been received by the end
of the day immediately preceding the mortgage loan's next due date. For example,
a mortgage loan will be considered 30 days delinquent if the borrower fails to
make a scheduled monthly payment originally due on March 1 by the close of
business on March 31 and it will be reported as "31-60 days delinquent" on the
April statement to certificateholders. A similar methodology is used for
determining whether a Mortgage Loan is 60 days delinquent, and the Mortgage Loan
will be considered "61-90 days delinquent" if the borrower fails to make that
scheduled monthly payment by April 30 and will be reported on the May statement
to certificateholders. IndyMac Bank reports delinquency data for securitizations
of mortgage loans under other categories consistent with the "OTS Method." Under
the OTS Method, as defined in Standard & Poor's LEVELS(R) Glossary, a mortgage
loan is considered delinquent if a monthly payment has not been received by the
close of business on the due date for that mortgage loan in the following month.
For securitized pools of mortgage loans listed under the categories of "INDA,"
"INDB," "INDX," "IMSC" and "RAST", as well as 2001-A and 2001-B pools listed
under the heading "SUBPRIME" and the 2006-1 pool under the heading "INDS"
IndyMac Bank calculates delinquencies according to the MBA Method. For
securitized pools of mortgage loans listed under the category "HELOC,"
"SUBPRIME" (other than the 2001-A and 2001-B pools) and "INDS" (other than the
2006-1 pool), IndyMac Bank calculates delinquencies according to the OTS Method.

      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 IndyMac Bank, F.S.B. that do not include
            the Underlying Mortgage Loans and that were established before
            January 1, 2006; or

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

                                  The Depositor

      The Depositor is IndyMac MBS, Inc., a Delaware corporation that is a
limited purpose finance subsidiary of IndyMac Bank, F.S.B., the servicer of the
Underlying Mortgage Loans. Its address is 155 North Lake Avenue, Pasadena,
California 91101, and its telephone number is (800) 669-2300. The Depositor is
also the depositor for the Underlying Trust. The Depositor will not have any
business operations other than securitizing mortgage assets and related
activities.

                               The Issuing Entity

         In connection with the issuance of the certificates, the Depositor has
formed the Residential Asset Securitization Trust 2007-R1, a common law trust
created under the laws of the State of New York pursuant to the pooling and
servicing agreement. 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.

         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. Because the Issuing Entity is created pursuant to the Trust
Agreement, the Issuing Entity and its permissible activities can only be amended
or modified by amending the Trust Agreement.

         Because 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."

                                   The Trustee

         Deutsche Bank National Trust Company ("DBNTC") will act as trustee for
the issuing entity (in such capacity, the "Trustee"). DBNTC is a national
banking association which has an office in Santa Ana, California. DBNTC has
previously been appointed to the role of trustee for numerous mortgage-backed
transactions in which residential mortgages comprised the asset pool and has
significant experience in this area. DBNTC has no legal proceeding that would
materially


                                      S-24


affect its ability to perform its duties as trustee. DBNTC may perform certain
of its obligations through one or more third party vendors. However, DBNTC will
remain liable for the duties and obligations required of it under the Trust
Agreement. The Depositor may maintain other banking relationships in the
ordinary course of business with DBNTC. DBNTC is also the trustee of the
Underlying Trust.

      Offered Certificates may be surrendered at the offices designated by the
Trustee from time to time for such purposes, which as of the closing date is
located at DB Services Tennessee, 648 Grassmere Park Rd., Nashville, TN
37211-3658, Attention: Transfer Unit, or at any other address the Trustee
designates from time to time. Correspondence may be directed to the Trustee at
its corporate trust office located at 1761 East St. Andrew Place, Santa Ana,
California 92705, Attention: Trust Administration IN07R1. Certificateholders may
access monthly statements from the Trustee's website
(https://www.tss.db.com/invr). Certificateholders may obtain assistance in
operating the Trustee's website by calling the Trustee's investor relations desk
at (800) 735-7777.

      In addition to the duties described elsewhere in this prospectus
supplement and the prospectus, the Trustee will perform many services on behalf
of the Issuing Entity pursuant to the Trust Agreement. The Trustee will be
responsible for (x) calculating and paying principal and interest distributions
to each certificateholder, (y) preparing and filing all income tax returns and
(z) the preparation of monthly statements to certificateholders.

      The Trustee will be liable for its own negligent action, its own negligent
failure to act or its own willful misconduct. 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 it is finally proven that the Trustee was
            negligent in ascertaining the pertinent facts,

      o     with respect to any action taken, suffered or omitted to be taken by
            it in good faith in accordance with the direction of holders of
            certificates evidencing not less than 25% of the Voting Rights of
            the certificates 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 Trust Agreement, or

      o     for any action taken, suffered or omitted by it in good faith and
            believed by it to be authorized or within the discretion or rights
            or powers conferred upon it by the Trust Agreement.

      The Trustee may request and rely upon and shall be protected in acting or
refraining from acting 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 in good faith 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 such laws 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 and each Rating Agency 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.


                                      S-25


      The Depositor may remove the Trustee and appoint a successor trustee if:

      o     the Trustee is removed or otherwise ceases to act as trustee for the
            Underlying Trust.

      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 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,

      o     a tax is imposed with respect to the Issuing Entity by any state in
            which the Trustee or the Issuing Entity is located and the
            imposition of the tax would be avoided by the appointment of a
            different trustee, or

      o     during the period in which the Depositor is required to file reports
            under the Securities Exchange Act of 1934, as amended, the Trustee
            fails to comply with its related obligations, as described in the
            Trust Agreement.

      In addition, the holders of certificates evidencing at least 51% of the
Voting Rights may at any time remove the Trustee and appoint a successor
trustee. Notice of any removal of the Trustee shall be given to each Rating
Agency by the successor trustee. The party initiating the removal of a trustee
will bear any expense associated with the removal of the appointment of a new
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 and its appointment does not
adversely affect the then-current ratings of the certificates.

                         Description of the Certificates

General

      The certificates will be issued pursuant to a Trust Agreement dated as of
August 16, 2007 (the "Trust Agreement") among the Depositor, the Underlying
Certificate Seller and the Trustee. The following sections of this prospectus
supplement are summaries of the material terms of the certificates and the Trust
Agreement pursuant to which the certificates will be issued. They do not purport
to be complete, however, and are subject to, and are qualified in their entirety
by reference to, the provisions of the Trust Agreement. When particular
provisions or terms used in the Trust Agreement are referred to, the actual
provisions (including definitions of terms) are incorporated by reference. We
will file a final copy of the Trust Agreement after the issuing entity issues
the certificates. The certificates represent obligations of the issuing entity
only and do not represent an interest in or obligation of IndyMac MBS, Inc., the
Underlying Certificate Seller or any of their affiliates.

      The Residential Asset Securitization Trust 2007-R1 will issue the Class
A-1, Class A-2, Class A-3 and Class A-R Certificates (collectively, the "Offered
Certificates"). All of the Offered Certificates are offered by this prospectus
supplement. The classes of Offered Certificates will have the respective initial
Class Certificate Balances and the pass-through rates set forth on the cover
page.

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

         Designation                           Classes of Certificates
         -----------                           -----------------------
     Offered Certificates                   Class A-1, Class A-2, Class A-3
                                              and Class A-R Certificates

  Super Senior Certificates                     Class A-1 and Class A-2

     Support Certificates                             Class A-3


                                      S-26


      The certificates are generally referred to as the following types:

            Class                                     Type
            -----                                     ----
     Class A-1 Certificates:      Senior/ Super Senior/ Fixed Pass-Through Rate

     Class A-2 Certificates:      Senior/ Super Senior/ Fixed Pass-Through Rate

     Class A-3 Certificates:         Senior/ Support/ Fixed Pass-Through Rate

     Class A-R Certificates:                  Senior/REMIC Residual

Calculation of Class Certificate Balance

      The "Class Certificate Balance" of each Class of Offered Certificates as
of any Distribution Date is the initial Class Certificate Balance thereof
reduced by the sum of (i) all amounts previously distributed to holders of
certificates of such class as distributions of principal and (ii) the amount of
Underlying Realized Losses allocated to such class, as described below under
"--Allocation of Losses," and in the case of Underlying Realized Losses have
been allocated to that class, increased by the amount of increase in the class
certificate balance of the Deposited Underlying Certificates due to the receipt
of Subsequent Recoveries on the Underlying Mortgage Loans (see "The
Agreements--Realization upon Defaulted Mortgage Loans" in the prospectus). The
Class A-R Certificates will be issued in fully registered certificated form. All
of the remaining classes of Offered Certificates will be represented by
book-entry certificates. The book-entry certificates will be issuable in
book-entry form only. The Class A-R Certificates will be issued in a
denomination of $100.

      The Decrement and Yield Tables and the original Class Certificate Balances
of the Offered Certificates in this prospectus supplement are based on the
information in the Underlying Trust Monthly Statement.

Book-Entry Certificates

      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 a single certificate in fully registered
certificated form. 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") or, upon
request, through Clearstream, Luxembourg (as defined in this prospectus
supplement) or the Euroclear System ("Euroclear"), if they are participants of
such systems, or indirectly through organizations that are participants in such
systems. The Book-Entry Certificates will be issued in one or more certificates
that equal the aggregate Class Certificate Balance of the offered certificates,
as applicable, 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 Banking's and Euroclear's names on the books of their respective
depositaries which in turn will hold such positions in customers' securities
accounts in the depositaries' names on the books of DTC. Citibank, N.A. will act
as depositary for Clearstream, Luxembourg and JPMorgan Chase Bank will act as
depositary for Euroclear (in such capacities, individually the "Relevant
Depositary" and collectively the "European Depositaries"). Investors may hold
such beneficial interests in the Book-Entry Certificates in minimum
denominations representing Class Certificate Balances of $25,000 and integral
multiples of $1,000 in excess thereof. One investor of each class of Book-Entry
Certificates may hold a beneficial interest therein that is not an integral
multiple of $1,000. Except as described below, no person acquiring a Book-Entry
Certificate will be entitled to receive a physical certificate representing such
offered certificate (a "Definitive Certificate"). Unless and until Definitive
Certificates are issued, it is anticipated that the only Certificateholder of
the offered 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.

      The Certificate Owner's ownership of a Book-Entry Certificate will be
recorded on the records of the brokerage firm, bank, thrift institution or other
financial intermediary (each, a "Financial Intermediary") that maintains the
beneficial owner's account for such purpose. In turn, the Financial
Intermediary's ownership of such Book-Entry Certificate will be recorded on the
records of DTC (or of a participating firm that acts as agent for the Financial
Intermediary, whose interest


                                      S-27


will in turn be recorded on the records of DTC, if the Certificate Owner's
Financial Intermediary is not a DTC participant and on the records of
Clearstream, Luxembourg or Euroclear, as appropriate).

      Certificate Owners will receive all distributions of principal of, and
interest on, the offered certificates from the trustee through DTC and DTC
participants. While the offered certificates are outstanding (except under the
circumstances described below), under the rules, regulations and procedures
creating and affecting DTC and its operations (the "DTC Rules"), DTC is required
to make book-entry transfers among Participants on whose behalf it acts with
respect to the offered certificates and is required to receive and transmit
distributions of principal of, and interest on, the offered certificates.
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 Certificate Owners have accounts
with respect to offered certificates are similarly required to make book-entry
transfers and receive and transmit such distributions on behalf of their
respective Certificate Owners. Accordingly, although Certificate Owners will not
possess certificates, the DTC Rules provide a mechanism by which Certificate
Owners will receive distributions and will be able to transfer their interest.

      Certificate Owners will not receive or be entitled to receive certificates
representing their respective interests in the offered certificates, except
under the limited circumstances described below. Unless and until Definitive
Certificates are issued, Certificate Owners who are not Participants may
transfer ownership of offered certificates only through Participants and
Indirect Participants by instructing such Participants and Indirect Participants
to transfer Book-Entry Certificates, by book-entry transfer, through DTC for the
account of the purchasers of such Book-Entry Certificates, which account is
maintained with their respective Participants. Under the DTC Rules and in
accordance with DTC's normal procedures, transfers of ownership of Book-Entry
Certificates 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 Certificate 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. Such credits or any
transactions in such securities, settled during such processing will be reported
to the relevant Euroclear or Clearstream, Luxembourg Participants on such
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. For information with respect to tax documentation procedures,
relating to the offered certificates, see "Material Federal Income Tax
Consequences -- Taxation of Residual Certificates" and "Description of the
Securities -- Global, Clearance, Settlement And Tax Documentation Procedures" in
the underlying prospectus."

      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 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 in DTC in accordance with DTC Rules on behalf of the relevant European
international clearing system by the Relevant Depositary; however, such cross
market transactions will require delivery of instructions to the relevant
European international clearing system by the counterpart in such system in
accordance with its rules and procedures and within its established deadlines
(European time). The relevant European international clearing system will, if
the transaction meets its settlement requirements, deliver instructions to 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.

      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 Certificates, whether
held for its own account or as a nominee for another person. In general,
beneficial ownership of Book-Entry Certificates will be subject to the DTC
Rules.


                                      S-28


      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 10 January 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 Clearstream,
Luxembourg International 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" With effect from 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 as such 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
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.


                                      S-29


      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 Certificates will be made on each
Distribution Date by the trustee to DTC. DTC will be responsible for crediting
the amount of such payments to the accounts of the applicable DTC participants
in accordance with DTC's normal procedures. Each DTC participant will be
responsible for disbursing such payments to the Certificate Owners that it
represents and to each Financial Intermediary for which it acts as agent. Each
such Financial Intermediary will be responsible for disbursing funds to the
Certificate Owners that it represents.

      Under a book-entry format, Certificate Owners may experience some delay in
their receipt of payments, since such payments will be forwarded by the trustee
to Cede & Co. Distributions with respect to offered certificates 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. Such distributions will be subject to tax reporting in
accordance with relevant United States tax laws and regulations. See "Material
Federal Income Tax Consequences -- Tax Status as a Grantor Trust" in the
prospectus. Because DTC can only act on behalf of Financial Intermediaries, the
ability of a Certificate Owner to pledge Book-Entry Certificates to persons or
entities that do not participate in the depository system, or otherwise take
actions in respect of such Book-Entry Certificates, may be limited due to the
lack of physical certificates for such Book-Entry Certificates. In addition,
issuance of the Book-Entry Certificates in book-entry form may reduce the
liquidity of such certificates in the secondary market since certain potential
investors may be unwilling to purchase certificates for which they cannot obtain
physical certificates.

      Monthly and annual reports on the issuing entity provided by the Trustee
to Cede & Co., as nominee of DTC, may be made available to Certificate Owners
upon request, in accordance with the DTC Rules and the rules, regulations and
procedures creating and affecting the Relevant Depositary, and to the Financial
Intermediaries to whose DTC accounts the Book-Entry Certificates of such
Certificate Owners are credited.

      DTC has advised the depositor and the trustee that, unless and until
Definitive Certificates are issued, DTC will take any action permitted to be
taken by the holders of the Book-Entry Certificates under the pooling and
servicing agreement only at the direction of one or more Financial
Intermediaries to whose DTC accounts the Book-Entry Certificates are credited,
to the extent that such actions are taken on behalf of Financial Intermediaries
whose holdings include such Book-Entry Certificates. 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 Certificate under the pooling and
servicing 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 such actions on
its behalf through DTC. DTC may take actions, at the direction of the related
Participants, with respect to some Book-Entry Certificates which conflict with
actions taken with respect to other Book-Entry Certificates.

      Definitive Certificates will be issued to Certificate Owners, 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 Certificates and the depositor or the trustee is unable to locate a
qualified successor, or (b) after the occurrence of an event of default under
the pooling and servicing agreement), beneficial owners having not less than 51%
of the voting rights evidenced by the Offered Certificates 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 such 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 such event and the availability through DTC of
Definitive Certificates. Upon surrender by DTC of the global certificate or
certificates representing the Book-Entry Certificates and instructions for
re-registration, the trustee will issue Definitive Certificates, and thereafter
the trustee will recognize the


                                      S-30


holders of such Definitive Certificates as holders of the related offered
certificates under the pooling and servicing agreement.

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

Distributions on the Deposited Underlying Certificates; Accounts

      On or prior to the closing date, the Trustee will establish an account
(the "Distribution Account"), which will be maintained in trust for the benefit
of the certificateholders. The Trustee will deposit or cause to be deposited in
the Distribution Account all amounts it receives in respect of the Deposited
Underlying Certificates. It is expected that distributions on the Deposited
Underlying Certificates will be received by the Trustee on each Distribution
Date and will then be used to make distributions on that day to
certificateholders as described below.

Investments of Amounts Held in Accounts

      Funds on deposit in the Distribution Account will not be invested.

Withdrawals From the Distribution Account

      The Trustee is permitted from time to time to withdraw funds from the
Distribution Account for the following purposes:

      o     to make distributions to the certificateholders as described in this
            prospectus supplement,

      o     to pay any taxes imposed on the Issuing Entity,

      o     to withdraw any amount deposited in the Distribution Account and not
            required to be deposited therein and

      o     to clear and terminate the Distribution Account upon termination of
            the Trust Agreement.

Distributions

      Distributions on the Deposited Underlying Certificates are made on the
25th day of each month, or if the 25th day of a month is not a business day,
then on the next business day (each, an "Underlying Distribution Date"). We will
make distributions on the Offered Certificates on the same day (each, a
"Distribution Date"). The first Distribution Date for the Offered Certificates
is scheduled for August 27, 2007. We will make distributions on each
Distribution Date to the persons in whose names the Offered Certificates are
registered at the close of business (x) on the closing date in the case of the
first Distribution Date and (y) on the last business day of the month preceding
the month of such Distribution Date in the case of any other Distribution Date
(each, a "Record Date").

      Distributions on each Distribution Date will be made by check mailed to
the address of the person entitled to it as it appears on the applicable
certificate register or, in the case of a certificateholder who has so notified
the Trustee in writing in accordance with the Trust 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 Offered
Certificates will be made only upon presentment and surrender of the Offered
Certificates at corporate trust office of the Trustee.

Priority of Distributions Among Certificates

      As more fully described in this prospectus supplement, distributions of
interest on each interest-bearing class of Offered Certificates will be made on
each Distribution Date from Available Interest Funds. Similarly, Available
Principal Funds will be distributed on each Distribution Date as principal on
the class of Offered Certificates then entitled to receive distributions of
principal, in the order and subject to the priorities set forth under
"Description of the Certificates--Principal" in this prospectus supplement.


                                      S-31


      "Available Interest Funds" with respect to any Distribution Date will be
equal to the aggregate of all previously undistributed amounts received by the
Trustee on or prior to such Distribution Date as distributions of interest on
the Deposited Underlying Certificates.

      "Available Principal Funds" with respect to any Distribution Date will be
equal to the aggregate of all previously undistributed amounts received by the
Trustee on or prior to such Distribution Date as distributions of principal on
the Deposited Underlying Certificates.

      "Available Funds" with respect to any Distribution Date will be equal to
the sum of (i) Available Interest Funds and (ii) Available Principal Funds for
such Distribution Date.

Interest

      The classes of Offered Certificates will have the respective pass-through
rates set forth on the cover page of this prospectus supplement.

      On each Distribution Date, each class of certificates will be entitled to
receive from Available Interest Funds an amount allocable to interest (as to
each such class, the "Interest Distribution Amount") with respect to the related
interest accrual period. The Interest Distribution Amount for any class of
Offered Certificates will be equal to the sum of (i) interest at the applicable
pass-through rate on the related Class Certificate Balance immediately prior to
that Distribution Date, and (ii) the sum of the amounts, if any, by which the
amount described in clause (i) above on each prior Distribution Date exceeded
the amount actually distributed as interest on such prior Distribution Dates and
not subsequently distributed ("Unpaid Interest Amounts").

      The interest accrual period for the certificates will be the calendar
month preceding the month of the Distribution Date. Interest will be calculated
and payable on the basis of a 360-day year divided into twelve 30-day months.

      If the interest entitlement of the Deposited Underlying Certificates is
reduced as provided in the Underlying Agreement, the interest entitlement of
each interest-bearing class of certificates for the corresponding interest
accrual period will be reduced proportionately. A reduction in such interest
entitlement may result from Relief Act Reductions, or Net Interest Shortfalls
(as defined in the Underlying Prospectus Supplement). See "Description of the
Certificates--Interest" in the Underlying Prospectus Supplement.

      In the event that, on a particular Distribution Date, Available Interest
Funds in the Distribution Account applied in the order described above under
"--Priority of Distributions Among Certificates" are not sufficient to make a
full distribution of the interest entitlement on the Offered Certificates,
interest will be distributed on each class of Offered Certificates based on the
amount of interest each such class would otherwise have been entitled to receive
in the absence of such shortfall. Any Unpaid Interest Amount will be carried
forward and added to the amount holders of each such class of certificates will
be entitled to receive on the next Distribution Date. Any Unpaid Interest Amount
so carried forward will not bear interest.

Principal

      On each Distribution Date, Available Principal Funds will be distributed
in the following priority:

      (i) to the Class A-R Certificates, until its Class Certificate Balance is
reduced to zero; and

      (ii) concurrently, to the Class A-1, Class A-2 and Class A-3 Certificates,
pro rata, until their respective Class Certificate Balances are reduced to zero.

      Residual Certificates. The Class A-R Certificates will remain outstanding
for so long as the Issuing Entity shall exist, whether or not they are receiving
current distributions of principal or interest. In addition to distributions of
interest and principal as described above, on each Distribution Date, the
holders of the Class A-R Certificates will be entitled to receive any Available
Funds remaining after distribution of interest on and principal of the classes
of Offered Certificates, as described above. It is not anticipated that there
will be any significant amounts remaining for that distribution.


                                      S-32


Allocation of Losses

      On each Distribution Date, all Realized Losses (other than Excess Losses)
(each as defined in the Underlying Prospectus Supplement) that are allocated to
the Deposited Underlying Certificates (collectively, "Underlying Realized
Losses") will be allocated first, to the Class A-3 Certificates, until its Class
Certificate Balance is reduced to zero, and second, concurrently to the Class
A-1 and Class A-2 Certificates, pro rata, based on their respective Class
Certificate Balances, until their respective Class Certificate Balances are
reduced to zero.

Statements to Certificateholders

      Concurrently with each distribution on a Distribution Date, the Trustee
will make available to certificateholders on the Trustee's website
(https://www.tss.db.com/invr), among other things, the information set forth
below:

      o     Available Interest Funds and Available Principal Funds for such
            Distribution Date;

      o     with respect to such Distribution Date, the aggregate amount of
            principal and interest, stated separately, distributed to holders of
            each class of Offered Certificates;

      o     with respect to such Distribution Date, the amount of any interest
            shortfall for each class of Offered Certificates, together with the
            amount of any unpaid interest shortfall for such class immediately
            following such Distribution Date;

      o     with respect to each class of Offered Certificates, the losses
            allocated to such class with respect to such Distribution Date;

      o     the Class Certificate Balance of each class of Offered Certificates,
            after giving effect to distributions of principal of such
            certificates on such Distribution Date; and

      o     any additional amount distributed to the holder of the Class A-R
            Certificates on such Distribution Date.

      The monthly statement is prepared by the Trustee based on information it
calculates related to the deposited underlying certificates. The trustee is
responsible for calculating and verifying the information in the monthly
statement. The report to certificateholders may include additional or other
information of a similar nature to that specified above.

Structuring Assumptions

      Unless otherwise specified, the information in the tables in this
Prospectus Supplement has been prepared on the basis of the following assumed
characteristics of the Underlying Mortgage Loans as of July 1, 2007, and the
following additional assumptions (collectively, the "Structuring Assumptions"):


                                      S-33


      o     the Underlying Mortgage Loans are 14 mortgage loans that have the
            following characteristics:

          Reference Date    Reference Date                              Original
             Original          Current                    Adjusted Net  term to
 Loan       Principal         Principal       Mortgage      Mortgage    Maturity
Group       Balance($)        Balance($)      Rate (%)      Rate (%)    (Months)
-----       ----------        ----------      --------      --------    --------
  1        1,446,499.00      1,441,373.13   5.6745968443  5.4190968443    360
  1          515,000.00        508,038.40   5.8750000000  5.6195000000    240
  1       60,722,871.00     60,651,036.74   6.1211533822  5.8656533822    360
  1       76,289,430.00     75,714,098.32   6.1253690421  5.8647890560    360
  1      122,451,101.00    121,739,324.35   6.4744635357  6.2689635357    360
  1        1,091,000.00      1,072,320.26   6.5000000000  6.2945000000    240
  1      138,149,425.80    137,820,416.84   6.5034009443  6.2979009443    360
  1        3,525,800.00      3,517,056.07   6.5553829833  6.3498829833    360
  2       25,091,109.00     25,074,137.06   6.7500000000  6.4945000000    360
  2       28,043,465.00     27,889,949.86   6.7500000000  6.4894666220    360
  2        2,486,000.00      2,479,049.89   6.7500000000  6.4945000000    360
  2       74,972,273.00     74,453,514.97   7.2182955185  7.0108352792    360
  2        8,567,800.00      8,549,460.27   7.2407045683  7.0352045683    360
  2      110,588,815.20    110,265,821.04   7.3120265732  7.0985907506    360

                                                            Original   Remaining
         Remaining                                          Interest-  Interest-
          term to     Original      Remaining                 Only       Only
 Loan    Maturity   Amortization   Amortization    Age        Term       Term
Group    (Months)     (Months)       (Months)    (Months)   (Months)   (Months)
-----    --------     --------       --------    --------   --------   --------
  1         354          480           474         6            0          0
  1         234          240           234         6            0          0
  1         354          240           240         6          120        114
  1         354          360           354         6            0          0
  1         354          360           354         6            0          0
  1         232          240           232         8            0          0
  1         354          240           240         6          120        114
  1         354          480           474         6            0          0
  2         354          240           240         6          120        114
  2         354          360           354         6            0          0
  2         354          480           474         6            0          0
  2         354          360           354         6            0          0
  2         355          480           475         5            0          0
  2         354          240           240         6          120        114


      o     the scheduled monthly payment for each Underlying Mortgage Loan has
            been calculated such that each Underlying Mortgage Loan will
            amortize in amounts sufficient to repay the current balance of the
            mortgage loan by its respective remaining term to maturity;

      o     all scheduled payments on the Underlying Mortgage Loans are timely
            received on the first day of each month, commencing in August 2007;

      o     the Underlying Mortgage Loans will prepay monthly at the specified
            percentages of the Prepayment Assumption;

      o     all principal prepayments constitute prepayments in full of the
            Underlying Mortgage Loans are received on the last day of each
            month, commencing in July 2007 and include 30 days' interest
            thereon;

      o     there are no defaults, losses or interest shortfalls on the
            Underlying Mortgage Loans prior to or after the closing date;

      o     no optional termination of the Underlying Trust;

      o     the initial Class Certificate Balances for the Class A-1, Class A-2
            and Class A-3 Certificates are $37,703,220, $10,052,580 and
            $2,507,100, respectively;

      o     distributions in respect of the Offered Certificates are received in
            cash on the 25th day (or the next Business Day if the 25th is not a
            Business Day) of each month commencing in August 2007;

      o     the closing date for the Offered Certificates is August 16, 2007;

      o     distributions of principal on the certificates in the Underlying
            Trust are made in accordance with the methodologies and priorities
            set forth in the Underlying Prospectus Supplement; and

      o     the Deposited Underlying Certificates, the Underlying Senior
            Certificates and the Underlying Subordinated Certificates have the
            Class Certificate Balances set forth on the Underlying Trust Monthly
            Statement.

      Prepayments of mortgage loans commonly are measured relative to a
prepayment standard or model. The model used in this prospectus supplement is
the Standard Prepayment Assumption (the "Group 2 Prepayment Assumption"), which
represents an assumed rate of prepayment each month of the then outstanding
principal balance of a pool of new mortgage loans. The Prepayment Assumption
does not purport to be either a historical description of the prepayment
experience of any pool of mortgage loans or a prediction of the anticipated rate
of any prepayment of any pool of mortgage loans, including the mortgage loans. A
100% Prepayment Assumption assumes a constant prepayment rate of 8% per annum of
the then outstanding principal balance of the mortgage loans in the first month
of the life of the mortgage loans


                                      S-34


and an additional approximately 1.09090909% per annum in each month thereafter
until the twelfth month. Beginning in the twelfth month and in each month
thereafter during the life of the mortgage loans, a 100% Prepayment Assumption
assumes a constant prepayment rate of 20% per annum each month. 0% of the
Prepayment Assumption assumes no prepayments. There is no assurance that
prepayments will occur at any of the Prepayment Assumption rate or at any other
constant rate.

      Although it is assumed that each of the Underlying Mortgage Loans prepays
at the specified constant percentages of PPC, this is not likely to be the case.
Moreover, discrepancies exist between the characteristics of the actual
Underlying Mortgage Loans and characteristics of the mortgage loans used in
preparing the tables.

Voting Rights of the Certificates

      As of any date of determination:

            o     the Class A-R Certificates will be allocated 1% of all voting
                  rights in respect of the certificates (collectively, the
                  "Voting Rights"), and

            o     the Class A-1, Class A-2 and Class A-3 Certificates will be
                  allocated the remaining Voting Rights based on their
                  respective Class Certificate Balances.

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

Optional Termination of the Underlying Trust

      Although there is no optional termination provision in the Issuing Entity,
the Underlying Servicer has the right to purchase all remaining Underlying
Mortgage Loans and real estate owned by the Underlying Trust and thereby effect
early retirement of the Deposited Underlying Certificates, subject to the
aggregate stated principal balance of such Underlying Mortgage Loans and real
estate owned by the Underlying Trust at the time of purchase being less than 10%
of the aggregate stated principal balance of the Underlying Mortgage Loans as of
the cut-off date of the Underlying Trust.

      Upon the Underlying Servicer effecting such purchase with respect to the
Underlying Trust, the Issuing Entity will terminate and the Trustee will
distribute amounts received in respect of the Deposited Underlying Certificates
in connection with such purchase to the certificateholders as described in this
prospectus supplement on the related Distribution Date.

      The proceeds from any such distribution may not be sufficient to
distribute the full amount to which each class of Offered Certificates is
entitled if the amount received on the Deposited Underlying Certificates is less
than the outstanding Class Certificate Balance thereof plus all accrued and
unpaid interest thereon. See "Description of the Certificates-- Termination of
the Issuing Entity; Optional Termination" in the Underlying Prospectus
Supplement.

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 --
REMIC Certificates -- Tax-Related Restrictions on Transfers of Residual
Certificates -- Disqualified Organizations," "-- Noneconomic Residual
Certificates" and "-- Foreign Investors" in the prospectus. The Class A-R
Certificates (in addition to other ERISA restricted classes of certificates, as
provided in the Trust Agreement) may not be acquired by an ERISA Plan. See
"ERISA Considerations" in the prospectus. Each Class A-R Certificate will
contain a legend describing the foregoing restrictions.

                  Yield, Prepayment and Maturity Considerations

Prepayment Considerations and Risks

      The effective yield to the holders of each class of certificates will be
lower than the yield otherwise produced by the applicable pass-through rate and
the purchase price of the certificates because monthly distributions will not be
payable


                                      S-35


to the holders until the 25th day (or, if that day is not a business day, the
following business day) of the month following the month in which interest
accrues on the Underlying Mortgage Loans (without any additional distribution of
interest or earnings on them for the delay).

      If the purchaser of an Offered Certificate offered at a discount
calculates the anticipated yield to maturity of such certificate based on an
assumed rate of payment of principal that is faster than that actually received,
the actual yield to maturity will be lower than that so calculated. If the
purchaser of an Offered Certificate offered at a premium calculates the
anticipated yield to maturity of such certificate based on an assumed rate of
payment of principal that is slower than that actually received, the actual
yield to maturity will be lower than that so calculated.

      The yield to maturity of the Offered Certificates and the aggregate amount
of distributions on the Offered Certificates will be related to the timing and
amount of principal payments on the Deposited Underlying Certificates, which
will be related to the rate of payment of principal (including prepayments) on
the Underlying Mortgage Loans and the allocation of such principal payments to
the Deposited Underlying Certificates in accordance with the priorities
discussed in the Underlying Prospectus Supplement. See "Description of the
Certificates--Interest" and "--Principal" in the Underlying Prospectus
Supplement and "Description of the Deposited Underlying Certificates" in this
prospectus supplement. The rate of principal payments on the Underlying Mortgage
Loans will be affected by the amortization schedules of the Underlying Mortgage
Loans and by the timing and amount of principal prepayments thereon. Since the
rate of payment of principal of the Underlying Mortgage Loans will depend on
future events and a variety of factors, no assurance can be given as to such
rate or the rate of principal prepayments. The rate of principal payments
(including prepayments) on pools of mortgage loans may vary significantly over
time and may be influenced by a variety of economic, geographic, social and
other factors, including changes in mortgagors' housing needs, job transfers,
unemployment, mortgagors' net equity in the mortgaged properties, servicing
decisions, as well as the characteristics of the Underlying Mortgage Loans
included in the underlying mortgage pool as described under "The Mortgage
Pool--General" and "--Underwriting Process" in the Underlying Prospectus
Supplement. In general, if prevailing interest rates were to fall significantly
below the mortgage rates on the Underlying Mortgage Loans, the Underlying
Mortgage Loans could be subject to higher prepayment rates than if prevailing
interest rates were to remain at or above the mortgage rates on the Underlying
Mortgage Loans. Conversely, if prevailing interest rates were to rise
significantly, the rate of prepayments on the Underlying Mortgage Loans would
generally be expected to decrease. No assurances can be given as to the rate of
prepayments on the Underlying Mortgage Loans in stable or changing interest rate
environments.

      See "Yield, Prepayment and Maturity Considerations" in the Underlying
Prospectus Supplement for a description of additional prepayment considerations
and risks related to the Underlying Mortgage Loans and the Deposited Underlying
Certificates.

Weighted Average Lives of the Offered Certificates

      The weighted average life of a class of certificates is determined by (a)
multiplying the amount of the net reduction, if any, of the Class Certificate
Balance of such class on each Distribution Date by the number of years from the
date of issuance to such Distribution Date, (b) summing the results and (c)
dividing the sum by the aggregate amount of the net reductions in Class
Certificate Balance of the class of certificates referred to in clause (a).

      The weighted average life of each class of Offered Certificates will be
influenced by the rate of the prepayment of principal (including prepayments) on
the Underlying Mortgage Loans and the allocation of such principal payments to
the Deposited Underlying Certificates in accordance with the priorities
discussed in the Underlying Prospectus Supplement.

      For a discussion of additional factors which may influence the rate of
payments (including prepayments) of the Underlying Mortgage Loans and the
Deposited Underlying Certificates, see "--Prepayment Considerations and Risks"
in this prospectus supplement, "Yield and Prepayment Considerations" in the
prospectus and "Yield, Prepayment and Maturity Considerations" in the Underlying
Prospectus Supplement.

      The interaction of the foregoing factors may have different effects on
various classes of Offered Certificates and the effects on any class may vary at
different times during the life of such class. Accordingly, no assurance can be
given as to the weighted average life of any class of Offered Certificates.
Further, to the extent the prices of the Offered Certificates represent
discounts or premiums to their respective original Class Certificate Balances,
variability in the weighted average lives of such class of Offered Certificates
will result in variability in the related yields to maturity. For an example of
how


                                      S-36


the weighted average lives of the class of Offered Certificates may be affected
at various constant percentages of the Prepayment Assumption, see the Decrement
Tables below.

Decrement Tables

      The following tables indicate the percentages of the initial Class
Certificate Balances of the classes of Offered Certificates (other than the
Class A-R Certificates) that would be outstanding after each of the dates shown
at various constant percentages of the Prepayment Assumption and the
corresponding weighted average lives of the classes. The tables have been
prepared on the basis of the structuring assumptions. It is unlikely that all of
the Underlying Mortgage Loans will prepay at the constant percentages of the
Prepayment Assumption specified in the tables or at any other constant rate.
Moreover, the diverse remaining terms to maturity of the Mortgage Loans could
produce slower or faster principal distributions than indicated in the tables,
which have been prepared using the specified constant percentages of the
Prepayment Assumption, even if the remaining term to maturity of the Underlying
Mortgage Loans is consistent with the remaining terms to maturity of the
Underlying Mortgage Loans specified in the structuring assumptions.


                                      S-37


            Percent of Initial Class Certificate Balances Outstanding

                                   Class A-1, Class A-2 and Class A-3
                             Percentage of the Group 2 Prepayment Assumption
                             -----------------------------------------------
Distribution Date              0%         50%      100%      150%       200%
-----------------              --         ---      ----      ----       ----
Initial Percentage.....        100        100       100       100        100
July 25, 2008..........        100        100       100       100        100
July 25, 2009..........        100        100       100       100        100
July 25, 2010..........        100        100       100       100         81
July 25, 2011..........        100        100       100        91         38
July 25, 2012..........        100         98        97        56         13
July 25, 2013..........         99         94        89        34          2
July 25, 2014..........         98         89        78        21          0
July 25, 2015..........         98         82        61        13          0
July 25, 2016..........         97         74        48         8          0
July 25, 2017..........         95         66        38         6          0
July 25, 2018..........         93         58        29         4          0
July 25, 2019..........         90         51        23         3          0
July 25, 2020..........         88         44        18         2          0
July 25, 2021..........         85         39        14         1          0
July 25, 2022..........         82         33        11         1          0
July 25, 2023..........         79         29         8         1          0
July 25, 2024..........         75         25         6         *          0
July 25, 2025..........         71         21         5         *          0
July 25, 2026..........         67         18         4         *          0
July 25, 2027..........         63         15         3         *          0
July 25, 2028..........         58         13         2         *          0
July 25, 2029..........         53         10         1         *          0
July 25, 2030..........         48          8         1         *          0
July 25, 2031..........         42          7         1         *          0
July 25, 2032..........         36          5         *         *          0
July 25, 2033..........         29          4         *         *          0
July 25, 2034..........         22          3         *         *          0
July 25, 2035..........         14          1         *         *          0
July 25, 2036..........          6          1         *         *          0
July 25, 2037..........          0          0         0         0          0
Weighted Average Life
  (in years)
  to Maturity**........      21.35      13.37      9.86      5.89       3.84

----------
*     Indicates an amount greater than zero but less than 0.5%.

**    Determined as specified under "Weighted Average Lives of the Offered
      Certificates" in this prospectus supplement.


                                      S-38


Final Scheduled Distribution Date

      The "Final Scheduled Distribution Date" for each class of Offered
Certificates is the Distribution Date in April 2037. Because the rate of
distributions in reduction of the Class Certificate Balance of each class of
Offered Certificates will depend on the rate of payment (including prepayments)
of the Underlying Mortgage Loans and resultant distributions of principal on the
Deposited Underlying Certificates, the Class Certificate Balance of any such
class could be reduced to zero significantly earlier or later than the Final
Scheduled Distribution Date. The rate of payments on the Underlying Mortgage
Loans will depend on their particular characteristics, as well as on prevailing
interest rates from time to time and other economic factors, and no assurance
can be given as to the actual payment experience of the Underlying Mortgage
Loans. See "Yield, Prepayment and Maturity Considerations -- Prepayment
Considerations and Risks" and "-- Weighted Average Lives of the Offered
Certificates" in this prospectus supplement and "Yield and Prepayment
Considerations" in the prospectus.

                               Credit Enhancement

      The Issuing Entity does not include any credit enhancement mechanism. The
only credit enhancement available to the certificates consists of the credit
enhancement provided to the Deposited Underlying Certificates.

The Underlying Subordinated Certificates

      In addition to issuing the Deposited Underlying Certificates, the
Underlying Trust issued various other classes of certificates, including the
Underlying Subordinated Certificates. These Underlying Subordinated Certificates
provide credit enhancement for the Deposited Underlying Certificates and the
other classes of Underlying Senior Certificates as described in the Underlying
Prospectus Supplement under the heading "Credit Enhancement--Subordination."
Credit enhancement is generally provided to the Underlying Senior Certificates
by allocation of realized losses to the Underlying Subordinated Certificates
until the class certificate balances of such Underlying Subordinated
Certificates are reduced to zero. However, the Underlying Subordinated
Certificates will provide limited protection against certain categories of
realized losses (referred to as excess losses) such as special hazard losses,
bankruptcy losses and fraud losses that are in excess of coverage amounts for
specified in the Underlying Prospectus Supplement and described in this
prospectus supplement. Any such losses in excess of such amounts will be
allocated pro rata to all classes of certificates issued by the Underlying Trust
(including the Deposited Underlying Certificates), even if the aggregate class
certificate balance of the Underlying Subordinated Certificates has not been
reduced to zero.

      If any Underlying Realized Losses, other than excess losses, on the
Underlying Mortgage Loans are allocated to the Deposited Underlying
Certificates, they will be allocated first, to the Class A-3 Certificates until
its Class Certificate Balance is reduced to zero, and second, concurrently to
the Class A-1 and Class A-2 Certificates, pro rata, based on their respective
Class Certificate Balances, until their respective Class Certificate Balances
are reduced to zero.

      See "Description of the Certificates--Allocation of Losses" and "Credit
Enhancement--Subordinated of Certain Classes" in the Underlying Prospectus
Supplement for a description of the allocation of Realized Losses (including
Excess Losses). As reported in the Underlying Trust Monthly Statement, as of the
applicable record date, the Special Hazard Loss Coverage Amount, the Bankruptcy
Loss Coverage Amount and the Fraud Loss Coverage Amount for the Underlying
Certificates equaled $3,658,455, $214,520 and $13,675,753, respectively.

                                 Use of Proceeds

      The Depositor's transfer of the Certificates to the Underwriter will serve
as consideration for the Underlying Certificate Seller's transfer of the
Deposited Underlying Certificates, and for the Underlying Certificate Seller's
fulfillment, on behalf of the Depositor, of the Depositor's obligation to pay
compensation to the Trustee.


                                      S-39


                                Legal Proceedings

      There are no legal proceedings against IndyMac Bank, F.S.B., the
Depositor, the Trustee, the Issuing Entity or the Underlying Certificate Seller,
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 certificates. It
is based on the current provisions and interpretations of 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 will comprise one
REMIC the master REMIC ("Master REMIC"). The assets of the Master REMIC, will
consist of the Deposited Underlying Certificates and all other property in the
Issuing Entity. All classes of certificates other than the Class A-R
Certificates (the "Regular Certificates," and the Class A-R Certificates, the
"Residual Certificates") will be designated as the regular interests in the
Master REMIC. The Class A-R Certificates will represent the beneficial ownership
of the residual interest in the Master REMIC.

      All classes of the Regular Certificates will be treated as debt
instruments issued by the Master REMIC for all federal income tax purposes.
Income on the Regular Certificates must be reported under an accrual method of
accounting. Under the 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 Class A-1, Class A-2 and Class A-3 Certificates will be treated for
federal income tax purposes as having been issued with Original Issue Discount
("OID") and the holders of these Certificates will have to include the OID in
their income as it accrues regardless of when it is received. For purposes of
determining the amount and rate of accrual of OID (and for purposes of
determining the amount and rate of accrual of any market discount), the Issuing
Entity intends to assume that there will be prepayments on the Underlying
Mortgage Loans at a rate equal to 100% of the Prepayment Assumption. No
representation is made that the Underlying Mortgage Loans will prepay at the
foregoing rate or any other rate. See "Yield, Prepayment and Maturity
Considerations" and "Material Federal Income Tax Consequences" in the
prospectus. 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 Offered Certificates
issued with OID in an accrual period. Holders will be entitled to offset
negative accruals of OID only against future OID accruals on their certificates.

      If the holders of any Regular Certificates are treated as holding their
certificates 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 -- REMIC Certificates --
a. Regular Certificates" in the prospectus.

      As described more fully under "Material Federal Income Tax Consequences"
in the prospectus, the Offered Certificates will represent "real estate assets"
under Section 856(c)(5)(B) of the Internal Revenue Code of 1986, as amended (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 Offered 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 Regular Certificates will represent qualifying assets under Section
860G(a)(3) if acquired by a REMIC within the prescribed time periods of the
Code.

Taxation of the 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


                                      S-40


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 of, and
imposing withholding tax 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 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 the Class A-R Certificates are encouraged to consider
carefully the tax consequences of an investment in such Certificates discussed
in the prospectus and consult their tax advisors with respect to those
consequences. See "Material Federal Income Tax Consequences -- REMIC
Certificates -- b. Residual Certificates" in the prospectus. In particular,
prospective holders of Class A-R Certificates should consult their tax advisors
regarding whether a Class A-R Certificate will be treated as a "noneconomic"
residual interest, as a "tax avoidance potential" residual interest or as both.
Among other things, holders of Class A-R Certificates that are treated as
"noneconomic residual interests" under the Code should be aware of REMIC
regulations that govern the treatment of "inducement fees" and that may affect
their ability to transfer their Class A-R Certificates. See "Material Federal
Income Tax Consequences -- Tax-Related Restrictions on Transfer of Residual
Certificates -- Noneconomic Residual Certificates," and "Material Federal Income
Tax Consequences -- b. Residual Certificate," "-- Excess Inclusions" in the
prospectus.

Other Taxes

      No representations are made regarding the tax consequences of the
purchase, ownership or disposition of the Offered Certificates under any state,
local or foreign tax law.


                                      S-41


      All investors should consult their tax advisers regarding the federal,
state, local or foreign tax consequences of purchasing, owning or disposing of
the Offered Certificates.

                              ERISA Considerations

      Any fiduciary of an employee benefit or other plan or arrangement (such as
an individual retirement account or Keogh plan) that is subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or to Section 4975
of the Code (a "Plan"), that proposes to cause the Plan to acquire any of the
Offered Certificates (directly or indirectly through investment by an entity or
account holding assets of the Plan) is encouraged to consult with its counsel
with respect to the potential consequences of the Plan's acquisition and
ownership of the Offered Certificates under ERISA and Section 4975 of the Code.
See "ERISA Considerations" in the prospectus. Section 406 of ERISA prohibits
"parties in interest" with respect to an employee benefit plan subject to ERISA
from engaging in various different types of transactions involving the Plan and
its assets unless a statutory, regulatory or administrative exemption applies to
the transaction. Section 4975 of the Code imposes excise taxes on prohibited
transactions involving "disqualified persons" and Plans described under that
Section. ERISA authorizes the imposition of civil penalties for prohibited
transactions involving Plans not subject to the requirements of Section 4975 of
the Code.

      Some employee benefit plans, including governmental plans and some church
plans, are not subject to ERISA's requirements. Accordingly, assets of those
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. However,
any of those plans that 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 that decides to invest the assets of a Plan in the Offered
Certificates should consider, among other factors, the extreme sensitivity of
the investment to the rate of principal payments (including prepayments) on the
Underlying Mortgage Loans. It is anticipated that the Offered Certificates will
constitute "equity interests" for the purpose of the Plan Assets Regulation.

      The U.S. Department of Labor has granted to the underwriter an
administrative exemption (the "Exemption") from some 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, in pass-through trusts
that consist of specified receivables, loans and other obligations that meet the
conditions and requirements of the Exemption. The Exemption applies to assets
such as the Underlying Mortgage Loans. Assuming that the general conditions of
the Exemption are met, the Exemption may apply to offered certificates that
qualify for the Exemption and that represent fractional undivided interests in a
trust comprised of mortgage loans like the Underlying Mortgage Loans. The
Exemption extends exemptive relief to certificates, including subordinated
certificates, rated in the four highest generic rating categories in certain
designated transactions when the conditions 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.

      For a general description of the Exemption and the conditions that must be
satisfied for the Exemption to apply, see "ERISA Considerations" in the
prospectus.

      It is expected that the Exemption will apply to the acquisition and
holding by Plans of the Offered Certificates (other than the Class A-R
Certificates) 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 mortgagor 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 Trust.

      The rating of a certificate may change. If a class of certificates no
longer has a rating of at least BBB- from S&P or Fitch, or Baa3 from Moody's
Investors Service, Inc., certificates of that class will no longer be eligible
for relief under the Exemption (although a Plan that had purchased the
certificate when it had an investment-grade rating would not be required by the
Exemption to dispose of it).


                                      S-42


      Because the characteristics of the Class A-R Certificates may not meet the
requirements of the Exemption, or any other issued exemption under ERISA, a Plan
may have engaged in a prohibited transaction giving rise to excise taxes or
civil penalties if it purchases and holds Class A-R Certificates. Consequently,
transfers of the Class A-R Certificates (and of certificates of any class that,
because of a change of rating, no longer satisfy the rating requirement of the
Exemption) will not be registered by the trustee, in accordance with the Trust
Agreement, unless 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;

      o     a representation that the transferee is an insurance company which
            is purchasing the certificate with funds contained in an "insurance
            company general account" (as defined in Section V(e) of Prohibited
            Transaction Class Exemption 95-60 ("PTCE 95-60")) and that the
            purchase and holding of the certificate satisfy the requirements for
            exemptive relief under Sections I and III of PTCE 95-60; or

      o     an opinion of counsel satisfactory to the trustee that the purchase
            and holding of the certificate by a Plan, or any 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 the Code and will
            not subject the trustee to any obligation in addition to those
            undertaken in the pooling and servicing agreement.

      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 and the applicability of the Exemption described in the
prospectus, and the potential consequences in their specific circumstances,
before making an investment in any of the Offered Certificates. Moreover, each
Plan fiduciary is encouraged to determine whether, under the general fiduciary
standards of investment prudence and diversification, an investment in any of
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 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 between the Depositor and HSBC Securities (USA) Inc. (the
"Underwriter"), the Depositor has agreed to sell to the Underwriter, and the
Underwriter has agreed to purchase from the Depositor, the Offered Certificates
(the "Underwritten Certificates"). Distribution of the Underwritten Certificates
will be made by the Underwriter from time to time in negotiated transactions or
otherwise at varying prices to be determined at the time of sale. In connection
with the sale of the Underwritten Certificates, the Underwriter may be deemed to
have received compensation from the Depositor in the form of underwriting
discounts.

      The Underwriter intends to make a secondary market in the Underwritten
Certificates, but has no obligation to do so. There can be no assurance that a
secondary market for the Offered Certificates will develop or, if it does
develop, that it will continue or that it will provide Certificateholders with a
sufficient level of liquidity of investment.

      The Depositor has agreed to indemnify the Underwriter against, or make
contributions to the Underwriter with respect to, certain liabilities, including
liabilities under the Securities Act.

      This distribution also constitutes the distribution of the Deposited
Underlying Certificates, the underwriters of which are Residential Asset
Securitization Trust 2007-R1, the Depositor and the Underwriter.

                                  Legal Matters

      The validity of the Offered Certificates, including their material federal
income tax consequences, will be passed upon for the Depositor by Sidley Austin
LLP, New York, New York. Certain legal matters will be passed upon for the
Underlying Certificate Seller and the Underwriter by McKee Nelson LLP.


                                      S-43


                                     Ratings

      It is a condition to the issuance of the offered certificates that they be
rated AAA by Standard & Poor's, a division of The McGraw-Hill Companies, Inc.
("S&P") and AAA by Fitch, Inc. ("Fitch").

      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
certificateholders under the agreements pursuant to which the certificates are
issued. S&P's ratings take into consideration the credit quality of the 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 ratings assigned by Fitch 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. The rating on residual certificates does not assess the
likelihood of return to investors except to the extent of the certificate
principal balance and accrued interest therein at the stated rate. Fitch's
ratings take into consideration the credit quality of the 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 ratings of the rating agencies 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 the Offered Certificates by
any rating agency other than the rating agencies listed above; there can be no
assurance, however, as to whether any other rating agency will rate the Offered
Certificates or, if it does, what rating would be assigned by the other rating
agency. The rating assigned by the other rating agency to the Offered
Certificates could be lower than the respective ratings assigned by the rating
agencies


                                      S-44


                            Index of Principal Terms

accredited investor .........................................               S-42
Available Funds .............................................               S-32
Available Interest Funds ....................................               S-32
Available Principal Funds ...................................               S-32
Book-Entry Certificates .....................................               S-27
Certificate Owners ..........................................               S-27
CI ..........................................................               S-29
Class Certificate Balance ...................................               S-27
Clearstream, Luxembourg .....................................               S-29
Code ........................................................               S-40
Cooperative .................................................               S-29
DBC .........................................................               S-29
DBNTC .......................................................               S-24
Definitive Certificate ......................................               S-27
Deposited Underlying Certificates ...........................               S-19
Depositor ...................................................               S-19
Distribution Account ........................................               S-31
Distribution Date ...........................................               S-31
DTC .........................................................         S-20, S-27
DTC Rules ...................................................               S-28
equity interests ............................................               S-42
ERISA .......................................................               S-42
Euroclear ...................................................               S-27
Euroclear Operator ..........................................               S-29
Euroclear Participants ......................................               S-29
European Depositaries .......................................               S-27
excess inclusion ............................................               S-41
Exemption ...................................................               S-42
Final Scheduled Distribution Date ...........................               S-39
Financial Intermediary ......................................               S-27
Fitch .......................................................          S-8, S-44
Group 2 Prepayment Assumption ...............................               S-34
HSBC ........................................................               S-23
Indirect Participants .......................................               S-28
Interest Distribution Amount ................................               S-32
Issuing Entity ..............................................               S-19
Master REMIC ................................................               S-40
MBA Method ..................................................               S-23
New CI ......................................................               S-29
Offered Certificates ........................................               S-26
OID .........................................................               S-40
OTS Method ..................................................               S-24
Participants ................................................               S-27
Percentage Interest .........................................               S-20
Plan ........................................................               S-42
PTCE 95-60 ..................................................               S-43
Record Date .................................................               S-31
Reference Date ..............................................               S-20
Regular Certificates ........................................               S-40
Relevant Depositary .........................................               S-27
Residual Certificates .......................................               S-40
S&P .........................................................          S-8, S-44
Structuring Assumptions .....................................               S-33
Tax Counsel .................................................               S-40
Terms and Conditions ........................................               S-30
Trust Agreement .............................................               S-26
Trustee .....................................................         S-20, S-24
Underlying Agreement ........................................               S-19
Underlying Certificate Seller ...............................               S-19
Underlying Distribution Date ................................               S-31
Underlying Mortgage Loans ...................................               S-19
Underlying Mortgage Pool Principal Balance ..................               S-19
Underlying Prospectus Supplement ............................               S-19
Underlying Realized Losses ..................................               S-33
Underlying Senior Certificates ..............................               S-19
Underlying Servicer .........................................               S-19
Underlying Subordinated Certificates ........................               S-19
Underlying Trust ............................................         S-19, S-23
Underlying Trust Monthly Statement ..........................               S-19
Underlying Trustee ..........................................               S-19
Underwriter .................................................               S-43
Underwritten Certificates ...................................               S-43
Unpaid Interest Amounts .....................................               S-32
Voting Rights ...............................................               S-35


                                      S-45


                                   Appendix I

                 Mortgage Loan Characteristics of the Underlying
                    Mortgage Loans as of the Reference Date

      The following information sets forth in tabular format information as to
the Underlying Mortgage Loans as of the Reference Date. Other than with respect
to rates of interest, percentages (approximate) are stated by Stated Principal
Balance of the Underlying Mortgage Loans as of the Reference Date and due to
rounding may not total 100%. The FICO Credit Scores for the Underlying Mortgage
Loans are the scores that were shown for the applicable borrower in the
Underlying Prospectus Supplement.



                            UNDERLYING MORTGAGE LOANS

                             GROUP 2 MORTGAGE LOANS

       Mortgage Rates for the Underlying Mortgage Loans in Loan Group 2(1)



------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                            Weighted
                                                                      Percent of                Weighted                    Average
                                   Number of        Aggregate         Aggregate     Weighted    Average       Average       Original
                                  Underlying        Principal         Principal     Average      FICO         Current       Loan-to-
Range of                           Mortgage          Balance           Balance      Mortgage     Credit       Principal      Value
Mortgage Rates (%)                   Loans         Outstanding       Outstanding     Rate        Score        Balance        Ratio
--------------------------------  -----------      -----------       -----------    --------    --------      -------       --------
6.500 - 6.999 ..................       210       $122,622,526.27        49.30%       6.818%       706       $583,916.79       74.12%
7.000 - 7.499 ..................       126         69,441,869.71        27.92        7.153        701        551,125.95       74.65
7.500 - 7.999 ..................        68         40,210,410.65        16.17        7.684        693        591,329.57       77.75
8.000 - 8.499 ..................        10          8,663,108.94         3.48        8.194        696        866,310.89       71.16
8.500 - 8.999 ..................        10          7,354,642.50         2.96        8.607        678        735,464.25       72.54
9.000 - 9.499 ..................         1            419,375.02         0.17        9.125        700        419,375.02       80.00
                                       ---       ---------------       ------
    Total ......................       425       $248,711,933.09       100.00%
                                       ===       ===============       ======


----------
(1)   The Mortgage Rates listed in the preceding table include lender acquired
      mortgage insurance premiums. As of the Reference Date, the weighted
      average Mortgage Rate of the Underlying Mortgage Loans in Loan Group 2 was
      approximately 7.156% per annum. As of the Reference Date, the weighted
      average Mortgage Rate of the Group 2 Mortgage Loans net of the insurance
      premiums charged by the lender was approximately 7.152% per annum.

             Current Principal Balances for the Underlying Mortgage
                            Loans in Loan Group 2(1)



------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                            Weighted
                                                                      Percent of                Weighted                    Average
                                   Number of        Aggregate         Aggregate     Weighted    Average       Average       Original
                                  Underlying        Principal         Principal     Average      FICO         Current       Loan-to-
Range of Current Mortgage          Mortgage          Balance           Balance      Mortgage     Credit       Principal      Value
Loan Principal Balances ($)          Loans         Outstanding       Outstanding     Rate        Score        Balance        Ratio
--------------------------------  -----------      -----------       -----------    --------    --------      -------       --------
50,000.01 - 400,000.00 .........        13       $  2,654,664.51         1.07%       7.287%       691     $  204,204.96       70.41%
400,000.01 - 450,000.00 ........        60         26,136,274.66        10.51        7.156        702        435,604.58       75.16
450,000.01 - 500,000.00 ........        92         43,862,941.96        17.64        7.111        689        476,771.11       77.17
500,000.01 - 550,000.00 ........        75         39,461,741.34        15.87        7.105        695        526,156.55       75.73
550,000.01 - 600,000.00 ........        47         27,078,294.19        10.89        7.075        707        576,133.92       76.93
600,000.01 - 650,000.00 ........        37         23,276,038.11         9.36        7.151        703        629,082.11       76.44
650,000.01 - 700,000.00 ........        28         19,050,476.69         7.66        6.955        710        680,374.17       75.85
700,000.01 - 750,000.00 ........        18         13,106,233.81         5.27        6.972        724        728,124.10       72.76
750,000.01 - 800,000.00 ........        15         11,665,834.15         4.69        7.202        699        777,722.28       74.24
800,000.01 - 850,000.00 ........         5          4,201,011.34         1.69        7.220        713        840,202.27       79.02
850,000.01 - 900,000.00 ........         6          5,189,041.62         2.09        7.540        713        864,840.27       69.62
900,000.01 - 950,000.00 ........         6          5,502,560.16         2.21        7.519        686        917,093.36       71.40
950,000.01 - 1,000,000.00.. ....        12         11,852,088.11         4.77        7.208        701        987,674.01       70.15
1,000,000.01 - 1,250,000.00 ....         5          5,388,848.45         2.17        7.393        718      1,077,769.69       70.06
1,250,000.01 - 1,500,000.00 ....         3          4,160,137.68         1.67        7.308        709      1,386,712.56       65.71
1,750,000.01 - 2,000,000.00 ....         2          3,740,795.73         1.50        7.852        662      1,870,397.87       55.70
2,250,000.01 - 2,500,000.00 ....         1          2,384,950.58         0.96        8.125        749      2,384,950.58       64.57
                                       ---       ---------------       ------
    Total ......................       425       $248,711,933.09       100.00%
                                       ===       ===============       ======


----------
(1)   As of the Reference Date, the average principal balance of the Underlying
      Mortgage Loans in Loan Group 2 was approximately $585,204.55.


                                      S-47


                Original Loan-to-Value Ratios for the Underlying
                       Mortgage Loans in Loan Group 2 (1)



------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                            Weighted
                                                                      Percent of                Weighted                    Average
                                   Number of        Aggregate         Aggregate     Weighted    Average       Average       Original
                                  Underlying        Principal         Principal     Average      FICO         Current       Loan-to-
Range of Original                  Mortgage          Balance           Balance      Mortgage     Credit       Principal      Value
Loan-to-Value Ratios (%)             Loans         Outstanding       Outstanding     Rate        Score        Balance        Ratio
--------------------------------  -----------      -----------       -----------    --------    --------      -------       --------
25.01 - 30.00 ..................         1       $    524,689.95         0.21%       6.875%       657     $  524,689.95       26.35%
30.01 - 35.00 ..................         3          1,101,904.15         0.44        6.906        703        367,301.38       32.71
35.01 - 40.00 ..................         2          1,490,816.99         0.60        7.204        659        745,408.50       39.42
40.01 - 45.00 ..................         1            718,988.14         0.29        6.875        641        718,988.14       44.75
45.01 - 50.00 ..................         4          4,474,218.37         1.80        6.989        654      1,118,554.59       49.45
50.01 - 55.00 ..................         2          1,527,118.47         0.61        6.750        654        763,559.24       53.68
55.01 - 60.00 ..................         7          3,849,113.82         1.55        7.191        700        549,873.40       56.59
60.01 - 65.00 ..................        33         23,500,641.67         9.45        7.304        707        712,140.66       63.95
65.01 - 70.00 ..................        38         22,529,252.17         9.06        7.127        686        592,875.06       69.69
70.01 - 75.00 ..................        56         36,156,287.19        14.54        7.190        714        645,647.99       73.80
75.01 - 80.00 ..................       272        150,230,978.39        60.40        7.139        703        552,319.77       79.58
80.01 - 85.00 ..................         3          1,362,689.56         0.55        7.259        684        454,229.85       84.26
85.01 - 90.00 ..................         3          1,245,234.22         0.50        7.369        657        415,078.07       87.91
                                       ---       ---------------       ------
    Total ......................       425       $248,711,933.09       100.00%
                                       ===       ===============       ======


----------
(1)   As of the Reference Date, the weighted average original Loan-to-Value
      Ratio of the Underlying Mortgage Loans in Loan Group 2 was approximately
      74.71%.

               Original Term to Stated Maturity for the Underlying
                         Mortgage Loans in Loan Group 2



------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                            Weighted
                                                                      Percent of                Weighted                    Average
                                   Number of        Aggregate         Aggregate     Weighted    Average       Average       Original
                                  Underlying        Principal         Principal     Average      FICO         Current       Loan-to-
Original Term to Stated            Mortgage          Balance           Balance      Mortgage     Credit       Principal      Value
Maturity (months)                    Loans         Outstanding       Outstanding     Rate        Score        Balance        Ratio
--------------------------------  -----------      -----------       -----------    --------    --------      -------       --------
360 ............................       425       $248,711,933.09       100.00%       7.156%       701       $585,204.55       74.71%
                                       ---       ---------------       ------
    Total ......................       425       $248,711,933.09       100.00%
                                       ===       ===============       ======



              Remaining Terms to Stated Maturity for the Underlying
                       Mortgage Loans in Loan Group 2 (1)



------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                            Weighted
                                                                      Percent of                Weighted                    Average
                                   Number of        Aggregate         Aggregate     Weighted    Average       Average       Original
                                  Underlying        Principal         Principal     Average      FICO         Current       Loan-to-
Remaining Terms to Stated          Mortgage          Balance           Balance      Mortgage     Credit       Principal      Value
Maturity (months)                    Loans         Outstanding       Outstanding     Rate        Score        Balance        Ratio
--------------------------------  -----------      -----------       -----------    --------    --------      -------       --------
347 ............................         2       $    585,940.07         0.24%       6.971%       699       $292,970.04       72.75%
349 ............................         2            702,054.09         0.28        7.470        753        351,027.05       74.22
350 ............................        12          6,332,467.72         2.55        7.481        710        527,705.64       76.28
351 ............................        14          6,817,241.68         2.74        7.762        696        486,945.83       75.88
352 ............................        17          8,070,584.93         3.24        7.168        711        474,740.29       74.67
353 ............................        68         40,571,803.33        16.31        7.066        706        596,644.17       75.14
354 ............................       174        109,900,422.07        44.19        7.181        700        631,611.62       73.36
355 ............................        94         52,417,338.76        21.08        7.098        699        557,631.26       76.77
356 ............................        42         23,314,080.44         9.37        7.054        695        555,097.15       75.08
                                       ---       ---------------       ------
    Total ......................       425       $248,711,933.09       100.00%
                                       ===       ===============       ======


----------
(1)   As of the Reference Date, the weighted average remaining term to stated
      maturity of the Underlying Mortgage Loans in Loan Group 2 was
      approximately 354 months.


                                      S-48


           Geographic Distribution of the Mortgaged Properties for the
                   Underlying Mortgage Loans in Loan Group 2



------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                            Weighted
                                                                      Percent of                Weighted                    Average
                                   Number of        Aggregate         Aggregate     Weighted    Average       Average       Original
                                  Underlying        Principal         Principal     Average      FICO         Current       Loan-to-
                                   Mortgage          Balance           Balance      Mortgage     Credit       Principal      Value
Geographic Area                      Loans         Outstanding       Outstanding     Rate        Score        Balance        Ratio
--------------------------------  -----------      -----------       -----------    --------    --------      -------       --------
Alabama ........................         2       $    946,000.00         0.38%       7.624%       678     $  473,000.00       80.27%
Alaska .........................         1            241,234.22         0.10        7.750        646        241,234.22       90.00
Arizona ........................        16          9,204,084.65         3.70        7.108        715        575,255.29       73.74
California .....................       151         87,516,185.57        35.19        7.016        703        579,577.39       75.78
Colorado .......................        15          8,005,591.08         3.22        7.375        702        533,706.07       75.37
Connecticut ....................         1          1,790,795.73         0.72        6.875        671      1,790,795.73       50.00
District of Columbia ...........         2            965,485.20         0.39        7.192        663        482,742.60       80.00
Florida ........................        35         20,127,031.18         8.09        7.203        694        575,058.03       71.05
Georgia ........................        12          6,861,726.25         2.76        7.215        700        571,810.52       78.29
Hawaii .........................         4          2,783,443.90         1.12        6.762        699        695,860.98       76.57
Illinois .......................        20         12,789,952.53         5.14        7.605        677        639,497.63       73.21
Indiana ........................         1            100,632.34         0.04        7.125        711        100,632.34       80.00
Kansas .........................         1            438,689.56         0.18        6.750        678        438,689.56       84.00
Maryland .......................        16          9,834,810.08         3.95        6.986        686        614,675.63       74.60
Massachusetts ..................        10          4,849,713.88         1.95        7.317        690        484,971.39       71.64
Michigan .......................        12          6,329,769.03         2.55        7.311        682        527,480.75       77.26
Minnesota ......................         2          1,147,036.86         0.46        7.083        721        573,518.43       79.69
Mississippi ....................         1            463,889.80         0.19        7.125        707        463,889.80       80.00
Missouri .......................         4          2,303,216.51         0.93        6.925        700        575,804.13       72.18
Nevada .........................        10          6,029,539.22         2.42        7.230        721        602,953.92       79.83
New Hampshire ..................         1            990,500.00         0.40        7.250        711        990,500.00       76.19
New Jersey .....................        18          9,675,391.90         3.89        7.388        686        537,521.77       75.94
New Mexico .....................         2          1,043,241.09         0.42        7.005        721        521,620.55       73.44
New York .......................        33         19,820,518.04         7.97        7.115        702        600,621.76       71.42
North Carolina .................         9          6,519,633.42         2.62        7.400        738        724,403.71       75.35
Ohio ...........................         3          1,140,357.57         0.46        7.020        720        380,119.19       76.72
Oregon .........................         4          2,060,916.27         0.83        6.983        715        515,229.07       78.48
Pennsylvania ...................         4          2,122,929.92         0.85        7.582        663        530,732.48       76.38
Rhode Island ...................         2          1,406,634.54         0.57        7.568        701        703,317.27       66.07
South Carolina .................         3          3,309,030.55         1.33        7.795        735      1,103,010.18       66.97
Tennessee ......................         2            979,428.73         0.39        6.810        683        489,714.37       74.74
Texas ..........................         7          4,089,654.46         1.64        7.395        699        584,236.35       74.18
Utah ...........................         1            556,649.00         0.22        7.000        766        556,649.00       80.00
Vermont ........................         1            796,904.62         0.32        8.375        698        796,904.62       57.94
Virginia .......................         3          2,282,450.00         0.92        6.996        758        760,816.67       77.62
Washington .....................        16          9,188,865.39         3.69        6.939        709        574,304.09       79.64
                                       ---       ---------------       ------
    Total ......................       425       $248,711,933.09       100.00%
                                       ===       ===============       ======



                                      S-49


  Mortgagors' FICO Scores for the Underlying Mortgage Loans in Loan Group 2 (1)



------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                            Weighted
                                                                      Percent of                Weighted                    Average
                                   Number of        Aggregate         Aggregate     Weighted    Average       Average       Original
                                  Underlying        Principal         Principal     Average      FICO         Current       Loan-to-
                                   Mortgage          Balance           Balance      Mortgage     Credit       Principal      Value
Range of FICO Credit Scores          Loans         Outstanding       Outstanding     Rate        Score        Balance        Ratio
--------------------------------  -----------      -----------       -----------    --------    --------      -------       --------
620 - 639 ......................        38       $ 20,770,515.22         8.35%       7.374%       630       $546,592.51       74.14%
640 - 659 ......................        52         29,782,744.52        11.97        7.338        650        572,745.09       71.17
660 - 679 ......................        63         36,253,552.01        14.58        7.070        669        575,453.21       73.99
680 - 699 ......................        72         41,022,267.87        16.49        7.132        690        569,753.72       75.67
700 - 719 ......................        69         39,977,501.52        16.07        7.053        709        579,384.08       75.45
720 - 739 ......................        49         29,649,681.92        11.92        7.157        729        605,095.55       74.88
740 - 759 ......................        32         21,456,152.88         8.63        7.308        750        670,504.78       75.36
760 - 779 ......................        23         13,673,334.49         5.50        6.922        766        594,492.80       75.70
780 - 799 ......................        20         11,388,301.89         4.58        7.077        789        569,415.09       78.43
800 - 819 ......................         7          4,737,880.77         1.90        6.965        810        676,840.11       74.90
                                       ---       ---------------       ------
    Total ......................       425       $248,711,933.09       100.00%
                                       ===       ===============       ======


----------
(1)   As of the Reference Date, the weighted average FICO Credit Score of the
      Underlying Mortgage Loans in Loan Group 2 was approximately 701.

 Types of Mortgaged Properties for the Underlying Mortgage Loans in Loan Group 2



------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                            Weighted
                                                                      Percent of                Weighted                    Average
                                   Number of        Aggregate         Aggregate     Weighted    Average       Average       Original
                                  Underlying        Principal         Principal     Average      FICO         Current       Loan-to-
                                   Mortgage          Balance           Balance      Mortgage     Credit       Principal      Value
Property Type                        Loans         Outstanding       Outstanding     Rate        Score        Balance        Ratio
--------------------------------  -----------      -----------       -----------    --------    --------      -------       --------
Single Family Residence ........       294       $167,055,172.02        67.17%       7.111%       697       $568,214.87       74.24%
Planned Unit
  Development (PUD) ............        81         49,008,903.98        19.71        7.194        711        605,048.20       76.20
Two-Family Residence ...........        17         10,505,070.79         4.22        7.280        701        617,945.34       77.45
Low-Rise Condominium ...........        14          9,703,963.54         3.90        7.566        688        693,140.25       72.58
High-Rise Condominium ..........        13          7,776,651.87         3.13        7.347        731        598,203.99       76.66
Three-Family Residence .........         3          2,740,810.19         1.10        6.950        718        913,603.40       70.74
Townhouse ......................         2          1,053,075.00         0.42        6.943        663        526,537.50       79.11
Four-Family Residence ..........         1            868,285.70         0.35        6.750        776        868,285.70       62.07
                                       ---       ---------------       ------
    Total ......................       425       $248,711,933.09       100.00%
                                       ===       ===============       ======


            Purposes of the Underlying Mortgage Loans in Loan Group 2



------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                            Weighted
                                                                      Percent of                Weighted                    Average
                                   Number of        Aggregate         Aggregate     Weighted    Average       Average       Original
                                  Underlying        Principal         Principal     Average      FICO         Current       Loan-to-
                                   Mortgage          Balance           Balance      Mortgage     Credit       Principal      Value
Loan Purpose                         Loans         Outstanding       Outstanding     Rate        Score        Balance        Ratio
--------------------------------  -----------      -----------       -----------    --------    --------      -------       --------
Refinance (Cash Out) ...........       172       $101,892,057.01        40.97%       7.156%       691       $592,395.68       71.49%
Purchase .......................       159         91,863,422.11        36.94        7.209        717        577,757.37       78.13
Refinance (Rate/Term) ..........        94         54,956,453.97        22.10        7.069        693        584,643.13       74.98
                                       ---       ---------------       ------
    Total ......................       425       $248,711,933.09       100.00%
                                       ===       ===============       ======



                                      S-50


      Occupancy Types for the Underlying Mortgage Loans in Loan Group 2 (1)



------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                            Weighted
                                                                      Percent of                Weighted                    Average
                                   Number of        Aggregate         Aggregate     Weighted    Average       Average       Original
                                  Underlying        Principal         Principal     Average      FICO         Current       Loan-to-
                                   Mortgage          Balance           Balance      Mortgage     Credit       Principal      Value
Occupancy Type                       Loans         Outstanding       Outstanding     Rate        Score        Balance        Ratio
--------------------------------  -----------      -----------       -----------    --------    --------      -------       --------
Owner Occupied .................       373       $215,905,121.89        86.81%       7.123%       699       $578,834.11       75.22%
Investment .....................        34         21,708,763.08         8.73        7.477        716        638,493.03       70.37
Secondary Home .................        18         11,098,048.12         4.46        7.176        713        616,558.23       73.35
                                       ---       ---------------       ------
    Total ......................       425       $248,711,933.09       100.00%
                                       ===       ===============       ======


----------
(1)   Based upon representations of the related mortgagors at the time of
      origination.

   Loan Documentation Types for the Underlying Mortgage Loans in Loan Group 2



------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                            Weighted
                                                                      Percent of                Weighted                    Average
                                   Number of        Aggregate         Aggregate     Weighted    Average       Average       Original
                                  Underlying        Principal         Principal     Average      FICO         Current       Loan-to-
                                   Mortgage          Balance           Balance      Mortgage     Credit       Principal      Value
Type of Documentation Program        Loans         Outstanding       Outstanding     Rate        Score        Balance        Ratio
--------------------------------  -----------      -----------       -----------    --------    --------      -------       --------
Full/Alternate .................        50       $ 26,374,772.87        10.60%       6.971%       704       $527,495.46       77.74%
Stated Income ..................       226        131,353,778.50        52.81        7.111        700        581,211.41       75.56
No Ratio .......................        71         45,316,425.58        18.22        7.274        697        638,259.52       74.43
No Income/No Asset .............        42         25,429,222.86        10.22        7.406        705        605,457.69       73.65
No Doc .........................        36         20,237,733.28         8.14        7.114        710        562,159.26       67.26
                                       ---       ---------------       ------
    Total ......................       425       $248,711,933.09       100.00%
                                       ===       ===============       ======


         Loan Ages for the Underlying Mortgage Loans in Loan Group 2 (1)



------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                            Weighted
                                                                      Percent of                Weighted                    Average
                                   Number of        Aggregate         Aggregate     Weighted    Average       Average       Original
                                  Underlying        Principal         Principal     Average      FICO         Current       Loan-to-
                                   Mortgage          Balance           Balance      Mortgage     Credit       Principal      Value
Loan Ages (months)                   Loans         Outstanding       Outstanding     Rate        Score        Balance        Ratio
--------------------------------  -----------      -----------       -----------    --------    --------      -------       --------
4 ..............................        42       $ 23,314,080.44         9.37%       7.054%       695       $555,097.15       75.08%
5 ..............................        94         52,417,338.76        21.08        7.098        699        557,631.26       76.77
6 ..............................       174        109,900,422.07        44.19        7.181        700        631,611.62       73.36
7 ..............................        68         40,571,803.33        16.31        7.066        706        596,644.17       75.14
8 ..............................        17          8,070,584.93         3.24        7.168        711        474,740.29       74.67
9 ..............................        14          6,817,241.68         2.74        7.762        696        486,945.83       75.88
10 .............................        12          6,332,467.72         2.55        7.481        710        527,705.64       76.28
11 .............................         2            702,054.09         0.28        7.470        753        351,027.05       74.22
13 .............................         2            585,940.07         0.24        6.971        699        292,970.04       72.75
                                       ---       ---------------       ------
    Total ......................       425       $248,711,933.09       100.00%
                                       ===       ===============       ======


----------
(1)   As of the Reference Date, the weighted average loan age of the Underlying
      Mortgage Loans in Loan Group 2 was approximately 6 months.


                                      S-51


               Prepayment Charge Terms and Types of the Underlying
                         Mortgage Loans in Loan Group 2



------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                            Weighted
                                                                      Percent of                Weighted                    Average
                                   Number of        Aggregate         Aggregate     Weighted    Average       Average       Original
                                  Underlying        Principal         Principal     Average      FICO         Current       Loan-to-
Prepayment Charge                   Mortgage          Balance           Balance      Mortgage     Credit       Principal      Value
Term and Type (months)               Loans         Outstanding       Outstanding     Rate        Score        Balance        Ratio
--------------------------------  -----------      -----------       -----------    --------    --------      -------       --------
0 ..............................       413       $245,585,813.31        98.74%       7.153%       702       $594,638.77       74.72%
12 - Hard ......................         2            452,633.28         0.18        7.408        694        226,316.64       54.70
24 - Hard ......................         2            831,874.03         0.33        7.671        678        415,937.02       79.30
36 - Hard ......................         5          1,477,856.77         0.59        7.281        653        295,571.35       79.96
36 - Soft ......................         3            363,755.70         0.15        7.406        656        121,251.90       62.29
                                       ---       ---------------       ------
    Total ......................       425       $248,711,933.09       100.00%
                                       ===       ===============       ======


     Interest Only Periods for the Underlying Mortgage Loans in Loan Group 2



------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                            Weighted
                                                                      Percent of                Weighted                    Average
                                   Number of        Aggregate         Aggregate     Weighted    Average       Average       Original
                                  Underlying        Principal         Principal     Average      FICO         Current       Loan-to-
Interest Only Period                Mortgage          Balance           Balance      Mortgage     Credit       Principal      Value
(months)                             Loans         Outstanding       Outstanding     Rate        Score        Balance        Ratio
--------------------------------  -----------      -----------       -----------    --------    --------      -------       --------
0 ..............................       201       $113,371,974.99        45.58%       7.095%       697       $564,039.68       73.13%
120 ............................       224        135,339,958.10        54.42        7.208        705        604,196.24       76.04
                                       ---       ---------------       ------
    Total ......................       425       $248,711,933.09       100.00%
                                       ===       ===============       ======


     Origination Channels for the Underlying Mortgage Loans in Loan Group 2



------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                            Weighted
                                                                      Percent of                Weighted                    Average
                                   Number of        Aggregate         Aggregate     Weighted    Average       Average       Original
                                  Underlying        Principal         Principal     Average      FICO         Current       Loan-to-
                                   Mortgage          Balance           Balance      Mortgage     Credit       Principal      Value
Origination Channel                  Loans         Outstanding       Outstanding     Rate        Score        Balance        Ratio
--------------------------------  -----------      -----------       -----------    --------    --------      -------       --------
Conduit ........................       268       $162,342,095.80        65.27%       7.206%       702       $605,754.09       73.96%
Correspondent ..................        63         35,757,897.68        14.38        7.080        703        567,585.68       76.33
Mortgage Professionals .........        94         50,611,939.61        20.35        7.051        696        538,424.89       76.00
                                       ---       ---------------       ------
    Total ......................       425       $248,711,933.09       100.00%
                                       ===       ===============       ======



                                      S-52


                            AGGREGATE MORTGAGE LOANS

               Mortgage Rates for the Underlying Mortgage Loans(1)



------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                            Weighted
                                                                      Percent of                Weighted                    Average
                                   Number of        Aggregate         Aggregate     Weighted    Average       Average       Original
                                  Underlying        Principal         Principal     Average      FICO         Current       Loan-to-
Range of Mortgage                  Mortgage          Balance           Balance      Mortgage     Credit       Principal      Value
Rates (%)                            Loans         Outstanding       Outstanding     Rate        Score        Balance        Ratio
------------------------------    -----------      -----------       -----------    --------    --------      -------       --------
5.000 - 5.499 ................           4       $  2,281,565.82         0.35%       5.303%       732       $570,391.46       62.49%
5.500 - 5.999 ................          24         16,097,435.76         2.47        5.774        719        670,726.49       75.39
6.000 - 6.499 ................         337        206,844,471.27        31.76        6.261        732        613,781.81       71.75
6.500 - 6.999 ................         491        299,862,717.53        46.05        6.659        715        610,718.37       72.03
7.000 - 7.499 ................         126         69,441,869.71        10.66        7.153        701        551,125.95       74.65
7.500 - 7.999 ................          68         40,210,410.65         6.18        7.684        693        591,329.57       77.75
8.000 - 8.499 ................          10          8,663,108.94         1.33        8.194        696        866,310.89       71.16
8.500 - 8.999 ................          10          7,354,642.50         1.13        8.607        678        735,464.25       72.54
9.000 - 9.499 ................           1            419,375.02         0.06        9.125        700        419,375.02       80.00
                                     -----       ---------------       ------
    Total ....................       1,071       $651,175,597.20       100.00%
                                     =====       ===============       ======


----------
(1)   The Mortgage Rates listed in the preceding table include lender acquired
      mortgage insurance premiums. As of the Reference Date, the weighted
      average Mortgage Rate of the Underlying Mortgage Loans was approximately
      6.666% per annum. As of the Reference Date, the weighted average Mortgage
      Rate of the Mortgage Loans net of the insurance premiums charged by the
      lender was approximately 6.663% per annum.

         Current Principal Balances for the Underlying Mortgage Loans(1)



------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                            Weighted
                                                                      Percent of                Weighted                    Average
                                   Number of        Aggregate         Aggregate     Weighted    Average       Average       Original
                                  Underlying        Principal         Principal     Average      FICO         Current       Loan-to-
Range of Current Mortgage Loan     Mortgage          Balance           Balance      Mortgage     Credit       Principal      Value
Principal Balances ($)               Loans         Outstanding       Outstanding     Rate        Score        Balance        Ratio
------------------------------    -----------      -----------       -----------    --------    --------      -------       --------
50,000.01 - 400,000.00 ........         17       $  3,710,841.23         0.57%       7.062%       706     $  218,284.78       67.53%
400,000.01 - 450,000.00 .......        121         52,622,583.83         8.08        6.738        707        434,897.39       73.48
450,000.01 - 500,000.00 .......        215        102,979,592.73        15.81        6.699        709        478,974.85       75.27
500,000.01 - 550,000.00 .......        186         97,519,326.61        14.98        6.647        715        524,297.45       74.37
550,000.01 - 600,000.00 .......        134         77,571,660.68        11.91        6.629        720        578,892.99       74.01
600,000.01 - 650,000.00 .......        118         73,885,825.00        11.35        6.624        721        626,151.06       74.18
650,000.01 - 700,000.00 .......         74         50,148,470.72         7.70        6.576        721        677,682.04       74.09
700,000.01 - 750,000.00 .......         49         35,620,333.86         5.47        6.563        727        726,945.59       72.77
750,000.01 - 800,000.00 .......         39         30,362,042.28         4.66        6.686        715        778,513.90       71.94
800,000.01 - 850,000.00 .......         14         11,682,952.85         1.79        6.732        725        834,496.63       70.19
850,000.01 - 900,000.00 .......         20         17,518,773.68         2.69        6.657        727        875,938.68       70.54
900,000.01 - 950,000.00 .......         15         13,979,012.57         2.15        6.698        694        931,934.17       69.65
950,000.01 - 1,000,000.00.. ...         34         33,553,650.78         5.15        6.643        727        986,872.08       67.34
1,000,000.01 - 1,250,000.00 ...         16         18,039,906.78         2.77        6.620        733      1,127,494.17       68.83
1,250,000.01 - 1,500,000.00 ...         11         15,401,416.27         2.37        6.706        729      1,400,128.75       65.23
1,500,000.01 - 1,750,000.00 ...          1          1,736,832.59         0.27        6.375        779      1,736,832.59       65.85
1,750,000.01 - 2,000,000.00 ...          5          9,457,424.16         1.45        7.087        694      1,891,484.83       56.50
2,250,000.01 - 2,500,000.00 ...          1          2,384,950.58         0.37        8.125        749      2,384,950.58       64.57
Greater than or equal to ......          1          3,000,000.00         0.46        6.500        719      3,000,000.00       40.00
  2,500,000.01 ................
                                     -----       ---------------       ------
    Total ....................       1,071       $651,175,597.20       100.00%
                                     =====       ===============       ======


----------
(1)   As of the Reference Date, the average principal balance of the Underlying
      Mortgage Loans was approximately $608,007.09.


                                      S-53


       Original Loan-to-Value Ratios for the Underlying Mortgage Loans(1)



------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                            Weighted
                                                                      Percent of                Weighted                    Average
                                   Number of        Aggregate         Aggregate     Weighted    Average       Average       Original
                                  Underlying        Principal         Principal     Average      FICO         Current       Loan-to-
Range of Original                  Mortgage          Balance           Balance      Mortgage     Credit       Principal      Value
Loan-to-Value Ratios (%)             Loans         Outstanding       Outstanding     Rate        Score        Balance        Ratio
------------------------------    -----------      -----------       -----------    --------    --------      -------       --------
25.01 - 30.00 ................           3       $  2,491,581.24         0.38%       6.530%       736     $  830,527.08       26.42%
30.01 - 35.00 ................           6          2,841,168.48         0.44        6.501        717        473,528.08       33.60
35.01 - 40.00 ................           4          4,990,816.99         0.77        6.685        704      1,247,704.25       39.57
40.01 - 45.00 ................           8          4,211,751.12         0.65        6.475        726        526,468.89       42.61
45.01 - 50.00 ................          26         20,084,334.70         3.08        6.515        730        772,474.41       48.57
50.01 - 55.00 ................          14          9,569,619.42         1.47        6.417        714        683,544.24       52.54
55.01 - 60.00 ................          37         23,857,698.56         3.66        6.552        715        644,802.66       58.08
60.01 - 65.00 ................         113         77,423,117.64        11.89        6.651        722        685,160.33       63.60
65.01 - 70.00 ................         101         65,386,180.54        10.04        6.626        708        647,387.93       68.87
70.01 - 75.00 ................         147         97,907,092.48        15.04        6.686        721        666,034.64       73.69
75.01 - 80.00 ................         598        336,017,572.80        51.60        6.698        717        561,902.30       79.48
80.01 - 85.00 ................           9          4,442,361.89         0.68        6.617        667        493,595.77       83.38
85.01 - 90.00 ................           5          1,952,301.34         0.30        7.100        688        390,460.27       88.20
                                     -----       ---------------       ------
    Total ....................       1,071       $651,175,597.20       100.00%
                                     =====       ===============       ======


----------
(1)   As of the Reference Date, the weighted average original Loan-to-Value
      Ratio of the Underlying Mortgage Loans was approximately 72.63%.

       Original Terms to Stated Maturity for the Underlying Mortgage Loans



------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                            Weighted
                                                                      Percent of                Weighted                    Average
                                   Number of        Aggregate         Aggregate     Weighted    Average       Average       Original
                                  Underlying        Principal         Principal     Average      FICO         Current       Loan-to-
Original Term to Stated            Mortgage          Balance           Balance      Mortgage     Credit       Principal      Value
Maturity (months)                    Loans         Outstanding       Outstanding     Rate        Score        Balance        Ratio
------------------------------    -----------      -----------       -----------    --------    --------      -------       --------
240 ..........................           3       $  1,580,358.66         0.24%       6.299%       742       $526,786.22       75.75%
360 ..........................       1,068        649,595,238.54        99.76        6.667        717        608,235.24       72.62
                                     -----       ---------------       ------
    Total ....................       1,071       $651,175,597.20       100.00%
                                     =====       ===============       ======



                                      S-54


     Remaining Terms to Stated Maturity for the Underlying Mortgage Loans(1)



------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                            Weighted
                                                                      Percent of                Weighted                    Average
                                   Number of        Aggregate         Aggregate     Weighted    Average       Average       Original
                                  Underlying        Principal         Principal     Average      FICO         Current       Loan-to-
Remaining Terms to Stated          Mortgage          Balance           Balance      Mortgage     Credit       Principal      Value
Maturity (months)                    Loans         Outstanding       Outstanding     Rate        Score        Balance        Ratio
------------------------------    -----------      -----------       -----------    --------    --------      -------       --------
231 ..........................           1       $    481,161.36         0.07%       6.500%       790       $481,161.36       72.85%
233 ..........................           1            591,158.90         0.09        6.500        717        591,158.90       75.95
234 ..........................           1            508,038.40         0.08        5.875        727        508,038.40       78.27
347 ..........................           2            585,940.07         0.09        6.971        699        292,970.04       72.75
349 ..........................           2            702,054.09         0.11        7.470        753        351,027.05       74.22
350 ..........................          14          7,075,443.40         1.09        7.373        711        505,388.81       75.60
351 ..........................          27         14,291,548.98         2.19        7.065        721        529,316.63       74.64
352 ..........................          33         17,442,551.76         2.68        6.745        715        528,562.17       71.58
353 ..........................         146         88,348,609.99        13.57        6.703        716        605,127.47       72.75
354 ..........................         496        298,327,627.98        45.81        6.639        718        601,466.99       73.06
355 ..........................         251        159,811,365.50        24.54        6.625        716        636,698.67       71.95
356 ..........................          97         63,010,096.77         9.68        6.648        716        649,588.63       71.53
                                     -----       ---------------       ------
    Total ....................       1,071       $651,175,597.20       100.00%
                                     =====       ===============       ======


----------
(1)   As of the Reference Date, the weighted average remaining term to stated
      maturity of the Underlying Mortgage Loans was approximately 354 months.


                                      S-55


           Geographic Distribution of the Mortgaged Properties for the
                           Underlying Mortgage Loans



------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                            Weighted
                                                                      Percent of                Weighted                    Average
                                   Number of        Aggregate         Aggregate     Weighted    Average       Average       Original
                                  Underlying        Principal         Principal     Average      FICO         Current       Loan-to-
                                   Mortgage          Balance           Balance      Mortgage     Credit       Principal      Value
Geographic Area                      Loans         Outstanding       Outstanding     Rate        Score        Balance        Ratio
------------------------------    -----------      -----------       -----------    --------    --------      -------       --------
Alabama ......................           7       $  3,820,805.41         0.59%       6.715%       711       $545,829.34       77.29%
Alaska .......................           1            241,234.22         0.04        7.750        646        241,234.22       90.00
Arizona ......................          29         17,106,408.34         2.63        6.754        716        589,876.15       74.34
California ...................         541        330,227,404.12        50.71        6.540        722        610,401.86       72.01
Colorado .....................          27         15,178,993.22         2.33        6.864        716        562,184.93       72.86
Connecticut ..................           4          3,201,522.29         0.49        6.692        687        800,380.57       60.76
Delaware .....................           1            652,500.00         0.10        6.375        722        652,500.00       75.00
District of Columbia .........           3          2,447,485.20         0.38        6.773        725        815,828.40       70.57
Florida ......................          50         30,423,578.35         4.67        6.911        707        608,471.57       70.78
Georgia ......................          21         14,171,289.28         2.18        6.815        724        674,823.30       76.37
Hawaii .......................           6          3,800,716.76         0.58        6.649        709        633,452.79       72.55
Idaho ........................           4          2,278,041.72         0.35        6.509        698        569,510.43       68.14
Illinois .....................          32         20,050,183.41         3.08        7.167        690        626,568.23       73.42
Indiana ......................           2            518,323.13         0.08        6.621        726        259,161.57       79.40
Iowa .........................           1            595,952.09         0.09        6.250        819        595,952.09       50.00
Kansas .......................           2            994,654.09         0.15        6.610        701        497,327.05       81.76
Kentucky .....................           1            799,761.42         0.12        6.500        720        799,761.42       70.00
Louisiana ....................           1            515,339.27         0.08        6.500        706        515,339.27       80.00
Maine ........................           1            644,595.50         0.10        6.500        740        644,595.50       57.52
Maryland .....................          26         14,962,225.49         2.30        6.763        698        575,470.21       75.33
Massachusetts ................          29         15,687,532.14         2.41        6.686        728        540,949.38       70.38
Michigan .....................          18          9,947,327.98         1.53        6.921        702        552,629.33       75.89
Minnesota ....................           5          2,834,401.55         0.44        6.692        700        566,880.31       77.88
Mississippi ..................           1            463,889.80         0.07        7.125        707        463,889.80       80.00
Missouri .....................           4          2,303,216.51         0.35        6.925        700        575,804.13       72.18
Montana ......................           1            647,758.53         0.10        6.375        806        647,758.53       79.03
Nevada .......................          19         12,441,871.48         1.91        6.772        732        654,835.34       75.88
New Hampshire ................           2          1,472,341.16         0.23        7.045        701        736,170.58       77.44
New Jersey ...................          33         18,009,843.10         2.77        6.921        693        545,752.82       73.62
New Mexico ...................           3          1,739,106.53         0.27        6.653        707        579,702.18       74.01
New York .....................          61         37,753,788.61         5.80        6.760        707        618,914.57       71.97
North Carolina ...............          14          9,884,872.95         1.52        7.050        728        706,062.35       72.53
Ohio .........................           4          1,681,144.42         0.26        6.732        708        420,286.11       77.77
Oregon .......................          12          7,842,930.49         1.20        6.579        745        653,577.54       73.58
Pennsylvania .................           8          4,729,155.42         0.73        6.740        677        591,144.43       72.85
Rhode Island .................           3          2,088,853.72         0.32        7.219        719        696,284.57       63.29
South Carolina ...............          10          8,930,257.73         1.37        6.917        723        893,025.77       68.26
Tennessee ....................           6          3,116,745.51         0.48        6.596        704        519,457.59       75.98
Texas ........................          16          9,827,600.94         1.51        6.818        719        614,225.06       73.80
Utah .........................           3          1,751,878.83         0.27        6.555        736        583,959.61       79.25
Vermont ......................           1            796,904.62         0.12        8.375        698        796,904.62       57.94
Virginia .....................          25         15,556,463.97         2.39        6.262        717        622,258.56       74.89
Washington ...................          30         17,458,598.10         2.68        6.673        728        581,953.27       76.63
Wisconsin ....................           2          1,053,025.80         0.16        6.315        728        526,512.90       77.56
Wyoming ......................           1            525,074.00         0.08        6.500        655        525,074.00       80.00
                                     -----       ---------------       ------
    Total ....................       1,071       $651,175,597.20       100.00%
                                     =====       ===============       ======



                                      S-56


          Mortgagors' FICO Scores for the Underlying Mortgage Loans(1)



------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                            Weighted
                                                                      Percent of                Weighted                    Average
                                   Number of        Aggregate         Aggregate     Weighted    Average       Average       Original
                                  Underlying        Principal         Principal     Average      FICO         Current       Loan-to-
                                   Mortgage          Balance           Balance      Mortgage     Credit       Principal      Value
Range of FICO Credit Scores          Loans         Outstanding       Outstanding     Rate        Score        Balance        Ratio
------------------------------    -----------      -----------       -----------    --------    --------      -------       --------
620 - 639 ....................          61       $ 34,013,182.24         5.22%       7.010%       630       $557,593.15       72.34%
640 - 659 ....................          84         49,269,824.79         7.57        6.933        651        586,545.53       70.61
660 - 679 ....................         136         79,244,658.12        12.17        6.675        669        582,681.31       72.42
680 - 699 ....................         143         83,328,326.25        12.80        6.755        690        582,715.57       74.49
700 - 719 ....................         161         99,771,002.95        15.32        6.651        709        619,695.67       73.72
720 - 739 ....................         125         79,267,639.96        12.17        6.691        730        634,141.12       74.24
740 - 759 ....................         135         85,439,169.11        13.12        6.594        750        632,882.73       71.70
760 - 779 ....................          99         61,617,726.20         9.46        6.466        769        622,401.27       70.86
780 - 799 ....................          90         56,287,075.99         8.64        6.480        789        625,411.96       71.24
800 - 819 ....................          36         22,346,991.61         3.43        6.455        807        620,749.77       73.14
820 - 839 ....................           1            589,999.98         0.09        6.500        820        589,999.98       50.95
                                     -----       ---------------       ------
    Total ....................       1,071       $651,175,597.20       100.00%
                                     =====       ===============       ======


----------
(1)   As of the Reference Date, the weighted average FICO Credit Score of the
      Underlying Mortgage Loans was approximately 717.

         Types of Mortgaged Properties for the Underlying Mortgage Loans



------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                            Weighted
                                                                      Percent of                Weighted                    Average
                                   Number of        Aggregate         Aggregate     Weighted    Average       Average       Original
                                  Underlying        Principal         Principal     Average      FICO         Current       Loan-to-
                                   Mortgage          Balance           Balance      Mortgage     Credit       Principal      Value
Property Type                        Loans         Outstanding       Outstanding     Rate        Score        Balance        Ratio
------------------------------    -----------      -----------       -----------    --------    --------      -------       --------
Single Family Residence ......         743       $440,838,394.28        67.70%       6.647%       716       $593,322.20       72.50%
 Planned Unit
  Development (PUD) ..........         222        141,057,324.68        21.66        6.633        719        635,393.35       72.51
Low-Rise Condominium .........          44         28,311,520.92         4.35        6.797        732        643,443.66       72.77
Two-Family Residence .........          35         22,219,617.65         3.41        6.840        703        634,846.22       74.70
High-Rise Condominium ........          15          8,902,854.08         1.37        7.248        733        593,523.61       77.08
Three-Family Residence .......           3          2,740,810.19         0.42        6.950        718        913,603.40       70.74
Townhouse ....................           6          3,897,789.70         0.60        6.578        701        649,631.62       76.97
Four-Family Residence ........           3          3,207,285.70         0.49        6.601        764      1,069,095.23       63.54
                                     -----       ---------------       ------
    Total ....................       1,071       $651,175,597.20       100.00%
                                     =====       ===============       ======


                    Purposes of the Underlying Mortgage Loans



------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                            Weighted
                                                                      Percent of                Weighted                    Average
                                   Number of        Aggregate         Aggregate     Weighted    Average       Average       Original
                                  Underlying        Principal         Principal     Average      FICO         Current       Loan-to-
                                   Mortgage          Balance           Balance      Mortgage     Credit       Principal      Value
Loan Purpose                         Loans         Outstanding       Outstanding     Rate        Score        Balance        Ratio
------------------------------    -----------      -----------       -----------    --------    --------      -------       --------
Refinance (Cash Out) .........         443       $269,377,982.48        41.37%       6.676%       708       $608,076.71       70.38%
Purchase .....................         341        203,935,341.16        31.32        6.738        731        598,050.85       76.49
Refinance (Rate/Term) ........         287        177,862,273.56        27.31        6.567        715        619,729.18       71.59
                                     -----       ---------------       ------
    Total ....................       1,071       $651,175,597.20       100.00%
                                     =====       ===============       ======



                                      S-57


              Occupancy Types for the Underlying Mortgage Loans(1)



------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                            Weighted
                                                                      Percent of                Weighted                    Average
                                   Number of        Aggregate         Aggregate     Weighted    Average       Average       Original
                                  Underlying        Principal         Principal     Average      FICO         Current       Loan-to-
                                   Mortgage          Balance           Balance      Mortgage     Credit       Principal      Value
Occupancy Type                       Loans         Outstanding       Outstanding     Rate        Score        Balance        Ratio
------------------------------    -----------      -----------       -----------    --------    --------      -------       --------
Owner Occupied ...............         975       $589,852,887.45        90.58%       6.638%       716       $604,977.32       73.02%
Investment ...................          57         35,275,904.70         5.42        7.084        728        618,875.52       67.46
Secondary Home ...............          39         26,046,805.05         4.00        6.735        737        667,866.80       70.76
                                     -----       ---------------       ------
    Total ....................       1,071       $651,175,597.20       100.00%
                                     =====       ===============       ======


----------
(1)   Based upon representations of the related mortgagors at the time of
      origination.

           Loan Documentation Types for the Underlying Mortgage Loans



------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                            Weighted
                                                                      Percent of                Weighted                    Average
                                   Number of        Aggregate         Aggregate     Weighted    Average       Average       Original
                                  Underlying        Principal         Principal     Average      FICO         Current       Loan-to-
                                   Mortgage          Balance           Balance      Mortgage     Credit       Principal      Value
Type of Documentation Program        Loans         Outstanding       Outstanding     Rate        Score        Balance        Ratio
------------------------------    -----------      -----------       -----------    --------    --------      -------       --------
Full/Alternate ...............         283       $161,176,030.49        24.75%       6.406%       728       $569,526.61       74.67%
Stated Income ................         526        325,006,388.63        49.91        6.672        713        617,882.87       73.21
No Ratio .....................         116         76,620,639.56        11.77        6.954        709        660,522.75       72.42
No Income/No Asset ...........          78         45,645,492.67         7.01        6.969        712        585,198.62       71.78
No Doc .......................          68         42,727,045.85         6.56        6.756        730        628,338.91       61.77
                                     -----       ---------------       ------
    Total ....................       1,071       $651,175,597.20       100.00%
                                     =====       ===============       ======


                 Loan Ages for the Underlying Mortgage Loans(1)



------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                            Weighted
                                                                      Percent of                Weighted                    Average
                                   Number of        Aggregate         Aggregate     Weighted    Average       Average       Original
                                  Underlying        Principal         Principal     Average      FICO         Current       Loan-to-
                                   Mortgage          Balance           Balance      Mortgage     Credit       Principal      Value
Loan Ages (months)                   Loans         Outstanding       Outstanding     Rate        Score        Balance        Ratio
------------------------------    -----------      -----------       -----------    --------    --------      -------       --------
4 ............................          97       $ 63,010,096.77         9.68%       6.648%       716       $649,588.63       71.53%
5 ............................         251        159,811,365.50        24.54        6.625        716        636,698.67       71.95
6 ............................         497        298,835,666.38        45.89        6.638        718        601,279.01       73.07
7 ............................         147         88,939,768.89        13.66        6.701        716        605,032.44       72.77
8 ............................          33         17,442,551.76         2.68        6.745        715        528,562.17       71.58
9 ............................          28         14,772,710.34         2.27        7.046        723        527,596.80       74.58
10 ...........................          14          7,075,443.40         1.09        7.373        711        505,388.81       75.60
11 ...........................           2            702,054.09         0.11        7.470        753        351,027.05       74.22
13 ...........................           2            585,940.07         0.09        6.971        699        292,970.04       72.75
                                     -----       ---------------       ------
    Total ....................       1,071       $651,175,597.20       100.00%
                                     =====       ===============       ======


----------
(1)   As of the Reference Date, the weighted average loan age of the Underlying
      Mortgage Loans was approximately 6 months.


                                      S-58


       Prepayment Charge Terms and Types of the Underlying Mortgage Loans



------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                            Weighted
                                                                      Percent of                Weighted                    Average
                                   Number of        Aggregate         Aggregate     Weighted    Average       Average       Original
                                  Underlying        Principal         Principal     Average      FICO         Current       Loan-to-
Prepayment Charge                  Mortgage          Balance           Balance      Mortgage     Credit       Principal      Value
Term and Type (months)               Loans         Outstanding       Outstanding     Rate        Score        Balance        Ratio
------------------------------    -----------      -----------       -----------    --------    --------      -------       --------
0 ............................       1,055       $646,993,300.70        99.36%       6.662%       717       $613,263.79       72.64%
12 - Hard ....................           2            452,633.28         0.07        7.408        694        226,316.64       54.70
24 - Hard ....................           2            831,874.03         0.13        7.671        678        415,937.02       79.30
36 - Hard ....................           9          2,534,033.49         0.39        6.953        691        281,559.28       71.76
36 - Soft ....................           3            363,755.70         0.06        7.406        656        121,251.90       62.29
                                     -----       ---------------       ------
    Total ....................       1,071       $651,175,597.20       100.00%
                                     =====       ===============       ======


             Interest Only Periods for the Underlying Mortgage Loans



------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                            Weighted
                                                                      Percent of                Weighted                    Average
                                   Number of        Aggregate         Aggregate     Weighted    Average       Average       Original
                                  Underlying        Principal         Principal     Average      FICO         Current       Loan-to-
                                   Mortgage          Balance           Balance      Mortgage     Credit       Principal      Value
Interest Only Period (months)        Loans         Outstanding       Outstanding     Rate        Score        Balance        Ratio
------------------------------    -----------      -----------       -----------    --------    --------      -------       --------
0 ............................         534       $317,364,185.52        48.74%       6.609%       717       $594,314.95       71.60%
120 ..........................         537        333,811,411.68        51.26        6.720        717        621,622.74       73.60
                                     -----       ---------------       ------
    Total ....................       1,071       $651,175,597.20       100.00%
                                     =====       ===============       ======


             Origination Channels for the Underlying Mortgage Loans



------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                            Weighted
                                                                      Percent of                Weighted                    Average
                                   Number of        Aggregate         Aggregate     Weighted    Average       Average       Original
                                  Underlying        Principal         Principal     Average      FICO         Current       Loan-to-
                                   Mortgage          Balance           Balance      Mortgage     Credit       Principal      Value
Origination Channel                  Loans         Outstanding       Outstanding     Rate        Score        Balance        Ratio
------------------------------    -----------      -----------       -----------    --------    --------      -------       --------
Conduit ......................         708       $421,873,462.33        64.79%       6.666%       717       $595,866.47       72.93%
Correspondent ................         137         88,486,336.84        13.59        6.681        725        645,885.67       71.65
Consumer Direct ..............           1            743,244.44         0.11        6.000        691        743,244.44       64.68
Mortgage Professionals .......         225        140,072,553.59        21.51        6.658        713        622,544.68       72.38
                                     -----       ---------------       ------
    Total ....................       1,071       $651,175,597.20       100.00%
                                     =====       ===============       ======



                                      S-59


                                   Exhibit A

     IndyMac RAST 2007-A2 Supplement, Prospectus Supplement and Prospectus



Supplement to Prospectus Supplement dated February 27, 2007
(to Prospectus dated February 27, 2007)

                                  $486,363,284

                               IndyMac MBS, Inc.
                                   Depositor

                               [LOGO] IndymacBank
                          Sponsor, Seller and Servicer

                 Residential Asset Securitization Trust 2007-A2
                                 Issuing Entity

      This Supplement updates the Prospectus Supplement (the "Prospectus
Supplement") dated February 27, 2007 that has been issued with respect to the
Residential Asset Securitization Trust 2007-A2, Mortgage Pass-Through
Certificates, Series 2007-B.

      Appendix I to this Supplement contains the April 2007 monthly statement
that has been furnished to certificateholders of record in connection with the
April 25, 2007 distribution. As set forth in Appendix I, as of March 31, 2007,
approximately 6.70% of the Mortgage Loans were delinquent 30 days or more.

      This Supplement also updates the information set forth in the last
paragraph of the cover page, the "Method of Distribution" section, on page S-105
in the Prospectus Supplement and the "Use of Proceeds" section on page S-100 in
the Prospectus Supplement, as described on the next page.

      Capitalized terms used in this Supplement and not otherwise defined shall
have the meanings assigned to them in the 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.

                                   HSBC [LOGO]

                  The dated of this Supplement is May 8, 2007




      Subject to the terms and conditions set forth in the underwriting
agreement dated May 8, 2007, between the depositor and HSBC Securities (USA)
Inc. (the "underwriter"), the depositor has agreed to sell to the underwriter,
and the underwriter has agreed to purchase, the class of certificates set forth
in the table below.

      Designation                                      Notional Amount
--------------------------                        -------------------------
        Class A-X                                     $479,329,851 (1)

----------
(1)   The Notional Amount reflected in the table above is as of April 25, 2007.

      Proceeds to the depositor from the sale of these certificates (the
"Underwritten Certificates") are expected to be approximately 0.765325% of the
Notional Amount of the Underwritten Certificates plus accrued interest before
deducting expenses payable by the depositor. The Underwritten Certificates will
be purchased by the underwriter on or about May 8, 2007.

      Distribution of the Underwritten Certificates will be made by the
underwriter from time to time in negotiated transactions or otherwise at varying
prices to be determined at the time of sale. the underwriter may effect such
transactions by selling the Underwritten Certificates to or through dealers and
such dealers may receive from the underwriter, for which they act as agent,
compensation in the form of underwriting discounts, concessions or commissions.
The underwriter and any dealers that participate with the underwriter in the
distribution of the Underwritten Certificates may be deemed to be underwriters,
and any discounts, commissions or concessions received by them, and any profits
on resale of the Underwritten Certificates purchased by them, may be deemed to
be underwriting discounts and commissions under the Securities Act of 1933, as
amended.

      The depositor has been advised by the underwriter that it intends to make
a market in the Underwritten Certificates but the underwriter has no obligation
to do so. There can be no assurance that a secondary market for the Underwritten
Certificates will develop or, if it does develop, that it will continue or that
it will provide certificateholders with a sufficient level of liquidity of
investment.

      The depositor has agreed to indemnify the underwriter against, or make
contributions to the underwriter with respect to, liabilities customarily
indemnified against, including liabilities under the Securities Act of 1933, as
amended.

      This Supplement also updates the "Summary--ERISA Considerations" and
"ERISA Considerations" sections on page S-16 and pages S-103 through S-105,
respectively, in the Prospectus Supplement, to reflect the fact that the
Underwritten Certificates are being purchased by a person to whom the Exemption
has been granted, and may therefore be transferred to Plans under the same
conditions as offered certificates that qualify for the Exemption.

                                   ----------

      This Supplement does not contain complete information about the
Underwritten Certificates. Additional information is contained in the Prospectus
Supplement dated February 27, 2007 prepared in connection with the issuance of
the certificates and in the prospectus of the depositor dated February 27, 2007.
You are urged to read this Supplement, the Prospectus Supplement, and the
prospectus in full.




                                   Appendix I

                          April 2007 Monthly Statement

                      [THIS PAGE INTENTIONALLY LEFT BLANK]



PROSPECTUS SUPPLEMENT
(to Prospectus dated February 27, 2007)

                                  $673,531,813
                                  (Approximate)

                                IndyMac MBS, Inc.
                                    Depositor

                               [LOGO] IndyMac Bank
                          Sponsor, Seller and Servicer

                 Residential Asset Securitization Trust 2007-A2
                                 Issuing Entity

                  Distributions payable monthly on the 25th day
                    of each month, beginning March 26, 2007

                                   ----------

      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 Class
                       Certificate Balance /                                            Initial Class
                      Initial Notional Amount   Pass-Through                        Certificate Balance /      Pass-Through
       Class                    (1)               Rate (2)           Class       Initial Notional Amount (1)     Rate (2)
-----------------------------------------------------------------------------------------------------------------------------
  Class 1-A-1              $ 20,000,000            6.00%          Class 2-A-2          $202,537,000               6.50%
-----------------------------------------------------------------------------------------------------------------------------
  Class 1-A-2              $250,000,000            6.00%          Class 2-A-3          $  2,045,699               6.50%
-----------------------------------------------------------------------------------------------------------------------------
  Class 1-A-3              $ 40,697,676            6.00%          Class 2-A-4          $ 66,511,900(3)            0.50%
-----------------------------------------------------------------------------------------------------------------------------
  Class 1-A-4              $  2,936,340            6.00%          Class 2-A-5          $    900,000               5.85%
-----------------------------------------------------------------------------------------------------------------------------
  Class 1-A-5              $ 12,507,000            6.00%          Class PO             $  3,350,001                (4)
-----------------------------------------------------------------------------------------------------------------------------
  Class 1-A-6              $ 49,526,000            6.00%          Class A-X            $486,363,284(3)           Variable
-----------------------------------------------------------------------------------------------------------------------------
  Class 1-A-7              $    499,997            6.00%          Class A-R            $        100               6.00%
-----------------------------------------------------------------------------------------------------------------------------
  Class 1-A-8              $ 12,128,343            6.00%          Class B-1            $ 13,676,000              Variable
-----------------------------------------------------------------------------------------------------------------------------
  Class 1-A-9              $    497,657            6.00%          Class B-2            $  7,864,000              Variable
-----------------------------------------------------------------------------------------------------------------------------
  Class 2-A-1              $ 50,263,000            5.85%          Class B-3            $  4,103,000              Variable
-----------------------------------------------------------------------------------------------------------------------------


--------------------------------------------------------------------------------
Consider carefully the risk factors beginning on page S-18 in this prospectus
supplement and on page 5 in the prospectus.

The certificates represent obligations of the issuing entity only and do not
represent an interest in or obligation of IndyMac MBS, Inc., IndyMac Bank,
F.S.B. or any of their affiliates.

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

(1)   This amount is approximate  and is subject to a permitted  variance in the
      aggregate of plus or minus 5%.

(2)   The  classes  of  certificates  offered  by  this  prospectus  supplement,
      together with their pass-through rates and initial ratings,  are listed in
      the tables under "Summary -- Description of the Certificates" beginning on
      page S-7 of this prospectus supplement.

(3)   The Class 2-A-4 and Class A-X  Certificates  are interest  only,  notional
      amount certificates.  The initial notional amounts for the notional amount
      certificates  are set forth in the table above but are not included in the
      aggregate class certificate balance of the certificates offered.

(4)   The Class PO  Certificates  are principal only  certificates  and will not
      bear interest.

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  consisting of two loan groups of 20- and 30-year
conventional,  fixed  rate  mortgage  loans  secured  by first  liens on one- to
four-family residential properties.

Credit  enhancement for the offered  certificates will consist of subordination.
The credit  enhancement for each class of offered  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.

HSBC Securities (USA) Inc. will offer the certificates  listed above (other than
the Class A-X  Certificates) to the public at varying prices to be determined at
the  time of  sale.  The  proceeds  to the  depositor  from  the  sale of  these
certificates  are expected to be  approximately  100.3080771%  of the  aggregate
class certificate balance of the offered  certificates (other than the Class A-X
Certificates),  plus accrued interest,  before deducting expenses. The Class A-X
Certificates  will not be purchased by HSBC  Securities  (USA) Inc., but will be
transferred to the seller on the closing date as partial  consideration  for the
sale of the mortgage loans to the  depositor.  See "Method of  Distribution"  in
this prospectus  supplement.  The offered certificates (other than the Class A-R
Certificates)  will be available  for delivery on or about  February 27, 2007 to
investors in  book-entry  form through the  facilities of The  Depository  Trust
Company,  and, upon request,  through  Clearstream,  Luxembourg or the Euroclear
System.  The offered  certificates  are not bank accounts and are not insured by
the FDIC or any other governmental entity.

                                   [LOGO] HSBC

                                February 27, 2007



                                TABLE OF CONTENTS

Prospectus Supplement                                                       Page
---------------------                                                       ----

Summary ..............................................................       S-5
Summary of Transaction Parties .......................................      S-17
Risk Factors .........................................................      S-18
The Mortgage Pool ....................................................      S-27
    General ..........................................................      S-27
    Assignment of the Mortgage Loans .................................      S-48
The Seller ...........................................................      S-49
    Origination Process ..............................................      S-49
    Underwriting Process .............................................      S-49
    Representations by Seller; Repurchases, etc ......................      S-52
Servicing of the Mortgage Loans ......................................      S-53
    The Servicer .....................................................      S-53
    Servicing Compensation and Payment of Expenses ...................      S-53
    Adjustment to Servicing Compensation in Connection
      with Certain Prepaid Mortgage Loans ............................      S-53
    Advances .........................................................      S-54
    Certain Modifications and Refinancings ...........................      S-55
    Prepayment Charges ...............................................      S-55
    Default Management Services ......................................      S-55
The Sponsor ..........................................................      S-55
Static Pool Data .....................................................      S-56
The Depositor ........................................................      S-56
The Issuing Entity ...................................................      S-56
The Trustee ..........................................................      S-57
Description of the Certificates ......................................      S-59
    General ..........................................................      S-59
    Calculation of Class Certificate Balance .........................      S-60
    Notional Amount Certificates .....................................      S-61
    Component Classes ................................................      S-61
    Book-Entry Certificates ..........................................      S-62
    Payments on Mortgage Loans; Accounts .............................      S-66
    Investments of Amounts Held in Accounts ..........................      S-66
    Fees and Expenses ................................................      S-67
    Distributions ....................................................      S-69
    Priority of Distributions Among Certificates .....................      S-69
    Interest .........................................................      S-70
    Principal ........................................................      S-72
    Allocation of Losses .............................................      S-80
    Structuring Assumptions ..........................................      S-82
    Voting Rights ....................................................      S-84
    Termination of the Issuing Entity; Optional Termination ..........      S-84
    Certain Matters Regarding the Servicer, the
      Depositor and the Seller .......................................      S-85
    Restrictions on Transfer of the Class A-R Certificates ...........      S-86
    Restrictions on Investment, Suitability Requirements .............      S-86
Yield, Prepayment and Maturity Considerations ........................      S-86
    General ..........................................................      S-86
    Prepayment Considerations and Risks ..............................      S-87
    Sensitivity of the Class PO Certificates .........................      S-90
    Weighted Average Lives of the Offered Certificates ...............      S-91
    Decrement Tables .................................................      S-91
    Final Scheduled Distribution Date ................................      S-98
    The Subordinated Certificates ....................................      S-98
Credit Enhancement ...................................................      S-99
    Subordination ....................................................      S-99
Use of Proceeds ......................................................     S-100
Legal Proceedings ....................................................     S-101
Material Federal Income Tax Consequences .............................     S-101
    Taxation of the Regular Certificates .............................     S-101
    Tax Treatment of Offered Certificates For Certain Purposes .......     S-102
    Taxation of the Residual Certificates ............................     S-102
ERISA Considerations .................................................     S-103
Method of Distribution ...............................................     S-105
Legal Matters ........................................................     S-106
Ratings ..............................................................     S-106
Index of Defined Terms ...............................................     S-107

                                      S-2


Prospectus                                                                  Page
----------                                                                  ----

 Important Notice About Information in This Prospectus
   and Each Accompanying Prospectus Supplement ...........................     4
 Risk Factors ............................................................     5
      Limited Source of Payments -- No Recourse to
        Sellers, Depositor or Servicer ...................................     5
      Credit Enhancement May Not Be Sufficient to
        Protect You from Losses ..........................................     6
      Losses on Balloon Payment Mortgages Are Borne by You ...............     6
      Multifamily Lending ................................................     6
      Junior Liens .......................................................     7
      Partially Unsecured Loans ..........................................     8
      Home Equity Lines of Credit ........................................     8
      Nature of Mortgages ................................................     9
      Your Risk of Loss May Be Higher Than You Expect
        If Your Securities Are Backed by Partially
        Unsecured Home Equity Loans ......................................    13
      Impact of World Events .............................................    13
      You Could Be Adversely Affected by Violations
        of Environmental Laws ............................................    14
      Ratings of the Securities Do Not Assure Their Payment ..............    14
      Book-Entry Registration ............................................    15
      Pre-Funding Accounts Will Not Be Used to
        Cover Losses on the Loans ........................................    15
      Unused Amounts on Deposit in Any Pre-Funding Account
        Will Be Paid as Principal to Securityholders .....................    16
      Secondary Market for the Securities May Not Exist ..................    16
      Bankruptcy or Insolvency May Affect the Timing
        and Amount of Distributions on the Securities.....................    16
      Holders of Original Issue Discount Securities
        Are Required to Include Original Issue Discount
        in Ordinary Gross Income as It Accrues ...........................    18
      The Principal Amount of Securities May Exceed the
        Market Value of the Issuing Entity Assets ........................    18
 The Issuing Entity ......................................................    19
      The Mortgage Loans--General ........................................    20
      Agency Securities ..................................................    26
      Private Mortgage-Backed Securities .................................    30
      Substitution of Issuing Entity Assets ..............................    32
      Available Information ..............................................    32
      Incorporation of Certain Documents by Reference;
        Reports Filed with the SEC .......................................    32
      Reports to Securityholders .........................................    33
 Use of Proceeds .........................................................    34
 The Depositor ...........................................................    34
 Mortgage Loan Program ...................................................    35
      Underwriting Standards .............................................    35
      Underwriting Process ...............................................    35
      Qualifications of Sellers ..........................................    36
      Representations by Sellers; Repurchases ............................    36
 Static Pool Data ........................................................    37
 Description of the Securities ...........................................    38
      General ............................................................    39
      Distributions on Securities ........................................    40
      Advances ...........................................................    42
      Mandatory Auction ..................................................    43
      Categories of Classes of Securities ................................    43
      Indices Applicable to Floating Rate and
        Inverse Floating Rate Classes ....................................    45
      Book-Entry Securities ..............................................    49
      Global Clearance, Settlement And Tax
        Documentation Procedures .........................................    52
 Credit Enhancement ......................................................    55
      General ............................................................    55
      Subordination ......................................................    56
      Letter of Credit ...................................................    57
      Mortgage Pool Insurance Policies ...................................    57
      Special Hazard Insurance Policies ..................................    58
      Bankruptcy Bonds ...................................................    59
      Reserve Fund .......................................................    59
      Cross Support ......................................................    60
      Insurance Policies, Surety Bonds and Guaranties ....................    60
      Over-Collateralization .............................................    60
      Financial Instruments ..............................................    61
      Deposit Agreements .................................................    61
 Yield and Prepayment Considerations .....................................    61
      Prepayment Standards or Models .....................................    64
      Yield ..............................................................    64
 The Agreements ..........................................................    64
      Assignment of Issuing Entity Assets ................................    64
      Payments on Issuing Entity Assets; Deposits
        to Security Account ..............................................    67
      Pre-Funding Account ................................................    69
      Collection Procedures ..............................................    69
      The Surety Provider ................................................    70
      Hazard Insurance ...................................................    71
      Realization upon Defaulted Mortgage Loans ..........................    72
      Servicing and Other Compensation and Payment
        of Expenses ......................................................    75
      Evidence as to Compliance ..........................................    75
      List of Securityholders ............................................    76
      Certain Matters Regarding the Servicer
        and the Depositor ................................................    76
      Events of Default ..................................................    77
      Amendment ..........................................................    79
      Termination; Optional Termination ..................................    81
      The Trustee ........................................................    82

                                      S-3


 Certain Legal Aspects of the Mortgage Loans .............................    82
      General ............................................................    82
      Foreclosure and Repossession .......................................    83
      Rights of Redemption ...............................................    85
      Anti-Deficiency Legislation and Other Limitations
        on Lenders .......................................................    85
      Environmental Risks ................................................    86
      Due-on-sale Clauses ................................................    87
      Prepayment Charges .................................................    87
      Applicability of Usury Laws ........................................    88
      Servicemembers Civil Relief Act ....................................    88
 Material Federal Income Tax Consequences ................................    88
      General ............................................................    88
      Taxation of Debt Securities ........................................    89
      REMIC Securities ...................................................    95
      Tax Status as a Grantor Trust ......................................   103
      Final Trust Reporting Regulations ..................................   110
      Tax Characterization of the Issuing Entity
        as a Partnership .................................................   111
      Tax Consequences to Holders of the Notes ...........................   111
      Tax Consequences to Holders of the Certificates ....................   113
 State Tax Considerations ................................................   117
 ERISA Considerations ....................................................   117
      Exemptions Available to Debt Instruments ...........................   117
      Underwriter Exemption ..............................................   118
 Legal Investment ........................................................   121
 Method of Distribution ..................................................   121
 Legal Matters ...........................................................   123
 Financial Information ...................................................   123
 Rating ..................................................................   123
Index of Principal Terms .................................................   124

                                      S-4


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

                                     Summary

This summary highlights selected information from this document and does not
contain all of the information that you need to consider in making your
investment decision. To understand all of the terms of an offering of the
certificates, carefully read this prospectus supplement and the accompanying
prospectus.

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 decisions.

Issuing Entity

Residential Asset Securitization Trust 2007-A2, a common law trust formed under
the laws of the State of New York.

See "The Issuing Entity" in this prospectus supplement.

Depositor

IndyMac MBS, Inc., a Delaware corporation, and a limited purpose finance
subsidiary of IndyMac Bank, F.S.B. Its address is 155 North Lake Avenue,
Pasadena, California 91101, and its telephone number is (800) 669-2300.

See "The Depositor" in this prospectus supplement and the prospectus.

Sponsor, Seller and Servicer

IndyMac Bank, F.S.B., a federal savings bank. Its principal executive offices
are located at 888 East Walnut Street, Pasadena, California 91101, and its
telephone number is (800) 669-2300.

Trustee

Deutsche Bank National Trust Company, a national banking association. The
corporate trust office of the trustee is located (i) for purposes of certificate
transfers, at DB Services Tennessee, 648 Grassmere Park Road, Nashville,
Tennessee 37211-3658, Attention: Transfer Unit and (ii) for all other purposes,
at 1761 East St. Andrew Place, Santa Ana, California 92705, Attention: Trust
Administration IN0702, and its telephone number is (714) 247-6000.

Pooling and Servicing Agreement

The pooling and servicing agreement dated as of February 1, 2007 among the
seller, the servicer, the depositor and the trustee, under which the issuing
entity will be formed.

Cut-off Date

For any mortgage loan, the later of February 1, 2007 and the origination date of
that mortgage loan.

Closing Date

On or about February 27, 2007.

The Mortgage Loans

The mortgage pool will consist of two loan groups consisting primarily of 20-
and 30-year conventional, fixed rate mortgage loans secured by first liens on
one-to-four family residential properties.

The depositor believes that the information set forth in this prospectus
supplement regarding the mortgage loans as of the cut-off date is representative
of the characteristics of the mortgage loans that will be delivered on the
closing date. However, certain mortgage loans may prepay or may be determined
not to meet the eligibility requirements for inclusion in the final mortgage
pool. A limited number of mortgage loans may be added to or substituted for the
mortgage loans that are described in this prospectus supplement. Any addition or
substitution will not result in a material difference in the final mortgage pool
although the cut-off date information regarding the actual mortgage loans may
vary somewhat from the information regarding the mortgage loans presented in
this prospectus supplement.

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

                                      S-5


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

The depositor expects that the group 1 mortgage loans will have the following
characteristics as of the cut-off date:

Aggregate Current Principal Balance   $413,797,798.90

Weighted Average Mortgage Rate        6.365%

Range of Mortgage Rates               5.250% to 6.625%

Average Current Principal Balance     $628,872.03

Range of Outstanding Principal
   Balances                           $205,813.77 to
                                       $3,000,000.00
Weighted Average Original
   Loan-to-Value Ratio                71.24%

Weighted Average Original Term to
   Maturity                           360 months

Weighted Average FICO Credit Score    728

Weighted Average Remaining Term to
   Stated Maturity                    359 months

Geographic Concentrations in
  excess of 10%:

  California                          60.08%

The depositor expects that the group 2 mortgage loans will have the following
characteristics as of the cut-off date:

Aggregate Current Principal Balance   $269,989,867.56

Weighted Average Mortgage Rate        7.189%

Range of Mortgage Rates               6.750% to 9.125%

Average Current Principal Balance     $590,787.46

Range of Outstanding Principal
   Balances                           $86,206.44 to
                                       $2,389,000.00
Weighted Average Original
   Loan-to-Value Ratio                74.63%

Weighted Average Original Term to
   Maturity                           360 months

Weighted Average FICO Credit Score    701

Weighted Average Remaining Term to
   Stated Maturity                    359 months

Geographic Concentrations in
  excess of 10%:

  California                          34.65%

The depositor expects that the mortgage loans in the aggregate will have the
following characteristics as of the cut-off date:

Aggregate Current Principal Balance   $683,787,666.46

Weighted Average Mortgage Rate        6.690%

Range of Mortgage Rates               5.250% to 9.125%

Average Current Principal Balance     $613,262.48

Range of Outstanding Principal
   Balances                           $86,206.44 to
                                       $3,000,000.00
Weighted Average Original
   Loan-to-Value Ratio                72.58%

Weighted Average Original Term to
   Maturity                           360 months

Weighted Average FICO Credit Score    717

Weighted Average Remaining Term to
   Stated Maturity                    359 months

Geographic Concentrations in
  excess of 10%:

  California                          50.04%

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

                                      S-6


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

Description of the Certificates

The issuing entity will issue the following classes of certificates:



                             Initial Class
                              Certificate                                           Final                                Initial
                               Balance /                                          Scheduled          Modeled Final        Rating
                            Initial Notional                                     Distribution         Distribution      (Fitch/S&P)
           Class               Amount (1)                    Type                  Date (2)             Date (3)            (4)
--------------------------  ----------------       ----------------------       -------------       ----------------    -----------
Offered Certificates
1-A-1.....................     $20,000,000            Senior/NAS/Fixed          April 25, 2037      January 25, 2037      AAA/AAA
                                                      Pass-Through Rate
1-A-2.....................    $250,000,000              Senior/Fixed            April 25, 2037        July 25, 2035       AAA/AAA
                                                      Pass-Through Rate
1-A-3.....................     $40,697,676             Senior/Fixed             April 25, 2037      January 25, 2037      AAA/AAA
                                                      Pass-Through Rate
1-A-4.....................      $2,936,340              Senior/Fixed            April 25, 2037      January 25, 2037      AAA/AAA
                                                      Pass-Through Rate
1-A-5.....................     $12,507,000             Senior/NAS/Super         April 25, 2037      January 25, 2037      AAA/AAA
                                                         Senior/Fixed
                                                      Pass-Through Rate
1-A-6.....................     $49,526,000              Senior/Fixed            April 25, 2037      January 25, 2037      AAA/AAA
                                                      Pass-Through Rate
1-A-7.....................        $499,997              Senior/Fixed            April 25, 2037      January 25, 2037      AAA/AAA
                                                      Pass-Through Rate
1-A-8.....................     $12,128,343             Senior/NAS/Super         April 25, 2037      January 25, 2037      AAA/AAA
                                                        Senior/Fixed
                                                      Pass-Through Rate
1-A-9.....................        $497,657         Senior/NAS/Support/Fixed     April 25, 2037      January 25, 2037      AAA/AAA
                                                       Pass-Through Rate
2-A-1.....................     $50,263,000             Senior/NAS/Super         April 25, 2037      January 25, 2037      AAA/AAA
                                                         Senior/Fixed
                                                       Pass-Through Rate
2-A-2.....................    $202,537,000               Senior/Fixed           April 25, 2037      January 25, 2037      AAA/AAA
                                                       Pass-Through Rate
2-A-3.....................      $2,045,699               Senior/Fixed           April 25, 2037      January 25, 2037      AAA/AAA
                                                       Pass-Through Rate
2-A-4.....................     $66,511,900 (5)         Senior/Notional          April 25, 2037      January 25, 2037      AAA/AAA
                                                       Amount/Interest
                                                         Only/Fixed
                                                      Pass-Through Rate
2-A-5.....................        $900,000         Senior/NAS/Support/Fixed     April 25, 2037      January 25, 2037      AAA/AAA
                                                       Pass-Through Rate
A-X.......................    $486,363,284 (5)         Senior/ Notional         April 25, 2037      January 25, 2037      AAA/AAA
                                                       Amount/Interest
                                                        Only/Variable
                                                      Pass-Through Rate/
                                                          Component


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

                                      S-7




                             Initial Class
                              Certificate                                       Final                                Initial
                               Balance /                                      Scheduled          Modeled Final        Rating
                            Initial Notional                                 Distribution         Distribution      (Fitch/S&P)
           Class               Amount (1)                Type                  Date (2)             Date (3)            (4)
--------------------------  ----------------   ----------------------       -------------       ----------------    -----------
PO........................      $3,350,001         Senior/Principal         April 25, 2037      January 25, 2037      AAA/AAA
                                                    Only/Component
A-R.......................            $100       Senior/REMIC Residual      April 25, 2037      January 25, 2007      AAA/AAA
B-1.......................     $13,676,000       Subordinate/Variable       April 25, 2037      January 25, 2037       NR/AA
                                                         Rate
B-2.......................      $7,864,000       Subordinate/Variable       April 25, 2037      January 25, 2037        NR/A
                                                         Rate
B-3.......................      $4,103,000       Subordinate/Variable       April 25, 2037      January 25, 2037       NR/BBB
                                                         Rate
Non-Offered
  Certificates (6)

B-4.......................      $4,445,000       Subordinate/Variable Rate  April 25, 2037      January 25, 2037
B-5.......................      $3,419,000       Subordinate/Variable Rate  April 25, 2037      January 25, 2037
B-6.......................      $2,391,853       Subordinate/Variable Rate  April 25, 2037      January 25, 2037


----------
(1)   This amount is subject to a permitted variance in the aggregate of plus or
      minus 5% depending on the amount of mortgage loans actually delivered on
      the closing date.

(2)   The final scheduled distribution date is the distribution date in the
      month after the month of the latest stated maturity date of any mortgage
      loan.

(3)   The modeled final distribution date is based upon (a) an assumed rate of
      prepayments equal to 100% PPC, (b) the modeling assumptions described
      under "Description of the Certificates--Structuring Assumptions" in this
      prospectus supplement and (c) the assumption that the optional termination
      is not exercised by the servicer as described in this prospectus
      supplement under "Description of the Certificates--Termination of the
      Issuing Entity; Optional Termination."

(4)   The offered certificates will not be offered unless they are assigned the
      indicated ratings by Standard & Poor's, a division of The McGraw-Hill
      Companies, Inc. ("S&P") and Fitch, Inc. ("Fitch"). 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.

(5)   The notional amounts of the Class 2-A-4 and Class A-X Certificates will be
      calculated as described in this prospectus supplement under "Description
      of the Certificates--Notional Amount Certificates."

(6)   The Class B-4, Class B-5 and Class B-6 Certificates are not offered by
      this prospectus supplement. Any information contained in this prospectus
      supplement with respect to the Class B-4, Class B-5 and Class B-6
      Certificates is provided only to permit a better understanding of the
      offered certificates.

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

                                      S-8


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

The certificates will also have the following characteristics:



                           Related Loan  Initial Pass-Through
          Class                Group           Rate (1)         Pass-Through Rate
------------------------   ------------  --------------------   -----------------
Offered Certificates
1-A-1...................         1            6.000000%             6.000000%
1-A-2...................         1            6.000000%             6.000000%
1-A-3...................         1            6.000000%             6.000000%
1-A-4...................         1            6.000000%             6.000000%
1-A-5...................         1            6.000000%             6.000000%
1-A-6...................         1            6.000000%             6.000000%
1-A-7...................         1            6.000000%             6.000000%
1-A-8...................         1            6.000000%             6.000000%
1-A-9...................         1            6.000000%             6.000000%
2-A-1...................         2            5.850000%             5.850000%
2-A-2...................         2            6.500000%             6.500000%
2-A-3...................         2            6.500000%             6.500000%
2-A-4...................         2            0.500000%             0.500000%
2-A-5...................         2            5.850000%             5.850000%
A-X.....................      1 and 2         0.422202%            Variable (4)
PO......................      1 and 2            (5)                   (5)
A-R.....................         1            6.000000%             6.000000%
B-1.....................      1 and 2            (6)                   (6)
B-2.....................      1 and 2            (6)                   (6)
B-3.....................      1 and 2            (6)                   (6)
Non-Offered Certificates
B-4.....................      1 and 2            (6)                   (6)
B-5.....................      1 and 2            (6)                   (6)
B-6.....................      1 and 2            (6)                   (6)


                               Interest Accrual   Interest Accrual
          Class                     Period           Convention
------------------------      ------------------  ----------------
Offered Certificates
1-A-1...................      calendar month (2)     30/360 (3)
1-A-2...................      calendar month (2)     30/360 (3)
1-A-3...................      calendar month (2)     30/360 (3)
1-A-4...................      calendar month (2)     30/360 (3)
1-A-5...................      calendar month (2)     30/360 (3)
1-A-6...................      calendar month (2)     30/360 (3)
1-A-7...................      calendar month (2)     30/360 (3)
1-A-8...................      calendar month (2)     30/360 (3)
1-A-9...................      calendar month (2)     30/360 (3)
2-A-1...................      calendar month (2)     30/360 (3)
2-A-2...................      calendar month (2)     30/360 (3)
2-A-3...................      calendar month (2)     30/360 (3)
2-A-4...................      calendar month (2)     30/360 (3)
2-A-5...................      calendar month (2)     30/360 (3)
A-X.....................      calendar month (2)     30/360 (3)
PO......................             N/A                 N/A
A-R.....................      calendar month (2)     30/360 (3)
B-1.....................      calendar month (2)     30/360 (3)
B-2.....................      calendar month (2)     30/360 (3)
B-3.....................      calendar month (2)     30/360 (3)
Non-Offered Certificates
B-4.....................      calendar month (2)     30/360 (3)
B-5.....................      calendar month (2)     30/360 (3)
B-6.....................      calendar month (2)     30/360 (3)

(1)   Reflects the expected pass-through rate as of the closing date.

(2)   The interest accrual period for any distribution date will be the calendar
      month preceding that distribution date.

(3)   Interest accrues at the rate specified in this table based on a 360-day
      year that consists of twelve 30-day months.

(4)   The pass-through rate for the Class A-X Certificates for the interest
      accrual period for any distribution date will equal the weighted average
      of the pass-through rates of its components. The pass-through rate for
      each component of the Class A-X Certificates for the interest accrual
      period for any distribution date will equal the excess of the average of
      the adjusted net mortgage rate of each non-discount mortgage loan in the
      related loan group, weighted on the basis of their respective stated
      principal balances as of the first day of the related due period (after
      giving effect to principal prepayments received in the prepayment period
      ending during that due period), over the related required coupon. The
      required coupon for loan group 1 is 6.00% and the required coupon for loan
      group 2 is 6.50%.

(5)   The Class PO Certificates are not entitled to any distributions of
      interest. See "Description of the Certificates" in this prospectus
      supplement.

(6)   The pass-through rate for each class of subordinated certificates for the
      interest accrual period related to any distribution date will be a per
      annum rate equal to the sum of:

      o     6.00% multiplied by the excess of the aggregate stated principal
            balance of the group 1 mortgage loans as of the first day of the
            related due period (after giving effect to principal prepayments in
            the prepayment period ending during that due period) over the
            aggregate class certificate balance of the group 1 senior
            certificates immediately prior to that distribution date;

      o     6.50% multiplied by the excess of the aggregate stated principal
            balance of the group 2 mortgage loans as of the first day of the
            related due period (after giving effect to principal prepayments in
            the prepayment period ending during that due period) over the
            aggregate class certificate balance of the group 2 senior
            certificates immediately prior to that distribution date; and

      divided by the aggregate class certificate balance of the subordinated
      certificates immediately prior to that distribution date. See "Description
      of Certificates -- Interest" in this prospectus supplement.

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

                                      S-9


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

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:

  Senior Certificates       Class 1-A-1, Class 1-A-2, Class 1-A-3, Class 1-A-4,
                             Class 1-A-5, Class 1-A-6, Class 1-A-7, Class 1-A-8,
                                   Class 1-A-9, Class 2-A-1, Class 2-A-2,
                                   Class 2-A-3, Class 2-A-4, Class 2-A-5,
                                Class A-X Class PO and Class A-R Certificates

      Subordinated              Class B-1, Class B-2, Class B-3, Class B-4,
      Certificates                 Class B-5 and Class B-6 Certificates

    Notional Amount               Class 2-A-4 and Class A-X Certificates
      Certificates

      Super Senior                    Class 1-A-5, Class 1-A-8 and
      Certificates                      Class 2-A-1 Certificates

  Support Certificates            Class 1-A-9 and Class 2-A-5 Certificates

     Group 1 Senior         Class 1-A-1, Class 1-A-2, Class 1-A-3, Class 1-A-4,
      Certificates          Class 1-A-5, Class 1-A-6, Class 1-A-7, Class 1-A-8,
                            Class 1-A-9 and Class A-R Certificates and Class PO-1
                                       and Class A-X-1 Components

     Group 2 Senior          Class 2-A-1, Class 2-A-2, Class 2-A-3, Class 2-A-4
      Certificates             and Class 2-A-5 Certificates and Class PO-2 and
                                          Class A-X-2 Components

  Offered Certificates          Senior Certificates, Class B-1, Class B-2
                                      and Class B-3 Certificates

Record Date

The record date is the last business day of the month immediately preceding the
month of that distribution date.

Denominations

Offered Certificates other than the Class A-R Certificates:

$100,000 and multiples of $1,000.

Class A-R Certificates:

$100.

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 and, upon
request, through 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 March 26, 2007, and thereafter on the 25th day of each calendar
month, or if the 25th is not a business day, the next business day.

Interest Distributions

The related interest accrual period, interest accrual convention and
pass-through rate for each class of interest-bearing certificates is shown in
the table on page S-9.

On each distribution date, to the extent funds are available for the related
loan group, each interest-bearing class and component of certificates will be
entitled to receive:

o     interest accrued at the applicable pass-through rate during the related
      interest accrual period on the class certificate balance, notional amount
      or component notional amount, as applicable, immediately prior to that
      distribution date; plus

o     any interest remaining unpaid from prior distribution dates; minus

o     any net interest shortfalls allocated to that class or component for that
      distribution date.

The Class PO Certificates do not bear interest.

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

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

                                      S-10


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

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 servicer is required to reduce its
servicing compensation to offset this shortfall but the reduction for any
distribution date is limited to an amount equal to the product of one-twelfth of
0.125% multiplied by the pool balance as of the first day of the prior month. If
the aggregate amount of interest shortfalls resulting from prepayments on the
mortgage loans exceeds the amount of the reduction in the servicer's servicing
compensation, the interest entitlement for each related class of certificates
will be reduced proportionately by the amount of this excess.

See "Servicing of Mortgage Loans--Servicing Compensation and Payment of
Expenses" and "--Adjustment to Servicing Compensation in Connection with Certain
Prepaid Mortgage Loans" in this prospectus supplement.

Allocation of Net Interest Shortfalls

For any distribution date, the interest entitlement for each interest-bearing
class or component of certificates will be reduced by the amount of net interest
shortfalls experienced by the mortgage loans in the related loan group or loan
groups resulting from:

o     prepayments on the mortgage loans; and

o     reductions in the mortgage rate on the related mortgage loans due to
      Servicemembers Civil Relief Act reductions or debt service reductions.

Net interest shortfalls for a loan group on any distribution date will be
allocated pro rata among all related interest-bearing classes and components of
certificates, based on their respective interest entitlements (or, in the case
of the subordinated certificates, based on interest accrued on the share of the
applicable assumed balance of each class of subordinated certificates, as
described more fully under "Description of the Certificates--Interest"), in each
case before taking into account any reduction in the interest entitlements due
to shortfalls.

If on any distribution date, available funds for a loan group are not sufficient
to make a full distribution of the interest entitlement on the related classes
or components of certificates in the order described below under "-- Priority of
Distributions Among Certificates," interest will be distributed on each class or
component of related certificates of equal priority, pro rata, based on their
respective entitlements. Any unpaid interest amount will be carried forward and
added to the amount holders of each affected class or component of certificates
will be entitled to receive on the next distribution date.

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

Principal Distributions

On each distribution date, certificateholders will only receive a distribution
of principal on their certificates if cash is available on that date for the
payment of principal according to the principal distribution rules described in
this prospectus supplement under "Description of the Certificates--Principal."

Principal collections from the mortgage loans in a loan group will be
distributed to the related classes of senior certificates as described in the
next sentence, and any remainder will be allocated to the subordinated
certificates. Principal distributed to the senior certificates in a senior
certificate group will be allocated between the related Class PO component, on
the one hand, and the other classes of senior certificates in that senior
certificate group (other than the notional amount certificates) and the
subordinated certificates, on the other hand, in each case based on the
applicable PO percentage and the applicable non-PO percentage, respectively, of
those amounts. The non-PO percentage with respect to any mortgage loan in a loan
group with a net mortgage rate less than the related required coupon will be
equal to the net mortgage rate of the mortgage loans in that loan group divided
by the related required coupon and the PO percentage of that mortgage loan will
be equal to 100% minus that non-PO percentage. With respect to a mortgage loan
in a loan group with a net mortgage rate equal to or greater than the required
coupon, the non-PO percentage will be 100% and the PO percentage will be 0%. The
applicable non-PO percentage of amounts in respect of principal will be
allocated to the classes of senior certificates in a senior certificate group
(other than the notional amount certificates and the related component of Class
PO certificates) as set forth below, and any remainder of that non-PO amount
will be allocated to the classes of subordinated certificates:

o     in the case of scheduled principal collections on the mortgage loans in a
      loan group, the amount allocated to the related senior certificates is
      based on the ratio of the aggregate class certificate balance of those
      senior certificates to the aggregate stated principal balance of the
      mortgage loans in that loan group and

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

                                      S-11


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

o     in the case of principal prepayments on the mortgage loans in a loan
      group, the amount allocated to the related senior certificates is based on
      a fixed percentage (equal to 100%) until the fifth anniversary of the
      first distribution date, at which time the percentage may step down as
      described in this prospectus supplement.

The required coupon for loan group 1 and loan group 2 will be 6.00% and 6.50%,
respectively.

General

Notwithstanding the foregoing, no decrease in the senior prepayment percentage
of either loan group will occur unless certain conditions related to the loss
and delinquency performance of the mortgage loans are satisfied with respect to
each loan group

Principal will be distributed on each class of certificates entitled to receive
principal payments as described below under "--Amounts Available for
Distributions on the Certificates."

The notional amount certificates and the notional amount components do not have
a class certificate balance or component principal balance and are not entitled
to any distributions of principal but will bear interest during each interest
accrual period on their respective notional amounts. See "Description of the
Certificates -- Principal" in this prospectus supplement.

Amounts Available for Distributions on the Certificates

General

The amount available for distributions on the certificates on any distribution
date will be calculated on a loan group by loan group basis and generally
consists of the following with respect to the mortgage loans in a loan group
(after the fees and expenses described under the next heading are subtracted):

o     all scheduled installments of interest and principal due and received on
      the mortgage loans in that loan group in the applicable period, together
      with any advances with respect to them;

o     all proceeds of any primary mortgage guaranty insurance policies and any
      other insurance policies with respect to the mortgage loans in that loan
      group, to the extent the proceeds are not applied to the restoration of
      the related mortgaged property or released to the borrower in accordance
      with the servicer's normal servicing procedures;

o     net proceeds from the liquidation of defaulted mortgage loans in that loan
      group, by foreclosure or otherwise during the calendar month preceding the
      month of the distribution date (to the extent the amounts do not exceed
      the unpaid principal balance of the mortgage loans, plus accrued
      interest);

o     subsequent recoveries with respect to mortgage loans in that loan group;

o     partial or full prepayments with respect to the mortgage loans in that
      loan group collected during the applicable period, together with interest
      paid in connection with the prepayment, other than certain excess amounts
      payable to the servicer and the compensating interest; and

o     any substitution adjustment amounts or purchase price in respect of a
      deleted mortgage loan or a mortgage loan in that loan group purchased by
      the seller or the servicer during the applicable 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 servicing fee and additional servicing compensation (as described in
      this prospectus supplement under "Servicing of Mortgage Loans--Servicing
      Compensation and Payment of Expenses" and "Description of the Certificates
      --Priority of Distributions Among Certificates") due to the servicer;

o     the trustee fee due to the trustee;

o     lender-paid mortgage insurance premiums, if any;

o     the amounts in reimbursement for advances previously made and other
      amounts as to which the servicer and the trustee are entitled to be
      reimbursed from the certificate account pursuant to the pooling and
      servicing agreement;

o     all prepayment charges; and

o     all other amounts for which the depositor, the seller or the servicer is
      entitled to be reimbursed.

Any amounts paid from amounts collected with respect to the mortgage loans will
reduce the amount

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

                                      S-12


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

that could have been distributed to the certificateholders.

Servicing Compensation

Servicing Fee

The servicer will be paid a monthly fee (referred to as the servicing fee) with
respect to each mortgage loan. The servicing fee for a mortgage loan will equal
one-twelfth of the stated principal balance of such mortgage loan multiplied by
the servicing fee rate. The servicing fee rate for each mortgage loan will equal
either 0.20% or 0.25% per annum. As of the cut-off date, the weighted average
servicing fee rates for the mortgage loans in loan group 1 and loan group 2 were
0.2170% and 0.2105% per annum, respectively. The amount of the servicing fee is
subject to adjustment with respect to certain prepaid mortgage loans, as
described under "Servicing of Mortgage Loans--Adjustment to Servicing
Compensation in Connection with Certain Prepaid Mortgage Loans" in this
prospectus supplement.

Additional Servicing Compensation

The servicer is also entitled to receive, as additional servicing compensation,
all late payment fees, assumption fees and other similar charges (including
prepayment charges), all investment income earned on amounts on deposit in
certain of the issuing entity's accounts and excess proceeds with respect to
mortgage loans as described under "Servicing of the Mortgage Loans -- Servicing
Compensation and Payment of Expenses."

Source and Priority of Distributions

The servicing fee and the additional servicing compensation described above will
be paid to the 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" and "Description of the Certificates --Priority of Distributions Among
Certificates" in this prospectus supplement.

Priority of Distributions Among Certificates

In general, on any distribution date, available funds for each loan group will
be distributed in the following priority:

o     to interest on each interest-bearing class and component of senior
      certificates related to that loan group, pro rata, based on their
      respective interest distribution amounts;

o     to principal of the classes of senior certificates related to that loan
      group then entitled to receive distributions of principal, in the order
      and subject to the priorities set forth below;

o     to any deferred amounts payable on the related Class PO Component, but
      only from amounts that would otherwise be distributed on that distribution
      date as principal of the classes of subordinated certificates;

o     to interest on and then principal of the classes of subordinated
      certificates, in the order of their seniority, beginning with the Class
      B-1 Certificates, in each case subject to the limitations set forth below;
      and

o     from any remaining available amounts to the Class A-R Certificates.

Priority of Distributions--Group 1 Senior Certificates

On each distribution date, the non-PO formula principal amount related to loan
group 1, up to the amount of the senior principal distribution amount for loan
group 1, will be distributed as principal of the following classes of group 1
senior certificates, in the following priority:

(1) to the Class A-R Certificates, until its class certificate balance is
reduced to zero; and

(2) concurrently:

      (A) 83.9161211984023% of that amount in the following priority:

            (i) concurrently, to the Class 1-A-1, Class 1-A-8 and Class 1-A-9
      Certificates, pro rata, based on their then-current class certificate
      balances, the Group 1A Priority Amount, until their respective class
      certificate balances are reduced to zero;

            (ii) up to $2,085,831 for each distribution date concurrently:

                        (a) 97.00% to the Class 1-A-2 Certificates, until its
                  class certificate balance is reduced to zero; and

                        (b) 3.00% to the Class 1-A-3 Certificates, until its
                  class certificate balance is reduced to zero;

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

                                      S-13


                  (iii) sequentially, to the Class 1-A-3 and Class 1-A-2
            Certificates, in that order, until their respective class
            certificate balances are reduced to zero;

                  (iv) to the Class 1-A-4 Certificates until its class
            certificate balance is reduced to zero; and

                  (v) concurrently, to the Class 1-A-1, Class 1-A-8 and Class
            1-A-9 Certificates, pro rata, based on their then-current class
            certificate balances, without regard to the Group 1A Priority
            Amount, until their respective class certificate balances are
            reduced to zero; and

      (B) 16.0838788016% of that amount in the following priority:

                  (i) to the Class 1-A-5 Certificates the Group 1B Priority
            Amount until its class certificate balance is reduced to zero;

                  (ii) sequentially, to the Class 1-A-6 and Class 1-A-7
            Certificates, in that order, until their respective class
            certificate balances are reduced to zero; and

                  (iii) to the Class 1-A-5 Certificates, without regard to the
            Group 1B Priority Amount, until its class certificate balance is
            reduced to zero.

Priority of Distributions--Group 2 Senior Certificates

On each distribution date, the non-PO formula principal amount related to loan
group 2, up to the amount of the senior principal distribution amount for loan
group 2, will be distributed as principal of the following classes of group 2
senior certificates, in the following priority:

(1) concurrently, to the Class 2-A-1 and Class 2-A-5 Certificates, pro rata,
based on their then-current Class Certificate Balances, the Group 2 Priority
Amount, until their respective class certificate balances are reduced to zero;

(2) sequentially, to the Class 2-A-2 and Class 2-A-3 Certificates, in that
order, until their respective class certificate balances are reduced to zero;
and

(3) concurrently, to the Class 2-A-1 and Class 2-A-5 Certificates, pro rata,
based on their then-current Class Certificate Balances, without regard to the
Group 2 Priority Amount, until their respective class certificate balances are
reduced to zero.

Class PO Certificates

On each distribution date, principal will be distributed to each Class PO
Component in an amount equal to the lesser of (x) the PO formula principal
amount for the related loan group for that distribution date and (y) the product
of:

o     available funds for the related loan group remaining after distribution of
      interest on the related senior certificates; and

o     a fraction, the numerator of which is the related PO formula principal
      amount and the denominator of which is the sum of that PO formula
      principal amount and the related senior principal distribution amount.

Subordinated Certificates; Applicable Credit Support Percentage Trigger

On each distribution date, with respect to both loan groups to the extent of
available funds available therefor, the non-PO formula principal amount for each
loan group, up to the subordinated principal distribution amount for that loan
group, will be distributed as principal of the classes of subordinated
certificates in order of seniority, beginning with the Class B-1 Certificates,
until their respective class certificate balances are reduced to zero. Each
class of subordinated certificates will be entitled to receive its pro rata
share of the subordinated principal distribution amount from all loan groups
(based on its class certificate balance); provided, that if the applicable
credit support percentage of a class or classes (other than the class of
subordinated certificates then outstanding with the highest priority of
distribution) is less than the original applicable credit support percentage for
that class or classes (referred to as "restricted classes"), the restricted
classes will not receive distributions of partial principal prepayments and
prepayments in full from either loan group. Instead, the portion of the partial
principal prepayments and prepayments in full otherwise distributable to the
restricted classes will be allocated to those classes of subordinated
certificates that are not restricted classes, pro rata, based upon their
respective class certificate balances and distributed in the sequential order
described above.

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

                                      S-14


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

Allocation of Realized Losses

On each distribution date, the amount of any realized losses on the mortgage
loans in a loan group will be allocated as follows:

o     the applicable non-PO percentage of any realized losses on the mortgage
      loans in a loan group will be allocated in the following order of
      priority:

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

      o     second, concurrently to the senior certificates related to the
            applicable loan group (other than the notional amount certificates
            and the Class PO Certificates), pro rata, based upon their
            respective class certificate balances, except that the non-PO
            percentage of any realized losses on the mortgage loans that would
            otherwise be allocated to the super senior certificates will instead
            be allocated to the related support certificates, until their
            respective class certificate balances are reduced to zero; and

o     the applicable PO percentage of any realized losses on a discount mortgage
      loan in a loan group will be allocated to the related Class PO Component;
      provided, however, that on or before the senior credit support depletion
      date, (i) those realized losses will be treated as Class PO Deferred
      Amounts and will be paid on the applicable Class PO Component (to the
      extent funds are available from amounts otherwise allocable to the
      subordinated principal distribution amount for a loan group) before
      distributions of principal on the subordinated certificates and (ii) the
      class certificate balance of the class of subordinated certificates then
      outstanding with the lowest distribution priority will be reduced by the
      amount of any payments of Class PO Deferred Amounts.

Credit Enhancement

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

Subordination

The senior certificates will have a distribution priority over the subordinated
certificates. Among the subordinated certificates offered by this prospectus
supplement, each class of subordinated certificates will have a distribution
priority over the class or classes of subordinated certificates with a higher
numerical designation, if any.

Allocation of Losses

Subordination is designed to provide the holders of certificates with 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 in a loan
group first, to the subordinated certificates, beginning with the class of
subordinated certificates then outstanding with the lowest priority of
distribution, and second to the related senior certificates (other than the
notional amount certificates) in accordance with the priorities set forth above
under "-- Allocation of Realized Losses."

Additionally, as described above under "Priority of Distributions--Principal,"
unless certain conditions are met, the senior prepayment percentage related to a
loan group (which determines the allocation of unscheduled payments of principal
between the related senior certificates and the subordinated certificates) will
exceed the related senior percentage (which represents such senior certificates'
pro rata percentage interest in the mortgage loans in that loan group). This
disproportionate allocation of unscheduled payments of principal will have the
effect of accelerating the amortization of the senior certificates that receive
these unscheduled payments of principal while, in the absence of realized
losses, increasing the interest in the principal balance evidenced by the
subordinated certificates. Increasing the respective interest of the
subordinated certificates relative to that of the senior certificates is
intended to preserve the availability of the subordination provided by the
subordinated certificates.

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

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

                                      S-15


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

Cross-Collateralization

In certain limited circumstances, principal and interest collected from one of
the loan groups may be used to pay principal or interest, or both, to the
certificates unrelated to that loan group.

See "Description of the Certificates -- Cross-Collateralization" in this
prospectus supplement.

Advances

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

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

Required Repurchases, Substitutions or Purchases of Mortgage Loans

The seller will make certain representations and warranties relating to the
mortgage loans pursuant to the pooling and servicing agreement. If with respect
to any mortgage loan any of the representations and warranties are breached in
any material respect as of the date made, or an uncured material document defect
exists, the seller will be obligated to repurchase or substitute for the
mortgage loan as further described in this prospectus supplement under "The
Seller--Representations by Seller; Repurchases, etc." and "The Mortgage
Pool--Assignment of the Mortgage Loans."

The servicer is permitted to modify any mortgage loan in lieu of refinancing at
the request of the related mortgagor, provided that the servicer purchases the
mortgage loan from the issuing entity immediately preceding the modification. In
addition, under limited circumstances, the servicer will repurchase certain
mortgage loans that experience an early payment default (default in the first
three months following origination). See "Servicing of Mortgage Loans--Certain
Modifications and Refinancings" and "Risk Factors--Risks Related To Newly
Originated Mortgage Loans and Servicer's Repurchase Obligation Related to Early
Payment Default" in this prospectus supplement.

Optional Termination

The servicer may purchase all of the remaining assets of the issuing entity and
retire all outstanding classes of certificates on or after the distribution date
on which the aggregate stated principal balance of the mortgage loans and real
estate owned by the issuing entity declines below 10% of the aggregate stated
principal balance of the mortgage loans as of the cut-off date.

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

Tax Status

For federal income tax purposes, the issuing entity will consist of one or more
REMICs: one or more underlying REMICs (if any) and the master REMIC. The assets
of the lowest underlying REMIC in this tiered structure (or the master REMIC if
there are no 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 several classes of certificates, which, other than the Class A-R
Certificates, will represent the regular interests in the master REMIC. 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.

ERISA Considerations

The offered certificates (other than Class A-X and Class A-R Certificates) may
be purchased by a pension or other benefit 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 benefit plan, so long as certain conditions are met.

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

Legal Investment

The senior certificates and the Class B-1 Certificates will be "mortgage related
securities" for purposes of the Secondary Mortgage Market Enhancement Act of
1984 as long as they are rated in one of the two highest rating categories by at
least one nationally recognized statistical rating organization. None of the
other classes of offered certificates will be "mortgage related securities" for
purposes of the Secondary Mortgage Market Enhancement Act of 1984.

See "Legal Investment" in the prospectus.

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

                                      S-16


                         Summary of Transaction Parties

--------------------                        --------------------
 Sponsor, Seller and      Mortgage Loans          Depositor
     Servicer       ----------------------->  IndyMac MBS, Inc.
IndyMac Bank, F.S.B.                        --------------------
--------------------\                                 |
                     \                                |
                      \                               |
                       \                              |
                        \    Mortgage                 |
                         \   Loan                     |
                          \  Servicing                |     Mortgage Loans
                           \                          |
                            \                         |
                             \                        |
                              \                       |
                               \                      |
                                \                     |
                                 \                    |
                                  \                   |
                                   \                  |
                                   V                  V
                                      --------------------------------
                                               Issuing Entity
                                      Residential Asset Securitization
                                               Trust 2007-A2

                                                  Trustee
                                           Deutsche Bank National
                                               Trust Company
                                      --------------------------------
                                                      |
                                                      |
                                                      |
                                                      |     Distributions
                                                      |
                                                      |
                                                      V
                                             ------------------
                                             Certificateholders
                                             ------------------

                                      S-17


                                  Risk Factors

      The following information, which you should carefully consider, identifies
significant sources of risk associated with an investment in the certificates.
You should also carefully consider the information under "Risk Factors"
beginning on page 5 in the prospectus.

Your Yield Will Be Affected
      by How Borrowers Repay
      Their Mortgage Loans ....    Borrowers may, at their option, prepay their
                                   mortgage loans in whole or in part at any
                                   time. We cannot predict the rate at which
                                   borrowers will repay their mortgage loans. A
                                   prepayment of a mortgage loan will result in
                                   a prepayment on the certificates. The issuing
                                   entity's prepayment experience 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  applicability of prepayment charges, and

                                   o  homeowner mobility.

                                   The rate and timing of prepayments of the
                                   mortgage loans will affect the yields to
                                   maturity and weighted average lives of the
                                   certificates.

                                   Any reinvestment risks from faster or slower
                                   prepayments of the mortgage loans will be
                                   borne entirely by the holders of the
                                   certificates.

                                   o  If you purchase principal only
                                      certificates or you purchase your
                                      certificates at a discount and principal
                                      is repaid slower than you anticipate, then
                                      your yield may be lower than you
                                      anticipate.

                                   o  If you purchase notional amount
                                      certificates or you purchase your
                                      certificates at a premium and principal is
                                      repaid faster than you anticipate, then
                                      your yield may be lower than you
                                      anticipate.

                                   o  If you purchase notional amount
                                      certificates and principal is repaid
                                      faster than you anticipate, then you may
                                      not fully recover your initial investment.

                                   See "Yield, Prepayment and Maturity
                                   Considerations" for a description of factors
                                   that may influence the rate and timing of
                                   prepayments on the mortgage loans.

                                      S-18


Your Yield Will Be Affected
      by the Interest- Only
      Feature of Some of the
      Mortgage Loans ..........    Approximately 49.24% and 54.28% of the group
                                   1 mortgage loans and group 2 mortgage loans,
                                   respectively, in each case by aggregate
                                   stated principal balance of the mortgage
                                   loans in the related loan group as of the
                                   cut-off date, require monthly payments of
                                   only accrued interest for a substantial
                                   period of time after origination. During the
                                   interest-only period, less principal will be
                                   available for distribution to
                                   certificateholders than otherwise would be
                                   the case. In addition, these loans may have a
                                   higher risk of default after the
                                   interest-only period due to the larger
                                   outstanding balance and the increased monthly
                                   payment necessary to amortize fully the
                                   mortgage loan.

                                   During the interest-only period, these
                                   mortgage loans may be less likely to prepay
                                   since the perceived benefits from refinancing
                                   may be less than if the mortgage loans were
                                   fully amortizing. As the interest-only period
                                   approaches its end, however, these mortgage
                                   loans may be more likely to be refinanced in
                                   order to avoid higher monthly payments
                                   necessary to fully amortize the mortgage
                                   loans.

                                   Investors should consider the fact that
                                   interest-only loans reduce the monthly
                                   payment required by borrowers during the
                                   interest-only period and consequently the
                                   monthly housing expense used to qualify
                                   borrowers. As a result, interest-only loans
                                   may allow some borrowers to qualify for a
                                   mortgage loan who would not otherwise qualify
                                   for a fully-amortizing loan or may allow them
                                   to qualify for a larger mortgage loan than
                                   otherwise would be the case.

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 in the related loan group, in the
                                      case of the interest-bearing senior
                                      certificates and principal only
                                      components, and in both loan groups, in
                                      the case of the subordinated certificates,

                                   o  how the classes of certificates receive
                                      distributions of principal,

                                   o  whether the servicer exercises its right,
                                      in its sole discretion, to terminate the
                                      issuing entity,

                                   o  the rate and timing of payment defaults
                                      and losses on the mortgage loans in the
                                      related loan group, in the case of the
                                      interest-bearing senior certificates and
                                      principal only components, and in both
                                      loan groups, in the case of the
                                      subordinated certificates, and

                                      S-19


                                   o  repurchases of mortgage loans in the
                                      related loan group, in the case of the
                                      interest-bearing senior certificates and
                                      principal only components, and in both
                                      loan groups, in the case of the
                                      subordinated certificates, for material
                                      breaches of representations and warranties
                                      or due to certain modifications of the
                                      mortgage loan in lieu of refinancing.

                                   Because distributions on the certificates are
                                   dependent upon the payments on the related
                                   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--Distributions," and
                                   "--Termination of the Issuing Entity;
                                   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--Representations by Seller; Repurchases,
                                   etc." and "Servicing of the Mortgage
                                   Loans--Certain Modifications and
                                   Refinancings" in this prospectus supplement
                                   for more information regarding the repurchase
                                   of mortgage loans.

Modification of Mortgage Loans
      By the Servicer May
      Adversely Affect Your
      Yield ...................    The servicer has the right to modify any
                                   mortgage loan in lieu of refinancing if it
                                   purchases the mortgage loan from the issuing
                                   entity. Modifications may include, but are
                                   not limited to, rate reductions. The servicer
                                   actively attempts to identify borrowers who
                                   may refinance and informs them of the
                                   alternative of a modification. Generally
                                   borrowers informed of this option choose it.
                                   The proceeds of any such repurchases are
                                   treated as prepayments in full of the
                                   applicable mortgage loans and will have the
                                   same effect on the yields on the certificates
                                   as prepayments in full. See "Servicing of the
                                   Mortgage Loans--Certain Modifications and
                                   Refinancings" in this prospectus supplement.

Credit Enhancement May Not Be
      Sufficient to Protect
      Senior Certificates from
      Losses ..................    The subordination features of the issuing
                                   entity are intended to enhance the likelihood
                                   that senior certificateholders will receive
                                   regular distributions of interest and
                                   principal, as applicable.

                                   Subordination. Credit enhancement will be
                                   provided for the certificates, first, by the
                                   right of the holders of certificates with a
                                   higher distribution priority to receive
                                   distributions of principal before the classes
                                   subordinated to them and, second, by the
                                   allocation of realized losses, other than
                                   excess losses, on the mortgage loans to the
                                   subordinated certificates in the reverse
                                   order of their priority of distribution. This
                                   form of credit enhancement uses collections
                                   on the mortgage loans otherwise distributable
                                   to holders of classes of subordinated
                                   certificates to distribute amounts due on
                                   more senior classes. Collections otherwise
                                   distributable to the classes of

                                      S-20


                                   subordinated certificates comprise the sole
                                   source of funds from which this type of
                                   credit enhancement is provided.

                                   Allocation of Losses. Except as described
                                   below, realized losses are allocated to the
                                   subordinated certificates in the reverse
                                   order of their priority of distribution,
                                   beginning with the class of subordinated
                                   certificates then outstanding with the lowest
                                   priority of distribution, until the class
                                   certificate balance of that class has been
                                   reduced to zero. Subsequent realized losses
                                   will be allocated to the next most junior
                                   class of subordinated certificates,
                                   sequentially, until the class certificate
                                   balance of each succeeding class has been
                                   reduced to zero. Accordingly, if the class
                                   certificate balance of each class of
                                   subordinated certificates were to be reduced
                                   to zero, delinquencies and defaults on the
                                   mortgage loans would reduce the amount of
                                   funds available for monthly distributions to
                                   holders of the classes of senior
                                   certificates. Realized losses on the mortgage
                                   loans allocable to the senior certificates
                                   will be allocated in accordance with the
                                   priorities set forth in this prospectus
                                   supplement under "Description of the
                                   Certificates--Allocation of Losses."
                                   Investors in the classes of super senior
                                   certificates should note that the initial
                                   class certificate balance of the applicable
                                   class of senior support certificates is
                                   substantially smaller than the initial class
                                   certificate balances of the related class or
                                   classes of super senior certificates and,
                                   consequently, the classes of senior support
                                   certificates will be able to absorb only a
                                   limited amount of realized losses otherwise
                                   allocable to the related class or classes of
                                   super senior certificates. Furthermore, the
                                   classes of subordinated certificates will
                                   provide only limited protection against some
                                   categories of losses on the mortgage loans
                                   such as special hazard losses, bankruptcy
                                   losses and fraud losses in excess of the
                                   amounts specified in this prospectus
                                   supplement. Any losses in excess of those
                                   amounts will be allocated proportionately to
                                   each class of certificates (other than the
                                   notional amount certificates), even if the
                                   principal balance of each class of
                                   subordinated certificates has not been
                                   reduced to zero. Unlike realized losses, any
                                   excess losses on the mortgage loans will be
                                   allocated proportionately among all classes
                                   of certificates (other than the notional
                                   amount certificates), including the super
                                   senior classes of certificates, without any
                                   reallocation of such excess losses to a
                                   related support class of certificates..

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

High Balance Mortgage Loans
      Present Greater Risk ....    As of the cut off date, 23 of the group 1
                                   mortgage loans constituting approximately
                                   7.08% of the aggregate stated principal
                                   balance of the group 1 mortgage loans and
                                   nine of the group 2 mortgage loans
                                   constituting approximately 4.10% of the
                                   aggregate stated principal balance of the
                                   group 2 mortgage loans, had principal
                                   balances greater than $1,000,000 and less
                                   than or equal to $1,500,000. As of the cut

                                      S-21


                                   off date, four of the group 1 mortgage loans
                                   constituting approximately 1.81% of the
                                   aggregate stated principal balance of the
                                   group 1 mortgage loans and two of the group 2
                                   mortgage loans constituting approximately
                                   1.39% of the aggregate stated principal
                                   balance of the group 2 mortgage loans, had
                                   principal balances greater than $1,500,000
                                   and less than or equal to $2,000,000. As of
                                   the cut off date, one of the group 1 mortgage
                                   loans constituting approximately 0.72% of the
                                   aggregate stated principal balance of the
                                   group 1 mortgage loans and one of the group 2
                                   mortgage loans constituting approximately
                                   0.88% of the aggregate stated principal
                                   balance of the group 2 mortgage loans, had
                                   principal balances greater than $2,000,000
                                   and less than or equal to $3,000,000. You
                                   should consider the risk that the loss,
                                   delinquency and prepayment experience on
                                   these high balance mortgage loans may have a
                                   disproportionate effect on the group 1
                                   mortgage loans, the group 2 mortgage loans
                                   and the pool of mortgage loans.

Second Liens on Some of the
      Mortgaged Properties May
      Adversely Affect You ....    With respect to approximately 33.86% and
                                   48.22% of the group 1 mortgage loans and
                                   group 2 mortgage loans, respectively, in each
                                   case by aggregate stated principal balance of
                                   the mortgage loans in the related loan group
                                   as of the cut-off date, at the time of
                                   origination of the first lien mortgage loan,
                                   the originator of the mortgage loan also
                                   originated a second lien mortgage loan that
                                   will not be included in the issuing entity
                                   and is not reflected in the loan-to-value
                                   ratio tables included in this prospectus
                                   supplement. The weighted average
                                   loan-to-value ratios of such group 1 mortgage
                                   loans and group 2 mortgage loans are
                                   approximately 73.87% and 76.86%,
                                   respectively, and the weighted average
                                   combined loan-to-value ratios (including the
                                   second lien) are approximately 87.87% and
                                   92.93%, respectively. With respect to such
                                   mortgage loans, foreclosure frequency may be
                                   increased relative to mortgage loans that
                                   were originated without a simultaneous second
                                   lien because mortgagors have less equity in
                                   the mortgaged property. You should also note
                                   that any mortgagor may obtain secondary
                                   financing at any time subsequent to the date
                                   of origination of its mortgage loan from the
                                   originator of its mortgage loan or from any
                                   other lender.

Certain Interest Shortfalls
      Will Be Allocated to the
      Certificates ............    Your certificates may be subject to certain
                                   shortfalls in interest collections arising
                                   from the application of the Servicemembers
                                   Civil Relief Act and similar state and local
                                   laws (referred to in this prospectus
                                   supplement 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 mortgage loan. The
                                   Relief Act provides generally that these
                                   borrowers may not be charged interest on a
                                   mortgage 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

                                      S-22


                                   future time, will not be advanced by the
                                   servicer, and will reduce accrued interest on
                                   each class of certificates on a pro rata
                                   basis. In addition, the Relief Act imposes
                                   certain limitations that would impair the
                                   servicer's ability to foreclose on an
                                   affected mortgage loan during the borrower's
                                   period of active service 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 that would be borne by you. See "Risk
                                   Factors - Impact of World Events" in the
                                   prospectus.

                                   Your certificates also may be subject to
                                   other shortfalls in collections of interest
                                   as described in this prospectus supplement
                                   under "Description of the Certificates
                                   -Interest."

Certain Mortgage Loans Do Not
      Yet Have A Payment Due ..    Approximately 10.06% and 8.84% of the group 1
                                   mortgage loans and group 2 mortgage loans,
                                   respectively, in each case by aggregate
                                   stated principal balance of the mortgage
                                   loans in the related loan group as of the
                                   cut-off date, have an initial payment date
                                   after the due date in the month of the first
                                   distribution date. IndyMac Bank, F.S.B. will
                                   deposit an amount equal to one month's
                                   interest on these loans into the distribution
                                   account prior to the first distribution date.
                                   As a result, there will be no principal paid
                                   with respect to these loans on the first
                                   distribution date. In addition, if IndyMac
                                   Bank, F.S.B. were unable or unwilling to
                                   deposit such amount, there would not be
                                   enough interest collections to distribute the
                                   required amount of interest on the
                                   certificates.

Risks Related to Newly
      Originated Mortgage
      Loans and Servicer's
      Repurchase Obligation
      Related to Early Payment
      Default .................    Investors should note that the majority of
                                   the mortgage loans included in the issuing
                                   entity have been originated within the twelve
                                   months prior to their sale to the issuing
                                   entity. As a result, the issuing entity may
                                   experience higher rates of default than if
                                   the mortgage loans had been outstanding for a
                                   longer period of time. In addition, the
                                   servicer will be obligated to repurchase
                                   certain mortgage loans that experience an
                                   early payment default. The proceeds of any
                                   such repurchases will be treated as
                                   prepayments in full of the applicable
                                   mortgage loans and will have the same effect
                                   on the yield of the senior certificates as
                                   prepayments in full. Investors in the senior
                                   certificates should note that the exercise of
                                   such obligation may be inconsistent with, and
                                   adverse to the interests of the holders of
                                   the senior certificates, and the servicer has
                                   no obligation or duty to consider the
                                   interests of the senior certificates in
                                   connection with the exercise or nonexercise
                                   of such obligation. Furthermore, the
                                   existence of this obligation, regardless of
                                   whether exercised, may adversely affect the

                                      S-23


                                   liquidity of the senior certificates relative
                                   to other mortgage-backed securities backed by
                                   comparable mortgage loans and with comparable
                                   distribution priorities and ratings.

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 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 in the
                                      related loan group, in the case of the
                                      interest-bearing senior certificates and
                                      principal only components, and in both
                                      loan groups, in the case of the
                                      subordinated certificates;

                                   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 on the mortgage loans in the
                                      related loan group, in the case of the
                                      interest-bearing senior certificates and
                                      principal only components, and in both
                                      loan groups, in the case of the
                                      subordinated certificates, 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; or

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

Individuals and Certain
      Entities Should Not
      Invest in the Class A-R
      Certificates ............    The fees and non-interest expenses of a REMIC
                                   will be allocated pro rata to the Class A-R
                                   Certificates. Individuals, however, will only
                                   be able to deduct these expenses as
                                   miscellaneous itemized deductions, which are
                                   subject to numerous restrictions and
                                   limitations under the Internal Revenue Code
                                   of 1986, as amended. Therefore, the Class A-R
                                   Certificates generally are not appropriate
                                   investments for individuals, estates, trusts
                                   beneficially owned by any individual or
                                   estates and pass-through entities having any
                                   individual, estate or trust as a shareholder,
                                   member or partner.

                                      S-24


Geographic Concentration
      Increases Risk That
      Certificate Yields Could
      Be Impaired .............    The tables under "The Mortgage Pool--General"
                                   in this prospectus supplement set forth the
                                   geographic concentration of the mortgaged
                                   properties for the loan groups and in the
                                   aggregate, including the percentage by
                                   aggregate stated principal balance of the
                                   related mortgage loans as of the cut-off date
                                   that are secured by property located in
                                   California. Property in California may be
                                   more susceptible than homes located in other
                                   parts of the country to some types of
                                   uninsured hazards, such as earthquakes,
                                   floods, mudslides and other natural
                                   disasters. 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 on time;

                                   o  Declines in the residential real estate
                                      market in states with significant
                                      concentrations may reduce the values of
                                      properties located in those states, which
                                      would result in an increase in the
                                      loan-to-value ratio. Mortgage loans with
                                      higher loan-to-value ratios may present a
                                      greater risk of default and, in the case
                                      of defaults, an increase in the severity
                                      of losses on the related mortgage loans;
                                      and

                                   o  Any increase in the market value of
                                      properties located in states with
                                      significant concentrations would reduce
                                      the 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 servicing fee might
                                   affect the ability to find a replacement
                                   servicer. Although the trustee is required to
                                   replace the servicer if the servicer is
                                   terminated or resigns, if the trustee is
                                   unwilling (including for example because the
                                   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 servicer. Because the servicing
                                   fee is structured as a percentage of the
                                   stated principal balance of each mortgage
                                   loan, it may be difficult to replace the
                                   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
                                   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
                                   servicer is not retained within a reasonable
                                   amount of time.

                                      S-25


Relocation of the Servicer's
      Default Management
      Services May Result in
      Increased Delinquencies
      and Defaults Which May
      Adversely Affect the
      Yield on the
      Certificates ............    The servicer intends to relocate its default
                                   management, collections, and loss mitigation
                                   functions from Pasadena, California to Texas
                                   in 2007. Fewer than 70 of the servicer's
                                   employees will be affected by this
                                   relocation. Although certain of these
                                   employees will be offered the opportunity to
                                   relocate, the servicer expects that a
                                   substantial number of these employees may
                                   elect not to do so.

                                   If a substantial number of employees in
                                   default management services resign prior to
                                   the relocation or elect not to relocate, the
                                   servicer's collection and default management
                                   processes may be disrupted which may result
                                   in an increase in delinquencies and defaults.
                                   Although any increase in delinquencies and
                                   defaults is expected to be temporary, there
                                   can be no assurance as to the duration or
                                   severity of any disruption in the collection
                                   and default management processes or as to the
                                   resulting effects on the yield of the
                                   certificates. In an attempt to mitigate any
                                   disruptions in these processes, the servicer
                                   will continue to provide default management
                                   services from Pasadena until the relocation
                                   of those services to Texas has been completed
                                   and the default management, collections, and
                                   loss mitigation functions in Texas are fully
                                   operational.

Recent Developments in the
      Residential Mortgage
      Market May Adversely
      Affect the Performance
      and Market Value of Your
      Securities the Yield on
      the Certificates ........    Recently, the residential mortgage market in
                                   the United States has experienced a variety
                                   of difficulties and economic conditions that
                                   may adversely affect the performance of the
                                   mortgage loans. Delinquencies and losses with
                                   respect to residential mortgage loans
                                   generally have increased in recent months,
                                   and may continue to increase, particularly in
                                   the subprime sector. Housing prices in many
                                   states have declined or stopped appreciating,
                                   after extended periods of significant
                                   appreciation. Decreasing or static housing
                                   prices will increase delinquencies and losses
                                   on the mortgage loans relative to
                                   delinquencies and losses when housing prices
                                   are increasing.

Some of the 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 results. 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-26


                                The Mortgage Pool

General

      The depositor, IndyMac MBS, Inc., will purchase the mortgage loans in the
mortgage pool from the sponsor, IndyMac Bank, F.S.B. ("IndyMac Bank") pursuant
to a pooling and servicing agreement dated as of February 1, 2007 among IndyMac
Bank, as seller and servicer, the depositor, and Deutsche Bank National Trust
Company, as trustee, and will cause the mortgage loans to be assigned to the
trustee for the benefit of holders of the certificates (such mortgage loans, the
"Mortgage Loans").

      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 first lien deeds of trust, security deeds or mortgages on one- to
four-family residential properties (the "Mortgaged Properties"). The Mortgaged
Properties in the mortgage pool are located in 44 states and the District of
Columbia.

      Under the pooling and servicing agreement, the seller will make certain
representations, warranties and covenants to the depositor relating to, among
other things, the due execution and enforceability of the pooling and servicing
agreement and certain characteristics of the Mortgage Loans and, subject to the
limitations described below in this prospectus supplement under "--Assignment of
the Mortgage Loans" and "--Representations by Seller, Repurchases, etc.," the
seller will be obligated to repurchase or substitute a similar mortgage loan for
any Mortgage Loan as to which there exists deficient documentation that
materially and adversely affects the interests of the certificateholders in the
Mortgage Loan 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. The seller will represent and warrant to the depositor in
the pooling and servicing agreement that the Mortgage Loans were selected from
among the outstanding one- to four- family mortgage loans in the seller's
portfolio as to which the representations and warranties set forth in the
pooling and servicing agreement can be made and that the selection was not made
in a manner intended to affect the interests of the certificateholders
adversely. See "Mortgage Loan Program--Representations by the Seller;
Repurchases, etc." in the prospectus. Under the pooling and servicing agreement,
the depositor will assign all of its right, title and interest in and to those
representations, warranties and covenants (including the seller's repurchase
obligation) to the trustee for the benefit of the certificateholders. The
depositor will make no representations or warranties with respect to the
Mortgage Loans and will have no obligation to repurchase or substitute Mortgage
Loans with deficient documentation or that are otherwise defective. IndyMac Bank
is selling the Mortgage Loans without recourse and will have no obligation with
respect to the certificates in its capacity as seller other than the repurchase
or substitution obligations described above. The obligations of IndyMac Bank as
servicer with respect to the certificates are limited to the servicer's
contractual servicing obligations under the pooling and servicing agreement.

      The depositor believes that the cut-off date information set forth in this
prospectus supplement regarding the Mortgage Loans is representative of the
characteristics of the Mortgage Loans to be delivered on the closing date.
Certain Mortgage Loans, however, may prepay or may be determined not to meet the
eligibility requirements for inclusion in the final pool. A limited number of
Mortgage Loans may be substituted for the Mortgage Loans described in this
prospectus supplement, although any addition or substitution will not result in
a material difference in the pool of Mortgage Loans. As a result, the cut-off
date information regarding the Mortgage Loans actually delivered on the closing
date may vary from the cut-off date information regarding the Mortgage Loans
presented in this prospectus supplement.

      As of the Cut-off Date, the aggregate Stated Principal Balance of the
Mortgage Loans is expected to be approximately $683,787,666, which is referred
to as the "Cut-off Date Pool Principal Balance." These Mortgage Loans have been
divided into two groups of Mortgage Loans (each is referred to as a "loan
group"): loan group 1, which is expected to have an aggregate Stated Principal
Balance as of the Cut-off Date of approximately $413,797,799 (the Mortgage Loans
in loan group 1 are also referred to as the "group 1 mortgage loans") and loan
group 2, which is expected to have an aggregate Stated Principal Balance as of
the Cut-off Date of approximately $269,989,868 (the Mortgage Loans in loan group
2 are referred to as the "group 2 mortgage loans").

                                      S-27


      Based on its amortization feature, each Mortgage Loan will fall into one
of three categories: Fully Amortizing Loans, Interest Only Loans or 40/30
Balloon Loans. Approximately 49.55% and 41.16% of the group 1 mortgage loans and
group 2 mortgage loans, respectively, in each case by aggregate Stated Principal
Balance of the Mortgage Loans in the related loan group as of the Cut-off Date,
will provide for the amortization of the amount financed over a series of
substantially equal monthly payments ("Fully Amortizing Loans"). Approximately
49.24% and 54.28% of the group 1 mortgage loans and group 2 mortgage loans,
respectively, in each case by aggregate Stated Principal Balance of the Mortgage
Loans in the related loan group as of the Cut-off Date, will provide that the
related mortgagors pay only interest on the principal balances of these Mortgage
Loans for up to ten years after their origination, but require the entire
principal balances of these Mortgage Loans to be fully amortized over the
related remaining term of the Mortgage Loans (the "Interest Only Loans").
Approximately 1.20% and 4.56% of the group 1 mortgage loans and group 2 mortgage
loans, respectively, in each case by aggregate Stated Principal Balance of the
Mortgage Loans in the related loan group as of the Cut-off Date, will provide
for monthly payments of principal based on an amortization schedule
significantly longer than the remaining term of those Mortgage Loans and a
disproportionate principal payment at their stated maturities (the "40/30
Balloon Loans"). All of the Mortgage Loans provide for payments due on the first
day of each month (the "Due Date"). At origination, all of the Mortgage Loans
had stated terms to maturity of 20 or 30 years. Scheduled monthly payments made
by the mortgagors on the Mortgage Loans (referred to as scheduled payments)
either earlier or later than their scheduled Due Dates will not affect the
amortization schedule or the relative application of the payments to principal
and interest.

      Approximately 0.26% and 1.30% of the group 1 mortgage loans and group 2
mortgage loans, respectively, in each case by aggregate Stated Principal Balance
of the Mortgage Loans in the related loan group as of the Cut-off Date, require
the payment of a prepayment charge if the mortgagors prepay their Mortgage
Loans. The remaining Mortgage Loans may be prepaid at any time without paying a
prepayment charge. Any prepayment charges received will not be available for
distribution on the certificates. Under certain circumstances, as described in
the pooling and servicing agreement, the servicer may waive the payment of any
otherwise applicable prepayment charge. Investors should conduct their own
analysis of the effect, if any, that the prepayment charges, and decisions by
the servicer with respect to the waiver thereof, may have on the prepayment
performance of the Mortgage Loans. The depositor makes no representations as to
the effect that the prepayment charges, and decisions by the servicer with
respect to the waiver thereof, may have on the prepayment performance of the
Mortgage Loans.

      The mortgage rate ("Mortgage Rate") of each of the Mortgage Loans will be
fixed for the life of the Mortgage Loan.

      Set forth below is the earliest first payment date and the earliest and
latest stated maturity date for the Mortgage Loans in each loan group.



                                  Earliest First            Earliest Stated       Latest Stated Maturity
                                   Payment Date              Maturity Date                  Date
                                  --------------            ---------------       ----------------------
loan group 1 ............       October 1, 2006            October 1, 2026             March 1, 2037
loan group 2 ............          June 1, 2006                May 1, 2036             March 1, 2037

      As of the Cut-off Date, no Mortgage Loan in either loan group was
delinquent 30 days or more and no Mortgage Loan has been delinquent 30 days or
more in the past 12 months.

      No Mortgage Loan provides for deferred interest or negative amortization.

      As of the Cut-off Date, two of the group 1 mortgage loans and four of the
group 2 mortgage loans, constituting 0.294% and 0.755% of the group 1 mortgage
loans and group 2 mortgage loans, respectively, in each case by aggregate Stated
Principal Balance of the Mortgage Loans in the related loan group as of the
Cut-off Date, were subject to a buydown agreement. The length of the buydown
period for these Mortgage Loans is 12, 18, 24 or


                                      S-28


36 months. The Mortgage Rates shown for the Mortgage Loans in this prospectus
supplement are the rates in the Mortgage Note, without giving effect to the
existence of the buydown agreement.

      At origination, all of the Mortgage Loans had a Loan-to-Value Ratio of
90.00% or less. Each Mortgage Loan with a Loan-to-Value Ratio at origination of
greater than 80% will be covered by a primary mortgage guaranty insurance policy
issued by a mortgage insurance company acceptable to Fannie Mae or Freddie Mac.
With respect to approximately 0.17% and 0.77% of the group 1 mortgage loans and
group 2 mortgage loans, in each case by aggregate Stated Principal Balance of
the Mortgage Loans in the related loan group as of the Cut-off Date, the lender
(rather than the borrower) acquired the primary mortgage guaranty insurance and
charged the related borrower an interest premium. Except for these lender
acquired mortgage insurance Mortgage Loans, no primary mortgage guaranty
insurance policy will be required with respect to any Mortgage Loan after the
date on which the Loan-to-Value Ratio of a Mortgage Loan is 80% or less (either
because of principal payments on the Mortgage Loan or because of a new appraisal
of the mortgaged property). The primary mortgage guaranty insurance policy will
be maintained for the life of the lender acquired mortgage insurance Mortgage
Loans, unless otherwise prohibited by law. See "--Underwriting Standards" in
this prospectus supplement.

      The "Loan-to-Value Ratio" of a Mortgage Loan at any given time is a
fraction, expressed as a percentage, the numerator of which is the principal
balance of that Mortgage Loan at the date of determination and the denominator
of which is

      o     in the case of a purchase, the lesser of the selling price of the
            mortgaged property or its appraised value at the time of sale, or

      o     in the case of a refinance, the appraised value of the mortgaged
            property at the time of the refinance.

      No assurance can be given that the value of any mortgaged property has
remained or will remain at the level that existed on the appraisal or sales
date. If residential real estate values generally or in a particular geographic
area decline, the Loan-to-Value Ratios might not be a reliable indicator of the
rates of delinquencies, foreclosures and losses that could occur with respect to
the Mortgage Loans.

      "FICO Credit Scores" are obtained by many mortgage lenders in connection
with mortgage loan applications to help assess a borrower's creditworthiness.
FICO Credit Scores are generated by models developed by a third party that
analyze data on consumers in order to establish patterns that are believed to be
indicative of the borrower's probability of default. The FICO Credit Score is
based on a borrower's historical credit data, including, among other things,
payment history, delinquencies on accounts, levels of outstanding indebtedness,
length of credit history, types of credit, and bankruptcy experience. FICO
Credit Scores range from approximately 300 to approximately 850, with higher
scores indicating an individual with a more favorable credit history compared to
an individual with a lower score. A FICO Credit Score, however, 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 FICO Credit Scores were developed to indicate
a level of default probability over a two-year period that does not correspond
to the life of a mortgage loan. Furthermore, FICO Credit Scores were not
developed specifically for use in connection with mortgage loans, but for
consumer loans in general. Therefore, a FICO Credit Score does not take into
consideration the effect of mortgage loan characteristics (which may differ from
consumer loan characteristics) on the probability of repayment by the borrower.
There can be no assurance that a FICO Credit Score will be an accurate predictor
of the likely risk or quality of a mortgage loan.

      The following section contains in tabular format information about the
group 1 mortgage loans and group 2 mortgage loans and the Mortgage Loans in the
aggregate as of the Cut-off Date. Other than with respect to rates of interest,
percentages (approximate) are stated by Stated Principal Balance of the Mortgage
Loans in the applicable loan group and in the aggregate as of the Cut-off Date
and have been rounded in order to total 100%


                                      S-29


                                  Loan Group 1

                Mortgage Rates for the Group 1 Mortgage Loans (1)



                                                                                                                            Weighted
                                                                     Percent of                 Weighted                     Average
                                                     Aggregate        Aggregate     Weighted    Average        Average         Loan
                                     Number of       Principal        Principal     Average       FICO         Current         -to-
Range of                             Mortgage         Balance          Balance      Mortgage     Credit       Principal       Value
Mortgage Rates (%)                    Loans         Outstanding      Outstanding      Rate       Score         Balance        Ratio
--------------------------------     ---------   ---------------     -----------    -------     --------    -----------     --------
5.000 - 5.499 ..................         4       $  2,290,758.63         0.55%       5.303%       732       $572,689.66       62.52%
5.500 - 5.999 ..................        25         16,656,728.38         4.03        5.777        721        666,269.14       75.25
6.000 - 6.499 ..................       339        209,838,206.87        50.71        6.261        733        618,991.76       71.61
6.500 - 6.999 ..................       290        185,012,105.02        44.71        6.549        722        637,972.78       70.57
                                       ---       ---------------       ------
Total: .........................       658       $413,797,798.90       100.00%
                                       ===       ===============       ======


----------
(1) The Mortgage Rates listed in the preceding table include lender acquired
mortgage insurance premiums. As of the Cut-off Date, the weighted average
Mortgage Rate of the group 1 mortgage loans was approximately 6.365% per annum.
As of the Cut-off Date, the weighted average Mortgage Rate of the group 1
mortgage loans net of the insurance premium charged by the lender was
approximately 6.364% per annum.

          Current Principal Balances for the Group 1 Mortgage Loans (1)



                                                                                                                            Weighted
                                                                     Percent of                 Weighted                     Average
                                                     Aggregate        Aggregate     Weighted    Average        Average         Loan
                                     Number of       Principal        Principal     Average       FICO         Current         -to-
Range of Current Mortgage            Mortgage         Balance          Balance      Mortgage     Credit       Principal       Value
Loan Principal Balances ($)           Loans         Outstanding      Outstanding      Rate       Score         Balance        Ratio
--------------------------------     ---------   ---------------     -----------    -------     --------    -----------     --------
200,000.01 - 250,000.00.........         2       $    427,021.82         0.10%       6.565%       671       $213,510.91       66.11%
250,000.01 - 300,000.00.........         1            265,122.25         0.06        6.375        802        265,122.25       57.91
350,000.01 - 400,000.00.........         1            368,991.11         0.09        6.500        785        368,991.11       55.22
400,000.01 - 450,000.00.........        61         26,552,496.65         6.42        6.330        712        435,286.83       72.07
450,000.01 - 500,000.00.........       120         57,751,189.00        13.96        6.391        722        481,259.91       73.93
500,000.01 - 550,000.00.........       116         60,748,927.03        14.68        6.339        731        523,697.65       73.32
550,000.01 - 600,000.00.........        89         51,826,126.32        12.52        6.394        726        582,316.03       72.37
600,000.01 - 650,000.00.........        80         50,083,391.32        12.10        6.380        726        626,042.39       72.93
650,000.01 - 700,000.00.........        47         31,731,709.05         7.67        6.356        731        675,142.75       73.13
700,000.01 - 750,000.00.........        34         24,642,020.53         5.96        6.326        729        724,765.31       72.07
750,000.01 - 800,000.00.........        24         18,699,150.27         4.52        6.354        728        779,131.26       70.91
800,000.01 - 850,000.00.........         9          7,453,270.34         1.80        6.486        734        828,141.15       64.06
850,000.01 - 900,000.00.........        14         12,299,768.01         2.97        6.295        730        878,554.86       72.01
900,000.01 - 950,000.00.........         9          8,448,151.65         2.04        6.180        703        938,683.52       67.21
950,000.01 - 1,000,000.00.......        23         22,721,830.30         5.49        6.327        738        987,905.67       65.53
1,000,000.01 - 1,250,000.00.....        12         13,916,200.00         3.36        6.298        741       1,159,683.33      68.90
1,250,000.01 - 1,500,000.00.....        11         15,367,433.25         3.71        6.478        744       1,397,039.39      65.74
1,500,000.01 - 1,750,000.00.....         1          1,745,000.00         0.42        6.375        779       1,745,000.00      65.85
1,750,000.01 - 2,000,000.00.....         3          5,750,000.00         1.39        6.586        715       1,916,666.67      57.04
2,750,000.01 - 3,000,000.00.....         1          3,000,000.00         0.72        6.500        719       3,000,000.00      40.00
                                       ---       ---------------       ------
Total:..........................       658       $413,797,798.90       100.00%
                                       ===       ===============       ======


----------
(1) As of the Cut-off Date, the average principal balance of the group 1
mortgage loans was approximately $628,872.03.

                                      S-30


        Original Loan-to-Value Ratios for the Group 1 Mortgage Loans (1)



                                                                                                                            Weighted
                                                                     Percent of                 Weighted                     Average
                                                     Aggregate        Aggregate     Weighted    Average      Average           Loan
                                     Number of       Principal        Principal     Average       FICO       Current           -to-
Range of Original                    Mortgage         Balance          Balance      Mortgage     Credit     Principal         Value
Loan-to-Value Ratios (%)              Loans         Outstanding      Outstanding      Rate       Score       Balance          Ratio
--------------------------------     ---------   ---------------     -----------    -------     --------  -------------     --------
25.01 - 30.00 ..................         2       $  1,976,087.26         0.48%       6.438%       756     $  988,043.63       26.44%
30.01 - 35.00 ..................         3          1,744,072.95         0.42        6.245        726        581,357.65       34.16
35.01 - 40.00 ..................         2          3,500,000.00         0.85        6.464        724      1,750,000.00       39.64
40.01 - 45.00 ..................         7          3,506,247.73         0.85        6.393        743        500,892.53       42.17
45.01 - 50.00 ..................        23         16,403,025.20         3.96        6.384        753        713,175.01       48.39
50.01 - 55.00 ..................        13          9,349,751.09         2.26        6.339        732        719,211.62       52.22
55.01 - 60.00 ..................        31         21,065,451.31         5.09        6.432        719        679,530.69       58.38
60.01 - 65.00 ..................        82         55,400,857.14        13.39        6.368        730        675,620.21       63.46
65.01 - 70.00 ..................        64         44,380,710.19        10.73        6.371        720        693,448.60       68.48
70.01 - 75.00 ..................        94         63,903,801.31        15.44        6.390        724        679,827.67       73.64
75.01 - 80.00 ..................       329        188,763,121.72        45.62        6.344        729        573,748.09       79.40
80.01 - 85.00 ..................         6          3,094,396.83         0.75        6.332        659        515,732.81       82.99
85.01 - 90.00 ..................         2            710,276.17         0.17        6.625        742        355,138.09       88.72
                                       ---       ---------------       ------
Total: .........................       658       $413,797,798.90       100.00%
                                       ===       ===============       ======


----------
(1) As of the Cut-off Date, the weighted average original Loan-to-Value Ratio of
the group 1 mortgage loans was approximately 71.24%.

      Original Terms to Stated Maturity for the Group 1 Mortgage Loans (1)



                                                                                                                            Weighted
                                                                     Percent of                 Weighted                     Average
                                                     Aggregate        Aggregate     Weighted    Average      Average           Loan
                                     Number of       Principal        Principal     Average       FICO       Current           -to-
Original Term to Stated              Mortgage         Balance          Balance      Mortgage     Credit     Principal         Value
Maturity (months)                     Loans         Outstanding      Outstanding      Rate       Score       Balance          Ratio
--------------------------------     ---------   ---------------     -----------    -------     --------  -------------     --------
240 ............................         3       $  1,598,376.33         0.39%       6.299%       742       $532,792.11       75.75%
360 ............................       655        412,199,422.57        99.61        6.365        728        629,312.10       71.22
                                       ---       ---------------       ------
Total: .........................       658       $413,797,798.90       100.00%
                                       ===       ===============       ======


----------
(1) As of the Cut-off Date, the weighted average original term to stated
maturity of the group 1 mortgage loans was approximately 360 months.

      Remaining Terms to Stated Maturity for the Group 1 Mortgage Loans (1)



                                                                                                                            Weighted
                                                                     Percent of                 Weighted                     Average
                                                     Aggregate        Aggregate     Weighted    Average      Average           Loan
                                     Number of       Principal        Principal     Average       FICO       Current           -to-
Remaining Term to Stated             Mortgage         Balance          Balance      Mortgage     Credit     Principal         Value
Maturity (months)                     Loans         Outstanding      Outstanding      Rate       Score       Balance          Ratio
--------------------------------     ---------   ---------------     -----------    -------     --------  -------------     --------
236 ............................         1       $    486,962.64         0.12%       6.500%       790       $486,962.64       72.85%
238 ............................         1            597,544.92         0.14        6.500        717        597,544.92       75.95
239 ............................         1            513,868.77         0.12        5.875        727        513,868.77       78.27
355 ............................         2            746,569.28         0.18        6.456        724        373,284.64       69.82
356 ............................        13          7,506,380.58         1.81        6.429        743        577,413.89        73.5
357 ............................        17         10,694,320.86         2.58        6.365        726        629,077.70       66.84
358 ............................        78         47,930,003.96        11.58        6.394        725        614,487.23       70.71
359 ............................       326        191,352,747.09        46.24        6.324        729        586,971.62       72.78
360 ............................       219        153,969,400.80        37.21        6.404        726        703,056.62       69.65
                                       ---       ---------------       ------
Total: .........................       658       $413,797,798.90       100.00%
                                       ===       ===============       ======


----------
(1) As of the Cut-off Date, the weighted average remaining term to stated
maturity of the group 1 mortgage loans was approximately 359 months.

                                      S-31


 Geographic Distribution of the Mortgaged Properties for the Group 1 Mortgage Loans



                                                                                                                            Weighted
                                                                     Percent of                 Weighted                     Average
                                                     Aggregate        Aggregate     Weighted    Average      Average           Loan
                                     Number of       Principal        Principal     Average       FICO       Current           -to-
                                     Mortgage         Balance          Balance      Mortgage     Credit     Principal         Value
State                                 Loans         Outstanding      Outstanding      Rate       Score       Balance          Ratio
--------------------------------     ---------   ---------------     -----------    -------     --------  -------------     --------
Alabama ........................         5       $  2,884,170.38         0.70%       6.416%       722     $  576,834.08       76.31%
Arizona ........................        13          7,920,426.50         1.91        6.342        717        609,263.58       75.05
California .....................       395        248,599,813.32        60.08        6.369        729        629,366.62       70.56
Colorado .......................        12          7,192,837.35         1.74        6.294        730        599,403.11       70.05
Connecticut ....................         4          2,830,155.42         0.68        6.542        714        707,538.86       72.19
Delaware .......................         1            652,500.00         0.16        6.375        722        652,500.00       75.00
District of Columbia ...........         1          1,482,000.00         0.36        6.500        766      1,482,000.00       64.43
Florida ........................        16         10,879,284.22         2.63        6.354        733        679,955.26       70.67
Georgia ........................         9          7,338,469.38         1.77        6.439        747        815,385.49       74.57
Hawaii .........................         2          1,018,991.11         0.25        6.341        737        509,495.56       61.54
Idaho ..........................         4          2,283,297.19         0.55        6.509        698        570,824.30       68.13
Illinois .......................        12          7,288,257.80         1.76        6.394        712        607,354.82       73.80
Indiana ........................         1            419,620.31         0.10        6.500        729        419,620.31       79.25
Iowa ...........................         1            598,858.43         0.14        6.250        819        598,858.43       50.00
Kansas .........................         1            558,575.89         0.13        6.500        719        558,575.89       80.00
Kentucky .......................         1            803,503.06         0.19        6.500        720        803,503.06       70.00
Louisiana ......................         1            517,905.53         0.13        6.500        706        517,905.53       80.00
Maine ..........................         1            647,630.40         0.16        6.500        740        647,630.40       57.52
Maryland .......................        10          5,143,732.25         1.24        6.337        720        514,373.23       76.74
Massachusetts ..................        20         11,483,548.30         2.78        6.409        747        574,177.42       69.47
Michigan .......................         6          3,620,099.85         0.87        6.240        738        603,349.98       73.51
Minnesota ......................         3          1,689,700.00         0.41        6.426        686        563,233.33       76.66
Montana ........................         1            651,255.75         0.16        6.375        806        651,255.75       79.03
Nevada .........................        10          7,152,113.07         1.73        6.356        745        715,211.31       69.94
New Hampshire ..................         1            484,000.00         0.12        6.625        680        484,000.00       80.00
New Jersey .....................        15          8,368,956.37         2.02        6.377        702        557,930.42       70.93
New Mexico .....................         1            699,319.65         0.17        6.125        686        699,319.65       74.87
New York .......................        29         18,504,768.92         4.47        6.355        714        638,095.48       72.53
North Carolina .................         5          3,376,138.67         0.82        6.372        709        675,227.73       67.05
Ohio ...........................         1            543,471.27         0.13        6.125        682        543,471.27       80.00
Oregon .........................         8          5,788,900.00         1.40        6.435        756        723,612.50       71.83
Pennsylvania ...................         4          2,613,217.50         0.63        6.055        688        653,304.38       70.00
Rhode Island ...................         1            685,000.00         0.17        6.500        756        685,000.00       57.56
South Carolina .................         7          5,658,209.46         1.37        6.400        716        808,315.64       69.01
Tennessee ......................         4          2,139,543.88         0.52        6.498        714        534,885.97       76.55
Texas ..........................         9          5,755,983.49         1.39        6.406        733        639,553.72       73.51
Utah ...........................         3          1,640,952.75         0.40        6.422        739        546,984.25       79.20
Virginia .......................        22         13,298,831.69         3.21        6.135        710        604,492.35       74.42
Washington .....................        15          8,896,603.43         2.15        6.394        743        593,106.90       73.39
Wisconsin ......................         2          1,159,633.63         0.28        6.309        726        579,816.82       77.46
Wyoming ........................         1            527,522.68         0.13        6.500        655        527,522.68       80.00
                                       ---       ---------------       ------
Total: .........................       658       $413,797,798.90       100.00%
                                       ===       ===============       ======


                                      S-32


           Mortgagors' FICO Scores for the Group 1 Mortgage Loans (1)



                                                                                                                            Weighted
                                                                     Percent of                 Weighted                     Average
                                                     Aggregate        Aggregate     Weighted    Average      Average           Loan
                                     Number of       Principal        Principal     Average       FICO       Current           -to-
Range of FICO                        Mortgage         Balance          Balance      Mortgage     Credit     Principal         Value
Credit Scores                         Loans         Outstanding      Outstanding      Rate       Score       Balance          Ratio
--------------------------------     ---------   ---------------     -----------    -------     --------  -------------     --------
620 - 639 ......................        24       $ 13,917,829.33         3.36%       6.441%       630       $579,909.56       69.75%
640 - 659 ......................        33         20,120,636.93         4.86        6.324        652        609,716.27       69.90
660 - 679 ......................        73         43,138,136.26        10.42        6.341        669        590,933.37       71.09
680 - 699 ......................        71         42,432,194.21        10.25        6.390        689        597,636.54       73.34
700 - 719 ......................        92         60,032,254.73        14.51        6.382        709        652,524.51       72.57
720 - 739 ......................        78         52,207,725.99        12.62        6.420        731        669,329.82       73.47
740 - 759 ......................       104         64,662,743.27        15.63        6.357        749        621,757.15       70.54
760 - 779 ......................        78         50,330,052.36        12.16        6.336        770        645,257.08       68.78
780 - 799 ......................        75         48,688,187.40        11.77        6.334        789        649,175.83       69.68
800 - 819 ......................        29         17,678,038.42         4.27        6.318        807        609,587.53       72.67
820 ............................         1            590,000.00         0.14        6.500        820        590,000.00       50.95
                                       ---       ---------------       ------
Total: .........................       658       $413,797,798.90       100.00%
                                       ===       ===============       ======


----------
(1) As of the Cut-off Date, the weighted average FICO Credit Score of the group
1 mortgage loans was approximately 728.

          Types of Mortgaged Properties for the Group 1 Mortgage Loans



                                                                                                                            Weighted
                                                                     Percent of                 Weighted                     Average
                                                     Aggregate        Aggregate     Weighted    Average      Average           Loan
                                     Number of       Principal        Principal     Average       FICO       Current           -to-
                                     Mortgage         Balance          Balance      Mortgage     Credit     Principal         Value
Property Type                         Loans         Outstanding      Outstanding      Rate       Score       Balance          Ratio
--------------------------------     ---------   ---------------     -----------    -------     --------  -------------     --------
Single Family Residence.........       458       $281,907,987.23        68.13%       6.365%       728     $  615,519.62       71.28%
Planned Unit Development
(PUD) ..........................       144         95,143,287.12        22.99        6.339        725        660,717.27       70.59
Low-rise Condominium ...........        30         18,670,136.85         4.51        6.396        754        622,337.90       72.87
Two-Family Residence ...........        18         11,750,718.00         2.84        6.446        704        652,817.67       72.23
Townhouse ......................         4          2,849,685.00         0.69        6.442        715        712,421.25       76.19
Four-Family Residence ..........         2          2,339,000.00         0.57        6.546        760      1,169,500.00       64.08
High-rise Condominium ..........         2          1,136,984.70         0.27        6.568        744        568,492.35       79.92
                                       ---       ---------------       ------
Total: .........................       658       $413,797,798.90       100.00%
                                       ===       ===============       ======


                     Purposes of the Group 1 Mortgage Loans



                                                                                                                            Weighted
                                                                     Percent of                 Weighted                     Average
                                                     Aggregate        Aggregate     Weighted    Average      Average           Loan
                                     Number of       Principal        Principal     Average       FICO       Current           -to-
                                     Mortgage         Balance          Balance      Mortgage     Credit     Principal         Value
Loan Purpose                          Loans         Outstanding      Outstanding      Rate       Score       Balance          Ratio
--------------------------------     ---------   ---------------     -----------    -------     --------  -------------     --------
Refinance (Cash Out) ...........       276       $172,606,771.51        41.71%       6.384%       720       $625,386.85       69.54%
Refinance (Rate/Term) ..........       196        125,619,812.61        30.36        6.345        725        640,917.41       69.88
Purchase .......................       186        115,571,214.78        27.93        6.358        743        621,350.62       75.25
                                       ---       ---------------       ------
Total: .........................       658       $413,797,798.90       100.00%
                                       ===       ===============       ======


                                      S-33


               Occupancy Types for the Group 1 Mortgage Loans (1)



                                                                                                                            Weighted
                                                                     Percent of                 Weighted                     Average
                                                     Aggregate        Aggregate     Weighted    Average      Average           Loan
                                     Number of       Principal        Principal     Average       FICO       Current           -to-
                                     Mortgage         Balance          Balance      Mortgage     Credit     Principal         Value
Occupancy Type                        Loans         Outstanding      Outstanding      Rate       Score       Balance          Ratio
--------------------------------     ---------   ---------------     -----------    -------     --------  -------------     --------
Owner Occupied .................       612       $383,390,973.71        92.65%       6.359%       726       $626,455.84       71.70%
Investment .....................        25         15,322,496.40         3.70        6.460        747        612,899.86       61.94
Second Home ....................        21         15,084,328.79         3.65        6.407        754        718,301.37       68.88
                                       ---       ---------------       ------
Total: .........................       658       $413,797,798.90       100.00%
                                       ===       ===============       ======


----------
(1) Based upon representations of the related mortgagors at the time of
origination.

             Loan Documentation Types for the Group 1 Mortgage Loans



                                                                                                                            Weighted
                                                                     Percent of                 Weighted                     Average
                                                     Aggregate        Aggregate     Weighted    Average      Average           Loan
                                     Number of       Principal        Principal     Average       FICO       Current           -to-
                                     Mortgage         Balance          Balance      Mortgage     Credit     Principal         Value
Type of Program                       Loans         Outstanding      Outstanding      Rate       Score       Balance          Ratio
--------------------------------     ---------   ---------------     -----------    -------     --------  -------------     --------
Full/Alternate .................       237       $139,261,518.64        33.65%       6.299%       733       $587,601.34       73.88%
Stated Income ..................       307        199,609,885.19        48.24        6.378        722        650,195.07       71.51
No Ratio .......................        46         32,069,234.11         7.75        6.487        727        697,157.26       69.41
No Income/No Asset .............        36         20,261,272.38         4.90        6.419        721        562,813.12       69.42
No Doc .........................        32         22,595,888.58         5.46        6.434        748        706,121.52       56.81
                                       ---       ---------------       ------
Total: .........................       658       $413,797,798.90       100.00%
                                       ===       ===============       ======


                  Loan Ages for the Group 1 Mortgage Loans (1)



                                                                                                                            Weighted
                                                                     Percent of                 Weighted                     Average
                                                     Aggregate        Aggregate     Weighted    Average      Average           Loan
                                     Number of       Principal        Principal     Average       FICO       Current           -to-
                                     Mortgage         Balance          Balance      Mortgage     Credit     Principal         Value
Loan Age (months)                     Loans         Outstanding      Outstanding      Rate       Score       Balance          Ratio
--------------------------------     ---------   ---------------     -----------    -------     --------  -------------     --------
0 ..............................       219       $153,969,400.80        37.21%       6.404%       726       $703,056.62       69.65%
1 ..............................       327        191,866,615.86        46.37        6.323        729        586,748.06       72.79
2 ..............................        79         48,527,548.88        11.73        6.396        725        614,272.77       70.78
3 ..............................        17         10,694,320.86         2.58        6.365        726        629,077.70       66.84
4 ..............................        14          7,993,343.22         1.93        6.433        746        570,953.09       73.46
5 ..............................         2            746,569.28         0.18        6.456        724        373,284.64       69.82
                                       ---       ---------------       ------
Total: .........................       658       $413,797,798.90       100.00%
                                       ===       ===============       ======


----------
(1) As of the Cut-off Date, the weighted average loan age of the group 1
mortgage loans was approximately one month.

         Prepayment Charge Terms and Type of the Group 1 Mortgage Loans



                                                                                                                            Weighted
                                                                     Percent of                 Weighted                     Average
                                                     Aggregate        Aggregate     Weighted    Average      Average           Loan
                                     Number of       Principal        Principal     Average       FICO       Current           -to-
Prepayment Charge                    Mortgage         Balance          Balance      Mortgage     Credit     Principal         Value
Term and Type (months)                Loans         Outstanding      Outstanding      Rate       Score       Balance          Ratio
--------------------------------     ---------   ---------------     -----------    -------     --------  -------------     --------
0 ..............................       654       $412,736,663.72        99.74%       6.365%       728       $631,095.82       71.27%
36-Hard ........................         4          1,061,135.18         0.26        6.495        744        265,283.80       60.27
                                       ---       ---------------       ------
Total: .........................       658       $413,797,798.90       100.00%
                                       ===       ===============       ======


                                      S-34


       Interest Only Periods at Origination of the Group 1 Mortgage Loans



                                                                                                                            Weighted
                                                                     Percent of                 Weighted                     Average
                                                     Aggregate        Aggregate     Weighted    Average      Average           Loan
                                     Number of       Principal        Principal     Average       FICO       Current           -to-
Interest Only Period                 Mortgage         Balance          Balance      Mortgage     Credit     Principal         Value
(months)                              Loans         Outstanding      Outstanding      Rate       Score       Balance          Ratio
--------------------------------     ---------   ---------------     -----------    -------     --------  -------------     --------
0 ..............................       338       $210,026,232.88        50.76%       6.340%       730       $621,379.39       70.57%
120 ............................       320        203,771,566.02        49.24        6.391        725        636,786.14       71.92
                                       ---       ---------------       ------
Total: .........................       658       $413,797,798.90       100.00%
                                       ===       ===============       ======


               Origination Channels for the Group 1 Mortgage Loans



                                                                                                                            Weighted
                                                                     Percent of                 Weighted                     Average
                                                     Aggregate        Aggregate     Weighted    Average      Average           Loan
                                     Number of       Principal        Principal     Average       FICO       Current           -to-
                                     Mortgage         Balance          Balance      Mortgage     Credit     Principal         Value
Origination Channel                   Loans         Outstanding      Outstanding      Rate       Score       Balance          Ratio
--------------------------------     ---------   ---------------     -----------    -------     --------  -------------     --------
Conduit ........................       445       $263,976,793.03        63.79%       6.328%       727       $593,206.28       72.11%
Correspondent ..................        76         54,918,486.36        13.27        6.414        740        722,611.66       68.83
Consumer Direct ................         1            747,000.00         0.18        6.000        691        747,000.00       64.68
Mortgage Professionals .........       136         94,155,519.51        22.75        6.442        723        692,320.00       70.26
                                       ---       ---------------       ------
Total: .........................       658       $413,797,798.90       100.00%
                                       ===       ===============       ======


                                      S-35


                                  Loan Group 2

                Mortgage Rates for the Group 2 Mortgage Loans (1)



                                                                                                                            Weighted
                                                                     Percent of                 Weighted                     Average
                                                     Aggregate        Aggregate     Weighted    Average      Average           Loan
                                     Number of       Principal        Principal     Average       FICO       Current           -to-
Range of                             Mortgage         Balance          Balance      Mortgage     Credit     Principal         Value
Mortgage Rates (%)                    Loans         Outstanding      Outstanding      Rate       Score       Balance          Ratio
--------------------------------     ---------   ---------------     -----------    -------     --------  -------------     --------
6.500 - 6.999 ..................       216       $126,848,617.26        46.98%       6.819%       706       $587,262.12       74.21%
7.000 - 7.499 ..................       133         73,450,150.85        27.20        7.156        701        552,256.77       74.70
7.500 - 7.999 ..................        79         47,694,787.93        17.67        7.682        691        603,731.49       77.33
8.000 - 8.499 ..................        15         12,817,390.50         4.75        8.177        690        854,492.70       69.35
8.500 - 8.999 ..................        13          8,756,121.02         3.24        8.621        680        673,547.77       72.93
9.000 - 9.499 ..................         1            422,800.00         0.16        9.125        700        422,800.00       80.00
                                       ---       ---------------       ------
Total: .........................       457       $269,989,867.56       100.00%
                                       ===       ===============       ======


----------
(1) The Mortgage Rates listed in the preceding table include lender acquired
mortgage insurance premiums. As of the Cut-off Date, the weighted average
Mortgage Rate of the group 2 mortgage loans was approximately 7.189% per annum.
As of the Cut-off Date, the weighted average Mortgage Rate of the group 2
mortgage loans net of the insurance premium charged by the lender was
approximately 7.185% per annum.

          Current Principal Balances for the Group 2 Mortgage Loans (1)



                                                                                                                            Weighted
                                                                     Percent of                 Weighted                     Average
                                                     Aggregate        Aggregate     Weighted    Average      Average           Loan
                                     Number of       Principal        Principal     Average       FICO       Current           -to-
Range of Current Mortgage            Mortgage         Balance          Balance      Mortgage     Credit     Principal         Value
Loan Principal Balances ($)           Loans         Outstanding      Outstanding      Rate       Score       Balance          Ratio
--------------------------------     ---------   ---------------     -----------    -------     --------  -------------     --------
50,000.01 - 100,000.00 .........         2       $    176,654.18         0.07%       7.500%       675     $   88,327.09       72.56%
100,000.01 - 150,000.00.. ......         3            341,654.27         0.13        7.253        663        113,884.76       76.84
150,000.01 - 200,000.00.. ......         2            322,218.63         0.12        7.073        632        161,109.32       43.31
200,000.01 - 250,000.00.. ......         2            485,791.48         0.18        8.189        685        242,895.74       79.97
250,000.01 - 300,000.00.. ......         1            299,144.80         0.11        7.750        722        299,144.80       67.42
300,000.01 - 350,000.00.. ......         1            329,223.03         0.12        7.250        627        329,223.03       64.71
350,000.01 - 400,000.00.. ......         2            759,012.96         0.28        6.813        693        379,506.48       80.00
400,000.01 - 450,000.00.. ......        64         27,919,195.09        10.34        7.174        700        436,237.42       74.74
450,000.01 - 500,000.00.. ......        97         46,303,137.92        17.15        7.112        691        477,351.94       77.29
500,000.01 - 550,000.00.. ......        80         42,132,232.33        15.61        7.161        695        526,652.90       75.52
550,000.01 - 600,000.00.. ......        48         27,697,927.90        10.26        7.078        707        577,040.16       76.99
600,000.01 - 650,000.00.. ......        42         26,438,976.28         9.79        7.203        701        629,499.44       76.19
650,000.01 - 700,000.00.. ......        29         19,753,769.88         7.32        7.022        710        681,164.48       75.97
700,000.01 - 750,000.00.. ......        22         16,087,114.28         5.96        7.051        720        731,232.47       73.85
750,000.01 - 800,000.00.. ......        18         14,040,603.60         5.20        7.168        706        780,033.53       74.98
800,000.01 - 850,000.00.. ......         3          2,505,000.00         0.93        7.453        697        835,000.00       78.35
850,000.01 - 900,000.00.. ......         8          6,900,092.59         2.56        7.375        719        862,511.57       72.18
900,000.01 - 950,000.00.. ......         7          6,420,199.38         2.38        7.516        684        917,171.34       72.46
950,000.01 - 1,000,000.00 ......        14         13,883,111.48         5.14        7.295        696        991,650.82       69.01
1,000,000.01 - 1,250,000.00 ....         5          5,392,319.70         2.00        7.394        718      1,078,463.94       70.05
1,250,000.01 - 1,500,000.00 ....         4          5,665,000.00         2.10        7.557        696      1,416,250.00       63.89
1,750,000.01 - 2,000,000.00 ....         2          3,748,487.78         1.39        7.850        662      1,874,243.89       55.69
2,250,000.01 - 2,500,000.00 ....         1          2,389,000.00         0.88        8.125        749      2,389,000.00       64.57
                                       ---       ---------------       ------
Total: .........................       457       $269,989,867.56       100.00%
                                       ===       ===============       ======


----------
(1) As of the Cut-off Date, the average principal balance of the group 2
mortgage loans was approximately $590,787.46.

                                      S-36


        Original Loan-to-Value Ratios for the Group 2 Mortgage Loans (1)



                                                                                                                            Weighted
                                                                     Percent of                 Weighted                     Average
                                                     Aggregate        Aggregate     Weighted    Average      Average           Loan
                                     Number of       Principal        Principal     Average       FICO       Current           -to-
Range of Original                    Mortgage         Balance          Balance      Mortgage     Credit     Principal         Value
Loan-to-Value Ratios (%)              Loans         Outstanding      Outstanding      Rate       Score       Balance          Ratio
--------------------------------     ---------   ---------------     -----------    -------     --------  -------------     --------
25.01 - 30.00 ..................         1       $    527,000.00         0.20%       6.875%       657     $  527,000.00       26.35%
30.01 - 35.00 ..................         3          1,105,054.15         0.41        6.905        703        368,351.38       32.71
35.01 - 40.00 ..................         2          1,496,820.67         0.55        7.204        659        748,410.34       39.42
40.01 - 45.00 ..................         1            724,390.91         0.27        6.875        641        724,390.91       44.75
45.01 - 50.00 ..................         4          4,487,626.79         1.66        6.988        654      1,121,906.70       49.45
50.01 - 55.00 ..................         2          1,533,834.41         0.57        6.750        654        766,917.21       53.68
55.01 - 60.00 ..................        10          6,862,587.37         2.54        7.591        679        686,258.74       57.05
60.01 - 65.00 ..................        34         24,109,627.56         8.93        7.302        706        709,106.69       63.95
65.01 - 70.00 ..................        44         26,031,853.14         9.64        7.179        686        591,633.03       69.61
70.01 - 75.00 ..................        59         38,144,670.60        14.13        7.236        715        646,519.84       73.81
75.01 - 80.00 ..................       291        162,355,650.33        60.13        7.159        703        557,923.20       79.57
80.01 - 85.00 ..................         3          1,364,620.31         0.51        7.258        684        454,873.44       84.26
85.01 - 90.00 ..................         3          1,246,131.32         0.46        7.370        657        415,377.11       87.91
                                       ---       ---------------       ------
Total: .........................       457       $269,989,867.56       100.00%
                                       ===       ===============       ======


----------
(1) As of the Cut-off Date, the weighted average original Loan-to-Value Ratio of
the group 2 mortgage loans was approximately 74.63%.

         Original Term to Stated Maturity for the Group 2 Mortgage Loans



                                                                                                                            Weighted
                                                                     Percent of                 Weighted                     Average
                                                     Aggregate        Aggregate     Weighted    Average      Average           Loan
                                     Number of       Principal        Principal     Average       FICO       Current           -to-
Original Term to Stated              Mortgage         Balance          Balance      Mortgage     Credit     Principal         Value
Maturity (months)                     Loans         Outstanding      Outstanding      Rate       Score       Balance          Ratio
--------------------------------     ---------   ---------------     -----------    -------     --------  -------------     --------
360 ............................       457       $269,989,867.56       100.00%       7.189%       701       $590,787.46       74.63%
                                       ---       ---------------       ------
Total: .........................       457       $269,989,867.56       100.00%
                                       ===       ===============       ======


      Remaining Terms to Stated Maturity for the Group 2 Mortgage Loans (1)



                                                                                                                            Weighted
                                                                     Percent of                 Weighted                     Average
                                                     Aggregate        Aggregate     Weighted    Average      Average           Loan
                                     Number of       Principal        Principal     Average       FICO       Current           -to-
Remaining Term to Stated             Mortgage         Balance          Balance      Mortgage     Credit     Principal         Value
Maturity (months)                     Loans         Outstanding      Outstanding      Rate       Score       Balance          Ratio
--------------------------------     ---------   ---------------     -----------    -------     --------  -------------     --------
351 ............................         1       $    243,660.16         0.09%       8.625%       723       $243,660.16       70.00%
352 ............................         3          2,087,964.71         0.77        7.890        670        695,988.24       62.74
354 ............................         2            702,723.41         0.26        7.470        753        351,361.71       74.20
355 ............................        12          6,345,579.12         2.35        7.481        710        528,798.26       76.28
356 ............................        15          7,696,687.42         2.85        7.732        690        513,112.49       76.07
357 ............................        19          9,226,924.53         3.42        7.168        714        485,627.61       74.91
358 ............................        77         46,997,987.46        17.41        7.117        705        610,363.47       75.21
359 ............................       186        117,252,908.55        43.43        7.211        699        630,391.98       73.35
360 ............................       142         79,435,432.20        29.42        7.101        699        559,404.45       76.21
                                       ---       ---------------       ------
Total: .........................       457       $269,989,867.56       100.00%
                                       ===       ===============       ======


----------
(1) As of the Cut-off Date, the weighted average remaining term to stated
maturity of the group 2 mortgage loans was approximately 359 months.

                                      S-37


       Geographic Distribution of the Mortgaged Properties for the Group 2
                                 Mortgage Loans



                                                                                                                            Weighted
                                                                     Percent of                 Weighted                     Average
                                                     Aggregate        Aggregate     Weighted    Average      Average           Loan
                                     Number of       Principal        Principal     Average       FICO       Current           -to-
                                     Mortgage         Balance          Balance      Mortgage     Credit     Principal         Value
State                                 Loans         Outstanding      Outstanding      Rate       Score       Balance          Ratio
--------------------------------     ---------   ---------------     -----------    -------     --------  -------------     --------
Alabama ........................         2       $    946,000.00         0.35%       7.624%       678     $  473,000.00       80.27%
Alaska .........................         1            242,131.32         0.09        7.750        646        242,131.32       90.00
Arizona ........................        19         10,646,279.76         3.94        7.135        710        560,330.51       73.94
California .....................       162         93,557,600.68        34.65        7.057        703        577,516.05       75.70
Colorado .......................        15          8,018,474.38         2.97        7.374        702        534,564.96       75.37
Connecticut ....................         1          1,798,487.78         0.67        6.875        671      1,798,487.78       50.00
District of Columbia ...........         2            967,586.72         0.36        7.191        663        483,793.36       80.00
Florida ........................        36         21,208,586.45         7.86        7.217        693        589,127.40       71.34
Georgia ........................        12          6,881,596.66         2.55        7.215        700        573,466.39       78.30
Hawaii .........................         4          2,796,778.79         1.04        6.762        699        699,194.70       76.56
Idaho ..........................         1            739,939.58         0.27        6.875        714        739,939.58       80.00
Illinois .......................        24         15,606,630.47         5.78        7.559        684        650,276.27       73.83
Indiana ........................         1            101,164.63         0.04        7.125        711        101,164.63       80.00
Kansas .........................         1            440,620.31         0.16        6.750        678        440,620.31       84.00
Maryland .......................        16          9,858,537.06         3.65        6.986        686        616,158.57       74.60
Massachusetts ..................        12          6,614,279.02         2.45        7.427        693        551,189.92       69.58
Michigan .......................        14          7,355,801.47         2.72        7.287        685        525,414.39       76.84
Minnesota ......................         2          1,147,600.00         0.43        7.083        721        573,800.00       79.69
Mississippi ....................         1            464,000.00         0.17        7.125        707        464,000.00       80.00
Missouri .......................         4          2,308,566.53         0.86        6.925        700        577,141.63       72.16
Nevada .........................        11          6,497,543.07         2.41        7.275        715        590,685.73       79.84
New Hampshire ..................         1            990,500.00         0.37        7.250        711        990,500.00       76.19
New Jersey .....................        19          9,948,513.41         3.68        7.419        687        523,605.97       75.80
New Mexico .....................         2          1,045,000.00         0.39        7.005        721        522,500.00       73.44
New York .......................        34         21,464,103.38         7.95        7.193        699        631,297.16       70.58
North Carolina .................         9          6,521,767.63         2.42        7.400        738        724,640.85       75.35
Ohio ...........................         4          1,752,691.44         0.65        7.231        708        438,172.86       77.86
Oregon .........................         4          2,067,053.47         0.77        6.983        715        516,763.37       78.48
Pennsylvania ...................         4          2,126,226.27         0.79        7.582        663        531,556.57       76.37
Rhode Island ...................         2          1,408,525.58         0.52        7.567        701        704,262.79       66.08
South Carolina .................         4          4,035,371.16         1.49        7.809        725      1,008,842.79       69.29
Tennessee ......................         2            981,200.00         0.36        6.810        683        490,600.00       74.73
Texas ..........................         7          4,304,020.68         1.59        7.371        703        614,860.10       74.45
Utah ...........................         2          1,555,196.86         0.58        7.401        711        777,598.43       72.91
Vermont ........................         1            799,502.76         0.30        8.375        698        799,502.76       57.94
Virginia .......................         3          2,282,450.00         0.85        6.996        758        760,816.67       77.62
Washington .....................        17          9,888,062.80         3.66        7.021        706        581,650.75       79.62
Wisconsin ......................         1            621,477.44         0.23        6.875        705        621,477.44       79.24
                                       ---       ---------------       ------
Total: .........................       457       $269,989,867.56       100.00%
                                       ===       ===============       ======


                                      S-38


           Mortgagors' FICO Scores for the Group 2 Mortgage Loans (1)



                                                                                                                            Weighted
                                                                     Percent of                 Weighted                     Average
                                                     Aggregate        Aggregate     Weighted    Average      Average           Loan
                                     Number of       Principal        Principal     Average       FICO       Current           -to-
Range of FICO                        Mortgage         Balance          Balance      Mortgage     Credit     Principal         Value
Credit Scores                         Loans         Outstanding      Outstanding      Rate       Score       Balance          Ratio
--------------------------------     ---------   ---------------     -----------    -------     --------  -------------     --------
620 - 639 ......................        40       $ 22,005,424.67         8.15%       7.389%       630       $550,135.62       74.45%
640 - 659 ......................        58         34,191,953.80        12.66        7.404        650        589,516.44       69.95
660 - 679 ......................        68         39,602,019.88        14.67        7.137        669        582,382.65       74.17
680 - 699 ......................        77         44,676,240.49        16.55        7.175        689        580,210.92       75.76
700 - 719 ......................        75         43,485,305.91        16.11        7.073        709        579,804.08       75.66
720 - 739 ......................        52         31,195,626.61        11.55        7.159        728        599,915.90       74.74
740 - 759 ......................        33         22,074,402.16         8.18        7.299        750        668,921.28       75.48
760 - 779 ......................        25         15,123,479.84         5.60        6.976        767        604,939.19       75.85
780 - 799 ......................        21         12,374,207.10         4.58        7.053        789        589,247.96       78.30
800 - 819 ......................         8          5,261,207.10         1.95        7.090        810        657,650.89       74.79
                                       ---       ---------------       ------
Total: .........................       457       $269,989,867.56       100.00%
                                       ===       ===============       ======


----------
(1) As of the Cut-off Date, the weighted average FICO Credit Score of the group
2 mortgage loans was approximately 701.

          Types of Mortgaged Properties for the Group 2 Mortgage Loans



                                                                                                                            Weighted
                                                                     Percent of                 Weighted                     Average
                                                     Aggregate        Aggregate     Weighted    Average      Average           Loan
                                     Number of       Principal        Principal     Average       FICO       Current           -to-
                                     Mortgage         Balance          Balance      Mortgage     Credit     Principal         Value
Property Type                         Loans         Outstanding      Outstanding      Rate       Score       Balance          Ratio
--------------------------------     ---------   ---------------     -----------    -------     --------  -------------     --------
Single Family Residence ........       314       $179,769,680.15        66.58%       7.140%       697       $572,514.90       74.31%
Planned Unit Development
(PUD) ..........................        87         53,010,952.75        19.63        7.196        712        609,321.30       76.30
Two-Family Residence ...........        18         10,768,718.10         3.99        7.311        702        598,262.12       77.28
Low-rise Condominium ...........        18         12,479,285.78         4.62        7.647        680        693,293.65       71.80
High-rise Condominium.. ........        14          9,292,838.35         3.44        7.492        719        663,774.17       73.78
Three-Family Residence. ........         3          2,743,392.43         1.02        6.951        718        914,464.14       70.75
Townhouse ......................         2          1,056,000.00         0.39        6.943        663        528,000.00       79.11
Four-Family Residence.. ........         1            869,000.00         0.32        6.750        776        869,000.00       62.07
                                       ---       ---------------       ------
Total: .........................       457       $269,989,867.56       100.00%
                                       ===       ===============       ======


                     Purposes of the Group 2 Mortgage Loans



                                                                                                                            Weighted
                                                                     Percent of                 Weighted                     Average
                                                     Aggregate        Aggregate     Weighted    Average      Average           Loan
                                     Number of       Principal        Principal     Average       FICO       Current           -to-
                                     Mortgage         Balance          Balance      Mortgage     Credit     Principal         Value
Loan Purpose                          Loans         Outstanding      Outstanding      Rate       Score       Balance          Ratio
--------------------------------     ---------   ---------------     -----------    -------     --------  -------------     --------
Refinance (Cashout) ............       184       $108,721,117.19        40.27%       7.185%       691       $590,875.64       71.63%
Purchase .......................       173        100,711,298.69        37.30        7.239        717        582,146.24       78.13
Refinance (Rate/Term).. ........       100         60,557,451.68        22.43        7.116        691        605,574.52       74.21
                                       ---       ---------------       ------
Total: .........................       457       $269,989,867.56       100.00%
                                       ===       ===============       ======


                                      S-39


               Occupancy Types for the Group 2 Mortgage Loans (1)



                                                                                                                            Weighted
                                                                     Percent of                 Weighted                     Average
                                                     Aggregate        Aggregate     Weighted    Average      Average           Loan
                                     Number of       Principal        Principal     Average       FICO       Current           -to-
                                     Mortgage         Balance          Balance      Mortgage     Credit     Principal         Value
Occupancy Type                        Loans         Outstanding      Outstanding      Rate       Score       Balance          Ratio
--------------------------------     ---------   ---------------     -----------    -------     --------  -------------     --------
Owner Occupied .................       404       $236,733,444.06        87.68%       7.162%       699       $585,973.87       75.09%
Investment .....................        35         22,122,566.72         8.19        7.490        716        632,073.33       70.33
Second Home ....................        18         11,133,856.78         4.12        7.176        713        618,547.60       73.36
                                       ---       ---------------       ------
Total: .........................       457       $269,989,867.56       100.00%
                                       ===       ===============       ======


----------
(1) Based upon representations of the related mortgagors at the time of
origination.

             Loan Documentation Types for the Group 2 Mortgage Loans



                                                                                                                            Weighted
                                                                     Percent of                 Weighted                     Average
                                                     Aggregate        Aggregate     Weighted    Average      Average           Loan
                                     Number of       Principal        Principal     Average       FICO       Current           -to-
                                     Mortgage         Balance          Balance      Mortgage     Credit     Principal         Value
Type of Program                       Loans         Outstanding      Outstanding      Rate       Score       Balance          Ratio
--------------------------------     ---------   ---------------     -----------    -------     --------  -------------     --------
Full/Alternate .................        52       $ 27,797,051.28        10.30%       6.984%       707       $534,558.68       77.82%
Stated Income ..................       244        143,309,576.24        53.08        7.145        699        587,334.33       75.53
No Ratio .......................        76         48,495,451.20        17.96        7.290        698        638,098.04       74.43
No Income/No Asset .............        46         28,449,826.35        10.54        7.471        701        618,474.49       72.84
No Doc .........................        39         21,937,962.49         8.13        7.151        711        562,511.86       67.52
                                       ---       ---------------       ------
Total: .........................       457       $269,989,867.56       100.00%
                                       ===       ===============       ======


                  Loan Ages for the Group 2 Mortgage Loans (1)



                                                                                                                            Weighted
                                                                     Percent of                 Weighted                     Average
                                                     Aggregate        Aggregate     Weighted    Average      Average           Loan
                                     Number of       Principal        Principal     Average       FICO       Current           -to-
                                     Mortgage         Balance          Balance      Mortgage     Credit     Principal         Value
Loan Age (months)                     Loans         Outstanding      Outstanding      Rate       Score       Balance          Ratio
--------------------------------     ---------   ---------------     -----------    -------     --------  -------------     --------
0 ..............................       142       $ 79,435,432.20        29.42%       7.101%       699       $559,404.45       76.21%
1 ..............................       186        117,252,908.55        43.43        7.211        699        630,391.98       73.35
2 ..............................        77         46,997,987.46        17.41        7.117        705        610,363.47       75.21
3 ..............................        19          9,226,924.53         3.42        7.168        714        485,627.61       74.91
4 ..............................        15          7,696,687.42         2.85        7.732        690        513,112.49       76.07
5 ..............................        12          6,345,579.12         2.35        7.481        710        528,798.26       76.28
6 ..............................         2            702,723.41         0.26        7.470        753        351,361.71       74.20
8 ..............................         3          2,087,964.71         0.77        7.890        670        695,988.24       62.74
9 ..............................         1            243,660.16         0.09        8.625        723        243,660.16       70.00
                                       ---       ---------------       ------
Total: .........................       457       $269,989,867.56       100.00%
                                       ===       ===============       ======


----------
(1) As of the Cut-off Date, the weighted average loan age of the group 2
mortgage loans was approximately one month.

                                      S-40


         Prepayment Charge Terms and Types of the Group 2 Mortgage Loans



                                                                                                                            Weighted
                                                                     Percent of                 Weighted                     Average
                                                     Aggregate        Aggregate     Weighted    Average      Average           Loan
                                     Number of       Principal        Principal     Average       FICO       Current           -to-
Prepayment Charge                    Mortgage         Balance          Balance      Mortgage     Credit     Principal         Value
Term and Type (months)                Loans         Outstanding      Outstanding      Rate       Score       Balance          Ratio
--------------------------------     ---------   ---------------     -----------    -------     --------  -------------     --------
0 ..............................       444       $266,478,051.40        98.70%       7.187%       701       $600,175.79       74.63%
12 - Hard ......................         2            454,640.02         0.17        7.408        694        227,320.01       54.68
24 - Hard ......................         2            832,407.53         0.31        7.670        678        416,203.77       79.30
36 - Hard ......................         6          1,859,515.35         0.69        7.172        653        309,919.23       79.97
36 - Soft ......................         3            365,253.26         0.14        7.406        656        121,751.09       62.29
                                       ---       ---------------       ------
Total: .........................       457       $269,989,867.56       100.00%
                                       ===       ===============       ======


       Interest Only Periods at Origination of the Group 2 Mortgage Loans



                                                                                                                            Weighted
                                                                     Percent of                 Weighted                     Average
                                                     Aggregate        Aggregate     Weighted    Average      Average           Loan
                                     Number of       Principal        Principal     Average       FICO       Current           -to-
Interest Only Period                 Mortgage         Balance          Balance      Mortgage     Credit     Principal         Value
(months)                              Loans         Outstanding      Outstanding      Rate       Score       Balance          Ratio
--------------------------------     ---------   ---------------     -----------    -------     --------  -------------     --------
0 ..............................       217       $123,446,083.57        45.72%       7.123%       696       $568,875.96       73.22%
120 ............................       240        146,543,783.99        54.28        7.245        704        610,599.10       75.82
                                       ---       ---------------       ------
Total: .........................       457       $269,989,867.56       100.00%
                                       ===       ===============       ======


               Origination Channels for the Group 2 Mortgage Loans



                                                                                                                            Weighted
                                                                     Percent of                 Weighted                     Average
                                                     Aggregate        Aggregate     Weighted    Average      Average           Loan
                                     Number of       Principal        Principal     Average       FICO       Current           -to-
                                     Mortgage         Balance          Balance      Mortgage     Credit     Principal         Value
Origination Channel                   Loans         Outstanding      Outstanding      Rate       Score       Balance          Ratio
--------------------------------     ---------   ---------------     -----------    -------     --------  -------------     --------
Conduit ........................       291       $178,214,545.37        66.01%       7.247%       701       $612,421.12       73.83%
Correspondent ..................        65         37,027,869.79        13.71        7.115        704        569,659.54       76.35
Mortgage Professionals..........       101         54,747,452.40        20.28        7.054        696        542,053.98       76.06
                                       ---       ---------------       ------
Total: .........................       457       $269,989,867.56       100.00%
                                       ===       ===============       ======


                                      S-41


                            Aggregate Mortgage Loans

                    Mortgage Rates for the Mortgage Loans (1)



                                                                                                                           Weighted
                                                                     Percent of                 Weighted                     Average
                                                     Aggregate        Aggregate     Weighted    Average      Average           Loan
                                     Number of       Principal        Principal     Average       FICO       Current           -to-
Range of                             Mortgage         Balance          Balance      Mortgage     Credit     Principal         Value
Mortgage Rates (%)                    Loans         Outstanding      Outstanding      Rate       Score       Balance          Ratio
--------------------------------     ---------   ---------------     -----------    -------     --------  -------------     --------
5.000 - 5.499 ..................         4       $  2,290,758.63         0.34%       5.303%       732       $572,689.66       62.52%
5.500 - 5.999 ..................        25         16,656,728.38         2.44        5.777        721        666,269.14       75.25
6.000 - 6.499 ..................       339        209,838,206.87        30.69        6.261        733        618,991.76       71.61
6.500 - 6.999 ..................       506        311,860,722.28        45.61        6.658        716        616,325.54       72.05
7.000 - 7.499 ..................       133         73,450,150.85        10.74        7.156        701        552,256.77       74.70
7.500 - 7.999 ..................        79         47,694,787.93         6.98        7.682        691        603,731.49       77.33
8.000 - 8.499 ..................        15         12,817,390.50         1.87        8.177        690        854,492.70       69.35
8.500 - 8.999 ..................        13          8,756,121.02         1.28        8.621        680        673,547.77       72.93
9.000 - 9.499 ..................         1            422,800.00         0.06        9.125        700        422,800.00       80.00
                                     -----       ---------------       ------
Total: .........................     1,115       $683,787,666.46       100.00%
                                     =====       ===============       ======


----------
(1) The Mortgage Rates listed in the preceding table include lender acquired
mortgage insurance premiums. As of the Cut-off Date, the weighted average
Mortgage Rate of the Mortgage Loans was approximately 6.690% per annum. As of
the Cut-off Date, the weighted average Mortgage Rate of the Mortgage Loans net
of the insurance premium charged by the lender was approximately 6.688% per
annum.

              Current Principal Balances for the Mortgage Loans (1)



                                                                                                                            Weighted
                                                                     Percent of                 Weighted                     Average
                                                     Aggregate        Aggregate     Weighted    Average      Average           Loan
                                     Number of       Principal        Principal     Average       FICO       Current           -to-
Range of Current Mortgage            Mortgage         Balance          Balance      Mortgage     Credit     Principal         Value
Loan Principal Balances ($)           Loans         Outstanding      Outstanding      Rate       Score       Balance          Ratio
--------------------------------     ---------   ---------------     -----------    -------     --------  -------------     --------
50,000.01 - 100,000.00 .........         2       $    176,654.18         0.03%       7.500%       675       $ 88,327.09       72.56%
100,000.01 - 150,000.00.. ......         3            341,654.27         0.05        7.253        663        113,884.76       76.84
150,000.01 - 200,000.00.. ......         2            322,218.63         0.05        7.073        632        161,109.32       43.31
200,000.01 - 250,000.00.. ......         4            912,813.30         0.13        7.429        678        228,203.33       73.48
250,000.01 - 300,000.00.. ......         2            564,267.05         0.08        7.104        760        282,133.53       62.95
300,000.01 - 350,000.00.. ......         1            329,223.03         0.05        7.250        627        329,223.03       64.71
350,000.01 - 400,000.00.. ......         3          1,128,004.07         0.16        6.710        723        376,001.36       71.89
400,000.01 - 450,000.00 ........       125         54,471,691.74         7.97        6.762        706        435,773.53       73.44
450,000.01 - 500,000.00 ........       217        104,054,326.92        15.22        6.712        708        479,513.03       75.43
500,000.01 - 550,000.00 ........       196        102,881,159.36        15.05        6.675        716        524,903.87       74.22
550,000.01 - 600,000.00 ........       137         79,524,054.22        11.63        6.632        720        580,467.55       73.98
600,000.01 - 650,000.00 ........       122         76,522,367.60        11.19        6.664        718        627,232.52       74.06
650,000.01 - 700,000.00 ........        76         51,485,478.93         7.53        6.611        723        677,440.51       74.22
700,000.01 - 750,000.00 ........        56         40,729,134.81         5.96        6.613        725        727,305.98       72.77
750,000.01 - 800,000.00 ........        42         32,739,753.87         4.79        6.703        718        779,517.95       72.65
800,000.01 - 850,000.00 ........        12          9,958,270.34         1.46        6.729        724        829,855.86       67.65
850,000.01 - 900,000.00 ........        22         19,199,860.60         2.81        6.683        726        872,720.94       72.07
900,000.01 - 950,000.00 ........        16         14,868,351.03         2.17        6.757        695        929,271.94       69.48
950,000.01 - 1,000,000.00 ......        37         36,604,941.78         5.35        6.694        722        989,322.75       66.85
1,000,000.01 - 1,250,000.00 ....        17         19,308,519.70         2.82        6.604        735      1,135,795.28       69.23
1,250,000.01 - 1,500,000.00 ....        15         21,032,433.25         3.08        6.769        731      1,402,162.22       65.24
1,500,000.01 - 1,750,000.00 ....         1          1,745,000.00         0.26        6.375        779      1,745,000.00       65.85
1,750,000.01 - 2,000,000.00 ....         5          9,498,487.78         1.39        7.085        694      1,899,697.56       56.51
2,250,000.01 - 2,500,000.00 ....         1          2,389,000.00         0.35        8.125        749      2,389,000.00       64.57
2,750,000.01 - 3,000,000.00 ....         1          3,000,000.00         0.44        6.500        719      3,000,000.00       40.00
                                     -----       ---------------       ------
Total: .........................     1,115       $683,787,666.46       100.00%
                                     =====       ===============       ======


----------
(1) As of the Cut-off Date, the average principal balance of the Mortgage Loans
was approximately $613.262.48.

                                      S-42


            Original Loan-to-Value Ratios for the Mortgage Loans (1)



                                                                                                                            Weighted
                                                                     Percent of                 Weighted                     Average
                                                     Aggregate        Aggregate     Weighted    Average      Average           Loan
                                     Number of       Principal        Principal     Average       FICO       Current           -to-
Range of Original                    Mortgage         Balance          Balance      Mortgage     Credit     Principal         Value
Loan-to-Value Ratios (%)              Loans         Outstanding      Outstanding      Rate       Score       Balance          Ratio
--------------------------------     ---------   ---------------     -----------    -------     --------  -------------     --------
25.01 - 30.00 ..................         3       $  2,503,087.26         0.37%       6.530%       736     $  834,362.42       26.42%
30.01 - 35.00 ..................         6          2,849,127.10         0.42        6.501        717        474,854.52       33.59
35.01 - 40.00 ..................         4          4,996,820.67         0.73        6.686        704      1,249,205.17       39.57
40.01 - 45.00 ..................         8          4,230,638.64         0.62        6.475        726        528,829.83       42.62
45.01 - 50.00 ..................        27         20,890,651.99         3.06        6.514        731        773,727.85       48.62
50.01 - 55.00 ..................        15         10,883,585.50         1.59        6.397        721        725,572.37       52.43
55.01 - 60.00 ..................        41         27,928,038.68         4.08        6.717        709        681,171.68       58.06
60.01 - 65.00 ..................       116         79,510,484.70        11.63        6.651        723        685,435.21       63.61
65.01 - 70.00 ..................       108         70,412,563.33        10.30        6.670        707        651,968.18       68.90
70.01 - 75.00 ..................       153        102,048,471.91        14.92        6.706        721        666,983.48       73.70
75.01 - 80.00 ..................       620        351,118,772.05        51.35        6.720        717        566,320.60       79.48
80.01 - 85.00 ..................         9          4,459,017.14         0.65        6.616        667        495,446.35       83.38
85.01 - 90.00 ..................         5          1,956,407.49         0.29        7.099        688        391,281.50       88.20
                                     -----       ---------------       ------
Total: .........................     1,115       $683,787,666.46       100.00%
                                     =====       ===============       ======


----------
(1) As of the Cut-off Date, the weighted average original Loan-to-Value Ratio of
the Mortgage Loans was approximately 72.58%.

            Original Terms to Stated Maturity for the Mortgage Loans



                                                                                                                            Weighted
                                                                     Percent of                 Weighted                     Average
                                                     Aggregate        Aggregate     Weighted    Average      Average           Loan
                                     Number of       Principal        Principal     Average       FICO       Current           -to-
Original Term to Stated              Mortgage         Balance          Balance      Mortgage     Credit     Principal         Value
Maturity (months)                     Loans         Outstanding      Outstanding      Rate       Score       Balance          Ratio
--------------------------------     ---------   ---------------     -----------    -------     --------  -------------     --------
240 ............................         3       $  1,598,376.33         0.23%       6.299%       742       $532,792.11       75.75%
360 ............................     1,112        682,189,290.13        99.77        6.691        717        613,479.58       72.57
                                     -----       ---------------       ------
Total: .........................     1,115       $683,787,666.46       100.00%
                                     =====       ===============       ======


----------
(1) As of the Cut-off Date, the weighted average original term to stated
maturity of the Mortgage Loans was approximately 360 months.

          Remaining Terms to Stated Maturity for the Mortgage Loans (1)



                                                                                                                            Weighted
                                                                     Percent of                 Weighted                     Average
                                                     Aggregate        Aggregate     Weighted    Average      Average           Loan
                                     Number of       Principal        Principal     Average       FICO       Current           -to-
Remaining Term to Stated             Mortgage         Balance          Balance      Mortgage     Credit     Principal         Value
Maturity (months)                     Loans         Outstanding      Outstanding      Rate       Score       Balance          Ratio
--------------------------------     ---------   ---------------     -----------    -------     --------  -------------     --------
236 ............................         1       $    486,962.64         0.07%       6.500%       790       $486,962.64       72.85%
238 ............................         1            597,544.92         0.09        6.500        717        597,544.92       75.95
239 ............................         1            513,868.77         0.08        5.875        727        513,868.77       78.27
351 ............................         1            243,660.16         0.04        8.625        723        243,660.16       70.00
352 ............................         3          2,087,964.71         0.31        7.890        670        695,988.24       62.74
354 ............................         2            702,723.41         0.10        7.470        753        351,361.71       74.20
355 ............................        14          7,092,148.40         1.04        7.373        711        506,582.03       75.60
356 ............................        28         15,203,068.00         2.22        7.089        717        542,966.71       74.80
357 ............................        36         19,921,245.39         2.91        6.737        720        553,367.93       70.58
358 ............................       155         94,927,991.42        13.88        6.752        715        612,438.65       72.94
359 ............................       512        308,605,655.64        45.13        6.661        718        602,745.42       72.99
360 ............................       361        233,404,833.00        34.13        6.641        717        646,550.78       71.88
                                     -----       ---------------       ------
Total: .........................     1,115       $683,787,666.46       100.00%
                                     =====       ===============       ======


----------
(1) As of the Cut-off Date, the weighted average remaining term to stated
maturity of the Mortgage Loans was approximately 359 months.

                                      S-43


   Geographic Distribution of the Mortgaged Properties for the Mortgage Loans



                                                                                                                            Weighted
                                                                     Percent of                 Weighted                     Average
                                                     Aggregate        Aggregate     Weighted    Average      Average           Loan
                                     Number of       Principal        Principal     Average       FICO       Current           -to-
                                     Mortgage         Balance          Balance      Mortgage     Credit     Principal         Value
State                                 Loans         Outstanding      Outstanding      Rate       Score       Balance          Ratio
--------------------------------     ---------   ---------------     -----------    -------     --------  -------------     --------
Alabama ........................         7       $  3,830,170.38         0.56%       6.715%       711       $547,167.20       77.29%
Alaska .........................         1            242,131.32         0.04        7.750        646        242,131.32       90.00
Arizona ........................        32         18,566,706.26         2.72        6.797        713        580,209.57       74.42
California .....................       557        342,157,414.00        50.04        6.558        722        614,286.20       71.96
Colorado .......................        27         15,211,311.73         2.22        6.863        716        563,381.92       72.86
Connecticut ....................         5          4,628,643.20         0.68        6.672        697        925,728.64       63.57
Delaware .......................         1            652,500.00         0.10        6.375        722        652,500.00       75.00
District of Columbia ...........         3          2,449,586.72         0.36        6.773        725        816,528.91       70.58
Florida ........................        52         32,087,870.67         4.69        6.924        707        617,074.44       71.11
Georgia ........................        21         14,220,066.04         2.08        6.815        724        677,146.00       76.37
Hawaii .........................         6          3,815,769.90         0.56        6.649        709        635,961.65       72.55
Idaho ..........................         5          3,023,236.77         0.44        6.598        702        604,647.35       71.03
Illinois .......................        36         22,894,888.27         3.35        7.188        693        635,969.12       73.82
Indiana ........................         2            520,784.94         0.08        6.621        726        260,392.47       79.40
Iowa ...........................         1            598,858.43         0.09        6.250        819        598,858.43       50.00
Kansas .........................         2            999,196.20         0.15        6.610        701        499,598.10       81.76
Kentucky .......................         1            803,503.06         0.12        6.500        720        803,503.06       70.00
Louisiana ......................         1            517,905.53         0.08        6.500        706        517,905.53       80.00
Maine ..........................         1            647,630.40         0.09        6.500        740        647,630.40       57.52
Maryland .......................        26         15,002,269.31         2.19        6.763        698        577,010.36       75.34
Massachusetts ..................        32         18,097,827.32         2.65        6.781        727        565,557.10       69.51
Michigan .......................        20         10,975,901.32         1.61        6.942        702        548,795.07       75.74
Minnesota ......................         5          2,837,300.00         0.41        6.692        700        567,460.00       77.88
Mississippi ....................         1            464,000.00         0.07        7.125        707        464,000.00       80.00
Missouri .......................         4          2,308,566.53         0.34        6.925        700        577,141.63       72.16
Montana ........................         1            651,255.75         0.10        6.375        806        651,255.75       79.03
Nevada .........................        21         13,649,656.14         2.00        6.794        730        649,983.63       74.65
New Hampshire ..................         2          1,474,500.00         0.22        7.045        701        737,250.00       77.44
New Jersey .....................        34         18,317,469.78         2.68        6.943        694        538,749.11       73.57
New Mexico .....................         3          1,744,319.65         0.26        6.652        707        581,439.88       74.01
New York .......................        63         39,968,872.30         5.85        6.805        706        634,426.54       71.48
North Carolina .................        14          9,897,906.30         1.45        7.050        728        706,993.31       72.52
Ohio ...........................         5          2,296,162.71         0.34        6.970        702        459,232.54       78.37
Oregon .........................        12          7,855,953.47         1.15        6.579        745        654,662.79       73.58
Pennsylvania ...................         8          4,739,443.77         0.69        6.740        677        592,430.47       72.86
Rhode Island ...................         3          2,093,525.58         0.31        7.218        719        697,841.86       63.29
South Carolina .................        11          9,693,580.62         1.42        6.987        720        881,234.60       69.13
Tennessee ......................         6          3,120,743.88         0.46        6.596        704        520,123.98       75.98
Texas ..........................        16         10,060,004.17         1.47        6.819        721        628,750.26       73.91
Utah ...........................         5          3,196,149.61         0.47        6.898        726        639,229.92       76.14
Vermont ........................         1            799,502.76         0.12        8.375        698        799,502.76       57.94
Virginia .......................        25         15,581,281.69         2.28        6.261        717        623,251.27       74.89
Washington .....................        32         18,784,666.23         2.75        6.724        724        587,020.82       76.67
Wisconsin ......................         3          1,781,111.07         0.26        6.507        719        593,703.69       78.08
Wyoming ........................         1            527,522.68         0.08        6.500        655        527,522.68       80.00
                                     -----       ---------------       ------
Total: .........................     1,115       $683,787,666.46       100.00%
                                     =====       ===============       ======


                                      S-44


               Mortgagors' FICO Scores for the Mortgage Loans (1)



                                                                                                                            Weighted
                                                                     Percent of                 Weighted                     Average
                                                     Aggregate        Aggregate     Weighted    Average      Average           Loan
                                     Number of       Principal        Principal     Average       FICO       Current           -to-
Range of FICO                        Mortgage         Balance          Balance      Mortgage     Credit     Principal         Value
Credit Scores                         Loans         Outstanding      Outstanding      Rate       Score       Balance          Ratio
--------------------------------     ---------   ---------------     -----------    -------     --------  -------------     --------
620 - 639 ......................        64       $ 35,923,254.00         5.25%       7.022%       630       $561,300.84       72.63%
640 - 659 ......................        91         54,312,590.73         7.94        7.004        651        596,841.66       69.93
660 - 679 ......................       141         82,740,156.14        12.10        6.722        669        586,809.62       72.57
680 - 699 ......................       148         87,108,434.70        12.74        6.792        689        588,570.50       74.58
700 - 719 ......................       167        103,517,560.64        15.14        6.673        709        619,865.63       73.87
720 - 739 ......................       130         83,403,352.60        12.20        6.697        730        641,564.25       73.94
740 - 759 ......................       137         86,737,145.43        12.68        6.597        750        633,117.85       71.80
760 - 779 ......................       103         65,453,532.20         9.57        6.484        769        635,471.19       70.41
780 - 799 ......................        96         61,062,394.50         8.93        6.480        789        636,066.61       71.43
800 - 819 ......................        37         22,939,245.52         3.35        6.495        807        619,979.61       73.16
820 ............................         1            590,000.00         0.09        6.500        820        590,000.00       50.95
                                     -----       ---------------       ------
Total: .........................     1,115       $683,787,666.46       100.00%
                                     =====       ===============       ======


----------
(1) As of the Cut-off Date, the weighted average FICO Credit Score of the
Mortgage Loans was approximately 717.

              Types of Mortgaged Properties for the Mortgage Loans



                                                                                                                            Weighted
                                                                     Percent of                 Weighted                     Average
                                                     Aggregate        Aggregate     Weighted    Average      Average           Loan
                                     Number of       Principal        Principal     Average       FICO       Current           -to-
                                     Mortgage         Balance          Balance      Mortgage     Credit     Principal         Value
Property Type                         Loans         Outstanding      Outstanding      Rate       Score       Balance          Ratio
--------------------------------     ---------   ---------------     -----------    -------     --------  -------------     --------
Single Family Residence ........       772       $461,677,667.38        67.52%       6.667%       716     $  598,028.07       72.46%
Planned Unit Development
(PUD) ..........................       231        148,154,239.87        21.67        6.646        720        641,360.35       72.63
Low-rise Condominium ...........        48         31,149,422.63         4.56        6.897        725        648,946.30       72.44
Two-Family Residence ...........        36         22,519,436.10         3.29        6.859        703        625,539.89       74.64
High-rise Condominium.. ........        16         10,429,823.05         1.53        7.391        722        651,863.94       74.45
Townhouse ......................         6          3,905,685.00         0.57        6.578        701        650,947.50       76.98
Three-Family Residence. ........         3          2,743,392.43         0.40        6.951        718        914,464.14       70.75
Four-Family Residence.. ........         3          3,208,000.00         0.47        6.601        764      1,069,333.33       63.54
                                     -----       ---------------       ------
Total: .........................     1,115       $683,787,666.46       100.00%
                                     =====       ===============       ======


                         Purposes of the Mortgage Loans



                                                                                                                            Weighted
                                                                     Percent of                 Weighted                     Average
                                                     Aggregate        Aggregate     Weighted    Average      Average           Loan
                                     Number of       Principal        Principal     Average       FICO       Current           -to-
                                     Mortgage         Balance          Balance      Mortgage     Credit     Principal         Value
Loan Purpose                          Loans         Outstanding      Outstanding      Rate       Score       Balance          Ratio
--------------------------------     ---------   ---------------     -----------    -------     --------  -------------     --------
Refinance (Cashout) ............       460       $281,327,888.70        41.14%       6.693%       708       $611,582.37       70.35%
Purchase .......................       359        216,282,513.47        31.63        6.768        731        602,458.25       76.59
Refinance (Rate/Term).. ........       296        186,177,264.29        27.23        6.596        714        628,977.24       71.29
                                     -----       ---------------       ------
Total: .........................     1,115       $683,787,666.46       100.00%
                                     =====       ===============       ======


                                      S-45


                   Occupancy Types for the Mortgage Loans (1)



                                                                                                                            Weighted
                                                                     Percent of                 Weighted                     Average
                                                     Aggregate        Aggregate     Weighted    Average      Average           Loan
                                   Number of         Principal        Principal     Average       FICO       Current           -to-
                                   Mortgage           Balance          Balance      Mortgage     Credit     Principal         Value
Occupancy Type                      Loans           Outstanding      Outstanding      Rate       Score       Balance          Ratio
--------------------------------   ---------     ---------------     -----------    -------     --------  -------------     --------
Owner Occupied .................     1,016       $620,124,417.77        90.69%       6.666%       715       $610,358.68       73.00%
Investment .....................        60         37,445,063.12         5.48        7.069        729        624,084.39       66.89
Second Home ....................        39         26,218,185.57         3.83        6.733        737        672,261.17       70.78
                                     -----       ---------------       ------
Total: .........................     1,115       $683,787,666.46       100.00%
                                     =====       ===============       ======


----------
(1) Based upon representations of the related mortgagors at the time of
origination.

                 Loan Documentation Types for the Mortgage Loans



                                                                                                                            Weighted
                                                                     Percent of                 Weighted                     Average
                                                     Aggregate        Aggregate     Weighted    Average      Average           Loan
                                     Number of       Principal        Principal     Average       FICO       Current           -to-
                                     Mortgage         Balance          Balance      Mortgage     Credit     Principal         Value
Type of Program                       Loans         Outstanding      Outstanding      Rate       Score       Balance          Ratio
--------------------------------     ---------   ---------------     -----------    -------     --------  -------------     --------
Full/Alternate .................       289       $167,058,569.92        24.43%       6.413%       729       $578,057.34       74.53%
Stated Income ..................       551        342,919,461.43        50.15        6.699        712        622,358.37       73.19
No Ratio .......................       122         80,564,685.31        11.78        6.970        709        660,366.27       72.43
No Income/No Asset .............        82         48,711,098.73         7.12        7.034        709        594,037.79       71.42
No Doc .........................        71         44,533,851.07         6.51        6.787        730        627,237.34       62.09
                                     -----       ---------------       ------
Total: .........................     1,115       $683,787,666.46       100.00%
                                     =====       ===============       ======


                      Loan Ages for the Mortgage Loans (1)



                                                                                                                            Weighted
                                                                     Percent of                 Weighted                     Average
                                                     Aggregate        Aggregate     Weighted    Average      Average           Loan
                                     Number of       Principal        Principal     Average       FICO       Current           -to-
                                     Mortgage         Balance          Balance      Mortgage     Credit     Principal         Value
Loan Age (months)                     Loans         Outstanding      Outstanding      Rate       Score       Balance          Ratio
--------------------------------     ---------   ---------------     -----------    -------     --------  -------------     --------
0 ..............................       361       $233,404,833.00        34.13%       6.641%       717       $646,550.78       71.88%
1 ..............................       513        309,119,524.41        45.21        6.660        718        602,572.17       73.00
2 ..............................       156         95,525,536.34        13.97        6.751        715        612,343.18       72.95
3 ..............................        36         19,921,245.39         2.91        6.737        720        553,367.93       70.58
4 ..............................        29         15,690,030.64         2.29        7.071        719        541,035.54       74.74
5 ..............................        14          7,092,148.40         1.04        7.373        711        506,582.03       75.60
6 ..............................         2            702,723.41         0.10        7.470        753        351,361.71       74.20
8 ..............................         3          2,087,964.71         0.31        7.890        670        695,988.24       62.74
9 ..............................         1            243,660.16         0.04        8.625        723        243,660.16       70.00
                                     -----       ---------------       ------
Total: .........................     1,115       $683,787,666.46       100.00%
                                     =====       ===============       ======


----------
(1)   As of the Cut-off Date, the weighted average loan age of the Mortgage
      Loans was approximately one month.

                                      S-46


             Prepayment Charge Terms and Types of the Mortgage Loans



                                                                                                                            Weighted
                                                                     Percent of                 Weighted                     Average
                                                     Aggregate        Aggregate     Weighted    Average      Average           Loan
                                   Number of         Principal        Principal     Average       FICO       Current           -to-
Prepayment Charge                  Mortgage           Balance          Balance      Mortgage     Credit     Principal         Value
Term and Type (months)              Loans           Outstanding      Outstanding      Rate       Score       Balance          Ratio
--------------------------------   ---------     ---------------     -----------    -------     --------  -------------     --------
0 ..............................     1,098       $679,214,715.12        99.33%       6.687%       717       $618,592.64       72.59%
12 - Hard ......................         2            454,640.02         0.07        7.408        694        227,320.01       54.68
24 - Hard ......................         2            832,407.53         0.12        7.670        678        416,203.77       79.30
36 - Hard ......................        10          2,920,650.53         0.43        6.926        686        292,065.05       72.82
36 - Soft ......................         3            365,253.26         0.05        7.406        656        121,751.09       62.29
                                     -----       ---------------       ------
Total: .........................     1,115       $683,787,666.46       100.00%
                                     =====       ===============       ======


           Interest Only Periods at Origination of the Mortgage Loans



                                                                                                                            Weighted
                                                                     Percent of                 Weighted                     Average
                                                     Aggregate        Aggregate     Weighted    Average      Average           Loan
                                     Number of       Principal        Principal     Average       FICO       Current           -to-
Interest Only Period                 Mortgage         Balance          Balance      Mortgage     Credit     Principal         Value
(months)                              Loans         Outstanding      Outstanding      Rate       Score       Balance          Ratio
--------------------------------     ---------   ---------------     -----------    -------     --------  -------------     --------
0 ..............................       555       $333,472,316.45        48.77%       6.630%       717       $600,851.02       71.55%
120 ............................       560        350,315,350.01        51.23        6.748        717        625,563.13       73.55
                                     -----       ---------------       ------
Total: .........................     1,115       $683,787,666.46       100.00%
                                     =====       ===============       ======


                   Origination Channels for the Mortgage Loans



                                                                                                                            Weighted
                                                                     Percent of                 Weighted                     Average
                                                     Aggregate        Aggregate     Weighted    Average      Average           Loan
                                     Number of       Principal        Principal     Average       FICO       Current           -to-
                                     Mortgage         Balance          Balance      Mortgage     Credit     Principal         Value
Origination Channel                   Loans         Outstanding      Outstanding      Rate       Score       Balance          Ratio
--------------------------------     ---------   ---------------     -----------    -------     --------  -------------     --------
Conduit ........................       736       $442,191,338.40        64.67%       6.699%       716       $600,803.45       72.80%
Correspondent ..................       141         91,946,356.15        13.45        6.696        725        652,101.82       71.86
Consumer Direct ................         1            747,000.00         0.11        6.000        691        747,000.00       64.68
Mortgage Professionals. ........       237        148,902,971.91        21.78        6.667        713        628,282.58       72.39
                                     -----       ---------------       ------
Total: .........................     1,115       $683,787,666.46       100.00%
                                     =====       ===============       ======


                                      S-47


Assignment of the Mortgage Loans

      Pursuant to the pooling and servicing agreement, on the closing date the
depositor will assign 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 Mortgage Loan and all interest in all other assets included in
Residential Asset Securitization Trust 2007-A2. This assignment will include all
scheduled payments received on or with respect to the Mortgage Loans that were
due after the Cut-off Date, but not any principal and interest due on or before
the Cut-off Date.

      In connection with the assignment of the Mortgage Loans, the depositor
will deliver or cause to be delivered to the trustee the mortgage file, which
contains among other things, the original mortgage note (and any modification or
amendment to it) endorsed in blank without recourse, except that the depositor
may deliver or cause to be delivered a lost note affidavit in lieu of any
original mortgage note that has been lost, the original instrument creating a
first lien on the related mortgaged property with evidence of recording
indicated thereon, an assignment in recordable form of the mortgage, the title
policy with respect to the related mortgaged property and, if applicable, all
recorded intervening assignments of the mortgage and any riders or modifications
to the mortgage note and mortgage (except for any documents not returned from
the public recording office, which will be delivered to the trustee as soon as
the same is available to the depositor). With respect to up to 30% of the
Mortgage Loans in each loan group, the depositor may deliver all or a portion of
each related mortgage file to the trustee not later than five business days
after the closing date. 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 such as California where in the opinion of counsel
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 seller. Under certain circumstances specified
in the pooling and servicing agreement, the assignments will be recorded (at the
Servicer's expense).

      The trustee will review each mortgage file relating to the Mortgage Loans
within 90 days of the closing date (or promptly after the trustee's receipt of
any document permitted to be delivered after the closing date) and if any
document in a mortgage file is found to be missing or defective in a material
respect adverse to the interests of the certificateholders in the related
Mortgage Loan and the seller does not cure the defect within 90 days of notice
of the defect from the trustee (or within such longer period not to exceed 720
days after the closing date as provided in the pooling and servicing agreement
in the case of missing documents not returned from the public recording office),
the seller will be obligated to repurchase the related Mortgage Loan from the
issuing entity. The trustee will hold the Mortgage Loan documents in trust for
the benefit of the certificateholders in accordance with its customary
procedures, including storing the documents in fire-resistant facilities. Rather
than repurchase the Mortgage Loan as provided above, the seller may remove the
Mortgage Loan (referred to as a deleted Mortgage Loan) from the issuing entity
and substitute in its place another Mortgage Loan (referred to as a replacement
Mortgage Loan); however, such a substitution is permitted only within two years
of the closing date and may not be made unless an opinion of counsel is provided
to the trustee to the effect that substitution will not disqualify any REMIC or
result in a prohibited transaction tax under the Code. Any replacement Mortgage
Loan generally will, on the date of substitution, among other characteristics
set forth in the pooling and servicing agreement,

o     have a principal balance, after deduction of all scheduled payments due in
      the month of substitution, not in excess of, and not more than 10% less
      than, the Stated Principal Balance of the deleted Mortgage Loan (the
      amount of any shortfall to be deposited by the seller in the Certificate
      Account and held for distribution to the certificateholders on the related
      Distribution Date (a "Substitution Adjustment Amount")),

o     have a Mortgage Rate not lower than, and not more than 1% per annum higher
      than, that of the deleted Mortgage Loan,

o     have a Loan-to-Value Ratio not higher than that of the deleted Mortgage
      Loan,

o     have a remaining term to maturity not more than one year greater than, nor
      more than one year less than, that of the deleted Mortgage Loan, and


                                      S-48


o     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 certificateholders or the trustee for a material omission
of, or a material defect in, a Mortgage Loan document.

      Notwithstanding the foregoing, in lieu of providing the duly executed
assignment of the mortgage to the trustee and the original recorded assignment
or assignments of the mortgage together with all interim recorded assignments of
such mortgage, 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
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, 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 servicer, registered
electronically through the MERS(R) System. For each of the Mortgage Loans, MERS
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.

                                   The Seller

      IndyMac Bank, F.S.B. ("IndyMac Bank") will be the seller of the Mortgage
Loans. The principal executive offices of the seller are located at 888 East
Walnut Street, Pasadena, California 91101-7211. IndyMac Bank is a wholly-owned
subsidiary of IndyMac Intermediate Holdings, Inc., which is a wholly-owned
subsidiary of IndyMac Bancorp, Inc. The business now operated by IndyMac Bank
began in 1993. On July 1, 2000, this business was transferred by a predecessor
company to IndyMac Bank and began operation as a federal savings bank

Origination Process

      IndyMac Bank acquires mortgage loans principally through four channels:
mortgage professionals, consumer direct, correspondent and conduit. IndyMac Bank
also acquires a relatively small number of mortgage loans through other
channels.

      Mortgage professionals: Mortgage brokers, mortgage bankers, financial
institutions and homebuilders who have taken applications from prospective
borrowers and submitted those applications to IndyMac Bank.

      Consumer direct: Mortgage loans initiated through direct contact with the
borrower. This contact may arise from internet advertising and IndyMac Bank
website traffic, affinity relationships, company referral programs, realtors and
through its Southern California retail banking branches.

      Correspondent: Mortgage brokers, mortgage bankers, financial institutions
and homebuilders who sell previously funded mortgage loans to IndyMac Bank.

      Conduit: IndyMac Bank acquires pools of mortgage loans in negotiated
transactions either with the original mortgagee or an intermediate owner of the
mortgage loans.

      IndyMac Bank approves each mortgage loan seller prior to the initial
transaction on the basis of the seller's financial and management strength,
reputation and prior experience. Sellers are periodically reviewed and if their
performance, as measured by compliance with the applicable loan sale agreement,
is unsatisfactory, IndyMac Bank will cease doing business with them.

Underwriting Process

      Mortgage loans that are acquired by IndyMac Bank are underwritten by
IndyMac Bank according to IndyMac Bank's underwriting guidelines, which also
accept mortgage loans meeting Fannie Mae or Freddie Mac


                                      S-49


guidelines regardless of whether such mortgage loans would otherwise meet
IndyMac Bank's guidelines, or pursuant to an exception to those guidelines based
on IndyMac Bank's procedures for approving such exceptions. Conventional
mortgage loans are loans that are not insured by the FHA or partially guaranteed
by the VA. Conforming mortgage loans are loans that qualify for sale to Fannie
Mae and Freddie Mac, whereas non-conforming mortgage loans are loans that do not
so qualify. Non-conforming mortgage loans originated or purchased by IndyMac
Bank pursuant to its underwriting programs typically differ from conforming
loans primarily with respect to loan-to-value ratios, borrower income, required
documentation, interest rates, borrower occupancy of the mortgaged property
and/or property types. To the extent that these programs reflect underwriting
standards different from those of Fannie Mae and Freddie Mac, the performance of
loans made pursuant to these different underwriting standards may reflect higher
delinquency rates and/or credit losses.

      IndyMac Bank has two principal underwriting methods designed to be
responsive to the needs of its mortgage loan customers: traditional underwriting
and e-MITS (Electronic Mortgage Information and Transaction System)
underwriting. E-MITS is an automated, internet-based underwriting and risk-based
pricing system. IndyMac Bank believes that e-MITS generally enables it to
estimate expected credit loss, interest rate risk and prepayment risk more
objectively than traditional underwriting and also provides consistent
underwriting decisions. IndyMac Bank has procedures to override an e-MITS
decision to allow for compensating factors.

      IndyMac Bank's underwriting criteria for traditionally underwritten
mortgage loans includes an analysis of the borrower's credit history, ability to
repay the mortgage loan and the adequacy of the mortgaged property as
collateral. Traditional underwriting decisions are made by individuals
authorized to consider compensating factors that would allow mortgage loans not
otherwise meeting IndyMac Bank's guidelines.

      In determining a borrower's FICO Credit Score, IndyMac Bank generally
selects the middle credit score of the scores provided by each of the three
major U.S. credit repositories (Equifax, TransUnion and Experian) for each
borrower, and then selects the lowest of these scores. In some instances,
IndyMac Bank selects the middle score of the borrower with the largest amount of
qualifying income among all of the borrowers on the mortgage loan. A FICO Credit
Score might not be available for a borrower due to insufficient credit
information on file with the credit repositories. In these situations, IndyMac
Bank will establish a borrower's credit history through documentation of
alternative sources of credit such as utility payments, auto insurance payments
and rent payments. In addition to the FICO Credit Score, other information
regarding a borrower's credit quality is considered in the loan approval
process, such as the number and degree of any late mortgage or rent payments
within the preceding 12-month period, the age of any foreclosure action against
any property owned by the borrower, the age of any bankruptcy action, the number
of seasoned tradelines reflected on the credit report and any outstanding
judgments, liens, charge-offs or collections.

      For each mortgage loan with a Loan-to-Value Ratio at origination exceeding
80%, IndyMac Bank will usually require a primary mortgage guarantee insurance
policy that conforms to the guidelines of Fannie Mae and Freddie Mac. After the
date on which the Loan-to-Value Ratio of a mortgage loan is 80% or less, either
because of principal payments on the mortgage loan or because of a new appraisal
of the mortgaged property, no primary mortgage guaranty insurance policy will be
required on that mortgage loan.

      All of the insurers that have issued primary mortgage guaranty insurance
policies with respect to the mortgage loans meet Fannie Mae's or Freddie Mac's
standards or are acceptable to the rating agencies. In some circumstances,
however, IndyMac Bank does not require primary mortgage guaranty insurance on
mortgage loans with Loan-to-Value Ratios greater than 80%.

      IndyMac Bank purchases loans that have been originated under one of seven
documentation programs: Full/Alternate, FastForward, Bank Statement, Stated
Income, No Ratio, No Income/No Asset and No Doc. In general, documentation types
that provide for less than full documentation of employment, income and liquid
assets require higher credit quality and have lower loan-to-value ratios and
loan amount limits.

      Under the Full/Alternate Documentation Program, the prospective borrower's
employment, income and assets are verified through written documentation such as
tax returns, pay stubs or W-2 forms. Generally, a two-year history of employment
or continuous source of income is required to demonstrate adequacy and
continuance of income. Borrowers applying under the Full/Alternate Documentation
Program may, based on certain loan


                                      S-50


characteristics and higher credit quality, qualify for IndyMac Bank's
FastForward program and be entitled to income and asset documentation relief.
Borrowers who qualify for FastForward must state their income, provide a signed
Internal Revenue Service Form 4506 (authorizing IndyMac Bank to obtain copies of
their tax returns), and state their assets; IndyMac Bank does not require any
verification of income or assets under this program.

      The Bank Statement Documentation Program is similar to the Full/Alternate
Documentation Program except that borrowers generally must document income and
employment for six months (rather than two, as required by the Full/Alternate
Documentation Program). Borrowers under the Bank Statement Documentation Program
may use bank statements to verify their income and employment. If applicable,
written verification of a borrower's assets is required under this program.

      The Stated Income Documentation Program requires prospective borrowers to
provide information regarding their assets and income. Information regarding a
borrower's assets, if applicable, is verified through written communications.
Information regarding income is not verified and employment verification may not
be written.

      The No Ratio Program requires prospective borrowers to provide information
regarding their assets, which is then verified through written communications.
The No Ratio Program does not require prospective borrowers to provide
information regarding their income, but employment may not be written.

      Under the No Income/No Asset Documentation Program and the No Doc
Documentation Program, emphasis is placed on the credit score of the prospective
borrower and on the value and adequacy of the mortgaged property as collateral,
rather than on the income and the assets of the prospective borrower.
Prospective borrowers are not required to provide information regarding their
assets or income under either program, although under the No Income/No Asset
Documentation Program, employment is orally verified.

      IndyMac Bank generally will re-verify income, assets, and employment for
mortgage loans it acquires through the wholesale channel, but not for mortgage
loans acquired through other channels.

      Maximum loan-to-value and combined loan-to-value ratios and loan amounts
are established according to the occupancy type, loan purpose, property type,
FICO Credit Score, number of previous late mortgage payments, and the age of any
bankruptcy or foreclosure actions. Additionally, maximum total monthly debt
payments-to-income ratios and cash-out limits may be applied. Other factors may
be considered in determining loan eligibility such as a borrower's residency and
immigration status, whether a non-occupying borrower will be included for
qualification purposes, sales or financing concessions included in any purchase
contract, the acquisition cost of the property in the case of a refinance
transaction, the number of properties owned by the borrower, the type and amount
of any subordinate mortgage, the amount of any increase in the borrower's
monthly mortgage payment compared to previous mortgage or rent payments and the
amount of disposable monthly income after payment of all monthly expenses.

      To determine the adequacy of the property to be used as collateral, an
appraisal is generally made of the subject property in accordance with the
Uniform Standards of Profession Appraisal Practice. The appraiser generally
inspects the property, analyzes data including the sales prices of comparable
properties and issues an opinion of value using a Fannie Mae/Freddie Mac
appraisal report form, or other acceptable form. In some cases, an automated
valuation model (AVM) may be used in lieu of an appraisal. AVMs are computer
programs that use real estate information, such as demographics, property
characteristics, sales prices, and price trends to calculate a value for the
specific property. The value of the property, as indicated by the appraisal or
AVM, must support the loan amount.

      Underwriting procedures vary by channel of origination. Generally,
mortgage loans originated through the mortgage professional channel will be
submitted to e-MITS for assessment and subjected to a full credit review and
analysis. Mortgage loans that do not meet IndyMac Bank's guidelines may be
manually re-underwritten and approved under an exception to those underwriting
guidelines. Mortgage loans originated through the consumer direct channel are
subjected to essentially the same procedures, modified as necessary to reflect
the fact that no third-party contributes to the preparation of the credit file.


                                      S-51


      IndyMac Bank currently operates two mortgage loan purchase programs as
part of its correspondent channel:

      1. Prior Approval Program. Under this program, IndyMac Bank performs a
full credit review and analysis of each mortgage loan generally with the same
procedures used for mortgage loans originated through the mortgage professionals
channel. Only after IndyMac Bank issues an approval notice to a loan originator
is a mortgage loan eligible for purchase pursuant to this program.

      2. Preferred Delegated Underwriting Program. Under this program, loan
originators that meet certain eligibility requirements are allowed to tender
mortgage loans for purchase without the need for IndyMac Bank to verify
mortgagor information. The eligibility requirements for participation in the
Preferred Delegated Underwriting Program vary based on the net worth of the loan
originators with more stringent requirements imposed on loan originators with a
lower net worth. Loan originators are required to submit a variety of
information to IndyMac Bank for review, including their current audited
financial statements, their quality control policies and procedures, their
current errors and omissions/fidelity insurance coverage evidencing blanket
coverage in a minimum amount of $300,000, at least three underwriters' resumes
showing at least three years experience or a direct endorsement designation, and
at least two references from mortgage insurance companies. Loan originators are
required to have an active, traditional warehouse line of credit, which is
verified together with the bailee letter and wire instructions. IndyMac Bank
requires each loan originator to be recertified on an annual basis to ensure
that it continues to meet the minimum eligibility guidelines for the Preferred
Delegated Underwriting Program.

      Under the Preferred Delegated Underwriting Program, each eligible loan
originator is required to underwrite mortgage loans in compliance with IndyMac
Bank's underwriting guidelines usually by use of e-MITS or, infrequently, by
submission of the mortgage loan to IndyMac Bank for traditional underwriting. A
greater percentage of mortgage loans purchased pursuant to this program are
selected for post-purchase quality control review than for the other program.

      Mortgage loans originated through the conduit channel were generally
initially underwritten by the seller to the seller's underwriting guidelines.
IndyMac Bank reviews each seller's guidelines for acceptability, and these
guidelines generally meet industry standards and incorporate many of the same
factors used by Fannie Mae, Freddie Mac and IndyMac Bank. Each mortgage loan is
re-underwritten by IndyMac Bank for compliance with its guidelines based only on
the objective characteristics of the mortgage loan, such as FICO Credit Score,
documentation type, loan-to-value ratio, etc., but without reassessing the
underwriting procedures originally used. In addition, a portion of the mortgage
loans acquired from a seller are subjected to a full re-underwriting.

      Exceptions to underwriting standards are permitted in situations in which
compensating factors exist. Examples of these factors are significant financial
reserves, a low loan-to-value ratio, significant decrease in the borrower's
monthly payment and long-term employment with the same employer.

Representations by Seller; Repurchases, etc.

      The seller represents that immediately before the assignment of the
Mortgage Loans to the depositor, it will have good title to, and will be the
sole owner of, each Mortgage Loan free and clear of any pledge, lien,
encumbrance or security interest and will have 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 the event of a breach of any representation or warranty in respect of a
Mortgage Loan that materially and adversely affects the interests of the
certificateholders, the seller will be obligated, in accordance with the pooling
and servicing agreement, to cure that breach, to repurchase the Mortgage Loan at
the purchase price or to substitute a qualified mortgage loan for the Mortgage
Loan. See "Mortgage Loan Program--Representations by Sellers; Repurchases" in
the prospectus.


                                      S-52


                         Servicing of the Mortgage Loans

The Servicer

      IndyMac Bank will act as servicer under the pooling and servicing
agreement (in such capacity, the "servicer"). The principal executive offices of
the servicer are located at 888 East Walnut Street, Pasadena, California
91101-7211. IndyMac Bank has been master servicing mortgage loans since 1993 and
servicing mortgage loans directly (servicing without the use of a subservicer)
since 1998. It is expected that on the closing date the servicer will be the
only entity servicing the Mortgage Loans. As of the date of this prospectus
supplement, IndyMac Bank is rated (x) by Fitch, "RPS2+" as a servicer of alt/A,
prime and subprime mortgage loans, (y) by Moody's, "SQ2" as a primary servicer
of prime first lien mortgage loans, "SQ2-" as a primary servicer of subprime
first lien mortgage loans and "SQ2-" as a special servicer and (z) by S&P,
"above average/stable" as a primary servicer and "average/stable" as a master
servicer and special servicer.

      The servicer will be responsible for servicing the Mortgage Loans in
accordance with the terms set forth in the pooling and servicing agreement
employing the same degree of skill and care that it employs in servicing other
mortgage loans comparable to the Mortgage Loans serviced by the servicer for
itself or others. The servicer has 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.

      If the servicing of any Mortgage Loan were to be transferred, there may be
an increase in delinquencies and defaults due to misapplied or lost payments,
data input errors, system incompatibilities or otherwise. Although any increase
in delinquencies is expected to be temporary, there can be no assurance as to
the duration or severity of any disruption in servicing the applicable Mortgage
Loans as a result of any servicing transfer. See also "Risk Factors--Bankruptcy
or Insolvency May Affect the Timing and Amount of Distributions on the
Securities" in the prospectus.

Servicing Compensation and Payment of Expenses

      The expense fees are payable out of the interest payments on each Mortgage
Loan. As of the Cut-off Date, the weighted average rate at which the expense
fees accrue (referred to as the "Expense Fee Rate") was approximately 0.2234%
and 0.2203% per annum for loan group 1 and loan group 2, respectively. The
"Expense Fees" consist of (a) the servicing fee, (b) fees payable to the trustee
in respect of its activities as trustee under the pooling and servicing
agreement in an amount of 0.0055% per annum of the Stated Principal Balance of
each Mortgage Loan (the "trustee fee") and (c) lender paid mortgage insurance
premiums. The servicing fee rate will equal either 0.20% per annum or 0.25% per
annum and will be set forth on the mortgage loan schedule attached as an exhibit
to the pooling and servicing agreement. The servicer is obligated to pay certain
ongoing expenses associated with the issuing entity and incurred by the servicer
in connection with its responsibilities under the pooling and servicing
agreement and those amounts will be paid by the servicer out of its fee. The
amount of the servicer's servicing compensation is subject to adjustment with
respect to prepaid Mortgage Loans, as described in this prospectus supplement
under "--Adjustment to Servicing Compensation in Connection with Certain Prepaid
Mortgage Loans." The servicer will also be entitled to receive late payment
fees, assumption fees and other similar charges. The servicer will be entitled
to receive all reinvestment income earned on amounts on deposit in the
Certificate Account and the Distribution Account and Excess Proceeds with
respect to the Mortgage Loans as described in this prospectus supplement under
"Description of the Certificates - Fees and Expenses."

      The "adjusted net mortgage rate" of a Mortgage Loan is the Mortgage Loan's
Mortgage Rate minus the related Expense Fee Rate.

Adjustment to Servicing Compensation in Connection with Certain Prepaid Mortgage
Loans

      When a borrower prepays a Mortgage Loan between Due Dates, the borrower is
required to pay interest on the amount prepaid only to the date of prepayment
and not thereafter. Similarly, if the servicer purchases a Mortgage Loan as
described in this prospectus supplement under "--Certain Modifications and
Refinancings," the issuing entity is entitled to the interest paid by the
borrower only to the date of purchase. Except with respect to the


                                      S-53


month of the Cut-off Date, principal prepayments by borrowers received by the
servicer from the first day through the fifteenth day of a calendar month will
be distributed to certificateholders on the Distribution Date in the same month
in which the prepayments on such Mortgage Loans are received and, accordingly,
no shortfall in the amount of interest to be distributed to certificateholders
with respect to the prepaid Mortgage Loans will result. Conversely, principal
prepayments on such Mortgage Loans received by the servicer from the sixteenth
day (or, in the case of the first Distribution Date, from the Cut-off Date)
through the last day of a calendar month will be distributed to
certificateholders on the Distribution Date in the month following the month of
receipt and, accordingly, a shortfall in the amount of interest to be
distributed to certificateholders with respect to such prepaid Mortgage Loans
would result. To offset any interest shortfall to certificateholders as a result
of any prepayments, the servicer will be required to reduce its servicing
compensation, but the reduction for any Distribution Date will be limited to an
amount (such amount, "Compensating Interest") equal to the product of

o     0.125% multiplied by

o     one-twelfth multiplied by

o     the aggregate Stated Principal Balance of the Mortgage Loans as of the
      first day of the prior month.

      If shortfalls in interest as a result of prepayments on the Mortgage Loans
in any month exceed the Compensating Interest for such month, the amount of
interest distributed to certificateholders will be reduced by the amount of the
excess and no amounts will be due or paid with respect to such reduction on
future Distribution Dates. See "Description of the Certificates -- Interest" in
this prospectus supplement.

Advances

      Except as described below, the servicer will be required to advance prior
to each Distribution Date, from its own funds or amounts received with respect
to the Mortgage Loans that do not constitute Available Funds for this
Distribution Date, an amount (referred to as an "advance") equal to

o     all of the payments of principal and interest on the Mortgage Loans due
      but delinquent as of the "Determination Date" (which will be the 18th of
      the month or, if the 18th is not a business day, the next business day
      after the 18th of the month)

      minus

o     the servicing fee for those Mortgage Loans for the period

      plus

o     an amount equivalent to interest on each Mortgage Loan as to which the
      mortgaged property has been acquired by the issuing entity (through
      foreclosure or deed-in-lieu of foreclosure).

      Advances are intended to maintain a regular flow of scheduled interest and
principal distributions on the certificates rather than to guarantee or insure
against losses. The servicer is obligated to make advances with respect to
delinquent payments of principal of or interest on each Mortgage Loan only to
the extent that such advances made on that Mortgage Loan are, in its reasonable
judgment, recoverable from future payments and collections or insurance payments
or proceeds of liquidation of the related Mortgage Loan. If the servicer
determines on any Determination Date to make an advance, that advance will be
included with the distribution to certificateholders on the related Distribution
Date. Any failure by the servicer to make a deposit in the Certificate Account
as required under the pooling and servicing agreement, including any failure to
make an advance, will constitute an event of default under the pooling and
servicing agreement if such failure remains unremedied for five days after
written notice of such failure. If the servicer is terminated as a result of the
occurrence of an event of default, the trustee or the successor servicer will be
obligated to make any required advance, 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 servicer delivers


                                      S-54


an officer's certificate to the trustee indicating that the advance is
nonrecoverable, the servicer will be 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

      The servicer may modify any Mortgage Loan at the request of the related
mortgagor, provided that the servicer purchases the Mortgage Loan from the
issuing entity immediately preceding the modification. A modification of a
Mortgage Loan may be made in lieu of refinancing to change the interest rate on
the related Mortgage Loan or to alter any other characteristics of the Mortgage
Loans as, for example, to change the terms relating to the adjustment of the
mortgage interest rate. The servicer attempts to identify mortgagors who are
likely to refinance their Mortgage Loans (and therefore cause a prepayment in
full) and inform them of the availability of the option of modification in lieu
of refinancing. Mortgagors who are informed of this option are more likely to
request a modification than mortgagors who are not so informed. 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 first day of the month in which the
proceeds are to be distributed at the applicable net mortgage rate, net of any
unreimbursed advances of principal and interest on the Mortgage Loan made by the
servicer. The servicer will deposit the purchase price in the Certificate
Account within one business day of the purchase of that Mortgage Loan. The
purchase price will be treated by the servicer as a prepayment in full of the
related Mortgage Loan, and will be distributed by the trustee in accordance with
the pooling and servicing agreement. Purchases of Mortgage Loans may occur when
prevailing interest rates are below the interest rates on the Mortgage Loans and
mortgagors request modifications as an alternative to refinancings. The servicer
will indemnify the issuing entity against liability for any prohibited
transactions taxes and any interest, additions or penalties imposed on any REMIC
as a result of any modification or purchase.

Prepayment Charges

      A portion of the Mortgage Loans provide for the payment of a prepayment
charge if the related mortgagor prepays such Mortgage Loan during a period
ranging from one year to three years after origination. The prepayment charges
that are imposed on such Mortgage Loans can either be hard prepayment charges or
soft prepayment charges. With respect to Mortgage Loans that impose soft
prepayment charges, the mortgagor is only required to pay a prepayment charge if
the mortgagor prepays the Mortgage Loan for a reason other than as a result of
selling the mortgaged property. Mortgage Loans that impose hard prepayment
charges require the payment of a prepayment charge in connection with any
prepayment, regardless of the reason for that prepayment. Approximately 0.14% of
the Mortgage Loans in loan group 2 (by aggregate Stated Principal Balance of the
Mortgage Loans in loan group 2 as of the Cut-off Date) have soft prepayment
charges and approximately 0.26% and 1.17% of the Mortgage Loans in loan group 1
and loan group 2, respectively, in each case by aggregate Stated Principal
Balance of the Mortgage Loans in the related loan group as of the Cut-off Date,
have hard prepayment charges. Any prepayment charges paid on the Mortgage Loans
will not be distributed to any of the certificates, but will be retained by the
servicer as additional compensation.

Default Management Services

      In connection with the servicing of defaulted Mortgage Loans, the servicer
may perform certain default management and other similar services (including,
but not limited to, appraisal services) and may act as a broker in the sale of
mortgaged properties related to those Mortgage Loans. The servicer will be
entitled to reasonable compensation for providing those services, in addition to
the servicing compensation described in this prospectus supplement.

                                   The Sponsor

      The sponsor is IndyMac Bank. The sponsor is the same entity as the seller
and the servicer of the Mortgage Loans, and is the parent company of the
depositor. The sponsor has been the sponsor of securitizations backed by


                                      S-55


residential mortgage loans since 1993. The following table describes the
approximate volume of mortgage loan securitizations sponsored by IndyMac Bank
since 2002.

                         Year                 Approximate Volume
                        ------               --------------------
                         2002                   $6.25 billion
                         2003                   $5.78 billion
                         2004                   $16.03 billion
                         2005                   $31.37 billion
                         2006                   $39.17 billion

      As the sponsor, IndyMac Bank originates and acquires mortgage loans and
initiates their securitization by transferring the mortgage loans to the
depositor. The mortgage loans are then transferred to the issuing entity for the
related securitization. The sponsor works with underwriters and rating agencies
in structuring their securitization transactions.

                                Static Pool Data

      Certain static pool data and delinquency, cumulative loss and prepayment
data for IndyMac Bank is available on the internet at
http://regab.indymacbank.com/. Each of these securitizations is unique, and the
characteristics of each securitized mortgage pool varies from each other as well
as from the Mortgage Loans to be included in the issuing entity that will issue
the certificates offered by this prospectus supplement. In addition, the
performance information relating to the prior securitizations described above
may have been influenced by factors beyond the sponsor's control, such as
housing prices and market interest rates. Therefore, the performance of these
prior securitizations is likely to not be indicative of the future performance
of the Mortgage Loans.

      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 IndyMac Bank, F.S.B. that do not include the
      Mortgage Loans and that were established 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 Depositor

      The depositor is IndyMac MBS, Inc., a Delaware corporation that is a
limited purpose finance subsidiary of IndyMac Bank, F.S.B. Its address is 155
North Lake Avenue, Pasadena, California 91101, and its telephone number is (800)
669-2300. The depositor will not have any business operations other than
securitizing mortgage assets and related activities.

                               The Issuing Entity

      In connection with the issuance of the certificates, the depositor has
formed the Residential Asset Securitization Trust 2007-A2, a common law trust
created under the laws of the State of New York pursuant to the pooling and
servicing agreement. 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-56


      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. Because 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.

      Because 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 the issuing entity would be
characterized as a "business trust."

                                   The Trustee

      Deutsche Bank National Trust Company ("DBNTC" or the "trustee") will act
as trustee, calculation agent and custodian. DBNTC is a national banking
association which has an office in Santa Ana, California. DBNTC has previously
been appointed to the role of trustee for numerous mortgage-backed transactions
since 1991. As custodian, DBNTC will maintain the mortgage files in secure,
fire-resistant facilities. DBNTC will not physically segregate the mortgage
files in DBNTC's custody and the mortgage files will be kept in shared
facilities. However, DBNTC's proprietary document tracking system will show the
location within DBNTC's facilities of each mortgage file held by the trustee on
behalf of the issuing entity. DBNTC has no legal proceeding that would
materially affect its ability to perform its duties as trustee, calculation
agent or custodian. DBNTC may perform certain of its obligations through one or
more third party vendors. However, DBNTC will remain liable for the duties and
obligations required of it under the pooling and servicing agreement. The
depositor and the servicer may maintain other banking relationships in the
ordinary course of business with DBNTC.

      Offered certificates may be surrendered at the offices designated by the
trustee from time to time for such purposes, which as of the closing date is of
the trustee located at DB Services Tennessee, 648 Grassmere Park Rd., Nashville,
TN 37211-3658, Attention: Transfer Unit, or at any other address the trustee
designates from time to time. Correspondence may be directed to the trustee at
its corporate trust office located at 1761 East St. Andrew Place, Santa Ana,
California 92705, Attention: Trust Administration IN0702. Certificateholders may
access monthly statements from the trustee's website
(https://www.tss.db.com/invr). Certificateholders may obtain assistance in
operating the trustee's website by calling the trustee's investor relations desk
at (800) 735-7777.

      In addition to the duties described elsewhere in this prospectus
supplement and the prospectus, the trustee will perform many services on behalf
of the issuing entity pursuant to the pooling and servicing agreement. The
trustee will be responsible for (x) calculating and paying principal and
interest distributions to each certificateholder, (y) preparing and filing all
income tax returns and (z) the preparation of monthly statements to
certificateholders.

      The trustee will be liable for its own negligent action, its own negligent
failure to act or its own willful misconduct. 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 it is finally proven that the trustee was
            negligent in ascertaining the pertinent facts,

      o     with respect to any action taken, suffered or omitted to be taken by
            it in good faith in accordance with the direction of holders of
            certificates evidencing not less than 25% of the Voting Rights of
            the certificates 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, suffered or omitted by it in good faith and
            believed by it to be authorized or within the discretion or rights
            or powers conferred upon it by the pooling and servicing agreement,
            or


                                      S-57


      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 may request and rely upon and shall be protected in acting or
refraining from acting 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 in good faith 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 such laws 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 servicer and each Rating Agency 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 or the servicer may remove the trustee and appoint a
successor trustee 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 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,

      o     a tax is imposed with respect to the issuing entity by any state in
            which the trustee or the issuing entity is located and the
            imposition of the tax would be avoided by the appointment of a
            different trustee, or

      o     during the period in which the depositor is required to file reports
            under the Securities Exchange Act of 1934, as amended, the trustee
            fails to comply with its related obligations, as described in the
            pooling and servicing agreement.

      In addition, the holders of certificates evidencing at least 51% of the
Voting Rights may at any time remove the trustee and appoint a successor
trustee. Notice of any removal of the trustee shall be given to each Rating
Agency by the successor trustee. The party initiating the removal of a trustee
will bear any expense associated with the removal of the appointment of a new
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 and its appointment does not
adversely affect the then-current ratings of the certificates.


                                      S-58


                         Description of the Certificates

General

      The certificates will be issued pursuant to the pooling and servicing
agreement. The following sections of this prospectus supplement are summaries of
the material terms of the certificates and the pooling and servicing agreement
pursuant to which the certificates will be issued. They do not purport to be
complete, however, and 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
certificates represent obligations of the issuing entity only and do not
represent an interest in or obligation of IndyMac MBS, Inc., IndyMac Bank,
F.S.B. or any of their affiliates.

      The Mortgage Pass-Through Certificates, Series 2007-B will consist of the
Class 1-A-1, Class 1-A-2, Class 1-A-3, Class 1-A-4, Class 1-A-5, Class 1-A-6,
Class 1-A-7, Class 1-A-8, Class 1-A-9, Class 2-A-1, Class 2-A-2, Class 2-A-3,
Class 2-A-4, Class 2-A-5, Class PO, Class A-X, Class A-R, Class B-1, Class B-2,
Class B-3, Class B-4, Class B-5 and Class B-6 Certificates. Only the classes of
certificates listed on the cover page (all of which are together referred to as
the "offered certificates") are offered by this prospectus supplement. The
classes of offered certificates will have the respective initial Class
Certificate Balances or initial Notional Amounts and pass-through rates set
forth on the cover page or as described in this prospectus supplement. The
initial Class Certificate Balances and initial Notional Amounts may vary in the
aggregate by plus or minus 5%.

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



              Designation                       Classes of Certificates
---------------------------------    ---------------------------------------------

         Senior Certificates           Class 1-A-1, Class 1-A-2, Class 1-A-3,
                                       Class 1-A-4, Class 1-A-5, Class 1-A-6,
                                       Class 1-A-7, Class 1-A-8, Class 1-A-9,
                                       Class 2-A-1, Class 2-A-2, Class 2-A-3,
                                        Class 2-A-4, Class 2-A-5, Class PO,
                                        Class A-X and Class A-R Certificates

     Group 1 Senior Certificates       Class 1-A-1, Class 1-A-2, Class 1-A-3,
                                       Class 1-A-4, Class 1-A-5, Class 1-A-6,
                                       Class 1-A-7, Class 1-A-8, Class 1-A-9
                                      and Class A-R Certificates and Class PO-1
                                           and Class A-X-1 Components

     Group 2 Senior Certificates       Class 2-A-1, Class 2-A-2, Class 2-A-3,
                                     Class 2-A-4, Class 2-A-5 Certificates and
                                       Class PO-2 and Class A-X-2 Components

      Subordinated Certificates      Class B-1, Class B-2, Class B-3, Class B-4,
                                        Class B-5 and Class B-6 Certificates

           Notional Amount              Class 2-A-4 and Class A-X Certificates
            Certificates

      Super Senior Certificates           Class 1-A-5, Class 1-A-8 and
                                            Class 2-A-1 Certificates

        Support Certificates          Class 1-A-9 and Class 2-A-5 Certificates

        Private Certificates              Class B-4, Class B-5 and Class B-6
                                                   Certificates



                                      S-59


      The certificates are generally referred to as the following types:



          Class                                           Type
---------------------------  -------------------------------------------------------
 Class 1-A-1 Certificates:            Senior / NAS / Fixed Pass-Through Rate

 Class 1-A-2 Certificates:               Senior / Fixed Pass-Through Rate

 Class 1-A-3 Certificates:               Senior / Fixed Pass-Through Rate

 Class 1-A-4 Certificates:               Senior / Fixed Pass-Through Rate

 Class 1-A-5 Certificates:     Senior/ NAS /Super Senior / Fixed Pass-Through Rate

 Class 1-A-6 Certificates:               Senior / Fixed Pass-Through Rate

 Class 1-A-7 Certificates:               Senior / Fixed Pass-Through Rate

 Class 1-A-8 Certificates:    Senior / NAS / Super Senior / Fixed Pass-Through Rate

 Class 1-A-9 Certificates:       Senior / NAS /Support / Fixed Pass-Through Rate

 Class 2-A-1 Certificates:    Senior / NAS / Super Senior / Fixed Pass-Through Rate

 Class 2-A-2 Certificates:               Senior / Fixed Pass-Through Rate

 Class 2-A-3 Certificates:               Senior / Fixed Pass-Through Rate

 Class 2-A-4 Certificates:            Senior / Notional Amount / Interest Only /
                                              Fixed Pass-Through Rate

 Class 2-A-5 Certificates:       Senior / NAS /Support / Fixed Pass-Through Rate

 Class A-X Certificates:       Senior / Notional Amount / Interest Only / Variable
                                          Pass-Through Rate / Component

 Class PO Certificates:                Senior / Principal Only / Component

 Class A-R Certificates:                     Senior / REMIC Residual


The private certificates are not being offered by this prospectus supplement.
Any information presented in this prospectus supplement with respect to the
private certificates is provided only to permit a better understanding of the
offered certificates. The initial Class Certificate Balances of the private
certificates are set forth in this prospectus supplement under "Summary -
Description of the Certificates." The classes of private certificates entitled
to receive distributions of interest will have the respective pass-through rates
set forth on the cover page of this prospectus supplement or described under
"--Interest" in this prospectus supplement.

Calculation of Class Certificate Balance

      The "Class Certificate Balance" of any class of certificates (other than
the Notional Amount Certificates) as of any Distribution Date is the initial
Class Certificate Balance of that class reduced by the sum of

o     all amounts previously distributed to holders of certificates of that
      class as distributions of principal;

o     the amount of Realized Losses (including Excess Losses) allocated to that
      class; and

o     in the case of any class of subordinated certificates, any amounts
      allocated to that class in reduction of its Class Certificate Balance in
      respect of payments of Class PO Deferred Amounts, as described in this
      prospectus supplement under "--Allocation of Losses;"

provided, however, that the Class Certificate Balance of each class of
certificates to which Realized Losses have been allocated will be increased,
sequentially in the order of payment priority, by the amount of Subsequent
Recoveries on the Mortgage Loans in the related loan group distributed as
principal to any related class of certificates, but not by more than the amount
of Realized Losses previously allocated to reduce the Class Certificate Balance
of such class of certificates. See "The Agreements--Realization upon Defaulted
Mortgage Loans--Application of Liquidation Proceeds" in the prospectus.


                                      S-60


      In addition, the Class Certificate Balance of the class of subordinated
certificates then outstanding with the lowest priority of distribution will be
reduced if and to the extent that the aggregate Class Certificate Balance of all
classes of certificates following all distributions and the allocation of
Realized Losses on any Distribution Date exceeds the pool principal balance as
of the Due Date occurring in the month of the Distribution Date (after giving
effect to principal prepayments in the related Prepayment Period).

      The Notional Amount Certificates do not have principal balances and are
not entitled to any distributions in respect of principal on the Mortgage Loans.

      The senior certificates will have an initial aggregate Class Certificate
Balance of approximately $647,888,813 and will evidence in the aggregate an
initial beneficial ownership interest in the issuing entity of approximately
94.75%. The Class B-1, Class B-2, Class B-3, Class B-4, Class B-5 and Class B-6
Certificates will each evidence in the aggregate an initial beneficial ownership
interest in the issuing entity of approximately 2.00%, 1.15%, 0.60%, 0.65%,
0.50% and 0.35%, respectively.

      The Class A-R Certificates and the private certificates will be issued in
fully registered certificated form. All of the remaining classes of offered
certificates will be represented by book-entry certificates. The book-entry
certificates will be issuable in book-entry form only. The Class A-R
Certificates will be issued in a denomination of $100.

Notional Amount Certificates

      The Class 2-A-4 and Class A-X Certificates (collectively, the "Notional
Amount Certificates") will not have Class Certificate Balances but will bear
interest on their respective outstanding Notional Amounts.

      The "Notional Amount" of the Class 2-A-4 Certificates for the interest
accrual period for any Distribution Date will equal the product of (i) the
aggregate Class Certificate Balance of the Class 2-A-1 and Class 2-A-5
Certificates immediately prior to that Distribution Date and (ii) 130.00%.

      The "Notional Amount" of the Class A-X Certificates for the interest
accrual period for any Distribution Date will equal the sum of the Class A-X-1
and Class A-X-2 Component Notional Amounts immediately prior to that
Distribution Date.

      The "Due Period" means for any Distribution Date, the period commencing on
the second day of the month preceding the month in which the Distribution Date
occurs and ending on the first day of the month in which the Distribution Date
occurs.

Component Classes

      Solely for purposes of calculating distributions and allocating losses,
the Class PO and Class A-X Certificates will be made up of two components having
the designations and initial Component Balances or initial Component Notional
Amounts set forth below as of the closing date:

                                                      Initial Component Balance
                        Designation                         (approximate)
                        -----------                   -------------------------
Class PO-1 Component.............................            $3,280,301

Class PO-2 Component.............................               $69,700

                                                     Initial Component Notional
                        Designation                      Amount (approximate)
                        -----------                  --------------------------
Class A-X-1 Component............................          $273,110,079

Class A-X-2 Component............................          $213,253,205


                                      S-61


      The "Component Balance" with respect to any Class PO Component as of any
Distribution Date is the initial Component Balance on the closing date, reduced
by all amounts applied and losses allocated in reduction of the principal
balance of such component on all previous Distribution Dates and increased by
the allocable portion of Subsequent Recoveries on the Mortgage Loans in the
related loan group.

      The Class Certificate Balance of the Class PO Certificates on any
Distribution Date will be equal to the aggregate Component Balance of the Class
PO Components on that Distribution Date. The Class PO Components comprising the
Class PO Certificates will not be separately transferable from the Class PO
Certificates. As used in this prospectus supplement, "Class PO Component" will
mean the Class PO-1 or Class PO-2 Component, as applicable. The Class PO-1
Component will relate to loan group 1 and the Class PO-2 Component will relate
to loan group 2.

      The "Component Notional Amount" of the Class A-X-1 Component for the
interest accrual period for any Distribution Date will equal the aggregate
Stated Principal Balance of the Non-Discount Mortgage Loans in loan group 1 as
of the first day of the related Due Period (after giving effect to prepayments
received in the Prepayment Period ending in that Due Period).

      The "Component Notional Amount" of the Class A-X-2 Component for the
interest accrual period for any Distribution Date will equal the aggregate
Stated Principal Balance of the Non-Discount Mortgage Loans in loan group 2 as
of the first day of the related Due Period (after giving effect to prepayments
received in the Prepayment Period ending in that Due Period).

      The Notional Amount of the Class A-X Certificates on any Distribution Date
will equal the aggregate Component Notional Amount of the Class A-X Components
on that Distribution Date. The Class A-X Components comprising the Class A-X
Certificates will not be separately transferable from the Class A-X
Certificates. As used in this prospectus supplement, "Class A-X Component" will
mean the Class A-X-1 or Class A-X-2 Component, as applicable. The Class A-X-1
Component will relate to loan group 1 and the Class A-X-2 Component will relate
to loan group 2.

Book-Entry Certificates

      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 a single certificate in fully registered
certificated form. 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") or, upon
request, through Clearstream, Luxembourg (as defined in this prospectus
supplement) or the Euroclear System ("Euroclear"), if they are participants of
such systems, or indirectly through organizations that are participants in such
systems. The Book-Entry Certificates will be issued in one or more certificates
that equal the aggregate Class Certificate Balance or Notional Amount of the
offered certificates, as applicable, 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 Banking's and Euroclear's names on the books
of their respective depositaries which in turn will hold such positions in
customers' securities accounts in the depositaries' names on the books of DTC.
Citibank, N.A. will act as depositary for Clearstream, Luxembourg and JPMorgan
Chase Bank will act as depositary for Euroclear (in such capacities,
individually the "Relevant Depositary" and collectively the "European
Depositaries"). Investors may hold such beneficial interests in the Book-Entry
Certificates in minimum denominations representing Class Certificate Balances or
Notional Amounts of $100,000 and integral multiples of $1,000 in excess thereof.
One investor of each class of Book-Entry Certificates may hold a beneficial
interest therein that is not an integral multiple of $1,000. Except as described
below, no person acquiring a Book-Entry Certificate will be entitled to receive
a physical certificate representing such offered certificate (a "Definitive
Certificate"). Unless and until Definitive Certificates are issued, it is
anticipated that the only Certificateholder of the offered 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.


                                      S-62


      The Certificate Owner's ownership of a Book-Entry Certificate will be
recorded on the records of the brokerage firm, bank, thrift institution or other
financial intermediary (each, a "Financial Intermediary") that maintains the
beneficial owner's account for such purpose. In turn, the Financial
Intermediary's ownership of such Book-Entry Certificate 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 Certificate Owner's Financial Intermediary is not a DTC participant and on
the records of Clearstream, Luxembourg or Euroclear, as appropriate).

      Certificate Owners will receive all distributions of principal of, and
interest on, the offered certificates from the trustee through DTC and DTC
participants. While the offered certificates are outstanding (except under the
circumstances described below), under the rules, regulations and procedures
creating and affecting DTC and its operations (the "DTC Rules"), DTC is required
to make book-entry transfers among Participants on whose behalf it acts with
respect to the offered certificates and is required to receive and transmit
distributions of principal of, and interest on, the offered certificates.
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 Certificate Owners have accounts
with respect to offered certificates are similarly required to make book-entry
transfers and receive and transmit such distributions on behalf of their
respective Certificate Owners. Accordingly, although Certificate Owners will not
possess certificates, the DTC Rules provide a mechanism by which Certificate
Owners will receive distributions and will be able to transfer their interest.

      Certificate Owners will not receive or be entitled to receive certificates
representing their respective interests in the offered certificates, except
under the limited circumstances described below. Unless and until Definitive
Certificates are issued, Certificate Owners who are not Participants may
transfer ownership of offered certificates only through Participants and
Indirect Participants by instructing such Participants and Indirect Participants
to transfer Book-Entry Certificates, by book-entry transfer, through DTC for the
account of the purchasers of such Book-Entry Certificates, which account is
maintained with their respective Participants. Under the DTC Rules and in
accordance with DTC's normal procedures, transfers of ownership of Book-Entry
Certificates 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 Certificate 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. Such credits or any
transactions in such securities, settled during such processing will be reported
to the relevant Euroclear or Clearstream, Luxembourg Participants on such
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. For information with respect to tax documentation procedures,
relating to the offered certificates, see "Material Federal Income Tax
Consequences -- Tax Treatment of Foreign Investors" in the prospectus and
"Description of the Securities -- Global, Clearance, Settlement And Tax
Documentation Procedures -- Material U.S. Federal Income Tax Documentation
Requirements" in the prospectus.

      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 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 in DTC in accordance with DTC Rules on behalf of the relevant European
international clearing system by the Relevant Depositary; however, such cross
market transactions will require delivery of instructions to the relevant
European international clearing system by the counterpart in such system in
accordance with its rules and procedures and within its established deadlines
(European time). The relevant European international clearing system will, if
the transaction meets its settlement requirements, deliver instructions to the
Relevant Depositary to take action to effect final settlement on its behalf by
delivering or receiving securities in DTC, and making or


                                      S-63


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.

      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 Certificates, whether
held for its own account or as a nominee for another person. In general,
beneficial ownership of Book-Entry Certificates will be subject to the DTC
Rules.

      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 10 January 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 Clearstream,
Luxembourg International 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" With effect from 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 as such 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


                                      S-64


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 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 Certificates will be made on each
Distribution Date by the trustee to DTC. DTC will be responsible for crediting
the amount of such payments to the accounts of the applicable DTC participants
in accordance with DTC's normal procedures. Each DTC participant will be
responsible for disbursing such payments to the Certificate Owners that it
represents and to each Financial Intermediary for which it acts as agent. Each
such Financial Intermediary will be responsible for disbursing funds to the
Certificate Owners that it represents.

      Under a book-entry format, Certificate Owners may experience some delay in
their receipt of payments, since such payments will be forwarded by the trustee
to Cede & Co. Distributions with respect to offered certificates 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. Such distributions will be subject to tax reporting in
accordance with relevant United States tax laws and regulations. See "Material
Federal Income Tax Consequences -- Taxation of Debt Securities--Non-U.S.
Persons" and "-- Backup Withholding" in the prospectus. Because DTC can only act
on behalf of Financial Intermediaries, the ability of a Certificate Owner to
pledge Book-Entry Certificates to persons or entities that do not participate in
the depository system, or otherwise take actions in respect of such Book-Entry
Certificates, may be limited due to the lack of physical certificates for such
Book-Entry Certificates. In addition, issuance of the Book-Entry Certificates in
book-entry form may reduce the liquidity of such certificates in the secondary
market since certain potential investors may be unwilling to purchase
certificates for which they cannot obtain physical certificates.

      Monthly and annual reports on the issuing entity provided by the trustee
to Cede & Co., as nominee of DTC, may be made available to Certificate Owners
upon request, in accordance with the DTC Rules and the rules, regulations and
procedures creating and affecting the Relevant Depositary, and to the Financial
Intermediaries to whose DTC accounts the Book-Entry Certificates of such
Certificate Owners are credited.

      DTC has advised the depositor and the trustee that, unless and until
Definitive Certificates are issued, DTC will take any action permitted to be
taken by the holders of the Book-Entry Certificates under the pooling and
servicing agreement only at the direction of one or more Financial
Intermediaries to whose DTC accounts the Book-Entry Certificates are credited,
to the extent that such actions are taken on behalf of Financial Intermediaries
whose holdings include such Book-Entry Certificates. 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 Certificate under the pooling and
servicing 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 such actions on


                                      S-65


its behalf through DTC. DTC may take actions, at the direction of the related
Participants, with respect to some Book-Entry Certificates which conflict with
actions taken with respect to other Book-Entry Certificates.

      Definitive Certificates will be issued to Certificate Owners, 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 Certificates and the depositor or the trustee is unable to locate a
qualified successor, or (b) after the occurrence of an event of default under
the pooling and servicing agreement), beneficial owners having not less than 51%
of the voting rights (as defined in the pooling and servicing agreement)
evidenced by the offered certificates 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 such 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 such event and the availability through DTC of
Definitive Certificates. Upon surrender by DTC of the global certificate or
certificates representing the Book-Entry Certificates and instructions for
re-registration, the trustee will issue Definitive Certificates, and thereafter
the trustee will recognize the holders of such Definitive Certificates as
holders of the related offered certificates under the pooling and servicing
agreement.

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

Payments on Mortgage Loans; Accounts

      On or before the closing date, the servicer will establish an account (the
"Certificate Account"), which will be maintained in trust for the benefit of the
certificateholders. The servicer will deposit or cause to be deposited in the
Certificate Account all amounts required to be deposited in it under the pooling
and servicing agreement. The servicer may withdraw funds from the Certificate
Account for purposes set forth in the pooling and servicing agreement. See "The
Agreements - Payments on Issuing Entity Assets - Deposits to Security Account"
in the prospectus. On or before the closing date, the trustee will establish an
account (the "Distribution Account"), which will be maintained with the trustee
in trust for the benefit of the certificateholders. On or prior to the business
day immediately preceding each Distribution Date, the servicer will withdraw
from the Certificate Account the amount of Available Funds for that Distribution
Date and remit such amounts to the trustee who will deposit such amounts in the
Distribution Account. 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 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 servicer in that report and will be permitted to conclusively rely
on any information provided to it by the servicer.

Investments of Amounts Held in Accounts

      Certificate Account. At the direction of the servicer, all funds in the
Certificate Account will be invested in permitted investments so long as they
are received from the servicer in a timely manner along with specific
instructions as to how they are to be invested. All income and gain net of any
losses realized from investment of funds in the Certificate Account will be for
the benefit of the servicer as additional servicing compensation and will be
remitted to it monthly as described herein. The amount of any losses incurred in
the Certificate Account in respect of the investments will be deposited by the
servicer in the Certificate Account. 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 and made in accordance with the pooling
and servicing agreement.

      Distribution Account. Funds on deposit in the Distribution Account will
not be invested.


                                      S-66


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
-------------------------  ---------------------------------  ---------------
Fees

Servicing Fee / Servicer   Either 0.20% or 0.25% per annum    Compensation
                           of the Stated Principal Balance
                           of each Mortgage Loan (3)




Additional Servicing       o    Prepayment Interest Excess    Compensation
Compensation / Servicer         (5)


                           o    All late payment fees,        Compensation
                                assumption fees and other
                                similar charges (including
                                prepayment charges)

                           o    All investment income earned  Compensation
                                on amounts on deposit in the
                                Certificate Account

                           o    Excess Proceeds (6)           Compensation


Trustee Fee / trustee      0.0055% per annum of the Stated    Compensation
                           Principal Balance of each
                           Mortgage Loan

Expenses

Insurance expenses /       Expenses incurred by the Servicer  Reimbursement
Servicer                                                      of Expenses




  Type / Recipient (1)                Source (2)               Frequency
-------------------------   ------------------------------  ------------
Fees

Servicing Fee / Servicer    Interest collected with              Monthly
                            respect to each Mortgage Loan
                            and any Liquidation Proceeds
                            or Subsequent Recoveries that
                            are allocable to accrued and
                            unpaid interest (4)

Additional Servicing        Interest collections with       Time to time
Compensation / Servicer     respect to certain Mortgage
                            Loans that prepay in full

                            Payments made by obligors with  Time to time
                            respect to the Mortgage Loans



                            Investment income related to         Monthly
                            the Certificate Account


                            Liquidation Proceeds and        Time to time
                            Subsequent Recoveries

Trustee Fee / trustee       Interest Distribution Amount        Monthly



Expenses

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


                                  S-67




 Type / Recipient (1)                     Amount              General Purpose
-----------------------    ---------------------------------  ---------------
Advances / Servicer        To the extent of funds available,  Reimbursement
                           theamount of any advances          of Expenses








Indemnification expenses   Amounts for which the seller,      Indemnification
/ the seller, the          the Servicer and the depositor
Servicer and the           are entitled to indemnification(8)
depositor


  Type / Recipient (1)                   Source (2)             Frequency
-------------------------    ------------------------------  ------------
Advances / Servicer          With respect to each Mortgage   Time to time
                             Loan, late recoveries of the
                             payments of the costs and
                             expenses, Liquidation
                             Proceeds, Subsequent

                             Recoveries, purchase proceeds
                             or repurchase proceeds for
                             that Mortgage Loan (7)

Indemnification expenses     Amounts on deposit on the            Monthly
/ the seller, the            Certificate Account on any
Servicer and the             Distribution Account Deposit
depositor                    Date, following the transfer
                             to the Distribution Account

----------
(1)   If the trustee succeeds to the position of servicer, it will be entitled
      to receive the same fees and expenses of the 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 "The Agreements--Amendment" in the prospectus.

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

(3)   The Servicing Fee Rate for each Mortgage Loan will equal either 0.20% or
      0.25% per annum. The amount of the monthly 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 Servicing Compensation in Connection with Certain
      Prepaid Mortgage Loans."

(4)   The servicing fee is payable from interest collections on the Mortgage
      Loans, but may be paid from any other amounts on deposit in the
      Certificate Account, if interest collections are insufficient to pay the
      Servicing Fee.

(5)   Prepayment Interest Excess is described in this prospectus supplement
      under "Servicing of the Mortgage Loans--Adjustment to Servicing
      Compensation in Connection with Certain Prepaid Mortgage Loans."

(6)   "Excess Proceeds" with respect to a liquidated Mortgage Loan means the
      amount, if any, by which the sum of any net liquidation proceeds and
      Subsequent Recoveries exceeds the sum of (i) the unpaid principal balance
      of the Mortgage Loans and (ii) 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.

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

(8)   Each of the seller, the servicer and the depositor are entitled to
      indemnification of certain expenses as described in this prospectus
      supplement under "-- Certain Matters Regarding the Servicer, the Depositor
      and the Seller."


                                      S-68


Distributions

      Distributions on the certificates will be made by the trustee on the 25th
day of each month, or if such day is not a business day, on the first business
day thereafter, commencing in March 2007 (each, a "Distribution Date"), to the
persons in whose names such certificates are registered at the close of business
on the Record Date. The "Record Date" is the last business day of the month
immediately preceding the month of such Distribution Date.

      Distributions on each Distribution Date will be made by check mailed to
the address of the person entitled thereto as it appears on the applicable
certificate register or in the case of a certificateholder who 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 such
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 presentment and surrender
of such certificates at the corporate trust office of the trustee.

Priority of Distributions Among Certificates

      As more fully described in this prospectus supplement, distributions on
the senior certificates will be made on each Distribution Date based on the
Available Funds of the related loan group for such Distribution Date and, in
certain circumstances, from any Available Funds from the other loan group
remaining after distribution to the senior certificates related to that loan
group, and distributions on the subordinated certificates will be based on any
remaining Available Funds for all loan groups for such Distribution Date after
giving effect to distributions on all related classes of senior certificates and
payment in respect of related Class PO Deferred Amounts, and will be made in the
following order of priority:

      1.    to interest on each interest- bearing class or component of senior
            certificates in the related senior certificate group, pro rata based
            on their respective Interest Distribution Amounts;

      2.    to principal on the classes and components of senior certificates in
            the related senior certificate group then entitled to receive
            distributions of principal, in the order and subject to the
            priorities set forth in this prospectus supplement under
            "Description of the Certificates -- Principal," in each case in an
            aggregate amount up to the maximum amount of principal to be
            distributed on the classes of certificates in the related senior
            certificate group on the Distribution Date;

      3.    to any Class PO Deferred Amounts with respect to the applicable
            Class PO Component, but only from amounts that would otherwise be
            distributed on the Distribution Date as principal of the
            subordinated certificates; and

      4.    to interest on and then principal of each class of subordinated
            certificates, in the order of their numerical class designations, in
            each case subject to (x) any payments that may be required to be
            made as described in this prospectus supplement under
            "--Cross-Collateralization" and (y) the limitations set forth in
            this prospectus supplement under "Description of the Certificates --
            Interest" and "--Principal."

      "Available Funds" for a loan group for any Distribution Date will be equal
to the sum of:

      o     all scheduled installments of interest (net of the Expense Fees for
            that loan group) and principal due on the Mortgage Loans in that
            loan group on the Due Date in the month in which the Distribution
            Date occurs and received before the related Determination Date,
            together with any advances with respect to them;

      o     all proceeds of any primary mortgage guaranty insurance policies and
            any other insurance policies with respect to the Mortgage Loans in
            that loan group, to the extent the proceeds are not applied to the
            restoration of the related mortgaged property or released to the
            mortgagor in accordance with the servicer's normal servicing
            procedures and all other cash amounts received and retained in
            connection with (a) the liquidation of defaulted Mortgage Loans in
            that loan group, by foreclosure or otherwise


                                      S-69


            during the calendar month preceding the month of the Distribution
            Date (in each case, net of unreimbursed expenses incurred in
            connection with a liquidation or foreclosure and unreimbursed
            advances, if any) and (b) any Subsequent Recoveries on the Mortgage
            Loans in that loan group;

      o     all partial or full prepayments with respect to Mortgage Loans in
            that loan group received during the related Prepayment Period,
            together with all interest paid in connection with the prepayment,
            other than certain excess amounts, and Compensating Interest
            allocated to the related loan group; and

      o     amounts received with respect to the Distribution Date as the
            Substitution Adjustment Amount or purchase price in respect of a
            deleted Mortgage Loan or a Mortgage Loan in that loan group
            repurchased by the seller or the servicer as of the Distribution
            Date;

      reduced by amounts in reimbursement for advances previously made and other
      amounts as to which the servicer is entitled to be reimbursed from the
      Certificate Account pursuant to the pooling and servicing agreement.

Interest

      The classes and components of offered certificates entitled to receive
distributions of interest will have the respective pass-through rates set forth
on the cover page of this prospectus supplement or described below.

      The pass-through rate for the Class A-X-1 Component for the interest
accrual period for any Distribution Date will equal the excess of the average of
the adjusted net mortgage rates of the Non-Discount Mortgage Loans in loan group
1, weighted on the basis of their respective Stated Principal Balances as of the
first day of the related Due Period (after giving effect to prepayments received
in the Prepayment Period ending during that Due Period), over 6.00% per annum.
The pass-through rate for the Class A-X-1 Component for the interest accrual
period for the first Distribution Date is expected to be approximately 0.286440%
per annum.

      The pass-through rate for the Class A-X-2 Component for the interest
accrual period for any Distribution Date will equal the excess of the average of
the adjusted net mortgage rates of the Non-Discount Mortgage Loans in loan group
2, weighted on the basis of their respective Stated Principal Balances as of the
first day of the related Due Period (after giving effect to prepayments received
in the Prepayment Period ending during that Due Period), over 6.50% per annum.
The pass-through rate for the Class A-X-2 Component for the interest accrual
period for the first Distribution Date is expected to be approximately 0.596071%
per annum.

      The pass-through rate for a class of subordinated certificates for the
interest accrual period related to each distribution date will be a per annum
rate equal to the sum of:

      o     6.00% multiplied by the excess of the aggregate Stated Principal
            Balance of the group 1 mortgage loans as of the first day of the
            related Due Period (after giving effect to principal prepayments in
            the Prepayment Period ending during such Due Period) over the
            aggregate Class Certificate Balance of the group 1 senior
            certificates immediately prior to that Distribution Date; and

      o     6.50% multiplied by the excess of the aggregate Stated Principal
            Balance of the group 2 mortgage loans as of the first day of the
            related Due Period (after giving effect to principal prepayments in
            the Prepayment Period ending during such Due Period) over the
            aggregate Class Certificate Balance of the group 2 senior
            certificates immediately prior to that Distribution Date;

      divided by the aggregate Class Certificate Balance of the subordinated
certificates immediately prior to that Distribution Date. The pass-through rate
for each class of subordinated certificates for the first interest accrual
period is expected to be approximately 6.197422% per annum.

      On each Distribution Date, to the extent of funds available, each
interest-bearing class and component of certificates will be entitled to receive
an amount allocable to interest for the related interest accrual period. This
"Interest Distribution Amount" for any interest-bearing class and component will
be equal to the sum of (a) interest


                                      S-70


accrued during the related interest accrual period at the applicable
pass-through rate on the related Class Certificate Balance or Notional Amount,
as the case may be, immediately prior to the applicable Distribution Date and
(b) the sum of the amounts, if any, by which the amount described in clause (a)
above on each prior Distribution Date exceeded the amount actually distributed
as interest on the prior Distribution Dates and not subsequently distributed
(which are called "unpaid interest amounts"). The Class PO Certificates are
principal only certificates and will not bear interest.

      With respect to each Distribution Date for all classes and components of
interest-bearing certificates, the interest accrual period will be the calendar
month preceding the month of the Distribution Date. Each interest accrual period
will be deemed to consist of 30 days. Interest will be calculated and payable on
the basis of a 360-day year divided into twelve 30-day months.

      The interest entitlement described above for each interest-bearing class
or component of certificates for any Distribution Date will be reduced by the
amount of Net Interest Shortfalls experienced by (a) the related loan group,
with respect to the senior certificates thereof and (b) each loan group, with
respect to the subordinated certificates. With respect to any Distribution Date
and loan group, the "Net Interest Shortfall" is equal to the sum of:

            o     any net prepayment interest shortfalls for that loan group for
                  that Distribution Date and

            o     the amount of interest that would otherwise have been received
                  with respect to any Mortgage Loan that was the subject of a
                  Relief Act Reduction or a Special Hazard Loss, Fraud Loss,
                  Debt Service Reduction or Deficient Valuation, after the
                  exhaustion of the respective amounts of coverage provided by
                  the subordinated certificates for those types of losses.

      Net Interest Shortfalls for a loan group on any Distribution Date will be
allocated pro rata among all interest-bearing classes and components in the
related senior certificate group on such Distribution Date, based on the amount
of interest each such class or component of certificates would otherwise be
entitled to receive (or, in the case of the subordinated certificates, be deemed
to be entitled to receive based on the subordinated class' share of the Assumed
Balance, as described more fully below) on such Distribution Date, before taking
into account any reduction in such amounts from such Net Interest Shortfalls.
The "Assumed Balance" for a Distribution Date and loan group is equal to the
Subordinated Percentage for that Distribution Date relating to that loan group
of the aggregate of the Non-PO Percentage of the Stated Principal Balance of
each Mortgage Loan in that loan group as of the Due Date occurring in the month
prior to the month of that Distribution Date (after giving effect to prepayments
received in the Prepayment Period related to such Due Date). Notwithstanding the
foregoing, on any Distribution Date after the Senior Termination Date, Net
Interest Shortfalls for the related loan group will be allocated to the classes
of subordinated certificates based on the amount of interest each such class of
subordinated certificates would otherwise be entitled to receive on that
Distribution Date.

      A "Relief Act Reduction" is a reduction in the amount of the monthly
interest payment on a Mortgage Loan pursuant to the Servicemembers Civil Relief
Act or any similar state or local law. See "Certain Legal Aspects of the
Mortgage Loans -- Servicemembers Civil Relief Act" in the prospectus.

      With respect to any Distribution Date, a net prepayment interest shortfall
for a loan group is the amount by which the aggregate of the prepayment interest
shortfalls for that loan group and Distribution Date exceeds the sum of (x) the
Compensating Interest for that Distribution Date and loan group and (y) the
excess, if any, of the Compensating Interest for the other loan group over the
prepayment interest shortfall for that loan group and Distribution Date. A
"prepayment interest shortfall" is the amount by which interest paid by a
borrower in connection with a prepayment of principal on a Mortgage Loan during
the portion of a Prepayment Period occurring in the month prior to the month of
the applicable Distribution Date is less than one month's interest at the
related Mortgage Rate, net of the related servicing fee rate, on the Stated
Principal Balance of the Mortgage Loan.

      If on any Distribution Date, Available Funds for a loan group in the
Certificate Account applied in the order described above under "-- Priority of
Distributions Among Certificates" are insufficient to make a full distribution
of the interest entitlement on the certificates related to that loan group,
interest will be distributed on each class of certificates in that certificate
group of equal priority based on the amount of interest it would otherwise


                                      S-71


have been entitled to receive in the absence of the shortfall. Any unpaid
interest amount will be carried forward and added to the amount holders of each
class of certificates in that certificate group will be entitled to receive on
the next Distribution Date. A shortfall could occur, for example, if losses
realized on the Mortgage Loans in that loan group were exceptionally high or
were concentrated in a particular month. Any unpaid interest amount so carried
forward will not bear interest.

Principal

      General. All payments and other amounts received in respect of principal
of the Mortgage Loans in a loan group will be allocated between (a) the related
Class PO Component and (b) the related senior certificates (other than the
Notional Amount Certificates and the Class PO Certificates) and the subordinated
certificates, in each case based on the applicable PO Percentage and the
applicable Non-PO Percentage, respectively, of those amounts.

      The "Non-PO Percentage" with respect to any Mortgage Loan with an adjusted
net mortgage rate less than the related Required Coupon (each a "Discount
Mortgage Loan") will be equal to the adjusted net mortgage rate divided by the
related Required Coupon and, with respect to any Mortgage Loan with an adjusted
net mortgage rate equal to or greater than the related Required Coupon (each a
"Non-Discount Mortgage Loan"), will be 100%.

      The "PO Percentage" with respect to any Discount Mortgage Loan will be
equal to the related Required Coupon minus the adjusted net mortgage rate
divided by the related Required Coupon and, with respect to any Non-Discount
Mortgage Loan, will be 0%.

      The "Required Coupon" is 6.00% and 6.50% for loan group 1 and loan group
2, respectively.

      Non-PO Formula Principal Amount. On each Distribution Date, the Non-PO
Formula Principal Amount for each loan group will be distributed as principal to
the related classes of senior certificates (other than the Notional Amount
Certificates and Class PO Certificates) in an amount up to the related Senior
Principal Distribution Amount and as principal of the subordinated certificates,
in an amount up to the related Subordinated Principal Distribution Amount.

      The "Non-PO Formula Principal Amount" for any Distribution Date and loan
group will equal the sum of:

      (i)   the sum of the applicable Non-PO Percentage of:

            (a)   all monthly payments of principal due on each Mortgage Loan in
                  that loan group on the related Due Date,

            (b)   the principal portion of the purchase price of each Mortgage
                  Loan in that loan group that was repurchased by the seller or
                  another person pursuant to the pooling and servicing agreement
                  as of the Distribution Date, excluding any Mortgage Loan that
                  was repurchased due to a modification of the Mortgage Loan in
                  lieu of refinancing,

            (c)   the Substitution Adjustment Amount in connection with any
                  deleted Mortgage Loan in that loan group received with respect
                  to the Distribution Date,

            (d)   any insurance proceeds or liquidation proceeds allocable to
                  recoveries of principal of Mortgage Loans in that loan group
                  that are not yet Liquidated Mortgage Loans received during the
                  calendar month preceding the month of the Distribution Date,

            (e)   with respect to each Mortgage Loan in that loan group that
                  became a Liquidated Mortgage Loan during the calendar month
                  preceding the month of the Distribution Date, the amount of
                  the liquidation proceeds allocable to principal received with
                  respect to the Mortgage Loan, and


                                      S-72


            (f)   all partial and full principal prepayments by borrowers on the
                  Mortgage Loans in that loan group received during the related
                  Prepayment Period, including the principal portion of the
                  purchase price of any Mortgage Loan in that loan group that
                  was repurchased due to a modification of the Mortgage Loan in
                  lieu of refinancing, and

      (ii) (A) any Subsequent Recoveries with respect to the Mortgage Loans in
that loan group received during the calendar month preceding the month of the
Distribution Date, or (B) with respect to Subsequent Recoveries attributable to
a Discount Mortgage Loan in that loan group that incurred (1) an Excess Loss or
(2) a Realized Loss after the related Senior Credit Support Depletion Date, the
Non-PO Percentage of any Subsequent Recoveries received during the calendar
month preceding the month of such Distribution Date.

      Senior Principal Distribution Amount. On each Distribution Date before the
Senior Credit Support Depletion Date, the Non-PO Formula Principal Amount for a
loan group, up to the amount of the related Senior Principal Distribution Amount
for the Distribution Date will be distributed as principal of the following
classes of senior certificates, as follows:

      (a)   with respect to loan group 1, in the following priority:

            first, to the Class A-R Certificates, until its Class Certificate
            Balance is reduced to zero; and

            second, concurrently,

                  (A)   83.9161211984023% as follows:

                        (i) concurrently, to the Class 1-A-1, Class 1-A-8 and
                  Class 1-A-9 Certificates, pro rata, based on their
                  then-current Class Certificate Balances, the Group 1A Priority
                  Amount, until their respective Class Certificate Balances are
                  reduced to zero;

                        (ii) up to $2,085,831 for each Distribution Date as
                  follows:

                              (a) 97.00% to the Class 1-A-2 Certificates until
                        its Class Certificate Balance is reduced to zero; and

                              (b) 3.00% to the Class 1-A-3 Certificates until
                        its Class Certificate Balance is reduced to zero;

                        (iii) sequentially, to the Class 1-A-3 and Class 1-A-2
                  Certificates, in that order, until their respective Class
                  Certificate Balances are reduced to zero;

                        (iv) to the Class 1-A-4 Certificates, until its Class
                  Certificate Balance is reduced to zero; and

                        (v) concurrently, to the Class 1-A-1, Class 1-A-8 and
                  Class 1-A-9 Certificates, pro rata, based on their
                  then-current Class Certificate Balances, without regard to the
                  Group 1A Priority Amount, until their respective Class
                  Certificate Balances are reduced to zero.

                  (B)   16.0838788016% as follows:

                        (i) to the Class 1-A-5 Certificates the Group 1B
                  Priority Amount, until its Class Certificate Balance is
                  reduced to zero;

                        (ii) sequentially, to the Class 1-A-6 and Class 1-A-7
                  Certificates, in that order, until their respective Class
                  Certificate Balances are reduced to zero; and


                                      S-73


                        (iii) to the Class 1-A-5 Certificates without regard to
                  the Group 1B Priority Amount, until its Class Certificate
                  Balance is reduced to zero.

      (b)   with respect to loan group 2, in the following priority:

            (i) concurrently, to the Class 2-A-1 and Class 2-A-5 Certificates,
      pro rata, based on their then-current Class Certificate Balances, the
      Group 2 Priority Amount, until their respective Class Certificate Balances
      are reduced to zero;

            (ii) sequentially, to the Class 2-A-2 and Class 2-A-3 Certificates,
      in that order, until their respective Class Certificate Balances are
      reduced to zero; and

            (iii) concurrently, to the Class 2-A-1 and Class 2-A-5 Certificates,
      pro rata, based on their then-current Class Certificate Balances, without
      regard to the Group 2 Priority Amount, until their respective Class
      Certificate Balances are reduced to zero.

      On each Distribution Date on and after the Senior Credit Support Depletion
Date, the Non-PO Formula Principal Amount for each loan group will be
distributed, concurrently as principal of the classes of Senior Certificates in
the related senior certificate group (other than the Notional Amount
Certificates and the Class PO Certificates), pro rata, in accordance with their
respective Class Certificate Balances immediately before that Distribution Date.

      The capitalized terms used in this prospectus supplement shall have the
following meanings:

      The "Group 1A Priority Amount" for any Distribution Date will equal the
sum of (i) the product of (A) the Scheduled Principal Distribution Amount for
loan group 1, (B) the Group 1A Priority Percentage and (C) the Shift Percentage
and (ii) the product of (A) the Unscheduled Principal Distribution Amount for
loan group 1, (B) the Group 1A Priority Percentage and (C) the Prepayment Shift
Percentage.

      "Group 1A Priority Percentage" for any Distribution Date and loan group 1,
will equal the percentage equivalent of a fraction, the numerator of which is
the aggregate Class Certificate Balance of the Class 1-A-1, Class 1-A-8 and
Class 1-A-9 Certificates immediately prior to such Distribution Date, and the
denominator of which is the Non-PO Percentage of the Stated Principal Balance of
each group 1 mortgage loan as of the Due Date in the month preceding the month
of such Distribution Date (after giving effect to principal prepayments received
in the Prepayment Period related to the prior Due Date).

      The "Group 1B Priority Amount" for any Distribution Date will equal the
sum of (i) the product of (A) the Scheduled Principal Distribution Amount for
loan group 1, (B) the Group 1B Priority Percentage and (C) the Shift Percentage
and (ii) the product of (A) the Unscheduled Principal Distribution Amount for
loan group 1, (B) the Group 1B Priority Percentage and (C) the Prepayment Shift
Percentage.

      "Group 1B Priority Percentage" for any Distribution Date and loan group 1,
will equal the percentage equivalent of a fraction, the numerator of which is
the Class Certificate Balance of the Class 1-A-5 Certificates immediately prior
to such Distribution Date, and the denominator of which is the Non-PO Percentage
of the Stated Principal Balance of each group 1 mortgage loan as of the Due Date
in the month preceding the month of such Distribution Date (after giving effect
to principal prepayments received in the Prepayment Period related to the prior
Due Date).

      The "Group 2 Priority Amount" for any Distribution Date will equal the sum
of (i) the product of (A) the Scheduled Principal Distribution Amount for loan
group 2, (B) the Group 2 Priority Percentage and (C) the Shift Percentage and
(ii) the product of (A) the Unscheduled Principal Distribution Amount for loan
group 2, (B) the Group 2 Priority Percentage and (C) the Prepayment Shift
Percentage.

      "Group 2 Priority Percentage" for any Distribution Date and loan group 2,
will equal the percentage equivalent of a fraction, the numerator of which is
the aggregate Class Certificate Balance of the Class 2-A-1 and


                                      S-74


Class 2-A-5 Certificates immediately prior to such Distribution Date, and the
denominator of which is the Non-PO Percentage of the Stated Principal Balance of
each group 2 mortgage loan as of the Due Date in the month preceding the month
of such Distribution Date (after giving effect to principal prepayments received
in the Prepayment Period related to the prior Due Date).

      "Scheduled Principal Distribution Amount" for any Distribution Date and
either loan group will equal the related Senior Percentage of the Non-PO
Percentage of all amounts described in subclauses (a) through (d) of clause (i)
of the definition of Non-PO Formula Principal Amount for that loan group for
that Distribution Date; provided, however, that if a Bankruptcy Loss that is an
Excess Loss is sustained with respect to a Mortgage Loan in that loan group that
is not a Liquidated Mortgage Loan, the Scheduled Principal Distribution Amount
will be reduced on the related Distribution Date by the applicable Non-PO
Percentage of the principal portion of that Bankruptcy Loss.

      The "Unscheduled Principal Distribution Amount" for any Distribution Date
and either loan group will equal, the Senior Prepayment Percentage of the Non-PO
Percentage of the sum of the amounts described in subclauses (e) and (f) of
clause (i) and clause (ii) of the definition of Non-PO Formula Principal Amount
for that loan group for that Distribution Date.

      "Prepayment Shift Percentage" for any Distribution Date occurring during
the five years beginning on the first Distribution Date will equal 0%.
Thereafter, the Prepayment Shift Percentage for any Distribution Date occurring
on or after the fifth anniversary of the first Distribution Date will be as
follows: for any Distribution Date in the first year thereafter, 30%; for any
Distribution Date in the second year thereafter, 40%; for any Distribution Date
in the third year thereafter, 60%; for any Distribution Date in the fourth year
thereafter, 80%; and for any Distribution Date thereafter, 100%.

      "Shift Percentage" for any Distribution Date occurring during the five
years beginning on the first Distribution Date will equal 0%. Thereafter, the
Shift Percentage for any Distribution Date will be 100%.

      The "Senior Credit Support Depletion Date" is the date on which the Class
Certificate Balance of each class of subordinated certificates has been reduced
to zero.

      "Prepayment Period" means for any Distribution Date and Due Date, the
period commencing on the sixteenth day of the prior calendar month (or, in the
case of the first Distribution Date, the Cut-off Date) and ending on the
fifteenth day of the calendar month in which such Distribution Date occurs.

      The "Senior Principal Distribution Amount" for any Distribution Date and
loan group will equal the sum of

      (i) the related Senior Percentage of the Non-PO Percentage of all amounts
      described in subclauses (a) through (d) of clause (i) of the definition of
      Non-PO Formula Principal Amount for that loan group and Distribution Date,

      (ii) for each Mortgage Loan that became a Liquidated Mortgage Loan during
      the calendar month preceding the month of the Distribution Date, the
      lesser of

            o     the Senior Percentage of the applicable Non-PO Percentage of
                  the Stated Principal Balance of the Mortgage Loan, and

            o     either

                  o     if no Excess Losses were sustained on a Liquidated
                        Mortgage Loan during the preceding calendar month, the
                        Senior Prepayment Percentage of the applicable Non-PO
                        Percentage of the amount of the liquidation proceeds
                        allocable to principal received on the Mortgage Loan or


                                      S-75


                  o     if an Excess Loss were sustained on the Liquidated
                        Mortgage Loan during the preceding calendar month, the
                        Senior Percentage of the applicable Non-PO Percentage of
                        the amount of the liquidation proceeds allocable to
                        principal received on the Mortgage Loan, and

      (iii) the Senior Prepayment Percentage of the applicable Non-PO Percentage
      of amounts described in subclause (f) of clause (i) of the definition of
      Non-PO Formula Principal Amount for that loan group and Distribution Date;
      and

      (iv) the Senior Prepayment Percentage of any Subsequent Recoveries
      described in clause (ii) of the definition of Non-PO Formula Principal
      Amount for that loan group and Distribution Date;

provided, however, that if a Bankruptcy Loss that is an Excess Loss is sustained
on a Mortgage Loan that is not a Liquidated Mortgage Loan, the related Senior
Principal Distribution Amount will be reduced on the related Distribution Date
by the related Senior Percentage of the applicable Non-PO Percentage of the
principal portion of the Bankruptcy Loss.

      Notwithstanding the foregoing definition of Senior Principal Distribution
Amount, on any Distribution Date after the Senior Termination Date, the Senior
Principal Distribution Amount for the remaining senior certificates will be
calculated pursuant to the above formula based on all of the Mortgage Loans in
the mortgage pool, as opposed to the Mortgage Loans in the related loan group.

      "Stated Principal Balance" means for any Mortgage Loan and any Due Date,
the unpaid principal balance of the Mortgage Loan as of that Due 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 (i) previous partial prepayments of principal and the
payment of principal due on that Due Date, irrespective of any delinquency in
payment by the related mortgagor and (ii) liquidation proceeds allocable to
principal received in the prior calendar month and prepayments of principal
received through the last day of the Prepayment Period in which the Due Date
occurs, in each case, with respect to that Mortgage Loan. The pool principal
balance equals the aggregate Stated Principal Balance of the Mortgage Loans.

      The "Senior Percentage" for any senior certificate group and Distribution
Date is the percentage equivalent of a fraction, the numerator of which is the
aggregate Class Certificate Balance of the senior certificates of such senior
certificate group (other than the Class PO Certificates and the Notional Amount
Certificates) immediately before the Distribution Date and the denominator of
which is the aggregate of the applicable Non-PO Percentage of the Stated
Principal Balance of each Mortgage Loan in the related loan group as of the Due
Date occurring in the month prior to the month of that Distribution Date (after
giving effect to prepayments in the Prepayment Period related to that Due Date);
provided, however, that on any Distribution Date after the Senior Termination
Date, the Senior Percentage of the remaining senior certificate group is the
percentage equivalent of a fraction, the numerator of which is the aggregate
Class Certificate Balance of the Certificates (other than the Class PO
Certificates and the Notional Amount Certificates) of such remaining senior
certificate group immediately prior to such date and the denominator of which is
the aggregate Class Certificate Balance of all classes of certificates (other
than the Class PO Certificates and the Notional Amount Certificates) immediately
prior to such Distribution Date. For any Distribution Date on or prior to the
Senior Termination Date, the "Subordinated Percentage" for the portion of the
subordinated certificates relating to a loan group will be calculated as the
difference between 100% and the Senior Percentage of the senior certificate
group relating to that loan group on such Distribution Date. After a Senior
Termination Date, the "Subordinated Percentage" will represent the entire
interest of the subordinated certificates in the mortgage pool and will be
calculated as the difference between 100% and the Senior Percentage for such
Distribution Date.

      The "Senior Prepayment Percentage" of a senior certificate group for any
Distribution Date occurring during the five years beginning on the first
Distribution Date will equal 100%. Thereafter, each Senior Prepayment Percentage
will be subject to gradual reduction as described in the following paragraph.
This disproportionate allocation of unscheduled payments of principal will have
the effect of accelerating the amortization of the senior certificates (other
than the Class PO Certificates and the Notional Amount Certificates) that
receive these


                                      S-76


unscheduled payments of principal while, in the absence of Realized Losses,
increasing the interest in the pool principal balance evidenced by the
subordinated certificates. Increasing the respective interest of the
subordinated certificates relative to that of the senior certificates is
intended to preserve the availability of the subordination provided by the
subordinated certificates. The "Subordinated Prepayment Percentage" for a loan
group as of any Distribution Date will be calculated as the difference between
100% and the related Senior Prepayment Percentage on that Distribution Date.

      The Senior Prepayment Percentage of a senior certificate group for any
Distribution Date occurring on or after the fifth anniversary of the first
Distribution Date will be as follows: for any Distribution Date in the first
year thereafter, the related Senior Percentage plus 70% of the related
Subordinated Percentage for the Distribution Date; for any Distribution Date in
the second year thereafter, the related Senior Percentage plus 60% of the
related Subordinated Percentage for the Distribution Date; for any Distribution
Date in the third year thereafter, the related Senior Percentage plus 40% of the
related Subordinated Percentage for the Distribution Date; for any Distribution
Date in the fourth year thereafter, the related Senior Percentage plus 20% of
the related Subordinated Percentage for the Distribution Date; and for any
Distribution Date thereafter, the related Senior Percentage for the Distribution
Date (unless on any Distribution Date the Senior Percentage of a senior
certificate group exceeds the initial Senior Percentage of such senior
certificate group, in which case each Senior Prepayment Percentage for each
senior certificate group for the Distribution Date will once again equal 100%).

      Notwithstanding the foregoing, no decrease in the Senior Prepayment
Percentage for either loan group will occur unless both of the step down
conditions listed below are satisfied with respect to both loan groups:

o     the outstanding principal balance of all Mortgage Loans in a loan group
      delinquent 60 days or more (averaged over the preceding six month period)
      (including any Mortgage Loans subject to foreclosure proceedings, real
      estate owned by the issuing entity and Mortgage Loans the mortgagors of
      which are in bankruptcy), as a percentage of (a) if such date is on or
      prior to the Senior Termination Date, the Subordinated Percentage for that
      loan group of the aggregate of the applicable Non-PO Percentage of the
      aggregate Stated Principal Balance of the related Mortgage Loans or (b) if
      such date is after the Senior Termination Date, the aggregate Class
      Certificate Balance of the subordinated certificates immediately prior to
      that Distribution Date, does not equal or exceed 50%; and

o     cumulative Realized Losses on the Mortgage Loans in each loan group do not
      exceed

      o     commencing with the Distribution Date on the fifth anniversary of
            the first Distribution Date, 30% of (i) if such date is on or prior
            to the Senior Termination Date, the Subordinated Percentage for that
            loan group of the aggregate of the applicable Non-PO Percentage of
            the Stated Principal Balances of the Mortgage Loans in that loan
            group, in each case as of the Cut-off Date or (ii) if such date is
            after the Senior Termination Date, the aggregate Class Certificate
            Balance of the subordinated certificates as of the closing date (in
            either case, the "original subordinate principal balance"),

      o     commencing with the Distribution Date on the sixth anniversary of
            the first Distribution Date, 35% of the original subordinate
            principal balance,

      o     commencing with the Distribution Date on the seventh anniversary of
            the first Distribution Date, 40% of the original subordinate
            principal balance,

      o     commencing with the Distribution Date on the eighth anniversary of
            the first Distribution Date, 45% of the original subordinate
            principal balance, and

      o     commencing with the Distribution Date on the ninth anniversary of
            the first Distribution Date, 50% of the original subordinate
            principal balance.

      The "Senior Termination Date" for a senior certificate group is the date
on which the aggregate Class Certificate Balance of the senior certificates of
such senior certificate group is reduced to zero.


                                      S-77


      If on any Distribution Date the allocation to the class or classes of
senior certificates (other than the Class PO Certificates) then entitled to
distributions of principal and other amounts in the percentages required above
would reduce the outstanding Class Certificate Balance of the class or classes
below zero, the distribution to the class or classes of certificates of the
related Senior Percentage and Senior Prepayment Percentage of those amounts for
the Distribution Date will be limited to the percentage necessary to reduce the
related Class Certificate Balance(s) to zero.

      Cross-Collateralization. If on any Distribution Date the aggregate Class
Certificate Balance of the senior certificates of a senior certificate group
after giving effect to distributions to be made on that Distribution Date, is
greater than the Non-PO Pool Balance for that loan group (any such group, the
"Undercollateralized Group"), all amounts otherwise distributable as principal
to the subordinated certificates (or, following the Senior Credit Support
Depletion Date, the amounts described in the following sentence) will be
distributed as principal to the senior certificates of the Undercollateralized
Group, other than the related Class PO Component, until the aggregate Class
Certificate Balance of the senior certificates, other than the related Class PO
Component, of the Undercollateralized Group equals the Non-PO Pool Balance for
that loan group (such distribution, an "Undercollateralization Distribution").
If the senior certificates of a senior certificate group constitute an
Undercollateralized Group on any Distribution Date following the Senior Credit
Support Depletion Date, Undercollateralization Distributions will be made from
the excess of the Available Funds for the other loan group remaining after all
required amounts for that Distribution Date have been distributed to the senior
certificates, other than the related Class PO Component, of that related senior
certificate group. Accordingly, the subordinated certificates will not receive
distributions of principal until each Undercollateralized Group is no longer
undercollateralized.

      The "Non-PO Pool Balance" for a loan group and any Due Date is equal to
the excess, if any, of (x) the aggregate Stated Principal Balance of all
Mortgage Loans in the related loan group over (y) the sum of the PO Percentage
of the Stated Principal Balance of each Discount Mortgage Loan in that loan
group.

      All distributions described in this "Cross-Collateralization" section will
be made in accordance with the priorities set forth under "Distributions on the
Certificates -- Principal -- Senior Principal Distribution Amount" above and "--
Subordinated Principal Distribution Amount" below.

      Subordinated Principal Distribution Amount. On each Distribution Date and
with respect to both loan groups, to the extent of Available Funds, the Non-PO
Formula Principal Amount for each loan group, up to the amount of the
Subordinated Principal Distribution Amount for each loan group for the
Distribution Date, will be distributed as principal of the subordinated
certificates. Except as provided in the next paragraph, each class of
subordinated certificates will be entitled to receive its pro rata share of the
Subordinated Principal Distribution Amount from both loan groups (based on its
respective Class Certificate Balance), in each case to the extent of the amount
available from Available Funds from both loan groups for distribution of
principal. Distributions of principal of the subordinated certificates' pro rata
share of the Subordinated Principal Distribution Amount will be made
sequentially to the classes of subordinated certificates in the order of their
numerical class designations, beginning with the Class B-1 Certificates, until
their respective Class Certificate Balances are reduced to zero.

      With respect to each class of subordinated certificates (other than the
class of subordinated certificates then outstanding with the highest priority of
distribution), if on any Distribution Date the sum of the Class Subordination
Percentages of such class and all classes of subordinated certificates that have
lower priorities of distribution than that class (the "Applicable Credit Support
Percentage") is less than the Applicable Credit Support Percentage for that
class on the date of issuance of the certificates (the "Original Applicable
Credit Support Percentage"), no distribution of partial principal prepayments
and principal prepayments in full will be made to any of those classes (the
"Restricted Classes") and the amount of partial principal prepayments and
principal prepayments in full otherwise distributable to the Restricted Classes
will be allocated among the remaining classes of subordinated certificates, pro
rata, based upon their respective Class Certificate Balances, and distributed in
the sequential order described above.

      The "Class Subordination Percentage" with respect to any Distribution Date
and each class of subordinated certificates, will equal the fraction (expressed
as a percentage) the numerator of which is the Class Certificate Balance of that
class of subordinated certificates immediately before the Distribution Date and
the


                                      S-78


denominator of which is the aggregate Class Certificate Balance of all classes
of certificates immediately before the Distribution Date.

      The approximate Original Applicable Credit Support Percentages for the
subordinated certificates on the date of issuance of the certificates are
expected to be as follows:

              Class B-1.................................... 5.25%
              Class B-2.................................... 3.25%
              Class B-3.................................... 2.10%
              Class B-4.................................... 1.50%
              Class B-5.................................... 0.85%
              Class B-6.................................... 0.35%

      The "Subordinated Principal Distribution Amount" for any Distribution Date
and loan group will equal the sum of:

      o     the related Subordinated Percentage of the applicable Non-PO
            Percentage of all amounts described in subclauses (a) through (d) of
            clause (i) of the definition of Non-PO Formula Principal Amount for
            that loan group and Distribution Date,

      o     for each Mortgage Loan that became a Liquidated Mortgage Loan during
            the calendar month preceding the month of the Distribution Date, the
            applicable Non-PO Percentage of the portion of the liquidation
            proceeds allocable to principal received on the Mortgage Loan, after
            application of the amounts pursuant to clause (ii) of the definition
            of Senior Principal Distribution Amount, up to the related
            Subordinated Percentage of the applicable Non-PO Percentage of the
            Stated Principal Balance of the Mortgage Loan,

      o     the Subordinated Prepayment Percentage of the applicable Non-PO
            Percentage of the amounts described in subclause (f) of clause (i)
            of the definition of Non-PO Formula Principal Amount for that loan
            group and Distribution Date, and

      o     the Subordinated Prepayment Percentage of any Subsequent Recoveries
            described in clause (ii) of the definition of Non-PO Formula
            Principal Amount for that loan group and Distribution Date, reduced
            by the amount of any payments in respect of Class PO Deferred
            Amounts on the Distribution Date.

      On any Distribution Date after the Senior Termination Date, the
Subordinated Principal Distribution Amount will not be calculated by loan group
but will equal the amount calculated pursuant to the formula set forth above
based on the applicable Subordinated Percentage or Subordinated Prepayment
Percentage, as applicable, for the subordinated certificates for such
Distribution Date with respect to all of the Mortgage Loans in the mortgage pool
as opposed to the Mortgage Loans in the related loan group.

      Residual Certificates. The Class A-R Certificates will remain outstanding
for so long as the issuing entity shall exist, regardless of whether they are
receiving current distributions of principal or interest. In addition to
distributions of interest and principal as described above, on each Distribution
Date, the holders of the Class A-R Certificates will be entitled to receive any
Available Funds for any loan group remaining after distribution of interest and
principal on the senior certificates and Class PO Deferred Amounts on the Class
PO Certificates and interest and principal on the subordinated certificates, as
described above. It is not anticipated that there will be any significant
amounts remaining for that distribution.

      Class PO Principal Distribution Amount. On each Distribution Date,
distributions of principal of a Class PO Component will be made in an amount
equal to the lesser of (x) the related PO Formula Principal Amount for the
Distribution Date and (y) the product of

            o     Available Funds for the related loan group remaining after
                  distribution of interest on the senior certificates, and


                                      S-79


            o     a fraction, the numerator of which is the related PO Formula
                  Principal Amount and the denominator of which is the sum of
                  the PO Formula Principal Amount and the related Senior
                  Principal Distribution Amount for the related loan group.

      If a Class PO Principal Distribution Amount on a Distribution Date is
calculated as provided in clause (y) above, principal distributions to holders
of the related senior certificates (other than the Notional Amount Certificates
and the related Class PO Component) will be in an amount equal to the product of
Available Funds for the applicable loan group remaining after distribution of
interest on the senior certificates in the related senior certificate group and
a fraction, the numerator of which is the Senior Principal Distribution Amount
and the denominator of which is the sum of that Senior Principal Distribution
Amount and the related PO Formula Principal Amount.

      The "PO Formula Principal Amount" for any Distribution Date and a Class PO
Component will equal the sum of:

      (i)   the sum of the applicable PO Percentage of:

            (a)   all monthly payments of principal due on each Mortgage Loan in
                  the related loan group on the related Due Date,

            (b)   the principal portion of the purchase price of each Mortgage
                  Loan in the related loan group that was repurchased by the
                  seller or another person pursuant to the pooling and servicing
                  agreement as of the Distribution Date, excluding any Mortgage
                  Loan in the related loan group that was repurchased due to a
                  modification of the Mortgage Rate,

            (c)   the Substitution Adjustment Amount in connection with any
                  deleted Mortgage Loan in the related loan group received for
                  the Distribution Date,

            (d)   any insurance proceeds or liquidation proceeds allocable to
                  recoveries of principal of mortgage loans in the related loan
                  group that are not yet Liquidated Mortgage Loans received
                  during the calendar month preceding the month of the
                  Distribution Date,

            (e)   for each Mortgage Loan in the related loan group that became a
                  Liquidated Mortgage Loan during the calendar month preceding
                  the month of the Distribution Date, the amount of liquidation
                  proceeds allocable to principal received on the Mortgage Loan,
                  and

            (f)   all partial and full principal prepayments by borrowers on the
                  Mortgage Loans in the related loan group received during the
                  related Prepayment Period, including the principal portion of
                  the purchase price of any Mortgage Loan in the related loan
                  group that was repurchased due to modification of the Mortgage
                  Rate, and

      (ii) with respect to Subsequent Recoveries attributable to a Discount
Mortgage Loan in the related loan group that incurred (1) an Excess Loss or (2)
a Realized Loss after the Senior Credit Support Depletion Date, the PO
Percentage of any Subsequent Recoveries received during the calendar month
preceding the month of that Distribution Date.

Allocation of Losses

      On each Distribution Date, the applicable PO Percentage of any Realized
Loss, including any Excess Loss, on a Discount Mortgage Loan in a loan group
will be allocated to the related Class PO Component, until its Component Balance
is reduced to zero. The amount of any Realized Loss, other than an Excess Loss
allocated in accordance with the previous sentence on or before the Senior
Credit Support Depletion Date, will be treated as a "Class-PO Deferred Amount."
To the extent funds are available on the Distribution Date or on any future
Distribution Date from amounts that would otherwise be allocable from Available
Funds of a loan group for the Subordinated Principal Distribution Amount, Class
PO Deferred Amounts will be paid on the related Class PO


                                      S-80


Component before distributions of principal on the subordinated certificates.
Any distribution of Available Funds in respect of unpaid Class PO Deferred
Amounts will not further reduce the Class Certificate Balance of the Class PO
Certificates. The Class PO Deferred Amounts will not bear interest. The Class
Certificates Balance of the class of subordinated certificates then outstanding
with the highest numerical class designation will be reduced by the amount of
any payments in respect of Class PO Deferred Amounts. After the Senior Credit
Support Depletion Date, no new Class PO Deferred Amounts will be created.

      On each Distribution Date, the applicable Non-PO Percentage of any
Realized Loss on the Mortgage Loans in a loan group, other than any Excess Loss,
will be allocated first to the subordinated certificates, in the reverse order
of their numerical class designations (beginning with the class of subordinated
certificates then outstanding with the highest numerical class designation), in
each case until the Class Certificate Balance of each class of subordinated
certificates has been reduced to zero, and then to the senior certificates of
the related senior certificate group (other than the Notional Amount
Certificates and the Class PO Certificates) pro rata, based upon their
respective Class Certificate Balances, except that the applicable Non-PO
Percentage of any Realized Losses (other than Excess Losses) on the mortgage
loans (A) in loan group 1 that would otherwise be allocated to (i) the Class
1-A-5 Certificates will be allocated up to the first $250,140 to the Class 1-A-9
Certificates, until the Class Certificate Balance of the Class 1-A-9
Certificates is reduced to zero and (ii) the Class 1-A-8 Certificates will be
allocated up to the first $247,517 to the Class 1-A-9 Certificates, until the
Class Certificate Balance of the Class 1-A-9 Certificates is reduced to zero and
(B) in loan group 2 that would otherwise be allocated to the Class 2-A-1
Certificates will be allocated to the Class 2-A-5 Certificates, until the Class
Certificate Balance of the Class 2-A-5 Certificates is reduced to zero.

      On each Distribution Date, the applicable Non-PO Percentage of Excess
Losses on the Mortgage Loans in a loan group will be allocated among the classes
of senior certificates of the related senior certificate group and the
subordinated certificates as follows:

o     the applicable Senior Percentage of the Non-PO Percentage of such Excess
      Loss will be allocated among the classes of senior certificates in that
      senior certificate group (other than the Notional Amount Certificates and
      the Class PO Certificates), pro rata, based on their Class Certificate
      Balances and

o     the applicable Subordinated Percentage of the Non-PO Percentage of such
      Excess Loss will be allocated among the classes of subordinated
      certificates, pro rata, based on each class' share of the Assumed Balance
      for the applicable loan group.

      The share of the Assumed Balance for each class of subordinated
certificates and a loan group will be based on the Class Certificate Balance of
each class of subordinated certificates; provided, however, on any Distribution
Date after the Senior Termination Date, such Excess Losses on the Mortgage Loans
in the related loan group will be allocated to the subordinated certificates
based upon their respective Class Certificate Balances; provided further,
however, on any Distribution Date on and after the Senior Credit Support
Depletion Date, the Non-PO Percentage of any Excess Loss on any Mortgage Loan
will be allocated pro rata among the classes of senior certificates in the
related senior certificate group. Unlike Realized Losses, the Non-PO Percentage
of any Excess Losses on the Mortgage Loans in a loan group will be allocated
proportionately among all related classes of certificates (other than the
related Notional Amount Certificates and the Class PO Certificates) including
the Class 1-A-5, Class 1-A-8 and Class 2-A-1 Certificates, without any
reallocation of Excess Losses to the Class 1-A-9 and Class 2-A-5 Certificates.

      Because principal distributions are paid to some classes of certificates
(other than the Class PO Certificates and the Notional Amount Certificates)
before other classes of certificates, holders of the certificates that are
entitled to receive principal later bear a greater risk of being allocated
Realized Losses on the Mortgage Loans than holders of classes that are entitled
to receive principal earlier.

      In general, a "Realized Loss" means, for a Liquidated Mortgage Loan, the
amount by which the remaining unpaid principal balance of the Mortgage Loan
exceeds the amount of liquidation proceeds applied to the principal balance of
the related Mortgage Loan. "Excess Losses" are Special Hazard Losses in excess
of the Special Hazard Loss Coverage Amount, Bankruptcy Losses in excess of the
Bankruptcy Loss Coverage Amount and Fraud Losses


                                      S-81


in excess of the Fraud Loss Coverage Amount. "Bankruptcy Losses" are losses that
are incurred as a result of Debt Service Reductions and Deficient Valuations.
"Special Hazard Losses" are Realized Losses in respect of Special Hazard
Mortgage Loans. "Fraud Losses" are losses sustained on a Liquidated Mortgage
Loan by reason of a default arising from fraud, dishonesty or misrepresentation.
See "Credit Enhancement -- Subordination" in this prospectus supplement.

      A "Liquidated Mortgage Loan" is a defaulted Mortgage Loan as to which the
servicer has determined that all recoverable liquidation and insurance proceeds
have been received. A "Special Hazard Mortgage Loan" is a Liquidated Mortgage
Loan as to which the ability to recover the full amount due thereunder was
substantially impaired by a hazard not insured against under a standard hazard
insurance policy of the type described in the prospectus under "Credit
Enhancement -- Special Hazard Insurance Policies." See "Credit Enhancement --
Subordination" in this prospectus supplement.

      "Subsequent Recoveries" are unexpected recoveries, net of reimbursable
expenses, with respect to a Liquidated Mortgage Loan that resulted in a Realized
Loss in a month prior to the month of receipt of such recoveries.

Structuring Assumptions

      Unless otherwise specified, the information in the tables under "Yield,
Prepayment and Maturity Considerations--Decrement Tables" in this prospectus
supplement has been prepared on the basis of the following assumed
characteristics of the Mortgage Loans and the following additional assumptions,
which combined are the structuring assumptions:

o     loan group 1 consists of eight Mortgage Loans with the following
      characteristics:




                  Adjusted Net                       Original       Remaining
    Principal       Mortgage         Mortgage      Amortization    Amortization
   Balance($)        Rate (%)         Rate (%)       (months)        (months)
--------------    ------------     ------------    ------------    ------------
  1,445,403.70    5.4190885423     5.6745885423        480             479
    513,868.77    5.6195000000     5.8750000000        240             239
 60,720,901.82    5.8657422512     6.1212422512        240             240
 78,007,545.60    5.8654696821     6.1259228025        360             359
125,450,110.12    6.2695885341     6.4750885341        360             359
  1,084,507.56    6.2945000000     6.5000000000        240             237
143,050,664.20    6.2995941964     6.5050941964        240             240
  3,524,797.13    6.3498789570     6.5553789570        480             479

                     Original        Remaining
                   Interest-Only   Interest-Only
    Principal           Term           Term
   Balance($)         (months)       (months)
--------------     -------------   -------------
  1,445,403.70             0              0
    513,868.77             0              0
 60,720,901.82           120            119
 78,007,545.60             0              0
125,450,110.12             0              0
  1,084,507.56             0              0
143,050,664.20           120            119
  3,524,797.13             0              0

o     loan group 2 consists of six Mortgage Loans with the following
      characteristics:




                  Adjusted Net                       Original       Remaining
    Principal       Mortgage         Mortgage      Amortization    Amortization
   Balance($)        Rate (%)         Rate (%)       (months)        (months)
--------------    ------------     ------------    ------------    ------------
 25,850,723.75    6.4945000000     6.7500000000        240             240
  2,484,984.30    6.4945000000     6.7500000000        480             479
 28,400,953.79    6.4895354308     6.7500000000        360             359
 82,739,821.02    7.0350933616     7.2423638446        360             359
  9,820,324.46    7.0879311789     7.2934311789        480             479
120,693,060.24    7.1385354458     7.3512856555        240             240

                      Original        Remaining
                    Interest-Only   Interest-Only
    Principal            Term           Term
   Balance($)          (months)       (months)
--------------      -------------   -------------
 25,850,723.75            120            119
  2,484,984.30              0              0
 28,400,953.79              0              0
 82,739,821.02              0              0
  9,820,324.46              0              0
120,693,060.24            120            119


                                      S-82


o     the Mortgage Loans prepay at the specified percentages of the Prepayment
      Assumption (as defined below),

o     no defaults in the payment by mortgagors of principal of and interest on
      the Mortgage Loans are experienced,

o     scheduled payments on the Mortgage Loans, except for Interest Only Loans,
      are received on the first day of each month commencing in the calendar
      month following the closing date and are computed before giving effect to
      prepayments received on the last day of the prior month,

o     any Interest Only Loan with a remaining interest-only term greater than
      zero does not amortize during the remaining interest-only term. At the end
      of the remaining interest-only term, any such Mortgage Loan will amortize
      in amounts sufficient to repay the current balance of any Mortgage Loan
      over the remaining term to maturity calculated at the expiration of the
      remaining interest-only term,

o     the 40/30 Balloon Loans will amortize over their respective remaining
      amortization terms with the final balloon payment being paid at the end of
      their respective remaining term to maturity,

o     prepayments are allocated as described in this prospectus supplement
      without giving effect to loss and delinquency tests,

o     there are no Net Interest Shortfalls and prepayments represent prepayments
      in full of individual Mortgage Loans and are received on the last day of
      each month, commencing in the calendar month of the closing date,

o     the scheduled monthly payment for each Mortgage Loan, except for Interest
      Only Loans and the 40/30 Balloon Loans, has been calculated such that each
      Mortgage Loan will amortize in amounts sufficient to repay the current
      balance of the Mortgage Loan by its respective remaining term to maturity,

o     the initial Class Certificate Balance, Notional Amount or Component
      Notional Amount, as applicable, of each class of certificates is as set
      forth on the cover page of this prospectus supplement or as described in
      this prospectus supplement under "Description of the Certificates --
      General," and "--Notional Amount Certificates" and "--Component Classes,"

o     interest accrues on each interest-bearing class and component of
      certificates at the applicable interest rate set forth or described on the
      cover page of this prospectus supplement or as described in this
      prospectus supplement,

o     distributions in respect of the certificates are received in cash on the
      25th day of each month commencing in the calendar month following the
      closing date,

o     the closing date of the sale of the certificates is February 27, 2007,

o     the seller is not required to repurchase or substitute for any Mortgage
      Loan,

o     the servicer is not required to repurchase any modified Mortgage Loan,

o     the servicer does not exercise the option to repurchase the Mortgage Loans
      described in this prospectus supplement under "-- Optional Termination,"
      and

o     no class of certificates becomes a Restricted Class.

      Each prepayment model used in this prospectus supplement 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 those mortgage loans. Each
Prepayment Assumption (each a "PPC") does not purport to be a historical
description of prepayment experience or a prediction of the anticipated rate of
prepayment of any pool of mortgage loans, including the Mortgage Loans. The
Prepayment Assumption for loan group 1 and loan group 2 are referred to as the
"Group 1


                                      S-83


Prepayment Assumption" or the "Group 2 Prepayment Assumption". The Group 1
Prepayment Assumption and the Group 2 Prepayment Assumption are referred to
collectively as the "Prepayment Assumptions." A 100% Group 1 Prepayment
Assumption assumes a constant prepayment rate (a "CPR") of 8% 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 1.4545454545% per
annum in each month thereafter until the twelfth month. Beginning in the twelfth
month and in each month thereafter during the life of the mortgage loans, a 100%
Group 1 Prepayment Assumption assumes a CPR of 24% per annum each month. A 100%
Group 2 Prepayment Assumption assumes a CPR of 8% 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 1.09090909% per annum
in each month thereafter until the twelfth month. Beginning in the twelfth month
and in each month thereafter during the life of the mortgage loans, a 100% Group
2 Prepayment Assumption assumes a CPR of 20% per annum each month. 0% PPC
assumes no prepayments. Correspondingly, 200% PPC assumes prepayment rates equal
to two times the related PPC, and so forth.

      Although it is assumed that each of the Mortgage Loans prepays at the
specified constant percentages of the Prepayment Assumption, this is not likely
to be the case. Moreover, discrepancies may exist between the characteristics of
the actual Mortgage Loans that will be delivered to the trustee and
characteristics of the Mortgage Loans used in preparing the tables.

Reports to Certificateholders

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

Voting Rights

      As of any date of determination:

            o     each class of Notional Amount Certificates and the Class A-R
                  Certificates will be allocated 1% of all voting rights in
                  respect of the certificates (for a total of 3% of the Voting
                  Rights), and

            o     the other classes of Certificates will be allocated the
                  remaining Voting Rights in proportion to their respective
                  outstanding Class Certificate Balances (collectively, the
                  "Voting Rights").

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

Termination of the Issuing Entity; Optional Termination

      The servicer will have the right to repurchase all remaining Mortgage
Loans and foreclosed or otherwise repossessed properties and thereby effect
early retirement of the certificates, subject to the aggregate Stated Principal
Balance of the Mortgage Loans and any related foreclosed or otherwise
repossessed properties at the time of repurchase being less than 10% of the
aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date.
In the event the servicer exercises such option, the purchase price distributed
with respect to each affected certificate will be 100% of its then outstanding
principal balance plus any Class PO Deferred Amounts in the case of the Class PO
Certificates and, in the case of an interest-bearing class or component of
certificates, any unpaid accrued interest on such principal balance at the
applicable pass-through rate, in each case subject to reduction as provided in
the pooling and servicing agreement if the purchase price is based in part on
the appraised value of any foreclosed or otherwise repossessed properties or
delinquent Mortgage Loans and the appraised value is less than the Stated
Principal Balance of the related Mortgage Loans. Distributions in respect of any
such optional termination will first be paid to the senior certificates and
then, except as set forth in the pooling and servicing agreement, to the
subordinated certificates. The proceeds from any optional termination 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


                                      S-84


any foreclosed or otherwise repossessed properties or delinquent Mortgage Loans
and such appraised value is less than the Stated Principal Balance of the
Mortgage Loans.

      The issuing entity also will terminate upon notice to the trustee of
either the later of: (i) the distribution to certificateholders of the final
payment or collection with respect to the last Mortgage Loan and the disposition
of all REO property, or (ii) the distribution of all funds due under the pooling
and servicing agreement; provided, however, that in no event will the issuing
entity terminate later than twenty one years after the death of the last
surviving lineal descendant of the person named in the pooling and servicing
agreement.

      The pooling and servicing agreement requires the servicer to direct the
trustee to send a notice of final distribution to each certificateholder in the
event that there are no outstanding Mortgage Loans and no other than the funds
or assets in the issuing entity other than funds in the Certificate Account. The
trustee will be required to promptly send the notice of final distribution by
letter to certificateholders mailed not later than the 15th day of the month of
such final distribution. Any such notice of final distribution will be required
to specify (a) the Distribution Date upon which final distribution on the
certificates will be made upon presentation and surrender of certificates at the
office designated in the notice, (b) the amount of such final distribution, (c)
the location of the office or agency at which such presentation and surrender
must be made, and (d) that the Record Date otherwise applicable to such
Distribution Date is not applicable, distributions being made only upon
presentation and surrender of the certificates at the office specified in the
notice.

      In the event a notice of final distribution is given, the servicer will be
required to remit all funds in the Certificate Account 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. Upon final deposit with respect to the issuing entity and the
receipt by the trustee of a request for release of the mortgage loan files, the
trustee will be required to promptly release the mortgage loan files to the
servicer or its designee.

      Upon presentation and surrender of the certificates, the trustee will be
required to cause to be distributed to the certificateholders of each class
(after reimbursement of all amounts due to each servicer, the depositor and the
trustee pursuant to the pooling and servicing agreement) (i) its Class
Certificate Balance plus accrued interest in the case of an interest bearing
certificate and all other amounts to which such classes are entitled and (ii) as
to the holder of the Class A-R Certificates, the amount, if any, which remains
on deposit in the Distribution Account (other than the amounts retained to meet
claims) after application pursuant to clause (i) above.

      In the event that any affected certificateholder does not surrender
certificates for cancellation within six months after the date specified in the
notice of final distribution, the trustee will be required to give a second
written notice to the remaining certificateholders to surrender their
certificates for cancellation and receive the final distribution. If within six
months after the second notice all the applicable certificates have been
surrendered for cancellation, the trustee may take appropriate steps, or may
appoint an agent to take appropriate steps, to contact the remaining
certificateholders concerning surrender of their certificates, and the related
costs will be paid out of the funds and other assets which remain a part of the
issuing entity. If within one year after the second notice all certificates have
not been surrendered for cancellation, the Class A-R Certificateholders will be
entitled to all unclaimed funds and other assets of the issuing entity.

Certain Matters Regarding the Servicer, the Depositor and the Seller

      The prospectus describes the indemnification to which the servicer and the
depositor (and their respective directors, officers, employees and agents) are
entitled and also describes the limitations on any liability of the Servicer and
the depositor (and their respective directors, officers, employees and agents)
to the issuing entity. See "The Agreements--Certain Matters Regarding the
Servicer and the Depositor" in the prospectus. The pooling and servicing
agreement provides that these same provisions regarding indemnification and
exculpation apply to the seller.


                                      S-85


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 (as modified by the restrictions imposed by the
Treasury Regulations and described in this prospectus supplement under "Material
Federal Income Tax Consequences") under "Material Federal Income Tax
Consequences--REMIC Certificates--Tax-Related Restrictions on Transfers of
Residual Certificates--Disqualified Organizations," "--Noneconomic Residual
Certificates" and "--Foreign Investors." 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. See "ERISA
Considerations" in this prospectus supplement. The Class A-R Certificates will
contain a legend describing the foregoing restrictions.

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.

                  Yield, Prepayment and Maturity Considerations

General

      The effective yield to the holders of each interest-bearing class of
certificates will be lower than the yield otherwise produced by the applicable
pass-through rate and the purchase price of the certificates because monthly
distributions will not be payable to the holders until the 25th day (or, if that
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 on them for the delay).

      Delinquencies on the Mortgage Loans that are not advanced by or on behalf
of the servicer (because amounts, if advanced, would be nonrecoverable), will
adversely affect the yield on the certificates. Because of the priority of
distributions, shortfalls resulting from delinquencies on the Mortgage Loans not
so advanced will be borne first by the subordinated certificates, in the reverse
order of their numerical class designations, and then by the senior certificates
of the senior certificate group to which the shortfall relates pro rata. If, as
a result of shortfalls on the Mortgage Loans, the sum of the Class Certificate
Balances of all classes of certificates exceeds the aggregate principal balance
of the Mortgage Loans, the Class Certificate Balance of the class of
subordinated certificates then outstanding with the highest numerical class
designation will be reduced by the amount of the excess.

      Net Interest Shortfalls on the Mortgage Loans in a loan group will
adversely affect the yields on the classes of offered certificates related to
that loan group that bear interest. Although all losses on the Mortgage Loans in
a loan group initially will be borne by the subordinated certificates in the
reverse order of their numerical class designations (either directly or through
distributions in respect of Class PO Deferred Amounts on the Class PO
Certificates), Excess Losses on the Mortgage Loans in a loan group will be borne
by all classes of certificates related to that loan group (other than the
Notional Amount Certificates) on a pro rata basis. Moreover, because the
Subordinated Principal Distribution Amount for each Distribution Date will be
reduced by the amount of any distributions on the Distribution Date in respect
of Class PO Deferred Amounts, the amount distributable as principal on each
Distribution Date to each class of subordinated certificates then entitled to a
distribution of principal will be less than it otherwise would be in the absence
of Class PO Deferred Amounts. As a result, the yields on the offered
certificates related to a loan group will depend on the rate and timing of
Realized Losses, including Excess Losses, on the Mortgage Loans in that loan
group. Excess Losses could occur at a time when one or more classes of the
subordinated certificates are still outstanding and otherwise available to
absorb other types of Realized Losses.


                                      S-86


Prepayment Considerations and Risks

      The rate of principal payments on the certificates, the aggregate amount
of distributions on the offered certificates and the yield to maturity of the
certificates will be related to the rate and timing of payments of principal on
the Mortgage Loans in the related loan group or loan groups. The rate of
principal payments on the Mortgage Loans will in turn be affected by the
amortization schedules of the Mortgage Loans and by the rate of principal
prepayments, including for this purpose prepayments resulting from refinancing,
liquidations of the Mortgage Loans due to defaults, casualties, condemnations
and repurchases by the seller or servicer. Except for certain of the Mortgage
Loans that have a prepayment charge if the related mortgagor prepays such
Mortgage Loan during a period ranging from one year to three years after
origination, the Mortgage Loans may be prepaid by the mortgagors at any time
without a prepayment charge. Because certain of the Mortgage Loans contain
prepayment charges, the rate of principal prepayments may be less than the rate
of principal payments for Mortgage Loans that did not have prepayment charges.
No prepayment charges received on the Mortgage Loans will be available for
distribution on the certificates. Under certain circumstances, as described in
the pooling and servicing agreement, the servicer may waive the payment of any
otherwise applicable prepayment charge. Investors should conduct their own
analysis of the effect, if any, that the prepayment charges, and decisions by
the servicer with respect to the waiver thereof, may have on the prepayment
performance of the Mortgage Loans. The depositor makes no representations as to
the effect that the prepayment charges, and decisions by the servicer with
respect to the waiver thereof, may have on the prepayment performance of the
Mortgage Loans. In addition, the Interest Only Loans do not provide for any
payments of principal for an extended period following their origination. These
Mortgage Loans may involve a greater degree of risk because, if the related
mortgagor defaults, the outstanding principal balance of the Mortgage Loans will
be higher than for amortizing Mortgage Loans. During their interest-only
periods, these Mortgage Loans may be less likely to prepay as the interest-only
feature may reduce the perceived benefits of refinancing due to the smaller
monthly payment. However, as an interest-only mortgage loan approaches the end
of its interest-only period, it may be more likely to be prepaid, even if market
interest rates at the time are only slightly higher or lower than the interest
rate on the interest-only mortgage loans as the related borrowers seek to avoid
increases in their respective monthly mortgage payment. The Mortgage Loans are
subject to the "due-on-sale" provisions included therein. However, the servicer
may choose not to accelerate a Mortgage Loan upon the conveyance of the related
mortgaged property if the servicer would make a similar decision with respect to
a comparable Mortgage Loan held for its own account. See "The Mortgage Pool" in
this prospectus supplement.

      Prepayments, liquidations and purchases of the Mortgage Loans in a loan
group will result in distributions on the certificates related to that loan
group of principal amounts that would otherwise be distributed over the
remaining terms of these Mortgage Loans. This includes any optional repurchase
of the remaining Mortgage Loans in connection with the termination of the
issuing entity as described in this prospectus supplement. Because the rate of
payment of principal of the Mortgage Loans will depend on future events and a
variety of factors, no assurance can be given as to the rate of payment of
principal of the Mortgage Loans or the rate of principal prepayments. The extent
to which the yield to maturity of a class of certificates may vary from the
anticipated yield will depend upon the degree to which the certificate is
purchased at a discount or premium, and the degree to which the timing of
payments thereon is sensitive to prepayments, liquidations and purchases of the
Mortgage Loans in the related loan group or loan groups. Further, an investor
should consider the risk that, in the case of the Class PO Certificates and any
other offered certificate purchased at a discount, a slower than anticipated
rate of principal payments (including prepayments) on the Mortgage Loans in the
related loan group or loan groups could result in an actual yield to the
investor that is lower than the anticipated yield and, in the case of the
Notional Amount Certificates and any other offered certificate purchased at a
premium, a faster than anticipated rate of principal payments on the Mortgage
Loans in the related loan group or loan groups could result in an actual yield
to the investor that is lower than the anticipated yield. Investors in the
Notional Amount Certificates should carefully consider the risk that a rapid
rate of principal payments on the Mortgage Loans could result in the failure of
the investors to recover their initial investments.

      The rate of principal payments (including prepayments) on pools of
Mortgage Loans may vary significantly over time and may be influenced by a
variety of economic, geographic, social and other factors, including changes in
mortgagors' housing needs, job transfers, unemployment, mortgagors' net equity
in the mortgaged properties, servicing decisions, as well as the characteristics
of the Mortgage Loans included in the mortgage pool as described in this
prospectus supplement under "The Mortgage Pool--General" and "--Underwriting
Process." In general, if prevailing interest rates were to fall significantly
below the Mortgage Rates on the Mortgage Loans, the Mortgage


                                      S-87


Loans could be subject to higher prepayment rates than if prevailing interest
rates were to remain at or above the Mortgage Rates on the Mortgage Loans.
Conversely, if prevailing interest rates were to rise significantly, the rate of
prepayments on the Mortgage Loans would generally be expected to decrease. No
assurances can be given as to the rate of prepayments on the Mortgage Loans in
stable or changing interest rate environments. With respect to mortgage loans
that are 40/30 Balloon Loans, such mortgage loans involve a greater degree of
risk than fully amortizing mortgage 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 the borrower to do this will depend on such factors as
mortgage rates at the time of the sale or refinancing, the borrower's equity in
the property, the relative strengths of the local housing market, the financial
condition of the borrower and tax laws. Furthermore, with respect to up to 30%
of the Mortgage Loans in each loan group, the depositor may deliver all or a
portion of each related mortgage file to the trustee not later than five
business days after the closing date. Should the seller fail to deliver all or a
portion of any mortgage files to the depositor or other designee of the
depositor or, at the depositor's direction, to the trustee, within that period,
the seller will be required to use its best efforts to deliver a substitute
Mortgage Loan for the related delayed delivery Mortgage Loan or repurchase the
related delayed delivery Mortgage Loan. Any repurchases pursuant to this
provision would also have the effect of accelerating the rate of prepayments on
the Mortgage Loans.

      As described in this prospectus supplement under "Description of the
Certificates -- Principal," the related Senior Prepayment Percentage of the
applicable Non-PO Percentage of all principal prepayments on the Mortgage Loans
in a loan group will be initially distributed to the classes of related senior
certificates (other than the Notional Amount Certificates and the Class PO
Certificates) then entitled to receive principal prepayment distributions. In
that event, this will result in all (or a disproportionate percentage) of the
principal prepayments being distributed to holders of the related classes of
senior certificates and none (or less than their pro rata share) of the
principal prepayments being distributed to the subordinated certificates during
the periods of time described in the definition of Senior Prepayment Percentage.
The Class 1-A-1, Class 1-A-5, Class 1-A-8, Class 1-A-9, Class 2-A-1 and Class
2-A-5 Certificates generally will not receive distributions of principal on the
related Mortgage Loans for the first five years after the closing date.

      The timing of changes in the rate of prepayments on the Mortgage Loans in
a loan group may significantly affect an investor's actual yield to maturity,
even if the average rate of principal payments on the Mortgage Loans in that
loan group is consistent with an investor's expectation. In general, the earlier
a prepayment of principal on the Mortgage Loans, the greater the effect on an
investor's yield to maturity. The effect on an investor's yield as a result of
principal payments occurring at a rate higher (or lower) than the rate
anticipated by the investor during the period immediately following the issuance
of the offered certificates may not be offset by a subsequent like decrease (or
increase) in the rate of principal payments.

      The tables in this section indicate the sensitivity of the pre-tax
corporate bond equivalent yields to maturity of the illustrated classes of
certificates to various constant percentages of the Prepayment Assumption. The
yields set forth in the tables were calculated by determining the monthly
discount rates that, when applied to the assumed streams of cash flows to be
paid on the applicable classes of certificates, would cause the discounted
present value of the assumed streams of cash flows to equal the assumed
aggregate purchase prices of the applicable classes and converting the monthly
rates to corporate bond equivalent rates. Those calculations do not take into
account variations that may occur in the interest rates at which investors may
be able to reinvest funds received by them as distributions on the certificates
and consequently do not purport to reflect the return on any investment in the
applicable classes of certificates when the reinvestment rates are considered.

Sensitivity of the Class 2-A-4 Certificates

      As indicated in the following table, the yield to investors in the Class
2-A-4 Certificates will be sensitive to the rate of principal payments
(including prepayments) of the group 2 mortgage loans, which can be prepaid at
any time. On the basis of the structuring assumptions and the price below, the
yield to maturity on the Class 2-A-4 Certificates would be approximately 0% if
prepayments of the group 2 mortgage loans were to occur at a constant rate of
approximately 191% of the Prepayment Assumption. If the actual prepayment rate
of the group 2 mortgage loans were to exceed the foregoing level for as little
as one month while equaling the level for the remaining months, the investors in
the Class 2-A-4 Certificates would not fully recoup their initial investments.


                                      S-88


      The information set forth in the following table has been prepared on the
basis of the structuring assumptions and on the assumption that the purchase
price of the Class 2-A-4 Certificates (expressed as a percentage of its initial
notional amount) is as follows:

      Class                                              Price*
      -----                                              ------
      Class 2-A-4 ...................................... 2.20312500%

      ----------
      *The price does not include accrued interest. Accrued interest has been
      added to such price in calculating the yields set forth in the table
      below.

           Sensitivity of the Class 2-A-4 Certificates to Prepayments
                           (Pre-Tax Yield to Maturity)

                                   Percentage of the Prepayment Assumption
                            ---------------------------------------------------
      Class                   0%        50%        100%      150%        200%
      -----                 ------     ------     ------    ------     --------
      Class 2-A-4 .....     22.86%     20.88%     19.00%    11.05%      (2.30)%

      It is unlikely that the group 2 mortgage loans will have the precise
characteristics described in this prospectus supplement or that the mortgage
loans will all prepay at the same rate until maturity or that all of the group 2
mortgage loans will prepay at the same rates or time. As a result of these
factors, the pre-tax yield on the Class 2-A-4 Certificates is likely to differ
from those shown in the table above, even if all of the Mortgage Loans prepay at
the indicated percentages of the Prepayment Assumption. No representation is
made as to the actual rate of principal payments on the mortgage loans for any
period or over the life of the Class 2-A-4 Certificates or as to the yield on
those Certificates. Investors must make their own decisions as to the
appropriate prepayment assumptions to be used in deciding whether to purchase
the Class 2-A-4 Certificates.

Sensitivity of the Class A-X Certificates

      As indicated in the following table, the yield to investors in the Class
A-X Certificates will be sensitive to the rate of principal payments (including
prepayments) of the Non-Discount Mortgage Loans (particularly those with high
adjusted net mortgage rates). The Mortgage Loans generally can be prepaid at any
time. On the basis of the structuring assumptions described under this heading,
the yield to maturity on the Class A-X Certificates would be approximately 0% if
prepayments on the Non-Discount Mortgage Loans were to occur at a rate of
approximately 211% of the Prepayment Assumption. If the actual prepayment rate
of the Non-Discount Mortgage Loans, were to exceed the foregoing level for as
little as one month while equaling the level for the remaining months, the
investors in the Class A-X Certificates would not fully recoup their initial
investments.

      As described in this prospectus supplement under "Description of the
Certificates --General," the Component Notional Amount of each Class A-X
Component of the Class A-X Certificates in effect from time to time is
calculated by reference to the adjusted net mortgage rates of the Non-Discount
Mortgage Loans in the related loan group. The Non-Discount Mortgage Loans will
have higher adjusted net mortgage rates (and higher Mortgage Rates) than the
other Mortgage Loans. In general, Mortgage Loans with higher Mortgage Rates tend
to prepay at higher rates than Mortgage Loans with relatively lower Mortgage
Rates in response to a given change in market interest rates. As a result, the
Non-Discount Mortgage Loans may prepay at higher rates, thereby reducing the
Notional Amount of the Class A-X Certificates.

      The information set forth in the following table has been prepared on the
basis of the structuring assumptions and on the assumption that the purchase
price of the Class A-X Certificates (expressed as a percentage of its initial
Notional Amount) is as follows:

                          Class                                    Price*
----------------------------------------------------------- --------------------
      Class A-X.............................................. 0.80218%

      ----------
      * The price does not include accrued interest. Accrued interest has been
      added to such price in calculating the yields in the following table.


                                      S-89


            Sensitivity of the Class A-X Certificates to Prepayments
                           (Pre-Tax Yield to Maturity)

                                Percentage of the Prepayment Assumption
                       ---------------------------------------------------------
      Class               0%          50%         100%         150%        200%
      -----            -------      --------    -------      -------      ------
      Class A-X .....   55.95%       43.92%      31.26%       17.84%       3.53%

      It is unlikely that the Non-Discount Mortgage Loans will have the precise
characteristics described in this prospectus supplement or that the Non-Discount
Mortgage Loans will prepay at the same rate until maturity or prepay at the same
rate or time. As a result of these factors, the pre-tax yield on the Class A-X
Certificates is likely to differ from those shown in the table above, even if
the Non-Discount Mortgage Loans prepay at the indicated percentages of the
prepayment assumption. No representation is made as to the actual rate of
principal payments on the Non-Discount Mortgage Loans, for any period or over
the life of the Class A-X Certificates or as to the yield on the Class A-X
Certificates. Investors must make their own decisions as to the appropriate
prepayment assumptions to be used in deciding whether to purchase the Class A-X
Certificates.

Sensitivity of the Class PO Certificates

      The Class PO Certificates will be principal only certificates and will not
bear interest. As indicated in the following table, a lower than anticipated
rate of principal payments (including prepayments) on the Discount Mortgage
Loans will have a negative effect on the yield to investors in the Class PO
Certificates.

      As described in this prospectus supplement above under "Description of the
Certificates -- Principal," the principal distribution amount for the Class PO
Certificates is calculated by reference to the principal payments (including
prepayments) on the Discount Mortgage Loans. The Discount Mortgage Loans will
have lower adjusted net mortgage rates (and lower Mortgage Rates) than the other
Mortgage Loans. In general, Mortgage Loans with higher Mortgage Rates tend to
prepay at higher rates than Mortgage Loans with relatively lower Mortgage Rates
in response to a given change in market interest rates. As a result, the
Discount Mortgage Loans may prepay at lower rates, thereby reducing the rate of
payment of principal and the resulting yield of the Class PO Certificates.

      The information set forth in the following table has been prepared on the
basis of the structuring assumptions and on the assumption that the aggregate
purchase price of the Class PO Certificates (expressed as a percentage of its
initial Class Certificate Balance) is as follows:

                           Class                         Price
      ----------------------------------------------------------
      Class PO.......................................... 70.75%

             Sensitivity of the Class PO Certificates to Prepayments
                           (Pre-tax Yield to Maturity)

                                  Percentage of the Prepayment Assumption
                      ----------------------------------------------------------
      Class             0%           50%         100%         150%        200%
      -----           ------       ------      -------      -------     --------
      Class PO ...     1.73%        5.57%       10.66%       16.20%      22.15%

      It is unlikely that the Discount Mortgage Loans will have the precise
characteristics described in this prospectus supplement or that the Discount
Mortgage Loans will all prepay at the same rate until maturity or that all of
the Discount Mortgage Loans will prepay at the same rate or time. As a result of
these factors, the pre-tax yield on the Class PO Certificates is likely to
differ from those shown in the table above, even if all of the Discount Mortgage
Loans prepay at the indicated percentages of the Prepayment Assumption. No
representation is made as to the actual rate of principal payments on the
Discount Mortgage Loans for any period or over the life of the Class PO
Certificates or as to the yield on the Class PO Certificates. Investors must
make their own decisions as to the appropriate prepayment assumptions to be used
in deciding whether to purchase the Class PO Certificates.


                                      S-90


Weighted Average Lives of the Offered Certificates

      The weighted average life of an offered certificate is determined by (a)
multiplying the amount of the net reduction, if any, of the Class Certificate
Balance or Notional Amount of the Certificate on each Distribution Date by the
number of years from the date of issuance to the Distribution Date, (b) summing
the results and (c) dividing the sum by the aggregate amount of the net
reductions in Class Certificate Balance or Notional Amount of the Certificate
referred to in clause (a).

      For a discussion of the factors that may influence the rate of payments
(including prepayments) of the Mortgage Loans, see "-- Prepayment Considerations
and Risks" in this prospectus supplement and "Yield and Prepayment
Considerations" in the prospectus.

      In general, the weighted average lives of the offered certificates will be
shortened if the level of prepayments of principal of the Mortgage Loans
increases. The weighted average lives of the offered certificates, however, will
depend upon a variety of other factors, including the timing of changes in the
rate of principal payments, and the priority sequence of distributions of
principal of the classes of certificates. See "Description of the
Certificates--Principal" in this prospectus supplement.

      The interaction of the foregoing factors may have different effects on
various classes of offered certificates and the effects on any class may vary at
different times during the life of the class. Accordingly, no assurance can be
given as to the weighted average life of any class of offered certificates.
Further, to the extent the prices of the offered certificates represent
discounts or premiums to their respective original Class Certificate Balances or
Notional Amounts, as the case may be, variability in the weighted average lives
of the classes of offered certificates will result in variability in the related
yields to maturity. For an example of how the weighted average lives of the
classes of offered certificates may be affected at various constant percentages
of the Prepayment Assumption, see the Decrement Tables under the next heading.

Decrement Tables

      The following tables indicate the percentages of the initial Class
Certificate Balances or Notional Amounts of the classes of offered certificates
(other than the Class A-X and Class A-R Certificates) that would be outstanding
after each of the Distribution Dates shown at various percentages of the
Prepayment Assumption and the corresponding weighted average lives of the
classes. The tables have been prepared on the basis of the structuring
assumptions. It is not likely that the Mortgage Loans will have the precise
characteristics described in this prospectus supplement or all of the Mortgage
Loans will prepay at the percentages of the Prepayment Assumption specified in
the tables or at any other rate. Moreover, the diverse remaining terms to
maturity of the Mortgage Loans could produce slower or faster principal
distributions than indicated in the tables, which have been prepared using the
specified percentages of the Prepayment Assumption, even if the remaining term
to maturity of the Mortgage Loans is consistent with the remaining terms to
maturity of the Mortgage Loans specified in the structuring assumptions.


                                      S-91


           Percent of Initial Class Certificate Balances Outstanding+



                               Class 1-A-1, Class 1-A-8 and Class 1-A-9
                              ------------------------------------------
                               Percentage of the Prepayment Assumption
Distribution Date              0%       50%      100%     150%     200%
-----------------             ----     -----    ------   ------   ------
Initial Percentage .........   100      100      100      100      100
February 25, 2008 ..........   100      100      100      100      100
February 25, 2009 ..........   100      100      100      100      100
February 25, 2010 ..........   100      100      100      100      100
February 25, 2011 ..........   100      100      100      100       39
February 25, 2012 ..........   100      100      100       72        0
February 25, 2013 ..........    99       95       91       33        0
February 25, 2014 ..........    98       90       81       12        0
February 25, 2015 ..........    97       82       68        3        0
February 25, 2016 ..........    96       74       54        0        0
February 25, 2017 ..........    95       64       41        0        0
February 25, 2018 ..........    93       55       30        0        0
February 25, 2019 ..........    90       47       22        0        0
February 25, 2020 ..........    87       40       16        0        0
February 25, 2021 ..........    84       34       12        0        0
February 25, 2022 ..........    81       29        9        0        0
February 25, 2023 ..........    78       24        6        0        0
February 25, 2024 ..........    74       20        5        0        0
February 25, 2025 ..........    70       17        3        0        0
February 25, 2026 ..........    66       14        2        0        0
February 25, 2027 ..........    62       12        2        0        0
February 25, 2028 ..........    57        9        1        0        0
February 25, 2029 ..........    53        8        1        0        0
February 25, 2030 ..........    47        6        1        0        0
February 25, 2031 ..........    42        5        *        0        0
February 25, 2032 ..........    36        4        *        0        0
February 25, 2033 ..........    30        3        *        0        0
February 25, 2034 ..........    23        2        *        0        0
February 25, 2035 ..........    16        1        *        0        0
February 25, 2036 ..........     8        *        *        0        0
February 25, 2037 ..........     0        0        0        0        0
Weighted Average Life
(in years) to Maturity** ... 21.38    12.88     9.99     5.77     3.93

                                              Class 1-A-2
                                ------------------------------------------
                                  Percentage of the Prepayment Assumption
Distribution Date                 0%      50%     100%      150%     200%
-----------------                ----    -----   ------    ------   ------
Initial Percentage .........     100      100     100     100        100
February 25, 2008 ..........      99       91      90      79         67
February 25, 2009 ..........      98       81      64      43         24
February 25, 2010 ..........      98       71      43      19          2
February 25, 2011 ..........      97       62      27       5          0
February 25, 2012 ..........      96       52      15       0          0
February 25, 2013 ..........      95       43       8       0          0
February 25, 2014 ..........      94       36       3       0          0
February 25, 2015 ..........      93       31       1       0          0
February 25, 2016 ..........      92       26       0       0          0
February 25, 2017 ..........      90       23       0       0          0
February 25, 2018 ..........      88       19       0       0          0
February 25, 2019 ..........      85       16       0       0          0
February 25, 2020 ..........      82       14       0       0          0
February 25, 2021 ..........      79       11       0       0          0
February 25, 2022 ..........      75       10       0       0          0
February 25, 2023 ..........      71        8       0       0          0
February 25, 2024 ..........      68        6       0       0          0
February 25, 2025 ..........      63        5       0       0          0
February 25, 2026 ..........      59        4       0       0          0
February 25, 2027 ..........      54        3       0       0          0
February 25, 2028 ..........      49        2       0       0          0
February 25, 2029 ..........      44        2       0       0          0
February 25, 2030 ..........      38        1       0       0          0
February 25, 2031 ..........      32        1       0       0          0
February 25, 2032 ..........      25        *       0       0          0
February 25, 2033 ..........      18        0       0       0          0
February 25, 2034 ..........      11        0       0       0          0
February 25, 2035 ..........       3        0       0       0          0
February 25, 2036 ..........       0        0       0       0          0
February 25, 2037 ..........       0        0       0       0          0
Weighted Average Life
(in years) to Maturity** ...   19.49     6.71    3.04    1.99       1.49

----------
+     Rounded to the nearest whole percentage (other than those percentages
      designated with an asterisk).
*     Indicates an amount greater than zero but less than 0.5%.
**    Determined as specified under "Yield, Prepayment and Maturity
      Considerations--Weighted Average Lives of the

    Offered Certificates" in this prospectus supplement.


                                      S-92


           Percent of Initial Class Certificate Balances Outstanding+



                                             Class 1-A-3
                              ------------------------------------------
                               Percentage of the Prepayment Assumption
Distribution Date              0%       50%      100%     150%     200%
-----------------             ----     -----    ------   ------   ------
Initial Percentage.. .......   100      100      100      100      100
February 25, 2008 ..........   100       79        8        0        0
February 25, 2009 ..........   100       43        0        0        0
February 25, 2010 ..........   100       18        0        0        0
February 25, 2011 ..........    99        4        0        0        0
February 25, 2012 ..........    99        0        0        0        0
February 25, 2013 ..........    99        0        0        0        0
February 25, 2014 ..........    99        0        0        0        0
February 25, 2015 ..........    99        0        0        0        0
February 25, 2016 ..........    98        0        0        0        0
February 25, 2017 ..........    98        0        0        0        0
February 25, 2018 ..........    98        0        0        0        0
February 25, 2019 ..........    97        0        0        0        0
February 25, 2020 ..........    97        0        0        0        0
February 25, 2021 ..........    96        0        0        0        0
February 25, 2022 ..........    95        0        0        0        0
February 25, 2023 ..........    95        0        0        0        0
February 25, 2024 ..........    94        0        0        0        0
February 25, 2025 ..........    93        0        0        0        0
February 25, 2026 ..........    92        0        0        0        0
February 25, 2027 ..........    91        0        0        0        0
February 25, 2028 ..........    90        0        0        0        0
February 25, 2029 ..........    89        0        0        0        0
February 25, 2030 ..........    88        0        0        0        0
February 25, 2031 ..........    87        0        0        0        0
February 25, 2032 ..........    86        0        0        0        0
February 25, 2033 ..........    85        0        0        0        0
February 25, 2034 ..........    83        0        0        0        0
February 25, 2035 ..........    82        0        0        0        0
February 25, 2036 ..........    49        0        0        0        0
February 25, 2037 ..........     0        0        0        0        0
Weighted Average Life
(in years) to Maturity** ... 27.34     1.99     0.68     0.45     0.34

                                             Class 1-A-4
                                ------------------------------------------
                                  Percentage of the Prepayment Assumption
Distribution Date                 0%      50%     100%      150%     200%
-----------------                ----    -----   ------    ------   ------
Initial Percentage.. .......     100      100     100     100        100
February 25, 2008 ..........     100      100     100     100        100
February 25, 2009 ..........     100      100     100     100        100
February 25, 2010 ..........     100      100     100     100        100
February 25, 2011 ..........     100      100     100     100          0
February 25, 2012 ..........     100      100     100       0          0
February 25, 2013 ..........     100      100     100       0          0
February 25, 2014 ..........     100      100     100       0          0
February 25, 2015 ..........     100      100     100       0          0
February 25, 2016 ..........     100      100      75       0          0
February 25, 2017 ..........     100      100      56       0          0
February 25, 2018 ..........     100      100      41       0          0
February 25, 2019 ..........     100      100      31       0          0
February 25, 2020 ..........     100      100      23       0          0
February 25, 2021 ..........     100      100      17       0          0
February 25, 2022 ..........     100      100      12       0          0
February 25, 2023 ..........     100      100       9       0          0
February 25, 2024 ..........     100      100       6       0          0
February 25, 2025 ..........     100      100       5       0          0
February 25, 2026 ..........     100      100       3       0          0
February 25, 2027 ..........     100      100       2       0          0
February 25, 2028 ..........     100      100       2       0          0
February 25, 2029 ..........     100      100       1       0          0
February 25, 2030 ..........     100      100       1       0          0
February 25, 2031 ..........     100      100       1       0          0
February 25, 2032 ..........     100      100       *       0          0
February 25, 2033 ..........     100       81       *       0          0
February 25, 2034 ..........     100       55       *       0          0
February 25, 2035 ..........     100       33       *       0          0
February 25, 2036 ..........     100       15       *       0          0
February 25, 2037 ..........       0        0       0       0          0
Weighted Average Life
(in years) to Maturity** ...   29.91    27.40   11.44    4.53       3.23

----------
+     Rounded to the nearest whole percentage (other than those percentages
      designated with an asterisk).
*     Indicates an amount greater than zero but less than 0.5%.
**    Determined as specified under "Yield, Prepayment and Maturity
      Considerations--Weighted Average Lives of the Offered Certificates" in
      this prospectus supplement.


                                      S-93


           Percent of Initial Class Certificate Balances Outstanding+



                                           Class 1-A-5
                               Percentage of the Prepayment Assumption
                              ------------------------------------------
Distribution Date              0%       50%      100%     150%     200%
-----------------             ----     -----    ------   ------   ------
Initial Percentage.. .......   100      100      100      100      100
February 25, 2008 ..........   100      100      100      100      100
February 25, 2009 ..........   100      100      100      100      100
February 25, 2010 ..........   100      100      100      100       63
February 25, 2011 ..........   100      100      100       72       19
February 25, 2012 ..........   100      100      100       36        0
February 25, 2013 ..........    99       95       81       17        0
February 25, 2014 ..........    98       90       58        6        0
February 25, 2015 ..........    97       82       42        1        0
February 25, 2016 ..........    96       74       30        0        0
February 25, 2017 ..........    95       64       23        0        0
February 25, 2018 ..........    93       55       17        0        0
February 25, 2019 ..........    90       47       13        0        0
February 25, 2020 ..........    87       40        9        0        0
February 25, 2021 ..........    84       34        7        0        0
February 25, 2022 ..........    81       29        5        0        0
February 25, 2023 ..........    78       24        4        0        0
February 25, 2024 ..........    74       20        3        0        0
February 25, 2025 ..........    70       17        2        0        0
February 25, 2026 ..........    66       14        1        0        0
February 25, 2027 ..........    62       12        1        0        0
February 25, 2028 ..........    57        9        1        0        0
February 25, 2029 ..........    53        8        *        0        0
February 25, 2030 ..........    47        6        *        0        0
February 25, 2031 ..........    42        5        *        0        0
February 25, 2032 ..........    36        4        *        0        0
February 25, 2033 ..........    30        3        *        0        0
February 25, 2034 ..........    23        2        *        0        0
February 25, 2035 ..........    16        1        *        0        0
February 25, 2036 ..........     8        *        *        0        0
February 25, 2037 ..........     0        0        0        0        0
Weighted Average Life
(in years) to Maturity** ... 21.38    12.88     8.51     4.88     3.40

                                              Class 1-A-6
                                  Percentage of the Prepayment Assumption
                                ------------------------------------------
Distribution Date                 0%      50%     100%      150%     200%
-----------------                ----    -----   ------    ------   ------
Initial Percentage.. .......     100      100     100     100        100
February 25, 2008 ..........      99       88      76      64         52
February 25, 2009 ..........      98       73      49      29         11
February 25, 2010 ..........      98       59      29       6          0
February 25, 2011 ..........      97       48      14       0          0
February 25, 2012 ..........      96       37       2       0          0
February 25, 2013 ..........      95       30       0       0          0
February 25, 2014 ..........      94       24       0       0          0
February 25, 2015 ..........      93       19       0       0          0
February 25, 2016 ..........      92       16       0       0          0
February 25, 2017 ..........      91       14       0       0          0
February 25, 2018 ..........      89       12       0       0          0
February 25, 2019 ..........      86       10       0       0          0
February 25, 2020 ..........      84        8       0       0          0
February 25, 2021 ..........      81        7       0       0          0
February 25, 2022 ..........      78        6       0       0          0
February 25, 2023 ..........      74        5       0       0          0
February 25, 2024 ..........      71        4       0       0          0
February 25, 2025 ..........      67        3       0       0          0
February 25, 2026 ..........      63        2       0       0          0
February 25, 2027 ..........      59        2       0       0          0
February 25, 2028 ..........      55        1       0       0          0
February 25, 2029 ..........      50        1       0       0          0
February 25, 2030 ..........      45        *       0       0          0
February 25, 2031 ..........      39        *       0       0          0
February 25, 2032 ..........      34        0       0       0          0
February 25, 2033 ..........      28        0       0       0          0
February 25, 2034 ..........      21        0       0       0          0
February 25, 2035 ..........      14        0       0       0          0
February 25, 2036 ..........       7        0       0       0          0
February 25, 2037 ..........       0        0       0       0          0
Weighted Average Life
(in years) to Maturity** ...   20.50     5.22    2.24    1.51       1.14

----------
+     Rounded to the nearest whole percentage (other than those percentages
      designated with an asterisk).
*     Indicates an amount greater than zero but less than 0.5%.
**    Determined as specified under "Yield, Prepayment and Maturity
      Considerations--Weighted Average Lives of the Offered Certificates" in
      this prospectus supplement.


                                      S-94


           Percent of Initial Class Certificate Balances Outstanding+


Percentage of the Prepayment Assumption



                                              Class 1-A-7
                               Percentage of the Prepayment Assumption
                              ------------------------------------------
Distribution Date              0%       50%      100%     150%     200%
-----------------             ----     -----    ------   ------   ------
Initial Percentage.. .......   100      100      100      100      100
February 25, 2008 ..........   100      100      100      100      100
February 25, 2009 ..........   100      100      100      100      100
February 25, 2010 ..........   100      100      100      100        0
February 25, 2011 ..........   100      100      100        0        0
February 25, 2012 ..........   100      100      100        0        0
February 25, 2013 ..........   100      100        0        0        0
February 25, 2014 ..........   100      100        0        0        0
February 25, 2015 ..........   100      100        0        0        0
February 25, 2016 ..........   100      100        0        0        0
February 25, 2017 ..........   100      100        0        0        0
February 25, 2018 ..........   100      100        0        0        0
February 25, 2019 ..........   100      100        0        0        0
February 25, 2020 ..........   100      100        0        0        0
February 25, 2021 ..........   100      100        0        0        0
February 25, 2022 ..........   100      100        0        0        0
February 25, 2023 ..........   100      100        0        0        0
February 25, 2024 ..........   100      100        0        0        0
February 25, 2025 ..........   100      100        0        0        0
February 25, 2026 ..........   100      100        0        0        0
February 25, 2027 ..........   100      100        0        0        0
February 25, 2028 ..........   100      100        0        0        0
February 25, 2029 ..........   100      100        0        0        0
February 25, 2030 ..........   100      100        0        0        0
February 25, 2031 ..........   100      100        0        0        0
February 25, 2032 ..........   100       82        0        0        0
February 25, 2033 ..........   100       59        0        0        0
February 25, 2034 ..........   100       40        0        0        0
February 25, 2035 ..........   100       24        0        0        0
February 25, 2036 ..........   100       11        0        0        0
February 25, 2037 ..........     0        0        0        0        0
Weighted Average Life
(in years) to Maturity** ... 29.91    26.71     5.48     3.45     2.49

                                Class 2-A-1, Class 2-A-4++ and Class 2-A-5
                                  Percentage of the Prepayment Assumption
                                ------------------------------------------
Distribution Date                 0%      50%     100%      150%     200%
-----------------                ----    -----   ------    ------   ------
Initial Percentage.. .......     100      100     100     100        100
February 25, 2008 ..........     100      100     100     100        100
February 25, 2009 ..........     100      100     100     100        100
February 25, 2010 ..........     100      100     100     100        100
February 25, 2011 ..........     100      100     100     100         51
February 25, 2012 ..........     100      100     100      68         19
February 25, 2013 ..........      99       96      93      42          5
February 25, 2014 ..........      99       92      84      25          0
February 25, 2015 ..........      98       85      70      15          0
February 25, 2016 ..........      97       78      55      10          0
February 25, 2017 ..........      96       69      43       7          0
February 25, 2018 ..........      94       61      34       5          0
February 25, 2019 ..........      92       54      26       3          0
February 25, 2020 ..........      89       47      21       2          0
February 25, 2021 ..........      86       41      16       1          0
February 25, 2022 ..........      83       36      12       1          0
February 25, 2023 ..........      80       31       9       1          0
February 25, 2024 ..........      77       27       7       *          0
February 25, 2025 ..........      73       23       6       *          0
February 25, 2026 ..........      69       19       4       *          0
February 25, 2027 ..........      65       16       3       *          0
February 25, 2028 ..........      61       14       2       *          0
February 25, 2029 ..........      56       11       2       *          0
February 25, 2030 ..........      51        9       1       *          0
February 25, 2031 ..........      45        7       1       *          0
February 25, 2032 ..........      39        6       1       *          0
February 25, 2033 ..........      33        4       *       *          0
February 25, 2034 ..........      26        3       *       *          0
February 25, 2035 ..........      18        2       *       *          0
February 25, 2036 ..........      10        1       *       *          0
February 25, 2037 ..........       0        0       0       0          0
Weighted Average Life
(in years) to Maturity** ...   21.93    13.86   10.45    6.37       4.24

----------
+     Rounded to the nearest whole percentage (other than those percentages
      designated with an asterisk).
++    The table indicates the percentage of initial Notional Amount outstanding.
*     Indicates an amount greater than zero but less than 0.5%.
**    Determined as specified under "Yield, Prepayment and Maturity
      Considerations--Weighted Average Lives of the Offered Certificates" in
      this prospectus supplement.


                                      S-95


           Percent of Initial Class Certificate Balances Outstanding+

                                             Class 2-A-2
                               Percentage of the Prepayment Assumption
                              ------------------------------------------
Distribution Date              0%       50%      100%     150%     200%
-----------------             ----     -----    ------   ------   ------
Initial Percentage.. .......   100      100      100      100      100
February 25, 2008 ..........    99       89       79       69       59
February 25, 2009 ..........    99       77       57       38       22
February 25, 2010 ..........    98       65       38       17        0
February 25, 2011 ..........    98       55       24        2        0
February 25, 2012 ..........    97       46       12        0        0
February 25, 2013 ..........    96       39        5        0        0
February 25, 2014 ..........    96       33        *        0        0
February 25, 2015 ..........    95       28        0        0        0
February 25, 2016 ..........    94       24        0        0        0
February 25, 2017 ..........    93       22        0        0        0
February 25, 2018 ..........    91       19        0        0        0
February 25, 2019 ..........    89       16        0        0        0
February 25, 2020 ..........    86       14        0        0        0
February 25, 2021 ..........    84       12        0        0        0
February 25, 2022 ..........    81       11        0        0        0
February 25, 2023 ..........    78        9        0        0        0
February 25, 2024 ..........    74        8        0        0        0
February 25, 2025 ..........    71        6        0        0        0
February 25, 2026 ..........    67        5        0        0        0
February 25, 2027 ..........    63        4        0        0        0
February 25, 2028 ..........    58        3        0        0        0
February 25, 2029 ..........    54        3        0        0        0
February 25, 2030 ..........    49        2        0        0        0
February 25, 2031 ..........    43        1        0        0        0
February 25, 2032 ..........    37        1        0        0        0
February 25, 2033 ..........    31        *        0        0        0
February 25, 2034 ..........    24        0        0        0        0
February 25, 2035 ..........    17        0        0        0        0
February 25, 2036 ..........     9        0        0        0        0
February 25, 2037 ..........     0        0        0        0        0
Weighted Average Life
(in years) to Maturity** ... 21.24     6.46     2.69     1.78     1.34

                                             Class 2-A-3
                                  Percentage of the Prepayment Assumption
                                ------------------------------------------
Distribution Date                 0%      50%     100%      150%     200%
-----------------                ----    -----   ------    ------   ------
Initial Percentage.. .......     100      100     100     100        100
February 25, 2008 ..........     100      100     100     100        100
February 25, 2009 ..........     100      100     100     100        100
February 25, 2010 ..........     100      100     100     100         77
February 25, 2011 ..........     100      100     100     100          0
February 25, 2012 ..........     100      100     100       0          0
February 25, 2013 ..........     100      100     100       0          0
February 25, 2014 ..........     100      100     100       0          0
February 25, 2015 ..........     100      100       0       0          0
February 25, 2016 ..........     100      100       0       0          0
February 25, 2017 ..........     100      100       0       0          0
February 25, 2018 ..........     100      100       0       0          0
February 25, 2019 ..........     100      100       0       0          0
February 25, 2020 ..........     100      100       0       0          0
February 25, 2021 ..........     100      100       0       0          0
February 25, 2022 ..........     100      100       0       0          0
February 25, 2023 ..........     100      100       0       0          0
February 25, 2024 ..........     100      100       0       0          0
February 25, 2025 ..........     100      100       0       0          0
February 25, 2026 ..........     100      100       0       0          0
February 25, 2027 ..........     100      100       0       0          0
February 25, 2028 ..........     100      100       0       0          0
February 25, 2029 ..........     100      100       0       0          0
February 25, 2030 ..........     100      100       0       0          0
February 25, 2031 ..........     100      100       0       0          0
February 25, 2032 ..........     100      100       0       0          0
February 25, 2033 ..........     100      100       0       0          0
February 25, 2034 ..........     100      100       0       0          0
February 25, 2035 ..........     100       64       0       0          0
February 25, 2036 ..........     100       32       0       0          0
February 25, 2037 ..........       0        0       0       0          0
Weighted Average Life
(in years) to Maturity** ...   29.91    28.50    7.40    4.20       3.06

----------
+     Rounded to the nearest whole percentage (other than those percentages
      designated with an asterisk).
*     Indicates an amount greater than zero but less than 0.5%.
**    Determined as specified under "Yield, Prepayment and Maturity
      Considerations--Weighted Average Lives of the Offered Certificates" in
      this prospectus supplement.


                                      S-96


           Percent of Initial Class Certificate Balances Outstanding+



                                               Class PO
                               Percentage of the Prepayment Assumption
                              ------------------------------------------
Distribution Date              0%       50%      100%     150%     200%
-----------------             ----     -----    ------   ------   ------
Initial Percentage.. .......   100      100      100      100      100
February 25, 2008 ..........    99       91       82       73       64
February 25, 2009 ..........    99       79       62       47       33
February 25, 2010 ..........    98       69       47       30       17
February 25, 2011 ..........    97       60       35       19        9
February 25, 2012 ..........    96       53       27       12        5
February 25, 2013 ..........    95       46       20        8        2
February 25, 2014 ..........    94       40       15        5        1
February 25, 2015 ..........    93       35       11        3        1
February 25, 2016 ..........    92       30        9        2        *
February 25, 2017 ..........    91       26        6        1        *
February 25, 2018 ..........    88       23        5        1        *
February 25, 2019 ..........    86       19        4        *        *
February 25, 2020 ..........    83       16        3        *        *
February 25, 2021 ..........    80       14        2        *        *
February 25, 2022 ..........    77       12        1        *        *
February 25, 2023 ..........    74       10        1        *        *
February 25, 2024 ..........    70        8        1        *        *
February 25, 2025 ..........    67        7        1        *        *
February 25, 2026 ..........    63        6        *        *        *
February 25, 2027 ..........    59        5        *        *        *
February 25, 2028 ..........    55        4        *        *        *
February 25, 2029 ..........    50        3        *        *        *
February 25, 2030 ..........    45        3        *        *        0
February 25, 2031 ..........    40        2        *        *        0
February 25, 2032 ..........    34        1        *        *        0
February 25, 2033 ..........    29        1        *        *        0
February 25, 2034 ..........    22        1        *        *        0
February 25, 2035 ..........    16        *        *        *        0
February 25, 2036 ..........     9        *        *        0        0
February 25, 2037 ..........     0        0        0        0        0
Weighted Average Life
(in years) to Maturity** ... 20.54     7.19     3.85     2.54     1.86

                                    Class B-1, Class B-2 and Class B-3
                                  Percentage of the Prepayment Assumption
                                ------------------------------------------
Distribution Date                 0%      50%     100%      150%     200%
-----------------                ----    -----   ------    ------   ------
Initial Percentage.. .......     100      100     100     100        100
February 25, 2008 ..........      99       99      99      99         99
February 25, 2009 ..........      99       99      99      99         99
February 25, 2010 ..........      98       98      98      98         98
February 25, 2011 ..........      98       98      98      98         98
February 25, 2012 ..........      97       97      97      97         91
February 25, 2013 ..........      96       93      89      85         60
February 25, 2014 ..........      95       88      80      72         37
February 25, 2015 ..........      95       81      68      56         21
February 25, 2016 ..........      94       73      55      40         12
February 25, 2017 ..........      93       64      42      26          7
February 25, 2018 ..........      90       56      32      17          4
February 25, 2019 ..........      88       48      24      11          2
February 25, 2020 ..........      85       41      18       7          1
February 25, 2021 ..........      83       36      14       5          1
February 25, 2022 ..........      80       31      10       3          *
February 25, 2023 ..........      76       26       8       2          *
February 25, 2024 ..........      73       22       6       1          *
February 25, 2025 ..........      69       19       4       1          *
February 25, 2026 ..........      66       16       3       1          *
February 25, 2027 ..........      61       13       2       *          *
February 25, 2028 ..........      57       11       2       *          *
February 25, 2029 ..........      52        9       1       *          *
February 25, 2030 ..........      47        7       1       *          *
February 25, 2031 ..........      42        6       1       *          *
February 25, 2032 ..........      36        4       *       *          *
February 25, 2033 ..........      30        3       *       *          *
February 25, 2034 ..........      23        2       *       *          *
February 25, 2035 ..........      16        1       *       *          *
February 25, 2036 ..........       9        1       *       *          *
February 25, 2037 ..........       0        0       0       0          0
Weighted Average Life
(in years) to Maturity** ...   21.03    12.95   10.07    8.71       6.84

----------
+     Rounded to the nearest whole percentage (other than those percentages
      designated with an asterisk).
*     Indicates an amount greater than zero but less than 0.5%.
**    Determined as specified under "Yield, Prepayment and Maturity
      Considerations--Weighted Average Lives of the Offered Certificates"
      in this prospectus supplement.


                                      S-97


Final Scheduled Distribution Date

      The Final Scheduled Distribution Date for the certificates is the
Distribution Date in April 2037. Because the rate of distributions in reduction
of the Class Certificate Balance or Notional Amount of each class of offered
certificates will depend on the rate of payment (including prepayments) of the
Mortgage Loans, the Class Certificate Balance or Notional Amount of any class
could be reduced to zero significantly earlier or later than the Final Scheduled
Distribution Date. The rate of payments on the Mortgage Loans will depend on
their particular characteristics, as well as on prevailing interest rates from
time to time and other economic factors, and no assurance can be given as to the
actual payment experience of the Mortgage Loans. See "Yield, Prepayment and
Maturity Considerations -- Prepayment Considerations and Risks" and "-- Weighted
Average Lives of the Offered Certificates" in this prospectus supplement and
"Yield and Prepayment Considerations" in the prospectus.

The Subordinated Certificates

      General. The weighted average life of, and the yield to maturity on, the
subordinated certificates, in increasing order of their numerical class
designation, will be progressively more sensitive to the rate and timing of
mortgagor defaults and the severity of ensuing losses on the Mortgage Loans. In
particular, the rate and timing of mortgagor defaults and the severity of
ensuing losses on the Mortgage Loans may be affected by the characteristics of
the Mortgage Loans as described under "The Mortgage Pool -- General" and "--
Underwriting Process." If the actual rate and severity of losses on the Mortgage
Loans is higher than those assumed by a holder of a subordinated certificate,
the actual yield to maturity of the certificate may be lower than the yield
expected by the holder based on the holder's assumptions. The timing of losses
on the Mortgage Loans will also affect an investor's actual yield to maturity,
even if the rate of defaults and severity of losses over the life of the
Mortgage Loans are consistent with an investor's expectations. In general, the
earlier a loss occurs, the greater the effect on an investor's yield to
maturity. Realized Losses on the Mortgage Loans will reduce the Class
Certificate Balance of the applicable class of subordinated certificates to the
extent of any losses allocated to it (as described in this prospectus supplement
under "Description of the Certificates -- Allocation of Losses"), without the
receipt of cash attributable to the reduction. In addition, shortfalls in cash
available for distributions on the subordinated certificates will result in a
reduction in the Class Certificate Balance of the class of subordinated
certificates then outstanding with the highest numerical class designation if
and to the extent that the aggregate of the Class Certificate Balances of the
certificates, following all distributions and the allocation of Realized Losses
on the Mortgage Loans on a Distribution Date, exceeds the aggregate Stated
Principal Balance of the Mortgage Loans as of the Due Date occurring in the
month of the Distribution Date. As a result of the reductions, less interest
will accrue on the class of subordinated certificates than otherwise would be
the case. The yield to maturity of the subordinated certificates will also be
affected by the disproportionate allocation of principal prepayments to the
certificates, Net Interest Shortfalls, other cash shortfalls in Available Funds
and distribution of funds to Class PO Certificateholders otherwise available for
distribution on the subordinated certificates to the extent of reimbursement for
Class PO Deferred Amounts on the Class PO Certificates. See "Description of the
Certificates -- Allocation of Losses" in this prospectus supplement.

      If on any Distribution Date, the Applicable Credit Support Percentage for
any class of subordinated certificates (other than the class of subordinated
certificates then outstanding with the highest priority of distribution) is less
than its Original Applicable Credit Support Percentage, all partial principal
prepayments and principal prepayments in full available for distribution on the
subordinated certificates will be allocated solely to that class and all other
classes of subordinated certificates with lower numerical class designations,
thereby accelerating their amortization relative to that of the Restricted
Classes and reducing the weighted average lives of the classes of subordinated
certificates receiving the distributions. Accelerating the amortization of the
classes of subordinated certificates with lower numerical class designations
relative to the other classes of subordinated certificates is intended to
preserve the availability of the subordination provided by the other classes.


                                      S-98


                               Credit Enhancement

Subordination

      Any Realized Losses, other than Excess Losses, that are allocable to the
senior certificates will be allocated as describer under "Description of the
Certificates--Allocation of Losses" in this prospectus supplement.

      The rights of the holders of the subordinated certificates to receive
distributions with respect to the Mortgage Loans will be subordinated to the
rights of the holders of the senior certificates and the rights of the holders
of each class of subordinated certificates (other than the Class B-1
Certificates) to receive the distributions that are allocated to the
subordinated certificates will be further subordinated to the rights of the
class or classes of subordinated certificates with lower numerical class
designations, in each case only to the extent described in this prospectus
supplement. The subordination of the subordinated certificates to the senior
certificates and the subordination of the classes of subordinated certificates
with higher numerical class designations to those with lower numerical class
designations is intended to increase the likelihood of receipt, respectively, by
the senior certificateholders and the holders of the subordinated certificates
with lower numerical class designations of the maximum amount to which they are
entitled on any Distribution Date and to provide the holders protection against
Realized Losses, other than Excess Losses. In addition, the subordinated
certificates will provide limited protection against Special Hazard Losses,
Bankruptcy Losses and Fraud Losses up to the Special Hazard Loss Coverage
Amount, Bankruptcy Loss Coverage Amount and Fraud Loss Coverage Amount,
respectively, as described in the following paragraphs. The applicable Non-PO
Percentage of Realized Losses, other than Excess Losses, on the Mortgage Loans
will be allocated to the subordinated certificates then outstanding with the
highest numerical class designation. In addition, the Certificate Balance of the
subordinated certificates having the highest numerical designation will be
reduced by the amount of distributions on the Class PO Certificates in
reimbursement for Class PO Deferred Amounts.

      The subordinated certificates will provide limited protection to the
classes of certificates of higher relative priority against

o     Special Hazard Losses in an initial amount expected to be up to
      approximately $6,837,876.66 (the "Special Hazard Loss Coverage Amount"),

o     Bankruptcy Losses in an initial amount expected to be up to approximately
      $214,520.52 (the "Bankruptcy Loss Coverage Amount"), and

o     Fraud Losses in an initial amount expected to be up to approximately
      $13,675,753.33 (the "Fraud Loss Coverage Amount").

      The Special Hazard Loss Coverage Amount will be reduced, from time to
time, to be an amount equal on any Distribution Date to the lesser of

o     that Special Hazard Loss Coverage Amount as of the closing date less the
      amount, if any, of losses attributable to Special Hazard Mortgage Loans,
      incurred since the closing date, or

o     the greatest of

            o     1% of the aggregate of the principal balances of the Mortgage
                  Loans,

            o     twice the principal balance of the largest Mortgage Loan, and

            o     the aggregate principal balances of the Mortgage Loans,
                  secured by mortgaged properties located in the single
                  California postal zip code area having the highest aggregate
                  principal balance of any ZIP code area.


                                      S-99


All principal balances for the purpose of this definition will be calculated as
of the first day of the month before the month in which the Distribution Date
occurs after giving effect to scheduled installments of principal and interest
on the Mortgage Loans then due, whether or not paid.

      The Fraud Loss Coverage Amount will be reduced, from time to time, by the
amount of Fraud Losses allocated to the Certificates. In addition, the Fraud
Loss Coverage Amount will be reduced on the fifth anniversary of the Cut-off
Date, to zero and on the first, second, third and fourth anniversaries of the
Cut-off Date, to an amount equal to the lesser of:

o     1% of the then current pool principal balance,

and

o     the excess of:

            o     the Fraud Loss Coverage Amount as of the preceding anniversary
                  of the Cut-off Date over

            o     the cumulative amount of Fraud Losses allocated to the
                  certificates since the preceding anniversary.

      The Bankruptcy Loss Coverage Amount will be reduced, from time to time, by
the amount of Bankruptcy Losses allocated to the subordinated certificates.

      The amount of coverage provided by the subordinated certificates for
Special Hazard Losses, Bankruptcy Losses and Fraud Losses may be cancelled or
reduced from time to time for each of the risks covered, provided that the then
current ratings of the certificates assigned by the rating agencies are not
adversely affected as a result. In addition, a reserve fund or other form of
credit enhancement may be substituted for the protection provided by the
subordinated certificates for Special Hazard Losses, Bankruptcy Losses and Fraud
Losses.

      A "Deficient Valuation" is a bankruptcy proceeding whereby the bankruptcy
court may establish the value of the mortgaged property at an amount less than
the then outstanding principal balance of the Mortgage Loan secured by the
mortgaged property or may reduce the outstanding principal balance of a Mortgage
Loan. In the case of a reduction in that value of the mortgaged property, the
amount of the secured debt could be reduced to that value, and the holder of the
Mortgage Loan thus would become an unsecured creditor to the extent the
outstanding principal balance of the Mortgage Loan exceeds the value so assigned
to the mortgaged property by the bankruptcy court. In addition, other
modifications of the terms of a Mortgage Loan can result from a bankruptcy
proceeding, including the reduction (a "Debt Service Reduction") of the amount
of the monthly payment on the Mortgage Loan. However, none of these shall be
considered a Debt Service Reduction or Deficient Valuation so long as the
servicer is pursuing any other remedies that may be available with respect to
the Mortgage Loan and either the Mortgage Loan has not incurred payment default
or scheduled monthly payments of principal and interest are being advanced by
the servicer without giving effect to any Debt Service Reduction or Deficient
Valuation.

                                 Use of Proceeds

      We expect the proceeds to the depositor from the sale of the offered
certificates (other than the Class A-X Certificates) to be approximately
100.3080771% of the aggregate Class Certificate Balance of these classes of
certificates, plus accrued interest, before deducting issuance expenses payable
by the depositor.

      The depositor will apply the net proceeds of the sale of these classes of
certificates against the purchase price of the Mortgage Loans.


                                     S-100


                                Legal Proceedings

      There are no legal proceedings against IndyMac Bank, the depositor, the
trustee, the issuing entity or the 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

      For federal income tax purposes, the issuing entity will consist of one 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 will issue multiple classes of
uncertificated interests (the "underlying REMIC Regular Interests"), which will
be designated as the regular interests in such underlying REMIC and will be held
by the REMIC directly above such underlying REMIC in a tiered structure. The
assets of the lowest REMIC in this tiered structure will consist of the Mortgage
Loans and any other assets designated in the pooling and servicing agreement.
The Master REMIC will issue the senior certificates and the subordinated
certificates (together, excluding the Class A-R Certificates, the "Regular
Certificates"). The Regular Certificates will be designated as the regular
interests in the Master REMIC. The Class A-R Certificates will represent the
beneficial ownership of the residual interest in each underlying REMIC (if any)
and the residual interest in the Master REMIC. The assets of the Master REMIC
will consist of the underlying REMIC Regular Certificates (or, if there are no
underlying REMICs, the Mortgage Loans and any other assets designated in the
pooling and servicing agreement). If there are one or more underlying REMICs,
the aggregate distributions on the underlying REMIC Regular Interests held by
the Master REMIC will equal the aggregate distributions on the Regular
Certificates issued by the Master REMIC.

      Each class of Regular Certificates will represent beneficial ownership of
regular interests issued by the Master REMIC.

      Upon the issuance of the certificates, Sidley Austin LLP ("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 Internal Revenue Code of 1986, as amended (the
"Code"), and that the Regular Certificates will represent regular interests in a
REMIC.

Taxation of the Regular Certificates

      The Regular Certificates will be treated as debt instruments issued by the
Master REMIC for federal income tax purposes. Income on the Regular Certificates
in their entirety must be reported under an accrual method of accounting. Under
the 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 Class PO Certificates and the Notional Amount Certificates will, and
the other classes of offered certificates may, be treated for federal income tax
purposes as having been issued with original issue discount ("OID"). The OID on
the Class PO Certificates will equal the difference between their principal
balance and their issue price. Although the tax treatment is not entirely
certain, the Notional Amount Certificates will be treated as having OID for
federal income tax purposes in an amount equal to the excess of (1) the sum of
all payments on the Notional Amount Certificates, determined under the
prepayment assumption over (2) the price at which the Notional Amount
Certificates are issued. The OID regulations sections suggest that OID with
respect to securities similar to the Class A-X Certificates that represent
multiple uncertificated REMIC regular interests, in which ownership interests
will be issued simultaneously to the same buyer, should be computed on an
aggregate method. In the absence of further guidance from the IRS, OID with
respect to the uncertificated regular interests represented by the Class A-X
Certificates will be reported to the IRS and the certificateholders on an
aggregate method based on a single overall constant yield and the Prepayment
Assumption, treating all uncertificated regular interests as a single debt
instrument as described in the OID regulations. 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


                                     S-101


at a rate equal to 100% of the Prepayment Assumption. No representation is made
as to whether the Mortgage Loans will prepay at the foregoing rate or any other
rate. Prospective purchasers of the Regular Certificates should consult with
their tax advisors regarding the treatment of the Regular Certificates under the
Treasury regulations concerning OID. See "Yield, Prepayment and Maturity
Considerations" and "Material Federal Income Tax Consequences" in the
prospectus.

      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. Although unclear, a
holder of a Notional Amount Certificate may be entitled to deduct a loss to the
extent that its remaining basis exceeds the maximum amount of future payments to
which the certificateholder would be entitled if there were no further
prepayments of the Mortgage Loans.

      If the holders of any Regular Certificates are treated as holding their
certificates 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--REMIC Certificates--a.
Regular Certificates" in the prospectus.

Tax Treatment of Offered Certificates For Certain Purposes

      As described more fully under "Material Federal Income Tax Consequences"
in the prospectus, 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 proportion or greater that the assets of
the issuing entity will be so treated, and income on 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 proportion or greater that the income on the assets of the issuing entity
will be so treated. The Regular Certificates will represent qualifying assets
under section 860G(a)(3) of the Code if acquired by a REMIC within the
prescribed time periods of the Code.

Taxation of the 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.

      Purchasers of the Class A-R Certificates are encouraged to consider
carefully the tax consequences of an investment in such Certificates discussed
in the prospectus and consult their tax advisors with respect to those
consequences. See "Material Federal Income Tax Consequences -- REMIC
Certificates -- b. Residual Certificates" in the prospectus. In particular,
prospective holders of Class A-R Certificates should consult their tax advisors
regarding whether a Class A-R Certificate will be treated as a "noneconomic"
residual interest, as a "tax avoidance potential" residual interest or as both.
Among other things, holders of Class A-R Certificates that are treated as
"noneconomic residual interests" under the Code should be aware of REMIC
regulations that govern the treatment of "inducement fees" and that may affect
their ability to transfer their Class A-R Certificates. See "Material Federal
Income Tax Consequences -- Tax-Related Restrictions on Transfer of Residual
Certificates -- Noneconomic Residual Certificates," and "Material Federal Income
Tax Consequences -- b. Residual Certificate," "-- Excess Inclusions" in the
prospectus.


                                     S-102


      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 of, and
imposing withholding tax 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 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.

                              ERISA Considerations

      Any fiduciary of an employee benefit or other plan or arrangement (such as
an individual retirement account or Keogh plan) that is subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or to Section 4975
of the Code (a "Plan") that proposes to cause the Plan to acquire any of the
offered certificates (directly or indirectly through investment by an entity or
account holding assets of the Plan) is encouraged to consult with its counsel
with respect to the potential consequences of the Plan's acquisition and
ownership of the certificates under ERISA and Section 4975 of the Code. See
"ERISA Considerations" in the prospectus. Section 406 of ERISA prohibits
"parties in interest" with respect to an employee benefit plan subject to ERISA
from engaging in various different types of transactions involving the Plan and
its assets unless a statutory, regulatory or administrative exemption applies to
the transaction. Section 4975 of the Code imposes excise taxes on prohibited
transactions involving "disqualified persons" and Plans described under that
Section. ERISA authorizes the imposition of civil penalties for prohibited
transactions involving Plans not subject to the requirements of Section 4975 of
the Code.

      Some employee benefit plans, including governmental plans and some church
plans, are not subject to ERISA's requirements. Accordingly, assets of those
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 of
those plans that 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.


                                     S-103


      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 that decides to invest the assets of a Plan in the offered
certificates should consider, among other factors, the extreme sensitivity of
the investment to the rate of principal payments (including prepayments) on the
Mortgage Loans. It is anticipated that the certificates will constitute "equity
interests" for the purpose of the Plan Assets Regulation.

      The U.S. Department of Labor has granted the underwriter an administrative
exemption (the "Exemption") from some 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, in pass-through trusts that consist of
specified receivables, loans and other obligations that meet the conditions and
requirements of the Exemption. The Exemption applies to mortgage loans such as
the Mortgage Loans. The Exemption extends exemptive relief to certificates,
including subordinated certificates, rated in the four highest generic rating
categories in certain designated transactions when the conditions 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.

      For a general description of the Exemption and the conditions that must be
satisfied for the Exemption to apply, see "ERISA Considerations" in the
prospectus.

      Except as provided below with respect to the Class A-X Certificates, it is
expected that the Exemption will apply to the acquisition and holding by Plans
of the offered certificates (other than the Class A-R Certificates) 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 mortgagor
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 of S&P, Fitch, Inc. or Moody's, certificates of that class will no
longer be eligible for relief under the Exemption (although a Plan that had
purchased the certificate when it had an investment-grade rating would not be
required by the Exemption to dispose of it).

      Because the Class A-X Certificates are not being purchased by any
underwriter to whom an exemption similar to the Exemption has been granted,
those classes of certificates do not currently meet the requirements of the
Exemption or any comparable individual administrative exemption granted to any
underwriter. Consequently, the Class A-X Certificates may be transferred only if
the conditions in the first or third bullet points in the next paragraph are
met.

      Because the characteristics of the Class A-R Certificates may not meet the
requirements of the Exemption, or any other issued exemption under ERISA, a Plan
may have engaged in a prohibited transaction giving rise to excise taxes or
civil penalties if it purchases and holds Class A-R Certificates. Consequently,
transfers of the Class A-R Certificates (and of certificates of any class that,
because of a change of rating, no longer satisfy the rating requirement of the
Exemption) will not be registered by the trustee unless 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;

o     a representation that the transferee is an insurance company which is
      purchasing the certificate with funds contained in an "insurance company
      general account" (as defined in Section V(e) of Prohibited Transaction
      Class Exemption 95-60 ("PTCE 95-60")) and that the purchase and holding of
      the certificate satisfy the requirements for exemptive relief under
      Sections I and III of PTCE 95-60; 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


                                     S-104


      transaction under ERISA or Section 4975 of the Code and will not subject
      the trustee or the servicer to any obligation in addition to those
      undertaken in the pooling and servicing agreement.

The first representation will be deemed to have been made by the transferee's
acceptance of a Class A-X Certificate. If the representation is not true, or any
attempt to transfer to a Plan or person acting on behalf of a Plan or using a
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 and the applicability of the Exemption described in the
prospectus, and the potential consequences in their specific circumstances,
before making an investment in any of the offered certificates. Moreover, each
Plan fiduciary is encouraged to determine whether, under the general fiduciary
standards of investment prudence and diversification, an investment in any of
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 offered 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.

                             Method of Distribution

      Subject to the terms and conditions set forth in the underwriting
agreement between the depositor and HSBC Securities (USA) Inc. ("HSBC", the
"underwriter"), the depositor has agreed to sell the offered certificates (other
than the Class A-X Certificates) to HSBC (the "Underwritten Certificates").

      Distribution of the Underwritten Certificates will be made by the
underwriter from time to time in negotiated transactions or otherwise at varying
prices to be determined at the time of sale. The underwriter may effect such
transactions by selling the Underwritten Certificates to or through dealers and
such dealers may receive from the underwriter, for which they act as agent,
compensation in the form of underwriting discounts, concessions or commissions.
The underwriter and any dealers that participate with the underwriter in the
distribution of the Underwritten Certificates may be deemed to be underwriters,
and any discounts, commissions or concessions received by them, and any profits
or resale of the Underwritten Certificates purchased by them, may be deemed to
be underwriting discounts and commissions under the Securities Act of 1933, as
amended.

      The depositor has been advised by the underwriter that it intends to make
a market in the Underwritten Certificates purchased by it but the underwriter
has no obligation to do so. There can be no assurance that a secondary market
for the Underwritten Certificates will develop or, if it does develop, that it
will continue or that it will provide certificateholders with a sufficient level
of liquidity of investment.

      The depositor has agreed to indemnify the underwriter against, or make
contributions to the underwriter with respect to, liabilities customarily
indemnified against, including liabilities under the Securities Act of 1933, as
amended.

      The Class A-X Certificates (the "IndyMac Certificates") may be offered by
the seller or the depositor (or an affiliate) from time to time directly or
through underwriters or agents, which may include IndyMac Securities Corp., an
affiliate of the seller, the depositor and the servicer, 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 IndyMac Certificates may be deemed to be "underwriters"
within the meaning of the Securities Act of 1933 and any profit on the sale of
those 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.


                                     S-105


                                  Legal Matters

      The validity of the certificates, including their material federal income
tax consequences, will be passed upon for the depositor by Sidley Austin LLP,
New York, New York. Certain legal matters will be passed upon for the
underwriter by McKee Nelson LLP.

                                     Ratings

      It is a condition to the issuance of the senior certificates that they be
rated AAA by Standard & Poor's, a division of The McGraw-Hill Companies, Inc.
("S&P") and Fitch, Inc. ("Fitch"). It is a condition to the issuance of the
Class B-1, Class B-2 and Class B-3 Certificates that they be rated at least AA,
A and BBB, respectively, by S&P.

      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
certificateholders under the agreements pursuant to which the certificates are
issued. S&P's ratings take into consideration the credit quality of the 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 ratings assigned by S&P to the Notional Amount Certificates do not address
whether investors will recoup their initial investments.

      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 certificateholders under the agreements pursuant to which the
certificates are issued. Fitch's ratings take into consideration the credit
quality of the 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 ratings assigned by Fitch to the Notional Amount
Certificates do not address whether investors will recoup their initial
investments. The rating on the Class A-R Certificates does not assess the
likelihood of return to investors except to the extent of the Class Certificate
Balance and accrued interest thereon at the stated pass-through rate. The rating
on the Class PO Certificates only addresses the return of the Class Certificate
Balance thereof.

      The ratings of the rating agencies do not address the possibility that, as
a result of principal prepayments, certificateholders may receive a lower than
anticipated yield.

      The 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 the offered certificates by
any rating agency other than the rating agencies; there can be no assurance,
however, as to whether any other rating agency will rate the offered
certificates or, if it does, what rating would be assigned by the other rating
agency. The rating assigned by the other rating agency to the offered
certificates could be lower than the respective ratings assigned by the rating
agencies.


                                     S-106


                             Index of Defined Terms

40/30 Balloon Loans ............................................            S-28
accredited investor ............................................           S-104
adjusted net mortgage rate .....................................            S-53
advance ........................................................            S-54
Applicable Credit Support Percentage ...........................            S-78
Assumed Balance ................................................            S-71
Available Funds ................................................            S-69
Bankruptcy Loss Coverage Amount ................................            S-99
Bankruptcy Losses ..............................................            S-82
Book-Entry Certificates ........................................            S-62
Certificate Account ............................................            S-66
Certificate Owners .............................................            S-62
CI .............................................................            S-64
Class A-X Component ............................................            S-62
Class Certificate Balance ......................................            S-60
Class PO Component .............................................            S-62
Class PO Deferred Amount .......................................            S-80
Class Subordination Percentage .................................            S-78
Clearstream, Luxembourg ........................................            S-64
Code ...........................................................           S-101
Compensating Interest ..........................................            S-54
Component Balance ..............................................            S-62
Component Notional Amount ......................................            S-62
Cooperative ....................................................            S-65
CPR ............................................................            S-84
Cut-off Date Pool Principal Balance ............................            S-27
DBC ............................................................            S-64
DBNTC ..........................................................            S-57
Debt Service Reduction .........................................           S-100
Deficient Valuation ............................................           S-100
Definitive Certificate .........................................            S-62
Determination Date .............................................            S-54
Discount Mortgage Loan .........................................            S-72
Distribution Account ...........................................            S-66
Distribution Date ..............................................            S-69
DTC ............................................................            S-62
DTC Rules ......................................................            S-63
Due Date .......................................................            S-28
Due Period .....................................................            S-61
due-on-sale ....................................................            S-87
equity interests ...............................................           S-104
ERISA ..........................................................           S-103
Euroclear ......................................................            S-62
Euroclear Operator .............................................            S-64
Euroclear Participants .........................................            S-64
European Depositaries ..........................................            S-62
excess inclusion ...............................................           S-102
Excess Losses ..................................................            S-81
Excess Proceeds ................................................            S-68
Exemption ......................................................           S-104
Expense Fee Rate ...............................................            S-53
Expense Fees ...................................................            S-53
FICO Credit Scores .............................................            S-29
Financial Intermediary .........................................            S-63
Fitch ..........................................................      S-8, S-106
Fraud Loss Coverage Amount .....................................            S-99
Fraud Losses ...................................................            S-82
Fully Amortizing Loans .........................................            S-28
group 1 mortgage loans .........................................            S-27
Group 1 Prepayment Assumption ..................................            S-84
Group 1 Priority Amount ........................................            S-74
Group 1 Priority Percentage ....................................            S-74
group 2 mortgage loans .........................................            S-27
Group 2 Prepayment Assumption ..................................            S-84
Group 2 Priority Amount ........................................            S-74
Group 2 Priority Percentage ....................................            S-74
HSBC ...........................................................           S-105
Indirect Participants ..........................................            S-63
IndyMac Bank ...................................................      S-27, S-49
IndyMac Certificates ...........................................           S-105
Interest Distribution Amount ...................................            S-70
Interest Only Loans ............................................            S-28
Liquidated Mortgage Loan .......................................            S-82
loan group .....................................................            S-27
Loan-to-Value Ratio ............................................            S-29
Master REMIC ...................................................           S-101
Mortgage Loans .................................................            S-27
Mortgage Notes .................................................            S-27
Mortgage Rate ..................................................            S-28
Mortgaged Properties ...........................................            S-27
Net Interest Shortfall .........................................            S-71
New CI .........................................................            S-64
Non-Discount Mortgage Loan .....................................            S-72
Non-PO Formula Principal Amount ................................            S-72
Non-PO Percentage ..............................................            S-72
Non-PO Pool Balance ............................................            S-78
Notional Amount ................................................            S-61
Notional Amount Certificates ...................................      S-59, S-61
offered certificates ...........................................            S-59
OID ............................................................           S-101
Original Applicable Credit Support Percentage ..................            S-78
original subordinate principal balance .........................            S-77
Participants ...................................................            S-62
Plan ...........................................................           S-103
PO Formula Principal Amount ....................................            S-80
PO Percentage ..................................................            S-72
PPC ............................................................            S-83
Prepayment Assumptions .........................................            S-84
prepayment interest shortfall ..................................            S-71
Prepayment Period ..............................................            S-75
Prepayment Shift Percentage ....................................            S-75
private certificates ...........................................            S-59
PTCE 95-60 .....................................................           S-104
Realized Loss ..................................................            S-81
Record Date ....................................................            S-69
Regular Certificates ...........................................           S-101


                                     S-107


Relevant Depositary ............................................            S-62
Relief Act Reduction ...........................................            S-71
Required Coupon ................................................            S-72
Restricted Classes .............................................            S-78
S&P ............................................................      S-8, S-106
Scheduled Principal Distribution Amount ........................            S-75
Senior Certificates ............................................            S-59
Senior Credit Support Depletion Date ...........................            S-75
Senior Percentage ..............................................            S-76
Senior Prepayment Percentage ...................................            S-76
Senior Principal Distribution Amount ...........................            S-75
Senior Support Certificates ....................................            S-59
Senior Termination Date ........................................            S-77
servicer .......................................................            S-53
Shift Percentage ...............................................            S-75
Special Hazard Loss Coverage Amount ............................            S-99
Special Hazard Losses ..........................................            S-82
Special Hazard Mortgage Loan ...................................            S-82
Stated Principal Balance .......................................            S-76
Subordinated Percentage ........................................            S-76
Subordinated Prepayment Percentage .............................            S-77
Subordinated Principal Distribution Amount .....................            S-79
Subsequent Recoveries ..........................................            S-82
Substitution Adjustment Amount .................................            S-48
Super Senior Certificates ......................................            S-59
Tax Counsel ....................................................           S-101
Temporary regulations ..........................................           S-103
Terms and Conditions ...........................................            S-65
trustee ........................................................            S-57
trustee fee ....................................................            S-53
Undercollateralization Distribution ............................            S-78
Undercollateralized Group ......................................            S-78
underlying REMIC ...............................................           S-101
underlying REMIC Regular Interests .............................           S-101
underwriter ....................................................           S-105
Underwritten Certificates ......................................           S-105
unpaid interest amounts ........................................            S-71
Unscheduled Principal Distribution Amount........                           S-75


                                     S-108


PROSPECTUS

                                INDYMAC MBS, INC.
                                    Depositor

                       Mortgage Pass-Through Certificates
                           Mortgage Pass-Through Notes
                              (Issuable in Series)

Please carefully consider our discussion of some of the risks of investing in
the securities under "Risk Factors" beginning on page 5.

The securities will represent obligations of the related issuing entity only and
will not represent an interest in or obligation of IndyMac MBS, Inc., any
originator, servicer, or any of their affiliates.

The Trusts

Each issuing entity will be established to hold assets transferred to it by
IndyMac MBS, Inc. The assets in each issuing entity will be specified in the
prospectus supplement for the particular trust and will generally consist of:

o     first and/or subordinate lien mortgage loans secured by one- to
      four-family residential properties, including manufactured housing that is
      permanently affixed and treated as real property under local law, or
      security interests issued by cooperative housing corporations or
      participations in that type of loan,

o     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 second lien loans, secured in whole or in part by subordinate
      liens on one- to four-family residential properties,

o     loans secured by first and/or subordinate liens on mixed residential and
      commercial properties (mixed use loans),

o     home equity line of credit loans or specified balances thereof, secured in
      whole or in part by first and/or subordinate liens on one- to four-family
      residential properties,

o     loans secured in whole or in part by first and/or subordinate liens on
      improved land that is generally suitable for one- to four-family
      residential dwellings (lot loans), including loans to finance the
      construction of a dwelling (construction loans) and construction loans
      which by their terms convert into a permanent loan upon the completion of
      construction (construction-to-permanent loans),

o     home improvement installment sale contracts and installment loan
      agreements that are secured by first or subordinate liens on one- to
      four-family residential properties,

o     mortgage pass-through securities issued or guaranteed by Ginnie Mae,
      Fannie Mae, or Freddie Mac,

o     private mortgage-backed securities backed by first lien mortgage loans
      secured by one- to four-family residential properties or participations in
      that type of loan, or

o     mortgage-backed securities or collateralized mortgage obligations backed
      by loans secured by first and/or subordinate liens on one- to four-family
      residential properties, by lot loans or by participations in these types
      of loans.

The Securities

IndyMac MBS, Inc. will offer 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 issuing
entity to which the series relates. A prospectus supplement for a series will
specify all of the terms of the series and of each of the classes in the series.

Offers of Securities

The securities may be offered through several different methods, including
offerings through underwriters.

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 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. Any representation to the contrary is a
criminal offense.

February 27, 2007



                                Table of Contents

                                                                            Page
                                                                            ----

Important Notice About Information in this Prospectus and
  Each Accompanying Prospectus Supplement ................................     4
Risk Factors .............................................................     5
  Limited Source of Payments -- No Recourse to Sellers,
    Depositor or Servicer ................................................     5
  Credit Enhancement May Not Be Sufficient to Protect You
    from Losses ..........................................................     6
  Losses on Balloon Payment Mortgages Are Borne by You ...................     6
  Multifamily Lending ....................................................     6
  Junior Liens ...........................................................     7
  Partially Unsecured Loans ..............................................     8
  Home Equity Lines of Credit ............................................     8
  Nature of Mortgages ....................................................     9
  Your Risk of Loss May Be Higher Than You Expect If Your
    Securities Are Backed by Partially Unsecured Home Equity Loans .......    13
  Impact of World Events .................................................    13
  You Could Be Adversely Affected by Violations of
    Environmental Laws ...................................................    14
  Ratings of the Securities Do Not Assure Their Payment ..................    14
  Book-Entry Registration ................................................    15
  Pre-Funding Accounts Will Not Be Used to Cover Losses
    on the Loans .........................................................    15
  Unused Amounts on Deposit in Any Pre-Funding Account Will Be
    Paid as Principal to Securityholders .................................    16
  Secondary Market for the Securities May Not Exist ......................    16
  Bankruptcy or Insolvency May Affect the Timing and Amount
    of Distributions on the Securities ...................................    16
  Holders of Original Issue Discount Securities Are Required
    to Include Original Issue Discount in Ordinary Gross Income as
    It Accrues ...........................................................    18
  The Principal Amount of Securities May Exceed the Market
    Value of the Issuing Entity Assets ...................................    18
The Issuing Entity .......................................................    19
  The Mortgage Loans--General ............................................    20
  Agency Securities ......................................................    26
  Private Mortgage-Backed Securities .....................................    30
  Substitution of Issuing Entity Assets ..................................    32
  Available Information ..................................................    32
  Incorporation of Certain Documents by Reference;
    Reports Filed with the SEC ...........................................    32
  Reports to Securityholders .............................................    33
Use of Proceeds ..........................................................    34
The Depositor ............................................................    34
Mortgage Loan Program ....................................................    35
  Underwriting Standards .................................................    35
  Underwriting Process ...................................................    35
  Qualifications of Sellers ..............................................    36
  Representations by Sellers; Repurchases ................................    36
Static Pool Data .........................................................    37
Description of the Securities ............................................    38
  General ................................................................    39
  Distributions on Securities ............................................    41
  Advances ...............................................................    42
  Mandatory Auction ......................................................    43
  Categories of Classes of Securities ....................................    43
  Indices Applicable to Floating Rate and Inverse
    Floating Rate Classes ................................................    45
  Book-Entry Securities ..................................................    49
  Global Clearance, Settlement And Tax Documentation Procedures ..........    52
Credit Enhancement .......................................................    55
  General ................................................................    55
  Subordination ..........................................................    56
  Letter of Credit .......................................................    57
  Mortgage Pool Insurance Policies .......................................    57
  Special Hazard Insurance Policies ......................................    58
  Bankruptcy Bonds .......................................................    59
  Reserve Fund ...........................................................    59
  Cross Support ..........................................................    60
  Insurance Policies, Surety Bonds and Guaranties ........................    60
  Over-Collateralization .................................................    60
  Financial Instruments ..................................................    61
  Deposit Agreements .....................................................    61
Yield and Prepayment Considerations ......................................    61
  Prepayment Standards or Models .........................................    64
  Yield ..................................................................    64
The Agreements ...........................................................    64
  Assignment of Issuing Entity Assets ....................................    64
  Payments on Issuing Entity Assets; Deposits to Security Account ........    67
  Pre-Funding Account ....................................................    69
  Collection Procedures ..................................................    69
  The Surety Provider ....................................................    70
  Hazard Insurance .......................................................    71
  Realization upon Defaulted Mortgage Loans ..............................    72
  Servicing and Other Compensation and Payment of Expenses ...............    75
  Evidence as to Compliance ..............................................    75
  List of Securityholders ................................................    76
  Certain Matters Regarding the Servicer and the Depositor ...............    76
  Events of Default ......................................................    77
  Amendment ..............................................................    80
  Termination; Optional Termination ......................................    81


                                       2


  The Trustee ............................................................    82
Certain Legal Aspects of the Mortgage Loans ..............................    82
  General ................................................................    82
  Foreclosure and Repossession ...........................................    83
  Rights of Redemption ...................................................    85
  Anti-Deficiency Legislation and Other Limitations on Lenders ...........    85
  Environmental Risks ....................................................    86
  Due-on-sale Clauses ....................................................    87
  Prepayment Charges .....................................................    88
  Applicability of Usury Laws ............................................    88
  Servicemembers Civil Relief Act ........................................    88
Material Federal Income Tax Consequences .................................    88
  General ................................................................    88
  Taxation of Debt Securities ............................................    89
  REMIC Securities .......................................................    96
  Tax Status as a Grantor Trust ..........................................   103
  Final Trust Reporting Regulations ......................................   111
  Tax Characterization of the Issuing Entity as a Partnership ............   111
  Tax Consequences to Holders of the Notes ...............................   111
  Tax Consequences to Holders of the Certificates ........................   113
State Tax Considerations .................................................   117
ERISA Considerations .....................................................   117
  Exemptions Available to Debt Instruments ...............................   117
  Underwriter Exemption ..................................................   118
Legal Investment .........................................................   121
Method of Distribution ...................................................   122
Legal Matters ............................................................   123
Financial Information ....................................................   123
Rating ...................................................................   123
INDEX OF PRINCIPAL TERMS .................................................   124


                                       3


         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 IndyMac MBS, Inc., 155 North Lake Avenue,
Pasadena, California 91101 and the telephone number is (800) 669-2300. For other
means of acquiring additional information about us or a series of securities,
see "The Issuing Entity--Available Information" and "--Incorporation of Certain
Documents by Reference; Reports Filed with the SEC" on page 33.


                                       4


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

                                  Risk Factors

      You should carefully consider the following information because it
identifies significant risks associated with an investment in the securities.

Limited Source of             The applicable prospectus supplement may provide
Payments -- No Recourse       that securities will be payable from other issuing
to Sellers, Depositor or      entities in addition to their associated issuing
Servicer                      entity, but if it does not, they will be payable
                              solely from their associated issuing entity. If
                              the issuing entity does not have sufficient assets
                              to distribute the full amount due to you as a
                              securityholder, your yield will be impaired. The
                              return of your principal may be impaired, and you
                              will not have recourse to any other entity.
                              Furthermore, at the times specified in the
                              applicable prospectus supplement, certain assets
                              of the issuing entity 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 issuing
                              entity. 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. Unless
                              otherwise specified in the applicable prospectus
                              supplement, you also will not have recourse
                              against the assets of the issuing entity 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 issuing
                              entity. The only obligation of the depositor to an
                              issuing entity comes from certain representations
                              and warranties made by it about assets transferred
                              to the issuing entity. If these representations
                              and warranties turn out to be untrue, the
                              depositor may be required to repurchase or
                              substitute for some of the transferred assets.
                              IndyMac MBS, Inc., which is the depositor, does
                              not have significant assets and is unlikely to
                              have significant assets in the future. 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 servicer to an issuing
                              entity (other than its 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 servicer may
                              be required to repurchase some of the loans.
                              However, the servicer may not have the financial
                              ability to make the required repurchase.

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                                       5


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                              The only obligations to an issuing entity 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 required to repurchase some
                              of the loans. However, the seller may not have the
                              financial ability to make the required repurchase.

Credit Enhancement May        Credit enhancement is intended to reduce the
Not Be Sufficient to          effect of loan losses. Credit enhancements,
Protect You from Losses       however, may benefit only some classes of a series
                              of securities and the amount of any credit
                              enhancement will be limited as described in the
                              applicable 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 a 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 adversely
                              change their rating of the securities.
                              Consequently, securityholders may suffer losses
                              even though a credit enhancement exists and its
                              provider does not default.

Losses on Balloon Payment     Some of the underlying loans may not be fully
Mortgages Are Borne by        amortizing over their terms to maturity and, thus,
You                           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.

Multifamily Lending           Multifamily lending may expose the lender to a
                              greater risk of loss than single family
                              residential lending. Owners of multifamily
                              residential properties rely on monthly rent
                              payments from tenants to:

                              o  pay for maintenance and other operating
                                 expenses of those properties,

                              o  fund capital improvements, and

                              o  service any loan or other debt that may be
                                 secured by those properties.

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                                       6


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                              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
                              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 cannot
                              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 property 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.

Junior Liens                  The mortgages and deeds of trust securing the
                              closed-end second-lien loans will be, the home
                              equity line of credit loans and home improvement
                              contracts will primarily be, and other loans may
                              be junior liens subordinate to the rights of the
                              related senior mortgage(s) or deed(s) of trust.
                              Accordingly, the proceeds from any liquidation,
                              insurance policy or condemnation proceeding 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, the junior mortgagee will have to
                              foreclose 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 if
                                 the mortgagor is in default under that
                                 mortgage.

                              Unless the servicer is obligated under the
                              applicable agreement to advance such funds, the
                              issuing entity may effectively be prevented from
                              foreclosing on the related property because it
                              will not have sufficient funds to satisfy any
                              senior mortgages or make

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                                       7


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                              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

                              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."

Partially Unsecured Loans     The issuing entity for any series may include
                              closed-end second-lien loans, home equity line of
                              credit loans and home improvement contracts that
                              were originated with loan-to-value ratios or
                              combined loan-to-value ratios in excess of the
                              value of the related property.

                              Under these circumstances, the issuing entity for
                              the related series could be treated as a general
                              unsecured creditor as to any unsecured portion of
                              any related loan. If a borrower defaults under a
                              loan that is unsecured in part, the related
                              issuing entity generally will have recourse only
                              against the borrower's assets for the unsecured
                              portion of the loan, along with all other general
                              unsecured creditors of the borrower. In a
                              bankruptcy or insolvency proceeding relating to a
                              borrower on a partially unsecured loan, the
                              borrower's unsecured obligation on that loan will
                              be treated as an unsecured loan and may be
                              discharged by the bankruptcy court. Losses on any
                              partially unsecured loans that are not otherwise
                              covered by a credit enhancement will be borne by
                              the holders of one or more classes of securities
                              of the related series.

Home Equity Lines of          Generally, a home equity line of credit has a draw
Credit                        period that lasts for the first ten years (during
                              which no principal or minimal amount of principal
                              is due) and, unless otherwise specified in the
                              related prospectus supplement, a repayment term
                              following the draw period of zero, ten, fifteen or
                              twenty years. As a result, there may be limited
                              collections available to make payments to related
                              securityholders or payments of principal may be
                              received more slowly than anticipated, which will
                              affect the yield on one or more classes of
                              securities of the related series.

                              Home equity lines of credit that do not have a
                              repayment term

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                                       8


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                              following the draw period are effectively balloon
                              loans that pose an additional risk because a
                              borrower must make a large lump sum payment of
                              principal at the end of the draw period. If the
                              borrower is unable to pay the lump sum or
                              refinance such amount, holders of one or more
                              classes of securities of the related series may
                              suffer a loss if the related credit enhancement is
                              not sufficient to cover such shortfall.

   Nature of Mortgages

   Declines In Property       The value of the properties underlying the loans
   Values May Adversely       held in the issuing entity may decline over time.
   Affect You                 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.

                              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.

   Cooperative Loans May      Cooperative loans are evidenced by promissory
   Experience Relatively      notes secured by security interests in shares
   Higher 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 a blanket mortgage (or mortgages) exists 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 an underlying lease of the land exists, 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

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                                       9


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                              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.

   Delays in Liquidation May  Even if the properties underlying the loans held
   Adversely Affect You       in the issuing entity 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.

                              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

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                                       10


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                                    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    Liquidation expenses of defaulted loans generally
   of Liquidation Expenses    do not vary directly with the outstanding
   May Adversely Affect You   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   Federal, state and local laws extensively regulate
   May Adversely Affect You   various aspects of brokering, originating,
                              servicing and collecting mortgage 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 mortgage 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 mortgage originators, including
                              claims based on fraud or misrepresentations, to be
                              asserted against persons acquiring the mortgage
                              loans, such as the trust.

                              The federal laws that may apply to loans held in
                              the trust include the following:

                              o  the Truth in Lending Act and its regulations,
                                 which (among other things) require disclosures
                                 to borrowers regarding the terms of mortgage
                                 loans and provide consumers who pledged

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                                       11


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                              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 (but in no
                              event more than three years);

                              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 this type of
                                 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 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 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 mortgage loan. Violations of
                              certain laws may limit the ability to collect all
                              or part of the principal or interest on a mortgage
                              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

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                                       12


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                              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 the secondary mortgage
                              market, including assignees that hold the mortgage
                              loan, such as the trust. 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
                              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
                              seller, will be borne by the holders of one or
                              more classes of securities.

Your Risk of Loss May Be      The issuing entity may also include home equity
Higher Than You Expect If     loans that were originated with loan-to-value
Your Securities Are           ratios or combined loan-to-value ratios in excess
Backed by Partially           of the value of the related mortgaged property.
Unsecured Home Equity         Under these circumstances, the issuing entity
Loans                         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 issuing entity 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.

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 issuing
                              entity. 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

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                              period of active duty status, and, under some
                              circumstances, during an additional period
                              thereafter.

You Could Be Adversely        Federal, state, and local laws and regulations
Affected by Violations of     impose a wide range of requirements on activities
Environmental Laws            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 issuing
                              entity. 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, under certain
                              circumstances, 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 issuing entity 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     Any class of securities offered under this
Do Not Assure Their           prospectus and the accompanying prospectus
Payment                       supplement will be rated in one of the four
                              highest rating categories of 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, in the case of surety bonds, insurance
                              policies, letters of credit or guarantees,
                              primarily on the claims paying ability of any
                              related surety provider, insurer, letter of credit
                              provider or guarantor, 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 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,

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                                       14


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

                              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 issuing
                              entity 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
                              regardless of whether the conditions affect real
                              property values and, accordingly, the rates of
                              delinquencies, foreclosures, and losses in any
                              issuing entity. 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

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

   Limit on Ability to        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.

Pre-Funding Accounts Will     The prospectus supplement for a series of
Not Be Used to Cover          securities may provide that on the closing date
Losses on the Loans           for that series, the depositor will deposit cash
                              into a pre-funding account. The amount deposited
                              into the pre-funding account will never exceed 50%
                              of the initial aggregate principal amount of the
                              certificates and/or notes of the related

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                                       15


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                              series. The pre-funding account will only be used
                              to purchase additional loans from the depositor
                              during the period beginning with the related
                              closing date and ending not more than one year
                              after the closing date. The depositor will acquire
                              these additional loans from the seller or sellers
                              specified in the related prospectus supplement.
                              The trustee for the related series will maintain
                              the pre-funding account. Amounts on deposit in the
                              pre-funding account will not be used to cover
                              losses on or in respect of the related loans.

Unused Amounts on Deposit     Any amounts remaining in a pre-funding account at
in Any Pre-Funding            the end of the period specified in the applicable
Account Will Be Paid as       prospectus supplement will be distributed as a
Principal to                  prepayment of principal to the related
Securityholders               securityholders on the first distribution date
                              after the end of that period. Any such
                              distribution will be made in the amounts and
                              according to the priorities specified in the
                              related prospectus supplement. The holders of one
                              or more classes of the related series of
                              securities will bear the entire reinvestment risk
                              resulting from that prepayment.

Secondary Market for the      The related prospectus supplement for each series
Securities May Not Exist      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. If only a portion of a class of
                              offered certificates has been sold to the public,
                              the market for the offered certificates could be
                              illiquid because of the small amount of these
                              certificates held by the public. In addition, the
                              market overhang created by the existence of
                              offered certificates that the market is aware may
                              be sold to the public in the near future could
                              adversely affect your ability to sell your
                              certificates. 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 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      The seller and the depositor will take steps to
May Affect the Timing and     structure the transfer of the loans held in the
Amount of Distributions       issuing entity by the seller to the depositor as a
on the Securities             sale. The depositor and the issuing entity will
                              take steps to structure the transfer of the loans
                              from the depositor to the issuing entity 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

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                                       16


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                              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 servicer becomes bankrupt, the bankruptcy
                              trustee may have the power to prevent the
                              appointment of a successor 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 servicer's own funds before each
                              distribution date for securities will be specified
                              in the applicable prospectus supplement. If the
                              servicer becomes bankrupt and cash collections
                              have been commingled with the servicer's own
                              funds, the issuing entity will likely not have a
                              perfected interest in those collections. In this
                              case the trust might be an unsecured creditor of
                              the servicer as to the commingled funds and could
                              recover only its share as a general creditor,
                              which might be nothing. Collections commingled but
                              still in an account of the servicer might also be
                              included in the bankruptcy estate of the servicer
                              even though the trust may have a perfected
                              security interest in them. Their inclusion in the
                              bankruptcy estate of the 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. In
                              certain instances a bankruptcy court may allow a
                              borrower to reduce the monthly payments, change
                              the rate of interest, 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.

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                                       17


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Holders of Original Issue     Debt securities that are compound interest
Discount Securities Are       securities will be, and certain other debt may be,
Required to Include           securities issued with original issue income
Original Issue Discount       discount for federal tax purposes. A holder of
in Ordinary Gross Income      debt securities issued with original issue
as It Accrues                 discount is required to include original issue
                              discount in ordinary gross income for federal
                              income tax purposes as it accrues, before
                              receiving the cash attributable to that income.
                              Accrued but unpaid interest on the debt securities
                              that are compound interest securities generally
                              will be treated as original issue discount for
                              this purpose.

                              See "Federal Income Tax Consequences-Taxation of
                              Debt Securities-Interest and Acquisition Discount"
                              and "-Market Discount."

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 than
Market Value of the           the principal amount of the securities of that
Issuing Entity Assets         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 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 of Principal
                              Terms" on page 124.

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                                       18


                              The Issuing Entity(1)

      This prospectus relates to either Mortgage Pass-Through Certificates or
Mortgage Pass-Through Notes, or a combination of those, which may be sold from
time to time in one or more series by the depositor, IndyMac MBS, Inc., on terms
determined at the time of sale and described in this prospectus and the related
prospectus supplement. Each series will be issued under a separate agreement to
be entered into with respect to each series. The securities of each series will
represent interests in the assets of the related issuing entity, and the notes
of each series will be secured by the pledge of the assets of the related
issuing entity. The issuing entity for each series will be held by the trustee
for the benefit of the related securityholders. Each issuing entity will consist
of the issuing entity assets (the "Issuing Entity Assets") consisting of:

      o     a pool of mortgage loans of the type or types specified in the
            related prospectus supplement, together with payments relating to
            those loans,

      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 "Private Mortgage-Backed Securities") evidencing an
            interest in, or secured by, mortgage loans of the type that would
            otherwise be eligible to be mortgage loans.

      The depositor will cause the Issuing Entity 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 servicer named in the
related prospectus supplement will service the Issuing Entity Assets pursuant
to:

      o     a pooling and servicing agreement among the depositor, the servicer
            and the trustee, in the case of a series consisting of certificates,

      o     a servicing agreement between the trustee and the servicer, in the
            case of a series consisting of certificates and notes, or

      o     a sale and servicing agreement among the depositor, the servicer and
            the trustee, in the case of a series consisting of notes.

      The servicer will receive a fee for its services. See "Loan Program" and
"The Agreements" in this prospectus. With respect to loans serviced by the
servicer through a sub-servicer, the servicer will remain liable for its
servicing obligations under the related agreement as if the servicer alone were
servicing those loans.

      In the case of a series consisting of certificates, the term "agreement"
means the related pooling and servicing agreement. In the case of a series
consisting of certificates and notes, the term "agreement" means the related
trust agreement, indenture and servicing agreement, as the context requires. In
the case of a series consisting of notes, the term "agreement" means the related
trust agreement, sale and servicing agreement or indenture, as the context
requires.

      If specified in the related prospectus supplement, an issuing entity for a
series may be a business trust or common law trust formed under the laws of the
state specified in the related prospectus supplement pursuant to a trust
agreement between the depositor and the related trustee.

      Before the initial offering of a series of securities, the issuing entity
for that series will have no assets or liabilities. The issuing entity for a
series is not expected to engage in any activities other than:

----------
(1)   Whenever the terms mortgage pool and certificates are used in this
      prospectus, those terms will be considered to apply, unless the context
      indicates otherwise, to one specific mortgage pool and the certificates
      representing certain undivided interests in a single issuing entity
      consisting primarily of the Issuing Entity Assets in the mortgage pool.
      Similarly, the term pass-through rate will refer to the pass-through rate
      borne by the certificates of one specific series and the term issuing
      entity will refer to one specific issuing entity.


                                       19


      o     acquiring, holding and managing the related Issuing Entity Assets
            and any other assets specified in this prospectus and the related
            prospectus supplement (including any proceeds of those assets),

      o     issuing securities and making distributions on them, and

      o     certain other related activities.

      The issuing entity for a series is not expected to have any source of
capital other than its assets and any related credit enhancement.

      The related prospectus supplement may provide for additional obligations
of the depositor, but if it does not, the depositor's only obligations with
respect to a series of securities will be to obtain certain representations and
warranties from the seller and to assign to the related trustee the depositor's
rights with respect to those representations and warranties. See "The
Agreements- Assignment of the Issuing Entity Assets." The servicer's obligations
with respect to the loans will consist mainly of its contractual servicing
obligations under the related agreement (including its obligation to enforce the
obligations of the sellers, as described in this prospectus under "Loan
Program-Representations by Seller; Repurchases" and "-Assignment of the Issuing
Entity Assets"), and any obligation to make cash advances in the event of
delinquent payments on the loans, as described under "Description of the
Securities-Advances" in this prospectus. The servicer's obligation to make
advances may be limited, as described in this prospectus and the related
prospectus supplement.

      The securities will be entitled to payment from the assets of the related
issuing entity or other assets pledged for the benefit of the holders of the
securities as specified in the related prospectus supplement and will not be
entitled to payments in respect of the assets of any other issuing entity
established by the depositor. The applicable prospectus supplement may specify
the Issuing Entity Assets that an issuing entity will consist of, but if it does
not, the Issuing Entity Assets of any issuing entity will consist of mortgage
loans, Agency Securities or Private Mortgage-Backed Securities but not a
combination of them. Mortgage loans acquired by the depositor will have been
originated in accordance with the underwriting criteria specified below under
"Mortgage Loan Program--Underwriting Standards" or as otherwise described in a
related prospectus supplement.

      The following is a brief description of the Issuing Entity Assets expected
to be included in the issuing entities. If specific information about the
Issuing Entity Assets is not known at the time the related series of securities
initially is offered, the related prospectus supplement will contain more
general information of the nature described below, 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 series
of securities. A maximum of 5% of the Issuing Entity Assets (relative to the
related pool principal balance) as they will be constituted at the time that the
applicable detailed description of Issuing Entity Assets is filed will deviate
in any material respect from the Mortgage Asset pool characteristics described
in the related prospectus supplement. A schedule of the Issuing Entity Assets
relating to the series will be attached to the pooling and servicing agreement
delivered to the trustee upon delivery of the securities.

The Mortgage Loans--General

      The mortgage loans will be secured by first and, if so specified in the
related prospectus supplement, subordinate mortgage liens on one- to four-family
residential properties and, if so specified in the related prospectus
supplement, may include cooperative apartment loans secured by security
interests in shares issued by private, nonprofit, cooperative housing
corporations and in the related proprietary leases or occupancy agreements
granting exclusive rights to occupy specific dwelling units in the cooperatives'
buildings. In addition, the Issuing Entity Assets of the related issuing entity
may include mortgage participation certificates evidencing interests in mortgage
loans. The mortgage loans may be conventional loans (i.e., loans that are not
insured or guaranteed by any governmental agency), insured by the FHA or
partially guaranteed by the VA as specified in the related prospectus
supplement. All or a portion of the mortgage loans in a mortgage pool may be
insured by FHA insurance and may be partially guaranteed by the VA.

      The mortgage loans will consist of single family loans, multifamily loans,
mixed-use loans, closed-end second-lien loans, home equity line of credit loans,
lot loans or home improvement contracts. If specified in the


                                       20


related prospectus supplement, 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 real property that secures repayment of the mortgage loans is referred
to collectively as "mortgaged properties." The mortgaged properties will be
located in any one of the fifty states, the District of Columbia, Guam, Puerto
Rico or any other territory of the United States. Mortgage loans with certain
Loan-to-Value Ratios or certain principal balances or both may be covered wholly
or partially by primary mortgage guaranty insurance policies. The existence,
extent and duration of coverage will be described in the applicable prospectus
supplement. The mortgaged properties will be secured by mortgages or deeds of
trust or other similar security instruments creating a lien on a property. In
the case of closed-end second-lien loans, liens will be, in the case of home
equity line of credit loans and home improvement contracts, liens generally will
be, and in the case of all other loans, liens may be subordinated to one or more
senior liens on the related properties, as described in the related prospectus
supplement. In addition to being secured by mortgages on real estate, the home
improvement 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 closed-end second-lien loans, home equity line of
credit loans and home improvement contracts may include loans (primarily for
home improvement or debt consolidation purposes) in amounts exceeding the value
of the related properties at the time of origination.

      The applicable prospectus supplement may specify the day or days on which
bi-weekly or monthly payments on the mortgage loans in a mortgage pool will be
due, but if it does not, all of the mortgage loans in a mortgage pool will have
monthly payments due on the first day of each month. The payment terms of the
mortgage loans to be included in an issuing entity 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:

      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. Mortgage loans may provide for the
            payment of interest at a rate lower than the specified interest rate
            borne by that loan (the "Loan Rate") for a period of time or for the
            life of the loan; the amount of the difference may be contributed by
            the seller of the property or another source.

      o     Principal may be payable on a level debt service basis to fully
            amortize the mortgage loan over its term, may be calculated on the
            basis of an assumed amortization schedule that is significantly
            longer than the original term to maturity or on 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 (referred to as a
            "balloon payment") of all or a substantial portion of the principal
            may be due on maturity, called balloon payments. Principal may
            include interest that has been deferred and added to the principal
            balance of the mortgage loan.

      o     Monthly payments of principal and interest may be fixed for the life
            of the mortgage loan, may increase over a specified period of time
            or may change from period to period, including periods in which
            payments are interest only. The terms of a mortgage 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 mortgage loans generally may be prepaid at any time without the
            payment of any prepayment charge. If so specified in the related
            prospectus supplement, some prepayments of principal may be subject
            to a prepayment charge, which may be fixed for the life of the
            mortgage loan or may decline


                                       21


            over time, and may be prohibited for the life of the mortgage loan
            or for certain periods, which are called lockout periods. Certain
            mortgage loans may permit prepayments after expiration of the
            applicable lockout period and may require the payment of a
            prepayment charge in connection with any subsequent prepayment.
            Other mortgage 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 mortgage loan in connection with the
            sale or certain transfers of the related mortgaged property. Other
            mortgage loans may be assumable by persons meeting the then
            applicable underwriting standards of the seller.

      An issuing entity may contain buydown loans that include provisions
whereby a third party partially subsidizes the monthly payments of the obligors
on the mortgage loans during the early years of the mortgage loans, the
difference to be made up from a buydown fund contributed by the third party at
the time of origination of the mortgage 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
mortgage loan upon receipt by the servicer of the mortgagor's portion of the
monthly payment on the mortgage loan. The 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 mortgage 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 initially paid by the
mortgagor, on annual increases in the interest rate and on the length of the
buydown period.

      The real properties securing repayment of the loans are referred to as the
properties. The loans will be secured by mortgages or deeds of trust or other
similar security instruments creating a lien on a property. In the case of
closed-end second-lien loans, liens will be, in the case of home equity line of
credit loans and home improvement contracts, liens generally will be, and in the
case of all other loans, liens may be subordinated to one or more senior liens
on the related properties, as described in the related prospectus supplement. In
addition to being secured by mortgages on real estate, the home improvement
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 closed-end second-lien loans, home equity line of credit loans
and home improvement contracts may include loans (primarily for home improvement
or debt consolidation purposes) in amounts exceeding the value of the related
properties at the time of origination. The properties and the home improvements
are collectively referred to in this prospectus as the "Properties" and are
individually referred to as a "Property." 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 (defined below) and/or certain
principal balances may be covered wholly or partially by primary mortgage
guaranty insurance policies. The existence, extent and duration of any such
coverage will be described in the applicable prospectus supplement.

      The related prospectus supplement will disclose the aggregate principal
balance of loans secured by owner-occupied properties. The related prospectus
supplement also may state the basis for representations relating to Single
Family Properties (defined below), but if it does not, the sole basis for a
representation that a given percentage of the loans is secured by owner-occupied
Single Family Properties will be the borrower's representation at origination
that the borrower intends to use the Property as a primary residence.

      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, security interests in shares issued by
cooperative housing corporations, 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 related prospectus supplement may specify the leasehold term, but
if it does not, the stated term of the leasehold will exceed the scheduled
maturity of the loan by at least five years.


                                       22


      Multifamily Loans. Properties securing 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. 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 conferring exclusive rights to occupy specific apartments or units.
Generally, a tenant-stockholder of a cooperative makes a monthly payment to the
cooperative representing that tenant-stockholder's pro rata share of the
cooperative's payments for its loan, real property taxes, maintenance expenses
and other capital or ordinary expenses. That monthly payment is in addition to
any payments of principal and interest the tenant-stockholder makes 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 depend in large part on its receipt
of maintenance payments from the tenant-stockholders, as well as any rental
income from units the cooperative controls. Unanticipated expenditures may in
some cases have to be paid by special assessments on the tenant-stockholders. No
more than 10% of the aggregate Issuing Entity 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.

      Mixed-Use Loans. The properties securing mixed-use loans will be improved
by structures that have both residential and commercial units. No more than 10%
of the aggregate Issuing Entity Assets for any series, as constituted at the
applicable cut-off date (measured by principal balance), will be comprised of
mixed-use loans.

      Closed-End Second-Lien Loans. The mortgaged properties relating to
closed-end second-lien loans will be Single Family Properties. The full amount
of a closed-end second-lien loan is advanced at the inception of the loan and
generally is repayable in equal (or substantially equal) installments designed
to fully amortize the loan at its stated maturity. Except as provided in the
related prospectus supplement, the original terms to stated maturity of
closed-end second-lien loans will not exceed 360 months. With respect to certain
circumstances, a borrower may choose an interest only payment option whereby the
borrower pays only the amount of interest accrued 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 Equity Line of Credit Loans. The mortgaged properties relating to
home equity line of credit loans will be Single Family Properties. As more fully
described in the related prospectus supplement, interest on each home equity
line of credit 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 home equity
line of credit loan may be drawn down (up to a maximum amount specified in the
related prospectus supplement) or repaid under each home equity line of credit
loan from time to time, but may be subject to a minimum periodic payment. Except
as provided in the related prospectus supplement, the Issuing Entity Assets will
not include any amounts borrowed under a home equity line of credit loan after
the cut-off date. With respect to certain circumstances, a borrower may choose
an interest only payment option whereby the borrower pays only the amount of
interest accrued 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.

      Lot Loans. These loans provide short-term financing for borrowers buying a
parcel of land that has been improved for residential use with the intention of
building a home thereon. Each lot loan is secured by a parcel of land that has
been improved for residential use, which generally means that it is legally
accessible by street and utilities such as sewer, electricity and water have
been brought to the parcel or are available in the street, but a dwelling has
not yet been built thereon. Lot loans may include loans to finance the
construction of a dwelling on such a parcel and construction loans which convert
into permanent loans upon the completion of construction.

      Home Improvement Contracts. The Issuing Entity Assets for a series of
securities may consist, in whole or in part, of home improvement 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 contracts may include, but are not limited to, replacement
windows, house siding, new roofs, swimming pools, spas, kitchen and bathroom
remodeling goods, solar heating panels and other exterior and interior
renovations and general


                                       23


remodeling projects. The home improvement contracts will be secured by mortgages
on Single Family Properties that are generally subordinate to other mortgages on
the same Property. In general, the home improvement contracts will be fully
amortizing and may have fixed interest rates or adjustable interest rates and
may provide for other payment characteristics as described below and in the
related prospectus supplement. The initial Loan-to-Value Ratio of a home
improvement 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 mortgage loans
contained in the related mortgage pool, including

      o     the aggregate outstanding principal balance and the average
            outstanding principal balance of the mortgage loans as of the first
            day of the month of issuance of the related series of securities or
            another date referred to in the related prospectus supplement as a
            cut-off date,

      o     the type of property securing the mortgage loans (e.g., single
            family residences, individual units in condominium apartment
            buildings or in buildings owned by cooperatives, vacation and second
            homes, small multi-family properties or other real property or home
            improvements),

      o     the original terms to maturity of the mortgage loans,

      o     the ranges of the principal balances of the mortgage loans,

      o     the earliest origination date and latest maturity date of any of the
            mortgage loans,

      o     the ranges of the Loan-to-Value Ratios or Combined Loan-to-Value
            Ratios (each as defined below), as applicable, of the loans at
            origination,

      o     the Loan Rates or annual percentage rates ("APR") or range of Loan
            Rates or APRs borne by the loans,

      o     the maximum and minimum per annum mortgage rates and

      o     the geographical distribution of the mortgage loans.

      If the depositor does not know specific information about the mortgage
loans at the time the related securities are initially offered, the related
prospectus supplement will contain more general information of the type
described above.

      Unless otherwise specified in the related prospectus supplement, the
"Loan-to-Value Ratio" of a loan at any given time is a 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.

      Unless otherwise specified in the related prospectus supplement, the
"Combined Loan-to-Value Ratio" of a loan at any given time is the ratio,
expressed as a percentage, of

      (x) the sum of

      o     the original principal balance of the loan (or, in the case of a
            home equity line of credit loan, the maximum amount available at
            origination), and

      o     the outstanding principal balance at the date of origination of the
            loan of any senior loan(s) (or, in the case of any open-ended senior
            loan, the maximum available line of credit with respect to that loan
            at origination, regardless of any lesser amount actually outstanding
            at the date of origination of the loan,

      to

      (y) the collateral value of the related Property.


                                       24


      The applicable prospectus supplement may specify how the collateral value
of a Property will be calculated, but if it does not, the collateral value of a
Property (other than with respect to certain loans the proceeds of which were
used to refinance an existing loan), is the lesser of:

      o     the sales price for the property, and

      o     the appraised value determined in an appraisal obtained by the
            originator at origination of the loan.

      In the case of refinance loans, the collateral value of the related
Property is generally the appraised value determined in an appraisal obtained at
the time of refinancing.

      We can give no assurance that values of the mortgaged properties have
remained or will remain at their levels on the dates of origination of the
related mortgage loans. If the residential real estate market were to experience
an overall decline in property values so that the outstanding principal balances
of the mortgage loans, and any primary or secondary financing on the Properties,
in a particular mortgage pool become equal to or greater than the value of the
mortgaged properties, the actual rates of delinquencies, foreclosures and losses
could be higher than those now generally experienced in the mortgage lending
industry. In addition, adverse economic conditions and other factors (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 mortgage loans
and, accordingly, the actual rates of delinquencies, foreclosures and losses
with respect to any mortgage 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.

      The depositor will cause the mortgage loans comprising each mortgage pool
to be assigned to the trustee named in the related prospectus supplement for the
benefit of the securityholders of the related series. The servicer named in the
related prospectus supplement will service the mortgage loans pursuant to the
pooling and servicing agreement, sale and servicing agreement or servicing
agreement, as applicable, and will receive a fee for its services. See "Mortgage
Loan Program" and "The Agreements."

      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
the series of securities the depositor's rights with respect to the
representations and warranties. See "The Agreements--Assignment of Issuing
Entity Assets." The obligations of the servicer with respect to the mortgage
loans will consist principally of its contractual servicing obligations under
the related pooling and servicing agreement, sale and servicing agreement or
servicing agreement, as applicable (including its obligation to enforce the
obligations of the sellers, as more fully described under "Mortgage Loan
Program--Representations by Sellers; Repurchases") and its obligation to make
cash advances upon delinquencies in payments on or with respect to the mortgage
loans in the amounts described under "Description of the Securities--Advances."
The obligations of the servicer to make advances may be subject to limitations,
to the extent provided in this prospectus and in the related prospectus
supplement. The servicer may also be a seller in which case a breach of its
obligations in one capacity will not constitute a breach of its obligations in
the other capacity.

      The mortgage loans will consist of mortgage loans, deeds of trust or
participations or other beneficial interests therein, secured by first and, if
so specified in the related prospectus supplement, subordinate, liens on one- to
four-family residential properties and, if so specified in the related
prospectus supplement, may include cooperative apartment loans secured by
security interests in shares issued by private, non-profit, cooperative housing
corporations and in the related proprietary leases or occupancy agreements
granting exclusive rights to occupy specific dwelling units in the cooperatives'
buildings. In addition, Issuing Entity Assets of the related issuing entity may
include mortgage participation certificates evidencing interests in mortgage
loans. These loans may be conventional loans (i.e., loans that are not insured
or guaranteed by any governmental agency) or loans insured by the FHA or
partially guaranteed by the VA, as specified in the related prospectus
supplement. The mortgaged properties relating to mortgage loans will consist of
detached or semi-detached one-family dwelling units, two- to four-family
dwelling units, townhouses, rowhouses, individual condominium units, individual
units in planned unit developments and certain other dwelling units. The
mortgaged properties may include vacation and second homes, investment
properties and leasehold interests. In the case of leasehold interests, the
applicable prospectus


                                       25


supplement may specify that the term of the leasehold may be less than five
years beyond the scheduled maturity of the mortgage loan, but if it does not,
the term of the leasehold will exceed the scheduled maturity of the mortgage
loan by at least five years.

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 an issuing
entity 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 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 an issuing entity, 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.


                                       26


      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 an issuing entity 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 an issuing entity 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 securities may be held in book-entry form.

      The Ginnie Mae certificates included in an issuing entity, 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 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 the 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 an issuing
entity 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


                                       27


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, regardless of whether 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 securities, 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 seller. Freddie
Mac is required to remit each registered Freddie Mac securityholder'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 charges,
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.


                                       28


      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 an issuing
entity 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 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, regardless of whether received, and the holder's
proportionate share of the full principal amount of any foreclosed or other
finally liquidated mortgage loan, regardless of whether 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.


                                       29


      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 an issuing entity, 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, an issuing entity 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 an issuing entity.

Private Mortgage-Backed Securities

      Private 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. Private 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 the principal and interest distributions (but not all the
distributions) on certain mortgage loans. Private 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
Private Mortgage-Backed Security. Mortgage loans underlying a Private
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 Private 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 residential mortgage
loans to the trusts and selling beneficial interests in the trusts. If so
specified in the related prospectus supplement, the issuer of Private
Mortgage-Backed Securities may be an affiliate of the depositor. The obligations
of the issuer of Private Mortgage-Backed Securities will generally be limited to
certain representations and warranties with respect to the assets conveyed by it
to the related issuing entity. The issuer of Private Mortgage-Backed Securities
will not have guaranteed any of the assets conveyed to the related issuing
entity or any of the Private Mortgage-Backed Securities issued under the pooling
and servicing agreement. Additionally, although the mortgage loans underlying
the Private Mortgage-Backed Securities may be guaranteed by


                                       30


an agency or instrumentality of the United States, the Private Mortgage-Backed
Securities themselves will not be so guaranteed.

      Distributions of principal and interest will be made on the Private
Mortgage-Backed Securities on the dates specified in the related prospectus
supplement. The Private 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 Private Mortgage-Backed
Securities by the private trustee or the private servicer. The issuer of Private
Mortgage-Backed Securities or the private servicer may have the right to
repurchase assets underlying the Private Mortgage-Backed Securities after a
certain date or under other circumstances specified in the related prospectus
supplement.

      The mortgage loans underlying the Private 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 property or
residential lot 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 issuing entity
includes Private Mortgage-Backed Securities will specify

      o     the aggregate approximate principal amount and type of the Private
            Mortgage-Backed Securities to be included in the issuing entity;

      o     certain characteristics of the mortgage loans that comprise the
            underlying assets for the Private 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

            o     the minimum and maximum stated maturities of the underlying
                  mortgage loans at origination;

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

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

      o     the pass-through or certificate rate of the Private Mortgage-Backed
            Securities;

      o     the weighted average pass-through or certificate rate of the Private
            Mortgage-Backed Securities;

      o     the issuer of Private Mortgage-Backed Securities, the private
            servicer (if other than the issuer of Private Mortgage-Backed
            Securities) and the private trustee for the Private Mortgage-Backed
            Securities;

      o     certain characteristics of credit support, if any, the as reserve
            funds, insurance policies, surety bonds, letters of credit or
            guaranties relating to the mortgage loans underlying the Private
            Mortgage-Backed Securities or to the Private Mortgage-Backed
            Securities themselves;

      o     the terms on which the underlying mortgage loans for the Private
            Mortgage-Backed Securities may, or are required to, be purchased
            before their stated maturity or the stated maturity of the Private
            Mortgage-Backed Securities;


                                       31


      o     the terms on which mortgage loans may be substituted for those
            originally underlying the Private Mortgage-Backed Securities; and

      o     as appropriate, shall indicate whether the information required to
            be presented with respect to the Private Mortgage-Backed Securities
            as a "significant obligor" is either incorporated by referenced,
            provided directly by the issuer or provided by reference to the
            Exchange Act filing of another entity.

      Private Mortgage-Backed Securities included in the issuing entity for a
series of certificates that were issued by an issuer of Private 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, as amended (the "Securities Act") or have been
held for at least the holding period required to be eligible for sale under Rule
144(k) under the Securities Act.

Substitution of Issuing Entity Assets

      Substitution of Issuing Entity Assets will be permitted upon breaches of
representations and warranties with respect to any original Mortgage Asset or if
the trustee determines that the documentation with respect to any Mortgage Asset
is incomplete. See "Loan Program--Representations by Sellers; Repurchases." 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 Issuing Entity Assets
may be substituted for Issuing Entity Assets initially included in the issuing
entity.

Available Information

      The depositor has filed with the SEC a Registration Statement under 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 Reference Room at 100 F Street,
N.E., Washington, DC 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 Web site that contains reports and information statements, and other
information regarding the registrants that file electronically with the SEC,
including the depositor. The address of that Internet Web site is
http://www.sec.gov. The depositor's SEC Securities Act file number is
333-132042.

      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 distribution reports on Form 10-D and current reports on Form 8-K
filed with the SEC for the issuing entity referred to in the accompanying
prospectus supplement after the date of this prospectus and before the end of
the related offering 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 servicer on behalf of the issuing entity 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 Securities Exchange Act of 1934, as amended
(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 issuing entity, including as
            Exhibits to the Form 8-K (1) the agreements or other documents
            specified


                                       32


            in the related prospectus supplement, if applicable, (2) the
            Detailed Description, if applicable, regarding the related Issuing
            Entity 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     Reports 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 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 an issuing entity following completion of the reporting period
required by Rule 15d-1 or Regulation 15D under the Exchange Act. 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 issuing entity 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 an issuing entity with the SEC after the final prospectus supplement
is filed will be available under issuing entity'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 issuing entity 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
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. All other reports filed with the SEC concerning the issuing entity
will be forwarded to securityholders free of charge upon written request to the
trustee on behalf of any issuing entity, but will not be made available through
a website of the depositor, the 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 viewed electronically at the
internet Web site of the SEC shown above under "--Available Information."

      The applicable prospectus supplement may specify different items to be
reported, but if it does not, before or concurrently with each distribution on a
distribution date the 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 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, prepayment
            charges;

      o     the amount of the distribution allocable to interest;

      o     the amount of any advance;


                                       33


      o     the aggregate amount otherwise allocable to the subordinated
            securityholders on the distribution date and the aggregate amount
            withdrawn from the reserve fund, if any, that is included in the
            amounts distributed to the securityholders;

      o     the Class Security 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 Issuing Entity Assets
            (excluding prepayments), if any, which each class will be entitled
            to receive on the following distribution date;

      o     the percentage of principal prepayments with respect to the Issuing
            Entity Assets, if any, which each class 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 servicer, and the amount
            of additional servicing compensation received by the servicer
            attributable to penalties, fees, excess liquidation proceeds and
            other similar charges and items;

      o     the number and aggregate principal balances of mortgage loans (A)
            delinquent (exclusive of mortgage 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, if adjusted from the date of the last
            statement, of a class expected to be applicable to the next
            distribution to the class; o if applicable, the amount remaining in
            the reserve fund at the close of business on the distribution date;

      o     the pass-through rate as of the day before the 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 certificate 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 servicer or the trustee will mail to each securityholder of
record at any time during the calendar year a report as to the aggregate of
amounts reported pursuant to the first two items for the calendar year or, if
the person was a securityholder of record during a portion of the calendar year,
for the applicable portion of the year and other customary information deemed
appropriate for securityholders to prepare their tax returns.

                                 Use of Proceeds

      The depositor will apply the net proceeds from the sale of the securities
to the purchase of Issuing Entity 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 securities offerings will depend
on a number of factors, including the volume of Issuing Entity Assets acquired
by the depositor, prevailing interest rates, availability of funds and general
market conditions.

                                  The Depositor

      IndyMac MBS, Inc., a Delaware corporation, was organized on July 9, 1999
for the limited purpose of acquiring, owning and transferring Issuing Entity
Assets and selling interests in them or bonds secured by them. The depositor is
a limited purpose finance subsidiary of IndyMac Bank, F.S.B., a federal savings
bank organized under


                                       34


the laws of the United States. The depositor maintains its principal office at
155 North Lake Avenue, Pasadena, California 91101. Its telephone number is (800)
669-2300.

      The depositor's obligations after issuance of the securities include
delivery of the Issuing Entity Assets and certain related documents and
instruments, repurchasing Issuing Entity Assets in the event of certain breaches
of representations and warranties made by the depositor, providing tax-related
information to the trustee and maintaining the trustee's first and/or
subordinate priority perfected security interest in the Issuing Entity Assets.

      Neither the depositor nor any of the depositor's affiliates will insure or
guarantee distributions on the securities of any series.

                              Mortgage Loan Program

      The mortgage loans will have been purchased by the depositor, either
directly or through affiliates, from sellers. The discussion below under
"Underwriting Process" contains a general description of underwriting standards
that are applicable to most sellers. A description of the underwriting
guidelines that are applied by the seller or sellers in a particular transaction
will be set forth in the related prospectus supplement.

Underwriting Standards

      The applicable prospectus supplement may provide for the seller's
representations and warranties relating to the mortgage loans, but if it does
not, each seller will represent and warrant that all loans originated and/or
sold by it to the depositor 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 the underwriting police of the FHA or the VA, as the case may be.

Underwriting Process

      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 Property as collateral. Most lenders offer a number of different
underwriting programs. Some programs place more emphasis on a borrower's credit
standing and repayment ability while others emphasize the value and adequacy of
the Property as collateral. The most comprehensive of the programs emphasize
both.

      In general, where a loan is subject to full underwriting review, a
prospective borrower applying for a mortgage loan is required to fill out a
detailed application designed to provide to the underwriting officer pertinent
credit information. 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. The verification reports the length of
employment with that organization, the borrower's current salary and whether it
is expected that the borrower will continue employment in the future. If a
prospective borrower is self-employed, the borrower may be required to submit
copies of signed tax returns. The borrower may also be required to authorize
verification of deposits at financial institutions where the borrower has demand
or savings accounts.

      In determining the adequacy of the Property as collateral, an appraisal is
made of each property considered for financing. Except as described in the
applicable prospectus supplement, an appraiser is required to inspect the
property and verify that it is in good repair and that construction, if new, has
been completed. The appraisal is 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.

      Once all applicable employment, credit and property information is
received, a determination generally is made as to whether the prospective
borrower has sufficient monthly income available to meet monthly housing
expenses and other financial obligations and monthly living expenses and to meet
the borrower's monthly obligations on the proposed mortgage loan (generally
determined on the basis of the monthly payments due in the


                                       35


year of origination) and other expenses related to the Property such as property
taxes and hazard insurance). The underwriting standards applied by sellers,
particularly with respect to the level of loan documentation and the mortgagor's
income and credit history, may be varied in appropriate cases where factors as
low Loan-to-Value Ratios or other favorable credit factors exist.

      In the event a lender underwrites mortgage loans under programs less
restrictive than the one described above, a description of those programs will
be set forth in the related prospectus supplement.

      Certain of the types of mortgage loans that may be included in an issuing
entity may be recently developed and may involve additional uncertainties not
present in traditional types of loans. For example, certain of the mortgage
loans may provide for escalating or variable payments by the mortgagor. These
types of mortgage loans are underwritten on the basis of a judgment that the
mortgagors have the ability to make the monthly payments required initially. In
some instances, however, a mortgagor's income may not be sufficient to permit
continued loan payments as the payments increase. These types of mortgage loans
may also be underwritten primarily on the basis of Loan-to-Value Ratios or other
favorable credit factors.

Qualifications of Sellers

      Each seller must be an institution experienced in originating mortgage
loans of the type contained in the related mortgage pool and must maintain
satisfactory facilities to originate those mortgage loans.

Representations by Sellers; Repurchases

      Each seller will have made representations and warranties in respect of
the mortgage loans sold by it and evidenced by a series of securities. The
applicable prospectus supplement may specify the different representations and
warranties, but if it does not, the representations and warranties will
generally include, among other things:

      o     that a lender's policy of title insurance (or in the case of
            mortgaged properties located in areas where title insurance 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 that
            each policy (or certificate of title as applicable) remained in
            effect on the date of purchase of the mortgage loan from the seller
            by or on behalf of the depositor;

      o     that the seller had good title to each mortgage loan and the
            mortgage loan was subject to no valid offsets, defenses,
            counterclaims or rights of rescission except to the extent that any
            buydown agreement described in this prospectus may forgive certain
            indebtedness of a mortgagor;

      o     that each mortgage loan is secured by a valid first lien on, or a
            first perfected security interest with respect to, the Property
            (subject only to permissible title insurance exceptions, if
            applicable, and certain other exceptions described in the pooling
            and servicing agreement or sale and servicing agreement, as
            applicable) and that the Property was free of material damage;

      o     that there were no delinquent tax or assessment liens against the
            Property; 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.

      As to any mortgage 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.

      As indicated in the related pooling and servicing agreement, the
representations and warranties of a seller in respect of a mortgage loan will be
made as of the date of initial issuance of the series of securities, the related
cut-off date, the date on which the seller sold the mortgage loan to the
depositor or one of its affiliates, or the date of origination of the related
mortgage loan, as the case may be. If representations and warranties are made as
of a date other than the closing date or cut-off date, a substantial period of
time may have elapsed between the other date and the date of initial issuance of
the series of securities evidencing an interest in the mortgage loan. Because
the representations and warranties of a seller do not address events that may
occur following the sale of a mortgage loan


                                       36


by the seller or following the origination of the mortgage loan, as the case may
be, its repurchase obligation will not arise if the relevant event that would
otherwise have given rise to a repurchase obligation with respect to a mortgage
loan occurs after the date of sale of the mortgage loan by the seller to the
depositor or its affiliates or after the origination of the mortgage loan, as
the case may be. In addition, the representations concerning fraud in the
origination of the mortgage loan will be limited to the extent the seller has
knowledge and the seller will be under no obligation to investigate the
substance of the representation. However, the depositor will not include any
mortgage loan in the issuing entity 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 mortgage loan as of the date of initial
issuance of the related series of securities. If the servicer is also a seller
of mortgage loans with respect to a particular series, the representations will
be in addition to the representations and warranties made by the servicer in its
capacity as the servicer.

      The trustee, if the servicer is the seller, or the servicer will promptly
notify the relevant seller of any breach of any representation or warranty made
by it in respect of a mortgage loan that materially and adversely affects the
interests of the securityholders in the mortgage loan. The applicable prospectus
supplement may specify that the seller has a different repurchase obligation,
but if it does not, then if the seller cannot cure the breach within 90 days
after notice from the servicer or the trustee, as the case may be, then the
seller will be obligated to either

            o     repurchase the mortgage loan from the issuing entity at a
                  price equal to 100% of the outstanding principal balance of
                  the mortgage as of the date of the repurchase plus accrued
                  interest on it to the first day of the month in which the
                  purchase price is to be distributed at the mortgage rate, less
                  any unreimbursed advances or amount payable as related
                  servicing compensation if the seller is the servicer with
                  respect to the mortgage loan or

            o     substitute for the loan a replacement loan that satisfies the
                  criteria specified in the related prospectus supplement.

      If an election is to be made to treat an issuing entity or designated
portions of it as a "real estate mortgage investment conduit" as defined in the
Internal Revenue Code of 1986, as amended (the "Code"), the servicer or a holder
of the related residual certificate will be obligated to pay any prohibited
transaction tax that 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 issuing entity to lose its status
as a REMIC or otherwise subject the issuing entity to a prohibited transaction
tax. The applicable prospectus supplement may contain different reimbursement
options, but if it does not, the servicer will be entitled to reimbursement for
that payment from the assets of the related issuing entity or from any holder of
the related residual certificate. See "Description of the Securities-- General"
and in the related prospectus supplement. Except in those cases in which the
servicer is the seller, the servicer will be required under the applicable
pooling and servicing agreement to enforce this obligation for the benefit of
the trustee and the securityholders, following the practices it would employ in
its good faith business judgment were it the owner of the mortgage loan. This
repurchase obligation will constitute the sole remedy available to
securityholders or the trustee for a breach of representation by a seller.

      Neither the depositor nor the servicer (unless the servicer is the seller)
will be obligated to purchase or substitute a mortgage 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
mortgage 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 servicer, the servicer may have a repurchase or substitution obligation as
described under "The Agreements--Assignment of Issuing Entity 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 IndyMac
Bank, F.S.B. or any other person specified in the related prospectus supplement
will be made available through a website. The prospectus supplement related to
each series for which the static pool data is provided through a website will
contain the website address to obtain this information. Except as stated below,
the static pool data provided through any Web site will be deemed part of this


                                       37


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
            IndyMac Bank, F.S.B. (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.

                         Description of the Securities

       The prospectus supplement relating to the securities of each series
to be offered under this prospectus will, among other things, set forth for the
securities, as appropriate:

      o     a description of the class or classes of securities and the rate at
            which interest will be passed through to holders of each class of
            securities entitled to interest or the method of determining the
            amount of interest, if any, to be passed through to each class;

      o     the initial aggregate principal balance of each class of securities
            included in the series, the dates on which distributions on the
            securities will be made and, if applicable, the initial and final
            scheduled distribution dates for each class;

      o     information as to the assets comprising the issuing entity,
            including the general characteristics of the Issuing Entity Assets
            included in the issuing entity and, if applicable, the insurance,
            surety bonds, guaranties, letters of credit or other instruments or
            agreements included in the issuing entity, and the amount and source
            of any reserve fund;

      o     the circumstances, if any, under which the issuing entity may be
            subject to early termination;

      o     the method used to calculate the amount of principal to be
            distributed with respect to each class of securities;

      o     the order of application of distributions to each of the classes
            within the series, whether sequential, pro rata, or otherwise;

      o     the distribution dates with respect to the series;

      o     additional information with respect to the plan of distribution of
            the securities;

      o     whether one or more REMIC elections will be made and designation of
            the regular interests and residual interests;

      o     the aggregate original percentage ownership interest in the issuing
            entity to be evidenced by each class of securities;

      o     information as to the nature and extent of subordination with
            respect to any class of securities that is subordinate in right of
            payment to any other class; and


                                       38


      o     information as to the seller, the servicer and the trustee.

      Each series of certificates will be issued pursuant to a separate Pooling
and Servicing Agreement. 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 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 issuing entity 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 servicer pursuant to a Sale and Servicing Agreement. Each
Indenture will be dated as of the cut-off date and the Issuing Entity 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 issuing entity. 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 agreements (without exhibits) relating to any series without
charge upon written request of a holder of record of a security of the series
addressed to IndyMac MBS, Inc., 155 North Lake Avenue, Pasadena, California
91101, Attention: Transaction Management. The following summaries describe
material provisions that may appear in each agreement.

General

      The securities of each series will be issued in either fully registered or
book-entry form in the authorized denominations specified in the related
prospectus supplement. In the case of certificates, the securities will evidence
specified beneficial ownership interests in the related issuing entity. In the
case of notes, the securities will be secured by the assets of the related
issuing entity. In both cases, the securities will not be entitled to payments
in respect of the assets included in any other issuing entity established by the
depositor. The applicable prospectus supplement may provide for guarantees by a
governmental entity or other person, but if it does not, the Issuing Entity
Assets will not be insured or guaranteed by any governmental entity or other
person. Each issuing entity will consist of, to the extent provided in the
related agreement,

      o     the Issuing Entity Assets that from time to time are subject to the
            related agreement (exclusive of any amounts specified in the related
            prospectus supplement as a retained interest);

      o     the assets required to be deposited in the related Security Account
            from time to time;

      o     property that secured a mortgage loan and that is acquired on behalf
            of the securityholders by foreclosure or deed in lieu of
            foreclosure; and

      o     any primary mortgage insurance policies, FHA insurance and VA
            guaranties, and any other insurance policies or other forms of
            credit enhancement required to be maintained pursuant to the related
            agreement.

      If specified in the related prospectus supplement, an issuing entity may
also include one or more of the following: reinvestment income on payments
received on the Issuing Entity 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 or other
agreements.

      Each series of securities will be issued in one or more classes. Each
class of securities of a series will evidence beneficial ownership of a
specified percentage or portion of future interest payments and a specified
percentage or portion of future principal payments on the Issuing Entity Assets
in the related issuing entity. These specified percentages may be 0%. Each class
of notes of a series will be secured by the related Issuing Entity 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 the series. Certain series
or classes of securities may be covered by insurance policies,


                                       39


surety bonds or other forms of credit enhancement, in each case as described
under"--Credit Enhancement" in this prospectus 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 of principal and
interest. Distributions on one or more classes of a series of securities may be
made before one or more other classes, after the occurrence of specified events,
in accordance with a schedule or formula, on the basis of collections from
designated portions of the Issuing Entity Assets in the related issuing entity,
or on a different basis, 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.

      The trustee will make distributions of either or both of principal and
interest on the related securities on each distribution date (i.e., monthly,
quarterly, semi-annually or at other intervals and on the dates specified in the
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. Distributions will be made in the manner
specified in the related prospectus supplement to the persons entitled to them
at the addresses appearing in the security register maintained for
securityholders; 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 specified 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.

      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 ("ERISA"), or the
Code of certain classes of securities 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 securities 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
securities by or on behalf of a plan, account or other retirement arrangement is
permissible under applicable law and will not subject the trustee, the servicer
or the depositor to any obligation or liability in addition to those undertaken
in the applicable agreement.

      As to each series, an election may be made to treat the related issuing
entity or designated portions of it as a real estate mortgage investment conduit
or REMIC as defined in the Code. The related prospectus supplement will specify
whether a REMIC election is to be made. Alternatively, the agreement for a
series may provide that a REMIC election may be made at the discretion of the
depositor or the servicer and may be made only if certain conditions are
satisfied. The terms applicable to the making of a REMIC election, as well as
any material federal income tax consequences to securityholders not described in
this prospectus, will be set forth in the related prospectus supplement. If a
REMIC election is 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, as defined in the Code.
As to each series for which a REMIC election is to be made, the servicer or a
holder of the related residual interest or ownership will be obligated to comply
with applicable laws and regulations and will be obligated to pay any prohibited
transaction taxes. The applicable prospectus supplement may restrict the
servicer's reimbursement rights, but if it does not, the servicer will be
entitled to reimbursement for that payment from the assets of the issuing entity
or from any holder of the related residual certificate or ownership interest.
Unless otherwise specified in the related prospectus supplement, if the amounts
distributable to the related residual securities are insufficient to cover the
amount of any prohibited transaction taxes, the amount necessary to reimburse
the servicer may be deducted from the amounts otherwise distributable to the
other classers of securities of the series.


                                       40


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, for that series. See "Credit Enhancement" in this prospectus and in the
related prospectus supplement. 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 that series.

      The trustee will make distributions allocable to principal of and interest
on the securities out of, and only to the extent of, funds in the related
Security Account, including any funds transferred from any reserve fund. As
between securities of different classes and as between distributions of
principal (and, if applicable, between distributions of principal prepayments
and scheduled payments of principal) and interest, distributions made on any
distribution date will be applied as specified in the related prospectus
supplement. The applicable prospectus supplement may provide for payment
distinctions within classes, but if it 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, in accordance with
the terms described in the related prospectus supplement and specified in the
related agreement. The applicable prospectus supplement may define Available
Funds with reference 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 issuing entity) other than
amounts to be held in the Security Account for distribution on future
distribution dates.

      Distributions of Interest. Interest will accrue on the aggregate original
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 at the
pass-through rate or interest rate, as applicable (which in either case may be a
fixed rate or a rate adjustable as specified in the prospectus supplement) from
the date 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 Class Security Balance of the class has
been distributed in full. In the case of securities entitled only to
distributions allocable to interest, interest will be distributable until the
aggregate notional amount of the securities is reduced to zero or for the period
of time designated in the related prospectus supplement. The original principal
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 certificate. 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. If the interest accrual period for a security ends two or
more days before a distribution date, the effective yield will be lower than the
yield obtained if interest on the security were to accrue through the day
immediately preceding that distribution date. In addition, the effective yield
(at par) to securityholders will be less than the indicated coupon rate.

      With respect to any class of accrual securities, any interest that has
accrued but is not paid on a given distribution date will be added to the Class
Security Balance of the class of securities on that distribution date. The
applicable prospectus supplement may specify some other basis for these
distributions, but if it does not, distributions of interest on each class of
accrual securities will commence only after the occurrence of the events
specified in the prospectus supplement and, before that time, the beneficial
ownership interest of the class of accrual securities in the issuing entity, as
reflected in the Class Security Balance of the class of accrual securities, will
increase on each distribution date by the amount of interest that accrued on the
class of accrual securities during the preceding interest accrual period but
that was not required to be distributed to the class on the distribution date. A
class of accrual securities will thereafter accrue interest on its outstanding
Class Security Balance as so adjusted.


                                       41


      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 that amount
will be allocated among the classes of securities entitled to distributions of
principal. The Class Security Balance of any class of securities entitled to
distributions of principal will be the 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
                  securities as allocable to principal

            o     in the case of accrual securities, unless otherwise specified
                  in the related prospectus supplement, increased by all
                  interest accrued but not then distributable on the accrual
                  securities,

            o     in the case of adjustable rate securities, unless otherwise
                  specified in the related prospectus supplement, subject to the
                  effect of negative amortization, 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.

      A series of securities may include one or more classes of senior
securities and one or more classes of subordinate securities. If so provided in
the related prospectus supplement, one or more classes of senior securities will
be entitled to receive all or a disproportionate percentage of the payments of
principal that are received from borrowers in advance of their scheduled due
dates and are not accompanied by amounts representing scheduled interest due
after the month of the payments in the percentages and under the circumstances
or for the periods specified in the prospectus supplement. Any disproportionate
allocation of these principal prepayments to senior securities will have the
effect of accelerating the amortization of the senior securities while
increasing the interests evidenced by the subordinated securities in the issuing
entity. Increasing the interests of the subordinated securities relative to that
of the senior securities is intended to preserve the availability of the
subordination provided by the subordinated securities. See "Credit
Enhancement--Subordination" and "Credit Enhancement--Subordination of the
Subordinated Securities" in the related prospectus supplement.

      Unscheduled Distributions. If specified in the related prospectus
supplement, the securities will be subject to receipt of distributions before
the next scheduled distribution date. 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 Issuing Entity Assets, the
trustee or the 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 the
distribution date. The applicable prospectus supplement may specify some other
basis for these distributions, but if it does not, the amount of the 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 provide that unscheduled distributions will not include interest or that
interest will be computed on a different basis, but if it does not, all
unscheduled distributions will include interest at the applicable pass-through
rate 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 servicer
will be required to advance on or before each distribution date (from its own
funds or funds held in the Security Account for future distributions to
securityholders), an amount equal to the aggregate of payments of principal and
interest that were delinquent on the related Determination Date, subject to the
servicer's determination that the advances will be recoverable out of late
payments by obligors on the Issuing Entity Assets, liquidation proceeds,
insurance proceeds not used to restore the property or otherwise. In the case of
cooperative loans, the servicer also will 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 servicer will endeavor to maintain a regular flow
of scheduled interest and principal payments to securityholders, rather than to
guarantee or insure against losses.


                                       42


      If the servicer makes advances from funds being held for future
distribution to securityholders, the servicer will replace the funds on or
before any future distribution date to the extent that funds in the applicable
Security Account on the distribution date would be less than the amount required
to be available for distributions to securityholders on the distribution date.
Any advances will be reimbursable to the servicer out of recoveries on the
specific Issuing Entity Assets with respect to which the advances were made
(e.g., late payments made by the related obligors, any related insurance
proceeds, liquidation proceeds or proceeds of any mortgage loan repurchased by
the depositor or a seller pursuant to the related pooling and servicing
agreement or sale and servicing agreement, as applicable). In addition, advances
by the servicer also will be reimbursable to the servicer from cash otherwise
distributable to securityholders (including the holders of senior securities) to
the extent that the servicer determines that the advances previously made are
not ultimately recoverable as described in the preceding sentence. The servicer
also will be obligated to make advances, to the extent recoverable out of
insurance proceeds not used to restore the property, liquidation proceeds or
otherwise, for certain taxes and insurance premiums not paid by mortgagors on a
timely basis. Funds so advanced are reimbursable to the servicer to the extent
permitted by the pooling and servicing agreement, sale and servicing agreement
or servicing agreement, as applicable. If specified in the related prospectus
supplement, the obligations of the servicer to make advances may be supported by
a cash advance reserve fund, a surety bond or other arrangement, in each case as
described in the prospectus supplement.

      In the event that the 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
such advance in its capacity as successor servicer. If the trustee makes such an
advance, it will be entitled to be reimbursed for such advance to the same
extent and degree as the servicer is entitled to be reimbursed for advances. See
"Description of the Securities-Distributions on Securities."

Mandatory Auction

      The applicable prospectus supplement for a series of notes may provide for
a Dutch auction of such notes to be held on a specified date, provided that
certain conditions are met. The prospectus supplement may further provide for
adjustments to the terms of the notes, including but not limited to,
acceleration of principal repayments, reset of interest rate and/or payment by a
credit enhancement provider, and such adjustments may be determined by the
results of the Dutch auction.

Categories of Classes of Securities

      In general, classes of pass-through securities fall into different
categories. The following chart identifies and generally defines the more
typical categories. The prospectus supplement for a series of securities may
identify the classes which comprise the series by reference to the following
categories.

                                                 Definition
Categories of Classes                          Principal Types

Accretion Directed Class ...  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 Issuing Entity Assets or other assets
                              of the issuing entity 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 Class ............  A class consisting of "components." The components
                              of a class of component securities may have
                              different principal and 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.


                                       43


                                                 Definition
Categories of Classes                          Principal Types

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) (1)
                              principal prepayments on the underlying Issuing
                              Entity Assets that are allocated
                              disproportionately to the senior securities
                              because of the shifting interest structure of the
                              securities in the issuing entity and/or (2)
                              scheduled principal payments on the underlying
                              Issuing Entity Assets, as specified in the related
                              prospectus supplement. During the lock-out period,
                              the portion of the principal distributions on the
                              underlying Issuing Entity Assets of which the NAS
                              Class is locked out will be distributed to the
                              other classes of senior securities.

Notional Amount Class ......  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 Issuing Entity
                              Assets. These two rates are the endpoints for the
                              "structuring range" for the planned principal
                              class. The planned principal classes in any series
                              of securities 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 securities 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
                              Issuing Entity Assets. These two rates are the
                              endpoints for the "structuring range" for the
                              scheduled principal class.

Sequential Pay Class .......  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 Class ................  A class that receives a constant proportion, or
                              "strip," of the principal payments on the
                              underlying Issuing Entity Assets or other assets
                              of the issuing entity.

Super Senior Class .........  A class that will not bear its proportionate share
                              of realized losses (other than excess losses) as
                              its share is directed to another class (the
                              "Support Class") until the Class Security Balance
                              of the Support Class is reduced to zero.

Support Class ..............  A class that absorbs realized losses other than
                              excess losses that would otherwise be allocated to
                              a Super Senior class after the related classes of
                              subordinated securities are no longer outstanding.


                                       44


                                                 Definition
Categories of Classes                          Principal Types

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 Issuing Entity
                              Assets.

                                                Interest Types

Fixed Rate .................  A class with an interest rate that is fixed
                              throughout the life of the class.

Floating 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 mortgage rates
                              borne by the underlying mortgage loans).

Interest Only ..............  A class that receives some or all of the interest
                              payments made on the underlying Issuing Entity
                              Assets or other assets of the issuing entity 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 of
                              principal.

Principal Only .............  A class that does not bear interest and is
                              entitled to receive only distributions of
                              principal.

Partial Accrual ............  A class that accretes a portion of the amount of
                              accrued interest on it, 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 class. The 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 class,
                              which amount will be added as principal to the
                              principal balance of the class on each applicable
                              distribution date. The accretion may continue
                              until some specified event has occurred or until
                              the accrual class is retired.

      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 securities 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, sale and servicing agreement or servicing agreement, as
applicable 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):


                                       45


LIBO Method

      If using this method to calculate LIBOR, the calculation agent will
determine LIBOR by reference to the quotations, as set forth on the Moneyline
Telerate Page 3750, offered by the principal London office of each of the
designated reference banks meeting the criteria set forth in this prospectus for
making one-month United States dollar deposits in leading banks in the London
Interbank market, as of 11:00 a.m. (London time) on the LIBOR determination
date. In lieu of relying on the quotations for those reference banks that appear
at the time on the Moneyline Telerate Page 3750, the calculation agent will
request each of the reference banks to provide the offered quotations at that
time.

      Under this method the calculation agent will establish LIBOR on each LIBOR
determination date as follows:

            (a) If on any LIBOR determination date two or more reference banks
      provide offered quotations, LIBOR for the next interest accrual period
      shall be the arithmetic mean of the offered quotations (rounded upwards if
      necessary to the nearest whole multiple of 1/32%).

            (b) If on any LIBOR determination date only one or none of the
      reference banks provides offered quotations, LIBOR for the next interest
      accrual period shall be whichever is the higher of

            o     LIBOR as determined on the previous LIBOR determination date
                  or

            o     the reserve interest rate.

      The reserve interest rate shall be the rate per annum which the
calculation agent determines to be either

            o     the arithmetic mean (rounded upwards if necessary to the
                  nearest whole multiple of 1/32%) of the one-month United
                  States dollar lending rates that New York City banks selected
                  by the calculation agent are quoting, on the relevant LIBOR
                  determination date, to the principal London offices of at
                  least two of the reference banks to which the quotations are,
                  in the opinion of the calculation agent being so made, or

            o     if the calculation agent cannot determine the arithmetic mean,
                  the lowest one-month United States dollar lending rate which
                  New York City banks selected by the calculation agent are
                  quoting on the LIBOR determination date to leading European
                  banks.

            (c) If on any LIBOR determination date for a class specified in the
      related prospectus supplement, the calculation agent is required but is
      unable to determine the reserve interest rate in the manner provided in
      paragraph (b) above, LIBOR for the next interest accrual period shall be
      LIBOR as determined on the preceding LIBOR determination date, or, in the
      case of the first LIBOR determination date, LIBOR shall be considered to
      be the per annum rate specified as such in the related prospectus
      supplement.

      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 calculation agent; and
will have an established place of business in London. If reference bank should
be unwilling or unable to act as such or if appointment of a reference bank is
terminated, another leading bank meeting the criteria specified above will be
appointed.

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
Moneyline 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,


                                       46


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 will be
calculated in accordance with the LIBOR method described under "LIBO Method."

      The calculation agent's determination of LIBOR on each LIBOR determination
date and its calculation of the rate of interest for the applicable classes for
the related interest accrual period will (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 before 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,
because 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 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 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 for which the
applicable interest rate is determined by reference to an index denominated as
COFI 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.


                                       47


      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 pooling and servicing agreement, sale and servicing
agreement or servicing agreement, as applicable, relating to the series of
securities. 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 calculations agent's determination of COFI 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.

      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. If the Treasury index is no longer published, a new
index based upon comparable data and methodology will be designated in
accordance with the pooling and servicing agreement, sale and servicing
agreement or servicing agreement, as applicable, 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 some other basis for
determining and defining the prime rate, but if it does not, on the prime rate
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
the prime rate, the calculation agent will ascertain the prime rate for the
related interest accrual period. 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 on the related prime rate determination date, or if not so
published, the "prime rate" as published in a newspaper of general circulation


                                       48


selected by the calculation agent in its sole discretion. If a prime rate range
is given, then the average of the range will be used. If the prime rate is no
longer published, a new index based upon comparable data and methodology will be
designated in accordance with the applicable 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 Securities

      If so specified in the related prospectus supplement, one or more classes
of securities of any series may be issued as book-entry securities. Persons
acquiring beneficial ownership interests in book-entry securities will hold
their securities either:

      o     directly through The Depository Trust Company ("DTC") in the United
            States, or Clearstream, Luxembourg or Euroclear in Europe, if they
            are participants of these systems, or

      o     indirectly through organizations that are participants in these
            systems.

      Each class of book-entry securities will be issued in one or more
securities that equal the aggregate principal balance of the class and will
initially be registered in the name of Cede & Co. as the nominee of DTC.
Clearstream, Luxembourg and Euroclear will hold omnibus positions on behalf of
their participants through customers' securities accounts in Clearstream,
Luxembourg's or Euroclear's name, on the books of their respective depositaries.
These depositaries will in turn hold the positions in customers' securities
accounts in the depositaries' names on the books of DTC. Citibank, N.A. will act
as depositary for Clearstream, Luxembourg and The Chase Manhattan Bank will act
as depositary for Euroclear. Except as described below, no person acquiring a
beneficial interest in a book-entry security will be entitled to receive a
physical certificate representing the security.

      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 that maintains the beneficial owner's account for that
purpose. In turn, the financial intermediary's ownership of a 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). Therefore, the beneficial owner must rely on the
foregoing procedures to evidence its beneficial ownership of a book-entry
security. Beneficial ownership of a book-entry security may only be transferred
by compliance with the procedures of the financial intermediaries and depository
participants.

      Beneficial owners will receive all distributions of principal of and
interest on the securities from the trustee through DTC and its participants.
While the securities are outstanding (except under the circumstances described
below), DTC is required to make book-entry transfers of the securities among
participants on whose behalf it acts and is required to receive and transmit
distributions on the securities in accordance with rules, regulations and
procedures creating and affecting DTC and its operations. Participants and
indirect participants with whom beneficial owners have accounts are likewise
required to make book-entry transfers and receive and transmit distributions on
behalf of their respective beneficial owners. Although beneficial owners will
not possess physical certificates, the DTC rules, regulations and procedures
provide a mechanism by which beneficial owners may receive distributions on the
securities and transfer their interests in the securities.

      Beneficial owners will not receive or be entitled to receive certificates
representing their interests in the securities except under the limited
circumstances described below. Until definitive securities are issued,
beneficial owners who are not participants may transfer ownership of their
securities only through participants and indirect participants by instructing
them to transfer securities through DTC for the accounts of the purchasers of
those securities. In accordance with DTC's rules, regulations and procedures,
transfers of ownership 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 the appropriate debits and
credits on their records on behalf of the selling and purchasing beneficial
owners.


                                       49


      Because of time zone differences, credits of securities received in
Clearstream, Luxembourg or Euroclear resulting from transactions with
participants will be made during subsequent securities settlement processing and
dated the business day after the DTC settlement date. These credits, and any
transactions in the securities settled during processing, will be reported to
the applicable Euroclear or Clearstream, Luxembourg participants on that
business day. Cash received in Clearstream, Luxembourg or Euroclear resulting
from sales of securities by or through a Clearstream, Luxembourg participant
(described below) or Euroclear Participant (described below) to a DTC
participant will be received with value on the DTC settlement date but will not
be available in the applicable Clearstream, Luxembourg or Euroclear cash account
until the business day after settlement in DTC.

      Transfers between DTC participants will be governed by DTC rules.
Transfers between Clearstream, Luxembourg participants and Euroclear
participants will be governed by their respective rules and operating
procedures.

      Cross-market transfers between persons holding directly or indirectly
through DTC and persons holding directly or indirectly through Clearstream,
Luxembourg participants or Euroclear participants will be effected in DTC in
accordance with DTC rules on behalf of the applicable European international
clearing system by the applicable depositary. These cross-market transactions,
however, will require delivery of instructions to the applicable European
international clearing system by the counterparty in that system according to
its rules and procedures and within its established deadlines (European time).
If the transaction meets its settlement requirements, the applicable European
international clearing system will deliver instructions to the applicable
depositary to effect final settlement on its behalf by delivering or receiving
securities in DTC, and making or receiving payment in accordance with the
procedures for same day funds settlement applicable to DTC. Clearstream,
Luxembourg Participants and Euroclear Participants may not deliver instructions
directly to the European depositaries.

      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 DTC Rules.

      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 10 January 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 Clearstream,
Luxembourg International 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" With effect from 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
transfer of certificates. Transactions may be settled by Clearstream, Luxembourg
in any of 30 currencies, including United States dollars.


                                       50


Clearstream, Luxembourg provides its customers, among other things, services for
safekeeping, administration, clearance and settlement of internationally traded
securities and securities lending and borrowing. Clearstream, Luxembourg
interfaces with domestic markets in several countries. As a professional
depository, Clearstream, Luxembourg is registered as a bank in Luxembourg, and
as such 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 also 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 its participants and
to clear and settle transactions between Euroclear participants through
simultaneous electronic book-entry delivery against payment, thereby eliminating
the need for physical transfer of certificates, as well as any risk from the
lack of simultaneous transfers of securities and cash. Transactions may be
settled in any of 32 currencies, including United States dollars. Euroclear
provides various other services, including securities lending and borrowing. It
also interfaces with domestic markets in several countries in a manner 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 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.

      Under a book-entry format, beneficial owners of the book-entry securities
may experience some delay in their receipt of payments, because the trustee will
send payments to Cede & Co., as nominee of DTC. Distributions on securities held
through Clearstream, Luxembourg or Euroclear and received by the applicable
depositary will be credited to the cash accounts of Clearstream, Luxembourg
Participants or Euroclear Participants in accordance with each system's rules
and procedures. These distributions will be subject to tax reporting under the
applicable United States laws and regulations. See "Federal Income Tax
Consequences-Tax Treatment of Foreign Investors" and "-Tax Consequences to
Holders of the Notes-Backup Withholding" in this prospectus. Because DTC can
only act on behalf of financial intermediaries, the a beneficial owner's ability
to pledge book-entry securities to persons or entities that do not participate
in the DTC system, or otherwise take actions in respect of the book-entry
securities, may be limited by 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 those securities in the secondary
market because some potential investors may not want to purchase securities for
which they cannot obtain physical certificates.

      Until definitive securities are issued, it is anticipated that the only
"securityholder" of the book-entry securities will be Cede & Co., as nominee of
DTC. Beneficial owners are only permitted to exercise the rights of
securityholders indirectly through financial intermediaries and DTC. Monthly and
annual reports for the related


                                       51


issuing entity will be provided to Cede & Co., as nominee of DTC. Cede & Co. may
make them available to beneficial owners upon request, in accordance with the
rules, regulations and procedures creating and affecting DTC. It may also make
them available to the financial intermediaries to whose DTC accounts the
book-entry securities of those beneficial owners are credited.

      Until definitive securities are issued, DTC will take any action permitted
to be taken by the holders of the book-entry securities of a series under the
related 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
the actions are taken on behalf of financial intermediaries whose holdings
include the 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 securityholder on behalf of a Clearstream, Luxembourg participant or
Euroclear participant, respectively, only in accordance with its applicable
rules and procedures and subject to the applicable depositary's ability to
effect actions on its behalf through DTC. At the direction of the related
participants, DTC may take actions with respect to some securities that conflict
with actions taken with respect to other securities.

      The applicable prospectus supplement may specify when and for what reasons
definitive securities may be issued, but if it does not, definitive securities
will be issued to beneficial owners of book-entry securities, or their nominees,
rather than to DTC, only if:

      o     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 depository with respect to the
            book-entry securities, and DTC or the trustee is unable to locate a
            qualified successor;

      o     the depositor, at its sole option, elects to terminate the
            book-entry system through DTC;

      o     or after the occurrence of an event of default, beneficial owners of
            securities representing not less than 51% of the aggregate
            percentage interests evidenced by each class of securities of the
            related series issued as book-entry securities advise the trustee
            and DTC through the financial intermediaries in writing that the
            continuation of a book-entry system through DTC (or a successor to
            it) is no longer in the best interests of the beneficial owners.

      Upon the occurrence of any of the events described in the preceding
paragraph, the trustee will be required to notify all beneficial owners of the
occurrence of the event and the availability of definitive securities through
DTC. Upon surrender by DTC of the global certificate or certificates
representing the book-entry securities and instructions for re-registration, the
trustee will issue the 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 not
obligated to perform or continue to perform these procedures and these
procedures may be discontinued at any time.

      The servicer, the depositor and the trustee will not be responsible 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.

Global Clearance, Settlement And Tax Documentation Procedures

      Except in certain limited circumstances, the securities offered by a
prospectus supplement, other than any residual securities, will be offered
globally (the "Global Securities") and will be available only in book-entry
form. Investors in the Global Securities may hold such Global Securities through
DTC and, upon request, through Clearstream 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.


                                       52


      Secondary market trading between investors holding Global Securities
through Clearstream 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.

      Secondary cross-market trading between Clearstream or Euroclear and
Participants holding Global Securities will be effected on a
delivery-against-payment basis through the respective Depositaries of
Clearstream and Euroclear (in such capacity) and as Participants.

      Non-U.S. holders (as described below) of Global Securities will be subject
to U.S. withholding taxes unless such holders meet certain requirements and
deliver appropriate U.S. tax documents to the securities clearing organizations
or their participants.

      Initial Settlement

      All Global Securities will be held in book-entry form by DTC in the name
of Cede & Co. as nominee of DTC. Investors' interests in the Global Securities
will be represented through financial institutions acting on their behalf as
direct and indirect Participants in DTC. As a result, Clearstream and Euroclear
will hold positions on behalf of their participants through their respective
European Depositaries, which in turn will hold such positions in accounts as
Participants.

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

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

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

      Trading between DTC Seller and Clearstream or Euroclear purchaser. When
Global Securities are to be transferred from the account of a Participant to the
account of a Clearstream participant or a Euroclear Participant, the purchaser
will send instructions to Clearstream or Euroclear through a Clearstream
participant or Euroclear Participant at least one business day prior to
settlement. Clearstream or Euroclear will instruct the respective Depositary, as
the case may be, to receive the Global Securities against payment. Payment will
include interest accrued on each class of Global Securities according to the
interest accrual method specified in the related prospectus supplement. 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 Participant's account against
delivery of the Global Securities. After settlement has been completed, the
Global Securities will be credited to the respective clearing system and by the
clearing system, in accordance with its usual procedures, to the Clearstream
participant's or Euroclear Participant's account. The Global 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 or Euroclear cash debt will be valued instead as of the actual
settlement date.


                                       53


      Clearstream participants and Euroclear Participants will need to make
available to the respective clearing systems the funds necessary to process
same-day funds settlement. The most direct means of doing so is to preposition
funds for settlement, either from cash on hand or existing lines of credit, as
they would for any settlement occurring within Clearstream or Euroclear. Under
this approach, they may take on credit exposure to Clearstream or Euroclear
until the Global Securities are credited to their accounts one day later.

      As an alternative, if Clearstream or Euroclear has extended at line of
credit to them, Clearstream participants or Euroclear Participants can elect not
to preposition funds and allow that credit line to be drawn upon the finance
settlement. Under this procedure, Clearstream participants or Euroclear
Participants purchasing Global Securities would incur overdraft charges for one
day, assuming they cleared the overdraft when the Global Securities were
credited to their accounts. However, interest on the Global Securities would
accrue from the value date. Therefore, in many cases the investment income on
the Global Securities earned during that one-day period may substantially reduce
or offset the amount of such overdraft charges, although this result will depend
on each Clearstream participant's or Euroclear Participant's particular cost of
funds.

      Because the settlement is taking place during New York business hours,
Participants can employ their usual procedures for sending Global Securities to
the respective European Depositary for the benefit of Clearstream participants
or Euroclear Participants. The sale proceeds will be available to the DTC seller
on the settlement date. Thus, to the Participants a cross-market transaction
will settle no differently than a trade between two Participants.

      Trading between Clearstream or Euroclear Seller and DTC Purchaser. Due to
time zone differences in their favor, Clearstream participants and Euroclear
Participants may employ their customary procedures for transactions in which
Global Securities are to be transferred by the respective clearing system,
through the respective Depositary, to a Participant. The seller will send
instructions to Clearstream or Euroclear through a Clearstream participant or
Euroclear Participant at least one business day prior to settlement. In these
cases Clearstream or Euroclear will instruct the respective Depositary, as
appropriate, to deliver the Global Securities to the Participant's account
against payment. Payment will include interest accrued on the Global Securities
according to the interest accrual method specified in the related prospectus
supplement. For transactions settling on the 31st of the month, payment will
include interest accrued to and excluding the first day of the following month.
The payment will then be reflected in the account of the Clearstream participant
or Euroclear Participant the following day, and receipt of the cash proceeds in
the Clearstream participant's or Euroclear Participant's account would be
back-valued to the value date (which would be the preceding day, when settlement
occurred in New York). If the Clearstream participant or Euroclear Participant
have a line of credit with its respective clearing system and elect to be in
debt in anticipation of receipt of the sale proceeds in its account, the
back-valuation will extinguish any overdraft incurred over that one-day period.
If settlement is not completed on the intended value date (i.e., the trade
fails), receipt of the cash proceeds in the Clearstream participant's or
Euroclear Participant's account would instead be valued as of the actual
settlement date.

      Finally, day traders that use Clearstream or Euroclear and that purchase
Global Securities from Participants for delivery to Clearstream 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:

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

            2. borrowing the Global Securities in the United States from a
      Participant no later than one day prior to settlement, which would give
      the Global Securities sufficient time to be reflected in their Clearstream
      or Euroclear account in order to settle the sale side of the trade; or

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


                                       54


      Certain U.S. Federal Income Tax Documentation Requirements

      A beneficial owner of Global Securities holding securities through
Clearstream or Euroclear (or through DTC if the holder has an address outside
the U.S.) will be subject to the 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 such beneficial owner and the
U.S. entity required to withhold tax complies with applicable certification
requirements and (ii) such beneficial owner takes one of the following steps to
obtain an exemption or reduced tax rate:

o     Exemption for non-U.S. Persons (Form W-8BEN). 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 Owner 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 can obtain an exemption or reduced tax rate
      (depending on the treaty terms) by filing Form W-8BEN (Certificate of
      Foreign Status of Beneficial Owner 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 such change. More complex rules apply to nominees
      and entities treated as partnerships that are not U.S. Persons.

o     Exemption for non-U.S. Persons with effectively connected income (Form
      W-8ECI). A non-U.S. Person, including a non-U.S. corporation or bank with
      a U.S. branch, for which the interest income is effectively connected with
      its conduct of a trade or business in the United States, can obtain an
      exemption from the withholding tax by filing Form 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).

o     Exemptions 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).

      In each case, 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). Form W-8BEN and Form W-8ECI are generally effective until the
end of the third succeeding calendar year after the date such form is signed
unless the information provided in the form changes. If information in the form
changes, a new form must be provided within 30 days of such change.

      The term "U.S. Person" means (i) a citizen or resident of the United
States, (ii) a corporation, partnership or other entity treated as a corporation
or partnership for United States federal income tax purposes organized in or
under the laws of the United States or any state thereof or the District of
Columbia (unless, in the case of a partnership, Treasury regulations provide
otherwise) or (iii) an estate the income of which is includible in gross income
for United States tax purposes, regardless of its source, or (iv) a trust if a
court within the United States is able to exercise primary supervision over the
administration of the trust and one or more United States persons have authority
to control all substantial decisions of the trust. Notwithstanding the preceding
sentence, to the extent provided in Treasury regulations, certain trusts in
existence on August 20, 1996, and treated as United States persons prior to that
date, that elect to continue to be treated as United States persons will also be
a U.S. Person. This summary does not deal with all aspects of U.S. federal
income tax withholding that may be relevant to foreign holders of the Global
Securities. Investors are advised to consult their own tax advisors for specific
tax advice concerning their holding and disposing of the Global Securities.

                               Credit Enhancement

General

      Credit enhancement may be provided for one or more classes of a series of
securities or with respect to the Issuing Entity Assets in the related issuing
entity. Credit enhancement may be in the form of a limited financial guaranty
policy issued by an entity named in the related prospectus supplement, the
subordination of one or more


                                       55


classes of the securities of the series, the establishment of one or more
reserve funds, the use of a cross support feature, use of a mortgage pool
insurance policy, FHA insurance, VA guarantee, bankruptcy bond, special hazard
insurance policy, surety bond, letter of credit, guaranteed investment contract,
overcollateralization or other method of credit enhancement described in the
related prospectus supplement, or any combination of them. Credit enhancement
may not provide protection against all risks of loss or guarantee repayment of
the entire principal balance of the securities and interest on them. 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, the rights of
holders of one or more classes of subordinated securities will be subordinate to
the rights of holders of one or more other classes of senior securities of the
series to distributions of scheduled principal, principal prepayments, interest
or any combination of them that otherwise would have been payable to holders of
subordinated securities under the circumstances and to the extent specified in
the related prospectus supplement. If specified in the related prospectus
supplement, holders of senior securities also may be protected by a reduction in
the ownership interest, if any, of the related subordinated securities or by any
other method described in the related prospectus supplement. If specified in the
related prospectus supplement, delays in receipt of scheduled payments on the
Issuing Entity Assets and losses with respect to the Issuing Entity Assets will
be borne first by the various classes of subordinated 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 of delinquent payments on the Issuing
Entity Assets over the lives of the securities or at any time, the aggregate
losses on Issuing Entity Assets which must be borne by the subordinated
securities by virtue of subordination and the amount of the distributions
otherwise distributable to the subordinated securityholders that will be
distributable to senior securityholders on any distribution date may be limited
as specified in the related prospectus supplement. If aggregate distributions of
delinquent payments on the Issuing Entity Assets or aggregate losses on the
Issuing Entity Assets were to exceed the amount specified in the related
prospectus supplement, senior securityholders would experience losses on the
securities.

      In addition to or instead of the subordination methods listed above, the
prospectus supplement for a series may provide that all or a portion of the
distributions otherwise payable to holders of subordinated securities on any
distribution date will instead either be deposited into one or more reserve
accounts established with the trustee, or distributed to the holders of senior
securities. As specified in the related prospectus supplement, deposits into a
reserve account may be made on each distribution date, or for specified time
periods, or until the balance in the reserve account has reached a specified
amount and thereafter, to the extent necessary to maintain the balance in the
reserve account at any required level. Amounts on deposit in the reserve account
for a series 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 subordinated securities may themselves be subordinate in
their right to receive certain distributions to other classes of senior and
subordinated securities, respectively, through a cross support mechanism or
otherwise.

      As between classes of senior securities and as between classes of
subordinated securities, distributions may be allocated among the classes in the
order of their scheduled final distribution dates, in accordance with a schedule
or formula, in relation to the occurrence of events, or otherwise, in each case
as specified in the related prospectus supplement. As between classes of
subordinated securities, payments to senior securityholders on account of
delinquencies or losses and payments to the reserve fund will be allocated as
specified in the related prospectus supplement.

      With respect to any series with classes of senior and subordinated
securities, the terms and priorities of the subordination may vary from those
described in the preceding paragraphs. Any such variation will be described in
the related prospectus supplement.


                                       56


Letter of Credit

      Any letter of credit for a series of securities will be issued by the bank
or financial institution specified in the related prospectus supplement. The
specified bank will be obligated to honor drawings under the letter of credit in
an aggregate fixed dollar amount, net of unreimbursed payments under the letter
of credit, equal to a specified percentage of the aggregate principal balance
of:

      o     the mortgage loans on the related cut-off date, or

      o     one or more classes of securities.

      If 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 Bankruptcy Code, or losses
resulting from denial of insurance coverage due to misrepresentations in
connection with the origination of a mortgage loan. The amount available under
the letter of credit will be reduced by the amount of unreimbursed payments
under the letter of credit. The obligations of the bank issuing a letter of
credit for any series of securities will expire at the earlier of the date
specified in the related prospectus supplement or the termination of the issuing
entity. See "The Agreements-Termination: Optional Termination." A copy of any
letter of credit 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.

Mortgage Pool Insurance Policies

      If specified in the related prospectus supplement relating to a mortgage
pool, a separate mortgage pool insurance policy will be obtained for the
mortgage pool and issued by the insurer named in the prospectus supplement. Each
mortgage pool insurance policy will, subject to policy limitations, cover loss
from default in payment on mortgage loans in the mortgage pool in an amount
equal to a percentage specified in the prospectus supplement of the aggregate
principal balance of the mortgage loans on the cut-off date that are not covered
as to their entire outstanding principal balances by primary mortgage insurance
policies. As more fully described below, the servicer will present claims under
the insurance to the pool insurer on behalf of itself, the trustee and the
securityholders. The mortgage pool insurance policies, however, are not blanket
policies against loss, since claims under them may be made only for particular
defaulted mortgage loans and only upon satisfaction of conditions precedent in
the policy. The applicable prospectus supplement may specify that mortgage pool
insurance will cover the failure to pay or the denial of a claim under a primary
mortgage insurance policy, but if it does not, the mortgage pool insurance
policies will not cover losses due to a failure to pay or denial of a claim
under a primary mortgage insurance policy.

      In general, each mortgage pool insurance policy will provide that no
claims may be validly presented unless

      o     any required primary mortgage insurance policy is in effect for the
            defaulted mortgage loan and a claim under it has been submitted and
            settled;

      o     hazard insurance on the related Property has been kept in force and
            real estate taxes and other protection and preservation expenses
            have been paid;

      o     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

      o     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 to purchase the Property at a price equal to the principal balance
of the related mortgage loan plus accrued and unpaid interest at the mortgage
rate to the date of the purchase and certain expenses incurred by the servicer
on behalf of the trustee and


                                       57


securityholders or to pay the amount by which the sum of the principal balance
of the defaulted mortgage loan plus accrued and unpaid interest at the mortgage
rate to the date of payment of the claim and the aforementioned expenses exceeds
the proceeds received from an approved sale of the 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 is damaged, and proceeds, if any,
from the related hazard insurance policy or a special hazard insurance policy or
policies maintained for a series are insufficient to restore the damaged
property to a condition sufficient to permit recovery under the mortgage pool
insurance policy, the servicer will not be required to expend its own funds to
restore the damaged property unless it determines that the restoration will
increase the proceeds to securityholders on liquidation of the mortgage loan
after reimbursement of the servicer for its expenses and the expenses will be
recoverable by it through proceeds of the sale of the Property or proceeds of
the related mortgage pool insurance policy or any related primary mortgage
insurance policy.

      The applicable prospectus supplement may specify that mortgage pool
insurance will cover various origination and servicing defaults, but if it does
not, then no mortgage pool insurance policy will insure (and many primary
mortgage insurance policies do not insure) against loss sustained from a default
arising from, among other things, fraud or negligence in the origination or
servicing of a mortgage loan, including misrepresentation by the mortgagor, the
originator or persons involved in its origination, or failure to construct a
Property in accordance with plans and specifications. A failure of coverage for
one of these reasons will not ordinarily result in a breach of the related
seller's representations and, in that case, will not result in an obligation on
the part of the seller to cure or repurchase the defaulted mortgage loan. No
mortgage pool insurance policy will cover (and many primary mortgage insurance
policies do not cover) a claim with respect to a defaulted mortgage loan
occurring when the servicer of the mortgage loan, at the time of default or
thereafter, was not approved by the applicable insurer.

      The original amount of coverage under each mortgage pool insurance policy
will be maintained to the extent provided in the related prospectus supplement
and may 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 that the claims paid will be net of servicer
expenses and accrued interest, but if it does not, then the amount of claims
paid will include certain expenses incurred by the servicer as well as accrued
interest on delinquent mortgage loans to the date of payment of the claim.
Accordingly, if aggregate net claims paid under any mortgage pool insurance
policy reach the original policy limit, coverage under that mortgage pool
insurance policy will be exhausted and any further losses will be borne by the
securityholders.

Special Hazard Insurance Policies

      If specified in the related prospectus supplement, a separate special
hazard insurance policy will be obtained for the mortgage pool and will be
issued by the insurer named in the prospectus supplement. Each special hazard
insurance policy will, subject to policy limitations, protect holders of the
related securities from loss caused by the application of the coinsurance clause
contained in hazard insurance policies and loss from damage to mortgaged
properties caused by certain hazards not insured against under the standard form
of hazard insurance policy in the states where the mortgaged properties are
located or under a flood insurance policy if the Property is located in a
federally designated flood area. Some of the losses covered include earthquakes
and, to a limited extent, tidal waves and related water damage or as otherwise
specified in the related prospectus supplement. See "The Agreements--Hazard
Insurance." No special hazard insurance policy will cover losses from fraud or
conversion by the trustee or servicer, war, insurrection, civil war, certain
governmental action, errors in design, faulty workmanship or materials (except
under certain circumstances), nuclear or chemical reaction, flood (if the
Property is located in a federally designated flood area), nuclear or chemical
contamination and certain other risks. The amount of coverage under any special
hazard insurance policy will be specified in the related prospectus supplement.
Each special hazard insurance policy will provide that no claim may be paid
unless hazard and, if applicable, flood insurance on the property securing the
mortgage loan have been kept in force and other protection and preservation
expenses have been paid.

      The applicable prospectus supplement may provide for other payment
coverage, but if it does not, then, subject to these limitations, each special
hazard insurance policy will provide that where there has been damage to
property securing a foreclosed mortgage loan (title to which has been acquired
by the insured) and to the extent the damage is not covered by the hazard
insurance policy or flood insurance policy, if any, maintained by the mortgagor


                                       58


or the servicer, the special hazard insurer will pay the lesser of the cost of
repair or replacement of the property or, upon transfer of the property to the
special hazard insurer, the unpaid principal balance of the mortgage loan at the
time of acquisition of the property by foreclosure or deed in lieu of
foreclosure, plus accrued interest to the date of claim settlement and certain
expenses incurred by the servicer with respect to the property. If the unpaid
principal balance of a mortgage loan plus accrued interest and certain expenses
is paid by the special hazard insurer, the amount of further coverage under the
related special hazard insurance policy will be reduced by that amount less any
net proceeds from the sale of the property. Any amount paid to repair the
property will further reduce coverage by that amount. So long as a mortgage pool
insurance policy remains in effect, the payment by the special hazard insurer of
the cost of repair or of the unpaid principal balance of the related mortgage
loan plus accrued interest and certain expenses will not affect the total
insurance proceeds paid to securityholders, but will affect the relative amounts
of coverage remaining under the related special hazard insurance policy and
mortgage pool insurance policy.

      To the extent specified in the prospectus supplement, the servicer may
deposit cash, an irrevocable letter of credit, or any other instrument
acceptable to each nationally recognized rating agency rating the securities of
the related series at the request of the depositor in a special trust account to
provide protection in lieu of or in addition to that provided by a special
hazard insurance policy. The amount of any special hazard insurance policy or of
the deposit to the special trust account relating to the securities may be
reduced so long as the reduction will not result in a downgrading of the rating
of the securities by a rating agency rating securities at the request of the
depositor.

Bankruptcy Bonds

      If specified in the related prospectus supplement, a bankruptcy bond to
cover losses resulting from proceedings under the federal Bankruptcy Code with
respect to a mortgage loan will be issued by an insurer named in the prospectus
supplement. Each bankruptcy bond will cover, to the extent specified in the
related prospectus supplement, certain losses resulting from a reduction by a
bankruptcy court of scheduled payments of principal and interest on a mortgage
loan or a reduction by the court of the principal amount of a mortgage loan and
will cover certain unpaid interest on the amount of a principal reduction from
the date of the filing of a bankruptcy petition. The required amount of coverage
under each bankruptcy bond will be set forth in the related prospectus
supplement. Coverage under a bankruptcy bond may be cancelled or reduced by the
servicer if the cancellation or reduction would not adversely affect the then
current rating or ratings of the related securities. See "Certain Legal Aspects
of the Mortgage Loans--Anti-Deficiency Legislation and Other Limitations on
Lenders."

      To the extent specified in the prospectus supplement, the servicer may
deposit cash, an irrevocable letter of credit or any other instrument acceptable
to each nationally recognized rating agency rating the securities of the related
series at the request of the depositor in a special trust account to provide
protection in lieu of or in addition to that provided by a bankruptcy bond. The
amount of any bankruptcy bond or of the deposit to the special trust account
relating to the securities may be reduced so long as the reduction will not
result in a downgrading of the rating of the securities by a rating agency
rating securities at the request of the depositor.

Reserve Fund

      If so specified in the related prospectus supplement, credit support with
respect to a series of securities may be provided by one or more reserve funds
held by the trustee, in trust, for the series of securities. The related
prospectus supplement will specify whether a reserve fund will be included in
the issuing entity for a series.

      The reserve fund for a series will be funded by a deposit of cash, U.S.
Treasury securities or instruments evidencing ownership of principal or interest
payments on U.S. Treasury securities, letters of credit, demand notes,
certificates of deposit, or a combination of them in an aggregate amount
specified in the related prospectus supplement; by the deposit from time to time
of amounts specified in the related prospectus supplement to which the
subordinated securityholders, if any, would otherwise be entitled; or in any
other manner specified in the related prospectus supplement.

      Any amounts on deposit in the reserve fund and the proceeds of any other
instrument deposited in it upon maturity will be held in cash or will be
invested in permitted investments. The applicable prospectus supplement may
specify a different definition of permitted investments, but if it does not,
then permitted investments will include obligations of the United States and
specified agencies of the United States, certificates of deposit, specified


                                       59


commercial paper, time deposits and bankers acceptances sold by eligible
commercial banks, and specified repurchase agreements for United States
government securities with eligible commercial banks. If a letter of credit is
deposited with the trustee, the letter of credit will be irrevocable. Generally,
any deposited instrument will name the trustee, in its capacity as trustee for
the securityholders, as beneficiary and will be issued by an entity acceptable
to each rating agency that rates the securities at the request of the depositor.
Additional information about the instruments deposited in the reserve funds will
be set forth in the related prospectus supplement.

      Any amounts so deposited and payments on instruments so deposited will be
available for withdrawal from the reserve fund for distribution to the
securityholders for the purposes, in the manner and at the times specified in
the related prospectus supplement.

Cross Support

      If specified in the related prospectus supplement, the beneficial
ownership of separate groups of assets included in an issuing entity may be
evidenced by separate classes of the related series of securities. 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 other asset groups within the same issuing entity. 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 issuing entities. If applicable, the related prospectus supplement will
identify the issuing entities 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 issuing entities.

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 of their
classes will be covered by insurance policies or surety bonds provided by one or
more insurance companies or sureties. These instruments may cover timely
distributions of interest or full distributions of principal or both 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, an issuing entity may also include
bankruptcy bonds, special hazard insurance policies, other insurance or
guaranties for the purpose of maintaining timely payments or providing
additional protection against losses on the assets included in the issuing
entity, paying administrative expenses, or establishing a minimum reinvestment
rate on the payments made on the assets or principal payment rate on the assets.
If specified in the related prospectus supplement, the issuing entity may
include a guaranteed investment contract pursuant to which the issuing entity 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 on the terms specified
in the prospectus supplement.

Over-Collateralization

      If provided in the prospectus supplement for a series, a portion of the
interest payment on each mortgage loan may be applied as an additional
distribution in respect of principal to reduce the principal balance of a
particular class or classes of securities and, thus, accelerate the rate of
principal payments on the specified class or classes. Reducing the principal
balance of the securities without a corresponding reduction in the principal
balance of the underlying mortgage loans will result in over-collateralization
and additional protection to the securityholders as specified in the related
prospectus supplement. If so specified in the related prospectus supplement,
overcollateralization may also be provided for on the date of issuance of
securities by the issuance of all classes of securities in an initial aggregate
principal amount that is less than the aggregate principal amount of the Issuing
Entity Assets in the related issuing entity. 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.

      If provided in the prospectus supplement for a series, during a revolving
period designated therein, the portion of interest payments collected on home
equity line of credit loans may be applied to purchase additional


                                       60


home equity line of credit loans so that the level of overcollateralization
represented by the amount by which the outstanding principal balances of the
home equity line of credit loans exceed the outstanding principal balances of
the securities will be maintained at a level specified in the prospectus
supplement.

Financial Instruments

      If specified in the related prospectus supplement, the issuing entity 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 issuing entity and whose primary
purpose is not to provide credit enhancement related to the assets in the
issuing entity or the securities issued by the issuing entity. 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 issuing entity 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
      loans or the securities issued by the trust rises above or falls below
      specified levels; or

o     provide protection against interest rate changes, certain types of losses,
      including reduced market values, or the payment shortfalls to one or more
      classes of the related series..

      If an issuing entity 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
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.

Deposit Agreements

      If specified in a prospectus supplement, the depositor or the seller and
the trustee for a series of securities will enter into a deposit agreement with
the entity specified in such prospectus supplement on or before the sale of that
series of securities. Pursuant to the deposit agreement, all or a portion of the
amounts held in the collection account, the distribution account or in any
reserve fund would be invested with the entity specified in the prospectus
supplement. The purpose of a deposit agreement would be to accumulate available
cash for investment so that the cash, together with income thereon, can be
applied to future distributions on one or more classes of securities. The
trustee would be entitled to withdraw amounts invested pursuant to a deposit
agreement, plus interest at a rate equal to the assumed reinvestment rate, in
the manner specified in the prospectus supplement. The prospectus supplement for
a series of securities pursuant to which a deposit agreement is used will
contain a description of the terms of such deposit agreement.

                       Yield 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 Issuing Entity Assets included in the related issuing
entity. The original terms to maturity of the underlying mortgage loans of the
Issuing Entity Assets in a given mortgage pool will vary depending upon the type
of mortgage loans included in it, and each prospectus supplement will contain
information about the type and maturities of the loans in the related pool or
securing Mortgage-Backed Securities. The applicable prospectus supplement may
indicate that some mortgage loans provide for prepayment charges or limit
prepayments thereof, but if it does not, then the mortgage loans may be prepaid
without penalty in full or in part at any time. The prepayment experience on the
underlying mortgage loans of the Issuing Entity Assets will affect the weighted
average lives of the related securities.

      The rate of prepayment on the mortgage loans cannot be predicted.
Closed-end second-lien loans, home equity line of credit loans and home
improvement contracts have been originated in significant volume only during


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the past few years and, with respect to any such loans originated by an
affiliate thereof, the depositor is not aware of any publicly available studies
or statistics on the respective prepayment rates of such loans. Generally,
borrowers do not view closed-end second-lien loans, home equity line of credit
loans and home improvement contracts as permanent financing. Accordingly, those
loans may experience a higher prepayment rate than traditional first-lien
mortgage loans. On the other hand, because home equity line of credit loans
generally are not fully amortizing, the absence of voluntary borrower
prepayments could cause principal payment rates to be similar to, or lower than,
the rates associated with traditional fully-amortizing first-lien mortgage
loans.

      A number of factors may affect the prepayment experience of the mortgage
loans, including general economic conditions, prevailing interest rates, the
availability of alternative financing, homeowner mobility and the frequency and
amount of future draws on any home equity lines of credit. Other factors that
might affect the prepayment rate of closed-end second-lien loans, home equity
line of credit loans or home improvement contracts include the amount of, and
interest rates on, the related senior loans, and the fact that subordinate loans
are generally used for shorter-term financing for a variety of purposes,
including home improvement, education expenses and purchases of consumer goods
such as automobiles. In addition, any future limitations on borrowers' right to
deduct interest payments on closed-end second-lien loans, home equity line of
credit loans or any other type of mortgage loan for federal income tax purposes
may further increase the rate of prepayments of the mortgage loans. The
enforcement of a due-on-sale provision (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." If you buy securities in the secondary market at a
price other than par, your yield may vary from the yield you anticipated if the
prepayment rate on the loans is different from the rate you anticipated when you
bought the securities.

      Collections on home equity line of credit loans may vary because, among
other things, borrowers may:

      o     make payments as low as the minimum monthly payment for any month,

      o     make payments consisting only of the interest, fees and charges for
            a given month during the interest-only period for certain home
            equity line of credit loans (and, in more limited circumstances, in
            the case of closed-end second-lien loans for which an interest-only
            payment option has been selected), or

      o     make payments as high as the entire outstanding principal balance
            plus accrued interest, fees and charges on that mortgage loan.

      In addition, borrowers may fail to make the required periodic payments.
Collections on the mortgage loans also may vary due to seasonal purchasing and
borrowers' payment habits.

      The applicable prospectus supplement may indicate that some conventional
mortgage loans do not have due-on-sale provisions, but if it does not, then all
conventional mortgage loans will contain due-on-sale provisions permitting the
mortgagee to accelerate the maturity of the loan upon sale or specified
transfers by the mortgagor of the underlying Property. Mortgage loans insured by
the FHA and mortgage loans partially guaranteed by the VA are assumable with the
consent of the FHA and the VA, respectively. Thus, the rate of prepayments on
those mortgage loans may be lower than that on conventional mortgage loans
bearing comparable interest rates. The 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. However, the 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 Mortgage Loans" for a description of certain provisions of each agreement
and certain legal developments that may affect the prepayment experience on the
mortgage loans.

      The rate of prepayments of conventional mortgage loans has fluctuated
significantly in recent years. In general, if prevailing rates fall
significantly below the mortgage rates borne by the mortgage loans, the mortgage
loans are likely to be subject to higher prepayment rates than if prevailing
interest rates remain at or above those mortgage rates. Conversely, if
prevailing interest rates rise appreciably above the mortgage rates borne by the


                                       62


mortgage loans, the mortgage loans are likely to experience a lower prepayment
rate than if prevailing rates remain at or below those mortgage rates. However,
there can be no assurance that this will be the case.

      When a full prepayment is made on a mortgage loan, the mortgagor is
charged interest on the principal amount of the mortgage loan 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. Thus, in most instances, the effect of
prepayments in full will be to reduce the amount of interest passed through in
the following month to securityholders. Partial prepayments in a given month may
be applied to the outstanding principal balances of the mortgage loans so
prepaid in the month of receipt or the month following receipt. In the latter
case, partial prepayments will not reduce the amount of interest passed through
in the month. In the latter case, partial prepayments will not reduce the amount
of interest passed through or paid in that month. Unless the related prospectus
supplement provides otherwise, neither full nor partial prepayments will be
passed through or paid until the month following receipt.

      Even if the Properties underlying the mortgage loans held in the issuing
entity or securing Mortgage-Backed Securities provide adequate security for the
mortgage 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. In addition, in some states, if
the proceeds of the foreclosure are insufficient to repay the loan, the borrower
is not liable for the deficit. If a borrower defaults, these restrictions may
impede the servicer's ability to dispose of the property and 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 payments to senior
lienholders, legal fees and costs, real estate taxes, and property maintenance
and preservation expenses.

      Liquidation expenses of defaulted loans generally do not vary directly
with the 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 a smaller
percentage of the outstanding principal balance of the small loan than it is for
the defaulted loan with a large remaining principal balance.

      State laws generally regulate interest rates and other charges, require
certain disclosures, and require licensing of loan originators and servicers. In
addition, most states have other laws and public policies for the protection of
consumers that prohibit unfair and deceptive practices in the origination,
servicing and collection of loans. Depending on the particular law and the
specific facts involved, violations may limit the ability of the servicer to
collect all or part of the principal or interest on the underlying loans held in
the issuing entity or securing Mortgage-Backed Securities. In some cases, the
borrower may even be entitled to a refund of amounts previously paid. In
addition, damages and administrative sanctions could be imposed on the servicer.

      If the rate at which interest is passed through or paid to securityholders
is calculated on a loan-by-loan basis, disproportionate principal prepayments
among loans with different Loan Rates will affect the yields on those
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 although interest will accrue on each
loan from the first day of the month (unless the related prospectus supplement
provides otherwise), the interest will not be distributed until the month
following the month of accrual. In the case of securities backed by
Mortgage-Backed Securities, the interest accrued on loans securing such
Mortgage-Backed Securities will generally not be distributed until several
months following the month of accrual on such underlying mortgage loans.

      Under specified circumstances, the servicer or the holders of the residual
interests in a REMIC or any person specified in the related prospectus
supplement may have the option to purchase the assets of an issuing entity
thereby effecting earlier retirement of the related series of securities. See
"The Agreements--Termination; Optional Termination."

      Factors other than those identified in this prospectus and in the related
prospectus supplement could significantly affect principal prepayments at any
time and over the lives of the securities. The relative contribution of the
various factors affecting prepayment may also vary from time to time. There can
be no assurance as to the rate of payment of principal of the Issuing Entity
Assets at any time or over the lives of the securities.


                                       63


      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 principal prepayments), delinquencies and losses on the yield,
weighted average lives and maturities of the securities.

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 issuing entity 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 issuing entity 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

      The following is a discussion of the material provisions of each agreement
that are not described elsewhere in this prospectus. Where particular provisions
or terms used in the agreements are referred to, the provisions or terms are as
specified in the related agreement.

Assignment of Issuing Entity Assets

      Assignment of the Mortgage Loans. At the time of issuance of the
securities of a series, the depositor will cause the mortgage loans comprising
the related issuing entity to be assigned to the trustee, together with all
principal and interest received by or on behalf of the depositor on or with
respect to the mortgage 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. The trustee will, concurrently
with the assignment, deliver the securities to the depositor in exchange for the
mortgage loans. Each mortgage loan will be identified in a schedule appearing as
an exhibit to the related agreement. The schedule will include information as to
the outstanding principal balance of each mortgage loan after application of
payments due on the cut-off date, as well as information regarding the mortgage
rate, the current scheduled monthly payment of principal and interest, the
maturity of the loan, the Loan-to-Value Ratios or Combined Loan-to-Value Ratios,
as applicable, at origination and other specified information.

      In addition, the depositor will deliver or cause to be delivered to the
trustee (or to the custodian) for each mortgage loan

      o     the mortgage note 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 in lieu of any original mortgage
            note that has been lost,


                                       64


      o     the mortgage, deed of trust or similar instrument with evidence of
            recording indicated on it (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 or some other arrangement will be provided
            for),

      o     an assignment of the mortgage to the trustee in recordable form and

      o     any other security documents specified in the related prospectus
            supplement or the related agreement, including security documents
            relating to any senior interests in the property.

The applicable prospectus supplement may provide other arrangements for assuring
the priority of the assignments, but if it does not, for administrative
convenience and facilitation of servicing and to reduce closing costs, the
assignments of mortgage shall not be required to be submitted for recording
(except with respect to any mortgage loan located in Maryland) unless such
failure to record would result in a withdrawal or a downgrade by any rating
agency of the rating on any class of securities (without regard to any financial
guaranty policy); provided, however, that each assignment of mortgage shall be
submitted for recording by the applicable seller (at the direction of the
servicer) in the manner described above, at no expense to the Issuing Entity or
the Trustee, upon the earliest to occur of: (i) reasonable direction by the
Holders of the Certificates entitled to at least 25% of the voting rights of the
securities issued by an issuing entity or by the NIM Insurer, if any, (ii) the
occurrence of a bankruptcy, insolvency or foreclosure relating to the applicable
seller, (iii) the occurrence of a servicing transfer and (iv) if the applicable
seller is not the servicer and with respect to any one assignment of mortgage,
the occurrence of a bankruptcy, insolvency or foreclosure relating to the
mortgagor under the related mortgage. Notwithstanding the foregoing, if the
servicer is unable to pay the cost of recording the assignments of mortgage,
such expense shall be paid by the Trustee and shall be reimbursable out of the
applicable Securities Account.

      With respect to any mortgage loans that are cooperative loans, the
depositor will cause to be delivered to the trustee

      o     the related original cooperative note endorsed without recourse in
            blank or to the order of the trustee (or, to the extent the related
            pooling and servicing agreement, sale and servicing agreement or
            servicing agreement, as applicable, so provides, a lost note
            affidavit),

      o     the original security agreement,

      o     the proprietary lease or occupancy agreement,

      o     the recognition agreement,

      o     an executed financing agreement and

      o     the relevant stock certificate, related blank stock powers 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.

      For any loans that are closed-end second-lien loans or home equity line of
credit loans, the applicable prospectus supplement will specify whether the
documents relating to those loans will have to be delivered to the trustee (or a
custodian) and whether assignments of the related mortgage to the trustee will
be recorded. If documents need not be delivered, the servicer will retain them.

      For any home improvement contracts, the applicable prospectus supplement
will specify whether the documents relating to those contracts will have to be
delivered to the trustee (or a custodian). However, unless specified in the
related prospectus supplement, the depositor will not deliver to the trustee the
original mortgage securing a home improvement contract. In order to give notice
of the right, title and interest of securityholders to the home improvement
contracts, the depositor will cause a UCC-1 financing statement to be executed
by the depositor or the seller, identifying the trustee as the secured party and
identifying all home improvement contracts as


                                       65


collateral. Unless otherwise specified in the related prospectus supplement, the
home improvement contracts will not be stamped or otherwise marked to reflect
their assignment to the trustee. Therefore, if, through negligence, fraud or
otherwise, a subsequent purchaser takes physical possession of the home
improvement contracts without notice of the assignment, the securityholders'
interest in the home improvement contracts could be defeated. See "Certain Legal
Aspects of the Loans-The Home Improvement Contracts."

      The trustee (or the custodian) will review the loan documents after
receiving them, within the time period specified in the related prospectus
supplement, and will hold the documents in trust for the benefit of the
securityholders. Generally, if a document is found to be missing or defective in
any material respect, the trustee (or custodian) will notify the servicer and
the depositor, and the servicer will notify the related seller. If, after
receiving notice, the seller cannot cure the omission or defect within the time
period specified in the related prospectus supplement, and such omission or
defect materially and adversely affects the interests of the securityholders in
the related mortgage loan, it will be obligated to:

      o     purchase the related mortgage loan from the issuing entity at the
            Purchase Price or,

      o     if specified in the related prospectus supplement, replace the
            mortgage loan with another mortgage loan that meets specified
            requirements.

      There can be no assurance that a seller will fulfill this purchase or
substitution obligation. Although the servicer may be obligated to enforce the
seller's obligation, the servicer will not be obligated to purchase or replace
the loan if the seller defaults on its obligation (nor will the servicer
otherwise be obligated to purchase or replace any loan for any other reason).
See "Loan Program-Representations by Sellers; Repurchases" in this prospectus.
The applicable prospectus supplement may provide other remedies, but if it does
not, then this obligation of the seller constitutes the sole remedy available to
the securityholders or the trustee for omission of, or a material defect in, a
constituent document.

      Notwithstanding the repurchase obligations described above, no purchase or
substitution of a loan will be made with respect to an issuing entity for which
a REMIC election is to be made if the purchase or substitution would result in a
prohibited transaction tax under the Code (unless the servicer or a holder of
the related residual certificate otherwise pays that tax from its own funds).
See "Loan Program-Representations by Sellers; Repurchases."

      The trustee will 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 mortgage loans as agent of the trustee.

      Notwithstanding these provisions, unless the related prospectus supplement
otherwise provides, no mortgage loan will be purchased from an issuing entity
for which a REMIC election is to be made if the purchase 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 were to 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. 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 securities. Each
Agency Security will be identified in a schedule appearing as an exhibit to the
related 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.


                                       66


      Assignment of Private Mortgage-Backed Securities. The depositor will cause
the Private Mortgage-Backed Securities to be registered in the name of the
trustee. The trustee (or the custodian) will have possession of any certificated
Private Mortgage-Backed Securities. Generally, the trustee will not be in
possession of or be assignee of record of any underlying assets for a Private
Mortgage-Backed Security. See "The Issuing Entity--Private Mortgage-Backed
Securities." Each Private 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 Private Mortgage-Backed
Security conveyed to the trustee.

Payments on Issuing Entity Assets; Deposits to Security Account

      The servicer will establish and maintain or cause to be established and
maintained for the related issuing entity a separate account or accounts for the
collection of payments on the related Issuing Entity Assets in the issuing
entity (the "Security Account"). The applicable prospectus supplement may
provide for other requirements for the Security Account, but if it does not,
then the Security Account must be one of the following:

      o     maintained with a depository institution the short-term unsecured
            debt obligations of which are rated in the highest short-term rating
            category by the nationally recognized statistical rating
            organizations that rated one or more classes of the related series
            of securities at the request of the depositor, or in the case of a
            depository institution that is the principal subsidiary of a holding
            company, the short-term debt obligations of the holding company are
            so rated,

      o     an account or accounts the deposits in which are insured by the FDIC
            or SAIF to the limits established by the FDIC or the SAIF, 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 trust department of
            a federal or a state chartered depository institution or trust
            company, acting in a fiduciary capacity or

      o     an account or accounts otherwise acceptable to each rating agency
            that rated one or more classes of the related series of securities
            at the request of the depositor.

      The collateral eligible to secure amounts in the Security Account is
limited to defined permitted investments. A Security Account may be maintained
as an interest bearing account or the funds held in it may be invested pending
each succeeding distribution date in defined permitted investments. To the
extent provided in the related prospectus supplement, the servicer or its
designee will be entitled to receive the 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 servicer or with a
depository institution that is an affiliate of the servicer, provided it meets
the standards set forth above.

      Unless otherwise indicated in the applicable prospectus supplement, the
servicer will deposit or cause to be deposited in the Security Account for each
issuing entity on a daily basis, to the extent applicable and unless the related
prospectus supplement provides for a different deposit arrangement, the
following payments and collections received or advances made by or on behalf of
it after the cut-off date (other than payments due on or before the cut-off date
and exclusive of any amounts representing any retained interest specified in the
related prospectus supplement):

      o     all payments on account of principal, including principal
            prepayments and, if specified in the related prospectus supplement,
            prepayment charges, on the mortgage loans;

      o     all payments on account of interest on the mortgage 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 servicer) of the hazard


                                       67


            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
            servicer's normal servicing procedures and all other cash amounts
            (net of unreimbursed expenses incurred in connection with
            liquidation or foreclosure and unreimbursed advances, if any)
            received and retained in connection with the liquidation of
            defaulted mortgage 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;

      o     all proceeds of any mortgage loan or property in respect thereof
            purchased by the servicer, the depositor or any seller as described
            under "Mortgage Loan Program--Representations by Sellers;
            Repurchases" or "The Agreements--Assignment of Issuing Entity
            Assets" above and all proceeds of any mortgage loan repurchased as
            described under "The Agreements--Termination; Optional Termination";

      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";

      o     any amount required to be deposited by the servicer in connection
            with losses realized on investments for the benefit of the servicer
            of funds held in the Security Account and, to the extent specified
            in the related prospectus supplement, any payments required to be
            made by the servicer in connection with prepayment interest
            shortfalls; and

      o     all other amounts required to be deposited in the Security Account
            pursuant to the pooling and servicing agreement.

      Unless otherwise specified in the related prospectus supplement, the
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 servicer the servicing fees described in the related
            prospectus supplement, the servicing fees (subject to reduction)
            and, as additional servicing compensation, earnings on or investment
            income with respect to funds in the amounts in the Security Account
            credited thereto;

      o     to reimburse the servicer for advances, the right of reimbursement
            with respect to any mortgage loan being limited to amounts received
            that represent late recoveries of payments of principal and interest
            on the mortgage loan (or insurance proceeds or liquidation proceeds
            from the mortgage loan) with respect to which the advance was made;

      o     to reimburse the servicer for any advances previously made that the
            servicer has determined to be nonrecoverable;

      o     to reimburse the servicer from insurance proceeds not used to
            restore the property for expenses incurred by the servicer and
            covered by the related insurance policies;

      o     to reimburse the servicer for (a) unpaid servicing fees and
            unreimbursed out-of-pocket costs and expenses incurred by the
            servicer in the performance of its servicing obligations, the right
            of reimbursement being limited to amounts received representing late
            recoveries of the payments for which the advances were made and (b)
            unreimbursed out-of-costs and expenses incurred for which such
            advances are not recoverable from the borrower under applicable law;

      o     to pay to the servicer, with respect to each mortgage loan or
            property acquired in respect thereof that has been purchased by the
            servicer pursuant to the pooling and servicing agreement, all
            amounts received on them and not taken into account in determining
            the principal balance of the repurchased mortgage loan;

      o     to reimburse the servicer, the depositor or other party specified in
            the related prospectus supplement for expenses incurred and
            reimbursable pursuant to the related agreement;


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      o     to pay any lender-paid primary mortgage insurance premium;

      o     to withdraw any amount deposited in the Security Account that was
            not required to be deposited in it; and

      o     to clear and terminate the Security Account upon termination of the
            related agreement.

      In addition, the related prospectus supplement will generally provide that
on or before the business day preceding each distribution date, the 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 servicer is required
to provide an annual certification to the effect that the servicer has fulfilled
its obligations under the related 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."

Pre-Funding Account

      If specified in the related prospectus supplement, the servicer will
establish and maintain a pre-funding account, in the name of the related trustee
on behalf of the related securityholders, into which the depositor will deposit
the pre-funded amount in cash on the related closing date. The pre-funding
account will be maintained with the trustee for the related series of securities
and is designed solely to hold funds that the trustee will use during the
funding period to pay the purchase price for subsequent loans to the depositor.
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 offering proceeds of the certificates and notes of the related
series. The applicable trustee will use the pre-funded amount to purchase
subsequent loans from the depositor from time to time during the funding period.
Each funding period will begin on the related closing date and will end on the
date specified in the related prospectus supplement (or at the latest, 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 agreement. Investment earnings on funds in a
pre-funding account will be deposited into the related Security Account or other
trust account specified in the related prospectus supplement. Any investment
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 to the related securityholders in the manner and
priority specified in the related prospectus supplement, as a prepayment of
principal of the related securities.

      In addition, if provided in the related prospectus supplement, on the
closing date for the related series, the depositor will deposit in an account
(the "Capitalized Interest Account") cash in an amount needed to cover
shortfalls in interest on the related series of securities that may arise by
using the pre-funding account as described above. The Capitalized Interest
Account will be maintained with the trustee for the related series of securities
and is designed solely to cover those interest shortfalls. Monies on deposit in
the Capitalized Interest Account will not be available to cover losses on or in
respect of the related loans. If the entire amount on deposit in a Capitalized
Interest Account has not been used to cover shortfalls in interest on the
related series of securities by the end of the related funding period, any
amounts remaining in that Capitalized Interest Account will be paid to the
depositor.

Collection Procedures

      The servicer will make reasonable efforts to collect all payments called
for under the mortgage loans and will, consistent with each pooling and
servicing agreement, sale and servicing agreement or servicing agreement, as
applicable, and any mortgage pool insurance policy, primary mortgage insurance
policy, FHA insurance, VA guaranty and bankruptcy bond or alternative
arrangements, follow the collection procedures it customarily follows for
mortgage loans that are comparable to the mortgage loans.

      Consistent with the above and pursuant to the authority granted to the
servicer in the related agreement, the servicer may, in its discretion, waive
any assumption fee, late payment or other charge in connection with a


                                       69


mortgage loan and arrange with a mortgagor a schedule for the liquidation of
delinquencies to the extent not inconsistent with the coverage of the mortgage
loan by a mortgage pool insurance policy, primary mortgage insurance policy, FHA
insurance, VA guaranty or bankruptcy bond or alternative arrangements, if
applicable. To the extent the servicer is obligated to make or to cause to be
made advances, the obligation will remain during any period of such an
arrangement. Notwithstanding the foregoing, in connection with a defaulted
mortgage loan, the servicer, consistent with the standards set forth in the
pooling and servicing agreement, sale and servicing agreement or servicing
agreement, as applicable, may waive, modify or vary any term of that mortgage
loan (including modifications that change the mortgage rate, forgive the payment
of principal or interest or extend the final maturity date of that mortgage
loan), accept payment from the related mortgagor of an amount less than the
stated principal balance in final satisfaction of that mortgage loan, or consent
to the postponement of strict compliance with any such term or otherwise grant
indulgence to any mortgagor if in the servicer's determination such waiver,
modification, postponement or indulgence is not materially adverse to the
interests of the securityholders (taking into account any estimated loss that
might result absent such action).

      The applicable prospectus supplement may provide for other alternatives
regarding due-on-sale clauses, but if it does not, then in any case in which
property securing a conventional mortgage loan has been, or is about to be,
conveyed by the mortgagor, the 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 mortgage loan under any due-on-sale
clause applicable to it, but only if permitted by applicable law and the
exercise will not impair or threaten to impair any recovery under any related
primary mortgage insurance policy. If these conditions are not met or if the
servicer reasonably believes it is unable under applicable law to enforce the
due-on-sale clause or if the mortgage loan is insured by the FHA or partially
guaranteed by the VA, the 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 that person becomes
liable for repayment of the mortgage loan and, to the extent permitted by
applicable law, the mortgagor also remains liable on it. Any fee collected by or
on behalf of the servicer for entering into an assumption agreement will be
retained by or on behalf of the servicer as additional servicing compensation.
See "Certain Legal Aspects of the Mortgage Loans--Due-on-Sale Clauses." The
terms of the related mortgage loan may not be changed in connection with an
assumption.

      Any prospective purchaser of a cooperative apartment 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 Mortgage 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 the approval could
limit the number of potential purchasers for those shares and otherwise limit
the issuing entity's ability to sell and realize the value of shares securing a
cooperative loan.

      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 the items are allowable as a deduction
to the corporation, the Section requires, among other things, that at least 80%
of the gross income of the corporation be derived from its tenant-stockholders
(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 Section
216(b)(1) for any particular year. If a cooperative fails to qualify for one or
more years, the value of the collateral securing any related cooperative loans
could be significantly impaired because no deduction would be allowable to
tenant-stockholders under 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.

The Surety Provider


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      The related prospectus supplement may provide that a surety provider will
irrevocably and unconditionally guarantee payment to, or at the direction of,
the related trustee for the benefit of the related investor of that portion of
any guaranteed interest or principal payments or any other covered amounts due
and payable pursuant to the terms of the related pooling and servicing
agreement, sale and servicing agreement, servicing agreement or sale agreement,
as applicable, and unpaid by reason of nonpayment (as defined in the applicable
policies).

Hazard Insurance

      The related prospectus supplement may provide otherwise, but the servicer
will generally require the mortgagor on each mortgage 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. The coverage will be in an amount
that is at least equal to the lesser of

      o     the maximum insurable value of the improvements securing the
            mortgage loan or

      o     the greater of

            o     the outstanding principal balance of the mortgage loan and

            o     an amount such that the proceeds of the policy shall be
                  sufficient to prevent the mortgagor or the mortgagee from
                  becoming a co-insurer.

All amounts collected by the servicer under any hazard policy (except for
amounts to be applied to the restoration or repair of the Property or released
to the mortgagor in accordance with the servicer's normal servicing procedures)
will be deposited in the related Security Account. If the servicer maintains a
blanket policy insuring against hazard losses on all the mortgage loans
comprising part of an issuing entity, it will have satisfied its obligation
relating to the maintenance of hazard insurance. The blanket policy may contain
a deductible clause, in which case the servicer will be required to deposit from
its own funds into the related Security Account the amounts that would have been
deposited therein but for the clause.

      In general, the standard form of fire and extended coverage policy covers
physical damage to or destruction of the improvements securing a mortgage 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 mortgage 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, their
basic terms are dictated by the respective state laws, and most policies
typically do not cover any physical damage resulting from 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. This list is merely indicative of certain kinds of uninsured risks
and is not all inclusive. If the Property securing a mortgage loan is located in
a federally designated special flood area at the time of origination, the
servicer will require the mortgagor to obtain and maintain flood insurance.

      The hazard insurance policies covering properties securing the mortgage
loans typically contain a clause that in effect requires the insured at all
times to carry insurance of a specified percentage (generally 80% to 90%) of the
full replacement value of the 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 upon partial loss will not exceed the
larger of 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 the proportion of the loss that 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 servicer may cause to be
maintained on the improvements securing the mortgage loans declines as the
principal balances owing on them decrease, and since improved real estate
generally has appreciated in value over time in the past, the effect of this
requirement upon partial loss may be that hazard insurance proceeds will be
insufficient to fully restore 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


                                       71


Enhancement--Special Hazard Insurance Policies" and "Credit
Enhancements--Insurance--Special Hazard Insurance Policy" in the related
prospectus supplement.

      The 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 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.

Realization upon Defaulted Mortgage Loans

      Primary Mortgage Insurance Policies. The servicer will maintain or cause
to be maintained, as the case may be, in effect, to the extent specified in the
related prospectus supplement, a primary mortgage insurance policy with regard
to each mortgage loan for which coverage is required. The 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 mortgage
loan will consist of the insured percentage of the unpaid principal amount of
the covered mortgage 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.

      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 mortgage loans, including misrepresentation by
the originator, mortgagor or other persons involved in the origination of the
mortgage loan; failure to construct the Property subject to the mortgage loan in
accordance with specified plans; and physical damage to the Property.

      Recoveries Under A Primary Mortgage Insurance Policy. As conditions
precedent to the filing of or payment of a claim under a primary mortgage
insurance policy covering a mortgage loan, the insured will be required to

      o     advance or discharge

            o     all hazard insurance policy premiums and

            o     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
                  mortgaged 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.


                                       72


      The servicer, on behalf of itself, the trustee and the securityholders,
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. As set forth above,
all collections by or on behalf of the servicer under any primary mortgage
insurance policy and, when the Property has not been restored, the hazard
insurance policy, are to be deposited in the Security Account, subject to
withdrawal as heretofore described.

      If the Property securing a defaulted mortgage loan is damaged and
proceeds, if any, from the related hazard insurance policy are insufficient to
restore the damaged Property to a condition sufficient to permit recovery under
the related primary mortgage insurance policy, if any, the servicer is not
required to expend its own funds to restore the damaged Property unless it
determines that the restoration will increase the proceeds to securityholders on
liquidation of the mortgage loan after reimbursement of the servicer for its
expenses and that the expenses will be recoverable by it from related insurance
proceeds or liquidation proceeds.

      If recovery on a defaulted mortgage loan under any related primary
mortgage insurance policy is not available for the reasons set forth in the
preceding paragraph, or if the defaulted mortgage loan is not covered by a
primary mortgage insurance policy, the servicer will be obligated to follow or
cause to be followed the normal practices and procedures that it deems
appropriate to realize upon the defaulted mortgage loan. If the proceeds of any
liquidation of the Property securing the defaulted mortgage loan are less than
the principal balance of the mortgage loan plus interest accrued on it that is
payable to securityholders, the issuing entity will realize a loss in the amount
of the difference plus the aggregate of expenses incurred by the servicer in
connection with the proceedings that are reimbursable under the pooling and
servicing agreement, sale and servicing agreement or servicing agreement, as
applicable. In the unlikely event that the proceedings result in a total
recovery which is, after reimbursement to the servicer of its expenses, in
excess of the principal balance of the mortgage loan plus interest accrued on it
that is payable to securityholders, the servicer will be entitled to withdraw or
retain from the Security Account amounts representing its normal servicing
compensation with respect to the mortgage loan and, unless otherwise specified
in the related prospectus supplement, amounts representing the balance of the
excess, exclusive of any amount required by law to be forwarded to the related
mortgagor, as additional servicing compensation.

      If the servicer or its designee recovers insurance proceeds not used to
restore the property which, when added to any related liquidation proceeds and
after deduction of certain expenses reimbursable to the servicer, exceed the
principal balance of a mortgage loan plus interest accrued thereon that is
payable to securityholders, the servicer will be entitled to withdraw or retain
from the Security Account amounts representing its normal servicing compensation
with respect to the mortgage loan. If the 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 issuing entity
may realize a loss up to the amount so charged. Since insurance proceeds cannot
exceed deficiency claims and certain expenses incurred by the servicer, no
insurance payment or recovery will result in a recovery to the issuing entity
that exceeds the principal balance of the defaulted mortgage loan together with
accrued interest on it. See "Credit Enhancement" in this prospectus and in the
related prospectus supplement.

      FHA Insurance; VA Guaranties. Mortgage loans designated in the related
prospectus supplement as insured by the FHA will be insured by the FHA as
authorized under the United States National Housing Act of 1934 of 1937, as
amended. Those mortgage 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. Mortgage loans insured by the FHA generally require a
minimum down payment of approximately 5% of the original principal amount of the
loan. No FHA-insured mortgage 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 mortgage loans insured by the FHA are collected
by lenders approved by the HUD or by the servicer 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 mortgage loan to HUD. With respect to a defaulted FHA-insured
mortgage loan, the servicer is limited in its ability to initiate foreclosure
proceedings. When it is determined, either by the servicer or HUD, that default
was caused by circumstances beyond


                                       73


the mortgagor's control, the servicer is expected to make an effort to avoid
foreclosure by entering, if feasible, into one of a number of available forms of
forbearance plans with the mortgagor. These plans may involve the reduction or
suspension of regular mortgage payments for a specified period, with the
payments to be made up on or before the maturity date of the mortgage, or the
recasting of payments due under the mortgage up to or beyond the maturity date.
In addition, when a default caused by circumstances beyond the mortgagor's
control is accompanied by certain other criteria, HUD may provide relief by
making payments to the servicer in partial or full satisfaction of amounts due
under the mortgage loan (which payments are to be repaid by the mortgagor to
HUD) or by accepting assignment of the loan from the servicer. With certain
exceptions, at least three full monthly installments must be due and unpaid
under the mortgage loan and HUD must have rejected any request for relief from
the mortgagor before the servicer may initiate foreclosure proceedings.

      HUD has the option, in most cases, to pay insurance claims in cash or in
debentures issued by HUD. Currently, claims are being paid in cash, and claims
have not been paid in debentures since 1965. HUD debentures issued in
satisfaction of FHA insurance claims bear interest at the applicable HUD
debentures interest rate. The servicer of each FHA-insured mortgage loan will be
obligated to purchase the debenture issued in satisfaction of the mortgage 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 mortgage loan adjusted to
reimburse the servicer for certain costs and expenses and to deduct certain
amounts received or retained by the servicer after default. When entitlement to
insurance benefits results from foreclosure (or other acquisition of possession)
and conveyance to HUD, the servicer is compensated for no more than two-thirds
of its foreclosure costs, and is compensated for 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 mortgage 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 mortgage 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.

      Mortgage loans designated in the related prospectus supplement as
guaranteed by the VA will be partially guaranteed by the VA under the
Serviceman's Readjustment Act of 1944, as amended. The Serviceman's Readjustment
Act of 1944, as amended, permits a veteran (or in certain instances the spouse
of a veteran) to obtain a mortgage loan guaranty by the VA covering mortgage
financing of the purchase of a one- to four-family dwelling unit at interest
rates permitted by the VA. The program has no mortgage loan limits, requires no
down payment from the purchaser and permits the guarantee of mortgage loans of
up to 30 years' duration. However, no mortgage loan guaranteed by the VA will
have an original principal amount greater than five times the partial VA
guaranty for the mortgage loan.

      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 mortgage upon its
assignment to the VA.

      With respect to a defaulted VA guaranteed mortgage loan, the servicer is,
absent exceptional circumstances, authorized to announce its intention to
foreclose only when the default has continued for three months. Generally, a
claim for the guaranty is submitted after liquidation of the Property.

      The amount payable under the guaranty will be the percentage of the
VA-insured mortgage 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 Property. The amount payable under the guaranty may in no
event exceed the amount of the original guaranty.


                                       74


      Application of Liquidation Proceeds. Unless the related pooling and
servicing agreement, sale and servicing agreement or servicing agreement, as
applicable, provides for a different application of liquidation proceeds, the
proceeds from any liquidation of a mortgage loan will be applied in the
following order of priority:

            first, to reimburse the servicer for any unreimbursed expenses
      incurred by it to restore the related Property and any unreimbursed
      servicing compensation payable to the servicer with respect to the
      mortgage loan;

            second, to reimburse the servicer for any unreimbursed advances with
      respect to the mortgage loan;

            third, to accrued and unpaid interest (to the extent no advance has
      been made for the amount) on the mortgage loan; and

            fourth, as a recovery of principal of the mortgage loan.

Unless otherwise specified in the related prospectus supplement, excess proceeds
from the liquidation of a mortgage loan will be retained by the servicer as
additional servicing compensation.

      If specified in the related prospectus supplement, if a final liquidation
of a mortgage loan resulted in a realized loss and thereafter the servicer
receives a recovery specifically related to that mortgage loan, such recovery
(net of any reimbursable expenses) shall be distributed to the securityholders
in the same manner as prepayments received in the prior calendar month, to the
extent that the related realized loss was allocated to any class of securities.
In addition, the Class Security 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 Class Security
Balance of each such class of securities will not be increased by more than the
amount of realized losses previously applied to reduce the Class Security
Balance of each such class of securities. Holders of securities whose Class
Security 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. The foregoing provisions will apply even if
the Class Security Balance of a class of securities was previously reduced to
zero. Accordingly, each class of securities will be considered to remain
outstanding until the termination of the related trust.

Servicing and Other Compensation and Payment of Expenses

      The principal servicing compensation to be paid to the servicer in respect
of its 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
mortgage loan, and the compensation will be retained by it from collections of
interest on the mortgage loan in the related issuing entity. As compensation for
its servicing duties, the servicer will be entitled to a monthly servicing fee
as described in the related prospectus supplement. In addition, generally the
servicer will retain all prepayment charges, assumption fees and late payment
charges, to the extent collected from mortgagors, and any benefit that may
accrue as a result of the investment of funds in the applicable Security Account
(unless otherwise specified in the related prospectus supplement).

      The servicer will, to the extent provided in the related pooling and
servicing agreement, sale and servicing agreement or servicing agreement, as
applicable, pay or cause to be paid certain ongoing expenses associated with
each issuing entity and incurred by it in connection with its responsibilities
under the related agreement, including, without limitation, payment of the fees
and disbursements of the trustee, any custodian appointed by the trustee, the
security registrar and any paying agent, and payment of expenses incurred in
enforcing the obligations of the servicer and the seller. In addition, as
indicated in the preceding section, the servicer will be entitled to
reimbursement for certain expenses incurred by it in connection with any
defaulted mortgage loan as to which it has determined that all recoverable
liquidation proceeds and insurance proceeds have been received (a "Liquidated
Mortgage"), and in connection with the restoration of mortgaged properties, the
right of reimbursement being before the rights of securityholders to receive any
related liquidation proceeds (including insurance proceeds).

Evidence as to Compliance


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      Each agreement will provide for delivery to the trustee, on or before a
specified date in each year, of an annual statement signed by two officers of
the servicer to the effect that the servicer has fulfilled its obligations under
the pooling and servicing agreement, sale and servicing agreement or servicing
agreement, as applicable, throughout the preceding year.

      Each pooling and servicing agreement, sale and servicing agreement or
servicing agreement, as applicable, will also provide for delivery to the
depositor, the 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 Issuing Entity 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 servicer at the
address set forth in the related prospectus supplement.

List of Securityholders

      Each agreement will provide that three or more holders of securities of
any series may, by written request to the trustee, obtain access to the list of
all securityholders maintained by the trustee for the purpose of communicating
with other securityholders with respect to their rights under the applicable
agreement and the securities.

Certain Matters Regarding the Servicer and the Depositor

      The servicer under each pooling and servicing agreement, sale and
servicing agreement or servicing agreement, as applicable, will be named in the
related prospectus supplement. The entity serving as servicer may be an
affiliate of the depositor and may have other business relationships with the
depositor or the depositor's affiliates.

      Each agreement will provide that the servicer may not resign from its
obligations and duties under the agreement except

      o     upon appointment of a successor servicer and receipt by the trustee
            of a letter from each rating agency rating the related transaction
            that such a resignation and appointment will not result in a
            downgrading of the rating of any of the securities of the related
            series, or

      o     upon a determination that the performance by it of its duties under
            the agreement is no longer permissible under applicable law.


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No resignation will become effective until the trustee or a successor servicer
has assumed the servicer's obligations and duties under the related agreement.

      Each agreement will further provide that neither the servicer, the
depositor nor any director, officer, employee, or agent of the servicer or the
depositor will be under any liability to the related issuing entity or
securityholders for any action taken or for refraining from the taking of any
action in good faith pursuant to the applicable agreement, or for errors in
judgment. However, neither the servicer, the depositor nor any director,
officer, employee, or agent of the servicer or the depositor will be protected
against any liability that would otherwise be imposed for willful misfeasance,
bad faith or negligence in the performance of duties under the pooling and
servicing agreement, sale and servicing agreement or servicing agreement, as
applicable, or for reckless disregard of obligations and duties under the
applicable agreement. Each agreement will further provide that the servicer, the
depositor and any director, officer, employee or agent of the servicer or the
depositor will be entitled to indemnification by the related issuing entity and
will be held harmless against any loss, liability or expense incurred in
connection with any legal action relating to the agreement or the securities,
other than any loss, liability or expense related to any specific Mortgage Asset
or Issuing Entity Assets (except any loss, liability or expense otherwise
reimbursable pursuant to the related agreement) and any loss, liability or
expense incurred for willful misfeasance, bad faith or negligence in the
performance of duties under the related agreement or for reckless disregard of
obligations and duties under the related agreement. In addition, each agreement
will provide that neither the servicer nor the depositor will be under any
obligation to appear in, prosecute or defend any legal action that is not
incidental to its respective responsibilities under that agreement and that in
its opinion may involve it in any expense or liability. The servicer or the
depositor may, however, in its discretion undertake any action that it deems
appropriate with respect to that agreement and the rights and duties of the
parties to the pooling and servicing agreement, sale and servicing agreement or
servicing agreement, as applicable, and the interests of the securityholders
under that agreement. In that event, the legal expenses and costs of the action
and any liability resulting from it will be expenses, costs and liabilities of
the issuing entity, and the servicer or the depositor, as the case may be, will
be entitled to be reimbursed for them out of funds otherwise distributable to
securityholders.

      Any person into which the servicer may be merged or consolidated, or any
person resulting from any merger or consolidation to which the servicer is a
party, or any person succeeding to the business of the servicer, will be the
successor of the servicer under each agreement, provided that the person is
qualified to sell mortgage loans to, and service mortgage loans on behalf of,
Fannie Mae or Freddie Mac and further provided that the merger, consolidation or
succession does not adversely affect the then current rating or ratings of the
class or classes of securities of any series that have been rated.

Events of Default

      Pooling and Servicing Agreement; Sale and Servicing Agreement; Servicing
Agreement. The applicable prospectus supplement may provide for other events of
default, but if it does not, then events of default under each agreement will
consist of

      o     any failure by the servicer to deposit in the 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
            servicer by the trustee or the depositor, or to the servicer and the
            trustee by the holders of securities having not less than 25% of the
            voting rights evidenced by the securities;

      o     any failure by the servicer to make an advance as required under the
            agreement, unless cured as specified therein;

      o     any failure by the servicer to observe or perform in any material
            respect any of its other covenants or agreements in the pooling and
            servicing agreement, sale and servicing agreement or servicing
            agreement, as applicable, which failure materially affects the
            rights of securityholders that continues unremedied for sixty days
            after the giving of written notice of the failure to the servicer by
            the trustee or the depositor, or to the servicer and the trustee by
            the holders of securities of any class evidencing not less than 25%
            of the voting rights evidenced by the securities; 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 servicer indicating its insolvency,
            reorganization or inability to pay its obligations.

      Unless otherwise provided in the related prospectus supplement, so long as
an event of default under an agreement remains unremedied, the depositor or the
trustee may, and at the direction of holders of securities of any class
evidencing not less than 66 2/3% of the aggregate percentage interests
constituting such class and under other circumstances specified in the
agreement, the trustee will terminate all of the rights and obligations of the
servicer under the agreement relating to the issuing entity and in and to the
related Issuing Entity Assets, upon which the trustee will succeed to all of the
responsibilities, duties and liabilities of the 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 servicer has received notice of termination, the trustee may execute and
deliver, on behalf of the 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 servicer,
including the transfer and endorsement or assignment of the loans and related
documents. The servicer has agreed to cooperate with the trustee in effecting
the termination of the 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. No additional funds have been
reserved to pay for any expenses not paid by the servicer in connection with a
servicing transfer.

      If the trustee is unwilling or unable to so act, it may appoint, or
petition a court of competent jurisdiction for the appointment of, a loan
servicing institution with a net worth of a least $15,000,000 to act as
successor to the servicer under the agreement. Pending any appointment, the
trustee is obligated to act as servicer. The trustee and any successor to the
servicer may agree upon the servicing compensation to be paid, which in no event
may be greater than the compensation payable to the servicer under the
agreement.

      Unless otherwise provided in the related prospectus supplement, no
securityholder, solely by virtue of its 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 evidencing not less
than 66 2/3% of the aggregate percentage interest constituting such class have
made a written request upon the trustee to institute a proceeding in its own
name as trustee and have offered to the trustee reasonable indemnity, and the
trustee for 60 days has neglected or refused to institute the proceeding.

      If specified in the related prospectus supplement, the agreement will
permit the trustee to sell the Issuing Entity Assets and the other assets of the
issuing entity described under "Credit Enhancement" if payments on them are
insufficient to make payments required in the agreement. The assets of the
issuing entity will be sold only under the circumstances and in the manner
specified in the related prospectus supplement.

      Indenture. The applicable prospectus supplement may provide for other
events of default, but if it does not, then the events of default under each
indenture will consist of:

      o     a default in the payment of any principal of or interest on any note
            of any series which continues unremedied for a specified number of
            days after the written notice of the default is given as specified
            in the related prospectus supplement;

      o     failure to perform in any material respect any other covenant of the
            depositor or the issuing entity in the indenture which continues for
            a specified number of days after notice is given in accordance with
            the procedures described in the related prospectus supplement;

      o     certain events of bankruptcy, insolvency, receivership or
            liquidation of the depositor or the issuing entity; 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.


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      If an event of default with respect to the notes of any series at the time
outstanding occurs and is continuing, either the trustee or the holders of a
majority of the then aggregate outstanding amount of the notes of such series
may declare the principal amount (or, if the notes of that series have an
interest rate of 0%, such 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 such series to be due and payable immediately. Such declaration
may, under certain circumstances, be rescinded and annulled by the holders of
more than 50% of the Percentage Interests of the notes of such series.

      If, following an event of default with respect to any series of notes, the
notes of such series have been declared to be due and payable, the trustee may,
in its discretion, notwithstanding such acceleration, elect to maintain
possession of the collateral securing the notes of such series and to continue
to apply distributions on such collateral as if there had been no declaration of
acceleration if such collateral continues to provide sufficient funds for the
payment of principal of and interest on the notes of such series as they would
have become due if there had not been such a declaration. In addition, the
trustee may not sell or otherwise liquidate the collateral securing the notes of
a series following an event of default, other than a default in the payment of
any principal or interest on any note of such series for a specified number of
days, unless

      o     the holders of 100% of the percentage interests of the notes of such
            series consent to the sale,

      o     the proceeds of such sale or liquidation are sufficient to pay in
            full the principal of and accrued interest, due and unpaid, on the
            outstanding notes of such series at the date of such sale or

      o     the trustee determines that such collateral would not be sufficient
            on an ongoing basis to make all payments on such notes as such
            payments would have become due if such notes had not been declared
            due and payable, and the trustee obtains the consent of the holders
            of 66 2/3% of the percentage interests of the notes of such 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
securityholders.

      If 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 provides that the trustee
will have a prior lien on the proceeds of any such liquidation for unpaid fees
and expenses. As a result, upon the occurrence of such an event of default, the
amount available for distribution to the noteholders 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 such an event of default.

      Except as otherwise specified in the related prospectus supplement, if the
principal of the notes of a series is declared due and payable, as described
above, the holders of any such notes issued at a discount from par may be
entitled to receive no more than an amount equal to the unpaid principal amount
of the notes less the amount of such 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 such series, unless such 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 such request or
direction. Subject to such provisions for indemnification and certain
limitations contained in the indenture, the holders of a majority of the then
aggregate outstanding amount of the notes of such 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 such series, and the holders of a majority
of the then aggregate outstanding amount of the notes of such series may, in
certain cases, waive any default with respect to them, 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 such series affected by that
default. If


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provided in the related prospectus supplement, the priority of payments payable
on the notes may change following and event of default.

Amendment

      The applicable prospectus supplement may specify other amendment
provisions, but if it does not, then each agreement may be amended by the
depositor, the servicer and the trustee, without the consent of any of the
securityholders,

            (a) to cure any ambiguity or mistake;

            (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 pooling and servicing agreement, sale and
      servicing agreement or servicing agreement, as applicable, to the final
      prospectus supplement provided to investors in accordance with the initial
      offering of the securities;

            (d) to add to the duties of the depositor, the seller or the
      servicer;

            (e) to modify, alter, amend, add to or rescind any of the terms or
      provisions contained in the pooling and servicing agreement, sale and
      servicing agreement or servicing agreement, as applicable, to comply with
      any rules or regulations promulgated by the SEC from time to time;

            (f) to add any other provisions with respect to matters or questions
      arising under the pooling and servicing agreement, sale and servicing
      agreement or servicing agreement, as applicable; or

            (g) to modify, alter, amend, add to or rescind any of the terms or
      provisions contained in the pooling and servicing agreement, sale and
      servicing agreement or servicing agreement, as applicable.

However, no action pursuant to clauses (e), (f) or (g) may, as evidenced by an
opinion of counsel, adversely affect in any material respect the interests of
any securityholder. But no opinion of counsel will be required if the person
requesting the amendment obtains a letter from each rating agency requested to
rate the class or classes of securities of the series stating that the amendment
will not result in the downgrading or withdrawal of the respective ratings then
assigned to the securities.

      In addition, the related agreement may be amended to modify, eliminate or
add to any of its provisions to the extent necessary to maintain the
qualification of the related issuing entity 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 issuing entity, 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 ensure the proper operation of the master REMIC,
to 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, then each pooling and servicing agreement may
also be amended by the depositor, the servicer and the trustee with the consent
of holders of securities of the series evidencing a majority in interest of each
class adversely 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.
However, no amendment may

            (a) reduce in any manner the amount of, or delay the timing of,
      payments received on Issuing Entity Assets that are required to be
      distributed on any security without the consent of the holder of the
      security,

            (b) amend, modify, add to, rescind or alter in any respect the
      provisions of the agreement restricting the issuing entity from engaging
      in any activity that would disqualify the issuing entity from being a
      qualifying special purpose entity under generally accepted accounting
      principles without the consent of the holders of securities evidencing
      percentage interests aggregating 66 2/3% (provided however


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      that no securities held by the seller, the depositor or any affiliate
      shall be given effect for the purpose of such calculation), or

            (c) reduce the aforesaid percentage of securities of any class of
      holders that is required to consent to the amendment without the consent
      of the holders of all securities of the class covered by the agreement
      then outstanding.

If a REMIC election is made with respect to an issuing entity, 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 issuing entity 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 or Servicing
Agreement. Generally, the obligations created by each 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 servicer and required to be
paid to them pursuant to the agreement following the later of

      o     the final payment or other liquidation of the last of the Issuing
            Entity Assets subject to it or the disposition of all property
            acquired upon foreclosure of the Issuing Entity Assets remaining in
            the issuing entity and

      o     the purchase by the servicer 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" in this prospectus and in the related prospectus
            supplement), from the related issuing entity of all of the remaining
            Issuing Entity Assets and all property acquired in respect of the
            Issuing Entity Assets.

      Any purchase of Issuing Entity Assets and property acquired in respect of
Issuing Entity Assets evidenced by a series of securities will be made at the
option of the servicer or the party specified in the related prospectus
supplement, including the holder of the REMIC residual interest, at a price, and
in accordance with the procedures, specified in the related prospectus
supplement. The exercise of that right will effect early retirement of the
securities of that series, but the right of the 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 Issuing Entity Assets being less
than the percentage specified in the related prospectus supplement of the
aggregate principal balance of the Issuing Entity 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 an issuing entity, any repurchase pursuant to the second
bulleted item above will be made only in connection with a "qualified
liquidation" of the REMIC within the meaning of Code Section 860F(a)(4).

      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
such series or, with certain limitations, upon deposit with the trustee of funds
sufficient for the payment in full of all of the notes of such series.

      In addition to such discharge with certain limitations, the indenture will
provide that, if so specified with respect to the notes of any series, the
related issuing entity will be discharged from any and all obligations in
respect of the notes of such series (except for certain obligations relating to
temporary notes and exchange of notes, to register the transfer of or exchange
notes of such series, to replace stolen, lost or mutilated notes of such series,
to maintain paying agencies and to hold monies for 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 of them 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 such series on the last scheduled
distribution date for such notes and any installment of interest on such notes
in accordance with the terms of the indenture and the notes of such series. In
the event of any defeasance and discharge of notes of such series, holders of
notes of such series would be able to look only to such money and/or direct
obligations for payment of principal


                                       81


and interest, if any, on their notes until maturity.

      The applicable prospectus supplement for a series of notes may also
provide that when the principal balance of such notes is reduced to a specified
percentage of the original principal balance as of the cut-off date, the
depositor, the indenture trustee or the holder of a call right may, at its
option, redeem one or more classes of notes at a price equal to 100% of the
outstanding principal balance of the notes plus accrued interest thereon plus
the amount due and owing to the surety provider, if any. Such redemption will
have the same effect as a prepayment on the notes.

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 servicer and any
of their respective affiliates.

                   Certain Legal Aspects of the Mortgage Loans

      The following discussion contains summaries, which are general in nature,
of certain legal matters relating to the mortgage loans. Because the legal
aspects are governed primarily by applicable state law (which laws may differ
substantially), the summaries do not purport to be complete or to reflect the
laws of any particular state or to encompass the laws of all states in which the
security for the mortgage loans is situated. If more than ten percent (by
principal balance) of the mortgage loans in the issuing entity for any series
are located in a single state, the prospectus, as supplemented by the related
prospectus supplement, will disclose all material legal matters relating to the
mortgage loans in that state.

General

      The mortgage loans will 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. Mortgages are used
in New York instead of deeds of trust. A mortgage creates a lien upon the real
property encumbered by the mortgage, which lien is generally not before 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 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.

      Cooperatives. Certain of the mortgage 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 or underlying land or both, 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. If the cooperative is unable to meet the payment obligations arising
under its blanket mortgage, the


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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 an issuing entity 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 and Repossession

      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 default
by the borrower under the terms of the note or deed of trust. In certain states,
foreclosure also may be accomplished by judicial action in the manner provided
for foreclosure of mortgages. In some states, such as California, the trustee
must record a notice of default and send a copy to the borrower-trustor and to
any person who has recorded a request for a copy of any notice of default and
notice of sale. In addition, the trustee must provide notice in some states to
any other individual having an interest of record in the real property,
including any junior lien holders. 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 specified period of
time in one or more newspapers. In addition, these notice provisions require
that a copy of the notice of sale be posted on the property and sent to all
parties having an interest of record in the property. In California, the entire
process from recording a notice of default to a non-judicial sale usually takes
four to five months, but can take longer if the borrower seeks bankruptcy
protection or other events intervene.

      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 reinstatement period, cure the
default by paying the entire amount in arrears plus the costs and expenses
incurred in enforcing the obligation. Certain state laws control the amount of
foreclosure expenses and costs, including attorney's fees, that a lender can
recover.

      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 sometimes 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 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


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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, a notice of sale must
be posted in a public place and, in most states, published for a specific period
of time in one or more newspapers. In addition, some state laws require that a
copy of the notice of sale be posted on the property and sent to all parties
having an interest in the real property.

      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. Thereafter,
the lender will assume the burden of ownership, including obtaining hazard
insurance and making repairs at its own expense 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.

      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 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 if an obligor fails
to make payments or defaults in the performance of covenants required under it.
Typically, the lender and the cooperative enter into a recognition agreement,
which establishes the rights and obligations of both parties upon 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, if 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 on it.

      Recognition agreements also provide that upon foreclosure of 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, such as New York, foreclosure on the cooperative shares is
accomplished by a sale in accordance with the provisions of Article 9 of the UCC
and the security agreement relating to those shares. Article 9 of the UCC
requires that a sale be conducted in a "commercially reasonable" manner. Whether
a foreclosure sale has


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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."

      In the case of foreclosure on a building 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 that 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.

Rights of Redemption

      In some states after a sale pursuant to a deed of trust or foreclosure of
a mortgage, the borrower and certain 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 New York, the borrower may not redeem the
property after a foreclosure sale. In most states where the right of redemption
is available, statutory redemption may occur upon payment of the foreclosure
purchase price, accrued interest and taxes. In some states, the right to redeem
is an equitable right. The effect of a right of redemption is to diminish the
ability of the lender to sell the foreclosed property. The exercise of a right
of redemption would defeat the title of any purchaser at a foreclosure sale, or
of any purchaser from the lender after judicial 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.

Anti-Deficiency Legislation and Other Limitations on Lenders

      Certain states have imposed statutory restrictions that limit the remedies
of a beneficiary under a deed of trust or a mortgagee under a mortgage. In some
states, including California and New York, statutes limit the right of the
beneficiary or mortgagee to obtain a deficiency judgment against the borrower
following foreclosure or a sale under a deed of trust. 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 current fair market value of the
property at the time of the foreclosure sale. As a result of these prohibitions,
it is anticipated that in most instances the servicer will utilize the
non-judicial foreclosure remedy and will not seek deficiency judgments against
defaulting mortgagors.

      Some state statutes may require the beneficiary or mortgagee to exhaust
the security afforded under a deed of trust or mortgage by foreclosure in an
attempt to satisfy the full debt before bringing a personal action against the
borrower. In certain other states, such as New York, 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, following judgment
on a personal action, the lender may be considered to have elected a remedy and
may be precluded from exercising other 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, upon waste of the
property.

      In addition to anti-deficiency and related legislation, numerous other
federal and state statutory provisions, including the federal bankruptcy laws,
the federal Servicemembers Civil Relief Act and state laws affording relief to


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debtors, may interfere with or affect the ability of the secured mortgage lender
to realize on its security. For example, in a proceeding under the federal
Bankruptcy Code, a lender may not foreclose on a 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, 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 certificates and even to reduce the aggregate
amount of payments on the loans underlying certificates.

      The federal tax laws provide priority to certain tax liens over the lien
of a mortgage or secured party. Numerous federal and state consumer protection
laws impose substantive requirements upon mortgage lenders in connection with
the origination, servicing and enforcement of mortgage loans. These laws include
the federal Truth-in-Lending Act, Real Estate Settlement Procedures Act, Equal
Credit Opportunity Act, Fair Credit Billing Act, Fair Credit Reporting Act and
related statutes and regulations. These federal and state laws impose specific
statutory liabilities on lenders who fail to comply with the provisions of the
law. In some cases, this liability may affect assignees of the loans or
contracts.

      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.

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 against 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 on 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
the 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 those 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


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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-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 and who has not settled its liability with the
government, 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 securityholders.

      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 decisionmaking 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 mortgaged
properties was conducted.

Due-on-sale Clauses

      Generally, each conventional mortgage 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 may be accelerated by the mortgagee.
In recent years, court decisions and legislative actions have placed substantial
restriction on the right of lenders to enforce these clauses in many states. For
instance, the California Supreme Court in August 1978 held 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 specified
exceptions, preempts state constitutional, statutory and case law prohibiting
the enforcement of due-on-sale clauses. 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 Garn-St Germain 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


                                       87


rate below the current market rate being assumed by a new home buyer, which may
affect the average life of the mortgage loans and the number of mortgage loans
which may extend to maturity.

Prepayment Charges

      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 mortgaged properties will be owner-occupied, it is
anticipated that prepayment charges may not be imposed on many of the mortgage
loans. The absence of this restraint on prepayment, particularly with respect to
fixed rate mortgage loans having higher mortgage rates, may increase the
likelihood of refinancing or other early retirement of the loans or contracts.

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 that expressly rejects an application of the federal law. In addition,
even where Title V is not so rejected, any state is authorized by the law to
adopt a provision limiting discount points or other charges on mortgage loans
covered by Title V. Certain states have taken action to reimpose interest rate
limits or to limit discount points or other charges, or both.

Servicemembers Civil Relief Act

      Generally, under the terms of the Servicemembers Civil Relief Act or
similar state and local laws (the "Relief Act"), a borrower who enters military
service after the origination of the borrower's mortgage 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 mortgage loan and is later called to active duty)
may not be charged interest above an annual rate of 6% during the period of the
borrower's active duty status, unless a court orders otherwise upon application
of the lender. It is possible that this interest rate limitation could have an
effect, for an indeterminate period of time, on the ability of the servicer to
collect full amounts of interest on some of the mortgage loans. Unless the
applicable prospectus supplement provides a special feature for a particular
issuing entity, any shortfall in interest collections resulting from the
application of the Relief Act could result in losses to the holders of the
securities. In addition, the Relief Act imposes limitations which would impair
the ability of the servicer to foreclose on an affected mortgage loan during the
borrower's period of active duty status. Thus, if an affected mortgage loan goes
into default, there may be delays and losses occasioned by the inability to
realize upon the Property in a timely fashion.

                    Material Federal Income Tax Consequences

      The following discussion is the opinion of Sidley Austin LLP, Heller
Ehrman LLP, Mayer, Brown, Rowe & Maw LLP or Thacher Proffitt & Wood LLP, counsel
to the depositor, as to the material federal income tax consequences of the
purchase, ownership, and disposition of securities. The opinion of the
applicable law firm is based on laws, regulations, administrative rulings, and
judicial decisions now in effect, all of which are subject to change either
prospectively or retroactively. The following discussion does not describe
aspects of federal tax law that are unique to insurance companies, securities
dealers and investors who hold securities as part of a straddle within the
meaning of Section 1092 of the Code. Prospective investors are encouraged to
consult their tax advisors regarding the federal, state, local, and any other
tax consequences to them of the purchase, ownership, and disposition of
securities.

General

      The federal income tax consequences to Holders will vary depending on
whether

o     the securities of a series are classified as indebtedness;


                                       88


o     an election is made to treat the issuing entity relating to a particular
      series of securities as a real estate mortgage investment conduit
      ("REMIC") under the Code;

o     the securities represent an ownership interest in some or all of the
      assets included in the issuing entity for a series; or

o     an election is made to treat the issuing entity 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 issuing
entity 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.

      Debt Securities. For purposes of the discussion that follows, securities
characterized as debt for federal income tax purposes and securities
representing REMIC regular interests ("Regular Interest Securities") will be
referred to hereinafter collectively as "Debt Securities."

Taxation of Debt Securities

      Original Issue Discount and Premium. The Debt Securities may be issued
with OID. Generally, OID, if any, will equal the difference between the "stated
redemption price at maturity" of a Debt Security and its "issue price." Holders
of any class of securities issued with OID will be required to include OID in
gross income for federal income tax purposes as it accrues, in accordance with a
constant interest method based on the compounding of interest as it accrues
rather than in accordance with receipt of the interest payments. Holders of Debt
Securities (the "Debt Securityholders") should be aware, however, that the OID
Regulations do not adequately address certain issues relevant to prepayable
securities, such as the Debt Securities.

      Rules governing OID are set forth in Code Sections 1271 through 1273 and
1275. These rules require that the amount and rate of accrual of OID be
calculated based on the Prepayment Assumption and the anticipated reinvestment
rate, if any, relating to the Debt Securities and prescribe a method for
adjusting the amount and rate of accrual of the discount where the actual
prepayment rate differs from the Prepayment Assumption. Under the Code, the
Prepayment Assumption must be determined in the manner prescribed by
regulations, which regulations have not yet been issued. The Legislative History
provides, however, that Congress intended the regulations to require that the
Prepayment Assumption be the prepayment assumption that is used in determining
the initial offering price of the Debt Securities. The prospectus supplement for
each series of Debt Securities will specify the Prepayment Assumption to be used
for the purpose of determining the amount and rate of accrual of OID. No
representation is made that the Debt Securities will prepay at the Prepayment
Assumption or at any other rate.

      Regulations governing the calculation of OID on instruments having
contingent interest payments (the "Contingent Regulations") specifically do not
apply for purposes of calculating OID on debt instruments subject to Code
Section 1272(a)(6), such as the Debt Securities. Additionally, the OID
Regulations do not contain provisions specifically interpreting Code Section
1272(a)(6). The trustee intends to base its computations on Code Section
1272(a)(6) and the OID Regulations as described in this prospectus. However,
because no regulatory guidance currently exists under Code Section 1272(a)(6),
we can give no assurance that this methodology represents the correct manner of
calculating OID.

      In general, each Debt Security will be treated as a single installment
obligation issued with an amount of OID equal to the excess of its "stated
redemption price at maturity" over its issue price. The issue price of a Debt
Security is the first price at which a substantial amount of Debt Securities of
that class are first sold to the public (excluding bond houses, brokers,
underwriters or wholesalers). The issue price of a Debt Security also includes
the amount paid by an initial securityholder for accrued interest that relates
to a period before 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 that
constitute "qualified stated interest." Qualified stated interest generally
means interest unconditionally payable at intervals of one year or less at a
single fixed rate or qualified variable rate (as described below) during the
entire term of the Debt Security. Interest is


                                       89


payable at a single fixed rate only if the rate appropriately takes into account
the length of the interval between payments. Distributions of interest on Debt
Securities with respect to which Deferred Interest will accrue will not
constitute qualified stated interest payments, and the stated redemption price
at maturity of the Debt Securities includes all distributions of interest as
well as principal thereon.

      Where the interval between the issue date and the first distribution date
on a Debt Security is longer than the interval between subsequent distribution
dates, the greater of any original issue discount disregarding the rate in the
first period and any interest foregone during the first period is treated as the
amount by which the stated redemption price of the security exceeds its issue
price for purposes of the de minimis rule described below. The OID Regulations
suggest that all or a portion of the interest on a long first period Debt
Security that is issued with non-de minimis OID will be treated as OID. Where
the interval between the issue date and the first distribution date on a Debt
Security is shorter than the interval between subsequent distribution dates,
interest due on the first distribution date in excess of the amount that accrued
during the first period would be added to the securities' stated redemption
price at maturity. Holders of Debt Securities should consult their own tax
advisors to determine the issue price and stated redemption price at maturity of
a Debt Security. Additionally, it is possible that the IRS could assert that the
stated pass-through rate of interest on the Debt Securities is not
unconditionally payable because late payments or nonpayments on the mortgage
loans are not penalized nor are there reasonable remedies in place to compel
payment on the mortgage loans. That position, if successful, would require all
holders of Debt Securities to accrue income on the securities under the OID
Regulations.

      Under the de minimis rule, OID on a Debt Security will be considered to be
zero if it 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.
For this purpose, the weighted average maturity of the Debt Security is computed
as the sum of the amounts determined by multiplying the number of full years
(i.e., rounding down partial years) from the issue date until each distribution
in reduction of stated redemption price at maturity is scheduled to be made by a
fraction, the numerator of which is the amount of each distribution included in
the stated redemption price at maturity of the Debt Security and the denominator
of which is the stated redemption price at maturity of the Debt Security.
Although currently unclear, it appears that the schedule of these distributions
should be determined in accordance with the Prepayment Assumption. The
Prepayment Assumption with respect to a series of Debt Security will be set
forth in the related prospectus supplement. Holders generally must report de
minimis OID pro rata as principal payments are received, and income will be
capital gain if the Debt Security is held as a capital asset. However, accrual
method holders may elect to accrue all de minimis OID as well as market discount
under a constant interest method.

      The prospectus supplement with respect to an issuing entity may provide
for certain Debt Securities to be issued at prices significantly exceeding their
principal amounts or based on notional principal balances (the "Super-Premium
Securities"). The income tax treatment of Super-Premium Securities is not
entirely certain. For information reporting purposes, the issuing entity intends
to take the position that the stated redemption price at maturity of
Super-Premium Securities is the sum of all payments to be made on these Debt
Securities determined under the Prepayment Assumption, with the result that
these Debt Securities would be issued with OID. The calculation of income in
this manner could result in negative original issue discount (which delays
future accruals of OID rather than being immediately deductible) when
prepayments on the mortgage loans exceed those estimated under the Prepayment
Assumption. As discussed above, the Contingent Regulations specifically do not
apply to prepayable debt instruments subject to Code Section 1272(a)(6), such as
the Debt Securities. However, if the Super-Premium Securities were treated as
contingent payment obligations, it is unclear how holders of those securities
would report income or recover their basis. In the alternative, the IRS could
assert that the stated redemption price at maturity of Super-Premium Securities
should be limited to their principal amount (subject to the discussion under
"--Accrued Interest Securities"), so that the Debt Securities would be
considered for federal income tax purposes to be issued at a premium. If this
position were to prevail, the rules described under "--Debt Securities
--Premium" would apply. It is unclear when a loss may be claimed for any
unrecovered basis for a Super-Premium Security. It is possible that a holder of
a Super-Premium Security may only claim a loss when its remaining basis exceeds
the maximum amount of future payments, assuming no further prepayments or when
the final payment is received with respect to the Super-Premium Security. Absent
further guidance, the trustee intends to treat the Super-Premium Securities as
described in this prospectus.

      Under the REMIC Regulations, if the issue price of a Regular Interest
Security (other than those based on a notional amount) does not exceed 125% of
its actual principal amount, the interest rate is not considered


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disproportionately high. Accordingly, such a Debt Security generally should not
be treated as a Super-Premium Security and the rules described under "--Debt
Securities--Premium" should apply. However, it is possible that Regular Interest
Securities issued at a premium, even if the premium is less than 25% of the
security's actual principal balance, will be required to amortize the premium
under an original issue discount method or contingent interest method even
though no election under section 171 of the Code is made to amortize the
premium.

      Generally, a Debt Securityholder must include in gross income the "daily
portions," as determined below, of the OID that accrues on a Debt Security for
each day a securityholder holds the Debt Security, including the purchase date
but excluding the disposition date. The daily portions of OID are determined by
allocating to each day in an accrual period the ratable portion of OID allocable
to the accrual period. Accrual periods may be of any length and may vary in
length over the term of the Debt Securities, provided that each accrual period
is not longer than one year, begins or ends on a distribution date (except for
the first accrual period which begins on the issue date) and begins on the day
after the preceding accrual period ends. This will be done, in the case of each
full accrual period, by

      o     adding

            o     The present value at the end of the accrual period (determined
                  by using as a discount factor the original yield to maturity
                  of the Debt Securities as calculated under the Prepayment
                  Assumption) of all remaining payments to be received on the
                  Debt Securities under the Prepayment Assumption and

            o     any payments included in the stated redemption price at
                  maturity received during the same accrual period, and

      o     subtracting from that total the adjusted issue price of the Debt
            Securities at the beginning of the same accrual period.

The adjusted issue price of a Debt Security at the beginning of the first
accrual period is its issue price; the adjusted issue price of a Debt Security
at the beginning of a subsequent accrual period is the adjusted issue price at
the beginning of the immediately preceding accrual period plus the amount of OID
allocable to that accrual period and reduced by the amount of any payment other
than a payment of qualified stated interest made at the end of or during that
accrual period. The OID accrued during an accrual period will then be divided by
the number of days in the period to determine the daily portion of OID for each
day in the accrual period. The calculation of OID under the method described
above will cause the accrual of OID to either increase or decrease (but never
below zero) in a given accrual period to reflect the fact that prepayments are
occurring faster or slower than under the Prepayment Assumption. With respect to
an initial accrual period shorter than a full accrual period, the daily portions
of OID may be determined according to an appropriate allocation under any
reasonable method.

      A subsequent purchaser of a Debt Security issued with OID who purchases
the Debt Security at a cost less than the remaining stated redemption price at
maturity will also be required to include in gross income the sum of the daily
portions of OID on that Debt Security. In computing the daily portions of OID
for a subsequent purchaser of a Debt Security (as well as an initial purchaser
that purchases at a price higher than the adjusted issue price but less than the
stated redemption price at maturity), however, the daily portion is reduced by
the amount that would be the daily portion for the day (computed in accordance
with the rules set forth above) multiplied by a fraction, the numerator of which
is the amount, if any, by which the price paid by the holder for that Debt
Security exceeds the following amount:

      o     the sum of the issue price plus the aggregate amount of OID that
            would have been includible in the gross income of an original Debt
            Securityholder (who purchased the Debt Security at its issue price),
            less

      o     any prior payments included in the stated redemption price at
            maturity, and the denominator of which is the sum of the daily
            portions for that Debt Security for all days beginning on the date
            after the purchase date and ending on the maturity date computed
            under the Prepayment Assumption.


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A holder who pays an acquisition premium instead may elect to accrue OID by
treating the purchase as a purchase at original issue.

      Variable Rate Debt Securities. Debt Securities may provide for interest
based on a variable rate. Interest is treated as payable at a variable rate and
not as contingent interest if, generally, the issue price does not exceed the
original principal balance by more than a specified amount and the interest
compounds or is payable at least annually at current values of certain objective
rates matured by or based on lending rates for newly borrowed funds. An
objective rate is a rate (other than a qualified floating rate) that is
determined using a single fixed formula and that is based on objective financial
or economic information. The variable interest generally will be qualified
stated interest to the extent it is unconditionally payable at least annually
and, to the extent successive variable rates are used, interest is not
significantly accelerated or deferred.

      The amount of OID with respect to a Debt Security bearing a variable rate
of interest will accrue in the manner described under "--Original Issue Discount
and Premium" by assuming generally that the index used for the variable rate
will remain fixed throughout the term of the security. Appropriate adjustments
are made for the actual variable rate.

      Although unclear at present, the depositor intends to treat Debt
Securities bearing an interest rate that is a weighted average of the net
interest rates on mortgage loans as variable rate securities. In such case, the
weighted average rate used to compute the initial pass-through rate on the Debt
Securities will be deemed to be the index in effect through the life of the Debt
Securities. It is possible, however, that the IRS may treat some or all of the
interest on Debt Securities with a weighted average rate as taxable under the
rules relating to obligations providing for contingent payments. This treatment
may effect the timing of income accruals on the Debt Securities. Additionally,
if some or all of the mortgage loans are subject to "teaser rates" (i.e., the
initial rates on the mortgage loans are less than subsequent rates on the
mortgage loans) the interest paid on some or all of the Debt Securities may be
subject to accrual using a constant yield method notwithstanding the fact that
these securities may not have been issued with "true" non-de minimis original
issue discount.

      Election to Treat All Interest as OID. The OID Regulations permit a
securityholder to elect to accrue all interest, discount (including de minimis
market or original issue discount) and premium in income as interest, based on a
constant yield method for securities. If such an election were to be made with
respect to a Debt Security with market discount, a securityholder 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
securityholder acquires during the year of the election or thereafter.
Similarly, a securityholder that makes this election for a 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 securityholder owns or acquires. See "--Debt Securities --Premium." The
election to accrue interest, discount and premium on a constant yield method
with respect to a security cannot be revoked without the consent of the IRS.

      Market Discount. A purchaser of a Debt Security may also be subject to the
market discount provisions of sections 1276 through 1278 of the Code. Under
these provisions and the OID Regulations, "market discount" equals the excess,
if any, of a Debt Security's stated principal amount or, in the case of a Debt
Security with OID, the adjusted issue price (determined for this purpose as if
the purchaser had purchased the Debt Security from an original holder) over the
price for the Debt Security paid by the purchaser. A securityholder that
purchases a Debt Security at a market discount will recognize income upon
receipt of each distribution representing stated redemption price. In
particular, under section 1276 of the Code a holder generally will be required
to allocate each principal distribution first to accrued market discount not
previously included in income, and to recognize ordinary income to that extent.
A securityholder may elect to include market discount in income currently as it
accrues rather than including it on a deferred basis in accordance with the
foregoing. If made, the election will apply to all market discount bonds
acquired by the electing securityholder on or after the first day of the first
taxable year to which the election applies.

      Market discount with respect to a Debt Security will be considered to be
zero if the amount allocable to the Debt Security is less than 0.25% of the Debt
Security's stated redemption price at maturity multiplied by the Debt Security's
weighted average maturity remaining after the date of purchase. If market
discount on a Debt Security is considered to be zero under this rule, the actual
amount of market discount must be allocated to the remaining principal payments
on the Debt Security, and gain equal to the allocated amount will be recognized
when the


                                       92


corresponding principal payment is made. Treasury regulations implementing the
market discount rules have not yet been issued; therefore, investors should
consult their own tax advisors regarding the application of these rules and the
advisability of making any of the elections allowed under sections 1276 through
1278 of the Code.

      The Code provides that any principal payment (whether a scheduled payment
or a prepayment) or any gain on disposition of a market discount bond acquired
by the taxpayer after October 22, 1986, shall be treated as ordinary income to
the extent that it does not exceed the accrued market discount at the time of
the payment. The amount of accrued market discount for purposes of determining
the tax treatment of subsequent principal payments or dispositions of the market
discount bond is to be reduced by the amount so treated as ordinary income.

      The Code also grants authority to the Treasury Department to issue
regulations providing for the computation of accrued market discount on debt
instruments, the principal of which is payable in more than one installment.
Until regulations are issued by the Treasury, rules described in the Legislative
History will apply. Under those rules, the holder of a market discount bond may
elect to accrue market discount either on the basis of a constant interest rate
or according to one of the following methods. For Debt Securities issued with
OID, the amount of market discount that accrues during a period is equal to the
product of the total remaining market discount and a fraction, the numerator of
which is the OID accruing during the period and the denominator of which is the
total remaining OID at the beginning of the period. For Debt Securities issued
without OID, the amount of market discount that accrues during a period is equal
to the product of the total remaining market discount and a fraction, the
numerator of which is the amount of stated interest paid during the accrual
period and the denominator of which is the total amount of stated interest
remaining to be paid at the beginning of the period. For purposes of calculating
market discount under any of the above methods in the case of instruments (such
as the Debt Securities) that provide for payments that may be accelerated due to
prepayments of other obligations securing the instruments, the same Prepayment
Assumption applicable to calculating the accrual of OID will apply.

      A holder of a Debt Security that acquires the Debt Security at a market
discount also may be required to defer, until the maturity date of the Debt
Security or its earlier disposition in a taxable transaction, the deduction of a
portion of the amount of interest that the holder paid or accrued during the
taxable year on indebtedness incurred or maintained to purchase or carry the
Debt Security in excess of the aggregate amount of interest (including OID)
includible in the holder's gross income for the taxable year with respect to the
Debt Security. The amount of the net interest expense deferred in a taxable year
may not exceed the amount of market discount accrued on the Debt Security for
the days during the taxable year on which the holder held the Debt Security and,
in general, would be deductible when the market discount is includible in
income. The amount of any remaining deferred deduction is to be taken into
account in the taxable year in which the Regular Security matures or is disposed
of in a taxable transaction. In the case of a disposition in which gain or loss
is not recognized in whole or in part, any remaining deferred deduction will be
allowed to the extent of gain recognized on the disposition. This deferral rule
does not apply if the Debt Securityholder elects to include the market discount
in income currently as it accrues on all market discount obligations acquired by
the Debt Securityholder in that taxable year or thereafter.

      Premium. A purchaser of a Debt Security that purchases the Debt Security
at a cost (not including accrued qualified stated interest) greater than its
remaining stated redemption price at maturity will be considered to have
purchased the Debt Security at a premium and may elect to amortize the premium
under a constant yield method. It is not clear whether the Prepayment Assumption
would be taken into account in determining the life of the Debt Security for
this purpose. The trustee intends to account for amortizable bond premium in the
manner described in this prospectus. However, the Legislative History states
that the same rules that apply to accrual of market discount (which rules
require use of a Prepayment Assumption in accruing market discount with respect
to Debt Securities without regard to whether the securities have OID) will also
apply in amortizing bond premium. The Code provides that amortizable bond
premium will be allocated among the interest payments on the Debt Securities and
will be applied as an offset against the interest payment. Prospective
purchasers of the Debt Securities should consult their tax advisors regarding
the possible application of the Amortizable Bond Premium Regulations.

      Deferred Interest. Certain classes of Debt Securities will provide for the
accrual of Deferred Interest with respect to one or more ARM Loans. Any Deferred
Interest that accrues with respect to a class of Debt Securities will constitute
income to the holders of the securities before the time distributions of cash
with respect to the Deferred Interest are made. It is unclear, under the OID
Regulations, whether any of the interest on the securities will constitute
qualified stated interest or whether all or a portion of the interest payable on
the securities must be included in the stated redemption price at maturity of
the securities and accounted for as OID (which could


                                       93


accelerate the inclusion). Interest on Debt Securities must in any event be
accounted for under an accrual method by the holders of the securities and,
therefore, applying the latter analysis may result only in a slight difference
in the timing of the inclusion in income of interest on the Debt Securities.

      Effects of Defaults and Delinquencies. Certain series of securities may
contain one or more classes of subordinated securities, and in the event there
are defaults or delinquencies on the mortgage loans, amounts that would
otherwise be distributed on the subordinated securities may instead be
distributed on the senior securities. Subordinated securityholders nevertheless
will be required to report income with respect to their securities under an
accrual method without giving effect to delays and reductions in distributions
on the subordinated securities attributable to defaults and delinquencies on the
mortgage loans, except to the extent that it can be established that the amounts
are uncollectible. As a result, the amount of income reported by a subordinated
securityholder 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 subordinated security is
reduced as a result of defaults and delinquencies on the mortgage loans.
However, the timing and characterization of any losses or reductions in income
are uncertain, and, accordingly, subordinated securityholders are urged to
consult their own tax advisors on this point.

      Sale, Exchange or Redemption. If a Debt Security is sold, exchanged,
redeemed or retired, the seller will recognize gain or loss equal to the
difference between the amount realized on the sale, exchange, redemption, or
retirement and the seller's adjusted basis in the Debt Security. The adjusted
basis generally will equal the cost of the Debt Security to the seller,
increased by any OID and market discount included in the seller's gross income
with respect to the Debt Security, and reduced (but not below zero) by payments
included in the stated redemption price at maturity previously received by the
seller and by any amortized premium. Similarly, a holder who receives a payment
that is part of the stated redemption price at maturity of a Debt Security will
recognize gain equal to the excess, if any, of the amount of the payment over
the holder's adjusted basis in the Debt Security. A Debt Securityholder who
receives a final payment that is less than the holder's adjusted basis in the
Debt Security will generally recognize a loss. Any gain or loss will be capital
gain or loss, provided that the Debt Security is held as a "capital asset"
(generally, property held for investment) within the meaning of section 1221 of
the Code. Gain from the sale or other disposition of a Debt Security that might
otherwise be capital gain will be treated as ordinary income (a) to the extent
the gain constitutes market discount and (b) in the case of Regular Interest
Securities, to the extent that the gain does not exceed the excess, if any, of
the amount that would have been includible in the holder s income with respect
to the Debt Security had income accrued on it at a rate equal to 110% of the AFR
as defined in section 1274(d) of the Code determined as of the date of purchase
of the Regular Interest Security, over the amount actually includible in the
holder's income. In addition, the Debt Securities will be "evidences of
indebtedness" within the meaning of section 582(c)(1) of the Code, so that gain
or loss recognized from the sale of a Debt Security by a bank or a thrift
institution to which this section applies will be ordinary income or loss.

      The Debt Security information reports will include a statement of the
adjusted issue price of the Debt Security at the beginning of each accrual
period. In addition, the reports will include information necessary to compute
the accrual of any market discount that may arise upon secondary trading of Debt
Securities. Because exact computation of the accrual of market discount on a
constant yield method would require information relating to the holder's
purchase price which the REMIC may not have, it appears that the information
reports will only require information pertaining to the appropriate
proportionate method of accruing market discount.

      Accrued Interest Securities. Certain of the Debt Securities ("Payment Lag
Securities") may provide for payments of interest based on a period that
corresponds to the interval between distribution dates but that ends before each
distribution date. The period between the Closing Date for Payment Lag
Securities and their first distribution date may or may not exceed that
interval. Purchasers of Payment Lag Securities for which the period between the
Closing Date and the first distribution date does not exceed that interval could
pay upon purchase of the Debt Securities accrued interest in excess of the
accrued interest that would be paid if the interest paid on the distribution
date were interest accrued from distribution date to distribution date. If a
portion of the initial purchase price of a Debt Security is allocable to
interest that has accrued before the issue date ("pre-issuance accrued
interest") and the Debt Security provides for a payment of stated interest on
the first payment date (and the first payment date is within one year of the
issue date) that equals or exceeds the amount of the pre-issuance accrued
interest, then the Regular v issue price may be computed by subtracting from the
issue price the amount of pre-issuance accrued interest, rather than as an
amount payable on the Debt Security. However, it is unclear under this


                                       94


method how the OID Regulations treat interest on Payment Lag Securities.
Therefore, in the case of a Payment Lag Security, the issuing entity intends to
include accrued interest in the issue price and report interest payments made on
the first distribution date as interest to the extent the payments represent
interest for the number of days that the securityholder has held the Payment Lag
Security during the first accrual period.

      Investors are encouraged to consult their own tax advisors concerning the
treatment for federal income tax purposes of Payment Lag Securities.

      Treatment of Realized Losses. Although not entirely clear, it appears that
holders of Regular Securities that are corporations should in general be allowed
to deduct as an ordinary loss any loss sustained during the taxable year on
account of the securities becoming wholly or partially worthless, and that, in
general, holders of securities that are not corporations should be allowed to
deduct as a short-term capital loss any loss sustained during the taxable year
on account of the securities becoming wholly worthless. Although the matter is
unclear, non-corporate holders of securities may be allowed a bad debt deduction
at the time that the principal balance of a certificate is reduced to reflect
realized losses resulting from any liquidated mortgage loans. The Internal
Revenue Service, however, could take the position that non-corporate holders
will be allowed a bad debt deduction to reflect realized losses only after all
mortgage loans remaining in the related issuing entity have been liquidated or
the securities of the related series have been otherwise retired. Potential
investors and Holders of the securities are urged to consult their own tax
advisors regarding the appropriate timing, amount and character of any loss
sustained with respect to their securities, including any loss resulting from
the failure to recover previously accrued interest or discount income.

      Subsequent Recoveries. The Class Security Balance of securities that have
been reduced because of allocations of Realized Losses may also be increased as
a result of Subsequent Recoveries. See the discussion under the caption "The
Agreements--Realization Upon Defaulted Mortgage Loans--Application of
Liquidation Proceeds." An increase in a principal balance caused by a Subsequent
Recovery should be treated by the securityholder as ordinary (or capital) income
to the extent that the securityholder claimed an ordinary (or capital) deduction
for any decrease in the principal balance caused by Realized Losses. Potential
investors and Holders of the securities are urged to consult their own tax
advisors regarding the appropriate timing, amount and character of any income
realized with respect to their securities as a result of Subsequent Recoveries.
"Subsequent Recoveries" are unexpected recoveries, net of reimbursable expenses,
with respect to a Liquidated Mortgage Loan that resulted in a Realized Loss
prior to the receipt of such recoveries.

      Non-U.S. Persons. A non-U.S. Person who is an individual or corporation
(or an entity treated as a corporation for federal income tax purposes) holding
the securities on its own behalf other than in connection with a United States
trade or business carried on by such non-U.S. Person will not be subject to
United States federal income taxes on payments of principal, premium, interest
or original issue discount on a debt security, unless such non-U.S. Person is a
direct or indirect 10% or greater shareholder of the issuing entity in a
particular transaction, a controlled foreign corporation related to the issuing
entity in a particular transaction or a bank receiving interest described in
section 881(c)(3)(A) of the Code. To qualify for the exemption from taxation,
the non-U.S. Person must follow the certification requirements set forth in the
section identified as "Material Federal Income Tax Consequences--Status as a
Grantor Trust--d. Non-U.S. Persons."

      Backup Withholding. Backup withholding of United States federal income tax
may apply to payments made in respect of the securities to registered owners who
are not "exempt recipients" and who fail to provide certain identifying
information (such as the registered owner's taxpayer identification number) in
the required manner. To qualify for the exemption from taxation, the non-U.S.
Person must follow the certification requirements set forth in the section
identified as "Material Federal Income Tax Consequences--Status as a Grantor
Trust--d. Non-U.S. Persons."

      In addition, upon the sale of a security to (or through) a broker, the
broker must report the sale and withhold on the entire purchase price, unless
either (a) the broker determines that the seller is a corporation or other
exempt recipient or (b) the seller certifies that such seller is a non-U.S.
Person (and certain other conditions are met).

      Certification of the registered owner's non-U.S. status would be made
normally on an IRS Form W-8BEN under penalties of perjury, although in certain
cases it may be possible to submit other documentary evidence.


                                       95


      Any amounts withheld under the backup withholding rules from a payment to
a beneficial owner would be allowed as a refund or a credit against such
beneficial owner's United States federal income tax provided the required
information is furnished to the IRS.

      Prospective investors are strongly urged to consult their own tax advisors
with respect to the Withholding Regulations.

REMIC Securities

      The issuing entity relating to a series of securities may elect to be
treated as one or more REMICs. Qualification as a REMIC requires ongoing
compliance with certain conditions. Although a REMIC is not generally subject to
federal income tax (see, however "--Residual Certificates" and "--Prohibited
Transactions"), if an issuing entity with respect to which a REMIC election is
made fails to comply with one or more of the ongoing requirements of the Code
for REMIC status during any taxable year, including the implementation of
restrictions on the purchase and transfer of the residual interests in a REMIC
as described under "Residual Certificates," the Code provides that an issuing
entity will not be treated as a REMIC for that year and thereafter. In that
event, the entity may be taxable as a separate corporation, and the related
securities (the "REMIC Securities") may not be accorded the status or given the
tax treatment described below. While the Code authorizes the Treasury Department
to issue regulations providing relief upon an inadvertent termination of the
status of an issuing entity as a REMIC, no such regulations have been issued.
Any relief, moreover, may be accompanied by sanctions, such as the imposition of
a corporate tax on all or a portion of the REMIC's income for the period in
which the requirements for REMIC status are not satisfied. Assuming compliance
with all provisions of the related pooling and servicing agreement or trust
agreement, as applicable, each issuing entity that elects REMIC status will
qualify as a REMIC, and the related securities will be considered to be regular
interests ("Regular Securities") or residual interests ("Residual Certificates")
in the REMIC. The related prospectus supplement for each series of securities
will indicate whether the issuing entity will make one or more REMIC elections
and whether a class of securities will be treated as a regular or residual
interest in the REMIC. With respect to each issuing entity for which a REMIC
election is to be made, tax counsel will issue an opinion confirming the
conclusions expressed above concerning the status of the issuing entity as a
REMIC and the status of the securities as representing regular or residual
interests in a REMIC.

      In general, with respect to each series of securities for which a REMIC
election is made, securities held by a thrift institution taxed as a "domestic
building and loan association" will constitute assets described in Code Section
7701(a)(19)(C); securities held by a real estate investment trust will
constitute "real estate assets" within the meaning of Code Section 856(c)(4)(A);
and interest on securities held by a real estate investment trust will be
considered "interest on obligations secured by mortgages on real property"
within the meaning of Code Section 856(c)(3)(B). If less than 95% of the REMIC's
assets are assets qualifying under any of these Code sections, the securities
will be qualifying assets only to the extent that the REMIC's assets are
qualifying assets. In addition, payments on mortgage loans held pending
distribution on the REMIC Securities will be considered to be real estate assets
for purposes of Code Section 856(c).

      In some instances the mortgage loans may not be treated entirely as assets
described in the foregoing sections. See, in this regard, the discussion of
buydown loans contained in "--Non-REMIC Securities--Single Class of Securities."
REMIC Securities held by a real estate investment trust will not constitute
"Government Securities" within the meaning of Code Section 856(c)(4)(A), and
REMIC Securities held by a regulated investment company will not constitute
"Government Securities" within the meaning of Code Section 851(b)(4)(A)(ii).
REMIC Securities held by certain financial institutions will constitute
"evidences of indebtedness" within the meaning of Code Section 582(c)(1).

      A "qualified mortgage" for REMIC purposes is any obligation (including
certificates of participation in an obligation) that is principally secured by
an interest in real property and that is transferred to the REMIC within a
prescribed time period in exchange for regular or residual interests in the
REMIC. The REMIC Regulations provide that manufactured housing or mobile homes
(not including recreational vehicles, campers or similar vehicles) that are
"single family residences" under Code Section 25(e)(10) will qualify as real
property without regard to state law classifications.

      Tiered REMIC Structures. For certain series of securities, two or more
separate elections may be made to treat designated portions of the related
issuing entity as separate REMICs (respectively, the "Subsidiary REMIC" or


                                       96


"REMICs" and the "Master REMIC") for federal income tax purposes. Upon the
issuance of such a series of securities, assuming compliance with all provisions
of the related agreement, the Master REMIC as well as each Subsidiary REMIC will
each qualify as a REMIC, and the REMIC Securities issued by the Master REMIC and
each Subsidiary REMIC, respectively, will be considered to evidence ownership of
Regular Securities or Residual Certificates in the related REMIC within the
meaning of the REMIC provisions. With respect to each issuing entity for which
more than one REMIC election is to be made, Sidley Austin LLP will issue an
opinion confirming the conclusions expressed above concerning the status of the
Master REMIC and each Subsidiary REMIC as a REMIC and the status of the
securities as regular or residual interests in a REMIC.

      To the extent more than one REMIC election is made with respect to
portions of an issuing entity, only the REMIC Securities issued by the Master
REMIC will be offered under this prospectus. Solely for purposes of determining
whether the REMIC Securities issued by an issuing entity will be "real estate
assets" within the meaning of Code Section 856(c)(4)(A); whether the REMIC
Securities will be "loans secured by an interest in real property" under Code
Section 7701(a)(19)(C); and whether the income on the securities is interest
described in Code Section 856(c)(3)(B), all related Subsidiary REMICs and the
Master REMIC will be treated as one REMIC.

   a. Regular Securities

      General. Except as otherwise stated in this discussion, Regular Securities
will be treated for federal income tax purposes as debt instruments issued by
the REMIC and not as ownership interests in the REMIC or its assets. Holders of
Regular Securities that otherwise report income under a cash method of
accounting will be required to report income with respect to Regular Interest
Securities under an accrual method. For a general discussion of the tax
consequences of investing in Regular Interest Securities, see the discussion
above under "Taxation of Debt Securities."

      Non-Interest Expenses of the REMIC. Under the temporary Treasury
regulations, if the REMIC is considered to be a "single-class REMIC," a portion
of the REMIC's servicing, administrative and other non-interest expenses will be
allocated as a separate item to those Regular Securityholders that are
"pass-through interest holders." securityholders that are pass-through interest
holders should consult their own tax advisors about the impact of these rules on
an investment in the Regular Securities. See "Pass-Through of Non-Interest
Expenses of the REMIC under Residual Certificates."

   b. Residual Certificates

      Allocation of the Income of the REMIC to the Residual Certificates. The
REMIC will not be subject to federal income tax except with respect to income
from prohibited transactions and certain other transactions. See "--Prohibited
Transactions and Other Taxes." Instead, each original holder of a Residual
Certificate will report on its federal income tax return, as ordinary income,
its share of the taxable income of the REMIC for each day during the taxable
year on which it owns any Residual Certificates. The taxable income of the REMIC
for each day will be determined by allocating the taxable income of the REMIC
for each calendar quarter ratably to each day in the quarter. An original
holder's share of the taxable income of the REMIC for each day will be based on
the portion of the outstanding Residual Certificates that the holder owns on
that day. The taxable income of the REMIC will be determined under an accrual
method and will be taxable to the holders of Residual Certificates without
regard to the timing or amounts of cash distributions by the REMIC. Ordinary
income derived from Residual Certificates will be "portfolio income" for
purposes of the taxation of taxpayers subject to the limitations on the
deductibility of "passive losses." As residual interests, the Residual
Certificates will be subject to tax rules, described below, that differ from
those that would apply if the Residual Certificates were treated for federal
income tax purposes as direct ownership interests in the securities or as debt
instruments issued by the REMIC.

      A Residual Certificateholder may be required to include taxable income
from the Residual Certificate in excess of the cash distributed. For example, a
structure where principal distributions are made serially on regular interests
(that is, a fast-pay, slow-pay structure) may generate that sort of mismatching
of income and cash distributions (that is, "phantom income"). This mismatching
may be caused by the use of certain required tax accounting methods by the
REMIC, variations in the prepayment rate of the underlying mortgage loans and
certain other factors. Depending upon the structure of a particular transaction,
the aforementioned factors may significantly reduce the after-tax yield of a
Residual Certificate to a Residual Certificateholder. Investors should consult
their own


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tax advisors concerning the federal income tax treatment of a Residual
Certificate and the impact of the tax treatment on the after-tax yield of a
Residual Certificate.

      Taxable Income of the REMIC Attributable to Residual Interests. The
taxable income of the REMIC will reflect a netting of the income from the
mortgage loans and the REMIC's other assets and the deductions allowed to the
REMIC for interest and OID on the Regular Securities and, except as described
under "--Regular Securities--Non-Interest Expenses of the REMIC," other
expenses. REMIC taxable income is generally determined in the same manner as the
taxable income of an individual using the accrual method of accounting, except
that the limitations on deductibility of investment interest expense and
expenses for the production of income do not apply, all bad loans will be
deductible as business bad debts, and the limitation on the deductibility of
interest and expenses related to tax-exempt income is more restrictive than with
respect to individual. The REMIC's gross income includes interest, original
issue discount income, and market discount income, if any, on the mortgage
loans, as well as, income earned from temporary investments on reverse assets,
reduced by the amortization of any premium on the mortgage loans. In addition, a
Residual Certificateholder will recognize additional income due to the
allocation of realized losses to the Regular Securities due to defaults,
delinquencies and realized losses on the mortgage loans. The timing of the
inclusion of the income by Residual Certificateholders may differ from the time
the actual loss is allocated to the Regular Securities. The REMIC's deductions
include interest and original issue discount expense on the Regular Securities,
servicing fees on the mortgage loans, other administrative expenses of the REMIC
and realized losses on the mortgage loans. The requirement that Residual
Certificateholders report their pro rata share of taxable income or net loss of
the REMIC will continue until there are no securities of any class of the
related series outstanding.

      For purposes of determining its taxable income, the REMIC will have an
initial aggregate tax basis in its assets equal to the sum of the issue prices
of the Regular Securities and the Residual Certificates (or, if a class of
securities is not sold initially, its fair market value). The aggregate basis
will be allocated among the mortgage loans and other assets of the REMIC in
proportion to their respective fair market value. A mortgage loan will be deemed
to have been acquired with discount or premium to the extent that the REMIC s
basis therein is less than or greater than its principal balance, respectively.
Any discount (whether market discount or OID) will be includible in the income
of the REMIC as it accrues, in advance of receipt of the cash attributable to
this income, under a method similar to the method described above for accruing
OID on the Regular Securities. The REMIC expects to elect under Code Section 171
to amortize any premium on the mortgage loans. Premium on any mortgage loan to
which the election applies would be amortized under a constant yield method. It
is not clear whether the yield of a mortgage loan would be calculated for this
purpose based on scheduled payments or taking account of the Prepayment
Assumption. Additionally, the election would not apply to the yield with respect
to any underlying mortgage loan originated on or before September 27, 1985.
Instead, premium with respect to that mortgage loan would be allocated among the
principal payments thereon and would be deductible by the REMIC as those
payments become due.

      The REMIC will be allowed a deduction for interest and OID on the Regular
Securities. The amount and method of accrual of OID will be calculated for this
purpose in the same manner as described above with respect to Regular Securities
except that the 0.25% per annum de minimis rule and adjustments for subsequent
holders described therein will not apply.

      A Residual Certificateholder will not be permitted to amortize the cost of
the Residual Certificate as an offset to its share of the REMIC's taxable
income. However, that taxable income will not include cash received by the REMIC
that represents a recovery of the REMIC's basis in its assets, and, as described
above, the issue price of the Residual Securities will be added to the issue
price of the Regular Securities in determining the REMIC's initial basis in its
assets. See "--Sale or Exchange of Residual Certificates." For a discussion of
possible adjustments to income of a subsequent holder of a Residual Certificate
to reflect any difference between the actual cost of the Residual Certificate to
the holder and the adjusted basis the Residual Certificate would have in the
hands of an original Residual Certificateholder, see "--Allocation of the Income
of the REMIC to the Residual Certificates."

      Net Losses of the REMIC. The REMIC will have a net loss for any calendar
quarter in which its deductions exceed its gross income. The net loss would be
allocated among the Residual Certificateholders in the same manner as the
REMIC's taxable income. The net loss allocable to any Residual Certificate will
not be deductible by the holder to the extent that the net loss exceeds the
holder's adjusted basis in the Residual Certificate. Any net loss that is not
currently deductible due to this limitation may only be used by the Residual
Certificateholder to offset its share of the REMIC's taxable income in future
periods (but not otherwise). The ability of Residual


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Certificateholders that are individuals or closely held corporations to deduct
net losses may be subject to additional limitations under the Code.

      For purposes of determining REMIC taxable income or loss, the trustee
intends to treat Subsequent Recoveries in a way described under the caption
"Subsequent Recoveries."

      Pass-Through of Non-Interest Expenses of the REMIC. As a general rule, all
of the fees and expenses of a REMIC will be taken into account by holders of the
Residual Certificates. In the case of a single class REMIC, however, the
expenses and a matching amount of additional income will be allocated among the
Regular Securityholders and the Residual Certificateholders on a daily basis in
proportion to the relative amounts of income accruing to each securityholder on
that day. In general terms, a single class REMIC is one that either would
qualify 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 is similar to a grantor trust and is structured with the
principal purpose of avoiding the single class REMIC rules. The applicable
prospectus supplement may apportion expenses to the Regular Securities, but if
it does not, then the expenses of the REMIC will be allocated to holders of the
related Residual Certificates in their entirety and not to holders of the
related Regular Securities.

      In the case of individuals (or trusts, estates or other persons that
compute their income in the same manner as individuals) who own an interest in a
Regular Security or a Residual Certificate directly or through a pass-through
interest holder that is required to pass miscellaneous itemized deductions
through to its owners or beneficiaries (e.g. a partnership, an S corporation or
a grantor trust), the trust expenses will be deductible under Code Section 67
only to the extent that those expenses, plus other "miscellaneous itemized
deductions" of the individual, exceed 2% of the individual's adjusted gross
income. In addition, Code Section 68 provides that the amount of itemized
deductions otherwise allowable for an individual whose adjusted gross income
exceeds a certain amount (the "Applicable Amount") will be reduced by the lesser
of 3% of the excess of the individual's adjusted gross income over the
Applicable Amount or 80% of the amount of itemized deductions otherwise
allowable for the taxable year. The amount of additional taxable income
recognized by Residual Certificateholders who are subject to these limitations
may be substantial. Further, holders (other than corporations) subject to the
alternative minimum tax may not deduct miscellaneous itemized deductions in
determining their alternative minimum taxable income. The REMIC is required to
report to each pass-through interest holder and to the IRS the holder's
allocable share, if any, of the REMIC's non-interest expenses. The term
"pass-through interest holder" generally refers to individuals, entities taxed
as individuals and certain pass-through entities, but does not include real
estate investment trusts. Residual Certificateholders that are pass-through
interest holders are encouraged to consult their own tax advisors about the
impact of these rules on an investment in the Residual Certificates.

      Excess Inclusions. A portion of the income on a Residual Certificate
(referred to in the Code as an "excess inclusion") will be subject to federal
income tax in all events. Thus, for example, an excess inclusion may not be
offset by any unrelated losses, deductions or loss carryovers of a Residual
Certificateholder; will be treated as "unrelated business taxable income" within
the meaning of Code Section 512 if the Residual Certificateholder is a pension
fund or any other organization that is subject to tax only on its unrelated
business taxable income (see "--Tax-Exempt Investors"); and is not eligible for
any reduction in the rate of withholding tax in the case of a Residual
Certificateholder that is a foreign investor. See "--Non-U.S. Persons."

      Except as discussed in the following paragraph, with respect to any
Residual Certificateholder, the excess inclusions is the excess, if any, of the
income of the Residual Certificateholder for that calendar quarter from its
Residual Certificate over the sum of the "daily accruals" for all days during
the calendar quarter on which the Residual Certificateholder holds the Residual
Certificate. For this purpose, the daily accruals with respect to a Residual
Certificate are determined by allocating to each day in the calendar quarter its
ratable portion of the product of the "adjusted issue price" of the Residual
Certificate at the beginning of the calendar quarter and 120 percent of the
"Federal long-term rate" in effect at the time the Residual Certificate is
issued. For this purpose, the "adjusted issue price" of a Residual Certificate
at the beginning of any calendar quarter equals the issue price of the Residual
Certificate, increased by the amount of daily accruals for all prior quarters,
and decreased (but not below zero) by the aggregate amount of payments made on
the Residual Certificate before the beginning of the same quarter.

      In the case of any Residual Certificates held by a real estate investment
trust, the aggregate excess inclusions with respect to the Residual
Certificates, reduced (but not below zero) by the real estate investment trust


                                       99


taxable income (within the meaning of Code Section 857(b)(2), excluding any net
capital gain), will be allocated among the shareholders of the trust in
proportion to the dividends received by the shareholders from the trust, and any
amount so allocated will be treated as an excess inclusion with respect to a
Residual Certificate as if held directly by the shareholder. Regulated
investment companies, common issuing entities and certain cooperatives are
subject to similar rules.

      Payments. Any distribution made on a Residual Certificate to a Residual
Certificateholder will be treated as a non-taxable return of capital to the
extent it does not exceed the Residual Certificateholder's adjusted basis in the
Residual Certificate. To the extent a distribution exceeds the adjusted basis,
it will be treated as gain from the sale of the Residual Certificate.

      Sale or Exchange of Residual Certificates. If a Residual Certificate is
sold or exchanged, the seller will generally recognize gain or loss equal to the
difference between the amount realized on the sale or exchange and its adjusted
basis in the Residual Certificate (except that the recognition of loss may be
limited under the "wash sale" rules). A holder's adjusted basis in a Residual
Certificate generally equals the cost of the Residual Certificate to the
Residual Certificateholder, increased by the taxable income of the REMIC that
was included in the income of the Residual Certificateholder with respect to the
Residual Certificate, and decreased (but not below zero) by the net losses that
have been allowed as deductions to the Residual Certificateholder with respect
to the Residual Certificate and by the distributions received thereon by the
Residual Certificateholder. In general, the gain or loss will be capital gain or
loss provided the Residual Certificate is held as a capital asset. However,
Residual Certificates will be "evidences of indebtedness" within the meaning of
Code Section 582(c)(1), so that gain or loss recognized from sale of a Residual
Certificate by a bank or thrift institution to which that section applies would
be ordinary income or loss.

      Except as provided in Treasury regulations yet to be issued, if the seller
of a Residual Certificate reacquires the Residual Certificate, or acquires any
other Residual Certificate, any residual interest in another REMIC or similar
interest in a "taxable mortgage pool" (as defined in Code Section 7701(i))
during the period beginning six months before, and ending six months after, the
date of the sale, the sale will be subject to the "wash sale" rules of Code
Section 1091. In that event, any loss realized by the Residual Certificateholder
on the sale will not be deductible, but, instead, will increase the Residual
Certificateholder's adjusted basis in the newly acquired asset.

      Purchasers of a Residual Certificate are encouraged to consider carefully
the tax consequences of an investment in Residual Certificates discussed in the
prospectus and consult their own tax advisors with respect to those
consequences. See "Material Federal Income Tax Consequences -- REMIC Securities
-- b. Residual Certificates." Specifically, prospective holders of Residual
Certificates should consult their tax advisors regarding whether, at the time of
acquisition, 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 may affect their ability to transfer their Residual
Certificates. See "Material Federal Income Tax Consequences -- Tax Restrictions
on Transfer of Residual Certificates -- Noneconomic Residual Certificates,"
"Material Federal Income Tax Consequences -- b. Residual Certificates -- Mark to
Market Rules," "-- Excess Inclusions" and "Material Federal Income Tax
Consequences -- Tax Related Restrictions on Transfers of Residual Certificates
-- Foreign Investors."

      Additionally, for information regarding Prohibited Transactions and
Treatment of Realized Losses, see "Material Federal Income Tax Consequences --
Prohibited Transactions and Other Taxes" and "-- REMIC Securities -- a. Regular
Securities -- Treatment of Realized Losses" 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 Relief Reconciliation Act of 2003 (the "2003 Act"), the backup
withholding rate has been reduced to 28%. Unless they are amended, these
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 own
tax advisors with respect to both statutes.


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   c. Prohibited Transactions and Other Taxes

      The Code imposes a tax on REMICs equal to 100 percent of the net income
derived from "prohibited transactions" (the "Prohibited Transactions Tax") and
prohibits deducting any loss with respect to prohibited transactions. In
general, subject to certain specified exceptions, a prohibited transaction means
the disposition of a mortgage loan, the receipt of income from a source other
than a mortgage loan or certain other permitted investments, the receipt of
compensation for services, or gain from the disposition of an asset purchased
with the payments on the mortgage loans for temporary investment pending
distribution on the securities. It is not anticipated that the issuing entity
for any series of securities will engage in any prohibited transactions in which
it would recognize a material amount of net income.

      In addition, certain contributions to an issuing entity as to which an
election has been made to treat the issuing entity as a REMIC made after the day
on which the issuing entity issues all of its interest could result in the
imposition of a tax on the issuing entity equal to 100% of the value of the
contributed property (the "Contributions Tax"). No issuing entity for any series
of securities will accept contributions that would subject it to a Contributions
Tax.

      In addition, an issuing entity as to which an election has been made to
treat the issuing entity as a REMIC may also be subject to federal income tax at
the highest corporate rate on "net income from foreclosure property," determined
by reference to the rules applicable to real estate investment trusts. "Net
income from foreclosure property" generally means income from foreclosure
property other than qualifying income for a real estate investment trust.

      Where any Prohibited Transactions Tax, Contributions Tax, tax on net
income from foreclosure property or state or local income or franchise tax that
may be imposed on a REMIC relating to any series of securities results from a
breach of the related servicer's, trustee's or seller's obligations under the
related pooling and servicing agreement, sale and servicing agreement or
servicing agreement, as applicable, for the series, the tax will be borne by the
servicer, trustee or seller, as the case may be, out of its own funds or the
seller's obligation to repurchase a mortgage loan, the tax will be borne by the
seller.

If the servicer, trustee or seller, as the case may be, fails to pay or is not
required to pay the tax as provided above, the tax will be payable out of the
issuing entity for the series and will result in a reduction in amounts
available to be distributed to the securityholders of the series.

   d. Administrative Matters

      Solely for the purpose of the administrative provisions of the Code, the
REMIC generally will be treated as a partnership and the Residual
Certificateholders will be treated as the partners if there is more than one
holder of the Residual Certificate. Certain information will be furnished
quarterly to each Residual Certificateholder who held a Residual Certificate on
any day in the previous calendar quarter.

      Each Residual Certificateholder is required to treat items on its return
consistently with their treatment on the REMIC's return, unless the Residual
Certificateholder either files a statement identifying the inconsistency or
establishes that the inconsistency resulted from incorrect information received
from the REMIC. The IRS may assert a deficiency resulting from a failure to
comply with the consistency requirement without instituting an administrative
proceeding at the REMIC level. Any person that holds a Residual Certificate as a
nominee for another person may be required to furnish the REMIC, in a manner to
be provided in Treasury regulations, with the name and address of the person and
other information.

   e. Tax-Exempt Investors

      Any Residual Certificateholder that is a pension fund or other entity that
is subject to federal income taxation only on its "unrelated business taxable
income" within the meaning of Code Section 512 will be subject to the tax on
that portion of the distributions received on a Residual Certificate that is
considered an excess inclusion. See "--Residual Certificates--Excess
Inclusions."


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    f. Tax-Related Restrictions on Transfers of Residual Certificates

      Disqualified Organizations. An entity may not qualify as a REMIC unless
there are reasonable arrangements designed to ensure that residual interests in
the entity are not held by "disqualified organizations." Further, a tax is
imposed on the transfer of a residual interest in a REMIC to a "disqualified
organization." The amount of the tax equals the product of an amount (as
determined under the REMIC Regulations) equal to the present value of the total
anticipated "excess inclusions" with respect to the interest for periods after
the transfer and the highest marginal federal income tax rate applicable to
corporations. The tax is imposed on the transferor unless the transfer is
through an agent (including a broker or other middleman) for a disqualified
organization, in which event the tax is imposed on the agent. A "disqualified
organization" means the United States, any State, possession or political
subdivision of the United States, any foreign government, any international
organization or any agency or instrumentality of any of the foregoing entities
(provided that the term does not include an instrumentality if all its
activities are subject to tax and, except for Freddie Mac, a majority of its
board of directors is not selected by a governmental agency), any organization
(other than certain farmers cooperatives) generally exempt from federal income
taxes unless the organization is subject to the tax on "unrelated business
taxable income" and a rural electric or telephone cooperative.

      A tax is imposed on a "pass-through entity" holding a residual interest in
a REMIC if at any time during the taxable year of the pass-through entity a
disqualified organization is the record holder of an interest in the entity. The
amount of the tax is equal to the product of the amount of excess inclusions for
the taxable year allocable to the interest held by the disqualified organization
and the highest marginal federal income tax rate applicable to corporations. The
pass-through entity otherwise liable for the tax, for any period during which
the disqualified organization is the record holder of an interest in the entity,
will be relieved of liability for the tax if the record holder furnishes to the
entity an affidavit that the record holder is not a disqualified organization
and, for the applicable period, the pass-through entity does not have actual
knowledge that the affidavit is false. For this purpose, a "pass-through entity"
means a regulated investment company, real estate investment trust, or common
issuing entity; a partnership, trust, or estate; and certain cooperatives.
Except as may be provided in Treasury regulations not yet issued, any person
holding an interest in a pass-through entity as a nominee for another will, with
respect to the interest, be treated as a pass-through entity. Large partnerships
(generally with 250 or more partners) will be taxable on excess inclusion income
as if all partners were disqualified organizations.

      To comply with these rules, the pooling and servicing agreement will
provide that no record or beneficial ownership interest in a Residual
Certificate may be purchased, transferred or sold, directly or indirectly,
without the express written consent of the servicer. The servicer will grant
consent to a proposed transfer only if it receives an affidavit from the
proposed transferee to the effect that it is not a disqualified organization and
is not acquiring the Residual Certificate as a nominee or agent for a
disqualified organization and a covenant by the proposed transferee to the
effect that the proposed transferee agrees to be bound by and to abide by the
transfer restrictions applicable to the Residual Certificate.

      Noneconomic Residual Certificates. The REMIC Regulations disregard, for
federal income tax purposes, any transfer of a Noneconomic Residual Certificate
to a "U.S. Person," as defined in the following section of this discussion,
unless no significant purpose of the transfer is to enable the transferor to
impede the assessment or collection of tax. In general, the definition of a U.S.
Person is the same as provided under "Certain Federal Income Tax
Consequences--Non-REMIC Certificates--Non-U.S. Persons," except that entities or
individuals that would otherwise be treated as Non-U.S. Persons, may be
considered U.S. Persons for this purpose if their income from the residual is
subject to tax under Code Section 871(b) or Code Section 882 (income effectively
connected with a U.S. trade or business). A Noneconomic Residual Certificate is
any Residual Certificate (including a Residual Certificate with a positive value
at issuance) unless, at the time of transfer, 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 Certificate at least equals the
product of the present value of the anticipated excess inclusions and the
highest corporate income tax rate in effect for the year in which the transfer
occurs and 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 significant purpose to impede the assessment or collection of tax
exists if the transferor, at the time of the transfer, either knew or should
have known that the transferee would be unwilling or unable to pay taxes due on
its share of the taxable income of the REMIC.


                                      102


      Any transfer of the Residual Certificate will be disregarded for federal
tax purposes if a significant purpose of the transfer was to enable the seller
to impede the assessment or collection of tax. As set forth in Treasury
Regulations, a significant purpose to impede the assessment or collection of tax
exists if the seller, at the time of the transfer, either knew or should have
known that the transferee would be unwilling or unable to pay taxes due on its
share of the taxable income of the REMIC. Notwithstanding the above, a transfer
will be respected if (a) the transferor has performed reasonable investigations
of the transferee and has no knowledge or no reason to know that a transferee
intended to impede the assessment or collection of taxes, (b) the transfer is
not made to a foreign permanent establishment or fixed base of a U.S. taxpayer
(an "offshore location"), (c) the transferee represents that it will not cause
income from the Residual Certificate to be attributable to an offshore location
and (d) one of the two tests set forth in Treasury regulations issued on July
19, 2002 is satisfied.

      Under the first alternative test, a transfer by the holder of the Residual
Certificate will, assuming all other requirements of the safe harbor are met,
qualify for the safe harbor if the present value of the anticipated tax
liabilities associated with holding the residual interest does not exceed the
sum of the present value of: (a) any consideration given to the purchaser to
acquire the interest; (b) the expected future distributions on the interest; and
(c) the anticipated tax savings associated with holding the interest as the
REMIC generates losses. For purposes of this test, the transferee generally must
use the highest corporate tax rate and the discount rate must be equal to the
Federal short-term rate prescribed by section 1274(d) for the month of the
transfer. Under the second alternative test, a transfer by the holder of the
Residual Certificate will, assuming all other requirements of the safe harbor
are met, qualify for the safe harbor if: (a) the price paid by the transferee
for the Residual Certificate would not cause a reasonable person to believe the
transferee does not intend to pay the taxes associated with such certificate,
(b) the transferee is an "eligible corporation" and (c) for the two fiscal years
preceding the transfer, the transferee's gross assets for financial reporting
purposes exceeded $100 million and its net assets for financial reporting
purposes exceeded $10 million (excluding certain related party transactions).

      The Treasury Department has issued final regulations, effective May 11,
2004, that address the federal income tax treatment of "inducement fees"
received by transferees of noneconomic REMIC residual interests. The final
regulations require inducement fees to be included in income over a period
reasonably related to the period in which the related REMIC residual interest is
expected to generate taxable income or net loss allocable to the holder. The
final regulations provide two safe harbor methods that permit transferees to
include inducement fees in income either (i) in the same amounts and over the
same period that the taxpayer uses for financial reporting purposes, provided
that such 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
such interests under the prepayment assumption. If the holder of a Residual
Certificate sells or otherwise disposes of the Residual Certificate, 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 REMIC 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 Certificates should
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.

      As a result of 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 Certificate. In addition, the backup
withholding rate has been reduced to 28%. Unless the statute is amended, all
provisions of the 2001 and the 2003 Act will no longer apply for taxable years
beginning on or after December 31, 2010. Investors are encouraged to consult
their own tax advisors with respect to the acquisition, ownership and
disposition of the securities.

Tax Status as a Grantor Trust

      If a REMIC election is not made, the issuing entity will not be classified
as an association taxable as a corporation and that each issuing entity will be
classified as a grantor trust under subpart E, Part I of subchapter J of chapter
1 of subtitle A of the Code. In this case, owners of securities will be treated
for federal income tax purposes


                                      103


as owners of a portion of the issuing entity's assets as described below. Sidley
Austin LLP will issue an opinion confirming the above-stated conclusions for
each issuing entity for which no REMIC election is made.

 a. Single Class of Securities

      Characterization. The issuing entity may be created with one class of
securities. In this case, each securityholder will be treated as the owner of a
pro rata undivided interest in the interest and principal portions of the
issuing entity represented by the securities and will be considered the
equitable owner of a pro rata undivided interest in each of the mortgage loans
in the issuing entity. Any amounts received by a securityholder in lieu of
amounts due with respect to any mortgage loans because of a default or
delinquency in payment will be treated for federal income tax purposes as having
the same character as the payments they replace.

      Each securityholder will be required to report on its federal income tax
return in accordance with its method of accounting its pro rata share of the
entire income from the mortgage loans in the issuing entity represented by
securities, including interest, original issue discount ("OID"), if any,
prepayment charges, assumption fees, any gain recognized upon an assumption and
late payment charges received by the servicer. Under Code Sections 162 or 212
each securityholder will be entitled to deduct its pro rata share of servicing
fees, prepayment charges, assumption fees, any loss recognized upon an
assumption and late payment charges retained by the servicer, provided that the
amounts are reasonable compensation for services rendered to the issuing entity.
Securityholders that are individuals, estates or trusts will be entitled to
deduct their share of expenses only to the extent expenses of the issuing entity
plus their other miscellaneous itemized deductions (as defined in the Code)
exceed two percent of their adjusted gross income. A securityholder using the
cash method of accounting must take into account its pro rata share of income
and deductions as and when collected by or paid to the servicer. A
securityholder using an accrual method of accounting must take into account its
pro rata share of income as it accrues, or when received if the income is
received before it accrues, and must take into account its pro rata share of
deductions as they accrue. If the servicing fees paid to the servicer are deemed
to exceed reasonable servicing compensation, the amount of any excess could be
considered as an ownership interest retained by the servicer (or any person to
whom the servicer assigned for value all or a portion of the servicing fees) in
a portion of the interest payments on the mortgage loans. The mortgage loans
would then be subject to the "coupon stripping" rules of the Code discussed
below.

      Generally, as to each series of securities:

      o     a certificate owned by a "domestic building and loan association"
            within the meaning of Code Section 7701(a)(19) representing
            principal and interest payments on mortgage loans will be considered
            to represent "loans ... secured by an interest in real property
            which is ... residential property" within the meaning of Code
            Section 7701(a)(19)(C)(v), to the extent that the mortgage loans
            represented by that certificate are of a type described in that Code
            section;

      o     a certificate owned by a real estate investment trust representing
            an interest in mortgage loans will be considered to represent "real
            estate assets" within the meaning of Code Section 856(c)(4)(A), and
            interest income on the mortgage loans will be considered "interest
            on obligations secured by mortgages on real property" within the
            meaning of Code Section 856(c)(3)(B), to the extent that the
            mortgage loans represented by that certificate are of a type
            described in that Code section; and

      o     a certificate owned by a REMIC will represent an "obligation ...
            which is principally secured, directly or indirectly, by an interest
            in real property" within the meaning of Code Section 860G(a)(3).

      Buydown Loans. Certain issuing entities may hold buydown loans. These
loans can be secured not only by a mortgage on real property but also by a
pledged account that is drawn upon to subsidize the mortgagor's monthly mortgage
payments for a limited period of time. So long as the loan value of the real
property at least equals the amount of the loan, then for purposes of the
above-described requirements, the mortgage loan will be treated as fully secured
by real property. If the loan value of the real property is less than the amount
of the loan, then, a securityholder could be required to treat the loan as one
secured by an interest in real property only to the extent of the loan value of
the real property. The related prospectus supplement for any series of
securities that includes buydown loans will specify whether apportionment would
be required.


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      Premium. The price paid for a security by a holder will be allocated to
the holder's undivided interest in each mortgage loan based on each mortgage
loan's relative fair market value, so that the holder's undivided interest in
each mortgage loan will have its own tax basis. A securityholder that acquires
an interest in mortgage loans at a premium generally may elect to amortize the
premium under a constant interest method, provided that the underlying mortgage
loans with respect to the mortgage loans were originated. Amortizable bond
premium will be treated as an offset to interest income on the security. The
basis for the security will be reduced to the extent that amortizable premium is
applied to offset interest payments.

      If a reasonable prepayment assumption is used to amortize premium, it
appears that any loss would be available, if at all, only if prepayments have
occurred at a rate faster than the reasonable assumed prepayment rate. It is not
clear whether any other adjustments would be required to reflect differences
between an assumed prepayment rate and the actual rate of prepayments.

      Regulations dealing with amortizable bond premium (the "Amortizable Bond
Premium Regulations") do not apply to prepayable debt instruments subject to
Code Section 1272(a)(6). Absent further guidance from the IRS, the trustee
intends to account for amortizable bond premium in the manner described above.
Prospective purchasers of the securities are encouraged to consult their tax
advisors regarding the possible application of the Amortizable Bond Premium
Regulations.

      Original Issue Discount. The IRS has stated in published rulings that, in
circumstances similar to those described in this prospectus, the special rules
of the Code relating to "original issue discount" (currently Code Sections 1271
through 1273 and 1275) will be applicable to a securityholder's interest in
those mortgage loans meeting the conditions necessary for these sections to
apply. OID generally must be reported as ordinary gross income as it accrues
under a constant interest method. See "--Multiple Classes of
Securities--Securities Representing Interests in Loans Other Than ARM Loans."

      Market Discount. A securityholder that acquires an undivided interest in
mortgage loans may be subject to the market discount rules of Code Sections 1276
through 1278 to the extent an undivided interest in a mortgage loan is
considered to have been purchased at a market discount. The amount of market
discount is equal to the excess of the portion of the principal amount of the
mortgage loan allocable to the holder's undivided interest in the mortgage loans
over the holder's tax basis in the undivided interest. Market discount with
respect to a security will be considered to be zero if the amount allocable to
the security is less than 0.25% of the security's stated redemption price at
maturity multiplied by the weighted average maturity remaining after the date of
purchase. Treasury regulations implementing the market discount rules have not
yet been issued; therefore, investors are encouraged to consult their own tax
advisors regarding the application of these rules and the advisability of making
any of the elections allowed under Code Sections 1276 through 1278.

      The Code provides that any principal payment or any gain on disposition of
a market discount bond shall generally be treated as ordinary income to the
extent that it does not exceed the accrued market discount at the time of the
payment. The amount of accrued market discount for purposes of determining the
tax treatment of subsequent principal payments or dispositions of the market
discount bond is to be reduced by the amount so treated as ordinary income.

      The Code also grants the Treasury Department authority to issue
regulations providing for the computation of accrued market discount on debt
instruments, the principal of which is payable in more than one installment.
Although the Treasury Department has not yet issued regulations, rules described
in the relevant legislative history describes how market discount should be
accrued on instruments bearing market discount. According to the legislative
history, the holder of a market discount bond may elect to accrue market
discount either on the basis of a constant interest rate or according to one of
the following methods. If a security is issued with OID, the amount of market
discount that accrues during any accrual period would be equal to the product of
the total remaining market discount and a fraction, the numerator of which is
the OID accruing during the period and the denominator of which is the total
remaining OID at the beginning of the accrual period. For securities issued
without OID, the amount of market discount that accrues during a period is equal
to the product of the total remaining market discount and a fraction, the
numerator of which is the amount of stated interest paid during the accrual
period and the denominator of which is the total amount of stated interest
remaining to be paid at the beginning of the accrual period. For purposes of
calculating market discount under any of these methods in the case of
instruments that provide for


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payments that may be accelerated due to prepayments of other obligations
securing the instruments, the same prepayment assumption applicable to
calculating the accrual of OID will apply.

      A holder who acquired a security at a market discount also may be required
to defer, until the maturity date of the security or its earlier disposition in
a taxable transaction, the deduction of a portion of the amount of interest that
the holder paid or accrued during the taxable year on indebtedness incurred or
maintained to purchase or carry the security in excess of the aggregate amount
of interest (including OID) includible in the holder's gross income for the
taxable year with respect to the security. The amount of the net interest
expense deferred in a taxable year may not exceed the amount of market discount
accrued on the security for the days during the taxable year on which the holder
held the security and, in general, would be deductible when the market discount
is includible in income. The amount of any remaining deferred deduction is to be
taken into account in the taxable year in which the security matures or is
disposed of in a taxable transaction. In the case of a disposition in which gain
or loss is not recognized in whole or in part, any remaining deferred deduction
will be allowed to the extent of gain recognized on the disposition. This
deferral rule does not apply if the securityholder elects to include the market
discount in income currently as it accrues on all market discount obligations
acquired by the securityholder in that taxable year or thereafter.

      Election to Treat All Interest As OID. The OID Regulations permit a
securityholder to elect to accrue all interest, discount (including de minimis
market or original issue discount) and premium in income as interest, based on a
constant yield method. If an election to treat all interest as OID were to be
made with respect to a security with market discount, the securityholder 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 securityholder acquires during the year of the election or thereafter.
Similarly, a securityholder that makes this election for a 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 securityholder owns or acquires. See "--Single Class of
Securities--Premium." The election to accrue interest, discount and premium on a
constant yield method with respect to a security cannot be revoked without the
consent of the IRS.

   b. Multiple Classes of Securities

      1. Stripped Bonds and Stripped Coupons

      Pursuant to Code Section 1286, 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. For purposes of Code Sections 1271
through 1288, Code Section 1286 treats a stripped bond or a stripped coupon as
an obligation issued on the date that the stripped interest is created. If an
issuing entity is created with two classes of securities, one class of
securities may represent the right to principal and interest, or principal only,
on all or a portion of the mortgage loans (the "Stripped Bond Securities"),
while the second class of securities may represent the right to some or all of
the interest on the same mortgage loans (the "Stripped Coupon Securities").

      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 (i.e., 1% interest on the mortgage loan principal
balance) or the securities are initially sold with a de minimis discount (which
amount may be calculated without a prepayment assumption), 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 mortgage loan by mortgage loan basis, which could result in some
mortgage loans being treated as having more than 100 basis points of interest
stripped off. See "--Non-REMIC Securities" and "Multiple Classes of Senior
Securities--Stripped Bonds and Stripped Coupons."

      Although current authority is not entirely clear, a Stripped Bond Security
should be treated as an interest in mortgage loans issued on the day the
security is purchased for purposes of calculating any OID. Generally, if the
discount on a mortgage loan is larger than a de minimis amount (as calculated
for purposes of the OID rules) a purchaser of the security will be required to
accrue the discount under the OID rules of the Code. See "--Non-REMIC
Securities" and "--Single Class of Securities--Original Issue Discount."
However, a purchaser of a Stripped Bond Security will be required to account for
any discount on the mortgage loans as market discount rather


                                      106


than OID if either the amount of OID with respect to the mortgage loan is
treated as zero under the OID de minimis rule when the security was stripped or
no more than 100 basis points (including any amount of servicing fees in excess
of reasonable servicing fees) is stripped off of the issuing entity's mortgage
loans.

      The precise tax treatment of Stripped Coupon Securities is substantially
uncertain. The Code could be read literally to require that OID computations be
made for each payment from each mortgage loan. However, it appears that all
payments from a mortgage loan underlying a Stripped Coupon Security should be
treated as a single installment obligation subject to the OID rules of the Code,
in which case, all payments from the mortgage loan would be included in the
mortgage loan's stated redemption price at maturity for purposes of calculating
income on the Stripped Coupon Security under the OID rules of the Code.

      Based on current authority under what circumstances, if any, the
prepayment of mortgage loans will give rise to a loss to the holder of a
Stripped Bond Security purchased at a premium or a Stripped Coupon Security is
unclear. If the security is treated as a single instrument (rather than an
interest in discrete mortgage loans) and the effect of prepayments is taken into
account in computing yield with respect to the security, it appears that no loss
will be available as a result of any particular prepayment unless prepayments
occur at a rate faster than the assumed prepayment rate. However, if a security
is treated as an interest in discrete mortgage loans, or if no prepayment
assumption is used, then when a mortgage loan is prepaid, any security so
treated should be able to recognize a loss equal to the portion of the
unrecovered premium of the security that is allocable to the mortgage loan.

      Holders of Stripped Bond Securities and Stripped Coupon Securities are
encouraged to consult with their own tax advisors regarding the proper treatment
of these securities for federal income tax purposes.

      2. Securities Representing Interests in Loans Other Than ARM Loans

      The original issue discount rules of Code Sections 1271 through 1275 will
generally be applicable to mortgages of corporations originated after May 27,
1969, mortgages of noncorporate mortgagors (other than individuals) originated
after July 1, 1982, and mortgages of individuals originated after March 2, 1984.
Under the OID Regulations, original issue discount could arise by the charging
of points by the originator of the mortgage in an amount greater than the
statutory de minimis exception, including a payment of points that is currently
deductible by the borrower under applicable Code provisions, or under certain
circumstances, by the presence of "teaser" rates (i.e., the initial rates on the
mortgage loans are lower than subsequent rates on the mortgage loans) on the
mortgage loans.

      OID on each security must be included in the owner's ordinary income for
federal income tax purposes as it accrues, in accordance with a constant
interest method that takes into account the compounding of interest, in advance
of receipt of the cash attributable to the income. The amount of OID required to
be included in an owner's income in any taxable year with respect to a security
representing an interest in mortgage loans other than mortgage loans with
interest rates that adjust periodically ("ARM Loans") likely will be computed as
described under "--Accrual of Original Issue Discount." The following discussion
is based in part on Treasury regulations issued under Code Sections 1271 through
1273 and 1275 (the "OID Regulations") and in part on the provisions of the Tax
Reform Act of 1986 (the "1986 Act"). The OID Regulations generally are effective
for debt instruments issued on or after April 4, 1994, but may be relied upon as
authority with respect to debt instruments issued after December 21, 1992. In
applying these dates, the issued date of the mortgage loans should be used, or,
in the case of Stripped Bond Securities or Stripped Coupon Securities, the date
the securities are acquired. The holder of a securities should be aware,
however, that the OID Regulations do not adequately address certain issues
relevant to prepayable securities.

      Under the Code, the mortgage loans underlying the securities will be
treated as having been issued on the date they were originated with an amount of
OID equal to the excess of the mortgage loan's stated redemption price at
maturity over its issue price. The issue price of a mortgage loan is generally
the amount lent to the mortgagee, which may be adjusted to take into account
certain loan origination fees. The stated redemption price at maturity of a
mortgage loan is the sum of all payments to be made on the mortgage loan other
than payments that are treated as qualified stated interest payments. The
accrual of this OID, as described under "--Accrual of Original Issue Discount,"
will, unless otherwise specified in the related prospectus supplement, utilize
the original yield to maturity of the securities calculated based on a
reasonable assumed prepayment rate for the mortgage loans underlying the
securities (the "Prepayment Assumption"), and will take into account events that
occur during the calculation period. The legislative history of the 1986 Act
(the "Legislative History") provides, however, that the regulations


                                      107


will require that the Prepayment Assumption be the prepayment assumption that is
used in determining the offering price of the security. No representation is
made that any security will prepay at the Prepayment Assumption or at any other
rate. However, no other legal authority provides guidance with regard to the
proper method for accruing OID on obligations that are subject to prepayment,
and, until further guidance is issued, the servicer intends to calculate and
report OID under the method described in "--Accrual of Original Issue Discount."

      Accrual of Original Issue Discount. Generally, the owner of a security
must include in gross income the sum of the "daily portions," as defined below,
of the OID on any security for each day on which it owns the security, including
the date of purchase but excluding the date of disposition. In the case of an
original owner, the daily portions of OID with respect to each component
generally will be determined as set forth under the OID Regulations. A
calculation will be made by the servicer or other entity specified in the
related prospectus supplement of the portion of OID that accrues during each
successive monthly accrual period (or shorter period from the date of original
issue) that ends on the day in the calendar year corresponding to each of the
distribution dates on the securities (or the day before each date). This will be
done, in the case of each full month accrual period, by adding the present value
at the end of the accrual period (determined by using as a discount factor the
original yield to maturity of the respective component under the Prepayment
Assumption) of all remaining payments to be received under the Prepayment
Assumption on the respective component and any payments received during the same
accrual period, and subtracting from that total the "adjusted issue price" of
the respective component at the beginning of the same accrual period. The
adjusted issue price of a security at the beginning of the first accrual period
is its issue price; the adjusted issue price of a security at the beginning of a
subsequent accrual period is the adjusted issue price at the beginning of the
immediately preceding accrual period plus the amount of OID allocable to that
accrual period reduced by the amount of any payment made at the end of or during
that accrual period. The OID accruing during the accrual period will then be
divided by the number of days in the period to determine the daily portion of
OID for each day in the period. With respect to an initial accrual period
shorter than a full monthly accrual period, the daily portions of OID must be
determined according to an appropriate allocation under any reasonable method.

      Original issue discount generally must be reported as ordinary gross
income as it accrues under a constant interest method that takes into account
the compounding of interest as it accrues rather than when received. However,
the amount of original issue discount includible in the income of a holder of an
obligation is reduced when the obligation is acquired after its initial issuance
at a price greater than the sum of the original issue price and the previously
accrued original issue discount, less prior payments of principal. Accordingly,
if mortgage loans acquired by a securityholder are purchased at a price equal to
the then unpaid principal amount of those mortgage loans, no original issue
discount attributable to the difference between the issue price and the original
principal amount of those mortgage loans (e.g., due to points) will be
includible by the holder. Other original issue discount on the mortgage loans
(e.g., that arising from a "teaser" rate) would still need to be accrued.

      3. Securities Representing Interests in ARM Loans

      The OID Regulations do not address the treatment of instruments, such as
the securities, which represent interests in ARM Loans. Additionally, the IRS
has not issued guidance under the Code's coupon stripping rules with respect to
instruments that represent interests in ARM Loans. In the absence of any
authority, the trustee will report OID on securities attributable to ARM Loans
("Stripped ARM Obligations") to holders in a manner it believes is consistent
with the rules described under the heading "--Securities Representing Interests
in Loans Other Than ARM Loans" and with the OID Regulations. As such, for
purposes of projecting the remaining payments and the projected yield, the
assumed rate payable on the ARM Loans will be the fixed rate equivalent on the
issue date. Application of these rules may require inclusion of income on a
Stripped ARM Obligation in advance of the receipt of cash attributable to the
income. Further, the addition of interest deferred due to negative amortization
("Deferred Interest") to the principal balance of an ARM Loan may require the
inclusion of the interest deferred due to negative amortization in the income of
the securityholder when it accrues. Furthermore, the addition of Deferred
Interest to the security's principal balance will result in additional income
(including possibly OID income) to the securityholder over the remaining life of
the securities.

      Because the treatment of Stripped ARM Obligations is uncertain, investors
are encouraged to consult their tax advisors regarding how income will be
includible with respect to the securities.


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   c. Sale or Exchange of a Security

      Sale or exchange of a security before its maturity will result in gain or
loss equal to the difference, if any, between the amount received and the
owner's adjusted basis in the security. The adjusted basis of a security
generally will equal the seller's purchase price for the security, increased by
the OID included in the seller's gross income with respect to the security, and
reduced by principal payments on the security previously received by the seller.
The gain or loss will be capital gain or loss to an owner for which a security
is a "capital asset" within the meaning of Code Section 1221, and will be
long-term or short-term depending on whether the security has been owned for the
long-term capital gain holding period (currently more than one year).

      The securities will be "evidences of indebtedness" within the meaning of
Code Section 582(c)(1), so that gain or loss recognized from the sale of a
security by a bank or a thrift institution to which that section applies will be
ordinary income or loss.

   d. Non-U.S. Persons

      Generally, to the extent that a security evidences ownership in underlying
mortgage loans that were issued on or before July 18, 1984, interest or OID paid
by the person required to withhold tax under Code Section 1441 or 1442 to an
owner that is not a U.S. Person or a securityholder holding on behalf of an
owner that is not a U.S. Person will be subject to federal income tax, collected
by withholding, at a rate of 30% or any lower rate provided for interest by an
applicable tax treaty. Accrued OID recognized by the owner on the sale or
exchange of a security also will be subject to federal income tax at the same
rate. Generally, accrued OID payments would not be subject to withholding to the
extent that a security evidences ownership in mortgage loans issued after July
18, 1984, by natural persons if the securityholder complies with certain
identification requirements (including delivery of a statement, signed by the
securityholder under penalties of perjury, certifying that the securityholder is
not a U.S. Person and providing the name and address of the securityholder).
Additional restrictions apply to mortgage loans where the mortgagor is not a
natural person in order to qualify for the exemption from withholding. Any
foreclosure property owned by the trust could be treated as a U.S. real property
interest owned by securityholders.

      As used in this prospectus, a "U.S. Person" means

      o     a citizen or resident of the United States,

      o     a corporation or a partnership (including an entity treated as a
            corporation or partnership for U.S. federal income tax purposes)
            organized in or created under the laws of the United States or any
            State thereof or the District of Columbia (unless in the case of a
            partnership Treasury Regulations provide otherwise),

      o     an estate, the income of which from sources outside the United
            States is includible in gross income for federal income tax purposes
            regardless of its connection with the conduct of a trade or business
            within the United States, or

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

In addition, U.S. Persons would include certain trusts that can elect to be
treated as U.S. Persons. A "Non-U.S. Person" is a person other than a U.S.
Person.

      Except where specifically discussed, the discussion below deals with a
Non-U.S. Person who is not holding the securities as part of its trade or
business in the U.S., and because a Non-U.S. Person is not supposed to hold a
Residual Certificate, this summary does not address the consequences of a
Non-U.S. Person holding the Residual Securities. A Non-U.S. Person who is an
individual or corporation (or an entity treated as a corporation for federal
income tax purposes) holding the securities on its own behalf will not be
subject to United States federal income taxes on payments of principal, premium,
interest or original issue discount on a Security, unless such Non-U.S. Person
is a direct or indirect 10% or greater shareholder of us, a controlled foreign
corporation related to us or a


                                      109


bank receiving interest described in Code Section 881(c)(3)(A). To qualify for
the exemption from taxation, the Withholding Agent, as defined below, must have
received a statement from the individual or corporation that (i) is signed under
penalties of perjury by the beneficial owner of the Security, (ii) certifies
that such owner is not a U.S. Holder, and (iii) provides the beneficial owner's
name and address.

      A "Withholding Agent" is the last United States payor (or a non-U.S. payor
who is a qualified intermediary, U.S. branch of a foreign person, or withholding
foreign partnership) in the chain of payment prior to payment to a Non-U.S.
Person (which itself is not a Withholding Agent). 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 annually to
the beneficial owner on IRS Form 1042-S. The beneficial owner must inform the
Withholding Agent within 30 days of such change and furnish a new W-8BEN. A
Non-U.S. Person who is not an individual or corporation (or an entity treated as
a corporation for federal income tax purposes) holding the securities on its own
behalf may have substantially increased reporting requirements. In particular,
in the case of securities 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.

      A foreign Security holder whose income with respect to its investment in a
Security is effectively connected with the conduct of a U.S. trade or business
would generally be taxed as if the holder was a U.S. person provided the holder
provides to the Withholding Agent an IRS Form W-8ECI.

      Certain securities clearing organizations, and other entities who are not
beneficial owners, may be able to provide a signed statement to the Withholding
Agent. However, in such case, the signed statement may require a copy of the
beneficial owner's W-8BEN (or the substitute form).

      Generally, a Non-U.S. Person will not be subject to federal income taxes
on any amount which constitutes capital gain upon retirement or disposition of a
Security, unless such Non-U.S. Person is an individual who is present in the
United States for 183 days or more in the taxable year of the disposition and
such gain is derived from sources within the United States. Certain other
exceptions may be applicable, and a Non-U.S. Person should consult its tax
advisor in this regard.

      The securities will not be includible in the estate of a Non-U.S. Person
unless the individual is a direct or indirect 10% or greater shareholder of us
or, at the time of such individual's death, payments in respect of the
securities would have been effectively connected with the conduct by such
individual of a trade or business in the United States.

      Prospective investors are strongly urged to consult their own tax advisors
with respect to the Withholding Regulations.

   e. Backup Withholding

      Backup withholding of United States federal income tax may apply to
payments made in respect of the securities to registered owners who are not
"exempt recipients" and who fail to provide certain identifying information
(such as the registered owner's taxpayer identification number) in the required
manner. Generally, individuals are not exempt recipients, whereas corporations
and certain other entities generally are exempt recipients. Payments made in
respect of the securities to a U.S. Holder must be reported to the IRS, unless
the U.S. Holder is an exempt recipient or establishes an exemption. Compliance
with the identification procedures described in the preceding section would
establish an exemption from backup withholding for those non-U.S. Persons who
are not exempt recipients.

      In addition, upon the sale of a security to (or through) a broker, the
broker must report the sale and withhold on the entire purchase price, unless
either (a) the broker determines that the seller is a corporation or other
exempt recipient or (b) the seller certifies that such seller is a non-U.S.
Person (and certain other conditions are met).


                                      110


      Certification of the registered owner's non-U.S. status would be made
normally on an IRS Form W-8BEN under penalties of perjury, although in certain
cases it may be possible to submit other documentary evidence.

      Any amounts withheld under the backup withholding rules from a payment to
a beneficial owner would be allowed as a refund or a credit against such
beneficial owner's United States federal income tax provided the required
information is furnished to the IRS.

      Prospective investors are strongly urged to consult their own tax advisors
with respect to the Withholding Regulations.

Final Trust Reporting Regulations

      On January 23, 2006, the IRS issued final regulations effective January 1,
2007, affecting the information reporting obligations of trustees of
"widely-held mortgage trusts" (that is, any grantor trust in which any interests
are held by "middlemen", and whose assets are mortgages or regular interests in
a REMIC, amounts received thereon and reasonably required reserve funds) and of
"middlemen" (a term that includes, among other things, a custodian of a person's
account, a nominee and a broker holding an interest for a customer in a street
name).

      Under the final regulations, the trustee would be required to report to
the IRS with respect to each beneficial owner of a grantor trust fractional
interest certificate who is not an "exempt recipient" (a term that includes
corporations, trusts, securities dealers, middlemen and certain other
non-individuals) and do not hold such certificates through a middleman, the
gross income of the trust and, if any trust assets were disposed of, the portion
of the gross proceeds relating to the trust assets that are allocable to such
beneficial owner. The same requirements would be imposed on middlemen holding on
behalf of beneficial owners of grantor trust fractional interest certificates.

      The final regulations will also require that the trustee make available
information regarding interest income and information necessary to compute any
original issue discount to (i) exempt recipients (including middlemen) and
non-calendar year taxpayers, upon request, in accordance with the requirements
of the final regulations and (ii) beneficial owners of grantor trust fractional
interest certificates who do not hold such certificates through a middleman. The
information must be provided to parties specified in part (i) by the later of
thirty days after the end of the first quarter for which the information was
requested or two weeks after the receipt of the request. The information must be
provided to parties specified in part (ii) at a time no later than March 15 of
the following tax year.

Tax Characterization of the Issuing Entity as a Partnership

      Tax counsel will deliver its opinion that an issuing entity that is
intended to be treated as a partnership 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 issuing entity 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 issuing entity will not be
characterized as a publicly traded partnership taxable as a corporation.

      If the issuing entity were taxable as a corporation for federal income tax
purposes, the issuing entity would be subject to corporate income tax on its
taxable income. The issuing entity'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 issuing entity.

Tax Consequences to Holders of the Notes

      Treatment of the Notes as Indebtedness. The issuing entity 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) does not
exceed 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. It is believed that
any prepayment premium paid as a result of a mandatory redemption will be
taxable as contingent interest when it becomes fixed and unconditionally
payable. A purchaser who buys a note for more or less than its principal amount
will generally be subject, respectively, to the premium amortization or market
discount rules of the Code.

      A holder of a note that has a fixed maturity date of not more than one
year from the issue date of 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
      issuing entity or the seller (including a holder of 10% of the outstanding
      securities) or a "controlled foreign corporation" with respect to which
      the issuing entity 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 who is an individual or corporation for federal
      income tax purposes of the note is a foreign person and providing the
      foreign person's name and address.


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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 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 issuing entity 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 issuing entity. If so treated, the issuing entity
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 issuing entity 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," 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 issuing entity's expenses.

Tax Consequences to Holders of the Certificates

      Treatment of the Issuing Entity as a Partnership. The issuing entity and
the servicer will agree, and the certificateholders will agree by their purchase
of certificates, to treat the issuing entity 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 issuing entity, 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 issuing entity, the
certificates, the notes, the issuing entity and the servicer is not clear
because there is no authority on transactions closely comparable to that
contemplated herein.

      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 issuing entity. That
characterization


                                      113


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 issuing entity 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 issuing entity. The issuing
entity'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 issuing
entity'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
issuing entity 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 issuing
entity 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 issuing entity
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
issuing entity will be allocated to the depositor. Based on the economic
arrangement of the parties, this approach for allocating issuing entity 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 issuing
entity 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 issuing entity income even if they have not received cash
from the issuing entity 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 issuing entity.

      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 issuing entity
(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 issuing entity.

      The issuing entity 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 issuing
entity might be required to incur additional expense but it is believed that
there would not be a material adverse effect on certificateholders.

      Discount and Premium. It is believed that the loans were not issued with
OID, and, therefore, the issuing entity should not have OID income. However, the
purchase price paid by the issuing entity for the loans may be


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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 issuing entity will make this
calculation on an aggregate basis, but might be required to recompute it on a
loan by loan basis.)

      If the issuing entity acquires the loans at a market discount or premium,
the issuing entity 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 issuing entity 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 issuing entity 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 issuing entity. 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 issuing entity 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 issuing entity 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 issuing
entity'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 issuing entity might be reallocated among the certificateholders. The
issuing entity'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 issuing entity's assets will not be adjusted to reflect
that higher (or lower) basis unless the issuing entity were to file an election
under Section 754 of the Code. In order to avoid the administrative complexities
that would be involved in keeping accurate accounting records, as well as
potentially onerous information reporting requirements, the issuing entity will
not make that election. As a result, certificateholders might be allocated a
greater or lesser amount of issuing entity income than would be appropriate
based on their own purchase price for certificates.


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      Administrative Matters. The owner trustee is required to keep or have kept
complete and accurate books of the issuing entity. Those books will be
maintained for financial reporting and tax purposes on an accrual basis and the
fiscal year of the issuing entity 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 issuing entity and will report each certificateholder's
allocable share of items of issuing entity income and expense to holders and the
IRS on Schedule K-1. The issuing entity will provide the Schedule K-l
information to nominees that fail to provide the issuing entity 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 issuing entity 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 issuing
entity 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 issuing entity
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 issuing
entity. The information referred to above for any calendar year must be
furnished to the issuing entity on or before the following January 31. Nominees,
brokers and financial institutions that fail to provide the issuing entity 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 issuing entity 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 issuing entity.
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 issuing entity.

      Tax Consequences to Foreign Certificateholders. It is not clear whether
the issuing entity 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 issuing entity would be engaged in a trade or business in the
United States for those purposes, the issuing entity will withhold as if it were
so engaged in order to protect the issuing entity from possible adverse
consequences of a failure to withhold. The issuing entity 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 issuing entity to change its withholding procedures. In determining
a holder's withholding status, the issuing entity 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 issuing entity's income. Each foreign holder
must obtain a taxpayer identification number from the IRS and submit that number
in order to assure appropriate


                                      116


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
issuing entity taking the position that no taxes were due because the issuing
entity 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 issuing entity. 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.

                            State Tax Considerations

      In addition to the federal income tax consequences described in "Certain
Federal Income Tax Considerations," potential investors are encouraged to
consider the state and local income tax consequences of the acquisition,
ownership, and disposition of the securities. State and local income tax law may
differ substantially from the corresponding federal law, and this discussion
does not purport to describe any aspect of the income tax laws of any state or
locality. Therefore, potential investors are encouraged to consult their own tax
advisors with respect to the various tax consequences of investments in the
securities.

                              ERISA Considerations

      Section 406 of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and Section 4975 of the Code prohibit a pension,
profit-sharing or other employee benefit plan, as well as individual retirement
accounts, Keogh plans and other plans covered by Section 4975 of the Code, and
entities deemed to hold "plan assets" of any of the foregoing under the Plan
Assets Regulation (as defined below) (each such entity a "Plan") from engaging
in certain transactions with persons that are "parties in interest" under ERISA
or "disqualified persons" under the Code with respect to such Plan. A violation
of these "prohibited transaction" rules may result in an excise tax or other
penalties and liabilities under ERISA and the Code for such persons or the
fiduciaries of the Plan. In addition, Title I of ERISA also requires fiduciaries
of a Plan subject to ERISA to make investments that are prudent, diversified and
in accordance with the governing plan documents.

Exemptions Available to Debt Instruments

      Certain transactions involving the issuer might be deemed to constitute
prohibited transactions under ERISA and the Code with respect to a Plan that
purchased securities if assets of the issuer were deemed to be assets of the
Plan. Under a regulation issued by the United State Department of Labor (the
"Plan Assets Regulation"), the assets of the issuer would be treated as plan
assets of a Plan for the purposes of ERISA and the Code only if the Plan
acquired an "equity interest" in the issuer and none of the exceptions to plan
asset treatment contained in the Plan Assets Regulation was applicable. An
equity interest is defined under the Plan Assets Regulation as an interest other
than an instrument which is treated as indebtedness under applicable local law
and which has no substantial equity features. Although there is little guidance
on the subject, assuming the securities constitute debt for local law purposes,
the issuer believes that, at the time of their issuance, the security should not
be treated an equity interest in the issuer for purposes of the Plan Assets
Regulation. This determination is based in part upon the traditional debt
features of the securities, including the reasonable expectation of purchasers
of securities that the securities will be repaid when due, as well as the
absence of conversion rights, warrants and other typical equity features. The
debt treatment of the securities for ERISA purposes could change if the issuer
incurred losses. This risk of recharacterization is enhanced for securities that
are subordinated to other classes of securities.

      However, without regard to whether the securities are treated as equity
interests for purposes of the Plan Assets Regulation, the acquisition or holding
of securities by or on behalf of a Plan could be considered to give rise to a
prohibited transaction if the issuer, the servicer, the trustee, or any of their
respective affiliates is or becomes a


                                      117


party in interest or a disqualified person with respect to such Plan. Certain
exemptions from the prohibited transaction rules could be applicable to the
purchase and holding of securities by a Plan depending on the type and
circumstances of the plan fiduciary making the decision to acquire such
securities. Included among these exemptions are: Prohibited Transaction Class
Exemption ("PTCE") 96-23, regarding transactions effected by "in-house asset
managers"; PTCE 95-60, regarding investments by insurance company general
accounts; PTCE 91-38, regarding investments by bank collective investment funds;
PTCE 90-1, regarding investments by insurance company pooled separate accounts;
and PTCE 84-14, regarding transactions effected by "qualified professional asset
managers." By acquiring a security, each purchaser will be deemed to represent
that either (i) it is not acquiring the securities with the assets of a Plan or
(ii) the acquisition and holding of the securities will not give rise to a
non-exempt prohibited transaction under ERISA, Section 4975 of the Code or any
substantially similar applicable law.

      Governmental plans, as defined in the Code and ERISA, are not subject to
Title I of ERISA, and are also not subject to the prohibited transaction
provisions under Section 4975 of the Code. However, state laws or regulations
governing the investment and management of the assets of such plans may contain
fiduciary and prohibited transaction requirements similar to those under ERISA
and the Code discussed above and may include other limitations on permissible
investments. Accordingly, fiduciaries of governmental plans, in consultation
with their advisors, should consider the requirements of their respective state
pension codes with respect to investments in the securities, and the
considerations discussed above, to the extent applicable.

      The issuing entity, the servicer, the trustee and the underwriter of the
securities of any series may be the sponsor of or investment advisor with
respect to one or more plans. Because they may receive certain benefits in
connection with the sale of the securities, the purchase of securities using
plan assets over which any of them has investment authority might be deemed to
be a violation of the prohibited transaction rules of ERISA and the Code for
which no exemption may be available. Accordingly, any plan for which the issuing
entity, the servicer, the trustee or the underwriter of the notes, or any of
their respective affiliates:

            o     has investment or administrative discretion with respect to
                  plan assets to be invested in the securities;

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

            o     is an employer maintaining or contributing to the plan,

may not invest in the securities unless an appropriate administrative prohibited
transaction exemption applies to the investment.

Underwriter Exemption

      The United States Department of Labor ("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, in pass-through entities, including trusts, that consist of
certain receivables, loans and other obligations that meet the conditions and
requirements of the Underwriter Exemptions, and with respect to transactions in
connection with the servicing, management and operation of the entity.

      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 the following:

      o     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;


                                      118


      o     the rights and interests evidenced by the securities acquired by the
            Plan are not subordinated to the rights and interests evidenced by
            other securities of the issuer, unless the entity holds only certain
            types of assets, such as fully-secured mortgage loans on real
            property (a "Designated Transaction");

      o     the securities acquired by the Plan have received a rating at the
            time of acquisition that is one of the three highest generic rating
            categories (four, in a Designated Transaction) 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 ("Fitch"). However, the certificates must have been rated in
            one of the two highest generic rating categories by at least one of
            rating agency and may not be subordinated to any other security of
            the issuer if the loan-to value ratio of any single-family
            residential mortgage loan or home equity loan held in the trust
            exceeded 100% on the date of issuance of the certificate;

      o     the trustee is not an affiliate of any other member of the
            Restricted Group, as defined below, other than an underwriter;

      o     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 other servicer
            represents not more than reasonable compensation for its services
            under the agreement pursuant to which the loans are pooled and
            reimbursements of its reasonable expenses in connection therewith;
            and

      o     the Plan investing in the securities is an "accredited investor" as
            defined in Rule 501(a)(1) of Regulation D of the SEC under the
            Securities Act.

      The Underwriter Exemptions will not apply to any of the certificates if
any mortgage loan or other asset held in the trust (other than a single family
mortgage loan or home equity loan) has a loan-to-value ratio that exceeds 100%
on the date of issuance of the certificates or if any single-family residential
mortgage loan or home equity loan has a loan-to-value ratio that exceeds 125% on
the date of issuance of the certificates. As noted above, when the trust
contains single-family residential mortgage loans or home equity loans with a
loan-to-value ratio that exceeds 100% (but does not exceed 125%) on the date of
issuance, only certificates that are rated in one of the two highest rating
categories by a rating agency and that are not subordinated are eligible for
relief under the Underwriter Exemptions.

      The issuer must also meet the following requirements:

      o     the corpus of the issuer must consist solely of assets of the type
            that have been included in other investment pools;

      o     securities in other investment pools must have been rated in one of
            the three highest rating categories (four, in a Designated
            Transaction) of S&P, Moody's or Fitch for at least one year before
            the Plan's acquisition of securities; and

      o     securities evidencing interests in the other investment pools must
            have been purchased by investors other than Plans for at least one
            year before any Plan's acquisition of securities.

      In addition, if the issuer is a legal entity of certain types, the legal
document establishing the issuer must contain restrictions necessary to ensure
that the assets of the issuer may not be reached by creditors of the seller in
the event of its bankruptcy or insolvency.

      Moreover, the Underwriter Exemptions generally provide relief from certain
self-dealing and conflict of interest prohibited transactions that may occur
when the 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:


                                      119


      o     in the case of an acquisition in connection with the initial
            issuance of securities, at least fifty percent of each class of
            securities in which Plans have invested and at least fifty percent
            of the securities in the aggregate are acquired by persons
            independent of the Restricted Group;

      o     the fiduciary (or its affiliate) is an obligor with respect to five
            percent or less of the fair market value of the obligations
            contained in the investment pool;

      o     the Plan's investment in securities of any class does not exceed
            twenty-five percent of all of the securities of that class
            outstanding at the time of the acquisition; and

      o     immediately after the acquisition, no more than twenty-five percent
            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.

This relief is not available to Plans sponsored by the seller, any underwriter,
the trustee, the servicer, any servicer, any insurer with respect to the trust,
any obligor with respect to mortgage loans included in the issuing entity
constituting more than five percent of the aggregate unamortized principal
balance of the assets in the issuing entity, any counterparty to a permissible
notional principal contract included in the trust, or any affiliate of those
parties (the "Restricted Group").

      The Underwriter Exemptions extend exemptive relief to specified
mortgage-backed and asset-backed securities transactions using pre-funded
accounts for trusts issuing pass-through securities. Mortgage loans or other
secured receivables supporting payments to securityholders, and having a value
equal to no more than twenty-five percent of the total principal amount of the
securities being offered by the trust, may be transferred to the trust 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, including, without limitation, (a) all additional loans must meet
the same terms and conditions for determining eligibility as the initial loans;
(b) the additional loans may not result in a lower credit rating; and (c) the
characteristics of the additional loans must be substantially similar to those
of the loans described in this prospectus and the applicable prospectus
supplement, and the acquisition of the additional loans must be monitored by an
independent accountant or a credit support provider or other insurance provider
independent of the seller.

      The Underwriter Exemptions extend exemptive relief to certain
mortgage-backed and asset-backed securities transactions involving trusts that
contain swaps, provided any swap satisfies certain requirements and the other
requirements of the Underwriter Exemptions are met. Among other requirements,
the counterparty to the swap must maintain ratings at certain levels from rating
agencies, and the documentation for the swap must provide for certain remedies
if the rating declines. The swap must be an interest rate swap denominated in
U.S. dollars, may not be leveraged, and must satisfy several other criteria.
Securities of any class affected by the swap may be sold to plan investors only
if they are "qualified plan investors" that satisfy several requirements
relating to their ability to understand the terms of the swap and the effects of
the swap on the risks associated with an investment in the security.

      The rating of a security may change. If a class of securities no longer
has a required rating from at least one rating agency, securities of that class
will no longer be eligible for relief under the Underwriter Exemptions (although
a Plan that had purchased the security when it had a permitted rating would not
be required by the Underwriter Exemptions to dispose of it.) A security 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 PTCE 95-60 are met. If the ratings decline below one of
the four highest generic rating categories from S&P, Moody's or Fitch, each
transferee will be deemed to represent that either (a) it is not purchasing the
securities with plan assets of a Plan, or (b) it is an insurance company using
the assets of its general account (within the meaning of PTCE 95-60) to purchase
the securities and that it is eligible for and satisfies all of the requirements
of Sections I and III of PTCE 95-60.

      The prospectus supplement for each series of securities will indicate the
classes of securities offered thereby, if any, as to which it is expected that
an Underwriter Exemption will apply.


                                      120


      Any Plan fiduciary that proposes to cause a Plan to purchase securities is
encouraged to consult with its counsel concerning the impact of ERISA and the
Code, the availability and applicability of any Underwriter Exemption or any
other exemptions from the prohibited transaction provisions of ERISA and the
Code and the potential consequences in their specific circumstances, before
making the 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 by it will 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 those investors
whose authorized investments are subject to state regulation, to the same extent
as, under applicable law, obligations issued by or guaranteed as to principal
and interest by the United States constitute legal investments for them. Those
investors are 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). Under SMMEA, if a state enacts legislation before October 4,
1991 specifically limiting the legal investment authority of those entities with
respect to "mortgage related securities," the securities will constitute legal
investments for entities subject to the legislation only to the extent provided
in it. Approximately twenty-one states adopted limiting legislation before the
October 4, 1991 deadline.

      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 by them,
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 regulations that the applicable federal
authority may prescribe. In this connection, federal credit unions should review
the National Credit Union Administration 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 its regulation "Investment and Deposit Activities" (12
C.F.R. Part 703), (regardless of whether the class of securities under
consideration for purchase constitutes a "mortgage related security").

      All depository institutions considering an investment in the securities
(regardless of whether 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 Securities
Activities (to the extent adopted by their respective regulators), 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" that are "high-risk mortgage securities" as defined in the
policy statement. According to the policy statement, "high-risk mortgage
securities" include securities such as securities not entitled to distributions
allocated to principal or interest, or subordinated securities. Under the policy
statement, each depository institution must determine, before 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
such a 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 "prudent


                                      121


investor" provisions, percentage-of-assets limits and provisions that may
restrict or prohibit investment in securities that are not "interest bearing" or
"income paying."

      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 them.

                             Method of Distribution

      Securities are being offered hereby in series from time to time (each
series evidencing a separate issuing entity) 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 of its underwriters and either the price at which the series
is being offered, the nature and amount of any underwriting discounts or
additional compensation to the 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 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 that 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 that 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 that 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 that has two or more of (1) an average of at
            least 250 employees during the last fiscal year; (2) total assets of
            more than (euro)43,000,000 and (3) an annual net revenue of more
            than (euro)50,000,000, as shown in its last annual or consolidated
            financial statements; or


                                      122


      (c)   in any other circumstances that 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 to it 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, including certain federal income tax
consequences with respect to the securities, will be passed upon for the
depositor by Sidley Austin LLP, New York, New York; Heller Ehrman LLP, New York,
New York; Mayer, Brown, Rowe & Maw LLP, New York, New York; or Thacher Proffitt
& Wood LLP, New York, New York.

                              Financial Information

      A new issuing entity will be formed for each series of securities and no
issuing entity will engage in any business activities or have any assets or
obligations before the issuance of the related series of securities.
Accordingly, no financial statements for any issuing entity 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
by this prospectus 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 specified in the related prospectus
supplement.

      Ratings on mortgage pass-through securities address the likelihood of
receipt by securityholders of all distributions on the underlying mortgage
loans. These ratings address the structural, legal and issuer-related aspects
associated with the securities, the nature of the underlying mortgage loans and
the credit quality of the credit enhancer or guarantor, if any. Ratings on
mortgage pass-through securities do not represent any assessment of the
likelihood of principal prepayments by mortgagors or of the degree by which the
prepayments might differ from those originally anticipated. As a result,
securityholders might suffer a lower than anticipated yield, and, in addition,
holders of stripped pass-through securities in extreme cases might fail to
recoup their underlying investments.

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


                                      123


                            INDEX OF PRINCIPAL TERMS

                                                                            Page
                                                                            ----

1986 Act .................................................................   107
2001 Act .................................................................   100
2003 Act .................................................................   100
Agency Securities ........................................................    19
Amortizable Bond Premium Regulations .....................................   105
Applicable Amount ........................................................    99
APR ......................................................................    24
ARM Loans ................................................................   107
Asset Conservation Act ...................................................    86
Capitalized Interest Account .............................................    69
CERCLA ...................................................................    86
CI .......................................................................    50
Class Security Balance ...................................................    41
Clearstream, Luxembourg ..................................................    50
Code ..................................................................   37, 89
Contingent Regulations ...................................................    89
Contributions Tax ........................................................   101
Cooperative ..............................................................    51
cooperative loans ........................................................    21
cooperatives .............................................................    21
DBC ......................................................................    50
Debt Securities ..........................................................    89
Deferred Interest ........................................................   108
Designated Transaction ...................................................   119
DOL ......................................................................   118
DTC ......................................................................    49
Eleventh District ........................................................    47
ERISA ....................................................................   117
Euroclear Operator .......................................................    51
excess inclusion .........................................................    99
excess servicing .........................................................   106
FHA ......................................................................    21
FHLBSF ...................................................................    47
Fitch ....................................................................   119
foreign person ...........................................................   112
Garn-St Germain Act ......................................................    87
Global Securities ........................................................    52
Indenture ................................................................    39
Insured Expenses .........................................................    67
Issuing Entity Assets ....................................................    19
Legislative History ......................................................   107
Liquidated Mortgage ......................................................    75
market discount ..........................................................    92
Master REMIC .............................................................    97
Moody's ..................................................................   119
National Cost of Funds Index .............................................    48
New CI ...................................................................    50
new partnership ..........................................................   115
Non-U.S. Person ..........................................................   109
offshore location ........................................................   103
OID ......................................................................   104
OID Regulations ..........................................................   107
old partnership ..........................................................   115
OTS ......................................................................    48
Payment Lag Securities ...................................................    94
phantom income ...........................................................    97
Plan .....................................................................   117
Plan Assets Regulation ...................................................   117
pre-issuance accrued interest ............................................    94
Prepayment Assumption ....................................................   107
Private Mortgage-Backed Securities .......................................    19
Prohibited Transactions Tax ..............................................   101
PTCE .....................................................................   118
RCRA .....................................................................    87
Regular Interest Securities ..............................................    89
Regular Securities .......................................................    96
Regular Securityholders ..................................................    89
Relevant Implementation Date .............................................   122
Relevant Member State ....................................................   122
Relief Act ............................................................   13, 88
REMIC ....................................................................    89
REMIC Securities .........................................................    96
REMICs ...................................................................    97
Residual Certificates ....................................................    96
Restricted Group .........................................................   120
S&P ......................................................................   119
SEC ......................................................................    20
secured creditor exemption ...............................................    86
Securities Act ...........................................................    32
Security Account .........................................................    67
Short-Term Note ..........................................................   112
Single Family Properties .................................................    22
SMMEA ....................................................................   121
Stripped ARM Obligations .................................................   108
Stripped Bond Securities .................................................   106
Stripped Coupon Securities ...............................................   106
Subsequent Recoveries ....................................................    95
Subsidiary REMIC .........................................................    96
Super-Premium Securities .................................................    90
Terms and Conditions .....................................................    51
Title V ..................................................................    88
U.S. Person .....................................................   55, 102, 109
Underwriter Exemptions ...................................................   118
VA .......................................................................    21
W-8BEN ..............................................................   110, 113
Withholding Agent ........................................................   112


                                      124


                 Residential Asset Securitization Trust 2007-A2
                                 Issuing Entity

                                IndyMac MBS, Inc.
                                    Depositor

                               [LOGO] IndyMac Bank
                          Sponsor, Seller and Servicer

                                  $673,531,813
                                 (Approximate)

                Mortgage Pass-Through Certificates, Series 2007-B

                                ----------------
                              PROSPECTUS SUPPLEMENT
                                ----------------

                                   HSBC [LOGO]

            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 Mortgage Pass-Through  Certificates,  Series
2007-B in any state where the offer is not permitted.

            Dealers will deliver a prospectus  supplement  and  prospectus  when
acting as underwriters of the Mortgage Pass-Through Certificates,  Series 2007-B
and with respect to their unsold allotments or subscriptions.  In addition,  all
dealers selling the Mortgage  Pass-Through  Certificates,  Series 2007-B will be
required to deliver a prospectus  supplement and prospectus  until 90 days after
the date of this prospectus supplement.

                                February 27, 2007



                                    Exhibit B

                         July 25, 2007 Remittance Report




                      [THIS PAGE INTENTIONALLY LEFT BLANK]

                      [THIS PAGE INTENTIONALLY LEFT BLANK]




PROSPECTUS

                                INDYMAC MBS, INC.
                                    Depositor

                       Mortgage Pass-Through Certificates
                           Mortgage Pass-Through Notes
                              (Issuable in Series)

Please carefully consider our discussion of some of the risks of investing in
the securities under "Risk Factors" beginning on page 5.

The securities will represent obligations of the related issuing entity only and
will not represent an interest in or obligation of IndyMac MBS, Inc., any
originator, any seller, any servicer, or any of their affiliates.

The Trusts

Each issuing entity will be established to hold assets transferred to it by
IndyMac MBS, Inc. The assets in each issuing entity will be specified in the
prospectus supplement for the particular trust and will generally consist of:

o     first and/or subordinate lien mortgage loans secured by one- to
      four-family residential properties, including manufactured housing that is
      permanently affixed and treated as real property under local law, or
      security interests issued by cooperative housing corporations or
      participations in that type of loan,

o     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 second lien loans, secured in whole or in part by subordinate
      liens on one- to four-family residential properties,

o     loans secured by first and/or subordinate liens on mixed residential and
      commercial properties (mixed use loans),

o     home equity line of credit loans or specified balances thereof, secured in
      whole or in part by first and/or subordinate liens on one- to four-family
      residential properties,

o     loans secured in whole or in part by first and/or subordinate liens on
      improved land that is generally suitable for one- to four-family
      residential dwellings (lot loans), including loans to finance the
      construction of a dwelling (construction loans) and construction loans
      which by their terms convert into a permanent loan upon the completion of
      construction (construction-to-permanent loans),

o     home improvement installment sale contracts and installment loan
      agreements that are secured by first or subordinate liens on one- to
      four-family residential properties,

o     mortgage pass-through securities issued or guaranteed by Ginnie Mae,
      Fannie Mae, or Freddie Mac,

o     private mortgage-backed securities backed by first lien mortgage loans
      secured by one- to four-family residential properties or participations in
      that type of loan, or

o     mortgage-backed securities or collateralized mortgage obligations backed
      by loans secured by first and/or subordinate liens on one- to four-family
      residential properties, by lot loans or by participations in these types
      of loans.

The Securities

IndyMac MBS, Inc. will offer 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 issuing
entity to which the series relates. A prospectus supplement for a series will
specify all of the terms of the series and of each of the classes in the series.

Offers of Securities

The securities may be offered through several different methods, including
offerings through underwriters.

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 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. Any representation to the contrary is a
criminal offense.

July 26, 2007



                                Table of Contents

                                                                            Page
                                                                            ----

Important Notice About Information in this Prospectus
  and Each Accompanying Prospectus Supplement ............................     4
Risk Factors .............................................................     5
  Limited Source of Payments -- No Recourse to Sellers,
    Depositor or Servicer ................................................     5
  Credit Enhancement May Not Be Sufficient to Protect
    You from Losses ......................................................     6
  Losses on Balloon Payment Mortgages Are Borne by You ...................     6
  Multifamily Lending ....................................................     6
  Junior Liens ...........................................................     7
  Partially Unsecured Loans ..............................................     8
  Home Equity Lines of Credit ............................................     8
  Nature of Mortgages ....................................................     9
  Your Risk of Loss May Be Higher Than You Expect
    If Your Securities Are Backed by Partially
    Unsecured Home Equity Loans ..........................................    13
  Impact of World Events .................................................    13
  You Could Be Adversely Affected by Violations
    of Environmental Laws ................................................    14
  Ratings of the Securities Do Not Assure Their Payment ..................    14
  Book-Entry Registration ................................................    15
  Pre-Funding Accounts Will Not Be Used to Cover Losses
    on the Loans .........................................................    16
  Unused Amounts on Deposit in Any Pre-Funding Account
    Will Be Paid as Principal to Securityholders .........................    16
  Secondary Market for the Securities May Not Exist ......................    16
  Bankruptcy or Insolvency May Affect the Timing and
    Amount of Distributions on the Securities ............................    17
  Holders of Original Issue Discount Securities Are
    Required to Include Original Issue Discount in
    Ordinary Gross Income as It Accrues ..................................    18
  The Principal Amount of Securities May Exceed
    the Market Value of the Issuing Entity Assets ........................    18
The Issuing Entity .......................................................    19
  The Mortgage Loans--General ............................................    20
  Agency Securities ......................................................    26
  Private Mortgage-Backed Securities .....................................    31
  Substitution of Issuing Entity Assets ..................................    32
  Available Information ..................................................    33
  Incorporation of Certain Documents by Reference;
    Reports Filed with the SEC ...........................................    33
  Reports to Securityholders .............................................    34
Use of Proceeds ..........................................................    35
The Depositor ............................................................    35
Mortgage Loan Program ....................................................    35
  Underwriting Standards .................................................    36
  Underwriting Process ...................................................    36
  Qualifications of Sellers.. 37
  Representations by Sellers; Repurchases ................................    37
Static Pool Data .........................................................    38
Description of the Securities ............................................    39
  General ................................................................    40
  Distributions on Securities ............................................    41
  Advances ...............................................................    43
  Mandatory Auction ......................................................    44
  Categories of Classes of Securities ....................................    44
  Indices Applicable to Floating Rate and
    Inverse Floating Rate Classes ........................................    46
  Book-Entry Securities ..................................................    50
  Global Clearance, Settlement and Tax Documentation
    Procedures ...........................................................    53
  Exchangeable Securities ................................................    57
Credit Enhancement .......................................................    59
  General ................................................................    59
  Subordination ..........................................................    59
  Letter of Credit .......................................................    60
  Mortgage Pool Insurance Policies .......................................    60
  Special Hazard Insurance Policies ......................................    61
  Bankruptcy Bonds .......................................................    62
  Reserve Fund ...........................................................    62
  Cross Support ..........................................................    63
  Insurance Policies, Surety Bonds and Guaranties ........................    63
  Over-Collateralization .................................................    63
  Financial Instruments ..................................................    64
  Deposit Agreements .....................................................    64
Yield and Prepayment Considerations ......................................    64
  Prepayment Standards or Models .........................................    67
  Yield ..................................................................    67
The Agreements ...........................................................    67
  Assignment of Issuing Entity Assets ....................................    67
  Payments on Issuing Entity Assets; Deposits to
    Security Account .....................................................    70
  Pre-Funding Account ....................................................    72
  Collection Procedures ..................................................    73
  The Surety Provider ....................................................    74
  Hazard Insurance .......................................................    74
  Realization upon Defaulted Mortgage Loans ..............................    75
  Servicing and Other Compensation and Payment
    of Expenses ..........................................................    78
  Evidence as to Compliance ..............................................    79
  List of Securityholders ................................................    79
  Certain Matters Regarding the Servicer and the Depositor ...............    80
  Events of Default ......................................................    81
  Amendment ..............................................................    83


                                       2


  Termination; Optional Termination ......................................    84
  The Trustee ............................................................    85
Certain Legal Aspects of the Mortgage Loans ..............................    85
  General ................................................................    86
  Foreclosure and Repossession ...........................................    87
  Rights of Redemption ...................................................    88
  Anti-Deficiency Legislation and Other Limitations
    on Lenders ...........................................................    89
  Environmental Risks ....................................................    90
  Due-on-sale Clauses ....................................................    91
  Prepayment Charges .....................................................    91
  Applicability of Usury Laws ............................................    91
  Servicemembers Civil Relief Act ........................................    92
  Material Federal Income Tax Consequences ...............................    92
  General ................................................................    92
  Taxation of Debt Securities ............................................    93
  REMIC Securities .......................................................   100
  Tax Status as a Grantor Trust ..........................................   107
  Final Trust Reporting Regulations ......................................   115
  Tax Characterization of the Issuing Entity as a Partnership ............   115
  Tax Consequences to Holders of the Notes ...............................   115
  Tax Consequences to Holders of the Certificates ........................   117
State Tax Considerations .................................................   121
ERISA Considerations .....................................................   121
  Exemptions Available to Debt Instruments ...............................   121
  Underwriter Exemption ..................................................   122
Legal Investment .........................................................   125
Method of Distribution ...................................................   126
Legal Matters ............................................................   127
Financial Information ....................................................   127
Rating ...................................................................   127
INDEX OF PRINCIPAL TERMS .................................................   128


                                       3


         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 IndyMac MBS, Inc., 155 North Lake Avenue,
Pasadena, California 91101 and the telephone number is (800) 669-2300. For other
means of acquiring additional information about us or a series of securities,
see "The Issuing Entity--Available Information" and "--Incorporation of Certain
Documents by Reference; Reports Filed with the SEC" on page 33.


                                       4


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                                  Risk Factors

      You should carefully consider the following information because it
identifies significant risks associated with an investment in the securities.

Limited Source of             The applicable prospectus supplement may provide
Payments -- No Recourse       that securities will be payable from other issuing
to Sellers, Depositor or      entities in addition to their associated issuing
Servicer                      entity, but if it does not, they will be payable
                              solely from their associated issuing entity. If
                              the issuing entity does not have sufficient assets
                              to distribute the full amount due to you as a
                              securityholder, your yield will be impaired. The
                              return of your principal may be impaired, and you
                              will not have recourse to any other entity.
                              Furthermore, at the times specified in the
                              applicable prospectus supplement, certain assets
                              of the issuing entity 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 issuing
                              entity. 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. Unless
                              otherwise specified in the applicable prospectus
                              supplement, you also will not have recourse
                              against the assets of the issuing entity 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 issuing
                              entity. The only obligation of the depositor to an
                              issuing entity comes from certain representations
                              and warranties made by it about assets transferred
                              to the issuing entity. If these representations
                              and warranties turn out to be untrue, the
                              depositor may be required to repurchase or
                              substitute for some of the transferred assets.
                              IndyMac MBS, Inc., which is the depositor, does
                              not have significant assets and is unlikely to
                              have significant assets in the future. 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 servicer to an issuing
                              entity (other than its 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 servicer may
                              be required to repurchase some of the loans.
                              However, the servicer may not have the financial
                              ability to make the required repurchase.

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                                       5


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                              The only obligations to an issuing entity 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 required to repurchase some
                              of the loans. However, the seller may not have the
                              financial ability to make the required repurchase.

Credit Enhancement May        Credit enhancement is intended to reduce the
Not Be Sufficient to          effect of loan losses. Credit enhancements,
Protect You from Losses       however, may benefit only some classes of a series
                              of securities and the amount of any credit
                              enhancement will be limited as described in the
                              applicable 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 a 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 adversely
                              change their rating of the securities.
                              Consequently, securityholders may suffer losses
                              even though a credit enhancement exists and its
                              provider does not default.

Losses on Balloon Payment     Some of the underlying loans may not be fully
Mortgages Are Borne by        amortizing over their terms to maturity and, thus,
You                           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.

Multifamily Lending           Multifamily lending may expose the lender to a
                              greater risk of loss than single family
                              residential lending. Owners of multifamily
                              residential properties rely on monthly rent
                              payments from tenants to:

                              o  pay for maintenance and other operating
                                 expenses of those properties,

                              o  fund capital improvements, and

                              o  service any loan or other debt that may be
                                 secured by those properties.

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                                       6


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                              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
                              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 cannot
                              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 property 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.

Junior Liens                  The mortgages and deeds of trust securing the
                              closed-end second-lien loans will be, the home
                              equity line of credit loans and home improvement
                              contracts will primarily be, and other loans may
                              be junior liens subordinate to the rights of the
                              related senior mortgage(s) or deed(s) of trust.
                              Accordingly, the proceeds from any liquidation,
                              insurance policy or condemnation proceeding 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, the junior mortgagee will have to
                              foreclose 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 if
                                 the mortgagor is in default under that
                                 mortgage.

                              Unless the servicer is obligated under the
                              applicable agreement to advance such funds, the
                              issuing entity may effectively be prevented from
                              foreclosing on the related property because it
                              will

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                                       7


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                              not have sufficient 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

                              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."

Partially Unsecured Loans     The issuing entity for any series may include
                              closed-end second-lien loans, home equity line of
                              credit loans and home improvement contracts that
                              were originated with loan-to-value ratios or
                              combined loan-to-value ratios in excess of the
                              value of the related property.

                              Under these circumstances, the issuing entity for
                              the related series could be treated as a general
                              unsecured creditor as to any unsecured portion of
                              any related loan. If a borrower defaults under a
                              loan that is unsecured in part, the related
                              issuing entity generally will have recourse only
                              against the borrower's assets for the unsecured
                              portion of the loan, along with all other general
                              unsecured creditors of the borrower. In a
                              bankruptcy or insolvency proceeding relating to a
                              borrower on a partially unsecured loan, the
                              borrower's unsecured obligation on that loan will
                              be treated as an unsecured loan and may be
                              discharged by the bankruptcy court. Losses on any
                              partially unsecured loans that are not otherwise
                              covered by a credit enhancement will be borne by
                              the holders of one or more classes of securities
                              of the related series.

Home Equity Lines of          Generally, a home equity line of credit has a draw
Credit                        period that lasts for the first ten years (during
                              which no principal or minimal amount of principal
                              is due) and, unless otherwise specified in the
                              related prospectus supplement, a repayment term
                              following the draw period of zero, ten, fifteen or
                              twenty years. As a result, there may be limited
                              collections available to make payments to related
                              securityholders or payments of principal may be
                              received more slowly than anticipated, which will
                              affect the yield on one or more classes of
                              securities of the related series.

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                                       8


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                              Home equity lines of credit that do not have a
                              repayment term following the draw period are
                              effectively balloon loans that pose an additional
                              risk because a borrower must make a large lump sum
                              payment of principal at the end of the draw
                              period. If the borrower is unable to pay the lump
                              sum or refinance such amount, holders of one or
                              more classes of securities of the related series
                              may suffer a loss if the related credit
                              enhancement is not sufficient to cover such
                              shortfall.

Nature of Mortgages           The value of the properties underlying the loans
                              held in the issuing entity may decline over time.
  Declines In Property        Among the factors that could adversely affect the
  Values May Adversely        value of the properties are:
  Affect You
                              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.

                              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.

  Cooperative Loans May       Cooperative loans are evidenced by promissory
  Experience Relatively       notes secured by security interests in shares
  Higher 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 a blanket mortgage (or mortgages) exists 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 an underlying lease of the land exists, 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

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                                       9


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                              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.

  Delays in Liquidation May   Even if the properties underlying the loans held
  Adversely Affect You        in the issuing entity 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.

                              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

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                                       10


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                                    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 generally
  Liquidation Expenses May    do not vary directly with the outstanding
  Adversely Affect You        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    Federal, state and local laws extensively regulate
  May Adversely Affect You    various aspects of brokering, originating,
                              servicing and collecting mortgage 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 mortgage 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 mortgage originators, including
                              claims based on fraud or misrepresentations, to be
                              asserted against persons acquiring the mortgage
                              loans, such as the trust.

                              The federal laws that may apply to loans held in
                              the trust include the following:

                              o  the Truth in Lending Act and its regulations,
                                 which (among other things) require disclosures
                                 to borrowers regarding the

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                                       11


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                                 terms of mortgage 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 (but in no event more than three
                                 years);

                              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 this type of
                                 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 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 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 mortgage loan. Violations of
                              certain laws may limit the ability to collect all
                              or part of the principal or interest on a mortgage
                              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

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                                       12


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                              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 the secondary mortgage
                              market, including assignees that hold the mortgage
                              loan, such as the trust. 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
                              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
                              seller, will be borne by the holders of one or
                              more classes of securities.

Your Risk of Loss May Be      The issuing entity may also include home equity
Higher Than You Expect If     loans that were originated with loan-to-value
Your Securities Are           ratios or combined loan-to-value ratios in excess
Backed by Partially           of the value of the related mortgaged property.
Unsecured Home Equity         Under these circumstances, the issuing entity
Loans                         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 issuing entity 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.

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 issuing
                              entity. 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

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                                       13


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                              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.

You Could Be Adversely        Federal, state, and local laws and regulations
Affected by Violations of     impose a wide range of requirements on activities
Environmental Laws            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 issuing
                              entity. 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, under certain
                              circumstances, 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 issuing entity 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     Any class of securities offered under this
Do Not Assure Their           prospectus and the accompanying prospectus
Payment                       supplement will be rated in one of the four
                              highest rating categories of 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, in the case of surety bonds, insurance
                              policies, letters of credit or guarantees,
                              primarily on the claims paying ability of any
                              related surety provider, insurer, letter of credit
                              provider or guarantor, 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

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                                       14


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                              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 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

                              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 issuing
                              entity 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
                              regardless of whether the conditions affect real
                              property values and, accordingly, the rates of
                              delinquencies, foreclosures, and losses in any
                              issuing entity. 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 only
  Limit on Liquidity          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.

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                                       15


   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.

Pre-Funding Accounts Will     The prospectus supplement for a series of
Not Be Used to Cover          securities may provide that on the closing date
Losses on the Loans           for that series, the depositor will deposit cash
                              into a pre-funding account. The amount deposited
                              into the pre-funding account will never exceed 50%
                              of the initial aggregate principal amount of the
                              certificates and/or notes of the related series.
                              The pre-funding account will only be used to
                              purchase additional loans from the depositor
                              during the period beginning with the related
                              closing date and ending not more than one year
                              after the closing date. The depositor will acquire
                              these additional loans from the seller or sellers
                              specified in the related prospectus supplement.
                              The trustee for the related series will maintain
                              the pre-funding account. Amounts on deposit in the
                              pre-funding account will not be used to cover
                              losses on or in respect of the related loans.

Unused Amounts on Deposit     Any amounts remaining in a pre-funding account at
in Any Pre-Funding            the end of the period specified in the applicable
Account Will Be Paid as       prospectus supplement will be distributed as a
Principal to                  prepayment of principal to the related
Securityholders               securityholders on the first distribution date
                              after the end of that period. Any such
                              distribution will be made in the amounts and
                              according to the priorities specified in the
                              related prospectus supplement. The holders of one
                              or more classes of the related series of
                              securities will bear the entire reinvestment risk
                              resulting from that prepayment.

Secondary Market for the      The related prospectus supplement for each series
Securities May Not Exist      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. If only a portion of a class of
                              offered certificates has been sold to the public,
                              the market for the offered certificates could be
                              illiquid because of the small amount of these
                              certificates held by the public. In addition, the
                              market overhang created by the existence of
                              offered certificates that the market is aware may
                              be sold to the public in the near future could
                              adversely affect your ability to sell your
                              certificates. 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 especially sensitive to
                              prepayment,

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                                       16


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                              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 to
May Affect the Timing and     structure the transfer of the loans held in the
Amount of Distributions       issuing entity by the seller to the depositor as a
on the Securities             sale. The depositor and the issuing entity will
                              take steps to structure the transfer of the loans
                              from the depositor to the issuing entity 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 servicer becomes bankrupt, the bankruptcy
                              trustee may have the power to prevent the
                              appointment of a successor 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 servicer's own funds before each
                              distribution date for securities will be specified
                              in the applicable prospectus supplement. If the
                              servicer becomes bankrupt and cash collections
                              have been commingled with the servicer's own
                              funds, the issuing entity will likely not have a
                              perfected interest in those collections. In this
                              case the trust might be an unsecured creditor of
                              the servicer as to the commingled funds and could
                              recover only its share as a general creditor,
                              which might be nothing. Collections commingled but
                              still in an account of the servicer might also be
                              included in the bankruptcy estate of the servicer
                              even though the trust may have a perfected
                              security interest in them. Their inclusion in the
                              bankruptcy estate of the 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. In
                              certain instances a

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                                       17


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                              bankruptcy court may allow a borrower to reduce
                              the monthly payments, change the rate of interest,
                              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.

Holders of Original Issue     Debt securities that are compound interest
Discount Securities Are       securities will be, and certain other debt may be,
Required to Include           securities issued with original issue income
Original Issue Discount       discount for federal tax purposes. A holder of
in Ordinary Gross Income      debt securities issued with original issue
as It Accrues                 discount is required to include original issue
                              discount in ordinary gross income for federal
                              income tax purposes as it accrues, before
                              receiving the cash attributable to that income.
                              Accrued but unpaid interest on the debt securities
                              that are compound interest securities generally
                              will be treated as original issue discount for
                              this purpose.

                              See "Federal Income Tax Consequences-Taxation of
                              Debt Securities-Interest and Acquisition Discount"
                              and "-Market Discount."

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 than
Market Value of the           the principal amount of the securities of that
Issuing Entity Assets         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 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 of Principal
                              Terms" on page 128.

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                                       18


                              The Issuing Entity(1)

      This prospectus relates to either Mortgage Pass-Through Certificates or
Mortgage Pass-Through Notes, or a combination of those, which may be sold from
time to time in one or more series by the depositor, IndyMac MBS, Inc., on terms
determined at the time of sale and described in this prospectus and the related
prospectus supplement. Each series will be issued under a separate agreement to
be entered into with respect to each series. The securities of each series will
represent interests in the assets of the related issuing entity, and the notes
of each series will be secured by the pledge of the assets of the related
issuing entity. The issuing entity for each series will be held by the trustee
for the benefit of the related securityholders. Each issuing entity will consist
of the issuing entity assets (the "Issuing Entity Assets") consisting of:

      o     a pool of mortgage loans of the type or types specified in the
            related prospectus supplement, together with payments relating to
            those loans,

      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 "Private Mortgage-Backed Securities") evidencing an
            interest in, or secured by, mortgage loans of the type that would
            otherwise be eligible to be mortgage loans.

      The Issuing Entity 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 issuing entity. Loans acquired by the depositor wil
have been originated in accordance with the underwriting criteria specified
below under "Mortgage Loan Program--Underwriting Standards" or as otherwise
described in the related prospectus supplement. See "Mortgage Loan
Program--Underwriting Standards" in this prospectus.

      The depositor will cause the Issuing Entity 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 servicer named in the
related prospectus supplement will service the Issuing Entity Assets pursuant
to:

      o     a pooling and servicing agreement among the depositor, the servicer
            and the trustee, in the case of a series consisting of certificates,

      o     a servicing agreement between the trustee and the servicer, in the
            case of a series consisting of certificates and notes, or

      o     a sale and servicing agreement among the depositor, the servicer and
            the trustee, in the case of a series consisting of notes.

      The servicer will receive a fee for its services. See "Loan Program" and
"The Agreements" in this prospectus. With respect to loans serviced by the
servicer through a sub-servicer, the servicer will remain liable for its
servicing obligations under the related agreement as if the servicer alone were
servicing those loans.

      In the case of a series consisting of certificates, the term "agreement"
means the related pooling and servicing agreement. In the case of a series
consisting of certificates and notes, the term "agreement" means the related
trust agreement, indenture and servicing agreement, as the context requires. In
the case of a series consisting of notes, the term "agreement" means the related
trust agreement, sale and servicing agreement or indenture, as the context
requires.

----------
(1)   Whenever the terms mortgage pool and certificates are used in this
      prospectus, those terms will be considered to apply, unless the context
      indicates otherwise, to one specific mortgage pool and the certificates
      representing certain undivided interests in a single issuing entity
      consisting primarily of the Issuing Entity Assets in the mortgage pool.
      Similarly, the term pass-through rate will refer to the pass-through rate
      borne by the certificates of one specific series and the term issuing
      entity will refer to one specific issuing entity.


                                       19


      If specified in the related prospectus supplement, an issuing entity for a
series may be a business trust or common law trust formed under the laws of the
state specified in the related prospectus supplement pursuant to a trust
agreement between the depositor and the related trustee.

      Before the initial offering of a series of securities, the issuing entity
for that series will have no assets or liabilities. The issuing entity for a
series is not expected to engage in any activities other than:

      o     acquiring, holding and managing the related Issuing Entity Assets
            and any other assets specified in this prospectus and the related
            prospectus supplement (including any proceeds of those assets),

      o     issuing securities and making distributions on them, and

      o     certain other related activities.

      The issuing entity for a series is not expected to have any source of
capital other than its assets and any related credit enhancement.

      The related prospectus supplement may provide for additional obligations
of the depositor, but if it does not, the depositor's only obligations with
respect to a series of securities will be to obtain certain representations and
warranties from the sellers and to assign to the related trustee the depositor's
rights with respect to those representations and warranties. See "The
Agreements- Assignment of the Issuing Entity Assets." The servicer's obligations
with respect to the loans will consist mainly of its contractual servicing
obligations under the related agreement (including its obligation to enforce the
obligations of the sellers, as described in this prospectus under "Loan
Program-Representations by Sellers; Repurchases" and "-Assignment of the Issuing
Entity Assets"), and any obligation to make cash advances in the event of
delinquent payments on the loans, as described under "Description of the
Securities-Advances" in this prospectus. The servicer's obligation to make
advances may be limited, as described in this prospectus and the related
prospectus supplement.

      The securities will be entitled to payment from the assets of the related
issuing entity or other assets pledged for the benefit of the holders of the
securities as specified in the related prospectus supplement and will not be
entitled to payments in respect of the assets of any other issuing entity
established by the depositor. The applicable prospectus supplement may specify
the Issuing Entity Assets that an issuing entity will consist of, but if it does
not, the Issuing Entity Assets of any issuing entity will consist of mortgage
loans, Agency Securities or Private Mortgage-Backed Securities but not a
combination of them. Mortgage loans acquired by the depositor will have been
originated in accordance with the underwriting criteria specified below under
"Mortgage Loan Program--Underwriting Standards" or as otherwise described in a
related prospectus supplement.

      The following is a brief description of the Issuing Entity Assets expected
to be included in the issuing entities. If specific information about the
Issuing Entity Assets is not known at the time the related series of securities
initially is offered, the related prospectus supplement will contain more
general information of the nature described below, 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 series
of securities. A maximum of 5% of the Issuing Entity Assets (relative to the
related pool principal balance) as they will be constituted at the time that the
applicable detailed description of Issuing Entity Assets is filed will deviate
in any material respect from the Mortgage Asset pool characteristics described
in the related prospectus supplement. A schedule of the Issuing Entity Assets
relating to the series will be attached to the pooling and servicing agreement
delivered to the trustee upon delivery of the securities.

The Mortgage Loans--General

      The mortgage loans will be secured by first and, if so specified in the
related prospectus supplement, subordinate mortgage liens on one- to four-family
residential properties and, if so specified in the related prospectus
supplement, may include cooperative apartment loans secured by security
interests in shares issued by private, nonprofit, cooperative housing
corporations and in the related proprietary leases or occupancy agreements
granting exclusive rights to occupy specific dwelling units in the cooperatives'
buildings. In addition, the Issuing Entity Assets of the related issuing entity
may include mortgage participation certificates evidencing interests in mortgage


                                       20


loans. The mortgage loans may be conventional loans (i.e., loans that are not
insured or guaranteed by any governmental agency), insured by the FHA or
partially guaranteed by the VA as specified in the related prospectus
supplement. All or a portion of the mortgage loans in a mortgage pool may be
insured by FHA insurance and may be partially guaranteed by the VA.

      The mortgage loans will consist of single family loans, multifamily loans,
mixed-use loans, closed-end second-lien loans, home equity line of credit loans,
lot loans or home improvement contracts. If specified in the related prospectus
supplement, 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 real property that secures repayment of the mortgage loans is referred
to collectively as "mortgaged properties." The mortgaged properties will be
located in any one of the fifty states, the District of Columbia, Guam, Puerto
Rico or any other territory of the United States. Mortgage loans with certain
Loan-to-Value Ratios or certain principal balances or both may be covered wholly
or partially by primary mortgage guaranty insurance policies. The existence,
extent and duration of coverage will be described in the applicable prospectus
supplement. The mortgaged properties will be secured by mortgages or deeds of
trust or other similar security instruments creating a lien on a property. In
the case of closed-end second-lien loans, liens will be, in the case of home
equity line of credit loans and home improvement contracts, liens generally will
be, and in the case of all other loans, liens may be subordinated to one or more
senior liens on the related properties, as described in the related prospectus
supplement. In addition to being secured by mortgages on real estate, the home
improvement 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 closed-end second-lien loans, home equity line of
credit loans and home improvement contracts may include loans (primarily for
home improvement or debt consolidation purposes) in amounts exceeding the value
of the related properties at the time of origination.

      The applicable prospectus supplement may specify the day or days on which
bi-weekly or monthly payments on the mortgage loans in a mortgage pool will be
due, but if it does not, all of the mortgage loans in a mortgage pool will have
monthly payments due on the first day of each month. The payment terms of the
mortgage loans to be included in an issuing entity 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:

      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. Mortgage loans may provide for the
            payment of interest at a rate lower than the specified interest rate
            borne by that loan (the "Loan Rate") for a period of time or for the
            life of the loan; the amount of the difference may be contributed by
            the seller of the property or another source.

      o     Principal may be payable on a level debt service basis to fully
            amortize the mortgage loan over its term, may be calculated on the
            basis of an assumed amortization schedule that is significantly
            longer than the original term to maturity or on 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 (referred to as a
            "balloon payment") of all or a substantial portion of the principal
            may be due on maturity, called balloon payments. Principal may
            include interest that has been deferred and added to the principal
            balance of the mortgage loan.

      o     Monthly payments of principal and interest may be fixed for the life
            of the mortgage loan, may increase over a specified period of time
            or may change from period to period, including periods in


                                       21


            which payments are interest only. The terms of a mortgage 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 mortgage loans generally may be prepaid at any time without the
            payment of any prepayment charge. If so specified in the related
            prospectus supplement, some prepayments of principal may be subject
            to a prepayment charge, which may be fixed for the life of the
            mortgage loan or may decline over time, and may be prohibited for
            the life of the mortgage loan or for certain periods, which are
            called lockout periods. Certain mortgage loans may permit
            prepayments after expiration of the applicable lockout period and
            may require the payment of a prepayment charge in connection with
            any subsequent prepayment. Other mortgage 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
            mortgage loan in connection with the sale or certain transfers of
            the related mortgaged property. Other mortgage loans may be
            assumable by persons meeting the then applicable underwriting
            standards of the seller.

      o     The mortgage loans may also consist of reverse mortgage loans, which
            generally provide for either an initial advance to the borrower at
            the time of origination of the loan followed by, in most cases,
            fixed monthly advances for the life of the loan, or for periodic
            credit line draws by the borrower at the borrower's discretion, and
            which provide that no interest or principal is payable by the
            borrower until maturity, which generally does not occur until the
            borrower dies, sells the home or moves out. Interest on reverse
            mortgage loans continues to accrue and is added to the outstanding
            amount of the loan.

      An issuing entity may contain buydown loans that include provisions
whereby a third party partially subsidizes the monthly payments of the obligors
on the mortgage loans during the early years of the mortgage loans, the
difference to be made up from a buydown fund contributed by the third party at
the time of origination of the mortgage 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
mortgage loan upon receipt by the servicer of the mortgagor's portion of the
monthly payment on the mortgage loan. The 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 mortgage 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 initially paid by the
mortgagor, on annual increases in the interest rate and on the length of the
buydown period.

      The real properties securing repayment of the loans are referred to as the
properties. The loans will be secured by mortgages or deeds of trust or other
similar security instruments creating a lien on a property. In the case of
closed-end second-lien loans, liens will be, in the case of home equity line of
credit loans and home improvement contracts, liens generally will be, and in the
case of all other loans, liens may be subordinated to one or more senior liens
on the related properties, as described in the related prospectus supplement. In
addition to being secured by mortgages on real estate, the home improvement
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 closed-end second-lien loans, home equity line of credit loans
and home improvement contracts may include loans (primarily for home improvement
or debt consolidation purposes) in amounts exceeding the value of the related
properties at the time of origination. The properties and the home improvements
are collectively referred to in this prospectus as the "Properties" and are
individually referred to as a "Property." 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 (defined below) and/or certain
principal balances may be covered wholly or partially by primary mortgage
guaranty insurance policies. The existence, extent and duration of any such
coverage will be described in the applicable prospectus supplement.


                                       22


      The related prospectus supplement will disclose the aggregate principal
balance of loans secured by owner-occupied properties. The related prospectus
supplement also may state the basis for representations relating to Single
Family Properties (defined below), but if it does not, the sole basis for a
representation that a given percentage of the loans is secured by owner-occupied
Single Family Properties will be the borrower's representation at origination
that the borrower intends to use the Property as a primary residence.

      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, security interests in shares issued by
cooperative housing corporations, 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 related prospectus supplement may specify the leasehold term, but
if it does not, the stated term of the leasehold will exceed the scheduled
maturity of the loan by at least five years.

      Multifamily Loans. Properties securing 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. 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 conferring exclusive rights to occupy specific apartments or units.
Generally, a tenant-stockholder of a cooperative makes a monthly payment to the
cooperative representing that tenant-stockholder's pro rata share of the
cooperative's payments for its loan, real property taxes, maintenance expenses
and other capital or ordinary expenses. That monthly payment is in addition to
any payments of principal and interest the tenant-stockholder makes 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 depend in large part on its receipt
of maintenance payments from the tenant-stockholders, as well as any rental
income from units the cooperative controls. Unanticipated expenditures may in
some cases have to be paid by special assessments on the tenant-stockholders. No
more than 10% of the aggregate Issuing Entity 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.

      Reverse Mortgage Loans. The mortgage loans in a particular issuing entity
may be reverse mortgage loans, which are fixed or variable rate mortgage loans
that do not provide for monthly payments of principal and interest by the
borrower. Instead, these mortgage loans will provide generally either for the
accrual of interest on a monthly basis and the repayment of principal, interest
and, in some cases, certain amounts calculated by reference to the value, or the
appreciation in value, of the related mortgaged property, or for payment in lieu
of interest of an amount calculated by reference to the appreciation in value of
the related mortgaged property, in each case upon the occurrence of specified
maturity events. Maturity events generally include:

            o     the death of the borrower, or the last living of two
                  co-borrowers;

            o     the borrower, or the last living of the two co-borrowers,
                  ceasing to use the related mortgaged property as his or her
                  principal residence; or

            o     the sale of the related mortgaged property.

      The maturity of this type of mortgage loan may be accelerated upon the
occurrence of certain events, such as deterioration in the condition of the
related mortgaged property.

      Mixed-Use Loans. The properties securing mixed-use loans will be improved
by structures that have both residential and commercial units. No more than 10%
of the aggregate Issuing Entity Assets for any series, as constituted at the
applicable cut-off date (measured by principal balance), will be comprised of
mixed-use loans.


                                       23


      Closed-End Second-Lien Loans. The mortgaged properties relating to
closed-end second-lien loans will be Single Family Properties. The full amount
of a closed-end second-lien loan is advanced at the inception of the loan and
generally is repayable in equal (or substantially equal) installments designed
to fully amortize the loan at its stated maturity. Except as provided in the
related prospectus supplement, the original terms to stated maturity of
closed-end second-lien loans will not exceed 360 months. With respect to certain
circumstances, a borrower may choose an interest only payment option whereby the
borrower pays only the amount of interest accrued 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 Equity Line of Credit Loans. The mortgaged properties relating to
home equity line of credit loans will be Single Family Properties. As more fully
described in the related prospectus supplement, interest on each home equity
line of credit 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 home equity
line of credit loan may be drawn down (up to a maximum amount specified in the
related prospectus supplement) or repaid under each home equity line of credit
loan from time to time, but may be subject to a minimum periodic payment. Except
as provided in the related prospectus supplement, the Issuing Entity Assets will
not include any amounts borrowed under a home equity line of credit loan after
the cut-off date. With respect to certain circumstances, a borrower may choose
an interest only payment option whereby the borrower pays only the amount of
interest accrued 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.

      Lot Loans. These loans provide short-term financing for borrowers buying a
parcel of land that has been improved for residential use with the intention of
building a home thereon. Each lot loan is secured by a parcel of land that has
been improved for residential use, which generally means that it is legally
accessible by street and utilities such as sewer, electricity and water have
been brought to the parcel or are available in the street, but a dwelling has
not yet been built thereon. Lot loans may include loans to finance the
construction of a dwelling on such a parcel and construction loans which convert
into permanent loans upon the completion of construction.

      Home Improvement Contracts. The Issuing Entity Assets for a series of
securities may consist, in whole or in part, of home improvement 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 contracts may include, but are not limited to, replacement
windows, house siding, new roofs, swimming pools, spas, kitchen and bathroom
remodeling goods, solar heating panels and other exterior and interior
renovations and general remodeling projects. The home improvement contracts will
be secured by mortgages on Single Family Properties that are generally
subordinate to other mortgages on the same Property. In general, the home
improvement contracts will be fully amortizing and may have fixed interest rates
or adjustable interest rates and may provide for other payment characteristics
as described below and in the related prospectus supplement. The initial
Loan-to-Value Ratio of a home improvement 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 mortgage loans
contained in the related mortgage pool, including

      o     the aggregate outstanding principal balance and the average
            outstanding principal balance of the mortgage loans as of the first
            day of the month of issuance of the related series of securities or
            another date referred to in the related prospectus supplement as a
            cut-off date,

      o     the type of property securing the mortgage loans (e.g., single
            family residences, individual units in condominium apartment
            buildings or in buildings owned by cooperatives, vacation and second
            homes, small multi-family properties or other real property or home
            improvements),

      o     the original terms to maturity of the mortgage loans,

      o     the ranges of the principal balances of the mortgage loans,


                                       24


      o     the earliest origination date and latest maturity date of any of the
            mortgage loans,

      o     the ranges of the Loan-to-Value Ratios or Combined Loan-to-Value
            Ratios (each as defined below), as applicable, of the loans at
            origination,

      o     the Loan Rates or annual percentage rates ("APR") or range of Loan
            Rates or APRs borne by the loans,

      o     the maximum and minimum per annum mortgage rates and

      o     the geographical distribution of the mortgage loans.

      If the depositor does not know specific information about the mortgage
loans at the time the related securities are initially offered, the related
prospectus supplement will contain more general information of the type
described above.

      Unless otherwise specified in the related prospectus supplement, the
"Loan-to-Value Ratio" of a loan at any given time is a 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.

      Unless otherwise specified in the related prospectus supplement, the
"Combined Loan-to-Value Ratio" of a loan at any given time is the ratio,
expressed as a percentage, of

      (x) the sum of

      o     the original principal balance of the loan (or, in the case of a
            home equity line of credit loan, the maximum amount available at
            origination), and

      o     the outstanding principal balance at the date of origination of the
            loan of any senior loan(s) (or, in the case of any open-ended senior
            loan, the maximum available line of credit with respect to that loan
            at origination, regardless of any lesser amount actually outstanding
            at the date of origination of the loan,

      to

      (y) the collateral value of the related Property.

      The applicable prospectus supplement may specify how the collateral value
of a Property will be calculated, but if it does not, the collateral value of a
Property (other than with respect to certain loans the proceeds of which were
used to refinance an existing loan), is the lesser of:

      o     the sales price for the property, and

      o     the appraised value determined in an appraisal obtained by the
            originator at origination of the loan.

In the case of refinance loans, the collateral value of the related Property is
generally the appraised value determined in an appraisal obtained at the time of
refinancing.

      We can give no assurance that values of the mortgaged properties have
remained or will remain at their levels on the dates of origination of the
related mortgage loans. If the residential real estate market were to experience
an overall decline in property values so that the outstanding principal balances
of the mortgage loans, and any primary or secondary financing on the Properties,
in a particular mortgage pool become equal to or greater than the value of the
mortgaged properties, the actual rates of delinquencies, foreclosures and losses
could be higher than those now generally experienced in the mortgage lending
industry. In addition, adverse economic conditions and other factors (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 mortgage loans
and, accordingly, the actual rates of


                                       25


delinquencies, foreclosures and losses with respect to any mortgage 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.

      The depositor will cause the mortgage loans comprising each mortgage pool
to be assigned to the trustee named in the related prospectus supplement for the
benefit of the securityholders of the related series. Each servicer named in the
related prospectus supplement will service the mortgage loans pursuant to the
pooling and servicing agreement, sale and servicing agreement or servicing
agreement, as applicable, and will receive a fee for its services. See "Mortgage
Loan Program" and "The Agreements."

      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
the series of securities the depositor's rights with respect to the
representations and warranties. See "The Agreements--Assignment of Issuing
Entity Assets." The obligations of the servicers with respect to the mortgage
loans will consist principally of its contractual servicing obligations under
the related pooling and servicing agreement, sale and servicing agreement or
servicing agreement, as applicable (including its obligation to enforce the
obligations of the sellers, as more fully described under "Mortgage Loan
Program--Representations by Sellers; Repurchases") and its obligation to make
cash advances upon delinquencies in payments on or with respect to the mortgage
loans in the amounts described under "Description of the Securities--Advances."
The obligations of the servicers to make advances may be subject to limitations,
to the extent provided in this prospectus and in the related prospectus
supplement. The servicer may also be a seller in which case a breach of its
obligations in one capacity will not constitute a breach of its obligations in
the other capacity.

      The mortgage loans will consist of mortgage loans, deeds of trust or
participations or other beneficial interests therein, secured by first and, if
so specified in the related prospectus supplement, subordinate, liens on one- to
four-family residential properties and, if so specified in the related
prospectus supplement, may include cooperative apartment loans secured by
security interests in shares issued by private, non-profit, cooperative housing
corporations and in the related proprietary leases or occupancy agreements
granting exclusive rights to occupy specific dwelling units in the cooperatives'
buildings. In addition, Issuing Entity Assets of the related issuing entity may
include mortgage participation certificates evidencing interests in mortgage
loans. These loans may be conventional loans (i.e., loans that are not insured
or guaranteed by any governmental agency) or loans insured by the FHA or
partially guaranteed by the VA, as specified in the related prospectus
supplement. The mortgaged properties relating to mortgage loans will consist of
detached or semi-detached one-family dwelling units, two- to four-family
dwelling units, townhouses, rowhouses, individual condominium units, individual
units in planned unit developments and certain other dwelling units. The
mortgaged properties may include vacation and second homes, investment
properties and leasehold interests. In the case of leasehold interests, the
applicable prospectus supplement may specify that the term of the leasehold may
be less than five years beyond the scheduled maturity of the mortgage loan, but
if it does not, the term of the leasehold will exceed the scheduled maturity of
the mortgage loan by at least five years.

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.


                                       26


      Ginnie Mae Certificates. Each Ginnie Mae certificate held in an issuing
entity 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 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 an issuing entity, 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 an issuing entity 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 an issuing entity 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.


                                       27


      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 securities may be held in book-entry form.

      The Ginnie Mae certificates included in an issuing entity, 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 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 the 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 an issuing
entity 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, regardless of whether 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 securities, 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


                                       28


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 seller. Freddie
Mac is required to remit each registered Freddie Mac securityholder'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 charges,
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


                                       29


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 an issuing
entity 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 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, regardless of whether received, and the holder's
proportionate share of the full principal amount of any foreclosed or other
finally liquidated mortgage loan, regardless of whether 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 an issuing entity, 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


                                       30


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, an issuing entity 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 an issuing entity.

Private Mortgage-Backed Securities

      Private 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. Private 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 the principal and interest distributions (but not all the
distributions) on certain mortgage loans. Private 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
Private Mortgage-Backed Security. Mortgage loans underlying a Private
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 Private 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 residential mortgage
loans to the trusts and selling beneficial interests in the trusts. If so
specified in the related prospectus supplement, the issuer of Private
Mortgage-Backed Securities may be an affiliate of the depositor. The obligations
of the issuer of Private Mortgage-Backed Securities will generally be limited to
certain representations and warranties with respect to the assets conveyed by it
to the related issuing entity. The issuer of Private Mortgage-Backed Securities
will not have guaranteed any of the assets conveyed to the related issuing
entity or any of the Private Mortgage-Backed Securities issued under the pooling
and servicing agreement. Additionally, although the mortgage loans underlying
the Private Mortgage-Backed Securities may be guaranteed by an agency or
instrumentality of the United States, the Private Mortgage-Backed Securities
themselves will not be so guaranteed.

      Distributions of principal and interest will be made on the Private
Mortgage-Backed Securities on the dates specified in the related prospectus
supplement. The Private 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 Private Mortgage-Backed
Securities by the private trustee or the private servicer. The issuer of Private
Mortgage-Backed Securities or the private servicer may have the right to
repurchase assets underlying the Private Mortgage-Backed Securities after a
certain date or under other circumstances specified in the related prospectus
supplement.

      The mortgage loans underlying the Private 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 property or
residential lot 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.


                                       31


      The prospectus supplement for a series for which the issuing entity
includes Private Mortgage-Backed Securities will specify

      o     the aggregate approximate principal amount and type of the Private
            Mortgage-Backed Securities to be included in the issuing entity;

      o     certain characteristics of the mortgage loans that comprise the
            underlying assets for the Private 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

            o     the minimum and maximum stated maturities of the underlying
                  mortgage loans at origination;

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

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

      o     the pass-through or certificate rate of the Private Mortgage-Backed
            Securities;

      o     the weighted average pass-through or certificate rate of the Private
            Mortgage-Backed Securities;

      o     the issuer of Private Mortgage-Backed Securities, the private
            servicer (if other than the issuer of Private Mortgage-Backed
            Securities) and the private trustee for the Private Mortgage-Backed
            Securities;

      o     certain characteristics of credit support, if any, the as reserve
            funds, insurance policies, surety bonds, letters of credit or
            guaranties relating to the mortgage loans underlying the Private
            Mortgage-Backed Securities or to the Private Mortgage-Backed
            Securities themselves;

      o     the terms on which the underlying mortgage loans for the Private
            Mortgage-Backed Securities may, or are required to, be purchased
            before their stated maturity or the stated maturity of the Private
            Mortgage-Backed Securities;

      o     the terms on which mortgage loans may be substituted for those
            originally underlying the Private Mortgage-Backed Securities; and

      o     as appropriate, shall indicate whether the information required to
            be presented with respect to the Private Mortgage-Backed Securities
            as a "significant obligor" is either incorporated by referenced,
            provided directly by the issuer or provided by reference to the
            Exchange Act filing of another entity.

      Private Mortgage-Backed Securities included in the issuing entity for a
series of certificates that were issued by an issuer of Private 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, as amended (the "Securities Act") or have been
held for at least the holding period required to be eligible for sale under Rule
144(k) under the Securities Act.

Substitution of Issuing Entity Assets

      Substitution of Issuing Entity Assets will be permitted upon breaches of
representations and warranties with respect to any original Mortgage Asset or if
the trustee determines that the documentation with respect to any Mortgage Asset
is incomplete. See "Loan Program--Representations by Sellers; Repurchases." The
period during


                                       32


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 Issuing Entity Assets may be substituted for
Issuing Entity Assets initially included in the issuing entity.

Available Information

      The depositor has filed with the SEC a Registration Statement under 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 Reference Room at 100 F Street,
N.E., Washington, DC 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
333-140726.

      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 distribution reports on Form 10-D and current reports on Form 8-K
filed with the SEC for the issuing entity referred to in the accompanying
prospectus supplement after the date of this prospectus and before the end of
the related offering 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 servicer on behalf of the issuing entity 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 Securities Exchange Act of 1934, as amended
(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 issuing entity, 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
            Issuing Entity 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     Reports 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 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 an issuing entity following completion of the reporting period
required by Rule 15d-1 or Regulation 15D under the Exchange Act. Unless
specifically stated in the report, the


                                       33


reports and any information included in the report will neither be examined nor
reported on by an independent public accountant. Each issuing entity 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 an issuing entity with the SEC
after the final prospectus supplement is filed will be available under issuing
entity'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 issuing entity 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
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. All other reports filed with the SEC concerning the issuing entity
will be forwarded to securityholders free of charge upon written request to the
trustee on behalf of any issuing entity, but will not be made available through
a website of the depositor, the 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 viewed electronically at the
internet Web site of the SEC shown above under "--Available Information."

      The applicable prospectus supplement may specify different items to be
reported, but if it does not, before or concurrently with each distribution on a
distribution date the 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 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, prepayment
            charges;

      o     the amount of the distribution allocable to interest;

      o     the amount of any advance;

      o     the aggregate amount otherwise allocable to the subordinated
            securityholders on the distribution date and the aggregate amount
            withdrawn from the reserve fund, if any, that is included in the
            amounts distributed to the securityholders; o the Class Security
            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 Issuing Entity Assets
            (excluding prepayments), if any, which each class will be entitled
            to receive on the following distribution date;

      o     the percentage of principal prepayments with respect to the Issuing
            Entity Assets, if any, which each class 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 servicer, and the amount
            of additional servicing compensation received by the servicer
            attributable to penalties, fees, excess liquidation proceeds and
            other similar charges and items;

      o     the number and aggregate principal balances of mortgage loans (A)
            delinquent (exclusive of mortgage loans in foreclosure) 1 to 30
            days, 31 to 60 days, 61 to 90 days and 91 or more days and (B) in


                                       34


            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, if adjusted from the date of the last
            statement, of a class expected to be applicable to the next
            distribution to the class;

      o     if applicable, the amount remaining in the reserve fund at the close
            of business on the distribution date;

      o     the pass-through rate as of the day before the 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 certificate 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 servicer or the trustee will mail to each securityholder of
record at any time during the calendar year a report as to the aggregate of
amounts reported pursuant to the first two items for the calendar year or, if
the person was a securityholder of record during a portion of the calendar year,
for the applicable portion of the year and other customary information deemed
appropriate for securityholders to prepare their tax returns.

                                 Use of Proceeds

      The depositor will apply the net proceeds from the sale of the securities
to the purchase of Issuing Entity 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 securities offerings will depend
on a number of factors, including the volume of Issuing Entity Assets acquired
by the depositor, prevailing interest rates, availability of funds and general
market conditions.

                                  The Depositor

      IndyMac MBS, Inc., a Delaware corporation, was organized on July 9, 1999
for the limited purpose of acquiring, owning and transferring Issuing Entity
Assets and selling interests in them or bonds secured by them. The depositor is
a limited purpose finance subsidiary of IndyMac Bank, F.S.B., a federal savings
bank organized under the laws of the United States. The depositor maintains its
principal office at 155 North Lake Avenue, Pasadena, California 91101. Its
telephone number is (800) 669-2300.

      The depositor's obligations after issuance of the securities include
delivery of the Issuing Entity Assets and certain related documents and
instruments, repurchasing Issuing Entity Assets in the event of certain breaches
of representations and warranties made by the depositor, providing tax-related
information to the trustee and maintaining the trustee's first and/or
subordinate priority perfected security interest in the Issuing Entity Assets.

      Neither the depositor nor any of the depositor's affiliates will insure or
guarantee distributions on the securities of any series.

                              Mortgage Loan Program

      The mortgage loans will have been purchased by the depositor, either
directly or through affiliates, from sellers. The discussion below under
"Underwriting Process" contains a general description of underwriting standards
that are applicable to most sellers. A description of the underwriting
guidelines that are applied by the seller or sellers in a particular transaction
will be set forth in the related prospectus supplement.


                                       35


Underwriting Standards

      The applicable prospectus supplement may provide for the seller's
representations and warranties relating to the mortgage loans, but if it does
not, each seller will represent and warrant that all loans originated and/or
sold by it to the depositor 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 the underwriting police of the FHA or the VA, as the case may be.

Underwriting Process

      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 Property as collateral. Most lenders offer a number of different
underwriting programs. Some programs place more emphasis on a borrower's credit
standing and repayment ability while others emphasize the value and adequacy of
the Property as collateral. The most comprehensive of the programs emphasize
both.

      In general, where a loan is subject to full underwriting review, a
prospective borrower applying for a mortgage loan is required to fill out a
detailed application designed to provide to the underwriting officer pertinent
credit information. 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. The verification reports the length of
employment with that organization, the borrower's current salary and whether it
is expected that the borrower will continue employment in the future. If a
prospective borrower is self-employed, the borrower may be required to submit
copies of signed tax returns. The borrower may also be required to authorize
verification of deposits at financial institutions where the borrower has demand
or savings accounts.

      In determining the adequacy of the Property as collateral, an appraisal is
made of each property considered for financing. Except as described in the
applicable prospectus supplement, an appraiser is required to inspect the
property and verify that it is in good repair and that construction, if new, has
been completed. The appraisal is 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.

      Once all applicable employment, credit and property information is
received, a determination generally is made as to whether the prospective
borrower has sufficient monthly income available to meet monthly housing
expenses and other financial obligations and monthly living expenses and to meet
the borrower's monthly obligations on the proposed mortgage loan (generally
determined on the basis of the monthly payments due in the year of origination)
and other expenses related to the Property such as property taxes and hazard
insurance). The underwriting standards applied by sellers, particularly with
respect to the level of loan documentation and the mortgagor's income and credit
history, may be varied in appropriate cases where factors as low Loan-to-Value
Ratios or other favorable credit factors exist.

      In the event a lender underwrites mortgage loans under programs less
restrictive than the one described above, a description of those programs will
be set forth in the related prospectus supplement.

      Certain of the types of mortgage loans that may be included in an issuing
entity may be recently developed and may involve additional uncertainties not
present in traditional types of loans. For example, certain of the mortgage
loans may provide for escalating or variable payments by the mortgagor. These
types of mortgage loans are underwritten on the basis of a judgment that the
mortgagors have the ability to make the monthly payments required initially. In
some instances, however, a mortgagor's income may not be sufficient to permit
continued loan payments as the payments increase. These types of mortgage loans
may also be underwritten primarily on the basis of Loan-to-Value Ratios or other
favorable credit factors.


                                       36


Qualifications of Sellers

      Each seller must be an institution experienced in originating mortgage
loans of the type contained in the related mortgage pool and must maintain
satisfactory facilities to originate those mortgage loans.

Representations by Sellers; Repurchases

      Each seller or, in some cases originator, will have made representations
and warranties in respect of the mortgage loans sold by the seller or originator
and evidenced by a series of securities. The applicable prospectus supplement
may specify the different representations and warranties, but if it does not,
the representations and warranties will generally include, among other things:

      o     that a lender's policy of title insurance (or in the case of
            mortgaged properties located in areas where title insurance 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 that
            each policy (or certificate of title as applicable) remained in
            effect on the date of purchase of the mortgage loan from the seller
            by or on behalf of the depositor;

      o     that the seller had good title to each mortgage loan and the
            mortgage loan was subject to no valid offsets, defenses,
            counterclaims or rights of rescission except to the extent that any
            buydown agreement described in this prospectus may forgive certain
            indebtedness of a mortgagor;

      o     that each mortgage loan is secured by a valid first lien on, or a
            first perfected security interest with respect to, the Property
            (subject only to permissible title insurance exceptions, if
            applicable, and certain other exceptions described in the pooling
            and servicing agreement or sale and servicing agreement, as
            applicable) and that the Property was free of material damage;

      o     that there were no delinquent tax or assessment liens against the
            Property; 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.

      As to any mortgage 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.

      As indicated in the related pooling and servicing agreement, the
representations and warranties of a seller or originator in respect of a
mortgage loan will be made as of the date of initial issuance of the series of
securities, the related cut-off date, the date on which the seller sold the
mortgage loan to the depositor or one of its affiliates, or the date of
origination of the related mortgage loan, as the case may be. If representations
and warranties are made as of a date other than the closing date or cut-off
date, a substantial period of time may have elapsed between the other date and
the date of initial issuance of the series of securities evidencing an interest
in the mortgage loan. Because the representations and warranties of a seller or
originator do not address events that may occur following the sale of a mortgage
loan by the seller or originator or following the origination of the mortgage
loan, as the case may be, its repurchase obligation will not arise if the
relevant event that would otherwise have given rise to a repurchase obligation
with respect to a mortgage loan occurs after the date of sale of the mortgage
loan by the seller to the depositor or its affiliates or after the origination
of the mortgage loan, as the case may be. In addition, the representations
concerning fraud in the origination of the mortgage loan will be limited to the
extent the seller or originator has knowledge and the seller will be under no
obligation to investigate the substance of the representation. However, the
depositor will not include any mortgage loan in the issuing entity 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
mortgage loan as of the date of initial issuance of the related series of
securities. If the servicer is also a seller or originator of mortgage loans
with respect to a particular series, the representations will be in addition to
the representations and warranties made by the servicer in its capacity as the
servicer.


                                       37


      The trustee, if the servicer is the seller or originator, or the servicer
will promptly notify the relevant seller of any breach of any representation or
warranty made by it in respect of a mortgage loan that materially and adversely
affects the interests of the securityholders in the mortgage loan. The
applicable prospectus supplement may specify that the seller has a different
repurchase obligation, but if it does not, then if the seller cannot cure the
breach within 90 days after notice from the servicer or the trustee, as the case
may be, then the seller will be obligated to either

            o     repurchase the mortgage loan from the issuing entity at a
                  price equal to 100% of the outstanding principal balance of
                  the mortgage as of the date of the repurchase plus accrued
                  interest on it to the first day of the month in which the
                  purchase price is to be distributed at the mortgage rate, less
                  any unreimbursed advances or amount payable as related
                  servicing compensation if the seller or originator is the
                  servicer with respect to the mortgage loan or

            o     substitute for the loan a replacement loan that satisfies the
                  criteria specified in the related prospectus supplement.

      If an election is to be made to treat an issuing entity or designated
portions of it as a "real estate mortgage investment conduit" as defined in the
Internal Revenue Code of 1986, as amended (the "Code"), the servicer or a holder
of the related residual certificate will be obligated to pay any prohibited
transaction tax that 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 issuing entity to lose its status
as a REMIC or otherwise subject the issuing entity to a prohibited transaction
tax. The applicable prospectus supplement may contain different reimbursement
options, but if it does not, the servicer will be entitled to reimbursement for
that payment from the assets of the related issuing entity or from any holder of
the related residual certificate. See "Description of the Securities-- General"
and in the related prospectus supplement. Except in those cases in which the
servicer is the seller or originator, the servicer will be required under the
applicable pooling and servicing agreement to enforce this obligation for the
benefit of the trustee and the securityholders, following the practices it would
employ in its good faith business judgment were it the owner of the mortgage
loan. This repurchase obligation will constitute the sole remedy available to
securityholders or the trustee for a breach of representation by a seller or
originator.

      Neither the depositor nor the servicer (unless the servicer is the seller)
will be obligated to purchase or substitute a mortgage 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
mortgage 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 servicer, the servicer may have a repurchase or substitution obligation as
described under "The Agreements--Assignment of Issuing Entity 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 IndyMac
Bank, F.S.B. or any other person specified in the related prospectus supplement
will be made available through a website. The prospectus supplement related to
each series for which the static pool data is provided through a website will
contain the website address to obtain this information. Except as stated below,
the static pool data provided through any 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
            IndyMac Bank, F.S.B. (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


                                       38


      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.

                               Description of the
                                   Securities

      The prospectus supplement relating to the securities of each series to be
offered under this prospectus will, among other things, set forth for the
securities, as appropriate:

      o     a description of the class or classes of securities and the rate at
            which interest will be passed through to holders of each class of
            securities entitled to interest or the method of determining the
            amount of interest, if any, to be passed through to each class;

      o     the initial aggregate principal balance of each class of securities
            included in the series, the dates on which distributions on the
            securities will be made and, if applicable, the initial and final
            scheduled distribution dates for each class;

      o     information as to the assets comprising the issuing entity,
            including the general characteristics of the Issuing Entity Assets
            included in the issuing entity and, if applicable, the insurance,
            surety bonds, guaranties, letters of credit or other instruments or
            agreements included in the issuing entity, and the amount and source
            of any reserve fund;

      o     the circumstances, if any, under which the issuing entity may be
            subject to early termination;

      o     the method used to calculate the amount of principal to be
            distributed with respect to each class of securities;

      o     the order of application of distributions to each of the classes
            within the series, whether sequential, pro rata, or otherwise;

      o     the distribution dates with respect to the series;

      o     additional information with respect to the plan of distribution of
            the securities;

      o     whether one or more REMIC elections will be made and designation of
            the regular interests and residual interests;

      o     the aggregate original percentage ownership interest in the issuing
            entity to be evidenced by each class of securities;

      o     information as to the nature and extent of subordination with
            respect to any class of securities that is subordinate in right of
            payment to any other class; and

      o     information as to the seller, the servicer and the trustee.

      Each series of certificates will be issued pursuant to a separate Pooling
and Servicing Agreement. 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 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 issuing entity 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 servicer pursuant to a Sale and Servicing Agreement. Each
Indenture will be dated as of the cut-off date and the Issuing Entity Assets
will be pledged to the related trustee for the benefit of the holders of the
securities of the related series.


                                       39


      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 issuing entity. 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 agreements (without exhibits) relating to any series without
charge upon written request of a holder of record of a security of the series
addressed to IndyMac MBS, Inc., 155 North Lake Avenue, Pasadena, California
91101, Attention: Transaction Management. The following summaries describe
material provisions that may appear in each agreement.

General

      The securities of each series will be issued in either fully registered or
book-entry form in the authorized denominations specified in the related
prospectus supplement. In the case of certificates, the securities will evidence
specified beneficial ownership interests in the related issuing entity. In the
case of notes, the securities will be secured by the assets of the related
issuing entity. In both cases, the securities will not be entitled to payments
in respect of the assets included in any other issuing entity established by the
depositor. The applicable prospectus supplement may provide for guarantees by a
governmental entity or other person, but if it does not, the Issuing Entity
Assets will not be insured or guaranteed by any governmental entity or other
person. Each issuing entity will consist of, to the extent provided in the
related agreement,

      o     the Issuing Entity Assets that from time to time are subject to the
            related agreement (exclusive of any amounts specified in the related
            prospectus supplement as a retained interest);

      o     the assets required to be deposited in the related Security Account
            from time to time;

      o     property that secured a mortgage loan and that is acquired on behalf
            of the securityholders by foreclosure or deed in lieu of
            foreclosure; and

      o     any primary mortgage insurance policies, FHA insurance and VA
            guaranties, and any other insurance policies or other forms of
            credit enhancement required to be maintained pursuant to the related
            agreement.

      If specified in the related prospectus supplement, an issuing entity may
also include one or more of the following: reinvestment income on payments
received on the Issuing Entity 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 or other
agreements.

      Each series of securities will be issued in one or more classes. Each
class of securities of a series will evidence beneficial ownership of a
specified percentage or portion of future interest payments and a specified
percentage or portion of future principal payments on the Issuing Entity Assets
in the related issuing entity. These specified percentages may be 0%. Each class
of notes of a series will be secured by the related Issuing Entity 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 the 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" in this prospectus 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 of principal and interest.
Distributions on one or more classes of a series of securities may be made
before one or more other classes, after the occurrence of specified events, in
accordance with a schedule or formula, on the basis of collections from
designated portions of the Issuing Entity Assets in the related issuing entity,
or on a different basis, 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.

      The trustee will make distributions of either or both of principal and
interest on the related securities on each distribution date (i.e., monthly,
quarterly, semi-annually or at other intervals and on the dates specified in the
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.


                                       40


Distributions will be made in the manner specified in the related prospectus
supplement to the persons entitled to them at the addresses appearing in the
security register maintained for securityholders; 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 specified 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.

      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 ("ERISA"), or the
Code of certain classes of securities 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 securities 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
securities by or on behalf of a plan, account or other retirement arrangement is
permissible under applicable law and will not subject the trustee, the servicer
or the depositor to any obligation or liability in addition to those undertaken
in the applicable agreement.

      As to each series, an election may be made to treat the related issuing
entity or designated portions of it as a real estate mortgage investment conduit
or REMIC as defined in the Code. The related prospectus supplement will specify
whether a REMIC election is to be made. Alternatively, the agreement for a
series may provide that a REMIC election may be made at the discretion of the
depositor or the servicer and may be made only if certain conditions are
satisfied. The terms applicable to the making of a REMIC election, as well as
any material federal income tax consequences to securityholders not described in
this prospectus, will be set forth in the related prospectus supplement. If a
REMIC election is 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, as defined in the Code.
As to each series for which a REMIC election is to be made, the servicer or a
holder of the related residual interest or ownership will be obligated to comply
with applicable laws and regulations and will be obligated to pay any prohibited
transaction taxes. The applicable prospectus supplement may restrict the
servicer's reimbursement rights, but if it does not, the servicer will be
entitled to reimbursement for that payment from the assets of the issuing entity
or from any holder of the related residual certificate or ownership interest.
Unless otherwise specified in the related prospectus supplement, if the amounts
distributable to the related residual securities are insufficient to cover the
amount of any prohibited transaction taxes, the amount necessary to reimburse
the servicer may be deducted from the amounts otherwise distributable to the
other classers of securities 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, for that series. See "Credit Enhancement" in this prospectus and in the
related prospectus supplement. 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 that series.

      The trustee will make distributions allocable to principal of and interest
on the securities out of, and only to the extent of, funds in the related
Security Account, including any funds transferred from any reserve fund. As
between securities of different classes and as between distributions of
principal (and, if applicable, between distributions of principal prepayments
and scheduled payments of principal) and interest, distributions made on any


                                       41


distribution date will be applied as specified in the related prospectus
supplement. The applicable prospectus supplement may provide for payment
distinctions within classes, but if it 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, in accordance with
the terms described in the related prospectus supplement and specified in the
related agreement. The applicable prospectus supplement may define Available
Funds with reference 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 issuing entity) other than
amounts to be held in the Security Account for distribution on future
distribution dates.

      Distributions of Interest. Interest will accrue on the aggregate original
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 at the
pass-through rate or interest rate, as applicable (which in either case may be a
fixed rate or a rate adjustable as specified in the prospectus supplement) from
the date 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 Class Security Balance of the class has
been distributed in full. In the case of securities entitled only to
distributions allocable to interest, interest will be distributable until the
aggregate notional amount of the securities is reduced to zero or for the period
of time designated in the related prospectus supplement. The original principal
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 certificate. 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. If the interest accrual period for a security ends two or
more days before a distribution date, the effective yield will be lower than the
yield obtained if interest on the security were to accrue through the day
immediately preceding that distribution date. In addition, the effective yield
(at par) to securityholders will be less than the indicated coupon rate.

      With respect to any class of accrual securities, any interest that has
accrued but is not paid on a given distribution date will be added to the Class
Security Balance of the class of securities on that distribution date. The
applicable prospectus supplement may specify some other basis for these
distributions, but if it does not, distributions of interest on each class of
accrual securities will commence only after the occurrence of the events
specified in the prospectus supplement and, before that time, the beneficial
ownership interest of the class of accrual securities in the issuing entity, as
reflected in the Class Security Balance of the class of accrual securities, will
increase on each distribution date by the amount of interest that accrued on the
class of accrual securities during the preceding interest accrual period but
that was not required to be distributed to the class on the distribution date. A
class of accrual securities will thereafter 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 that amount
will be allocated among the classes of securities entitled to distributions of
principal. The Class Security Balance of any class of securities entitled to
distributions of principal will be the 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
                  securities as allocable to principal

            o     in the case of accrual securities, unless otherwise specified
                  in the related prospectus supplement, increased by all
                  interest accrued but not then distributable on the accrual
                  securities,


                                       42


            o     in the case of adjustable rate securities, unless otherwise
                  specified in the related prospectus supplement, subject to the
                  effect of negative amortization, 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.

      A series of securities may include one or more classes of senior
securities and one or more classes of subordinate securities. If so provided in
the related prospectus supplement, one or more classes of senior securities will
be entitled to receive all or a disproportionate percentage of the payments of
principal that are received from borrowers in advance of their scheduled due
dates and are not accompanied by amounts representing scheduled interest due
after the month of the payments in the percentages and under the circumstances
or for the periods specified in the prospectus supplement. Any disproportionate
allocation of these principal prepayments to senior securities will have the
effect of accelerating the amortization of the senior securities while
increasing the interests evidenced by the subordinated securities in the issuing
entity. Increasing the interests of the subordinated securities relative to that
of the senior securities is intended to preserve the availability of the
subordination provided by the subordinated securities. See "Credit
Enhancement--Subordination" and "Credit Enhancement--Subordination of the
Definition Subordinated Securities" in the related Principal prospectus
supplement. Types

      Unscheduled Distributions. If specified in the related prospectus
supplement, the securities will be subject to receipt of distributions before
the next scheduled distribution date. 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 Issuing Entity Assets, the
trustee or the 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 the
distribution date. The applicable prospectus supplement may specify some other
basis for these distributions, but if it does not, the amount of the 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 provide that unscheduled distributions will not include interest or that
interest will be computed on a different basis, but if it does not, all
unscheduled distributions will include interest at the applicable pass-through
rate 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, each servicer
will be required to advance on or before each distribution date (from its own
funds or funds held in the Security Account for future distributions to
securityholders), an amount equal to the aggregate of payments of principal and
interest that were delinquent on the related Determination Date, subject to the
servicer's determination that the advances will be recoverable out of late
payments by obligors on the Issuing Entity Assets, liquidation proceeds,
insurance proceeds not used to restore the property or otherwise. In the case of
cooperative loans, the servicer also will 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, each servicer will endeavor to maintain a regular flow
of scheduled interest and principal payments to securityholders, rather than to
guarantee or insure against losses.

      If the servicer makes advances from funds being held for future
distribution to securityholders, the servicer will replace the funds on or
before any future distribution date to the extent that funds in the applicable
Security Account on the distribution date would be less than the amount required
to be available for distributions to securityholders on the distribution date.
Any advances will be reimbursable to the servicer out of recoveries on the
specific Issuing Entity Assets with respect to which the advances were made
(e.g., late payments made by the related obligors, any related insurance
proceeds, liquidation proceeds or proceeds of any mortgage loan repurchased by
the depositor or a seller pursuant to the related pooling and servicing
agreement or sale and servicing agreement, as applicable). In addition, advances
by the servicer also will be reimbursable to the servicer from cash otherwise
distributable to securityholders (including the holders of senior securities) to
the extent that the servicer determines that the advances previously made are
not ultimately recoverable as described in the preceding sentence. The


                                       43


servicer also will be obligated to make advances, to the extent recoverable out
of insurance proceeds not used to restore the property, liquidation proceeds or
otherwise, for certain taxes and insurance premiums not paid by mortgagors on a
timely basis. Funds so advanced are reimbursable to the servicer to the extent
permitted by the pooling and servicing agreement, sale and servicing agreement
or servicing agreement, as applicable. If specified in the related prospectus
supplement, the obligations of the servicer to make advances may be supported by
a cash advance reserve fund, a surety bond or other arrangement, in each case as
described in the prospectus supplement.

      In the event that the 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
such advance in its capacity as successor servicer. If the trustee makes such an
advance, it will be entitled to be reimbursed for such advance to the same
extent and degree as the servicer is entitled to be reimbursed for advances. See
"Description of the Securities-Distributions on Securities."

Mandatory Auction

      The applicable prospectus supplement for a series of notes may provide for
a Dutch auction of such notes to be held on a specified date, provided that
certain conditions are met. The prospectus supplement may further provide for
adjustments to the terms of the notes, including but not limited to,
acceleration of principal repayments, reset of interest rate and/or payment by a
credit enhancement provider, and such adjustments may be determined by the
results of the Dutch auction.

Categories of Classes of Securities

      In general, classes of pass-through securities fall into different
categories. The following chart identifies and generally defines the more
typical categories. The prospectus supplement for a series of securities may
identify the classes which comprise the series by reference to the following
categories.

                                                 Definition
  Categories of Classes                        Principal Types

Accretion Directed Class ...  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 Issuing Entity Assets or other assets
                              of the issuing entity 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 Class ............  A class consisting of "components." The components
                              of a class of component securities may have
                              different principal and 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.


                                       44


                                                 Definition
  Categories of Classes                        Principal Types

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) (1)
                              principal prepayments on the underlying Issuing
                              Entity Assets that are allocated
                              disproportionately to the senior securities
                              because of the shifting interest structure of the
                              securities in the issuing entity and/or (2)
                              scheduled principal payments on the underlying
                              Issuing Entity Assets, as specified in the related
                              prospectus supplement. During the lock-out period,
                              the portion of the principal distributions on the
                              underlying Issuing Entity Assets of which the NAS
                              Class is locked out will be distributed to the
                              other classes of senior securities.

Notional Amount Class ......  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 Issuing Entity
                              Assets. These two rates are the endpoints for the
                              "structuring range" for the planned principal
                              class. The planned principal classes in any series
                              of securities 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 securities 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
                              Issuing Entity Assets. These two rates are the
                              endpoints for the "structuring range" for the
                              scheduled principal class.

Sequential Pay Class .......  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 Class ................  A class that receives a constant proportion, or
                              "strip," of the principal payments on the
                              underlying Issuing Entity Assets or other assets
                              of the issuing entity.

Super Senior Class .........  A class that will not bear its proportionate share
                              of realized losses (other than excess losses) as
                              its share is directed to another class (the
                              "Support Class") until the Class Security Balance
                              of the Support Class is reduced to zero.

Support Class ..............  A class that absorbs realized losses other than
                              excess losses that would otherwise be allocated to
                              a Super Senior class after the related classes of
                              subordinated securities are no longer outstanding.


                                       45


                                                 Definition
  Categories of Classes                        Principal Types

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 Issuing Entity
                              Assets.

                                                Interest Types

Fixed Rate .................  A class with an interest rate that is fixed
                              throughout the life of the class.

Floating 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 mortgage rates
                              borne by the underlying mortgage loans).

Interest Only ..............  A class that receives some or all of the interest
                              payments made on the underlying Issuing Entity
                              Assets or other assets of the issuing entity 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 of
                              principal.

Principal Only .............  A class that does not bear interest and is
                              entitled to receive only distributions of
                              principal.

Partial Accrual ............  A class that accretes a portion of the amount of
                              accrued interest on it, 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 class. The 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 class,
                              which amount will be added as principal to the
                              principal balance of the class on each applicable
                              distribution date. The accretion may continue
                              until some specified event has occurred or until
                              the accrual class is retired.

      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 securities 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, sale and servicing agreement or servicing agreement, as
applicable 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):


                                       46


LIBO Method

      If using this method to calculate LIBOR, the calculation agent will
determine LIBOR by reference to the quotations, as set forth on the Reuters Page
LIBOR01, offered by the principal London office of each of the designated
reference banks meeting the criteria set forth in this prospectus for making
one-month United States dollar deposits in leading banks in the London Interbank
market, as of 11:00 a.m. (London time) on the LIBOR determination date. In lieu
of relying on the quotations for those reference banks that appear at the time
on the Reuters Page LIBOR01, the calculation agent will request each of the
reference banks to provide the offered quotations at that time.

      Under this method the calculation agent will establish LIBOR on each LIBOR
determination date as follows:

            (a) If on any LIBOR determination date two or more reference banks
      provide offered quotations, LIBOR for the next interest accrual period
      shall be the arithmetic mean of the offered quotations (rounded upwards if
      necessary to the nearest whole multiple of 1/32%).

            (b) If on any LIBOR determination date only one or none of the
      reference banks provides offered quotations, LIBOR for the next interest
      accrual period shall be whichever is the higher of

            o     LIBOR as determined on the previous LIBOR determination date
                  or

            o     the reserve interest rate.

      The reserve interest rate shall be the rate per annum which the
calculation agent determines to be either

            o     the arithmetic mean (rounded upwards if necessary to the
                  nearest whole multiple of 1/32%) of the one-month United
                  States dollar lending rates that New York City banks selected
                  by the calculation agent are quoting, on the relevant LIBOR
                  determination date, to the principal London offices of at
                  least two of the reference banks to which the quotations are,
                  in the opinion of the calculation agent being so made, or

            o     if the calculation agent cannot determine the arithmetic mean,
                  the lowest one-month United States dollar lending rate which
                  New York City banks selected by the calculation agent are
                  quoting on the LIBOR determination date to leading European
                  banks.

            (c) If on any LIBOR determination date for a class specified in the
      related prospectus supplement, the calculation agent is required but is
      unable to determine the reserve interest rate in the manner provided in
      paragraph (b) above, LIBOR for the next interest accrual period shall be
      LIBOR as determined on the preceding LIBOR determination date, or, in the
      case of the first LIBOR determination date, LIBOR shall be considered to
      be the per annum rate specified as such in the related prospectus
      supplement.

      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 calculation agent; and
will have an established place of business in London. If reference bank should
be unwilling or unable to act as such or if appointment of a reference bank is
terminated, another leading bank meeting the criteria specified above will be
appointed.

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
Reuters Page LIBOR01 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


                                       47


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 will be
calculated in accordance with the LIBOR method described under "LIBO Method."

      The calculation agent's determination of LIBOR on each LIBOR determination
date and its calculation of the rate of interest for the applicable classes for
the related interest accrual period will (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 before 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,
because 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 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 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 for which the
applicable interest rate is determined by reference to an index denominated as
COFI 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.


                                       48


      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 pooling and servicing agreement, sale and servicing
agreement or servicing agreement, as applicable, relating to the series of
securities. 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 calculations agent's determination of COFI 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.

      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. If the Treasury index is no longer published, a new
index based upon comparable data and methodology will be designated in
accordance with the pooling and servicing agreement, sale and servicing
agreement or servicing agreement, as applicable, 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 some other basis for
determining and defining the prime rate, but if it does not, on the prime rate
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
the prime rate, the calculation agent will ascertain the prime rate for the
related interest accrual period. 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 on the related prime rate determination date, or if not so
published, the "prime rate" as published in a newspaper of general circulation


                                       49


selected by the calculation agent in its sole discretion. If a prime rate range
is given, then the average of the range will be used. If the prime rate is no
longer published, a new index based upon comparable data and methodology will be
designated in accordance with the applicable 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.

      The Indices described above that are applicable to the Issuing Entity
Assets for an issuing entity will be disclosed in the related prospectus
supplement.

Book-Entry Securities

      If so specified in the related prospectus supplement, one or more classes
of securities of any series may be issued as book-entry securities. Persons
acquiring beneficial ownership interests in book-entry securities will hold
their securities either:

      o     directly through The Depository Trust Company ("DTC") in the United
            States, or Clearstream, Luxembourg or Euroclear in Europe, if they
            are participants of these systems, or

      o     indirectly through organizations that are participants in these
            systems.

      Each class of book-entry securities will be issued in one or more
securities that equal the aggregate principal balance of the class and will
initially be registered in the name of Cede & Co. as the nominee of DTC.
Clearstream, Luxembourg and Euroclear will hold omnibus positions on behalf of
their participants through customers' securities accounts in Clearstream,
Luxembourg's or Euroclear's name, on the books of their respective depositaries.
These depositaries will in turn hold the positions in customers' securities
accounts in the depositaries' names on the books of DTC. Citibank, N.A. will act
as depositary for Clearstream, Luxembourg and The Chase Manhattan Bank will act
as depositary for Euroclear. Except as described below, no person acquiring a
beneficial interest in a book-entry security will be entitled to receive a
physical certificate representing the security.

      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 that maintains the beneficial owner's account for that
purpose. In turn, the financial intermediary's ownership of a 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). Therefore, the beneficial owner must rely on the
foregoing procedures to evidence its beneficial ownership of a book-entry
security. Beneficial ownership of a book-entry security may only be transferred
by compliance with the procedures of the financial intermediaries and depository
participants.

      Beneficial owners will receive all distributions of principal of and
interest on the securities from the trustee through DTC and its participants.
While the securities are outstanding (except under the circumstances described
below), DTC is required to make book-entry transfers of the securities among
participants on whose behalf it acts and is required to receive and transmit
distributions on the securities in accordance with rules, regulations and
procedures creating and affecting DTC and its operations. Participants and
indirect participants with whom beneficial owners have accounts are likewise
required to make book-entry transfers and receive and transmit distributions on
behalf of their respective beneficial owners. Although beneficial owners will
not possess physical certificates, the DTC rules, regulations and procedures
provide a mechanism by which beneficial owners may receive distributions on the
securities and transfer their interests in the securities.

      Beneficial owners will not receive or be entitled to receive certificates
representing their interests in the securities except under the limited
circumstances described below. Until definitive securities are issued,
beneficial owners who are not participants may transfer ownership of their
securities only through participants and indirect participants by instructing
them to transfer securities through DTC for the accounts of the purchasers of
those securities. In accordance with DTC's rules, regulations and procedures,
transfers of ownership will be executed


                                       50


through DTC, and the accounts of the respective participants at DTC will be
debited and credited. Similarly, the participants and indirect participants will
make the appropriate debits and credits on their records on behalf of the
selling and purchasing beneficial owners.

      Because of time zone differences, credits of securities received in
Clearstream, Luxembourg or Euroclear resulting from transactions with
participants will be made during subsequent securities settlement processing and
dated the business day after the DTC settlement date. These credits, and any
transactions in the securities settled during processing, will be reported to
the applicable Euroclear or Clearstream, Luxembourg participants on that
business day. Cash received in Clearstream, Luxembourg or Euroclear resulting
from sales of securities by or through a Clearstream, Luxembourg participant
(described below) or Euroclear Participant (described below) to a DTC
participant will be received with value on the DTC settlement date but will not
be available in the applicable Clearstream, Luxembourg or Euroclear cash account
until the business day after settlement in DTC.

      Transfers between DTC participants will be governed by DTC rules.
Transfers between Clearstream, Luxembourg participants and Euroclear
participants will be governed by their respective rules and operating
procedures.

      Cross-market transfers between persons holding directly or indirectly
through DTC and persons holding directly or indirectly through Clearstream,
Luxembourg participants or Euroclear participants will be effected in DTC in
accordance with DTC rules on behalf of the applicable European international
clearing system by the applicable depositary. These cross-market transactions,
however, will require delivery of instructions to the applicable European
international clearing system by the counterparty in that system according to
its rules and procedures and within its established deadlines (European time).
If the transaction meets its settlement requirements, the applicable European
international clearing system will deliver instructions to the applicable
depositary to effect final settlement on its behalf by delivering or receiving
securities in DTC, and making or receiving payment in accordance with the
procedures for same day funds settlement applicable to DTC. Clearstream,
Luxembourg Participants and Euroclear Participants may not deliver instructions
directly to the European depositaries.

      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 DTC Rules.

      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 10 January 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 Clearstream,
Luxembourg International 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" With effect from 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."


                                       51


      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
transfer of certificates. Transactions may be settled by Clearstream, Luxembourg
in any of 30 currencies, including United States dollars. Clearstream,
Luxembourg provides its customers, among other things, services for safekeeping,
administration, clearance and settlement of internationally traded securities
and securities lending and borrowing. Clearstream, Luxembourg interfaces with
domestic markets in several countries. As a professional depository,
Clearstream, Luxembourg is registered as a bank in Luxembourg, and as such 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
also 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 its participants and
to clear and settle transactions between Euroclear participants through
simultaneous electronic book-entry delivery against payment, thereby eliminating
the need for physical transfer of certificates, as well as any risk from the
lack of simultaneous transfers of securities and cash. Transactions may be
settled in any of 32 currencies, including United States dollars. Euroclear
provides various other services, including securities lending and borrowing. It
also interfaces with domestic markets in several countries in a manner 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 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.

      Under a book-entry format, beneficial owners of the book-entry securities
may experience some delay in their receipt of payments, because the trustee will
send payments to Cede & Co., as nominee of DTC. Distributions on securities held
through Clearstream, Luxembourg or Euroclear and received by the applicable
depositary will be credited to the cash accounts of Clearstream, Luxembourg
Participants or Euroclear Participants in accordance with each system's rules
and procedures. These distributions will be subject to tax reporting under the
applicable United States laws and regulations. See "Federal Income Tax
Consequences-Tax Treatment of Foreign Investors" and "-Tax Consequences to
Holders of the Notes-Backup Withholding" in this prospectus. Because DTC can
only act on behalf of financial intermediaries, the a beneficial owner's ability
to pledge book-entry securities to persons or entities that do not participate
in the DTC system, or otherwise take actions in respect of the book-entry
securities, may be limited by 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 those securities in the secondary
market because some potential investors may not want to purchase securities for
which they cannot obtain physical certificates.


                                       52


      Until definitive securities are issued, it is anticipated that the only
"securityholder" of the book-entry securities will be Cede & Co., as nominee of
DTC. Beneficial owners are only permitted to exercise the rights of
securityholders indirectly through financial intermediaries and DTC. Monthly and
annual reports for the related issuing entity will be provided to Cede & Co., as
nominee of DTC. Cede & Co. may make them available to beneficial owners upon
request, in accordance with the rules, regulations and procedures creating and
affecting DTC. It may also make them available to the financial intermediaries
to whose DTC accounts the book-entry securities of those beneficial owners are
credited.

      Until definitive securities are issued, DTC will take any action permitted
to be taken by the holders of the book-entry securities of a series under the
related 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
the actions are taken on behalf of financial intermediaries whose holdings
include the 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 securityholder on behalf of a Clearstream, Luxembourg participant or
Euroclear participant, respectively, only in accordance with its applicable
rules and procedures and subject to the applicable depositary's ability to
effect actions on its behalf through DTC. At the direction of the related
participants, DTC may take actions with respect to some securities that conflict
with actions taken with respect to other securities.

      The applicable prospectus supplement may specify when and for what reasons
definitive securities may be issued, but if it does not, definitive securities
will be issued to beneficial owners of book-entry securities, or their nominees,
rather than to DTC, only if:

      o     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 depository with respect to the
            book-entry securities, and DTC or the trustee is unable to locate a
            qualified successor;

      o     the depositor, at its sole option, elects to terminate the
            book-entry system through DTC;

      o     or after the occurrence of an event of default, beneficial owners of
            securities representing not less than 51% of the aggregate
            percentage interests evidenced by each class of securities of the
            related series issued as book-entry securities advise the trustee
            and DTC through the financial intermediaries in writing that the
            continuation of a book-entry system through DTC (or a successor to
            it) is no longer in the best interests of the beneficial owners.

      Upon the occurrence of any of the events described in the preceding
paragraph, the trustee will be required to notify all beneficial owners of the
occurrence of the event and the availability of definitive securities through
DTC. Upon surrender by DTC of the global certificate or certificates
representing the book-entry securities and instructions for re-registration, the
trustee will issue the 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 not
obligated to perform or continue to perform these procedures and these
procedures may be discontinued at any time.

      The servicer, the depositor and the trustee will not be responsible 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.

Global Clearance, Settlement and Tax Documentation Procedures

      Except in certain limited circumstances, the securities offered by a
prospectus supplement, other than any residual securities, will be offered
globally (the "Global Securities") and will be available only in book-entry
form. Investors in the Global Securities may hold such Global Securities through
DTC and, upon request, through


                                       53


Clearstream 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 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.

      Secondary cross-market trading between Clearstream or Euroclear and
Participants holding Global Securities will be effected on a
delivery-against-payment basis through the respective Depositaries of
Clearstream and Euroclear (in such capacity) and as Participants.

      Non-U.S. holders (as described below) of Global Securities will be subject
to U.S. withholding taxes unless such holders meet certain requirements and
deliver appropriate U.S. tax documents to the securities clearing organizations
or their participants.

      Initial Settlement

      All Global Securities will be held in book-entry form by DTC in the name
of Cede & Co. as nominee of DTC. Investors' interests in the Global Securities
will be represented through financial institutions acting on their behalf as
direct and indirect Participants in DTC. As a result, Clearstream and Euroclear
will hold positions on behalf of their participants through their respective
European Depositaries, which in turn will hold such positions in accounts as
Participants.

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

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

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

      Trading between DTC Seller and Clearstream or Euroclear purchaser. When
Global Securities are to be transferred from the account of a Participant to the
account of a Clearstream participant or a Euroclear Participant, the purchaser
will send instructions to Clearstream or Euroclear through a Clearstream
participant or Euroclear Participant at least one business day prior to
settlement. Clearstream or Euroclear will instruct the respective Depositary, as
the case may be, to receive the Global Securities against payment. Payment will
include interest accrued on each class of Global Securities according to the
interest accrual method specified in the related prospectus supplement. 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 Participant's account against
delivery of the Global Securities. After settlement has been completed, the
Global Securities will be credited to the respective clearing system and by the
clearing system, in accordance with its usual procedures, to the Clearstream
participant's or Euroclear Participant's account. The Global Securities credit
will appear the next day (European time) and the cash debt will be back-valued
to, and the interest on the Global


                                       54


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 or Euroclear cash
debt will be valued instead as of the actual settlement date.

      Clearstream participants and Euroclear Participants will need to make
available to the respective clearing systems the funds necessary to process
same-day funds settlement. The most direct means of doing so is to preposition
funds for settlement, either from cash on hand or existing lines of credit, as
they would for any settlement occurring within Clearstream or Euroclear. Under
this approach, they may take on credit exposure to Clearstream or Euroclear
until the Global Securities are credited to their accounts one day later.

      As an alternative, if Clearstream or Euroclear has extended at line of
credit to them, Clearstream participants or Euroclear Participants can elect not
to preposition funds and allow that credit line to be drawn upon the finance
settlement. Under this procedure, Clearstream participants or Euroclear
Participants purchasing Global Securities would incur overdraft charges for one
day, assuming they cleared the overdraft when the Global Securities were
credited to their accounts. However, interest on the Global Securities would
accrue from the value date. Therefore, in many cases the investment income on
the Global Securities earned during that one-day period may substantially reduce
or offset the amount of such overdraft charges, although this result will depend
on each Clearstream participant's or Euroclear Participant's particular cost of
funds.

      Because the settlement is taking place during New York business hours,
Participants can employ their usual procedures for sending Global Securities to
the respective European Depositary for the benefit of Clearstream participants
or Euroclear Participants. The sale proceeds will be available to the DTC seller
on the settlement date. Thus, to the Participants a cross-market transaction
will settle no differently than a trade between two Participants.

      Trading between Clearstream or Euroclear Seller and DTC Purchaser. Due to
time zone differences in their favor, Clearstream participants and Euroclear
Participants may employ their customary procedures for transactions in which
Global Securities are to be transferred by the respective clearing system,
through the respective Depositary, to a Participant. The seller will send
instructions to Clearstream or Euroclear through a Clearstream participant or
Euroclear Participant at least one business day prior to settlement. In these
cases Clearstream or Euroclear will instruct the respective Depositary, as
appropriate, to deliver the Global Securities to the Participant's account
against payment. Payment will include interest accrued on the Global Securities
according to the interest accrual method specified in the related prospectus
supplement. For transactions settling on the 31st of the month, payment will
include interest accrued to and excluding the first day of the following month.
The payment will then be reflected in the account of the Clearstream participant
or Euroclear Participant the following day, and receipt of the cash proceeds in
the Clearstream participant's or Euroclear Participant's account would be
back-valued to the value date (which would be the preceding day, when settlement
occurred in New York). If the Clearstream participant or Euroclear Participant
have a line of credit with its respective clearing system and elect to be in
debt in anticipation of receipt of the sale proceeds in its account, the
back-valuation will extinguish any overdraft incurred over that one-day period.
If settlement is not completed on the intended value date (i.e., the trade
fails), receipt of the cash proceeds in the Clearstream participant's or
Euroclear Participant's account would instead be valued as of the actual
settlement date.

      Finally, day traders that use Clearstream or Euroclear and that purchase
Global Securities from Participants for delivery to Clearstream 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:

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

            2. borrowing the Global Securities in the United States from a
      Participant no later than one day prior to settlement, which would give
      the Global Securities sufficient time to be reflected in their Clearstream
      or Euroclear account in order to settle the sale side of the trade; or


                                       55


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

      Certain U.S. Federal Income Tax Documentation Requirements

      A beneficial owner of Global Securities holding securities through
Clearstream or Euroclear (or through DTC if the holder has an address outside
the U.S.) will be subject to the 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 such beneficial owner and the
U.S. entity required to withhold tax complies with applicable certification
requirements and (ii) such beneficial owner takes one of the following steps to
obtain an exemption or reduced tax rate:

o     Exemption for non-U.S. Persons (Form W-8BEN). 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 Owner 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 can obtain an exemption or reduced tax rate
      (depending on the treaty terms) by filing Form W-8BEN (Certificate of
      Foreign Status of Beneficial Owner 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 such change. More complex rules apply to nominees
      and entities treated as partnerships that are not U.S. Persons.

o     Exemption for non-U.S. Persons with effectively connected income (Form
      W-8ECI). A non-U.S. Person, including a non-U.S. corporation or bank with
      a U.S. branch, for which the interest income is effectively connected with
      its conduct of a trade or business in the United States, can obtain an
      exemption from the withholding tax by filing Form 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).

o     Exemptions 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).

      In each case, 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). Form W-8BEN and Form W-8ECI are generally effective until the
end of the third succeeding calendar year after the date such form is signed
unless the information provided in the form changes. If information in the form
changes, a new form must be provided within 30 days of such change.

      The term "U.S. Person" means (i) a citizen or resident of the United
States, (ii) a corporation, partnership or other entity treated as a corporation
or partnership for United States federal income tax purposes organized in or
under the laws of the United States or any state thereof or the District of
Columbia (unless, in the case of a partnership, Treasury regulations provide
otherwise) or (iii) an estate the income of which is includible in gross income
for United States tax purposes, regardless of its source, or (iv) a trust if a
court within the United States is able to exercise primary supervision over the
administration of the trust and one or more United States persons have authority
to control all substantial decisions of the trust. Notwithstanding the preceding
sentence, to the extent provided in Treasury regulations, certain trusts in
existence on August 20, 1996, and treated as United States persons prior to that
date, that elect to continue to be treated as United States persons will also be
a U.S. Person. This summary does not deal with all aspects of U.S. federal
income tax withholding that may be relevant to foreign holders of the Global
Securities. Investors are advised to consult their own tax advisors for specific
tax advice concerning their holding and disposing of the Global Securities.


                                       56


Exchangeable Securities

      General. If specified in the related prospectus supplement, a series of
securities may include one or more classes that are exchangeable securities. In
any of these series, the holders of one or more of the classes of exchangeable
securities will be entitled, after notice and payment to the trustee of an
administrative fee, to exchange all or a portion of those classes for
proportionate interests in one or more of the other classes of exchangeable
securities.

      If a series includes exchangeable securities as described in the related
prospectus supplement, all of these classes of exchangeable securities will be
listed in the prospectus supplement. The classes of securities that are
exchangeable for one another will be referred to in the related prospectus
supplement as "related" to each other, and each related grouping of exchangeable
securities will be referred to as a "combination." Each exchangeable security
will represent a beneficial ownership interest in the class or classes of
securities deposited with the trustee in connection with the exchange (these
classes of certificates will be referred to in the related prospectus supplement
as the "depositable securities"). The classes of depositable securities will be
deposited in a separate trust fund, referred to in this prospectus as the
"exchangeable securities trust fund," which will also be established pursuant to
the pooling and servicing agreement or trust agreement establishing the trust
fund that issues the depositable securities. The trustee for the issuing entity
that issues the depositable securities will also serve as trustee of the
exchangeable securities trust fund. The exchangeable securities will be issued
by the exchangeable securities trust fund and, in the aggregate, will represent
a distinct combination of uncertificated interests in the issuing entity. At any
time after their initial issuance, the class or classes of depositable
securities may be exchanged for the related class or classes of exchangeable
securities. In some cases, multiple classes of depositable securities may be
exchanged for one or more classes of related exchangeable securities.
Exchangeable securities received in an exchange may subsequently be exchanged
for other exchangeable securities that are part of the same combination or for
the related depositable securities. This process may be repeated again and
again.

      The descriptions in the related prospectus supplement of the securities of
a series that includes depositable securities, including descriptions of
principal and interest distributions, registration and denomination of
securities, credit enhancement, yield and prepayment considerations and tax,
ERISA and legal investment considerations, also will apply to each class of
exchangeable securities. The related prospectus supplement will separately
describe the yield and prepayment considerations applicable to, and the risks of
investment in, each class of exchangeable securities. For example, separate
decrement tables and yield tables, if applicable, will be included for each
class of exchangeable securities.

      Exchanges. If a holder elects to exchange its depositable securities for
related exchangeable securities, the following three conditions must be
satisfied:

            o     the aggregate security balance of the exchangeable securities
                  received in the exchange, immediately after the exchange, must
                  equal the aggregate security balance, immediately prior to the
                  exchange, of the depositable securities (for purposes of this
                  condition, an interest-only class will have a principal
                  balance of zero);

            o     the aggregate amount of interest payable on any distribution
                  date with respect to the exchangeable securities received in
                  the exchange must equal the aggregate amount of interest
                  payable on such distribution date with respect to the
                  depositable securities; and

            o     the class or classes of depositable securities must be
                  exchanged in the proportions, if any, described in the related
                  prospectus supplement.

      There are different types of combinations of depositable securities and of
exchangeable securities that can exist. Any individual series of securities may
have multiple types of combinations. Some examples of combinations of
exchangeable securities that differ in their interest characteristics include:

            o     a class of depositable securities with a floating interest
                  rate and a class of depositable securities with an inverse
                  floating interest rate may be exchangeable for a class of
                  exchangeable securities with a fixed interest rate. In this
                  case, the classes of depositable securities with interest
                  rates that


                                       57


                  vary with an index would produce, in the aggregate, an annual
                  interest amount equal to that generated by the exchangeable
                  class with a fixed interest rate. In addition, the aggregate
                  security balance of the two depositable classes with interest
                  rates that vary with an index would equal the security balance
                  of the exchangeable class with the fixed interest rate.

            o     an interest-only class and a principal only class of
                  depositable securities may be exchangeable, together, for a
                  class of exchangeable securities that is entitled to both
                  principal and interest payments. The security balance of the
                  principal and interest class of exchangeable securities would
                  be equal to the principal balance of the depositable principal
                  only class, and the interest rate on the exchangeable
                  principal and interest class would be a fixed rate that, when
                  applied to the security balance of this class, would generate
                  an annual interest amount equal to the annual interest amount
                  of the depositable interest-only class in distributions that
                  have identical amounts and identical timing.

            o     two classes of depositable principal and interest classes with
                  different fixed interest rates may be exchangeable, together,
                  for an exchangeable class that is entitled to both principal
                  and interest payments, with a principal balance equal to the
                  aggregate principal balance of the two depositable classes,
                  and a fixed interest rate that, when applied to the security
                  balance of the exchangeable class, would generate an annual
                  interest amount equal to the aggregate amount of annual
                  interest of the two depositable classes.

      In some series, a securityholder may be able to exchange its exchangeable
securities for other exchangeable securities that have different principal
payment characteristics. Examples of these types of combinations include:

            o     a class of depositable securities that accretes all of its
                  interest for a specified period, with the accreted amount
                  added to the principal balance of the accreting class, and a
                  class of depositable securities that receives principal
                  payments from these accretions may be exchangeable, together,
                  for a single class of exchangeable securities that receives
                  payments of interest continuously from the first distribution
                  date on which it receives interest until it is retired.

            o     a class of depositable securities that is a Planned Principal
                  Class or Targeted Principal Class, and a class of depositable
                  securities that only receives principal payments on a
                  distribution date if scheduled payments have been made on the
                  Planned Principal Class or Targeted Principal Class, as
                  applicable, may be exchangeable, together, for a class of
                  exchangeable securities that receives principal payments
                  without regard to the schedule from the first distribution
                  date on which it receives principal until it is retired.

      Procedures. The related prospectus supplement will describe the procedures
that must be followed to make an exchange. A securityholder will be required to
provide notice to the trustee in advance of the proposed exchange date. The
notice must include the outstanding security balance or notional amount of the
securities to be exchanged and to be received, and the proposed exchange date.
When the trustee receives this notice, it will provide instructions to the
securityholder regarding delivery of the securities and payment of the
administrative fee. A securityholder's notice to the trustee will become
irrevocable on the second business day prior to the proposed exchange date. Any
exchangeable securities in book-entry form will be subject to the rules,
regulations and procedures applicable to DTC's book-entry securities.

      If the related prospectus supplement describes exchange proportions for a
combination of classes of exchangeable securities, these proportions will be
based on the original, rather than the outstanding, security balance or notional
amounts of these classes.

      The first payment on an exchangeable security received in an exchange will
be made on the distribution date in the month following the month of the
exchange or as otherwise described in the related prospectus supplement. This
payment will be made to the securityholder of record as of the applicable record
date.


                                       58


                               Credit Enhancement

General

      Credit enhancement may be provided for one or more classes of a series of
securities or with respect to the Issuing Entity Assets in the related issuing
entity. Credit enhancement may be in the form of a limited financial guaranty
policy issued by an entity named in the related prospectus supplement, the
subordination of one or more classes of the securities of the series, the
establishment of one or more reserve funds, the use of a cross support feature,
use of a mortgage pool insurance policy, FHA insurance, VA guarantee, bankruptcy
bond, special hazard insurance policy, surety bond, letter of credit, guaranteed
investment contract, overcollateralization or other method of credit enhancement
described in the related prospectus supplement, or any combination of them.
Credit enhancement may not provide protection against all risks of loss or
guarantee repayment of the entire principal balance of the securities and
interest on them. 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, the rights of
holders of one or more classes of subordinated securities will be subordinate to
the rights of holders of one or more other classes of senior securities of the
series to distributions of scheduled principal, principal prepayments, interest
or any combination of them that otherwise would have been payable to holders of
subordinated securities under the circumstances and to the extent specified in
the related prospectus supplement. If specified in the related prospectus
supplement, holders of senior securities also may be protected by a reduction in
the ownership interest, if any, of the related subordinated securities or by any
other method described in the related prospectus supplement. If specified in the
related prospectus supplement, delays in receipt of scheduled payments on the
Issuing Entity Assets and losses with respect to the Issuing Entity Assets will
be borne first by the various classes of subordinated 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 of delinquent payments on the Issuing
Entity Assets over the lives of the securities or at any time, the aggregate
losses on Issuing Entity Assets which must be borne by the subordinated
securities by virtue of subordination and the amount of the distributions
otherwise distributable to the subordinated securityholders that will be
distributable to senior securityholders on any distribution date may be limited
as specified in the related prospectus supplement. If aggregate distributions of
delinquent payments on the Issuing Entity Assets or aggregate losses on the
Issuing Entity Assets were to exceed the amount specified in the related
prospectus supplement, senior securityholders would experience losses on the
securities.

      In addition to or instead of the subordination methods listed above, the
prospectus supplement for a series may provide that all or a portion of the
distributions otherwise payable to holders of subordinated securities on any
distribution date will instead either be deposited into one or more reserve
accounts established with the trustee, or distributed to the holders of senior
securities. As specified in the related prospectus supplement, deposits into a
reserve account may be made on each distribution date, or for specified time
periods, or until the balance in the reserve account has reached a specified
amount and thereafter, to the extent necessary to maintain the balance in the
reserve account at any required level. Amounts on deposit in the reserve account
for a series 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 subordinated securities may themselves be subordinate in
their right to receive certain distributions to other classes of senior and
subordinated securities, respectively, through a cross support mechanism or
otherwise.

      As between classes of senior securities and as between classes of
subordinated securities, distributions may be allocated among the classes in the
order of their scheduled final distribution dates, in accordance with a schedule
or formula, in relation to the occurrence of events, or otherwise, in each case
as specified in the related prospectus supplement. As between classes of
subordinated securities, payments to senior securityholders on account of
delinquencies or losses and payments to the reserve fund will be allocated as
specified in the related prospectus supplement.


                                       59


      With respect to any series with classes of senior and subordinated
securities, the terms and priorities of the subordination may vary from those
described in the preceding paragraphs. Any such variation will be described in
the related prospectus supplement.

Letter of Credit

      Any letter of credit for a series of securities will be issued by the bank
or financial institution specified in the related prospectus supplement. The
specified bank will be obligated to honor drawings under the letter of credit in
an aggregate fixed dollar amount, net of unreimbursed payments under the letter
of credit, equal to a specified percentage of the aggregate principal balance
of:

      o     the mortgage loans on the related cut-off date, or

      o     one or more classes of securities.

      If 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 Bankruptcy Code, or losses
resulting from denial of insurance coverage due to misrepresentations in
connection with the origination of a mortgage loan. The amount available under
the letter of credit will be reduced by the amount of unreimbursed payments
under the letter of credit. The obligations of the bank issuing a letter of
credit for any series of securities will expire at the earlier of the date
specified in the related prospectus supplement or the termination of the issuing
entity. See "The Agreements-Termination: Optional Termination." A copy of any
letter of credit 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.

Mortgage Pool Insurance Policies

      If specified in the related prospectus supplement relating to a mortgage
pool, a separate mortgage pool insurance policy will be obtained for the
mortgage pool and issued by the insurer named in the prospectus supplement. Each
mortgage pool insurance policy will, subject to policy limitations, cover loss
from default in payment on mortgage loans in the mortgage pool in an amount
equal to a percentage specified in the prospectus supplement of the aggregate
principal balance of the mortgage loans on the cut-off date that are not covered
as to their entire outstanding principal balances by primary mortgage insurance
policies. As more fully described below, the servicer will present claims under
the insurance to the pool insurer on behalf of itself, the trustee and the
securityholders. The mortgage pool insurance policies, however, are not blanket
policies against loss, since claims under them may be made only for particular
defaulted mortgage loans and only upon satisfaction of conditions precedent in
the policy. The applicable prospectus supplement may specify that mortgage pool
insurance will cover the failure to pay or the denial of a claim under a primary
mortgage insurance policy, but if it does not, the mortgage pool insurance
policies will not cover losses due to a failure to pay or denial of a claim
under a primary mortgage insurance policy.

      In general, each mortgage pool insurance policy will provide that no
claims may be validly presented unless

      o     any required primary mortgage insurance policy is in effect for the
            defaulted mortgage loan and a claim under it has been submitted and
            settled;

      o     hazard insurance on the related Property has been kept in force and
            real estate taxes and other protection and preservation expenses
            have been paid;

      o     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

      o     the insured has acquired good and merchantable title to the Property
            free and clear of liens except certain permitted encumbrances.


                                       60


      Upon satisfaction of these conditions, the pool insurer will have the
option either to purchase the Property at a price equal to the principal balance
of the related mortgage loan plus accrued and unpaid interest at the mortgage
rate to the date of the purchase and certain expenses incurred by the servicer
on behalf of the trustee and securityholders or to pay the amount by which the
sum of the principal balance of the defaulted mortgage loan plus accrued and
unpaid interest at the mortgage rate to the date of payment of the claim and the
aforementioned expenses exceeds the proceeds received from an approved sale of
the 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 is
damaged, and proceeds, if any, from the related hazard insurance policy or a
special hazard insurance policy or policies maintained for a series are
insufficient to restore the damaged property to a condition sufficient to permit
recovery under the mortgage pool insurance policy, the servicer will not be
required to expend its own funds to restore the damaged property unless it
determines that the restoration will increase the proceeds to securityholders on
liquidation of the mortgage loan after reimbursement of the servicer for its
expenses and the expenses will be recoverable by it through proceeds of the sale
of the Property or proceeds of the related mortgage pool insurance policy or any
related primary mortgage insurance policy.

      The applicable prospectus supplement may specify that mortgage pool
insurance will cover various origination and servicing defaults, but if it does
not, then no mortgage pool insurance policy will insure (and many primary
mortgage insurance policies do not insure) against loss sustained from a default
arising from, among other things, fraud or negligence in the origination or
servicing of a mortgage loan, including misrepresentation by the mortgagor, the
originator or persons involved in its origination, or failure to construct a
Property in accordance with plans and specifications. A failure of coverage for
one of these reasons will not ordinarily result in a breach of the related
seller's representations and, in that case, will not result in an obligation on
the part of the seller to cure or repurchase the defaulted mortgage loan. No
mortgage pool insurance policy will cover (and many primary mortgage insurance
policies do not cover) a claim with respect to a defaulted mortgage loan
occurring when the servicer of the mortgage loan, at the time of default or
thereafter, was not approved by the applicable insurer.

      The original amount of coverage under each mortgage pool insurance policy
will be maintained to the extent provided in the related prospectus supplement
and may 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 that the claims paid will be net of servicer
expenses and accrued interest, but if it does not, then the amount of claims
paid will include certain expenses incurred by the servicer as well as accrued
interest on delinquent mortgage loans to the date of payment of the claim.
Accordingly, if aggregate net claims paid under any mortgage pool insurance
policy reach the original policy limit, coverage under that mortgage pool
insurance policy will be exhausted and any further losses will be borne by the
securityholders.

Special Hazard Insurance Policies

      If specified in the related prospectus supplement, a separate special
hazard insurance policy will be obtained for the mortgage pool and will be
issued by the insurer named in the prospectus supplement. Each special hazard
insurance policy will, subject to policy limitations, protect holders of the
related securities from loss caused by the application of the coinsurance clause
contained in hazard insurance policies and loss from damage to mortgaged
properties caused by certain hazards not insured against under the standard form
of hazard insurance policy in the states where the mortgaged properties are
located or under a flood insurance policy if the Property is located in a
federally designated flood area. Some of the losses covered include earthquakes
and, to a limited extent, tidal waves and related water damage or as otherwise
specified in the related prospectus supplement. See "The Agreements--Hazard
Insurance." No special hazard insurance policy will cover losses from fraud or
conversion by the trustee or servicer, war, insurrection, civil war, certain
governmental action, errors in design, faulty workmanship or materials (except
under certain circumstances), nuclear or chemical reaction, flood (if the
Property is located in a federally designated flood area), nuclear or chemical
contamination and certain other risks. The amount of coverage under any special
hazard insurance policy will be specified in the related prospectus supplement.
Each special hazard insurance policy will provide that no claim may be paid
unless hazard and, if applicable, flood insurance on the property securing the
mortgage loan have been kept in force and other protection and preservation
expenses have been paid.


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      The applicable prospectus supplement may provide for other payment
coverage, but if it does not, then, subject to these limitations, each special
hazard insurance policy will provide that where there has been damage to
property securing a foreclosed mortgage loan (title to which has been acquired
by the insured) and to the extent the damage is not covered by the hazard
insurance policy or flood insurance policy, if any, maintained by the mortgagor
or the servicer, the special hazard insurer will pay the lesser of the cost of
repair or replacement of the property or, upon transfer of the property to the
special hazard insurer, the unpaid principal balance of the mortgage loan at the
time of acquisition of the property by foreclosure or deed in lieu of
foreclosure, plus accrued interest to the date of claim settlement and certain
expenses incurred by the servicer with respect to the property. If the unpaid
principal balance of a mortgage loan plus accrued interest and certain expenses
is paid by the special hazard insurer, the amount of further coverage under the
related special hazard insurance policy will be reduced by that amount less any
net proceeds from the sale of the property. Any amount paid to repair the
property will further reduce coverage by that amount. So long as a mortgage pool
insurance policy remains in effect, the payment by the special hazard insurer of
the cost of repair or of the unpaid principal balance of the related mortgage
loan plus accrued interest and certain expenses will not affect the total
insurance proceeds paid to securityholders, but will affect the relative amounts
of coverage remaining under the related special hazard insurance policy and
mortgage pool insurance policy.

      To the extent specified in the prospectus supplement, the servicer may
deposit cash, an irrevocable letter of credit, or any other instrument
acceptable to each nationally recognized rating agency rating the securities of
the related series at the request of the depositor in a special trust account to
provide protection in lieu of or in addition to that provided by a special
hazard insurance policy. The amount of any special hazard insurance policy or of
the deposit to the special trust account relating to the securities may be
reduced so long as the reduction will not result in a downgrading of the rating
of the securities by a rating agency rating securities at the request of the
depositor.

Bankruptcy Bonds

      If specified in the related prospectus supplement, a bankruptcy bond to
cover losses resulting from proceedings under the federal Bankruptcy Code with
respect to a mortgage loan will be issued by an insurer named in the prospectus
supplement. Each bankruptcy bond will cover, to the extent specified in the
related prospectus supplement, certain losses resulting from a reduction by a
bankruptcy court of scheduled payments of principal and interest on a mortgage
loan or a reduction by the court of the principal amount of a mortgage loan and
will cover certain unpaid interest on the amount of a principal reduction from
the date of the filing of a bankruptcy petition. The required amount of coverage
under each bankruptcy bond will be set forth in the related prospectus
supplement. Coverage under a bankruptcy bond may be cancelled or reduced by the
servicer if the cancellation or reduction would not adversely affect the then
current rating or ratings of the related securities. See "Certain Legal Aspects
of the Mortgage Loans--Anti-Deficiency Legislation and Other Limitations on
Lenders."

      To the extent specified in the prospectus supplement, the servicer may
deposit cash, an irrevocable letter of credit or any other instrument acceptable
to each nationally recognized rating agency rating the securities of the related
series at the request of the depositor in a special trust account to provide
protection in lieu of or in addition to that provided by a bankruptcy bond. The
amount of any bankruptcy bond or of the deposit to the special trust account
relating to the securities may be reduced so long as the reduction will not
result in a downgrading of the rating of the securities by a rating agency
rating securities at the request of the depositor.

Reserve Fund

      If so specified in the related prospectus supplement, credit support with
respect to a series of securities may be provided by one or more reserve funds
held by the trustee, in trust, for the series of securities. The related
prospectus supplement will specify whether a reserve fund will be included in
the issuing entity for a series.

      The reserve fund for a series will be funded by a deposit of cash, U.S.
Treasury securities or instruments evidencing ownership of principal or interest
payments on U.S. Treasury securities, letters of credit, demand notes,
certificates of deposit, or a combination of them in an aggregate amount
specified in the related prospectus supplement; by the deposit from time to time
of amounts specified in the related prospectus supplement to which the
subordinated securityholders, if any, would otherwise be entitled; or in any
other manner specified in the related prospectus supplement.


                                       62


      Any amounts on deposit in the reserve fund and the proceeds of any other
instrument deposited in it upon maturity will be held in cash or will be
invested in permitted investments. The applicable prospectus supplement may
specify a different definition of permitted investments, but if it does not,
then permitted investments will include obligations of the United States and
specified agencies of the United States, certificates of deposit, specified
commercial paper, time deposits and bankers acceptances sold by eligible
commercial banks, and specified repurchase agreements for United States
government securities with eligible commercial banks. If a letter of credit is
deposited with the trustee, the letter of credit will be irrevocable. Generally,
any deposited instrument will name the trustee, in its capacity as trustee for
the securityholders, as beneficiary and will be issued by an entity acceptable
to each rating agency that rates the securities at the request of the depositor.
Additional information about the instruments deposited in the reserve funds will
be set forth in the related prospectus supplement.

      Any amounts so deposited and payments on instruments so deposited will be
available for withdrawal from the reserve fund for distribution to the
securityholders for the purposes, in the manner and at the times specified in
the related prospectus supplement.

Cross Support

      If specified in the related prospectus supplement, the beneficial
ownership of separate groups of assets included in an issuing entity may be
evidenced by separate classes of the related series of securities. 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 other asset groups within the same issuing entity. 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 issuing entities. If applicable, the related prospectus supplement will
identify the issuing entities 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 issuing entities.

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 of their
classes will be covered by insurance policies or surety bonds provided by one or
more insurance companies or sureties. These instruments may cover timely
distributions of interest or full distributions of principal or both 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, an issuing entity may also include
bankruptcy bonds, special hazard insurance policies, other insurance or
guaranties for the purpose of maintaining timely payments or providing
additional protection against losses on the assets included in the issuing
entity, paying administrative expenses, or establishing a minimum reinvestment
rate on the payments made on the assets or principal payment rate on the assets.
If specified in the related prospectus supplement, the issuing entity may
include a guaranteed investment contract pursuant to which the issuing entity 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 on the terms specified
in the prospectus supplement.

Over-Collateralization

      If provided in the prospectus supplement for a series, a portion of the
interest payment on each mortgage loan may be applied as an additional
distribution in respect of principal to reduce the principal balance of a
particular class or classes of securities and, thus, accelerate the rate of
principal payments on the specified class or classes. Reducing the principal
balance of the securities without a corresponding reduction in the principal
balance of the underlying mortgage loans will result in over-collateralization
and additional protection to the securityholders as specified in the related
prospectus supplement. If so specified in the related prospectus supplement,
overcollateralization may also be provided for on the date of issuance of
securities by the issuance of all classes of securities in an initial aggregate
principal amount that is less than the aggregate principal amount of the Issuing


                                       63


Entity Assets in the related issuing entity. 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.

      If provided in the prospectus supplement for a series, during a revolving
period designated therein, the portion of interest payments collected on home
equity line of credit loans may be applied to purchase additional home equity
line of credit loans so that the level of overcollateralization represented by
the amount by which the outstanding principal balances of the home equity line
of credit loans exceed the outstanding principal balances of the securities will
be maintained at a level specified in the prospectus supplement.

Financial Instruments

      If specified in the related prospectus supplement, the issuing entity 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 issuing entity and whose primary
purpose is not to provide credit enhancement related to the assets in the
issuing entity or the securities issued by the issuing entity. 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 issuing entity 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
      loans or the securities issued by the trust rises above or falls below
      specified levels; or

o     provide protection against interest rate changes, certain types of losses,
      including reduced market values, or the payment shortfalls to one or more
      classes of the related series..

      If an issuing entity 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
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.

Deposit Agreements

      If specified in a prospectus supplement, the depositor or the seller and
the trustee for a series of securities will enter into a deposit agreement with
the entity specified in such prospectus supplement on or before the sale of that
series of securities. Pursuant to the deposit agreement, all or a portion of the
amounts held in the collection account, the distribution account or in any
reserve fund would be invested with the entity specified in the prospectus
supplement. The purpose of a deposit agreement would be to accumulate available
cash for investment so that the cash, together with income thereon, can be
applied to future distributions on one or more classes of securities. The
trustee would be entitled to withdraw amounts invested pursuant to a deposit
agreement, plus interest at a rate equal to the assumed reinvestment rate, in
the manner specified in the prospectus supplement. The prospectus supplement for
a series of securities pursuant to which a deposit agreement is used will
contain a description of the terms of such deposit agreement.

                       Yield 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 Issuing Entity Assets included in the related issuing
entity. The original terms to maturity of the underlying mortgage loans of the
Issuing Entity Assets in a given mortgage pool will vary depending upon the type
of mortgage loans included in it, and each prospectus supplement will contain
information about the type and maturities of the loans in the related pool or
securing


                                       64


Mortgage-Backed Securities. The applicable prospectus supplement may indicate
that some mortgage loans provide for prepayment charges or limit prepayments
thereof, but if it does not, then the mortgage loans may be prepaid without
penalty in full or in part at any time. The prepayment experience on the
underlying mortgage loans of the Issuing Entity Assets will affect the weighted
average lives of the related securities.

      The rate of prepayment on the mortgage loans cannot be predicted.
Closed-end second-lien loans, home equity line of credit loans and home
improvement contracts have been originated in significant volume only during the
past few years and, with respect to any such loans originated by an affiliate
thereof, the depositor is not aware of any publicly available studies or
statistics on the respective prepayment rates of such loans. Generally,
borrowers do not view closed-end second-lien loans, home equity line of credit
loans and home improvement contracts as permanent financing. Accordingly, those
loans may experience a higher prepayment rate than traditional first-lien
mortgage loans. On the other hand, because home equity line of credit loans
generally are not fully amortizing, the absence of voluntary borrower
prepayments could cause principal payment rates to be similar to, or lower than,
the rates associated with traditional fully-amortizing first-lien mortgage
loans.

      A number of factors may affect the prepayment experience of the mortgage
loans, including general economic conditions, prevailing interest rates, the
availability of alternative financing, homeowner mobility and the frequency and
amount of future draws on any home equity lines of credit. Other factors that
might affect the prepayment rate of closed-end second-lien loans, home equity
line of credit loans or home improvement contracts include the amount of, and
interest rates on, the related senior loans, and the fact that subordinate loans
are generally used for shorter-term financing for a variety of purposes,
including home improvement, education expenses and purchases of consumer goods
such as automobiles. In addition, any future limitations on borrowers' right to
deduct interest payments on closed-end second-lien loans, home equity line of
credit loans or any other type of mortgage loan for federal income tax purposes
may further increase the rate of prepayments of the mortgage loans. The
enforcement of a due-on-sale provision (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." If you buy securities in the secondary market at a
price other than par, your yield may vary from the yield you anticipated if the
prepayment rate on the loans is different from the rate you anticipated when you
bought the securities.

      Collections on home equity line of credit loans may vary because, among
other things, borrowers may:

      o     make payments as low as the minimum monthly payment for any month,

      o     make payments consisting only of the interest, fees and charges for
            a given month during the interest-only period for certain home
            equity line of credit loans (and, in more limited circumstances, in
            the case of closed-end second-lien loans for which an interest-only
            payment option has been selected), or

      o     make payments as high as the entire outstanding principal balance
            plus accrued interest, fees and charges on that mortgage loan.

      In addition, borrowers may fail to make the required periodic payments.
Collections on the mortgage loans also may vary due to seasonal purchasing and
borrowers' payment habits.

      The applicable prospectus supplement may indicate that some conventional
mortgage loans do not have due-on-sale provisions, but if it does not, then all
conventional mortgage loans will contain due-on-sale provisions permitting the
mortgagee to accelerate the maturity of the loan upon sale or specified
transfers by the mortgagor of the underlying Property. Mortgage loans insured by
the FHA and mortgage loans partially guaranteed by the VA are assumable with the
consent of the FHA and the VA, respectively. Thus, the rate of prepayments on
those mortgage loans may be lower than that on conventional mortgage loans
bearing comparable interest rates. The 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. However, the servicer will not take any enforcement action
that would impair or threaten to impair any recovery under any related insurance
policy. See


                                       65


"The Agreements--Collection Procedures" and "Certain Legal Aspects of the
Mortgage Loans" for a description of certain provisions of each agreement and
certain legal developments that may affect the prepayment experience on the
mortgage loans.

      The rate of prepayments of conventional mortgage loans has fluctuated
significantly in recent years. In general, if prevailing rates fall
significantly below the mortgage rates borne by the mortgage loans, the mortgage
loans are likely to be subject to higher prepayment rates than if prevailing
interest rates remain at or above those mortgage rates. Conversely, if
prevailing interest rates rise appreciably above the mortgage rates borne by the
mortgage loans, the mortgage loans are likely to experience a lower prepayment
rate than if prevailing rates remain at or below those mortgage rates. However,
there can be no assurance that this will be the case.

      When a full prepayment is made on a mortgage loan, the mortgagor is
charged interest on the principal amount of the mortgage loan 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. Thus, in most instances, the effect of
prepayments in full will be to reduce the amount of interest passed through in
the following month to securityholders. Partial prepayments in a given month may
be applied to the outstanding principal balances of the mortgage loans so
prepaid in the month of receipt or the month following receipt. In the latter
case, partial prepayments will not reduce the amount of interest passed through
in the month. In the latter case, partial prepayments will not reduce the amount
of interest passed through or paid in that month. Unless the related prospectus
supplement provides otherwise, neither full nor partial prepayments will be
passed through or paid until the month following receipt.

      Even if the Properties underlying the mortgage loans held in the issuing
entity or securing Mortgage-Backed Securities provide adequate security for the
mortgage 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. In addition, in some states, if
the proceeds of the foreclosure are insufficient to repay the loan, the borrower
is not liable for the deficit. If a borrower defaults, these restrictions may
impede the servicer's ability to dispose of the property and 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 payments to senior
lienholders, legal fees and costs, real estate taxes, and property maintenance
and preservation expenses.

      Liquidation expenses of defaulted loans generally do not vary directly
with the 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 a smaller
percentage of the outstanding principal balance of the small loan than it is for
the defaulted loan with a large remaining principal balance.

      State laws generally regulate interest rates and other charges, require
certain disclosures, and require licensing of loan originators and servicers. In
addition, most states have other laws and public policies for the protection of
consumers that prohibit unfair and deceptive practices in the origination,
servicing and collection of loans. Depending on the particular law and the
specific facts involved, violations may limit the ability of the servicer to
collect all or part of the principal or interest on the underlying loans held in
the issuing entity or securing Mortgage-Backed Securities. In some cases, the
borrower may even be entitled to a refund of amounts previously paid. In
addition, damages and administrative sanctions could be imposed on the servicer.

      If the rate at which interest is passed through or paid to securityholders
is calculated on a loan-by-loan basis, disproportionate principal prepayments
among loans with different Loan Rates will affect the yields on those
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 although interest will accrue on each
loan from the first day of the month (unless the related prospectus supplement
provides otherwise), the interest will not be distributed until the month
following the month of accrual. In the case of securities backed by
Mortgage-Backed Securities, the interest accrued on loans securing such
Mortgage-Backed Securities will generally not be distributed until several
months following the month of accrual on such underlying mortgage loans.


                                       66


      Under specified circumstances, the servicer or the holders of the residual
interests in a REMIC or any person specified in the related prospectus
supplement may have the option to purchase the assets of an issuing entity
thereby effecting earlier retirement of the related series of securities. See
"The Agreements--Termination; Optional Termination."

      Factors other than those identified in this prospectus and in the related
prospectus supplement could significantly affect principal prepayments at any
time and over the lives of the securities. The relative contribution of the
various factors affecting prepayment may also vary from time to time. There can
be no assurance as to the rate of payment of principal of the Issuing Entity
Assets at any time or over the lives of the securities.

      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 principal prepayments), delinquencies and losses on the yield,
weighted average lives and maturities of the securities.

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 issuing entity 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 issuing entity 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

      The following is a discussion of the material provisions of each agreement
that are not described elsewhere in this prospectus. Where particular provisions
or terms used in the agreements are referred to, the provisions or terms are as
specified in the related agreement.

Assignment of Issuing Entity Assets

      Assignment of the Mortgage Loans. At the time of issuance of the
securities of a series, the depositor will cause the mortgage loans comprising
the related issuing entity to be assigned to the trustee, together with all
principal and interest received by or on behalf of the depositor on or with
respect to the mortgage 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. The trustee will, concurrently
with the assignment, deliver the securities to the depositor in exchange for the
mortgage loans. Each mortgage loan will be identified in a schedule appearing as
an exhibit to the related agreement. The schedule will include information as to
the outstanding principal balance of each mortgage loan after application of
payments due on the cut-off date, as well as information


                                       67


regarding the mortgage rate, the current scheduled monthly payment of principal
and interest, the maturity of the loan, the Loan-to-Value Ratios or Combined
Loan-to-Value Ratios, as applicable, at origination and other specified
information.

      In addition, the depositor will deliver or cause to be delivered to the
trustee (or to the custodian) for each mortgage loan

      o     the mortgage note 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 in lieu of any original mortgage
            note that has been lost,

      o     the mortgage, deed of trust or similar instrument with evidence of
            recording indicated on it (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 or some other arrangement will be provided
            for),

      o     an assignment of the mortgage to the trustee in recordable form and

      o     any other security documents specified in the related prospectus
            supplement or the related agreement, including security documents
            relating to any senior interests in the property.

The applicable prospectus supplement may provide other arrangements for assuring
the priority of the assignments, but if it does not, for administrative
convenience and facilitation of servicing and to reduce closing costs, the
assignments of mortgage shall not be required to be submitted for recording
(except with respect to any mortgage loan located in Maryland) unless such
failure to record would result in a withdrawal or a downgrade by any rating
agency of the rating on any class of securities (without regard to any financial
guaranty policy); provided, however, that each assignment of mortgage shall be
submitted for recording by the applicable seller (at the direction of the
servicer) in the manner described above, at no expense to the Issuing Entity or
the Trustee, upon the earliest to occur of: (i) reasonable direction by the
Holders of the Certificates entitled to at least 25% of the voting rights of the
securities issued by an issuing entity or by the NIM Insurer, if any, (ii) the
occurrence of a bankruptcy, insolvency or foreclosure relating to the applicable
seller, (iii) the occurrence of a servicing transfer and (iv) if the applicable
seller is not the servicer and with respect to any one assignment of mortgage,
the occurrence of a bankruptcy, insolvency or foreclosure relating to the
mortgagor under the related mortgage. Notwithstanding the foregoing, if the
servicer is unable to pay the cost of recording the assignments of mortgage,
such expense shall be paid by the Trustee and shall be reimbursable out of the
applicable Securities Account.

      With respect to any mortgage loans that are cooperative loans, the
depositor will cause to be delivered to the trustee

      o     the related original cooperative note endorsed without recourse in
            blank or to the order of the trustee (or, to the extent the related
            pooling and servicing agreement, sale and servicing agreement or
            servicing agreement, as applicable, so provides, a lost note
            affidavit),

      o     the original security agreement,

      o     the proprietary lease or occupancy agreement,

      o     the recognition agreement,

      o     an executed financing agreement and

      o     the relevant stock certificate, related blank stock powers 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.


                                       68


      For any loans that are closed-end second-lien loans or home equity line of
credit loans, the applicable prospectus supplement will specify whether the
documents relating to those loans will have to be delivered to the trustee (or a
custodian) and whether assignments of the related mortgage to the trustee will
be recorded. If documents need not be delivered, the servicer will retain them.

      For any home improvement contracts, the applicable prospectus supplement
will specify whether the documents relating to those contracts will have to be
delivered to the trustee (or a custodian). However, unless specified in the
related prospectus supplement, the depositor will not deliver to the trustee the
original mortgage securing a home improvement contract. In order to give notice
of the right, title and interest of securityholders to the home improvement
contracts, the depositor will cause a UCC-1 financing statement to be executed
by the depositor or the seller, identifying the trustee as the secured party and
identifying all home improvement contracts as collateral. Unless otherwise
specified in the related prospectus supplement, the home improvement contracts
will not be stamped or otherwise marked to reflect their assignment to the
trustee. Therefore, if, through negligence, fraud or otherwise, a subsequent
purchaser takes physical possession of the home improvement contracts without
notice of the assignment, the securityholders' interest in the home improvement
contracts could be defeated. See "Certain Legal Aspects of the Loans-The Home
Improvement Contracts."

      The trustee (or the custodian) will review the loan documents after
receiving them, within the time period specified in the related prospectus
supplement, and will hold the documents in trust for the benefit of the
securityholders. Generally, if a document is found to be missing or defective in
any material respect, the trustee (or custodian) will notify the servicer and
the depositor, and the servicer will notify the related seller. If, after
receiving notice, the seller cannot cure the omission or defect within the time
period specified in the related prospectus supplement, and such omission or
defect materially and adversely affects the interests of the securityholders in
the related mortgage loan, it will be obligated to:

      o     purchase the related mortgage loan from the issuing entity at the
            Purchase Price or,

      o     if specified in the related prospectus supplement, replace the
            mortgage loan with another mortgage loan that meets specified
            requirements.

      There can be no assurance that a seller will fulfill this purchase or
substitution obligation. Although the servicer may be obligated to enforce the
seller's obligation, the servicer will not be obligated to purchase or replace
the loan if the seller defaults on its obligation (nor will the servicer
otherwise be obligated to purchase or replace any loan for any other reason).
See "Loan Program-Representations by Sellers; Repurchases" in this prospectus.
The applicable prospectus supplement may provide other remedies, but if it does
not, then this obligation of the seller constitutes the sole remedy available to
the securityholders or the trustee for omission of, or a material defect in, a
constituent document.

      Notwithstanding the repurchase obligations described above, no purchase or
substitution of a loan will be made with respect to an issuing entity for which
a REMIC election is to be made if the purchase or substitution would result in a
prohibited transaction tax under the Code (unless the servicer or a holder of
the related residual certificate otherwise pays that tax from its own funds).
See "Loan Program-Representations by Sellers; Repurchases."

      The trustee will 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 mortgage loans as agent of the trustee.

      Notwithstanding these provisions, unless the related prospectus supplement
otherwise provides, no mortgage loan will be purchased from an issuing entity
for which a REMIC election is to be made if the purchase 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 were to characterize the transaction


                                       69


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. 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 securities. Each
Agency Security will be identified in a schedule appearing as an exhibit to the
related 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 Private Mortgage-Backed Securities. The depositor will cause
the Private Mortgage-Backed Securities to be registered in the name of the
trustee. The trustee (or the custodian) will have possession of any certificated
Private Mortgage-Backed Securities. Generally, the trustee will not be in
possession of or be assignee of record of any underlying assets for a Private
Mortgage-Backed Security. See "The Issuing Entity--Private Mortgage-Backed
Securities." Each Private 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 Private Mortgage-Backed
Security conveyed to the trustee.

Payments on Issuing Entity Assets; Deposits to Security Account

      The servicer or servicers will establish and maintain or cause to be
established and maintained for the related issuing entity a separate account or
accounts for the collection of payments on the related Issuing Entity Assets in
the issuing entity (the "Security Account"). The applicable prospectus
supplement may provide for other requirements for the Security Account, but if
it does not, then the Security Account must be one of the following:

      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 either such holding company
            or the depository institution or trust company, whichever are rated
            higher) have (x) if Moody's is a rating agency at the time amounts
            are held on deposit therein, the highest short-term ratings of
            Moody's (which shall be Prime-1), (y) if Fitch is a rating agency at
            the time any amounts are held on deposit therein, the highest
            short-term rating of Fitch (which shall be F1 for funds held for
            less than 30 days, and F1+ for funds held for longer than 30 days
            and less than 365 days) and (z) if S&P is a rating agency at the
            time any amounts are held on deposit therein, a short-term rating of
            at least A-2, for funds held no longer than 30 days, and, if funds
            will be held longer than 30 days and less than 365 days, a
            short-term rating of at least A-1+,

      o     if either of Moody's or Fitch is a Rating Agency, an account or
            accounts the deposits in which are insured by the FDIC or SAIF to
            the limits established by the FDIC or the SAIF, 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 (a) the trust department
            of a federal or a state chartered depository institution or (b) a
            trust company, acting in a fiduciary capacity or

      o     an account or accounts otherwise acceptable to each rating agency
            that rated one or more classes of the related series of securities
            at the request of the depositor.

      The collateral eligible to secure amounts in the Security Account is
limited to defined permitted investments. A Security Account may be maintained
as an interest bearing account or the funds held in it may be invested pending
each succeeding distribution date in defined permitted investments. To the
extent provided in the related prospectus supplement, the servicer or its
designee will be entitled to receive the interest or other income


                                       70


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 servicer or with a
depository institution that is an affiliate of the servicer, provided it meets
the standards set forth above.

      Unless otherwise indicated in the applicable prospectus supplement, the
servicer will deposit or cause to be deposited in the Security Account for each
issuing entity on a daily basis, to the extent applicable and unless the related
prospectus supplement provides for a different deposit arrangement, the
following payments and collections received or advances made by or on behalf of
it after the cut-off date (other than payments due on or before the cut-off date
and exclusive of any amounts representing any retained interest specified in the
related prospectus supplement):

      o     all payments on account of principal, including principal
            prepayments and, if specified in the related prospectus supplement,
            prepayment charges, on the mortgage loans;

      o     all payments on account of interest on the mortgage 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 any servicer) 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
            servicer's normal servicing procedures and all other cash amounts
            (net of unreimbursed expenses incurred in connection with
            liquidation or foreclosure and unreimbursed advances, if any)
            received and retained in connection with the liquidation of
            defaulted mortgage 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;

      o     all proceeds of any mortgage loan or property in respect thereof
            purchased by any servicer, the depositor or any seller as described
            under "Mortgage Loan Program--Representations by Sellers;
            Repurchases" or "The Agreements--Assignment of Issuing Entity
            Assets" above and all proceeds of any mortgage loan repurchased as
            described under "The Agreements--Termination; Optional Termination";

      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";

      o     any amount required to be deposited by the servicer in connection
            with losses realized on investments for the benefit of the servicer
            of funds held in the Security Account and, to the extent specified
            in the related prospectus supplement, any payments required to be
            made by the servicer in connection with prepayment interest
            shortfalls; and

      o     all other amounts required to be deposited in the Security Account
            pursuant to the pooling and servicing agreement.

      Unless otherwise specified in the related prospectus supplement, any
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 servicer the servicing fees described in the related
            prospectus supplement, the servicing fees (subject to reduction)
            and, as additional servicing compensation, earnings on or investment
            income with respect to funds in the amounts in the Security Account
            credited thereto;

      o     to reimburse the servicer for advances, the right of reimbursement
            with respect to any mortgage loan being limited to amounts received
            that represent late recoveries of payments of principal and interest
            on the mortgage loan (or insurance proceeds or liquidation proceeds
            from the mortgage loan) with respect to which the advance was made;


                                       71


      o     to reimburse the servicer for any advances previously made that the
            servicer has determined to be nonrecoverable;

      o     to reimburse the servicer from insurance proceeds not used to
            restore the property for expenses incurred by the servicer and
            covered by the related insurance policies;

      o     to reimburse the servicer for (a) unpaid servicing fees and
            unreimbursed out-of-pocket costs and expenses incurred by the
            servicer in the performance of its servicing obligations, the right
            of reimbursement being limited to amounts received representing late
            recoveries of the payments for which the advances were made and (b)
            unreimbursed out-of-costs and expenses incurred for which such
            advances are not recoverable from the borrower under applicable law;

      o     to pay to the servicer, with respect to each mortgage loan or
            property acquired in respect thereof that has been purchased by the
            servicer pursuant to the pooling and servicing agreement, all
            amounts received on them and not taken into account in determining
            the principal balance of the repurchased mortgage loan;

      o     to reimburse the servicer, the depositor or other party specified in
            the related prospectus supplement for expenses incurred and
            reimbursable pursuant to the related agreement;

      o     to pay any lender-paid primary mortgage insurance premium;

      o     to withdraw any amount deposited in the Security Account that was
            not required to be deposited in it; and

      o     to clear and terminate the Security Account upon termination of the
            related agreement.

      In addition, the related prospectus supplement will generally provide that
on or before the business day preceding each distribution date, the 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. Each servicer is required
to provide an annual certification to the effect that the servicer has fulfilled
its obligations under the related 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."

Pre-Funding Account

      If specified in the related prospectus supplement, the servicer or
servicers will establish and maintain a pre-funding account, in the name of the
related trustee on behalf of the related securityholders, into which the
depositor will deposit the pre-funded amount in cash on the related closing
date. The pre-funding account will be maintained with the trustee for the
related series of securities and is designed solely to hold funds that the
trustee will use during the funding period to pay the purchase price for
subsequent loans to the depositor. 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 offering proceeds of the
certificates and notes of the related series. The applicable trustee will use
the pre-funded amount to purchase subsequent loans from the depositor from time
to time during the funding period. Each funding period will begin on the related
closing date and will end on the date specified in the related prospectus
supplement (or at the latest, 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 agreement.
Investment earnings on funds in a pre-funding account will be deposited into the
related Security Account or other trust account specified in the related
prospectus supplement. Any investment 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 to the related
securityholders in the manner and priority specified in the related prospectus
supplement, as a prepayment of principal of the related securities.


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      In addition, if provided in the related prospectus supplement, on the
closing date for the related series, the depositor will deposit in an account
(the "Capitalized Interest Account") cash in an amount needed to cover
shortfalls in interest on the related series of securities that may arise by
using the pre-funding account as described above. The Capitalized Interest
Account will be maintained with the trustee for the related series of securities
and is designed solely to cover those interest shortfalls. Monies on deposit in
the Capitalized Interest Account will not be available to cover losses on or in
respect of the related loans. If the entire amount on deposit in a Capitalized
Interest Account has not been used to cover shortfalls in interest on the
related series of securities by the end of the related funding period, any
amounts remaining in that Capitalized Interest Account will be paid to the
depositor.

Collection Procedures

      Each servicer will make reasonable efforts to collect all payments called
for under the mortgage loans and will, consistent with each pooling and
servicing agreement, sale and servicing agreement or servicing agreement, as
applicable, and any mortgage pool insurance policy, primary mortgage insurance
policy, FHA insurance, VA guaranty and bankruptcy bond or alternative
arrangements, follow the collection procedures it customarily follows for
mortgage loans that are comparable to the mortgage loans.

      Consistent with the above and pursuant to the authority granted to each
servicer in the related agreement, a servicer may, in its discretion, waive any
assumption fee, late payment or other charge in connection with a mortgage loan
and arrange with a mortgagor a schedule for the liquidation of delinquencies to
the extent not inconsistent with the coverage of the mortgage loan by a mortgage
pool insurance policy, primary mortgage insurance policy, FHA insurance, VA
guaranty or bankruptcy bond or alternative arrangements, if applicable. To the
extent the servicer is obligated to make or to cause to be made advances, the
obligation will remain during any period of such an arrangement. Notwithstanding
the foregoing, in connection with a defaulted mortgage loan, the servicer,
consistent with the standards set forth in the pooling and servicing agreement,
sale and servicing agreement or servicing agreement, as applicable, may waive,
modify or vary any term of that mortgage loan (including modifications that
change the mortgage rate, forgive the payment of principal or interest or extend
the final maturity date of that mortgage loan), accept payment from the related
mortgagor of an amount less than the stated principal balance in final
satisfaction of that mortgage loan, or consent to the postponement of strict
compliance with any such term or otherwise grant indulgence to any mortgagor if
in the servicer's determination such waiver, modification, postponement or
indulgence is not materially adverse to the interests of the securityholders
(taking into account any estimated loss that might result absent such action).

      The applicable prospectus supplement may provide for other alternatives
regarding due-on-sale clauses, but if it does not, then in any case in which
property securing a conventional mortgage loan has been, or is about to be,
conveyed by the mortgagor, the 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 mortgage loan under any due-on-sale
clause applicable to it, but only if permitted by applicable law and the
exercise will not impair or threaten to impair any recovery under any related
primary mortgage insurance policy. If these conditions are not met or if the
servicer reasonably believes it is unable under applicable law to enforce the
due-on-sale clause or if the mortgage loan is insured by the FHA or partially
guaranteed by the VA, the 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 that person becomes
liable for repayment of the mortgage loan and, to the extent permitted by
applicable law, the mortgagor also remains liable on it. Any fee collected by or
on behalf of the servicer for entering into an assumption agreement will be
retained by or on behalf of the servicer as additional servicing compensation.
See "Certain Legal Aspects of the Mortgage Loans--Due-on-Sale Clauses." The
terms of the related mortgage loan may not be changed in connection with an
assumption.

      Any prospective purchaser of a cooperative apartment 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 Mortgage 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 the approval could
limit the number of potential purchasers for those shares and otherwise limit
the issuing entity's ability to sell and realize the value of shares securing a
cooperative loan.


                                       73


      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 the items are allowable as a deduction
to the corporation, the Section requires, among other things, that at least 80%
of the gross income of the corporation be derived from its tenant-stockholders
(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 Section
216(b)(1) for any particular year. If a cooperative fails to qualify for one or
more years, the value of the collateral securing any related cooperative loans
could be significantly impaired because no deduction would be allowable to
tenant-stockholders under 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.

The Surety Provider

      The related prospectus supplement may provide that a surety provider will
irrevocably and unconditionally guarantee payment to, or at the direction of,
the related trustee for the benefit of the related investor of that portion of
any guaranteed interest or principal payments or any other covered amounts due
and payable pursuant to the terms of the related pooling and servicing
agreement, sale and servicing agreement, servicing agreement or sale agreement,
as applicable, and unpaid by reason of nonpayment (as defined in the applicable
policies).

Hazard Insurance

      The related prospectus supplement may provide otherwise, but the servicer
will generally require the mortgagor on each mortgage 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. The coverage will be in an amount
that is at least equal to the lesser of

      o     the maximum insurable value of the improvements securing the
            mortgage loan or

      o     the greater of

            o     the outstanding principal balance of the mortgage loan and

            o     an amount such that the proceeds of the policy shall be
                  sufficient to prevent the mortgagor or the mortgagee from
                  becoming a co-insurer.

All amounts collected by the servicer under any hazard policy (except for
amounts to be applied to the restoration or repair of the Property or released
to the mortgagor in accordance with the servicer's normal servicing procedures)
will be deposited in the related Security Account. If a servicer maintains a
blanket policy insuring against hazard losses on all the mortgage loans
comprising part of an issuing entity, it will have satisfied its obligation
relating to the maintenance of hazard insurance. The blanket policy may contain
a deductible clause, in which case the servicer will be required to deposit from
its own funds into the related Security Account the amounts that would have been
deposited therein but for the clause.

      In general, the standard form of fire and extended coverage policy covers
physical damage to or destruction of the improvements securing a mortgage 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 mortgage 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, their
basic terms are dictated by the respective state laws, and most policies
typically do not cover any physical damage resulting from 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


                                       74


animals, theft and, in certain cases, vandalism. This list is merely indicative
of certain kinds of uninsured risks and is not all inclusive. If the Property
securing a mortgage loan is located in a federally designated special flood area
at the time of origination, the servicer will require the mortgagor to obtain
and maintain flood insurance.

      The hazard insurance policies covering properties securing the mortgage
loans typically contain a clause that in effect requires the insured at all
times to carry insurance of a specified percentage (generally 80% to 90%) of the
full replacement value of the 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 upon partial loss will not exceed the
larger of 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 the proportion of the loss that 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 servicer may cause to be
maintained on the improvements securing the mortgage loans declines as the
principal balances owing on them decrease, and since improved real estate
generally has appreciated in value over time in the past, the effect of this
requirement upon partial loss may be that hazard insurance proceeds will be
insufficient to fully restore 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--Special Hazard Insurance Policies" and "Credit
Enhancements--Insurance--Special Hazard Insurance Policy" in the related
prospectus supplement.

      Each 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 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.

Realization upon Defaulted Mortgage Loans

      Primary Mortgage Insurance Policies. Each servicer will maintain or cause
to be maintained, as the case may be, in effect, to the extent specified in the
related prospectus supplement, a primary mortgage insurance policy with regard
to each mortgage loan for which coverage is required. Each 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 mortgage
loan will consist of the insured percentage of the unpaid principal amount of
the covered mortgage 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.

      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 mortgage loans, including misrepresentation by
the originator, mortgagor or other persons involved in the origination of the
mortgage loan; failure to construct the Property subject to the mortgage loan in
accordance with specified plans; and physical damage to the Property.


                                       75


      Recoveries Under A Primary Mortgage Insurance Policy. As conditions
precedent to the filing of or payment of a claim under a primary mortgage
insurance policy covering a mortgage loan, the insured will be required to

      o     advance or discharge

            o     all hazard insurance policy premiums and

            o     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
                  mortgaged 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 servicer, on behalf of itself, the trustee and the securityholders,
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. As set forth above,
all collections by or on behalf of the servicer under any primary mortgage
insurance policy and, when the Property has not been restored, the hazard
insurance policy, are to be deposited in the Security Account, subject to
withdrawal as heretofore described.

      If the Property securing a defaulted mortgage loan is damaged and
proceeds, if any, from the related hazard insurance policy are insufficient to
restore the damaged Property to a condition sufficient to permit recovery under
the related primary mortgage insurance policy, if any, the servicer is not
required to expend its own funds to restore the damaged Property unless it
determines that the restoration will increase the proceeds to securityholders on
liquidation of the mortgage loan after reimbursement of the servicer for its
expenses and that the expenses will be recoverable by it from related insurance
proceeds or liquidation proceeds.

      If recovery on a defaulted mortgage loan under any related primary
mortgage insurance policy is not available for the reasons set forth in the
preceding paragraph, or if the defaulted mortgage loan is not covered by a
primary mortgage insurance policy, the servicer will be obligated to follow or
cause to be followed the normal practices and procedures that it deems
appropriate to realize upon the defaulted mortgage loan. If the proceeds of any
liquidation of the Property securing the defaulted mortgage loan are less than
the principal balance of the mortgage loan plus interest accrued on it that is
payable to securityholders, the issuing entity will realize a loss in the amount
of the difference plus the aggregate of expenses incurred by the servicer in
connection with the proceedings that are reimbursable under the pooling and
servicing agreement, sale and servicing agreement or servicing agreement, as
applicable. In the unlikely event that the proceedings result in a total
recovery which is, after reimbursement to the servicer of its expenses, in
excess of the principal balance of the mortgage loan plus interest accrued on it
that is payable to securityholders, the servicer will be entitled to withdraw or
retain from the Security Account amounts representing its normal servicing
compensation with respect to the mortgage loan and, unless otherwise specified
in the related prospectus supplement, amounts representing the balance of the
excess, exclusive of any amount required by law to be forwarded to the related
mortgagor, as additional servicing compensation.

      If a servicer or its designee recovers insurance proceeds not used to
restore the property which, when added to any related liquidation proceeds and
after deduction of certain expenses reimbursable to the servicer, exceed the
principal balance of a mortgage loan plus interest accrued thereon that is
payable to securityholders, the servicer will be entitled to withdraw or retain
from the Security Account amounts representing its normal servicing compensation
with respect to the mortgage loan. If the 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 issuing entity
may realize a loss up to the amount so charged. Since insurance


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proceeds cannot exceed deficiency claims and certain expenses incurred by the
servicer, no insurance payment or recovery will result in a recovery to the
issuing entity that exceeds the principal balance of the defaulted mortgage loan
together with accrued interest on it. See "Credit Enhancement" in this
prospectus and in the related prospectus supplement.

      FHA Insurance; VA Guaranties. Mortgage loans designated in the related
prospectus supplement as insured by the FHA will be insured by the FHA as
authorized under the United States National Housing Act of 1934 of 1937, as
amended. Those mortgage 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. Mortgage loans insured by the FHA generally require a
minimum down payment of approximately 5% of the original principal amount of the
loan. No FHA-insured mortgage 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 mortgage loans insured by the FHA are collected
by lenders approved by the HUD or by the servicer 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 mortgage loan to HUD. With respect to a defaulted FHA-insured
mortgage loan, the servicer is limited in its ability to initiate foreclosure
proceedings. When it is determined, either by the servicer or HUD, that default
was caused by circumstances beyond the mortgagor's control, the servicer is
expected to make an effort to avoid foreclosure by entering, if feasible, into
one of a number of available forms of forbearance plans with the mortgagor.
These plans may involve the reduction or suspension of regular mortgage payments
for a specified period, with the payments to be made up on or before the
maturity date of the mortgage, or the recasting of payments due under the
mortgage up to or beyond the maturity date. In addition, when a default caused
by circumstances beyond the mortgagor's control is accompanied by certain other
criteria, HUD may provide relief by making payments to the servicer in partial
or full satisfaction of amounts due under the mortgage loan (which payments are
to be repaid by the mortgagor to HUD) or by accepting assignment of the loan
from the servicer. With certain exceptions, at least three full monthly
installments must be due and unpaid under the mortgage loan and HUD must have
rejected any request for relief from the mortgagor before the servicer may
initiate foreclosure proceedings.

      HUD has the option, in most cases, to pay insurance claims in cash or in
debentures issued by HUD. Currently, claims are being paid in cash, and claims
have not been paid in debentures since 1965. HUD debentures issued in
satisfaction of FHA insurance claims bear interest at the applicable HUD
debentures interest rate. The servicer of each FHA-insured mortgage loan will be
obligated to purchase the debenture issued in satisfaction of the mortgage 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 mortgage loan adjusted to
reimburse the servicer for certain costs and expenses and to deduct certain
amounts received or retained by the servicer after default. When entitlement to
insurance benefits results from foreclosure (or other acquisition of possession)
and conveyance to HUD, the servicer is compensated for no more than two-thirds
of its foreclosure costs, and is compensated for 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 mortgage 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 mortgage 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.

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


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guaranteed by the VA will have an original principal amount greater than five
times the partial VA guaranty for the mortgage loan.

      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 mortgage upon its
assignment to the VA.

      With respect to a defaulted VA guaranteed mortgage loan, the servicer is,
absent exceptional circumstances, authorized to announce its intention to
foreclose only when the default has continued for three months. Generally, a
claim for the guaranty is submitted after liquidation of the Property.

      The amount payable under the guaranty will be the percentage of the
VA-insured mortgage 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 Property. The amount payable under the guaranty may in no
event exceed the amount of the original guaranty.

      Application of Liquidation Proceeds. Unless the related pooling and
servicing agreement, sale and servicing agreement or servicing agreement, as
applicable, provides for a different application of liquidation proceeds, the
proceeds from any liquidation of a mortgage loan will be applied in the
following order of priority:

            first, to reimburse the servicer for any unreimbursed expenses
      incurred by it to restore the related Property and any unreimbursed
      servicing compensation payable to the servicer with respect to the
      mortgage loan;

            second, to reimburse the servicer for any unreimbursed advances with
      respect to the mortgage loan;

            third, to accrued and unpaid interest (to the extent no advance has
      been made for the amount) on the mortgage loan; and

            fourth, as a recovery of principal of the mortgage loan.

Unless otherwise specified in the related prospectus supplement, excess proceeds
from the liquidation of a mortgage loan will be retained by the servicer as
additional servicing compensation.

      If specified in the related prospectus supplement, if a final liquidation
of a mortgage loan resulted in a realized loss and thereafter the servicer
receives a recovery specifically related to that mortgage loan, such recovery
(net of any reimbursable expenses) shall be distributed to the securityholders
in the same manner as prepayments received in the prior calendar month, to the
extent that the related realized loss was allocated to any class of securities.
In addition, the Class Security 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 Class Security
Balance of each such class of securities will not be increased by more than the
amount of realized losses previously applied to reduce the Class Security
Balance of each such class of securities. Holders of securities whose Class
Security 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. The foregoing provisions will apply even if
the Class Security Balance of a class of securities was previously reduced to
zero. Accordingly, each class of securities will be considered to remain
outstanding until the termination of the related trust.

Servicing and Other Compensation and Payment of Expenses

      The principal servicing compensation to be paid to each servicer in
respect of its 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 mortgage loan, and the


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compensation will be retained by it from collections of interest on the mortgage
loan in the related issuing entity. As compensation for its servicing duties,
each servicer will be entitled to a monthly servicing fee as described in the
related prospectus supplement. In addition, generally each servicer will retain
all prepayment charges, assumption fees and late payment charges, to the extent
collected from mortgagors, and any benefit that may accrue as a result of the
investment of funds in the applicable Security Account (unless otherwise
specified in the related prospectus supplement).

      Each servicer will, to the extent provided in the related pooling and
servicing agreement, sale and servicing agreement or servicing agreement, as
applicable, pay or cause to be paid certain ongoing expenses associated with
each issuing entity and incurred by it in connection with its responsibilities
under the related agreement, including, without limitation, payment of the fees
and disbursements of the trustee, any custodian appointed by the trustee, the
security registrar and any paying agent, and payment of expenses incurred in
enforcing the obligations of each servicer and each seller. In addition, as
indicated in the preceding section, each servicer will be entitled to
reimbursement for certain expenses incurred by it in connection with any
defaulted mortgage loan as to which it has determined that all recoverable
liquidation proceeds and insurance proceeds have been received (a "Liquidated
Mortgage"), and in connection with the restoration of mortgaged properties, the
right of reimbursement being before the rights of securityholders to receive any
related liquidation proceeds (including insurance proceeds).

Evidence as to Compliance

      Each agreement will provide for delivery to the trustee, on or before a
specified date in each year, of an annual statement signed by two officers of
the servicer to the effect that the servicer has fulfilled its obligations under
the pooling and servicing agreement, sale and servicing agreement or servicing
agreement, as applicable, throughout the preceding year.

      Each pooling and servicing agreement, sale and servicing agreement or
servicing agreement, as applicable, will also provide for delivery to the
depositor, the 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 Issuing Entity 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 servicer at the
address set forth in the related prospectus supplement.

List of Securityholders

      Each agreement will provide that three or more holders of securities of
any series may, by written request to the trustee, obtain access to the list of
all securityholders maintained by the trustee for the purpose of


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communicating with other securityholders with respect to their rights under the
applicable agreement and the securities.

Certain Matters Regarding the Servicer and the Depositor

      Each servicer under each pooling and servicing agreement, sale and
servicing agreement or servicing agreement, as applicable, will be named in the
related prospectus supplement. Any entity serving as servicer may be an
affiliate of the depositor and may have other business relationships with the
depositor or the depositor's affiliates.

      Each agreement will provide that each servicer may not resign from its
obligations and duties under the agreement except

      o     upon appointment of a successor servicer and receipt by the trustee
            of a letter from each rating agency rating the related transaction
            that such a resignation and appointment will not result in a
            downgrading of the rating of any of the securities of the related
            series, or

      o     upon a determination that the performance by it of its duties under
            the agreement is no longer permissible under applicable law.

No resignation will become effective until the trustee or a successor servicer
has assumed the servicer's obligations and duties under the related agreement.

      Each agreement will further provide that neither the servicer, the
depositor nor any director, officer, employee, or agent of the servicer or the
depositor will be under any liability to the related issuing entity or
securityholders for any action taken or for refraining from the taking of any
action in good faith pursuant to the applicable agreement, or for errors in
judgment. However, neither the servicer, the depositor nor any director,
officer, employee, or agent of the servicer or the depositor will be protected
against any liability that would otherwise be imposed for willful misfeasance,
bad faith or negligence in the performance of duties under the pooling and
servicing agreement, sale and servicing agreement or servicing agreement, as
applicable, or for reckless disregard of obligations and duties under the
applicable agreement. Each agreement will further provide that the servicer, the
depositor and any director, officer, employee or agent of the servicer or the
depositor will be entitled to indemnification by the related issuing entity and
will be held harmless against any loss, liability or expense incurred in
connection with any legal action relating to the agreement or the securities,
other than any loss, liability or expense related to any specific Mortgage Asset
or Issuing Entity Assets (except any loss, liability or expense otherwise
reimbursable pursuant to the related agreement) and any loss, liability or
expense incurred for willful misfeasance, bad faith or negligence in the
performance of duties under the related agreement or for reckless disregard of
obligations and duties under the related agreement. In addition, each agreement
will provide that neither the servicer nor the depositor will be under any
obligation to appear in, prosecute or defend any legal action that is not
incidental to its respective responsibilities under that agreement and that in
its opinion may involve it in any expense or liability. The servicer or the
depositor may, however, in its discretion undertake any action that it deems
appropriate with respect to that agreement and the rights and duties of the
parties to the pooling and servicing agreement, sale and servicing agreement or
servicing agreement, as applicable, and the interests of the securityholders
under that agreement. In that event, the legal expenses and costs of the action
and any liability resulting from it will be expenses, costs and liabilities of
the issuing entity, and the servicer or the depositor, as the case may be, will
be entitled to be reimbursed for them out of funds otherwise distributable to
securityholders.

      Any person into which the servicer may be merged or consolidated, or any
person resulting from any merger or consolidation to which the servicer is a
party, or any person succeeding to the business of the servicer, will be the
successor of the servicer under each agreement, provided that the person is
qualified to sell mortgage loans to, and service mortgage loans on behalf of,
Fannie Mae or Freddie Mac and further provided that the merger, consolidation or
succession does not adversely affect the then current rating or ratings of the
class or classes of securities of any series that have been rated.


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Events of Default

      Pooling and Servicing Agreement; Sale and Servicing Agreement; Servicing
Agreement. The applicable prospectus supplement may provide for other events of
default, but if it does not, then events of default under each agreement will
consist of

      o     any failure by the servicer to deposit in the 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
            servicer by the trustee or the depositor, or to the servicer and the
            trustee by the holders of securities having not less than 25% of the
            voting rights evidenced by the securities;

      o     any failure by the servicer to make an advance as required under the
            agreement, unless cured as specified therein;

      o     any failure by the servicer to observe or perform in any material
            respect any of its other covenants or agreements in the pooling and
            servicing agreement, sale and servicing agreement or servicing
            agreement, as applicable, which failure materially affects the
            rights of securityholders that continues unremedied for sixty days
            after the giving of written notice of the failure to the servicer by
            the trustee or the depositor, or to the servicer and the trustee by
            the holders of securities of any class evidencing not less than 25%
            of the voting rights evidenced by the securities; and

      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 servicer indicating its insolvency,
            reorganization or inability to pay its obligations.

      Unless otherwise provided in the related prospectus supplement, so long as
an event of default under an agreement remains unremedied, the depositor or the
trustee may, and at the direction of holders of securities of any class
evidencing not less than 66 2/3% of the aggregate percentage interests
constituting such class and under other circumstances specified in the
agreement, the trustee will terminate all of the rights and obligations of the
servicer under the agreement relating to the issuing entity and in and to the
related Issuing Entity Assets, upon which the trustee will succeed to all of the
responsibilities, duties and liabilities of the 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 servicer has received notice of termination, the trustee may execute and
deliver, on behalf of the 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 servicer,
including the transfer and endorsement or assignment of the loans and related
documents. The servicer has agreed to cooperate with the trustee in effecting
the termination of the 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. No additional funds have been
reserved to pay for any expenses not paid by the servicer in connection with a
servicing transfer.

      If the trustee is unwilling or unable to so act, it may appoint, or
petition a court of competent jurisdiction for the appointment of, a loan
servicing institution with a net worth of a least $15,000,000 to act as
successor to the servicer under the agreement. Pending any appointment, the
trustee is obligated to act as servicer. The trustee and any successor to the
servicer may agree upon the servicing compensation to be paid, which in no event
may be greater than the compensation payable to the servicer under the
agreement.

      Unless otherwise provided in the related prospectus supplement, no
securityholder, solely by virtue of its 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 evidencing not less
than 66 2/3% of the aggregate percentage interest constituting such class have
made a written request upon the trustee to institute a proceeding in its own
name as trustee and have offered to the trustee reasonable indemnity, and the
trustee for 60 days has neglected or refused to institute the proceeding.


                                       81


      If specified in the related prospectus supplement, the agreement will
permit the trustee to sell the Issuing Entity Assets and the other assets of the
issuing entity described under "Credit Enhancement" if payments on them are
insufficient to make payments required in the agreement. The assets of the
issuing entity will be sold only under the circumstances and in the manner
specified in the related prospectus supplement.

      Indenture. The applicable prospectus supplement may provide for other
events of default, but if it does not, then the events of default under each
indenture will consist of:

      o     a default in the payment of any principal of or interest on any note
            of any series which continues unremedied for a specified number of
            days after the written notice of the default is given as specified
            in the related prospectus supplement;

      o     failure to perform in any material respect any other covenant of the
            depositor or the issuing entity in the indenture which continues for
            a specified number of days after notice is given in accordance with
            the procedures described in the related prospectus supplement;

      o     certain events of bankruptcy, insolvency, receivership or
            liquidation of the depositor or the issuing entity; 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.

      If an event of default with respect to the notes of any series at the time
outstanding occurs and is continuing, either the trustee or the holders of a
majority of the then aggregate outstanding amount of the notes of such series
may declare the principal amount (or, if the notes of that series have an
interest rate of 0%, such 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 such series to be due and payable immediately. Such declaration
may, under certain circumstances, be rescinded and annulled by the holders of
more than 50% of the Percentage Interests of the notes of such series.

      If, following an event of default with respect to any series of notes, the
notes of such series have been declared to be due and payable, the trustee may,
in its discretion, notwithstanding such acceleration, elect to maintain
possession of the collateral securing the notes of such series and to continue
to apply distributions on such collateral as if there had been no declaration of
acceleration if such collateral continues to provide sufficient funds for the
payment of principal of and interest on the notes of such series as they would
have become due if there had not been such a declaration. In addition, the
trustee may not sell or otherwise liquidate the collateral securing the notes of
a series following an event of default, other than a default in the payment of
any principal or interest on any note of such series for a specified number of
days, unless

      o     the holders of 100% of the percentage interests of the notes of such
            series consent to the sale,

      o     the proceeds of such sale or liquidation are sufficient to pay in
            full the principal of and accrued interest, due and unpaid, on the
            outstanding notes of such series at the date of such sale or

      o     the trustee determines that such collateral would not be sufficient
            on an ongoing basis to make all payments on such notes as such
            payments would have become due if such notes had not been declared
            due and payable, and the trustee obtains the consent of the holders
            of 66 2/3% of the percentage interests of the notes of such 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
securityholders.


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      If 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 provides that the trustee
will have a prior lien on the proceeds of any such liquidation for unpaid fees
and expenses. As a result, upon the occurrence of such an event of default, the
amount available for distribution to the noteholders 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 such an event of default.

      Except as otherwise specified in the related prospectus supplement, if the
principal of the notes of a series is declared due and payable, as described
above, the holders of any such notes issued at a discount from par may be
entitled to receive no more than an amount equal to the unpaid principal amount
of the notes less the amount of such 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 such series, unless such 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 such request or
direction. Subject to such provisions for indemnification and certain
limitations contained in the indenture, the holders of a majority of the then
aggregate outstanding amount of the notes of such 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 such series, and the holders of a majority
of the then aggregate outstanding amount of the notes of such series may, in
certain cases, waive any default with respect to them, 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 such series affected by that
default. If provided in the related prospectus supplement, the priority of
payments payable on the notes may change following and event of default.

Amendment

      The applicable prospectus supplement may specify other amendment
provisions, but if it does not, then each agreement may be amended by the
depositor, the servicer and the trustee, without the consent of any of the
securityholders,

            (a) to cure any ambiguity or mistake;

            (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 pooling and servicing agreement, sale and
      servicing agreement or servicing agreement, as applicable, to the final
      prospectus supplement provided to investors in accordance with the initial
      offering of the securities;

            (d) to add to the duties of the depositor, any seller or any
      servicer;

            (e) to modify, alter, amend, add to or rescind any of the terms or
      provisions contained in the pooling and servicing agreement, sale and
      servicing agreement or servicing agreement, as applicable, to comply with
      any rules or regulations promulgated by the SEC from time to time;

            (f) to add any other provisions with respect to matters or questions
      arising under the pooling and servicing agreement, sale and servicing
      agreement or servicing agreement, as applicable; or

            (g) to modify, alter, amend, add to or rescind any of the terms or
      provisions contained in the pooling and servicing agreement, sale and
      servicing agreement or servicing agreement, as applicable.


                                       83


However, no action pursuant to clauses (e), (f) or (g) may, as evidenced by an
opinion of counsel, adversely affect in any material respect the interests of
any securityholder. But no opinion of counsel will be required if the person
requesting the amendment obtains a letter from each rating agency requested to
rate the class or classes of securities of the series stating that the amendment
will not result in the downgrading or withdrawal of the respective ratings then
assigned to the securities.

      In addition, the related agreement may be amended to modify, eliminate or
add to any of its provisions to the extent necessary to maintain the
qualification of the related issuing entity 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 issuing entity, 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 ensure the proper operation of the master REMIC,
to 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, then each pooling and servicing agreement may
also be amended by the depositor, the servicers and the trustee with the consent
of holders of securities of the series evidencing a majority in interest of each
class adversely 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.
However, no amendment may

            (a) reduce in any manner the amount of, or delay the timing of,
      payments received on Issuing Entity Assets that are required to be
      distributed on any security without the consent of the holder of the
      security,

            (b) amend, modify, add to, rescind or alter in any respect the
      provisions of the agreement restricting the issuing entity from engaging
      in any activity that would disqualify the issuing entity from being a
      qualifying special purpose entity under generally accepted accounting
      principles without the consent of the holders of securities evidencing
      percentage interests aggregating 66?% (provided however that no securities
      held by the seller, the depositor or any affiliate shall be given effect
      for the purpose of such calculation), or

            (c) reduce the aforesaid percentage of securities of any class of
      holders that is required to consent to the amendment without the consent
      of the holders of all securities of the class covered by the agreement
      then outstanding.

If a REMIC election is made with respect to an issuing entity, 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 issuing entity 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 or Servicing
Agreement. Generally, the obligations created by each 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 servicer and required to be
paid to them pursuant to the agreement following the later of

      o     the final payment or other liquidation of the last of the Issuing
            Entity Assets subject to it or the disposition of all property
            acquired upon foreclosure of the Issuing Entity Assets remaining in
            the issuing entity and

      o     the purchase by any servicer 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" in this prospectus and in the related prospectus
            supplement), from the


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            related issuing entity of all of the remaining Issuing Entity Assets
            and all property acquired in respect of the Issuing Entity Assets.

      Any purchase of Issuing Entity Assets and property acquired in respect of
Issuing Entity Assets evidenced by a series of securities will be made at the
option of the servicer or the party specified in the related prospectus
supplement, including the holder of the REMIC residual interest, at a price, and
in accordance with the procedures, specified in the related prospectus
supplement. The exercise of that right will effect early retirement of the
securities of that series, but the right of the 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 Issuing Entity Assets being less
than the percentage specified in the related prospectus supplement of the
aggregate principal balance of the Issuing Entity

      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 an issuing entity,
any repurchase pursuant to the second bulleted item above will be made only in
connection with a "qualified liquidation" of the REMIC within the meaning of
Code Section 860F(a)(4).

      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
such series or, with certain limitations, upon deposit with the trustee of funds
sufficient for the payment in full of all of the notes of such series.

      In addition to such discharge with certain limitations, the indenture will
provide that, if so specified with respect to the notes of any series, the
related issuing entity will be discharged from any and all obligations in
respect of the notes of such series (except for certain obligations relating to
temporary notes and exchange of notes, to register the transfer of or exchange
notes of such series, to replace stolen, lost or mutilated notes of such series,
to maintain paying agencies and to hold monies for 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 of them 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 such series on the last scheduled
distribution date for such notes and any installment of interest on such notes
in accordance with the terms of the indenture and the notes of such series. In
the event of any defeasance and discharge of notes of such series, holders of
notes of such series would be able to look only to such money and/or direct
obligations for payment of principal and interest, if any, on their notes until
maturity.

      The applicable prospectus supplement for a series of notes may also
provide that when the principal balance of such notes is reduced to a specified
percentage of the original principal balance as of the cut-off date, the
depositor, the indenture trustee or the holder of a call right may, at its
option, redeem one or more classes of notes at a price equal to 100% of the
outstanding principal balance of the notes plus accrued interest thereon plus
the amount due and owing to the surety provider, if any. Such redemption will
have the same effect as a prepayment on the notes.

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, any servicer and any
of their respective affiliates.

                   Certain Legal Aspects of the Mortgage Loans

      The following discussion contains summaries, which are general in nature,
of certain legal matters relating to the mortgage loans. Because the legal
aspects are governed primarily by applicable state law (which laws may differ
substantially), the summaries do not purport to be complete or to reflect the
laws of any particular state or to encompass the laws of all states in which the
security for the mortgage loans is situated. If more than ten percent (by
principal balance) of the mortgage loans in the issuing entity for any series
are located in a single state, the prospectus, as supplemented by the related
prospectus supplement, will disclose all material legal matters relating to the
mortgage loans in that state.


                                       85


General

      The mortgage loans will 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. Mortgages are used
in New York instead of deeds of trust. A mortgage creates a lien upon the real
property encumbered by the mortgage, which lien is generally not before 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 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.

      Cooperatives. Certain of the mortgage 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 or underlying land or both, 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. 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 an issuing entity
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.


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Foreclosure and Repossession

      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 default
by the borrower under the terms of the note or deed of trust. In certain states,
foreclosure also may be accomplished by judicial action in the manner provided
for foreclosure of mortgages. In some states, such as California, the trustee
must record a notice of default and send a copy to the borrower-trustor and to
any person who has recorded a request for a copy of any notice of default and
notice of sale. In addition, the trustee must provide notice in some states to
any other individual having an interest of record in the real property,
including any junior lien holders. 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 specified period of
time in one or more newspapers. In addition, these notice provisions require
that a copy of the notice of sale be posted on the property and sent to all
parties having an interest of record in the property. In California, the entire
process from recording a notice of default to a non-judicial sale usually takes
four to five months, but can take longer if the borrower seeks bankruptcy
protection or other events intervene.

      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 reinstatement period, cure the
default by paying the entire amount in arrears plus the costs and expenses
incurred in enforcing the obligation. Certain state laws control the amount of
foreclosure expenses and costs, including attorney's fees, that a lender can
recover.

      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 sometimes 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 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, a notice of sale must be posted in a public place
and, in most states, published for a specific period of time in one or more
newspapers. In addition, some state laws require that a copy of the notice of
sale be posted on the property and sent to all parties having an interest in the
real property.

      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. Thereafter,
the lender will assume the burden of ownership, including obtaining hazard
insurance and making repairs at its own expense 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.

      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


                                       87


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 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 if an obligor fails
to make payments or defaults in the performance of covenants required under it.
Typically, the lender and the cooperative enter into a recognition agreement,
which establishes the rights and obligations of both parties upon 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, if 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 on it.

      Recognition agreements also provide that upon foreclosure of 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, such as New York, foreclosure on the cooperative shares is
accomplished by a sale in accordance with the provisions of Article 9 of the UCC
and the security agreement relating to those shares. Article 9 of the UCC
requires that a sale be conducted in a "commercially reasonable" manner. Whether
a foreclosure sale has been conducted in a "commercially reasonable" manner will
depend on the facts in each case. In determining commercial reasonableness, a
court will look to the notice given the debtor and the method, manner, time,
place and terms of the foreclosure. Generally, a sale conducted according to the
usual practice of banks selling similar collateral will be considered reasonably
conducted.

      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."

      In the case of foreclosure on a building 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 that 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.

Rights of Redemption

      In some states after a sale pursuant to a deed of trust or foreclosure of
a mortgage, the borrower and certain 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,


                                       88


and not to sales pursuant to a non-judicial power of sale. In New York, the
borrower may not redeem the property after a foreclosure sale. In most states
where the right of redemption is available, statutory redemption may occur upon
payment of the foreclosure purchase price, accrued interest and taxes. In some
states, the right to redeem is an equitable right. The effect of a right of
redemption is to diminish the ability of the lender to sell the foreclosed
property. The exercise of a right of redemption would defeat the title of any
purchaser at a foreclosure sale, or of any purchaser from the lender after
judicial 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.

Anti-Deficiency Legislation and Other Limitations on Lenders

      Certain states have imposed statutory restrictions that limit the remedies
of a beneficiary under a deed of trust or a mortgagee under a mortgage. In some
states, including California and New York, statutes limit the right of the
beneficiary or mortgagee to obtain a deficiency judgment against the borrower
following foreclosure or a sale under a deed of trust. 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 current fair market value of the
property at the time of the foreclosure sale. As a result of these prohibitions,
it is anticipated that in most instances the servicer will utilize the
non-judicial foreclosure remedy and will not seek deficiency judgments against
defaulting mortgagors.

      Some state statutes may require the beneficiary or mortgagee to exhaust
the security afforded under a deed of trust or mortgage by foreclosure in an
attempt to satisfy the full debt before bringing a personal action against the
borrower. In certain other states, such as New York, 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, following judgment
on a personal action, the lender may be considered to have elected a remedy and
may be precluded from exercising other 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, upon waste of the
property.

      In addition to anti-deficiency and related legislation, numerous other
federal and state statutory provisions, including the federal bankruptcy laws,
the federal Servicemembers Civil Relief Act and state laws affording relief to
debtors, may interfere with or affect the ability of the secured mortgage lender
to realize on its security. For example, in a proceeding under the federal
Bankruptcy Code, a lender may not foreclose on a 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, 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 certificates and even to reduce the aggregate
amount of payments on the loans underlying certificates.

      The federal tax laws provide priority to certain tax liens over the lien
of a mortgage or secured party. Numerous federal and state consumer protection
laws impose substantive requirements upon mortgage lenders in connection with
the origination, servicing and enforcement of mortgage loans. These laws include
the federal Truth-in-Lending Act, Real Estate Settlement Procedures Act, Equal
Credit Opportunity Act, Fair Credit Billing Act, Fair Credit Reporting Act and
related statutes and regulations. These federal and state laws impose specific
statutory liabilities on lenders who fail to comply with the provisions of the
law. In some cases, this liability may affect assignees of the loans or
contracts.

      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.


                                       89


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 against 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 on 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
the 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 those 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-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 and who has not settled its liability with the
government, 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 securityholders.

      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"


                                       90


of the tank or tank system if the lender either: (a) "exercises decisionmaking
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 mortgaged
properties was conducted.

Due-on-sale Clauses

      Generally, each conventional mortgage 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 may be accelerated by the mortgagee.
In recent years, court decisions and legislative actions have placed substantial
restriction on the right of lenders to enforce these clauses in many states. For
instance, the California Supreme Court in August 1978 held 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 specified
exceptions, preempts state constitutional, statutory and case law prohibiting
the enforcement of due-on-sale clauses. 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 Garn-St Germain 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 mortgage loans and the number of
mortgage loans which may extend to maturity.

Prepayment Charges

      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 mortgaged properties will be owner-occupied, it is
anticipated that prepayment charges may not be imposed on many of the mortgage
loans. The absence of this restraint on prepayment, particularly with respect to
fixed rate mortgage loans having higher mortgage rates, may increase the
likelihood of refinancing or other early retirement of the loans or contracts.

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 that expressly rejects an application of the federal law. In addition,
even where Title V is not so rejected, any state is authorized by the law to
adopt a provision limiting discount points or other charges on mortgage loans
covered by Title V. Certain states have taken action to reimpose interest rate
limits or to limit discount points or other charges, or both.


                                       91


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 mortgage 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
mortgage loan and is later called to active duty) may not be charged interest
above an annual rate of 6% during the period of the borrower's active duty
status, unless a court orders otherwise upon application of the lender. It is
possible that this interest rate limitation could have an effect, for an
indeterminate period of time, on the ability of the servicer to collect full
amounts of interest on some of the mortgage loans. Unless the applicable
prospectus supplement provides a special feature for a particular issuing
entity, any shortfall in interest collections resulting from the application of
the Relief Act could result in losses to the holders of the securities. In
addition, the Relief Act imposes limitations which would impair the ability of
the servicer to foreclose on an affected mortgage loan during the borrower's
period of active duty status. Moreover, the Relief Act permits the extension of
a loan's maturity and the readjustment of its payment schedule beyond the
completion of military service. Thus, if an affected mortgage loan goes into
default, there may be delays and losses occasioned by the inability to realize
upon the Property in a timely fashion.

                    Material Federal Income Tax Consequences

      The following discussion is the opinion of Sidley Austin LLP, Heller
Ehrman LLP, Mayer, Brown, Rowe & Maw LLP or Thacher Proffitt & Wood LLP, counsel
to the depositor, as to the material federal income tax consequences of the
purchase, ownership, and disposition of securities. The opinion of the
applicable law firm is based on laws, regulations, administrative rulings, and
judicial decisions now in effect, all of which are subject to change either
prospectively or retroactively. The following discussion does not describe
aspects of federal tax law that are unique to insurance companies, securities
dealers and investors who hold securities as part of a straddle within the
meaning of Section 1092 of the Code. Prospective investors are encouraged to
consult their tax advisors regarding the federal, state, local, and any other
tax consequences to them of the purchase, ownership, and disposition of
securities.

General

      The federal income tax consequences to Holders will vary depending on
whether

o     the securities of a series are classified as indebtedness;

o     an election is made to treat the issuing entity relating to a particular
      series of securities as a real estate mortgage investment conduit
      ("REMIC") under the Code;

o     the securities represent an ownership interest in some or all of the
      assets included in the issuing entity for a series; or

o     an election is made to treat the issuing entity 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 issuing
entity 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.

      Debt Securities. For purposes of the discussion that follows, securities
characterized as debt for federal income tax purposes and securities
representing REMIC regular interests ("Regular Interest Securities") will be
referred to hereinafter collectively as "Debt Securities."


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Taxation of Debt Securities

      Original Issue Discount and Premium. The Debt Securities may be issued
with OID. Generally, OID, if any, will equal the difference between the "stated
redemption price at maturity" of a Debt Security and its "issue price." Holders
of any class of securities issued with OID will be required to include OID in
gross income for federal income tax purposes as it accrues, in accordance with a
constant interest method based on the compounding of interest as it accrues
rather than in accordance with receipt of the interest payments. Holders of Debt
Securities (the "Debt Securityholders") should be aware, however, that the OID
Regulations do not adequately address certain issues relevant to prepayable
securities, such as the Debt Securities.

      Rules governing OID are set forth in Code Sections 1271 through 1273 and
1275. These rules require that the amount and rate of accrual of OID be
calculated based on the Prepayment Assumption and the anticipated reinvestment
rate, if any, relating to the Debt Securities and prescribe a method for
adjusting the amount and rate of accrual of the discount where the actual
prepayment rate differs from the Prepayment Assumption. Under the Code, the
Prepayment Assumption must be determined in the manner prescribed by
regulations, which regulations have not yet been issued. The Legislative History
provides, however, that Congress intended the regulations to require that the
Prepayment Assumption be the prepayment assumption that is used in determining
the initial offering price of the Debt Securities. The prospectus supplement for
each series of Debt Securities will specify the Prepayment Assumption to be used
for the purpose of determining the amount and rate of accrual of OID. No
representation is made that the Debt Securities will prepay at the Prepayment
Assumption or at any other rate.

      Regulations governing the calculation of OID on instruments having
contingent interest payments (the "Contingent Regulations") specifically do not
apply for purposes of calculating OID on debt instruments subject to Code
Section 1272(a)(6), such as the Debt Securities. Additionally, the OID
Regulations do not contain provisions specifically interpreting Code Section
1272(a)(6). The trustee intends to base its computations on Code Section
1272(a)(6) and the OID Regulations as described in this prospectus. However,
because no regulatory guidance currently exists under Code Section 1272(a)(6),
we can give no assurance that this methodology represents the correct manner of
calculating OID.

      In general, each Debt Security will be treated as a single installment
obligation issued with an amount of OID equal to the excess of its "stated
redemption price at maturity" over its issue price. The issue price of a Debt
Security is the first price at which a substantial amount of Debt Securities of
that class are first sold to the public (excluding bond houses, brokers,
underwriters or wholesalers). The issue price of a Debt Security also includes
the amount paid by an initial securityholder for accrued interest that relates
to a period before 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 that
constitute "qualified stated interest." Qualified stated interest generally
means interest unconditionally payable at intervals of one year or less at a
single fixed rate or qualified variable rate (as described below) during the
entire term of the Debt Security. Interest is payable at a single fixed rate
only if the rate appropriately takes into account the length of the interval
between payments. Distributions of interest on Debt Securities with respect to
which Deferred Interest will accrue will not constitute qualified stated
interest payments, and the stated redemption price at maturity of the Debt
Securities includes all distributions of interest as well as principal thereon.

      Where the interval between the issue date and the first distribution date
on a Debt Security is longer than the interval between subsequent distribution
dates, the greater of any original issue discount disregarding the rate in the
first period and any interest foregone during the first period is treated as the
amount by which the stated redemption price of the security exceeds its issue
price for purposes of the de minimis rule described below. The OID Regulations
suggest that all or a portion of the interest on a long first period Debt
Security that is issued with non-de minimis OID will be treated as OID. Where
the interval between the issue date and the first distribution date on a Debt
Security is shorter than the interval between subsequent distribution dates,
interest due on the first distribution date in excess of the amount that accrued
during the first period would be added to the securities' stated redemption
price at maturity. Holders of Debt Securities should consult their own tax
advisors to determine the issue price and stated redemption price at maturity of
a Debt Security. Additionally, it is possible that the IRS could assert that the
stated pass-through rate of interest on the Debt Securities is not
unconditionally payable because late payments or nonpayments on the mortgage
loans are not penalized nor are there reasonable remedies in place to


                                       93


compel payment on the mortgage loans. That position, if successful, would
require all holders of Debt Securities to accrue income on the securities under
the OID Regulations.

      Under the de minimis rule, OID on a Debt Security will be considered to be
zero if it 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.
For this purpose, the weighted average maturity of the Debt Security is computed
as the sum of the amounts determined by multiplying the number of full years
(i.e., rounding down partial years) from the issue date until each distribution
in reduction of stated redemption price at maturity is scheduled to be made by a
fraction, the numerator of which is the amount of each distribution included in
the stated redemption price at maturity of the Debt Security and the denominator
of which is the stated redemption price at maturity of the Debt Security.
Although currently unclear, it appears that the schedule of these distributions
should be determined in accordance with the Prepayment Assumption. The
Prepayment Assumption with respect to a series of Debt Security will be set
forth in the related prospectus supplement. Holders generally must report de
minimis OID pro rata as principal payments are received, and income will be
capital gain if the Debt Security is held as a capital asset. However, accrual
method holders may elect to accrue all de minimis OID as well as market discount
under a constant interest method.

      The prospectus supplement with respect to an issuing entity may provide
for certain Debt Securities to be issued at prices significantly exceeding their
principal amounts or based on notional principal balances (the "Super-Premium
Securities"). The income tax treatment of Super-Premium Securities is not
entirely certain. For information reporting purposes, the issuing entity intends
to take the position that the stated redemption price at maturity of
Super-Premium Securities is the sum of all payments to be made on these Debt
Securities determined under the Prepayment Assumption, with the result that
these Debt Securities would be issued with OID. The calculation of income in
this manner could result in negative original issue discount (which delays
future accruals of OID rather than being immediately deductible) when
prepayments on the mortgage loans exceed those estimated under the Prepayment
Assumption. As discussed above, the Contingent Regulations specifically do not
apply to prepayable debt instruments subject to Code Section 1272(a)(6), such as
the Debt Securities. However, if the Super-Premium Securities were treated as
contingent payment obligations, it is unclear how holders of those securities
would report income or recover their basis. In the alternative, the IRS could
assert that the stated redemption price at maturity of Super-Premium Securities
should be limited to their principal amount (subject to the discussion under
"--Accrued Interest Securities"), so that the Debt Securities would be
considered for federal income tax purposes to be issued at a premium. If this
position were to prevail, the rules described under "--Debt Securities
--Premium" would apply. It is unclear when a loss may be claimed for any
unrecovered basis for a Super-Premium Security. It is possible that a holder of
a Super-Premium Security may only claim a loss when its remaining basis exceeds
the maximum amount of future payments, assuming no further prepayments or when
the final payment is received with respect to the Super-Premium Security. Absent
further guidance, the trustee intends to treat the Super-Premium Securities as
described in this prospectus.

      Under the REMIC Regulations, if the issue price of a Regular Interest
Security (other than those based on a notional amount) does not exceed 125% of
its actual principal amount, the interest rate is not considered
disproportionately high. Accordingly, such a Debt Security generally should not
be treated as a Super-Premium Security and the rules described under "--Debt
Securities--Premium" should apply. However, it is possible that Regular Interest
Securities issued at a premium, even if the premium is less than 25% of the
security's actual principal balance, will be required to amortize the premium
under an original issue discount method or contingent interest method even
though no election under section 171 of the Code is made to amortize the
premium.

      Generally, a Debt Securityholder must include in gross income the "daily
portions," as determined below, of the OID that accrues on a Debt Security for
each day a securityholder holds the Debt Security, including the purchase date
but excluding the disposition date. The daily portions of OID are determined by
allocating to each day in an accrual period the ratable portion of OID allocable
to the accrual period. Accrual periods may be of any length and may vary in
length over the term of the Debt Securities, provided that each accrual period
is not longer than one year, begins or ends on a distribution date (except for
the first accrual period which begins on the issue date) and begins on the day
after the preceding accrual period ends. This will be done, in the case of each
full accrual period, by


                                       94


      o     adding

            o     The present value at the end of the accrual period (determined
                  by using as a discount factor the original yield to maturity
                  of the Debt Securities as calculated under the Prepayment
                  Assumption) of all remaining payments to be received on the
                  Debt Securities under the Prepayment Assumption and

            o     any payments included in the stated redemption price at
                  maturity received during the same accrual period, and

      o     subtracting from that total the adjusted issue price of the Debt
            Securities at the beginning of the same accrual period.

The adjusted issue price of a Debt Security at the beginning of the first
accrual period is its issue price; the adjusted issue price of a Debt Security
at the beginning of a subsequent accrual period is the adjusted issue price at
the beginning of the immediately preceding accrual period plus the amount of OID
allocable to that accrual period and reduced by the amount of any payment other
than a payment of qualified stated interest made at the end of or during that
accrual period. The OID accrued during an accrual period will then be divided by
the number of days in the period to determine the daily portion of OID for each
day in the accrual period. The calculation of OID under the method described
above will cause the accrual of OID to either increase or decrease (but never
below zero) in a given accrual period to reflect the fact that prepayments are
occurring faster or slower than under the Prepayment Assumption. With respect to
an initial accrual period shorter than a full accrual period, the daily portions
of OID may be determined according to an appropriate allocation under any
reasonable method.

      A subsequent purchaser of a Debt Security issued with OID who purchases
the Debt Security at a cost less than the remaining stated redemption price at
maturity will also be required to include in gross income the sum of the daily
portions of OID on that Debt Security. In computing the daily portions of OID
for a subsequent purchaser of a Debt Security (as well as an initial purchaser
that purchases at a price higher than the adjusted issue price but less than the
stated redemption price at maturity), however, the daily portion is reduced by
the amount that would be the daily portion for the day (computed in accordance
with the rules set forth above) multiplied by a fraction, the numerator of which
is the amount, if any, by which the price paid by the holder for that Debt
Security exceeds the following amount:

      o     the sum of the issue price plus the aggregate amount of OID that
            would have been includible in the gross income of an original Debt
            Securityholder (who purchased the Debt Security at its issue price),
            less

      o     any prior payments included in the stated redemption price at
            maturity, and the denominator of which is the sum of the daily
            portions for that Debt Security for all days beginning on the date
            after the purchase date and ending on the maturity date computed
            under the Prepayment Assumption.

A holder who pays an acquisition premium instead may elect to accrue OID by
treating the purchase as a purchase at original issue.

      Variable Rate Debt Securities. Debt Securities may provide for interest
based on a variable rate. Interest is treated as payable at a variable rate and
not as contingent interest if, generally, the issue price does not exceed the
original principal balance by more than a specified amount and the interest
compounds or is payable at least annually at current values of certain objective
rates matured by or based on lending rates for newly borrowed funds. An
objective rate is a rate (other than a qualified floating rate) that is
determined using a single fixed formula and that is based on objective financial
or economic information. The variable interest generally will be qualified
stated interest to the extent it is unconditionally payable at least annually
and, to the extent successive variable rates are used, interest is not
significantly accelerated or deferred.


                                       95


      The amount of OID with respect to a Debt Security bearing a variable rate
of interest will accrue in the manner described under "--Original Issue Discount
and Premium" by assuming generally that the index used for the variable rate
will remain fixed throughout the term of the security. Appropriate adjustments
are made for the actual variable rate.

      Although unclear at present, the depositor intends to treat Debt
Securities bearing an interest rate that is a weighted average of the net
interest rates on mortgage loans as variable rate securities. In such case, the
weighted average rate used to compute the initial pass-through rate on the Debt
Securities will be deemed to be the index in effect through the life of the Debt
Securities. It is possible, however, that the IRS may treat some or all of the
interest on Debt Securities with a weighted average rate as taxable under the
rules relating to obligations providing for contingent payments. This treatment
may effect the timing of income accruals on the Debt Securities. Additionally,
if some or all of the mortgage loans are subject to "teaser rates" (i.e., the
initial rates on the mortgage loans are less than subsequent rates on the
mortgage loans) the interest paid on some or all of the Debt Securities may be
subject to accrual using a constant yield method notwithstanding the fact that
these securities may not have been issued with "true" non-de minimis original
issue discount.

      Election to Treat All Interest as OID. The OID Regulations permit a
securityholder to elect to accrue all interest, discount (including de minimis
market or original issue discount) and premium in income as interest, based on a
constant yield method for securities. If such an election were to be made with
respect to a Debt Security with market discount, a securityholder 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
securityholder acquires during the year of the election or thereafter.
Similarly, a securityholder that makes this election for a 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 securityholder owns or acquires. See "--Debt Securities --Premium." The
election to accrue interest, discount and premium on a constant yield method
with respect to a security cannot be revoked without the consent of the IRS.

      Market Discount. A purchaser of a Debt Security may also be subject to the
market discount provisions of sections 1276 through 1278 of the Code. Under
these provisions and the OID Regulations, "market discount" equals the excess,
if any, of a Debt Security's stated principal amount or, in the case of a Debt
Security with OID, the adjusted issue price (determined for this purpose as if
the purchaser had purchased the Debt Security from an original holder) over the
price for the Debt Security paid by the purchaser. A securityholder that
purchases a Debt Security at a market discount will recognize income upon
receipt of each distribution representing stated redemption price. In
particular, under section 1276 of the Code a holder generally will be required
to allocate each principal distribution first to accrued market discount not
previously included in income, and to recognize ordinary income to that extent.
A securityholder may elect to include market discount in income currently as it
accrues rather than including it on a deferred basis in accordance with the
foregoing. If made, the election will apply to all market discount bonds
acquired by the electing securityholder on or after the first day of the first
taxable year to which the election applies.

      Market discount with respect to a Debt Security will be considered to be
zero if the amount allocable to the Debt Security is less than 0.25% of the Debt
Security's stated redemption price at maturity multiplied by the Debt Security's
weighted average maturity remaining after the date of purchase. If market
discount on a Debt Security is considered to be zero under this rule, the actual
amount of market discount must be allocated to the remaining principal payments
on the Debt Security, and gain equal to the allocated amount will be recognized
when the corresponding principal payment is made. Treasury regulations
implementing the market discount rules have not yet been issued; therefore,
investors should consult their own tax advisors regarding the application of
these rules and the advisability of making any of the elections allowed under
sections 1276 through 1278 of the Code.

      The Code provides that any principal payment (whether a scheduled payment
or a prepayment) or any gain on disposition of a market discount bond acquired
by the taxpayer after October 22, 1986, shall be treated as ordinary income to
the extent that it does not exceed the accrued market discount at the time of
the payment. The amount of accrued market discount for purposes of determining
the tax treatment of subsequent principal payments or dispositions of the market
discount bond is to be reduced by the amount so treated as ordinary income.


                                       96


      The Code also grants authority to the Treasury Department to issue
regulations providing for the computation of accrued market discount on debt
instruments, the principal of which is payable in more than one installment.
Until regulations are issued by the Treasury, rules described in the Legislative
History will apply. Under those rules, the holder of a market discount bond may
elect to accrue market discount either on the basis of a constant interest rate
or according to one of the following methods. For Debt Securities issued with
OID, the amount of market discount that accrues during a period is equal to the
product of the total remaining market discount and a fraction, the numerator of
which is the OID accruing during the period and the denominator of which is the
total remaining OID at the beginning of the period. For Debt Securities issued
without OID, the amount of market discount that accrues during a period is equal
to the product of the total remaining market discount and a fraction, the
numerator of which is the amount of stated interest paid during the accrual
period and the denominator of which is the total amount of stated interest
remaining to be paid at the beginning of the period. For purposes of calculating
market discount under any of the above methods in the case of instruments (such
as the Debt Securities) that provide for payments that may be accelerated due to
prepayments of other obligations securing the instruments, the same Prepayment
Assumption applicable to calculating the accrual of OID will apply.

      A holder of a Debt Security that acquires the Debt Security at a market
discount also may be required to defer, until the maturity date of the Debt
Security or its earlier disposition in a taxable transaction, the deduction of a
portion of the amount of interest that the holder paid or accrued during the
taxable year on indebtedness incurred or maintained to purchase or carry the
Debt Security in excess of the aggregate amount of interest (including OID)
includible in the holder's gross income for the taxable year with respect to the
Debt Security. The amount of the net interest expense deferred in a taxable year
may not exceed the amount of market discount accrued on the Debt Security for
the days during the taxable year on which the holder held the Debt Security and,
in general, would be deductible when the market discount is includible in
income. The amount of any remaining deferred deduction is to be taken into
account in the taxable year in which the Regular Security matures or is disposed
of in a taxable transaction. In the case of a disposition in which gain or loss
is not recognized in whole or in part, any remaining deferred deduction will be
allowed to the extent of gain recognized on the disposition. This deferral rule
does not apply if the Debt Securityholder elects to include the market discount
in income currently as it accrues on all market discount obligations acquired by
the Debt Securityholder in that taxable year or thereafter.

      Premium. A purchaser of a Debt Security that purchases the Debt Security
at a cost (not including accrued qualified stated interest) greater than its
remaining stated redemption price at maturity will be considered to have
purchased the Debt Security at a premium and may elect to amortize the premium
under a constant yield method. It is not clear whether the Prepayment Assumption
would be taken into account in determining the life of the Debt Security for
this purpose. The trustee intends to account for amortizable bond premium in the
manner described in this prospectus. However, the Legislative History states
that the same rules that apply to accrual of market discount (which rules
require use of a Prepayment Assumption in accruing market discount with respect
to Debt Securities without regard to whether the securities have OID) will also
apply in amortizing bond premium. The Code provides that amortizable bond
premium will be allocated among the interest payments on the Debt Securities and
will be applied as an offset against the interest payment. Prospective
purchasers of the Debt Securities should consult their tax advisors regarding
the possible application of the Amortizable Bond Premium Regulations.

      Deferred Interest. Certain classes of Debt Securities will provide for the
accrual of Deferred Interest with respect to one or more ARM Loans. Any Deferred
Interest that accrues with respect to a class of Debt Securities will constitute
income to the holders of the securities before the time distributions of cash
with respect to the Deferred Interest are made. It is unclear, under the OID
Regulations, whether any of the interest on the securities will constitute
qualified stated interest or whether all or a portion of the interest payable on
the securities must be included in the stated redemption price at maturity of
the securities and accounted for as OID (which could accelerate the inclusion).
Interest on Debt Securities must in any event be accounted for under an accrual
method by the holders of the securities and, therefore, applying the latter
analysis may result only in a slight difference in the timing of the inclusion
in income of interest on the Debt Securities.

      Effects of Defaults and Delinquencies. Certain series of securities may
contain one or more classes of subordinated securities, and in the event there
are defaults or delinquencies on the mortgage loans, amounts that would
otherwise be distributed on the subordinated securities may instead be
distributed on the senior securities. Subordinated securityholders nevertheless
will be required to report income with respect to their securities under an
accrual method without giving effect to delays and reductions in distributions
on the subordinated securities


                                       97


attributable to defaults and delinquencies on the mortgage loans, except to the
extent that it can be established that the amounts are uncollectible. As a
result, the amount of income reported by a subordinated securityholder 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 subordinated security is reduced as a result of defaults
and delinquencies on the mortgage loans. However, the timing and
characterization of any losses or reductions in income are uncertain, and,
accordingly, subordinated securityholders are urged to consult their own tax
advisors on this point.

      Sale, Exchange or Redemption. If a Debt Security is sold, exchanged,
redeemed or retired, the seller will recognize gain or loss equal to the
difference between the amount realized on the sale, exchange, redemption, or
retirement and the seller's adjusted basis in the Debt Security. The adjusted
basis generally will equal the cost of the Debt Security to the seller,
increased by any OID and market discount included in the seller's gross income
with respect to the Debt Security, and reduced (but not below zero) by payments
included in the stated redemption price at maturity previously received by the
seller and by any amortized premium. Similarly, a holder who receives a payment
that is part of the stated redemption price at maturity of a Debt Security will
recognize gain equal to the excess, if any, of the amount of the payment over
the holder's adjusted basis in the Debt Security. A Debt Securityholder who
receives a final payment that is less than the holder's adjusted basis in the
Debt Security will generally recognize a loss. Any gain or loss will be capital
gain or loss, provided that the Debt Security is held as a "capital asset"
(generally, property held for investment) within the meaning of section 1221 of
the Code. Gain from the sale or other disposition of a Debt Security that might
otherwise be capital gain will be treated as ordinary income (a) to the extent
the gain constitutes market discount and (b) in the case of Regular Interest
Securities, to the extent that the gain does not exceed the excess, if any, of
the amount that would have been includible in the holder s income with respect
to the Debt Security had income accrued on it at a rate equal to 110% of the AFR
as defined in section 1274(d) of the Code determined as of the date of purchase
of the Regular Interest Security, over the amount actually includible in the
holder's income. In addition, the Debt Securities will be "evidences of
indebtedness" within the meaning of section 582(c)(1) of the Code, so that gain
or loss recognized from the sale of a Debt Security by a bank or a thrift
institution to which this section applies will be ordinary income or loss.

      The Debt Security information reports will include a statement of the
adjusted issue price of the Debt Security at the beginning of each accrual
period. In addition, the reports will include information necessary to compute
the accrual of any market discount that may arise upon secondary trading of Debt
Securities. Because exact computation of the accrual of market discount on a
constant yield method would require information relating to the holder's
purchase price which the REMIC may not have, it appears that the information
reports will only require information pertaining to the appropriate
proportionate method of accruing market discount.

      Accrued Interest Securities. Certain of the Debt Securities ("Payment Lag
Securities") may provide for payments of interest based on a period that
corresponds to the interval between distribution dates but that ends before each
distribution date. The period between the Closing Date for Payment Lag
Securities and their first distribution date may or may not exceed that
interval. Purchasers of Payment Lag Securities for which the period between the
Closing Date and the first distribution date does not exceed that interval could
pay upon purchase of the Debt Securities accrued interest in excess of the
accrued interest that would be paid if the interest paid on the distribution
date were interest accrued from distribution date to distribution date. If a
portion of the initial purchase price of a Debt Security is allocable to
interest that has accrued before the issue date ("pre-issuance accrued
interest") and the Debt Security provides for a payment of stated interest on
the first payment date (and the first payment date is within one year of the
issue date) that equals or exceeds the amount of the pre-issuance accrued
interest, then the Regular v issue price may be computed by subtracting from the
issue price the amount of pre-issuance accrued interest, rather than as an
amount payable on the Debt Security. However, it is unclear under this method
how the OID Regulations treat interest on Payment Lag Securities. Therefore, in
the case of a Payment Lag Security, the issuing entity intends to include
accrued interest in the issue price and report interest payments made on the
first distribution date as interest to the extent the payments represent
interest for the number of days that the securityholder has held the Payment Lag
Security during the first accrual period.

      Investors are encouraged to consult their own tax advisors concerning the
treatment for federal income tax purposes of Payment Lag Securities.


                                       98


      Treatment of Realized Losses. Although not entirely clear, it appears that
holders of Regular Securities that are corporations should in general be allowed
to deduct as an ordinary loss any loss sustained during the taxable year on
account of the securities becoming wholly or partially worthless, and that, in
general, holders of securities that are not corporations should be allowed to
deduct as a short-term capital loss any loss sustained during the taxable year
on account of the securities becoming wholly worthless. Although the matter is
unclear, non-corporate holders of securities may be allowed a bad debt deduction
at the time that the principal balance of a certificate is reduced to reflect
realized losses resulting from any liquidated mortgage loans. The Internal
Revenue Service, however, could take the position that non-corporate holders
will be allowed a bad debt deduction to reflect realized losses only after all
mortgage loans remaining in the related issuing entity have been liquidated or
the securities of the related series have been otherwise retired. Potential
investors and Holders of the securities are urged to consult their own tax
advisors regarding the appropriate timing, amount and character of any loss
sustained with respect to their securities, including any loss resulting from
the failure to recover previously accrued interest or discount income.

      Subsequent Recoveries. The Class Security Balance of securities that have
been reduced because of allocations of Realized Losses may also be increased as
a result of Subsequent Recoveries. See the discussion under the caption "The
Agreements--Realization Upon Defaulted Mortgage Loans--Application of
Liquidation Proceeds." An increase in a principal balance caused by a Subsequent
Recovery should be treated by the securityholder as ordinary (or capital) income
to the extent that the securityholder claimed an ordinary (or capital) deduction
for any decrease in the principal balance caused by Realized Losses. Potential
investors and Holders of the securities are urged to consult their own tax
advisors regarding the appropriate timing, amount and character of any income
realized with respect to their securities as a result of Subsequent Recoveries.
"Subsequent Recoveries" are unexpected recoveries, net of reimbursable expenses,
with respect to a Liquidated Mortgage Loan that resulted in a Realized Loss
prior to the receipt of such recoveries.

      Non-U.S. Persons. A non-U.S. Person who is an individual or corporation
(or an entity treated as a corporation for federal income tax purposes) holding
the securities on its own behalf other than in connection with a United States
trade or business carried on by such non-U.S. Person will not be subject to
United States federal income taxes on payments of principal, premium, interest
or original issue discount on a debt security, unless such non-U.S. Person is a
direct or indirect 10% or greater shareholder of the issuing entity in a
particular transaction, a controlled foreign corporation related to the issuing
entity in a particular transaction or a bank receiving interest described in
section 881(c)(3)(A) of the Code. To qualify for the exemption from taxation,
the non-U.S. Person must follow the certification requirements set forth in the
section identified as "Material Federal Income Tax Consequences--Status as a
Grantor Trust--d. Non-U.S. Persons."

      Backup Withholding. Backup withholding of United States federal income tax
may apply to payments made in respect of the securities to registered owners who
are not "exempt recipients" and who fail to provide certain identifying
information (such as the registered owner's taxpayer identification number) in
the required manner. To qualify for the exemption from taxation, the non-U.S.
Person must follow the certification requirements set forth in the section
identified as "Material Federal Income Tax Consequences--Status as a Grantor
Trust--d. Non-U.S. Persons."

      In addition, upon the sale of a security to (or through) a broker, the
broker must report the sale and withhold on the entire purchase price, unless
either (a) the broker determines that the seller is a corporation or other
exempt recipient or (b) the seller certifies that such seller is a non-U.S.
Person (and certain other conditions are met).

      Certification of the registered owner's non-U.S. status would be made
normally on an IRS Form W-8BEN under penalties of perjury, although in certain
cases it may be possible to submit other documentary evidence.

      Any amounts withheld under the backup withholding rules from a payment to
a beneficial owner would be allowed as a refund or a credit against such
beneficial owner's United States federal income tax provided the required
information is furnished to the IRS.

      Prospective investors are strongly urged to consult their own tax advisors
with respect to the Withholding Regulations.


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REMIC Securities

      The issuing entity relating to a series of securities may elect to be
treated as one or more REMICs. Qualification as a REMIC requires ongoing
compliance with certain conditions. Although a REMIC is not generally subject to
federal income tax (see, however "--Residual Certificates" and "--Prohibited
Transactions"), if an issuing entity with respect to which a REMIC election is
made fails to comply with one or more of the ongoing requirements of the Code
for REMIC status during any taxable year, including the implementation of
restrictions on the purchase and transfer of the residual interests in a REMIC
as described under "Residual Certificates," the Code provides that an issuing
entity will not be treated as a REMIC for that year and thereafter. In that
event, the entity may be taxable as a separate corporation, and the related
securities (the "REMIC Securities") may not be accorded the status or given the
tax treatment described below. While the Code authorizes the Treasury Department
to issue regulations providing relief upon an inadvertent termination of the
status of an issuing entity as a REMIC, no such regulations have been issued.
Any relief, moreover, may be accompanied by sanctions, such as the imposition of
a corporate tax on all or a portion of the REMIC's income for the period in
which the requirements for REMIC status are not satisfied. Assuming compliance
with all provisions of the related pooling and servicing agreement or trust
agreement, as applicable, each issuing entity that elects REMIC status will
qualify as a REMIC, and the related securities will be considered to be regular
interests ("Regular Securities") or residual interests ("Residual Certificates")
in the REMIC. The related prospectus supplement for each series of securities
will indicate whether the issuing entity will make one or more REMIC elections
and whether a class of securities will be treated as a regular or residual
interest in the REMIC. With respect to each issuing entity for which a REMIC
election is to be made, tax counsel will issue an opinion confirming the
conclusions expressed above concerning the status of the issuing entity as a
REMIC and the status of the securities as representing regular or residual
interests in a REMIC.

      In general, with respect to each series of securities for which a REMIC
election is made, securities held by a thrift institution taxed as a "domestic
building and loan association" will constitute assets described in Code Section
7701(a)(19)(C); securities held by a real estate investment trust will
constitute "real estate assets" within the meaning of Code Section 856(c)(4)(A);
and interest on securities held by a real estate investment trust will be
considered "interest on obligations secured by mortgages on real property"
within the meaning of Code Section 856(c)(3)(B). If less than 95% of the REMIC's
assets are assets qualifying under any of these Code sections, the securities
will be qualifying assets only to the extent that the REMIC's assets are
qualifying assets. In addition, payments on mortgage loans held pending
distribution on the REMIC Securities will be considered to be real estate assets
for purposes of Code Section 856(c).

      In some instances the mortgage loans may not be treated entirely as assets
described in the foregoing sections. See, in this regard, the discussion of
buydown loans contained in "--Non-REMIC Securities--Single Class of Securities."
REMIC Securities held by a real estate investment trust will not constitute
"Government Securities" within the meaning of Code Section 856(c)(4)(A), and
REMIC Securities held by a regulated investment company will not constitute
"Government Securities" within the meaning of Code Section 851(b)(4)(A)(ii).
REMIC Securities held by certain financial institutions will constitute
"evidences of indebtedness" within the meaning of Code Section 582(c)(1).

      A "qualified mortgage" for REMIC purposes is any obligation (including
certificates of participation in an obligation) that is principally secured by
an interest in real property and that is transferred to the REMIC within a
prescribed time period in exchange for regular or residual interests in the
REMIC. The REMIC Regulations provide that manufactured housing or mobile homes
(not including recreational vehicles, campers or similar vehicles) that are
"single family residences" under Code Section 25(e)(10) will qualify as real
property without regard to state law classifications.

      Tiered REMIC Structures. For certain series of securities, two or more
separate elections may be made to treat designated portions of the related
issuing entity as separate REMICs (respectively, the "Subsidiary REMIC" or
"REMICs" and the "Master REMIC") for federal income tax purposes. Upon the
issuance of such a series of securities, assuming compliance with all provisions
of the related agreement, the Master REMIC as well as each Subsidiary REMIC will
each qualify as a REMIC, and the REMIC Securities issued by the Master REMIC and
each Subsidiary REMIC, respectively, will be considered to evidence ownership of
Regular Securities or Residual Certificates in the related REMIC within the
meaning of the REMIC provisions. With respect to each issuing entity for which
more than one REMIC election is to be made, Sidley Austin LLP will issue an
opinion confirming the


                                      100


conclusions expressed above concerning the status of the Master REMIC and each
Subsidiary REMIC as a REMIC and the status of the securities as regular or
residual interests in a REMIC.

      To the extent more than one REMIC election is made with respect to
portions of an issuing entity, only the REMIC Securities issued by the Master
REMIC will be offered under this prospectus. Solely for purposes of determining
whether the REMIC Securities issued by an issuing entity will be "real estate
assets" within the meaning of Code Section 856(c)(4)(A); whether the REMIC
Securities will be "loans secured by an interest in real property" under Code
Section 7701(a)(19)(C); and whether the income on the securities is interest
described in Code Section 856(c)(3)(B), all related Subsidiary REMICs and the
Master REMIC will be treated as one REMIC.

   a. Regular Securities

      General. Except as otherwise stated in this discussion, Regular Securities
will be treated for federal income tax purposes as debt instruments issued by
the REMIC and not as ownership interests in the REMIC or its assets. Holders of
Regular Securities that otherwise report income under a cash method of
accounting will be required to report income with respect to Regular Interest
Securities under an accrual method. For a general discussion of the tax
consequences of investing in Regular Interest Securities, see the discussion
above under "Taxation of Debt Securities."

      Non-Interest Expenses of the REMIC. Under the temporary Treasury
regulations, if the REMIC is considered to be a "single-class REMIC," a portion
of the REMIC's servicing, administrative and other non-interest expenses will be
allocated as a separate item to those Regular Securityholders that are
"pass-through interest holders." securityholders that are pass-through interest
holders should consult their own tax advisors about the impact of these rules on
an investment in the Regular Securities. See "Pass-Through of Non-Interest
Expenses of the REMIC under Residual Certificates."

   b. Residual Certificates

      Allocation of the Income of the REMIC to the Residual Certificates. The
REMIC will not be subject to federal income tax except with respect to income
from prohibited transactions and certain other transactions. See "--Prohibited
Transactions and Other Taxes." Instead, each original holder of a Residual
Certificate will report on its federal income tax return, as ordinary income,
its share of the taxable income of the REMIC for each day during the taxable
year on which it owns any Residual Certificates. The taxable income of the REMIC
for each day will be determined by allocating the taxable income of the REMIC
for each calendar quarter ratably to each day in the quarter. An original
holder's share of the taxable income of the REMIC for each day will be based on
the portion of the outstanding Residual Certificates that the holder owns on
that day. The taxable income of the REMIC will be determined under an accrual
method and will be taxable to the holders of Residual Certificates without
regard to the timing or amounts of cash distributions by the REMIC. Ordinary
income derived from Residual Certificates will be "portfolio income" for
purposes of the taxation of taxpayers subject to the limitations on the
deductibility of "passive losses." As residual interests, the Residual
Certificates will be subject to tax rules, described below, that differ from
those that would apply if the Residual Certificates were treated for federal
income tax purposes as direct ownership interests in the securities or as debt
instruments issued by the REMIC.

      A Residual Certificateholder may be required to include taxable income
from the Residual Certificate in excess of the cash distributed. For example, a
structure where principal distributions are made serially on regular interests
(that is, a fast-pay, slow-pay structure) may generate that sort of mismatching
of income and cash distributions (that is, "phantom income"). This mismatching
may be caused by the use of certain required tax accounting methods by the
REMIC, variations in the prepayment rate of the underlying mortgage loans and
certain other factors. Depending upon the structure of a particular transaction,
the aforementioned factors may significantly reduce the after-tax yield of a
Residual Certificate to a Residual Certificateholder. Investors should consult
their own tax advisors concerning the federal income tax treatment of a Residual
Certificate and the impact of the tax treatment on the after-tax yield of a
Residual Certificate.

      Taxable Income of the REMIC Attributable to Residual Interests. The
taxable income of the REMIC will reflect a netting of the income from the
mortgage loans and the REMIC's other assets and the deductions allowed to the
REMIC for interest and OID on the Regular Securities and, except as described
under "--Regular Securities--Non-Interest Expenses of the REMIC," other
expenses. REMIC taxable income is generally determined in the same


                                      101


manner as the taxable income of an individual using the accrual method of
accounting, except that the limitations on deductibility of investment interest
expense and expenses for the production of income do not apply, all bad loans
will be deductible as business bad debts, and the limitation on the
deductibility of interest and expenses related to tax-exempt income is more
restrictive than with respect to individual. The REMIC's gross income includes
interest, original issue discount income, and market discount income, if any, on
the mortgage loans, as well as, income earned from temporary investments on
reverse assets, reduced by the amortization of any premium on the mortgage
loans. In addition, a Residual Certificateholder will recognize additional
income due to the allocation of realized losses to the Regular Securities due to
defaults, delinquencies and realized losses on the mortgage loans. The timing of
the inclusion of the income by Residual Certificateholders may differ from the
time the actual loss is allocated to the Regular Securities. The REMIC's
deductions include interest and original issue discount expense on the Regular
Securities, servicing fees on the mortgage loans, other administrative expenses
of the REMIC and realized losses on the mortgage loans. The requirement that
Residual Certificateholders report their pro rata share of taxable income or net
loss of the REMIC will continue until there are no securities of any class of
the related series outstanding.

      For purposes of determining its taxable income, the REMIC will have an
initial aggregate tax basis in its assets equal to the sum of the issue prices
of the Regular Securities and the Residual Certificates (or, if a class of
securities is not sold initially, its fair market value). The aggregate basis
will be allocated among the mortgage loans and other assets of the REMIC in
proportion to their respective fair market value. A mortgage loan will be deemed
to have been acquired with discount or premium to the extent that the REMIC s
basis therein is less than or greater than its principal balance, respectively.
Any discount (whether market discount or OID) will be includible in the income
of the REMIC as it accrues, in advance of receipt of the cash attributable to
this income, under a method similar to the method described above for accruing
OID on the Regular Securities. The REMIC expects to elect under Code Section 171
to amortize any premium on the mortgage loans. Premium on any mortgage loan to
which the election applies would be amortized under a constant yield method. It
is not clear whether the yield of a mortgage loan would be calculated for this
purpose based on scheduled payments or taking account of the Prepayment
Assumption. Additionally, the election would not apply to the yield with respect
to any underlying mortgage loan originated on or before September 27, 1985.
Instead, premium with respect to that mortgage loan would be allocated among the
principal payments thereon and would be deductible by the REMIC as those
payments become due.

      The REMIC will be allowed a deduction for interest and OID on the Regular
Securities. The amount and method of accrual of OID will be calculated for this
purpose in the same manner as described above with respect to Regular Securities
except that the 0.25% per annum de minimis rule and adjustments for subsequent
holders described therein will not apply.

      A Residual Certificateholder will not be permitted to amortize the cost of
the Residual Certificate as an offset to its share of the REMIC's taxable
income. However, that taxable income will not include cash received by the REMIC
that represents a recovery of the REMIC's basis in its assets, and, as described
above, the issue price of the Residual Securities will be added to the issue
price of the Regular Securities in determining the REMIC's initial basis in its
assets. See "--Sale or Exchange of Residual Certificates." For a discussion of
possible adjustments to income of a subsequent holder of a Residual Certificate
to reflect any difference between the actual cost of the Residual Certificate to
the holder and the adjusted basis the Residual Certificate would have in the
hands of an original Residual Certificateholder, see "--Allocation of the Income
of the REMIC to the Residual Certificates."

      Net Losses of the REMIC. The REMIC will have a net loss for any calendar
quarter in which its deductions exceed its gross income. The net loss would be
allocated among the Residual Certificateholders in the same manner as the
REMIC's taxable income. The net loss allocable to any Residual Certificate will
not be deductible by the holder to the extent that the net loss exceeds the
holder's adjusted basis in the Residual Certificate. Any net loss that is not
currently deductible due to this limitation may only be used by the Residual
Certificateholder to offset its share of the REMIC's taxable income in future
periods (but not otherwise). The ability of Residual Certificateholders that are
individuals or closely held corporations to deduct net losses may be subject to
additional limitations under the Code.

      For purposes of determining REMIC taxable income or loss, the trustee
intends to treat Subsequent Recoveries in a way described under the caption
"Subsequent Recoveries."


                                      102


      Pass-Through of Non-Interest Expenses of the REMIC. As a general rule, all
of the fees and expenses of a REMIC will be taken into account by holders of the
Residual Certificates. In the case of a single class REMIC, however, the
expenses and a matching amount of additional income will be allocated among the
Regular Securityholders and the Residual Certificateholders on a daily basis in
proportion to the relative amounts of income accruing to each securityholder on
that day. In general terms, a single class REMIC is one that either would
qualify 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 is similar to a grantor trust and is structured with the
principal purpose of avoiding the single class REMIC rules. The applicable
prospectus supplement may apportion expenses to the Regular Securities, but if
it does not, then the expenses of the REMIC will be allocated to holders of the
related Residual Certificates in their entirety and not to holders of the
related Regular Securities.

      In the case of individuals (or trusts, estates or other persons that
compute their income in the same manner as individuals) who own an interest in a
Regular Security or a Residual Certificate directly or through a pass-through
interest holder that is required to pass miscellaneous itemized deductions
through to its owners or beneficiaries (e.g. a partnership, an S corporation or
a grantor trust), the trust expenses will be deductible under Code Section 67
only to the extent that those expenses, plus other "miscellaneous itemized
deductions" of the individual, exceed 2% of the individual's adjusted gross
income. In addition, Code Section 68 provides that the amount of itemized
deductions otherwise allowable for an individual whose adjusted gross income
exceeds a certain amount (the "Applicable Amount") will be reduced by the lesser
of 3% of the excess of the individual's adjusted gross income over the
Applicable Amount or 80% of the amount of itemized deductions otherwise
allowable for the taxable year. The amount of additional taxable income
recognized by Residual Certificateholders who are subject to these limitations
may be substantial. Further, holders (other than corporations) subject to the
alternative minimum tax may not deduct miscellaneous itemized deductions in
determining their alternative minimum taxable income. The REMIC is required to
report to each pass-through interest holder and to the IRS the holder's
allocable share, if any, of the REMIC's non-interest expenses. The term
"pass-through interest holder" generally refers to individuals, entities taxed
as individuals and certain pass-through entities, but does not include real
estate investment trusts. Residual Certificateholders that are pass-through
interest holders are encouraged to consult their own tax advisors about the
impact of these rules on an investment in the Residual Certificates.

      Excess Inclusions. A portion of the income on a Residual Certificate
(referred to in the Code as an "excess inclusion") will be subject to federal
income tax in all events. Thus, for example, an excess inclusion may not be
offset by any unrelated losses, deductions or loss carryovers of a Residual
Certificateholder; will be treated as "unrelated business taxable income" within
the meaning of Code Section 512 if the Residual Certificateholder is a pension
fund or any other organization that is subject to tax only on its unrelated
business taxable income (see "--Tax-Exempt Investors"); and is not eligible for
any reduction in the rate of withholding tax in the case of a Residual
Certificateholder that is a foreign investor. See "--Non-U.S. Persons."

      Except as discussed in the following paragraph, with respect to any
Residual Certificateholder, the excess inclusions is the excess, if any, of the
income of the Residual Certificateholder for that calendar quarter from its
Residual Certificate over the sum of the "daily accruals" for all days during
the calendar quarter on which the Residual Certificateholder holds the Residual
Certificate. For this purpose, the daily accruals with respect to a Residual
Certificate are determined by allocating to each day in the calendar quarter its
ratable portion of the product of the "adjusted issue price" of the Residual
Certificate at the beginning of the calendar quarter and 120 percent of the
"Federal long-term rate" in effect at the time the Residual Certificate is
issued. For this purpose, the "adjusted issue price" of a Residual Certificate
at the beginning of any calendar quarter equals the issue price of the Residual
Certificate, increased by the amount of daily accruals for all prior quarters,
and decreased (but not below zero) by the aggregate amount of payments made on
the Residual Certificate before the beginning of the same quarter.

      In the case of any Residual Certificates held by a real estate investment
trust, the aggregate excess inclusions with respect to the Residual
Certificates, reduced (but not below zero) by the real estate investment trust
taxable income (within the meaning of Code Section 857(b)(2), excluding any net
capital gain), will be allocated among the shareholders of the trust in
proportion to the dividends received by the shareholders from the trust, and any
amount so allocated will be treated as an excess inclusion with respect to a
Residual Certificate as if held directly by the shareholder. Regulated
investment companies, common issuing entities and certain cooperatives are
subject to similar rules.


                                      103


      Payments. Any distribution made on a Residual Certificate to a Residual
Certificateholder will be treated as a non-taxable return of capital to the
extent it does not exceed the Residual Certificateholder's adjusted basis in the
Residual Certificate. To the extent a distribution exceeds the adjusted basis,
it will be treated as gain from the sale of the Residual Certificate.

      Sale or Exchange of Residual Certificates. If a Residual Certificate is
sold or exchanged, the seller will generally recognize gain or loss equal to the
difference between the amount realized on the sale or exchange and its adjusted
basis in the Residual Certificate (except that the recognition of loss may be
limited under the "wash sale" rules). A holder's adjusted basis in a Residual
Certificate generally equals the cost of the Residual Certificate to the
Residual Certificateholder, increased by the taxable income of the REMIC that
was included in the income of the Residual Certificateholder with respect to the
Residual Certificate, and decreased (but not below zero) by the net losses that
have been allowed as deductions to the Residual Certificateholder with respect
to the Residual Certificate and by the distributions received thereon by the
Residual Certificateholder. In general, the gain or loss will be capital gain or
loss provided the Residual Certificate is held as a capital asset. However,
Residual Certificates will be "evidences of indebtedness" within the meaning of
Code Section 582(c)(1), so that gain or loss recognized from sale of a Residual
Certificate by a bank or thrift institution to which that section applies would
be ordinary income or loss.

      Except as provided in Treasury regulations yet to be issued, if the seller
of a Residual Certificate reacquires the Residual Certificate, or acquires any
other Residual Certificate, any residual interest in another REMIC or similar
interest in a "taxable mortgage pool" (as defined in Code Section 7701(i))
during the period beginning six months before, and ending six months after, the
date of the sale, the sale will be subject to the "wash sale" rules of Code
Section 1091. In that event, any loss realized by the Residual Certificateholder
on the sale will not be deductible, but, instead, will increase the Residual
Certificateholder's adjusted basis in the newly acquired asset.

      Purchasers of a Residual Certificate are encouraged to consider carefully
the tax consequences of an investment in Residual Certificates discussed in the
prospectus and consult their own tax advisors with respect to those
consequences. See "Material Federal Income Tax Consequences -- REMIC Securities
-- b. Residual Certificates." Specifically, prospective holders of Residual
Certificates should consult their tax advisors regarding whether, at the time of
acquisition, 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 may affect their ability to transfer their Residual
Certificates. See "Material Federal Income Tax Consequences -- Tax Restrictions
on Transfer of Residual Certificates -- Noneconomic Residual Certificates,"
"Material Federal Income Tax Consequences -- b. Residual Certificates -- Mark to
Market Rules," "-- Excess Inclusions" and "Material Federal Income Tax
Consequences -- Tax Related Restrictions on Transfers of Residual Certificates
-- Foreign Investors."

      Additionally, for information regarding Prohibited Transactions and
Treatment of Realized Losses, see "Material Federal Income Tax Consequences --
Prohibited Transactions and Other Taxes" and "-- REMIC Securities -- a. Regular
Securities -- Treatment of Realized Losses" 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 Relief Reconciliation Act of 2003 (the "2003 Act"), the backup
withholding rate has been reduced to 28%. Unless they are amended, these
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 own
tax advisors with respect to both statutes.

   c. Prohibited Transactions and Other Taxes

      The Code imposes a tax on REMICs equal to 100 percent of the net income
derived from "prohibited transactions" (the "Prohibited Transactions Tax") and
prohibits deducting any loss with respect to prohibited transactions. In
general, subject to certain specified exceptions, a prohibited transaction means
the disposition of a mortgage loan, the receipt of income from a source other
than a mortgage loan or certain other permitted investments, the receipt of
compensation for services, or gain from the disposition of an asset purchased
with the payments on the mortgage loans for temporary investment pending
distribution on the securities. It is not anticipated


                                      104


that the issuing entity for any series of securities will engage in any
prohibited transactions in which it would recognize a material amount of net
income.

      In addition, certain contributions to an issuing entity as to which an
election has been made to treat the issuing entity as a REMIC made after the day
on which the issuing entity issues all of its interest could result in the
imposition of a tax on the issuing entity equal to 100% of the value of the
contributed property (the "Contributions Tax"). No issuing entity for any series
of securities will accept contributions that would subject it to a Contributions
Tax.

      In addition, an issuing entity as to which an election has been made to
treat the issuing entity as a REMIC may also be subject to federal income tax at
the highest corporate rate on "net income from foreclosure property," determined
by reference to the rules applicable to real estate investment trusts. "Net
income from foreclosure property" generally means income from foreclosure
property other than qualifying income for a real estate investment trust.

      Where any Prohibited Transactions Tax, Contributions Tax, tax on net
income from foreclosure property or state or local income or franchise tax that
may be imposed on a REMIC relating to any series of securities results from a
breach of the related servicer's, trustee's or seller's obligations under the
related pooling and servicing agreement, sale and servicing agreement or
servicing agreement, as applicable, for the series, the tax will be borne by the
servicer, trustee or seller, as the case may be, out of its own funds or the
seller's obligation to repurchase a mortgage loan, the tax will be borne by the
seller. If the servicer, trustee or seller, as the case may be, fails to pay or
is not required to pay the tax as provided above, the tax will be payable out of
the issuing entity for the series and will result in a reduction in amounts
available to be distributed to the securityholders of the series.

   d. Administrative Matters

      Solely for the purpose of the administrative provisions of the Code, the
REMIC generally will be treated as a partnership and the Residual
Certificateholders will be treated as the partners if there is more than one
holder of the Residual Certificate. Certain information will be furnished
quarterly to each Residual Certificateholder who held a Residual Certificate on
any day in the previous calendar quarter.

      Each Residual Certificateholder is required to treat items on its return
consistently with their treatment on the REMIC's return, unless the Residual
Certificateholder either files a statement identifying the inconsistency or
establishes that the inconsistency resulted from incorrect information received
from the REMIC. The IRS may assert a deficiency resulting from a failure to
comply with the consistency requirement without instituting an administrative
proceeding at the REMIC level. Any person that holds a Residual Certificate as a
nominee for another person may be required to furnish the REMIC, in a manner to
be provided in Treasury regulations, with the name and address of the person and
other information.

   e. Tax-Exempt Investors

      Any Residual Certificateholder that is a pension fund or other entity that
is subject to federal income taxation only on its "unrelated business taxable
income" within the meaning of Code Section 512 will be subject to the tax on
that portion of the distributions received on a Residual Certificate that is
considered an excess inclusion. See "--Residual Certificates--Excess
Inclusions."

   f. Tax-Related Restrictions on Transfers of Residual Certificates

      Disqualified Organizations. An entity may not qualify as a REMIC unless
there are reasonable arrangements designed to ensure that residual interests in
the entity are not held by "disqualified organizations." Further, a tax is
imposed on the transfer of a residual interest in a REMIC to a "disqualified
organization." The amount of the tax equals the product of an amount (as
determined under the REMIC Regulations) equal to the present value of the total
anticipated "excess inclusions" with respect to the interest for periods after
the transfer and the highest marginal federal income tax rate applicable to
corporations. The tax is imposed on the transferor unless the transfer is
through an agent (including a broker or other middleman) for a disqualified
organization, in which event the tax is imposed on the agent. A "disqualified
organization" means the United States, any State, possession or political
subdivision of the United States, any foreign government, any international
organization or any agency


                                      105


or instrumentality of any of the foregoing entities (provided that the term does
not include an instrumentality if all its activities are subject to tax and,
except for Freddie Mac, a majority of its board of directors is not selected by
a governmental agency), any organization (other than certain farmers
cooperatives) generally exempt from federal income taxes unless the organization
is subject to the tax on "unrelated business taxable income" and a rural
electric or telephone cooperative.

      A tax is imposed on a "pass-through entity" holding a residual interest in
a REMIC if at any time during the taxable year of the pass-through entity a
disqualified organization is the record holder of an interest in the entity. The
amount of the tax is equal to the product of the amount of excess inclusions for
the taxable year allocable to the interest held by the disqualified organization
and the highest marginal federal income tax rate applicable to corporations. The
pass-through entity otherwise liable for the tax, for any period during which
the disqualified organization is the record holder of an interest in the entity,
will be relieved of liability for the tax if the record holder furnishes to the
entity an affidavit that the record holder is not a disqualified organization
and, for the applicable period, the pass-through entity does not have actual
knowledge that the affidavit is false. For this purpose, a "pass-through entity"
means a regulated investment company, real estate investment trust, or common
issuing entity; a partnership, trust, or estate; and certain cooperatives.
Except as may be provided in Treasury regulations not yet issued, any person
holding an interest in a pass-through entity as a nominee for another will, with
respect to the interest, be treated as a pass-through entity. Large partnerships
(generally with 250 or more partners) will be taxable on excess inclusion income
as if all partners were disqualified organizations.

      To comply with these rules, the pooling and servicing agreement will
provide that no record or beneficial ownership interest in a Residual
Certificate may be purchased, transferred or sold, directly or indirectly,
without the express written consent of the servicer. The servicer will grant
consent to a proposed transfer only if it receives an affidavit from the
proposed transferee to the effect that it is not a disqualified organization and
is not acquiring the Residual Certificate as a nominee or agent for a
disqualified organization and a covenant by the proposed transferee to the
effect that the proposed transferee agrees to be bound by and to abide by the
transfer restrictions applicable to the Residual Certificate.

      Noneconomic Residual Certificates. The REMIC Regulations disregard, for
federal income tax purposes, any transfer of a Noneconomic Residual Certificate
to a "U.S. Person," as defined in the following section of this discussion,
unless no significant purpose of the transfer is to enable the transferor to
impede the assessment or collection of tax. In general, the definition of a U.S.
Person is the same as provided under "Certain Federal Income Tax
Consequences--Non-REMIC Certificates--Non-U.S. Persons," except that entities or
individuals that would otherwise be treated as Non-U.S. Persons, may be
considered U.S. Persons for this purpose if their income from the residual is
subject to tax under Code Section 871(b) or Code Section 882 (income effectively
connected with a U.S. trade or business). A Noneconomic Residual Certificate is
any Residual Certificate (including a Residual Certificate with a positive value
at issuance) unless, at the time of transfer, 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 Certificate at least equals the
product of the present value of the anticipated excess inclusions and the
highest corporate income tax rate in effect for the year in which the transfer
occurs and 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 significant purpose to impede the assessment or collection of tax
exists if the transferor, at the time of the transfer, either knew or should
have known that the transferee would be unwilling or unable to pay taxes due on
its share of the taxable income of the REMIC.

      Any transfer of the Residual Certificate will be disregarded for federal
tax purposes if a significant purpose of the transfer was to enable the seller
to impede the assessment or collection of tax. As set forth in Treasury
Regulations, a significant purpose to impede the assessment or collection of tax
exists if the seller, at the time of the transfer, either knew or should have
known that the transferee would be unwilling or unable to pay taxes due on its
share of the taxable income of the REMIC. Notwithstanding the above, a transfer
will be respected if (a) the transferor has performed reasonable investigations
of the transferee and has no knowledge or no reason to know that a transferee
intended to impede the assessment or collection of taxes, (b) the transfer is
not made to a foreign permanent establishment or fixed base of a U.S. taxpayer
(an "offshore location"), (c) the transferee represents that it will not cause
income from the Residual Certificate to be attributable to an offshore location
and (d) one of the two tests set forth in Treasury regulations issued on July
19, 2002 is satisfied.


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      Under the first alternative test, a transfer by the holder of the Residual
Certificate will, assuming all other requirements of the safe harbor are met,
qualify for the safe harbor if the present value of the anticipated tax
liabilities associated with holding the residual interest does not exceed the
sum of the present value of: (a) any consideration given to the purchaser to
acquire the interest; (b) the expected future distributions on the interest; and
(c) the anticipated tax savings associated with holding the interest as the
REMIC generates losses. For purposes of this test, the transferee generally must
use the highest corporate tax rate and the discount rate must be equal to the
Federal short-term rate prescribed by section 1274(d) for the month of the
transfer. Under the second alternative test, a transfer by the holder of the
Residual Certificate will, assuming all other requirements of the safe harbor
are met, qualify for the safe harbor if: (a) the price paid by the transferee
for the Residual Certificate would not cause a reasonable person to believe the
transferee does not intend to pay the taxes associated with such certificate,
(b) the transferee is an "eligible corporation" and (c) for the two fiscal years
preceding the transfer, the transferee's gross assets for financial reporting
purposes exceeded $100 million and its net assets for financial reporting
purposes exceeded $10 million (excluding certain related party transactions).

      The Treasury Department has issued final regulations, effective May 11,
2004, that address the federal income tax treatment of "inducement fees"
received by transferees of noneconomic REMIC residual interests. The final
regulations require inducement fees to be included in income over a period
reasonably related to the period in which the related REMIC residual interest is
expected to generate taxable income or net loss allocable to the holder. The
final regulations provide two safe harbor methods that permit transferees to
include inducement fees in income either (i) in the same amounts and over the
same period that the taxpayer uses for financial reporting purposes, provided
that such 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
such interests under the prepayment assumption. If the holder of a Residual
Certificate sells or otherwise disposes of the Residual Certificate, 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 REMIC 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 Certificates should
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.

      As a result of 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 Certificate. In addition, the backup
withholding rate has been reduced to 28%. Unless the statute is amended, all
provisions of the 2001 and the 2003 Act will no longer apply for taxable years
beginning on or after December 31, 2010. Investors are encouraged to consult
their own tax advisors with respect to the acquisition, ownership and
disposition of the securities.

Tax Status as a Grantor Trust

      If a REMIC election is not made, the issuing entity will not be classified
as an association taxable as a corporation and that each issuing entity will be
classified as a grantor trust under subpart E, Part I of subchapter J of chapter
1 of subtitle A of the Code. In this case, owners of securities will be treated
for federal income tax purposes as owners of a portion of the issuing entity's
assets as described below. Sidley Austin LLP will issue an opinion confirming
the above-stated conclusions for each issuing entity for which no REMIC election
is made.

   a. Single Class of Securities

      Characterization. The issuing entity may be created with one class of
securities. In this case, each securityholder will be treated as the owner of a
pro rata undivided interest in the interest and principal portions of the
issuing entity represented by the securities and will be considered the
equitable owner of a pro rata undivided interest in each of the mortgage loans
in the issuing entity. Any amounts received by a securityholder in lieu of
amounts due with respect to any mortgage loans because of a default or
delinquency in payment will be treated for federal income tax purposes as having
the same character as the payments they replace.


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      Each securityholder will be required to report on its federal income tax
return in accordance with its method of accounting its pro rata share of the
entire income from the mortgage loans in the issuing entity represented by
securities, including interest, original issue discount ("OID"), if any,
prepayment charges, assumption fees, any gain recognized upon an assumption and
late payment charges received by the servicer. Under Code Sections 162 or 212
each securityholder will be entitled to deduct its pro rata share of servicing
fees, prepayment charges, assumption fees, any loss recognized upon an
assumption and late payment charges retained by the servicer, provided that the
amounts are reasonable compensation for services rendered to the issuing entity.
Securityholders that are individuals, estates or trusts will be entitled to
deduct their share of expenses only to the extent expenses of the issuing entity
plus their other miscellaneous itemized deductions (as defined in the Code)
exceed two percent of their adjusted gross income. A securityholder using the
cash method of accounting must take into account its pro rata share of income
and deductions as and when collected by or paid to the servicer. A
securityholder using an accrual method of accounting must take into account its
pro rata share of income as it accrues, or when received if the income is
received before it accrues, and must take into account its pro rata share of
deductions as they accrue. If the servicing fees paid to the servicer are deemed
to exceed reasonable servicing compensation, the amount of any excess could be
considered as an ownership interest retained by the servicer (or any person to
whom the servicer assigned for value all or a portion of the servicing fees) in
a portion of the interest payments on the mortgage loans. The mortgage loans
would then be subject to the "coupon stripping" rules of the Code discussed
below.

      Generally, as to each series of securities:

      o     a certificate owned by a "domestic building and loan association"
            within the meaning of Code Section 7701(a)(19) representing
            principal and interest payments on mortgage loans will be considered
            to represent "loans ... secured by an interest in real property
            which is ... residential property" within the meaning of Code
            Section 7701(a)(19)(C)(v), to the extent that the mortgage loans
            represented by that certificate are of a type described in that Code
            section;

      o     a certificate owned by a real estate investment trust representing
            an interest in mortgage loans will be considered to represent "real
            estate assets" within the meaning of Code Section 856(c)(4)(A), and
            interest income on the mortgage loans will be considered "interest
            on obligations secured by mortgages on real property" within the
            meaning of Code Section 856(c)(3)(B), to the extent that the
            mortgage loans represented by that certificate are of a type
            described in that Code section; and

      o     a certificate owned by a REMIC will represent an "obligation ...
            which is principally secured, directly or indirectly, by an interest
            in real property" within the meaning of Code Section 860G(a)(3).

      Buydown Loans. Certain issuing entities may hold buydown loans. These
loans can be secured not only by a mortgage on real property but also by a
pledged account that is drawn upon to subsidize the mortgagor's monthly mortgage
payments for a limited period of time. So long as the loan value of the real
property at least equals the amount of the loan, then for purposes of the
above-described requirements, the mortgage loan will be treated as fully secured
by real property. If the loan value of the real property is less than the amount
of the loan, then, a securityholder could be required to treat the loan as one
secured by an interest in real property only to the extent of the loan value of
the real property. The related prospectus supplement for any series of
securities that includes buydown loans will specify whether apportionment would
be required.

      Premium. The price paid for a security by a holder will be allocated to
the holder's undivided interest in each mortgage loan based on each mortgage
loan's relative fair market value, so that the holder's undivided interest in
each mortgage loan will have its own tax basis. A securityholder that acquires
an interest in mortgage loans at a premium generally may elect to amortize the
premium under a constant interest method, provided that the underlying mortgage
loans with respect to the mortgage loans were originated. Amortizable bond
premium will be treated as an offset to interest income on the security. The
basis for the security will be reduced to the extent that amortizable premium is
applied to offset interest payments.


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      If a reasonable prepayment assumption is used to amortize premium, it
appears that any loss would be available, if at all, only if prepayments have
occurred at a rate faster than the reasonable assumed prepayment rate. It is not
clear whether any other adjustments would be required to reflect differences
between an assumed prepayment rate and the actual rate of prepayments.

      Regulations dealing with amortizable bond premium (the "Amortizable Bond
Premium Regulations") do not apply to prepayable debt instruments subject to
Code Section 1272(a)(6). Absent further guidance from the IRS, the trustee
intends to account for amortizable bond premium in the manner described above.
Prospective purchasers of the securities are encouraged to consult their tax
advisors regarding the possible application of the Amortizable Bond Premium
Regulations.

      Original Issue Discount. The IRS has stated in published rulings that, in
circumstances similar to those described in this prospectus, the special rules
of the Code relating to "original issue discount" (currently Code Sections 1271
through 1273 and 1275) will be applicable to a securityholder's interest in
those mortgage loans meeting the conditions necessary for these sections to
apply. OID generally must be reported as ordinary gross income as it accrues
under a constant interest method. See "--Multiple Classes of
Securities--Securities Representing Interests in Loans Other Than ARM Loans."

      Market Discount. A securityholder that acquires an undivided interest in
mortgage loans may be subject to the market discount rules of Code Sections 1276
through 1278 to the extent an undivided interest in a mortgage loan is
considered to have been purchased at a market discount. The amount of market
discount is equal to the excess of the portion of the principal amount of the
mortgage loan allocable to the holder's undivided interest in the mortgage loans
over the holder's tax basis in the undivided interest. Market discount with
respect to a security will be considered to be zero if the amount allocable to
the security is less than 0.25% of the security's stated redemption price at
maturity multiplied by the weighted average maturity remaining after the date of
purchase. Treasury regulations implementing the market discount rules have not
yet been issued; therefore, investors are encouraged to consult their own tax
advisors regarding the application of these rules and the advisability of making
any of the elections allowed under Code Sections 1276 through 1278.

      The Code provides that any principal payment or any gain on disposition of
a market discount bond shall generally be treated as ordinary income to the
extent that it does not exceed the accrued market discount at the time of the
payment. The amount of accrued market discount for purposes of determining the
tax treatment of subsequent principal payments or dispositions of the market
discount bond is to be reduced by the amount so treated as ordinary income.

      The Code also grants the Treasury Department authority to issue
regulations providing for the computation of accrued market discount on debt
instruments, the principal of which is payable in more than one installment.
Although the Treasury Department has not yet issued regulations, rules described
in the relevant legislative history describes how market discount should be
accrued on instruments bearing market discount. According to the legislative
history, the holder of a market discount bond may elect to accrue market
discount either on the basis of a constant interest rate or according to one of
the following methods. If a security is issued with OID, the amount of market
discount that accrues during any accrual period would be equal to the product of
the total remaining market discount and a fraction, the numerator of which is
the OID accruing during the period and the denominator of which is the total
remaining OID at the beginning of the accrual period. For securities issued
without OID, the amount of market discount that accrues during a period is equal
to the product of the total remaining market discount and a fraction, the
numerator of which is the amount of stated interest paid during the accrual
period and the denominator of which is the total amount of stated interest
remaining to be paid at the beginning of the accrual period. For purposes of
calculating market discount under any of these methods in the case of
instruments that provide for payments that may be accelerated due to prepayments
of other obligations securing the instruments, the same prepayment assumption
applicable to calculating the accrual of OID will apply.

      A holder who acquired a security at a market discount also may be required
to defer, until the maturity date of the security or its earlier disposition in
a taxable transaction, the deduction of a portion of the amount of interest that
the holder paid or accrued during the taxable year on indebtedness incurred or
maintained to purchase or carry the security in excess of the aggregate amount
of interest (including OID) includible in the holder's gross income for the
taxable year with respect to the security. The amount of the net interest
expense deferred in a taxable year may not exceed the amount of market discount
accrued on the security for the days during the taxable year on which the


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holder held the security and, in general, would be deductible when the market
discount is includible in income. The amount of any remaining deferred deduction
is to be taken into account in the taxable year in which the security matures or
is disposed of in a taxable transaction. In the case of a disposition in which
gain or loss is not recognized in whole or in part, any remaining deferred
deduction will be allowed to the extent of gain recognized on the disposition.
This deferral rule does not apply if the securityholder elects to include the
market discount in income currently as it accrues on all market discount
obligations acquired by the securityholder in that taxable year or thereafter.

      Election to Treat All Interest As OID. The OID Regulations permit a
securityholder to elect to accrue all interest, discount (including de minimis
market or original issue discount) and premium in income as interest, based on a
constant yield method. If an election to treat all interest as OID were to be
made with respect to a security with market discount, the securityholder 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 securityholder acquires during the year of the election or thereafter.
Similarly, a securityholder that makes this election for a 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 securityholder owns or acquires. See "--Single Class of
Securities--Premium." The election to accrue interest, discount and premium on a
constant yield method with respect to a security cannot be revoked without the
consent of the IRS.

   b. Multiple Classes of Securities

      1. Stripped Bonds and Stripped Coupons

      Pursuant to Code Section 1286, 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. For purposes of Code Sections 1271
through 1288, Code Section 1286 treats a stripped bond or a stripped coupon as
an obligation issued on the date that the stripped interest is created. If an
issuing entity is created with two classes of securities, one class of
securities may represent the right to principal and interest, or principal only,
on all or a portion of the mortgage loans (the "Stripped Bond Securities"),
while the second class of securities may represent the right to some or all of
the interest on the same mortgage loans (the "Stripped Coupon Securities").

      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 (i.e., 1% interest on the mortgage loan principal
balance) or the securities are initially sold with a de minimis discount (which
amount may be calculated without a prepayment assumption), 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 mortgage loan by mortgage loan basis, which could result in some
mortgage loans being treated as having more than 100 basis points of interest
stripped off. See "--Non-REMIC Securities" and "Multiple Classes of Senior
Securities--Stripped Bonds and Stripped Coupons."

      Although current authority is not entirely clear, a Stripped Bond Security
should be treated as an interest in mortgage loans issued on the day the
security is purchased for purposes of calculating any OID. Generally, if the
discount on a mortgage loan is larger than a de minimis amount (as calculated
for purposes of the OID rules) a purchaser of the security will be required to
accrue the discount under the OID rules of the Code. See "--Non-REMIC
Securities" and "--Single Class of Securities--Original Issue Discount."
However, a purchaser of a Stripped Bond Security will be required to account for
any discount on the mortgage loans as market discount rather than OID if either
the amount of OID with respect to the mortgage loan is treated as zero under the
OID de minimis rule when the security was stripped or no more than 100 basis
points (including any amount of servicing fees in excess of reasonable servicing
fees) is stripped off of the issuing entity's mortgage loans.

      The precise tax treatment of Stripped Coupon Securities is substantially
uncertain. The Code could be read literally to require that OID computations be
made for each payment from each mortgage loan. However, it appears that all
payments from a mortgage loan underlying a Stripped Coupon Security should be
treated as a single installment obligation subject to the OID rules of the Code,
in which case, all payments from the mortgage loan


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would be included in the mortgage loan's stated redemption price at maturity for
purposes of calculating income on the Stripped Coupon Security under the OID
rules of the Code.

      Based on current authority under what circumstances, if any, the
prepayment of mortgage loans will give rise to a loss to the holder of a
Stripped Bond Security purchased at a premium or a Stripped Coupon Security is
unclear. If the security is treated as a single instrument (rather than an
interest in discrete mortgage loans) and the effect of prepayments is taken into
account in computing yield with respect to the security, it appears that no loss
will be available as a result of any particular prepayment unless prepayments
occur at a rate faster than the assumed prepayment rate. However, if a security
is treated as an interest in discrete mortgage loans, or if no prepayment
assumption is used, then when a mortgage loan is prepaid, any security so
treated should be able to recognize a loss equal to the portion of the
unrecovered premium of the security that is allocable to the mortgage loan.

      Holders of Stripped Bond Securities and Stripped Coupon Securities are
encouraged to consult with their own tax advisors regarding the proper treatment
of these securities for federal income tax purposes.

      2. Securities Representing Interests in Loans Other Than ARM Loans

      The original issue discount rules of Code Sections 1271 through 1275 will
generally be applicable to mortgages of corporations originated after May 27,
1969, mortgages of noncorporate mortgagors (other than individuals) originated
after July 1, 1982, and mortgages of individuals originated after March 2, 1984.
Under the OID Regulations, original issue discount could arise by the charging
of points by the originator of the mortgage in an amount greater than the
statutory de minimis exception, including a payment of points that is currently
deductible by the borrower under applicable Code provisions, or under certain
circumstances, by the presence of "teaser" rates (i.e., the initial rates on the
mortgage loans are lower than subsequent rates on the mortgage loans) on the
mortgage loans.

      OID on each security must be included in the owner's ordinary income for
federal income tax purposes as it accrues, in accordance with a constant
interest method that takes into account the compounding of interest, in advance
of receipt of the cash attributable to the income. The amount of OID required to
be included in an owner's income in any taxable year with respect to a security
representing an interest in mortgage loans other than mortgage loans with
interest rates that adjust periodically ("ARM Loans") likely will be computed as
described under "--Accrual of Original Issue Discount." The following discussion
is based in part on Treasury regulations issued under Code Sections 1271 through
1273 and 1275 (the "OID Regulations") and in part on the provisions of the Tax
Reform Act of 1986 (the "1986 Act"). The OID Regulations generally are effective
for debt instruments issued on or after April 4, 1994, but may be relied upon as
authority with respect to debt instruments issued after December 21, 1992. In
applying these dates, the issued date of the mortgage loans should be used, or,
in the case of Stripped Bond Securities or Stripped Coupon Securities, the date
the securities are acquired. The holder of a securities should be aware,
however, that the OID Regulations do not adequately address certain issues
relevant to prepayable securities.

      Under the Code, the mortgage loans underlying the securities will be
treated as having been issued on the date they were originated with an amount of
OID equal to the excess of the mortgage loan's stated redemption price at
maturity over its issue price. The issue price of a mortgage loan is generally
the amount lent to the mortgagee, which may be adjusted to take into account
certain loan origination fees. The stated redemption price at maturity of a
mortgage loan is the sum of all payments to be made on the mortgage loan other
than payments that are treated as qualified stated interest payments. The
accrual of this OID, as described under "--Accrual of Original Issue Discount,"
will, unless otherwise specified in the related prospectus supplement, utilize
the original yield to maturity of the securities calculated based on a
reasonable assumed prepayment rate for the mortgage loans underlying the
securities (the "Prepayment Assumption"), and will take into account events that
occur during the calculation period. The legislative history of the 1986 Act
(the "Legislative History") provides, however, that the regulations will require
that the Prepayment Assumption be the prepayment assumption that is used in
determining the offering price of the security. No representation is made that
any security will prepay at the Prepayment Assumption or at any other rate.
However, no other legal authority provides guidance with regard to the proper
method for accruing OID on obligations that are subject to prepayment, and,
until further guidance is issued, the servicer intends to calculate and report
OID under the method described in "--Accrual of Original Issue Discount."


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      Accrual of Original Issue Discount. Generally, the owner of a security
must include in gross income the sum of the "daily portions," as defined below,
of the OID on any security for each day on which it owns the security, including
the date of purchase but excluding the date of disposition. In the case of an
original owner, the daily portions of OID with respect to each component
generally will be determined as set forth under the OID Regulations. A
calculation will be made by the servicer or other entity specified in the
related prospectus supplement of the portion of OID that accrues during each
successive monthly accrual period (or shorter period from the date of original
issue) that ends on the day in the calendar year corresponding to each of the
distribution dates on the securities (or the day before each date). This will be
done, in the case of each full month accrual period, by adding the present value
at the end of the accrual period (determined by using as a discount factor the
original yield to maturity of the respective component under the Prepayment
Assumption) of all remaining payments to be received under the Prepayment
Assumption on the respective component and any payments received during the same
accrual period, and subtracting from that total the "adjusted issue price" of
the respective component at the beginning of the same accrual period. The
adjusted issue price of a security at the beginning of the first accrual period
is its issue price; the adjusted issue price of a security at the beginning of a
subsequent accrual period is the adjusted issue price at the beginning of the
immediately preceding accrual period plus the amount of OID allocable to that
accrual period reduced by the amount of any payment made at the end of or during
that accrual period. The OID accruing during the accrual period will then be
divided by the number of days in the period to determine the daily portion of
OID for each day in the period. With respect to an initial accrual period
shorter than a full monthly accrual period, the daily portions of OID must be
determined according to an appropriate allocation under any reasonable method.

      Original issue discount generally must be reported as ordinary gross
income as it accrues under a constant interest method that takes into account
the compounding of interest as it accrues rather than when received. However,
the amount of original issue discount includible in the income of a holder of an
obligation is reduced when the obligation is acquired after its initial issuance
at a price greater than the sum of the original issue price and the previously
accrued original issue discount, less prior payments of principal. Accordingly,
if mortgage loans acquired by a securityholder are purchased at a price equal to
the then unpaid principal amount of those mortgage loans, no original issue
discount attributable to the difference between the issue price and the original
principal amount of those mortgage loans (e.g., due to points) will be
includible by the holder. Other original issue discount on the mortgage loans
(e.g., that arising from a "teaser" rate) would still need to be accrued.

      3. Securities Representing Interests in ARM Loans

      The OID Regulations do not address the treatment of instruments, such as
the securities, which represent interests in ARM Loans. Additionally, the IRS
has not issued guidance under the Code's coupon stripping rules with respect to
instruments that represent interests in ARM Loans. In the absence of any
authority, the trustee will report OID on securities attributable to ARM Loans
("Stripped ARM Obligations") to holders in a manner it believes is consistent
with the rules described under the heading "--Securities Representing Interests
in Loans Other Than ARM Loans" and with the OID Regulations. As such, for
purposes of projecting the remaining payments and the projected yield, the
assumed rate payable on the ARM Loans will be the fixed rate equivalent on the
issue date. Application of these rules may require inclusion of income on a
Stripped ARM Obligation in advance of the receipt of cash attributable to the
income. Further, the addition of interest deferred due to negative amortization
("Deferred Interest") to the principal balance of an ARM Loan may require the
inclusion of the interest deferred due to negative amortization in the income of
the securityholder when it accrues. Furthermore, the addition of Deferred
Interest to the security's principal balance will result in additional income
(including possibly OID income) to the securityholder over the remaining life of
the securities.

      Because the treatment of Stripped ARM Obligations is uncertain, investors
are encouraged to consult their tax advisors regarding how income will be
includible with respect to the securities.

   c. Sale or Exchange of a Security

      Sale or exchange of a security before its maturity will result in gain or
loss equal to the difference, if any, between the amount received and the
owner's adjusted basis in the security. The adjusted basis of a security
generally will equal the seller's purchase price for the security, increased by
the OID included in the seller's gross income with respect to the security, and
reduced by principal payments on the security previously received by the seller.
The gain or loss will be capital gain or loss to an owner for which a security
is a "capital asset" within the


                                      112


meaning of Code Section 1221, and will be long-term or short-term depending on
whether the security has been owned for the long-term capital gain holding
period (currently more than one year).

      The securities will be "evidences of indebtedness" within the meaning of
Code Section 582(c)(1), so that gain or loss recognized from the sale of a
security by a bank or a thrift institution to which that section applies will be
ordinary income or loss.

   d. Non-U.S. Persons

      Generally, to the extent that a security evidences ownership in underlying
mortgage loans that were issued on or before July 18, 1984, interest or OID paid
by the person required to withhold tax under Code Section 1441 or 1442 to an
owner that is not a U.S. Person or a securityholder holding on behalf of an
owner that is not a U.S. Person will be subject to federal income tax, collected
by withholding, at a rate of 30% or any lower rate provided for interest by an
applicable tax treaty. Accrued OID recognized by the owner on the sale or
exchange of a security also will be subject to federal income tax at the same
rate. Generally, accrued OID payments would not be subject to withholding to the
extent that a security evidences ownership in mortgage loans issued after July
18, 1984, by natural persons if the securityholder complies with certain
identification requirements (including delivery of a statement, signed by the
securityholder under penalties of perjury, certifying that the securityholder is
not a U.S. Person and providing the name and address of the securityholder).
Additional restrictions apply to mortgage loans where the mortgagor is not a
natural person in order to qualify for the exemption from withholding. Any
foreclosure property owned by the trust could be treated as a U.S. real property
interest owned by securityholders.

      As used in this prospectus, a "U.S. Person" means

      o     a citizen or resident of the United States,

      o     a corporation or a partnership (including an entity treated as a
            corporation or partnership for U.S. federal income tax purposes)
            organized in or created under the laws of the United States or any
            State thereof or the District of Columbia (unless in the case of a
            partnership Treasury Regulations provide otherwise),

      o     an estate, the income of which from sources outside the United
            States is includible in gross income for federal income tax purposes
            regardless of its connection with the conduct of a trade or business
            within the United States, or

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

In addition, U.S. Persons would include certain trusts that can elect to be
treated as U.S. Persons. A "Non-U.S. Person" is a person other than a U.S.
Person.

      Except where specifically discussed, the discussion below deals with a
Non-U.S. Person who is not holding the securities as part of its trade or
business in the U.S., and because a Non-U.S. Person is not supposed to hold a
Residual Certificate, this summary does not address the consequences of a
Non-U.S. Person holding the Residual Securities. A Non-U.S. Person who is an
individual or corporation (or an entity treated as a corporation for federal
income tax purposes) holding the securities on its own behalf will not be
subject to United States federal income taxes on payments of principal, premium,
interest or original issue discount on a Security, unless such Non-U.S. Person
is a direct or indirect 10% or greater shareholder of us, a controlled foreign
corporation related to us or a bank receiving interest described in Code Section
881(c)(3)(A). To qualify for the exemption from taxation, the Withholding Agent,
as defined below, must have received a statement from the individual or
corporation that (i) is signed under penalties of perjury by the beneficial
owner of the Security, (ii) certifies that such owner is not a U.S. Holder, and
(iii) provides the beneficial owner's name and address.


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      A "Withholding Agent" is the last United States payor (or a non-U.S. payor
who is a qualified intermediary, U.S. branch of a foreign person, or withholding
foreign partnership) in the chain of payment prior to payment to a Non-U.S.
Person (which itself is not a Withholding Agent). 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 annually to
the beneficial owner on IRS Form 1042-S. The beneficial owner must inform the
Withholding Agent within 30 days of such change and furnish a new W-8BEN. A
Non-U.S. Person who is not an individual or corporation (or an entity treated as
a corporation for federal income tax purposes) holding the securities on its own
behalf may have substantially increased reporting requirements. In particular,
in the case of securities 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.

      A foreign Security holder whose income with respect to its investment in a
Security is effectively connected with the conduct of a U.S. trade or business
would generally be taxed as if the holder was a U.S. person provided the holder
provides to the Withholding Agent an IRS Form W-8ECI.

      Certain securities clearing organizations, and other entities who are not
beneficial owners, may be able to provide a signed statement to the Withholding
Agent. However, in such case, the signed statement may require a copy of the
beneficial owner's W-8BEN (or the substitute form).

      Generally, a Non-U.S. Person will not be subject to federal income taxes
on any amount which constitutes capital gain upon retirement or disposition of a
Security, unless such Non-U.S. Person is an individual who is present in the
United States for 183 days or more in the taxable year of the disposition and
such gain is derived from sources within the United States. Certain other
exceptions may be applicable, and a Non-U.S. Person should consult its tax
advisor in this regard.

      The securities will not be includible in the estate of a Non-U.S. Person
unless the individual is a direct or indirect 10% or greater shareholder of us
or, at the time of such individual's death, payments in respect of the
securities would have been effectively connected with the conduct by such
individual of a trade or business in the United States.

      Prospective investors are strongly urged to consult their own tax advisors
with respect to the Withholding Regulations.

   e. Backup Withholding

      Backup withholding of United States federal income tax may apply to
payments made in respect of the securities to registered owners who are not
"exempt recipients" and who fail to provide certain identifying information
(such as the registered owner's taxpayer identification number) in the required
manner. Generally, individuals are not exempt recipients, whereas corporations
and certain other entities generally are exempt recipients. Payments made in
respect of the securities to a U.S. Holder must be reported to the IRS, unless
the U.S. Holder is an exempt recipient or establishes an exemption. Compliance
with the identification procedures described in the preceding section would
establish an exemption from backup withholding for those non-U.S. Persons who
are not exempt recipients.

      In addition, upon the sale of a security to (or through) a broker, the
broker must report the sale and withhold on the entire purchase price, unless
either (a) the broker determines that the seller is a corporation or other
exempt recipient or (b) the seller certifies that such seller is a non-U.S.
Person (and certain other conditions are met).

      Certification of the registered owner's non-U.S. status would be made
normally on an IRS Form W-8BEN under penalties of perjury, although in certain
cases it may be possible to submit other documentary evidence.


                                      114


      Any amounts withheld under the backup withholding rules from a payment to
a beneficial owner would be allowed as a refund or a credit against such
beneficial owner's United States federal income tax provided the required
information is furnished to the IRS.

      Prospective investors are strongly urged to consult their own tax advisors
with respect to the Withholding Regulations.

Final Trust Reporting Regulations

      On January 23, 2006, the IRS issued final regulations effective January 1,
2007, affecting the information reporting obligations of trustees of
"widely-held mortgage trusts" (that is, any grantor trust in which any interests
are held by "middlemen", and whose assets are mortgages or regular interests in
a REMIC, amounts received thereon and reasonably required reserve funds) and of
"middlemen" (a term that includes, among other things, a custodian of a person's
account, a nominee and a broker holding an interest for a customer in a street
name).

      Under the final regulations, the trustee would be required to report to
the IRS with respect to each beneficial owner of a grantor trust fractional
interest certificate who is not an "exempt recipient" (a term that includes
corporations, trusts, securities dealers, middlemen and certain other
non-individuals) and do not hold such certificates through a middleman, the
gross income of the trust and, if any trust assets were disposed of, the portion
of the gross proceeds relating to the trust assets that are allocable to such
beneficial owner. The same requirements would be imposed on middlemen holding on
behalf of beneficial owners of grantor trust fractional interest certificates.

      The final regulations will also require that the trustee make available
information regarding interest income and information necessary to compute any
original issue discount to (i) exempt recipients (including middlemen) and
non-calendar year taxpayers, upon request, in accordance with the requirements
of the final regulations and (ii) beneficial owners of grantor trust fractional
interest certificates who do not hold such certificates through a middleman. The
information must be provided to parties specified in part (i) by the later of
thirty days after the end of the first quarter for which the information was
requested or two weeks after the receipt of the request. The information must be
provided to parties specified in part (ii) at a time no later than March 15 of
the following tax year.

Tax Characterization of the Issuing Entity as a Partnership

      Tax counsel will deliver its opinion that an issuing entity that is
intended to be treated as a partnership 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 issuing entity 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 issuing entity will not be
characterized as a publicly traded partnership taxable as a corporation.

      If the issuing entity were taxable as a corporation for federal income tax
purposes, the issuing entity would be subject to corporate income tax on its
taxable income. The issuing entity'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 issuing entity.

Tax Consequences to Holders of the Notes

      Treatment of the Notes as Indebtedness. The issuing entity 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.


                                      115


      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) does not
exceed 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. It is believed that
any prepayment premium paid as a result of a mandatory redemption will be
taxable as contingent interest when it becomes fixed and unconditionally
payable. A purchaser who buys a note for more or less than its principal amount
will generally be subject, respectively, to the premium amortization or market
discount rules of the Code.

      A holder of a note that has a fixed maturity date of not more than one
year from the issue date of 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
      issuing entity or the seller (including a holder of 10% of the outstanding
      securities) or a "controlled foreign corporation" with respect to which
      the issuing entity 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 who is an individual or corporation for federal
      income tax purposes of the note is a foreign person and providing the
      foreign person's name and address.


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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 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 issuing entity 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 issuing entity. If so treated, the issuing entity
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 issuing entity 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," 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 issuing entity's expenses.

Tax Consequences to Holders of the Certificates

      Treatment of the Issuing Entity as a Partnership. The issuing entity and
the servicer will agree, and the certificateholders will agree by their purchase
of certificates, to treat the issuing entity 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 issuing entity, 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 issuing entity, the
certificates, the notes, the issuing entity and the servicer is not clear
because there is no authority on transactions closely comparable to that
contemplated herein.


                                      117


      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 issuing entity. 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 issuing entity 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 issuing entity. The issuing
entity'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 issuing
entity'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
issuing entity 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 issuing
entity 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 issuing entity
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
issuing entity will be allocated to the depositor. Based on the economic
arrangement of the parties, this approach for allocating issuing entity 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 issuing
entity 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 issuing entity income even if they have not received cash
from the issuing entity 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 issuing entity.

      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 issuing entity
(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 issuing entity.

      The issuing entity 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 issuing
entity might be required to incur additional expense but it is believed that
there would not be a material adverse effect on certificateholders.


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      Discount and Premium. It is believed that the loans were not issued with
OID, and, therefore, the issuing entity should not have OID income. However, the
purchase price paid by the issuing entity 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 issuing entity will make this calculation on an
aggregate basis, but might be required to recompute it on a loan by loan basis.)

      If the issuing entity acquires the loans at a market discount or premium,
the issuing entity 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 issuing entity 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 issuing entity 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 issuing entity. 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 issuing entity 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 issuing entity 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 issuing
entity'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 issuing entity might be reallocated among the certificateholders. The
issuing entity'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 issuing entity's assets will not be adjusted to reflect
that higher (or lower) basis unless the issuing entity were to file an election
under Section 754 of the Code. In order to avoid the administrative complexities
that would be involved in keeping accurate accounting records, as well as
potentially onerous information reporting requirements, the issuing entity will
not make that election. As a result, certificateholders


                                      119


might be allocated a greater or lesser amount of issuing entity 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 issuing entity. Those books will be
maintained for financial reporting and tax purposes on an accrual basis and the
fiscal year of the issuing entity 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 issuing entity and will report each certificateholder's
allocable share of items of issuing entity income and expense to holders and the
IRS on Schedule K-1. The issuing entity will provide the Schedule K-l
information to nominees that fail to provide the issuing entity 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 issuing entity 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 issuing
entity 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 issuing entity
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 issuing
entity. The information referred to above for any calendar year must be
furnished to the issuing entity on or before the following January 31. Nominees,
brokers and financial institutions that fail to provide the issuing entity 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 issuing entity 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 issuing entity.
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 issuing entity.

      Tax Consequences to Foreign Certificateholders. It is not clear whether
the issuing entity 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 issuing entity would be engaged in a trade or business in the
United States for those purposes, the issuing entity will withhold as if it were
so engaged in order to protect the issuing entity from possible adverse
consequences of a failure to withhold. The issuing entity 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 issuing entity to change its withholding procedures. In determining
a holder's withholding status, the issuing entity 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.


                                      120


      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 issuing entity's income. Each foreign holder
must 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 issuing entity taking the position that no taxes were
due because the issuing entity 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 issuing entity.
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.

                            State Tax Considerations

      In addition to the federal income tax consequences described in "Certain
Federal Income Tax Considerations," potential investors are encouraged to
consider the state and local income tax consequences of the acquisition,
ownership, and disposition of the securities. State and local income tax law may
differ substantially from the corresponding federal law, and this discussion
does not purport to describe any aspect of the income tax laws of any state or
locality. Therefore, potential investors are encouraged to consult their own tax
advisors with respect to the various tax consequences of investments in the
securities.

                              ERISA Considerations

      Section 406 of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and Section 4975 of the Code prohibit a pension,
profit-sharing or other employee benefit plan, as well as individual retirement
accounts, Keogh plans and other plans covered by Section 4975 of the Code, and
entities deemed to hold "plan assets" of any of the foregoing under the Plan
Assets Regulation (as defined below) (each such entity a "Plan") from engaging
in certain transactions with persons that are "parties in interest" under ERISA
or "disqualified persons" under the Code with respect to such Plan. A violation
of these "prohibited transaction" rules may result in an excise tax or other
penalties and liabilities under ERISA and the Code for such persons or the
fiduciaries of the Plan. In addition, Title I of ERISA also requires fiduciaries
of a Plan subject to ERISA to make investments that are prudent, diversified and
in accordance with the governing plan documents.

Exemptions Available to Debt Instruments

      Certain transactions involving the issuer might be deemed to constitute
prohibited transactions under ERISA and the Code with respect to a Plan that
purchased securities if assets of the issuer were deemed to be assets of the
Plan. Under a regulation issued by the United State Department of Labor (the
"Plan Assets Regulation"), the assets of the issuer would be treated as plan
assets of a Plan for the purposes of ERISA and the Code only if the Plan
acquired an "equity interest" in the issuer and none of the exceptions to plan
asset treatment contained in the Plan Assets Regulation was applicable. An
equity interest is defined under the Plan Assets Regulation as an interest other
than an instrument which is treated as indebtedness under applicable local law
and which has no substantial equity features. Although there is little guidance
on the subject, assuming the securities constitute debt for local law purposes,
the issuer believes that, at the time of their issuance, the security should not
be treated an equity interest in the issuer for purposes of the Plan Assets
Regulation. This determination is based in part upon the traditional debt
features of the securities, including the reasonable expectation of purchasers
of securities that the securities will be repaid when due, as well as the
absence of conversion rights, warrants and other typical equity features. The
debt treatment of the securities for ERISA purposes could change if the issuer
incurred losses. This risk of recharacterization is enhanced for securities that
are subordinated to other classes of securities.


                                      121


      However, without regard to whether the securities are treated as equity
interests for purposes of the Plan Assets Regulation, the acquisition or holding
of securities by or on behalf of a Plan could be considered to give rise to a
prohibited transaction if the issuer, the servicer, the trustee, or any of their
respective affiliates is or becomes a party in interest or a disqualified person
with respect to such Plan. Certain exemptions from the prohibited transaction
rules could be applicable to the purchase and holding of securities by a Plan
depending on the type and circumstances of the plan fiduciary making the
decision to acquire such securities. Included among these exemptions are:
Prohibited Transaction Class Exemption ("PTCE") 96-23, regarding transactions
effected by "in-house asset managers"; PTCE 95-60, regarding investments by
insurance company general accounts; PTCE 91-38, regarding investments by bank
collective investment funds; PTCE 90-1, regarding investments by insurance
company pooled separate accounts; and PTCE 84-14, regarding transactions
effected by "qualified professional asset managers." By acquiring a security,
each purchaser will be deemed to represent that either (i) it is not acquiring
the securities with the assets of a Plan or (ii) the acquisition and holding of
the securities will not give rise to a non-exempt prohibited transaction under
ERISA, Section 4975 of the Code or any substantially similar applicable law.

      Governmental plans, as defined in the Code and ERISA, are not subject to
Title I of ERISA, and are also not subject to the prohibited transaction
provisions under Section 4975 of the Code. However, state laws or regulations
governing the investment and management of the assets of such plans may contain
fiduciary and prohibited transaction requirements similar to those under ERISA
and the Code discussed above and may include other limitations on permissible
investments. Accordingly, fiduciaries of governmental plans, in consultation
with their advisors, should consider the requirements of their respective state
pension codes with respect to investments in the securities, and the
considerations discussed above, to the extent applicable.

      The issuing entity, the servicer, the trustee and the underwriter of the
securities of any series may be the sponsor of or investment advisor with
respect to one or more plans. Because they may receive certain benefits in
connection with the sale of the securities, the purchase of securities using
plan assets over which any of them has investment authority might be deemed to
be a violation of the prohibited transaction rules of ERISA and the Code for
which no exemption may be available. Accordingly, any plan for which the issuing
entity, the servicer, the trustee or the underwriter of the notes, or any of
their respective affiliates:

      o     has investment or administrative discretion with respect to plan
            assets to be invested in the securities;

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

      o     is an employer maintaining or contributing to the plan,

may not invest in the securities unless an appropriate administrative prohibited
transaction exemption applies to the investment.

Underwriter Exemption

      The United States Department of Labor ("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, in pass-through entities, including trusts, that consist of
certain receivables, loans and other obligations that meet the conditions and
requirements of the Underwriter Exemptions, and with respect to transactions in
connection with the servicing, management and operation of the entity.


                                      122


      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 the following:

      o     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;

      o     the rights and interests evidenced by the securities acquired by the
            Plan are not subordinated to the rights and interests evidenced by
            other securities of the issuer, unless the entity holds only certain
            types of assets, such as fully-secured mortgage loans on real
            property (a "Designated Transaction");

      o     the securities acquired by the Plan have received a rating at the
            time of acquisition that is one of the three highest generic rating
            categories (four, in a Designated Transaction) 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 ("Fitch"). However, the certificates must have been rated in
            one of the two highest generic rating categories by at least one of
            rating agency and may not be subordinated to any other security of
            the issuer if the loan-to value ratio of any single-family
            residential mortgage loan or home equity loan held in the trust
            exceeded 100% on the date of issuance of the certificate;

      o     the trustee is not an affiliate of any other member of the
            Restricted Group, as defined below, other than an underwriter;

      o     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 other servicer
            represents not more than reasonable compensation for its services
            under the agreement pursuant to which the loans are pooled and
            reimbursements of its reasonable expenses in connection therewith;
            and

      o     the Plan investing in the securities is an "accredited investor" as
            defined in Rule 501(a)(1) of Regulation D of the SEC under the
            Securities Act.

      The Underwriter Exemptions will not apply to any of the certificates if
any mortgage loan or other asset held in the trust (other than a single family
mortgage loan or home equity loan) has a loan-to-value ratio that exceeds 100%
on the date of issuance of the certificates or if any single-family residential
mortgage loan or home equity loan has a loan-to-value ratio that exceeds 125% on
the date of issuance of the certificates. As noted above, when the trust
contains single-family residential mortgage loans or home equity loans with a
loan-to-value ratio that exceeds 100% (but does not exceed 125%) on the date of
issuance, only certificates that are rated in one of the two highest rating
categories by a rating agency and that are not subordinated are eligible for
relief under the Underwriter Exemptions.

      The issuer must also meet the following requirements:

      o     the corpus of the issuer must consist solely of assets of the type
            that have been included in other investment pools;

      o     securities in other investment pools must have been rated in one of
            the three highest rating categories (four, in a Designated
            Transaction) of S&P, Moody's or Fitch for at least one year before
            the Plan's acquisition of securities; and

      o     securities evidencing interests in the other investment pools must
            have been purchased by investors other than Plans for at least one
            year before any Plan's acquisition of securities.

      In addition, if the issuer is a legal entity of certain types, the legal
document establishing the issuer must contain restrictions necessary to ensure
that the assets of the issuer may not be reached by creditors of the seller in
the event of its bankruptcy or insolvency.


                                      123


      Moreover, the Underwriter Exemptions generally provide relief from certain
self-dealing and conflict of interest prohibited transactions that may occur
when the 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 securities, at least fifty percent of each class of
            securities in which Plans have invested and at least fifty percent
            of the securities in the aggregate are acquired by persons
            independent of the Restricted Group;

      o     the fiduciary (or its affiliate) is an obligor with respect to five
            percent or less of the fair market value of the obligations
            contained in the investment pool;

      o     the Plan's investment in securities of any class does not exceed
            twenty-five percent of all of the securities of that class
            outstanding at the time of the acquisition; and

      o     immediately after the acquisition, no more than twenty-five percent
            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.

This relief is not available to Plans sponsored by the seller, any underwriter,
the trustee, the servicer, any servicer, any insurer with respect to the trust,
any obligor with respect to mortgage loans included in the issuing entity
constituting more than five percent of the aggregate unamortized principal
balance of the assets in the issuing entity, any counterparty to a permissible
notional principal contract included in the trust, or any affiliate of those
parties (the "Restricted Group").

      The Underwriter Exemptions extend exemptive relief to specified
mortgage-backed and asset-backed securities transactions using pre-funded
accounts for trusts issuing pass-through securities. Mortgage loans or other
secured receivables supporting payments to securityholders, and having a value
equal to no more than twenty-five percent of the total principal amount of the
securities being offered by the trust, may be transferred to the trust 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, including, without limitation, (a) all additional loans must meet
the same terms and conditions for determining eligibility as the initial loans;
(b) the additional loans may not result in a lower credit rating; and (c) the
characteristics of the additional loans must be substantially similar to those
of the loans described in this prospectus and the applicable prospectus
supplement, and the acquisition of the additional loans must be monitored by an
independent accountant or a credit support provider or other insurance provider
independent of the seller.

      The Underwriter Exemptions extend exemptive relief to certain
mortgage-backed and asset-backed securities transactions involving trusts that
contain swaps, provided any swap satisfies certain requirements and the other
requirements of the Underwriter Exemptions are met. Among other requirements,
the counterparty to the swap must maintain ratings at certain levels from rating
agencies, and the documentation for the swap must provide for certain remedies
if the rating declines. The swap must be an interest rate swap denominated in
U.S. dollars, may not be leveraged, and must satisfy several other criteria.
Securities of any class affected by the swap may be sold to plan investors only
if they are "qualified plan investors" that satisfy several requirements
relating to their ability to understand the terms of the swap and the effects of
the swap on the risks associated with an investment in the security.

      The rating of a security may change. If a class of securities no longer
has a required rating from at least one rating agency, securities of that class
will no longer be eligible for relief under the Underwriter Exemptions (although
a Plan that had purchased the security when it had a permitted rating would not
be required by the Underwriter Exemptions to dispose of it.) A security 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 PTCE 95-60 are met. If the ratings decline below one of
the four highest generic rating categories from S&P, Moody's or Fitch, each
transferee will be deemed to represent that either (a) it is not purchasing the
securities with plan assets of a Plan, or (b) it is an insurance company using
the assets of its general account (within the meaning of PTCE 95-60) to purchase
the securities and that it is eligible for and satisfies all of the requirements
of Sections I and III of PTCE 95-60.


                                      124


      The prospectus supplement for each series of securities will indicate the
classes of securities offered thereby, if any, as to which it is expected that
an Underwriter Exemption will apply.

      Any Plan fiduciary that proposes to cause a Plan to purchase securities is
encouraged to consult with its counsel concerning the impact of ERISA and the
Code, the availability and applicability of any Underwriter Exemption or any
other exemptions from the prohibited transaction provisions of ERISA and the
Code and the potential consequences in their specific circumstances, before
making the 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 by it will 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 those investors
whose authorized investments are subject to state regulation, to the same extent
as, under applicable law, obligations issued by or guaranteed as to principal
and interest by the United States constitute legal investments for them. Those
investors are 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). Under SMMEA, if a state enacts legislation before October 4,
1991 specifically limiting the legal investment authority of those entities with
respect to "mortgage related securities," the securities will constitute legal
investments for entities subject to the legislation only to the extent provided
in it. Approximately twenty-one states adopted limiting legislation before the
October 4, 1991 deadline.

      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 by them,
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 regulations that the applicable federal
authority may prescribe. In this connection, federal credit unions should review
the National Credit Union Administration 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 its regulation "Investment and Deposit Activities" (12
C.F.R. Part 703), (regardless of whether the class of securities under
consideration for purchase constitutes a "mortgage related security").

      All depository institutions considering an investment in the securities
(regardless of whether 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 Securities
Activities (to the extent adopted by their respective regulators), 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" that are "high-risk mortgage securities" as defined in the
policy statement. According to the policy statement, "high-risk mortgage
securities" include securities such as securities not entitled to distributions
allocated to principal or interest, or subordinated securities. Under the policy
statement, each depository institution must determine, before 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
such a product would be consistent with the policy statement.


                                      125


      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 "prudent
investor" provisions, percentage-of-assets limits and provisions that may
restrict or prohibit investment in securities that are not "interest bearing" or
"income paying."

      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 them.

                             Method of Distribution

      Securities are being offered hereby in series from time to time (each
series evidencing a separate issuing entity) 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 of its underwriters and either the price at which the series
is being offered, the nature and amount of any underwriting discounts or
additional compensation to the 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 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 that 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 that 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 that 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 that has two or more of (1) an average of at
            least 250 employees during the last fiscal year; (2) total assets of
            more than (euro)43,000,000 and (3) an annual net revenue of more
            than (euro)50,000,000, as shown in its last annual or consolidated
            financial statements; or


                                      126


      (c)   in any other circumstances that 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 to it 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, including certain federal income tax
consequences with respect to the securities, will be passed upon for the
depositor by Sidley Austin LLP, New York, New York; Heller Ehrman LLP, New York,
New York; Mayer, Brown, Rowe & Maw LLP, New York, New York; or Thacher Proffitt
& Wood LLP, New York, New York.

                              Financial Information

      A new issuing entity will be formed for each series of securities and no
issuing entity will engage in any business activities or have any assets or
obligations before the issuance of the related series of securities.
Accordingly, no financial statements for any issuing entity 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
by this prospectus 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 specified in the related prospectus
supplement.

      Ratings on mortgage pass-through securities address the likelihood of
receipt by securityholders of all distributions on the underlying mortgage
loans. These ratings address the structural, legal and issuer-related aspects
associated with the securities, the nature of the underlying mortgage loans and
the credit quality of the credit enhancer or guarantor, if any. Ratings on
mortgage pass-through securities do not represent any assessment of the
likelihood of principal prepayments by mortgagors or of the degree by which the
prepayments might differ from those originally anticipated. As a result,
securityholders might suffer a lower than anticipated yield, and, in addition,
holders of stripped pass-through securities in extreme cases might fail to
recoup their underlying investments.

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


                                      127


                            INDEX OF PRINCIPAL TERMS

                                                                            Page
                                                                            ----

1986 Act ........................................................            111
2001 Act ........................................................            104
2003 Act ........................................................            104
Agency Securities ...............................................             19
Amortizable Bond Premium Regulations ............................            109
Applicable Amount ...............................................            103
APR .............................................................             25
ARM Loans .......................................................            111
Asset Conservation Act ..........................................             90
Capitalized Interest Account ....................................             73
CERCLA ..........................................................             90
CI ..............................................................             51
Class Security Balance ..........................................             42
Clearstream, Luxembourg .........................................             51
Code ............................................................         38, 92
combination .....................................................             57
Contingent Regulations ..........................................             93
Contributions Tax ...............................................            105
Cooperative .....................................................             52
cooperative loans ...............................................             21
cooperatives ....................................................             21
DBC 51
Debt Securities .................................................             92
Deferred Interest ...............................................            112
depositable securities ..........................................             57
Designated Transaction ..........................................            123
DOL 122
DTC 50
Eleventh District ...............................................             48
ERISA ...........................................................            121
Euroclear Operator ..............................................             52
excess inclusion ................................................            103
excess servicing ................................................            110
exchangeable securities trust fund ..............................             57
FHA 21
FHLBSF ..........................................................             48
Fitch ...........................................................            123
foreign person ..................................................            116
Garn-St Germain Act .............................................             91
Global Securities ...............................................             53
Indenture .......................................................             39
Insured Expenses ................................................             71
Issuing Entity Assets ...........................................             19
Legislative History .............................................            111
Liquidated Mortgage .............................................             79
market discount .................................................             96
Master REMIC ....................................................            100
Moody's .........................................................            123
National Cost of Funds Index ....................................             49
New CI ..........................................................             51
new partnership .................................................            119
Non-U.S. Person .................................................            113
offshore location ...............................................            106
OID 108
OID Regulations .................................................            111
old partnership .................................................            119
OTS .............................................................             49
Payment Lag Securities ..........................................             98
phantom income ..................................................            101
Plan ............................................................            121
Plan Assets Regulation ..........................................            121
pre-issuance accrued interest ...................................             98
Prepayment Assumption ...........................................            111
Private Mortgage-Backed Securities ..............................             19
Prohibited Transactions Tax .....................................            104
PTCE ............................................................            122
RCRA ............................................................             90
Regular Interest Securities .....................................             92
Regular Securities ..............................................            100
Regular Securityholders .........................................             93
Relevant Implementation Date ....................................            126
Relevant Member State ...........................................            126
Relief Act ......................................................         13, 92
REMIC ...........................................................             92
REMIC Securities ................................................            100
REMICs ..........................................................            100
Residual Certificates ...........................................            100
Restricted Group ................................................            124
S&P .............................................................            123
SEC .............................................................             20
secured creditor exemption ......................................             90
Securities Act ..................................................             32
Security Account ................................................             70
Short-Term Note .................................................            116
Single Family Properties ........................................             23
SMMEA ...........................................................            125
Stripped ARM Obligations ........................................            112
Stripped Bond Securities ........................................            110
Stripped Coupon Securities ......................................            110
Subsequent Recoveries ...........................................             99
Subsidiary REMIC ................................................            100
Super-Premium Securities ........................................             94
Terms and Conditions ............................................             52
Title V .........................................................             91
U.S. Person .....................................................   56, 106, 113
Underwriter Exemptions ..........................................            122
VA ..............................................................             21
W-8BEN ..........................................................       114, 117
Withholding Agent ...............................................            116


                                      128


                 Residential Asset Securitization Trust 2007-R1
                                 Issuing Entity

                                IndyMac MBS, Inc.
                                    Depositor

                           HSBC Securities (USA) Inc.
                               Sponsor and Seller

                                   $50,263,000
                                  (Approximate)

               Mortgage Pass-Through Certificates, Series 2007-R1

                                -----------------
                              PROSPECTUS SUPPLEMENT
                                -----------------

                                   HSBC[LOGO]

      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 Mortgage Pass-Through Certificates, Series 2007-R1
in any state where the offer is not permitted.

      Dealers will deliver a prospectus supplement and prospectus when acting as
underwriters of the Mortgage Pass-Through Certificates, Series 2007-R1 and with
respect to their unsold allotments or subscriptions. In addition, all dealers
selling the Mortgage Pass-Through Certificates, Series 2007-R1 will be required
to deliver a prospectus supplement and prospectus until ninety days after the
date of this prospectus supplement.

                                 August 16, 2007