PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED MARCH 29, 2007)

                                  $401,225,100
                                  (APPROXIMATE)

                              [IndymacBank(SM)LOGO]

                                INDYMAC MBS, INC.
                                    DEPOSITOR
                          SPONSOR, SELLER AND SERVICER
                   INDYMAC INDX MORTGAGE LOAN TRUST 2007-FLX3
                                 ISSUING ENTITY
 DISTRIBUTIONS ARE PAYABLE MONTHLY ON THE 25TH DAY OF EACH MONTH, BEGINNING
                                  MAY 25, 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        PASS-THROUGH                     INITIAL CLASS        PASS-THROUGH
CLASS       CERTIFICATE BALANCE (1)     RATE (2)       CLASS      CERTIFICATE BALANCE (1)     RATE (2)
---------   -----------------------   ------------   ---------   ------------------------   ------------

Class A-1         $229,470,000          Floating     Class M-2          $1,615,000            Floating
Class A-2         $ 95,615,000          Floating     Class M-3          $3,025,000            Floating
Class A-3         $ 57,370,000          Floating     Class M-4          $1,415,000            Floating
Class A-R         $        100          Variable     Class M-5          $2,015,000            Floating
Class M-1         $  9,285,000          Floating     Class M-6          $1,415,000            Floating


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

(2)  The pass-through rate for each class of offered certificates (other than
     the Class A-R Certificates) is calculated as described in this prospectus
     supplement under "Summary" and is based on the one-month LIBOR index.

--------------------------------------------------------------------------------
CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE S-19 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.
--------------------------------------------------------------------------------

The classes of certificates offered by this prospectus supplement, together with
the method of calculating their pass-through rates, are listed in the tables
under "Summary--Description of the Certificates" beginning on page S-8 of this
prospectus supplement. This prospectus supplement and the accompanying
prospectus relate only to the offering of the certificates listed above and not
to the other classes of certificates that will be issued by the issuing entity.

Credit enhancement for the offered certificates consists of:

o    Excess cashflow;

o    Overcollateralization as described in this prospectus supplement under
     "Description of the Certificates--Overcollateralization Provisions;"

o    Subordination; and

o    Loss allocation features.

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

The offered certificates also will have the benefit of an interest rate swap
contract with Credit Suisse International as swap counterparty, as described in
this prospectus supplement under "Description of the Certificates--The Swap
Contract."

The assets of the issuing entity will be comprised primarily of a pool of
30-year conventional adjustable-rate negative amortization mortgage loans
secured by first liens on one- to four-family residential properties.

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.

Credit Suisse Securities (USA) LLC will offer the 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 offered certificates are expected to be
approximately 100.00% of the aggregate class certificate balance of the offered
certificates, plus accrued interest, before deducting expenses. 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 April 27, 2007 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.

                                 CREDIT SUISSE.

                                 April 27, 2007



                                TABLE OF CONTENTS

PROSPECTUS SUPPLEMENT                                                       PAGE
---------------------                                                      -----
Summary ................................................................     S-6
   Issuing Entity ......................................................     S-6
   Depositor ...........................................................     S-6
   Sponsor, Seller and Servicer ........................................     S-6
   Trustee and Supplemental Interest Trustee ...........................     S-6
   The Swap Counterparty ...............................................     S-6
   The NIM Insurer .....................................................     S-6
   Pooling and Servicing Agreement .....................................     S-6
   Cut-off Date ........................................................     S-6
   Closing Date ........................................................     S-6
   The Mortgage Loans ..................................................     S-7
   Description of the Certificates .....................................     S-8
   Designations ........................................................    S-10
   Record Date .........................................................    S-10
   Denominations .......................................................    S-10
   Registration of Offered Certificates ................................    S-10
   Distribution Dates ..................................................    S-10
   Interest Distributions ..............................................    S-11
   Principal Distributions .............................................    S-11
   Amounts Available for Distributions on the Certificates .............    S-12
   Fees and Expenses ...................................................    S-12
   Priority of Interest Distributions ..................................    S-13
   Priority of Principal Distributions .................................    S-13
   The Swap Contract ...................................................    S-14
   Limited Recourse ....................................................    S-15
   Optional Termination ................................................    S-15
   Advances ............................................................    S-15
   Required Repurchases, Substitutions or Purchases of Mortgage Loans ..    S-15
   Credit Enhancement ..................................................    S-15
   Overcollateralization ...............................................    S-15
   Excess Cashflow .....................................................    S-16
   Subordination .......................................................    S-16
   Allocation of Losses ................................................    S-17
   Tax Status ..........................................................    S-17
   ERISA Considerations ................................................    S-17
   Legal Investment ....................................................    S-17
Risk Factors ...........................................................    S-19
The Mortgage Pool ......................................................    S-33
   General .............................................................    S-33
   Assignment of the Mortgage Loans ....................................    S-46
The Seller .............................................................    S-47
   Origination Process .................................................    S-47
   Underwriting Process ................................................    S-48
   Representations by Seller; Repurchases, etc .........................    S-50
Servicing of the Mortgage Loans ........................................    S-51
   The Servicer ........................................................    S-51
   Servicing Compensation and Payment of Expenses ......................    S-51
   Adjustment to Servicing Compensation in Connection with Certain
      Prepaid Mortgage Loans ...........................................    S-52
   Advances ............................................................    S-52
   Certain Modifications and Refinancings ..............................    S-53
   Prepayment Charges ..................................................    S-53
   Default Management Services .........................................    S-53
The Sponsor ............................................................    S-53
Static Pool Data .......................................................    S-54
The Depositor ..........................................................    S-55
The Issuing Entity .....................................................    S-55
The Trustee ............................................................    S-55
The Swap Counterparty ..................................................    S-57
Description of the Certificates ........................................    S-58
   General .............................................................    S-58
   Calculation of Class Certificate Balance ............................    S-59
   Book-Entry Certificates .............................................    S-59
   Payments on Mortgage Loans; Accounts ................................    S-63
   The Swap Account ....................................................    S-64
   Investments of Amounts Held in Accounts .............................    S-64
   Fees and Expenses ...................................................    S-65
   Distributions .......................................................    S-67
   Interest ............................................................    S-68
   Principal ...........................................................    S-71
   Overcollateralization Provisions ....................................    S-75
   The Swap Contract ...................................................    S-76
   Determination of LIBOR ..............................................    S-81
   Carryover Reserve Fund ..............................................    S-82
   Applied Realized Loss Amounts .......................................    S-82
   Relief Act Reductions ...............................................    S-82
   Residual Certificates ...............................................    S-82
   Structuring Assumptions .............................................    S-83
   Reports to Certificateholders .......................................    S-86
   Voting Rights .......................................................    S-86
   Termination of the Issuing Entity; Optional Termination .............    S-86
   Certain Matters Regarding the Servicer, the Depositor, the Seller
      and the NIM Insurer ..............................................    S-87
   Restrictions on Transfer of the Class A-R Certificates ..............    S-87
   Restrictions on Investment, Suitability Requirements ................    S-87
   Rights of the NIM Insurer Under the Pooling and Servicing
      Agreement .........................................................   S-87


                                       S-2



   General .............................................................    S-88
   Prepayment Considerations and Risks .................................    S-88
   Weighted Average Lives of the Offered Certificates ..................    S-90
   Decrement Tables ....................................................    S-91
   Final Scheduled Distribution Date ...................................    S-96
   The Subordinated Certificates .......................................    S-96
   Taxation of the Regular Interest
      Component of the LIBOR Certificates ..............................    S-97
      Status of the LIBOR Certificates .................................    S-98
      The Basis Risk Contract Components ...............................    S-98
      Taxation of the Class A-R Certificates ...........................    S-99
ERISA Considerations ...................................................   S-100
Method of Distribution .................................................   S-102
Use of Proceeds ........................................................   S-102
Legal Matters ..........................................................   S-102
Ratings ................................................................   S-103
Index of Defined Terms .................................................   S-104


                                       S-3



                                TABLE OF CONTENTS

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...     13
   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 ..................................................     71
   Hazard Insurance .....................................................     71
   Realization upon Defaulted Mortgage Loans ............................     72
   Servicing and Other Compensation and Payment of
   Expenses .............................................................     75
   Evidence as to Compliance ............................................     76
   List of Securityholders ..............................................     76
   Certain Matters Regarding the Servicer and the
      Depositor .........................................................     76


                                      S-4



   Events of Default ....................................................     77
   Amendment ............................................................     80
   Termination; Optional Termination ....................................     81
   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 ..............................................................     89
   Taxation of Debt Securities ..........................................     89
   REMIC Securities .....................................................     96
   Tax Status as a Grantor Trust ........................................    104
   Final Trust Reporting Regulations ....................................    111
   Tax Characterization of the Issuing Entity as a Partnership ..........    111
   Tax Consequences to Holders of the Notes .............................    112
   Tax Consequences to Holders of the Certificates ......................    114
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 ................................................    125


                                      S-5



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                                     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, carefully read this entire document and the accompanying
     prospectus.

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

IndyMac INDX Mortgage Loan Trust 2007-FLX3, 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 91101-7211, and its
telephone number is (800) 669-2300.

TRUSTEE AND SUPPLEMENTAL INTEREST 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 IN07F3, and its telephone number is (714) 247-6000.

THE SWAP COUNTERPARTY

Credit Suisse International, an English bank regulated as a European Union
credit institution by the Financial Services Authority under the Financial
Services and Markets Act 2000. The swap counterparty is an affiliate of the
underwriter.

THE NIM INSURER

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

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

See "Risk Factors--Rights of the NIM Insurer" in this prospectus supplement.

POOLING AND SERVICING AGREEMENT

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

CUT-OFF DATE

For each mortgage loan, the later of April 1, 2007 and the origination date of
that mortgage loan.

CLOSING DATE

On or about April 27, 2007.

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                                      S-6



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THE MORTGAGE LOANS

The mortgage pool will consist primarily of 30-year conventional adjustable-rate
negative amortization mortgage loans secured by first liens on one- to
four-family residential properties. The mortgage rate on each mortgage loan is
fixed for a specified period after origination after which the mortgage rate is
adjustable, based on the one-year LIBOR index.

The percentages of the aggregate stated principal balance of the mortgage loans
as of the cut-off date for the various fixed rate periods are expected to be
approximately as follows:

                    PERCENT OF
                   CUT-OFF DATE
  FIXED RATE      POOL PRINCIPAL
PERIOD (MONTHS)      BALANCE
---------------   --------------
      36              5.48%
      60             85.07%
      84              9.46%

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.

As of the cut-off date, the depositor expects that the mortgage loans in the
issuing entity will have the following characteristics:

Aggregate Stated
   Principal Balance ..................................            $403,645,670
Geographic
   Concentrations in
   excess of 10%:
   California .........................................                   63.15%
Weighted Average
   Original LTV Ratio .................................                   70.93%
Weighted Average
   Mortgage Rate ......................................                   6.771%
Range of Mortgage Rates ...............................         5.000% to 8.625%
Average Current
   Principal Balance ..................................        $        413,148
Range of
   Current Principal
   Balances ...........................................   $42,080 to $2,532,200
Weighted Average
   Remaining Term to
   Maturity ...........................................              359 months
Weighted Average FICO
   Credit Score .......................................                    719
Weighted Average Gross
   Margin .............................................                   2.754%
Weighted Average
   Maximum Mortgage
   Rate ...............................................                  11.825%
Weighted Average
   Minimum Mortgage
   Rate ...............................................                   2.754%
Range of Months to Next
   Mortgage Rate
   Adjustment .........................................                35 to 84
Range of Months to Next
   Payment Adjustment .................................                36 to 85
Negative Amortization
   Limit
      110% ............................................                    2.68%
      115% ............................................                   97.32%

See "The Mortgage Pool" in this prospectus supplement.

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                                      S-7



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DESCRIPTION OF THE CERTIFICATES

The issuing entity will issue the following classes of certificates:



                                INITIAL                                                     FINAL        MODELED        INITIAL
                                 CLASS                                                    SCHEDULED       FINAL          RATING
                              CERTIFICATE                                               DISTRIBUTION  DISTRIBUTION    MOODY'S/S&P
            CLASS             BALANCE (1)         PRINCIPAL TYPE         INTEREST TYPE    DATE (2)       DATE (3)         (4)
----------------------------  ------------  ---------------------------  -------------  ------------  --------------  ------------
OFFERED CERTIFICATES

A-1.........................  $229,470,000      Senior/Super Senior      Floating Rate    June 2037    October 2015       Aaa/AAA
A-2.........................  $ 95,615,000  Senior/Super Senior/Support  Floating Rate    June 2037    October 2015       Aaa/AAA
A-3.........................  $ 57,370,000        Senior/Support         Floating Rate    June 2037    October 2015       Aaa/AAA
A-R.........................  $        100     Senior/REMIC Residual     Variable Rate    June 2037      May 2007          NR/AAA
M-1.........................  $  9,285,000          Subordinate          Floating Rate    June 2037    October 2015        Aa2/AA
M-2.........................  $  1,615,000          Subordinate          Floating Rate    June 2037    October 2015       Aa3/AA-
M-3.........................  $  3,025,000          Subordinate          Floating Rate    June 2037    October 2015         A1/A
M-4.........................  $  1,415,000          Subordinate          Floating Rate    June 2037   September 2014       A2/A-
M-5.........................  $  2,015,000          Subordinate          Floating Rate    June 2037   November 2013       Baa1/BBB
M-6.........................  $  1,415,000          Subordinate          Floating Rate    June 2037     March 2013       Baa2/BBB-

Non-Offered Certificates (5)

L...........................       N/A                  N/A                                  N/A           N/A
P...........................       N/A                  N/A                                  N/A           N/A
C...........................       N/A                  N/A                                  N/A           N/A


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

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

(3)  The modeled final distribution date is based upon (a) an assumed rate of
     prepayments equal to 25% CPR, (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 exercised by the servicer at the earliest possible distribution date 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 not
     lower than the indicated ratings by Standard & Poor's, a division of The
     McGraw-Hill Companies, Inc. ("S&P") and Moody's Investors Service Inc.
     ("Moody's"). 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 Class L, Class P and Class C Certificates are not offered by this
     prospectus supplement. The Class L Certificates will be entitled to receive
     all late payment fees collected on the mortgage loans. The Class P
     Certificates will be entitled to any prepayment charges collected on the
     mortgage loans. The Class C Certificates will be entitled to receive any
     excess cashflow from the mortgage loans after all required distributions
     are made on the offered certificates. Any information contained in this
     prospectus supplement with respect to these certificates is provided only
     to permit a better understanding of the offered certificates.

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                                      S-8



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The certificates also will have the following characteristics:



                                     PASS-THROUGH RATE
                                    BEFORE AND INCLUDING   PASS-THROUGH RATE
                         INITIAL             THE               AFTER THE                                    INTEREST
                      PASS-THROUGH        OPTIONAL              OPTIONAL                                    ACCRUAL
      CLASS             RATE (1)    TERMINATION DATE (2)  TERMINATION DATE (3)  INTEREST ACCRUAL PERIOD    CONVENTION
--------------------  ------------  --------------------  --------------------  -----------------------  --------------

OFFERED CERTIFICATES
A-1..............       5.56000%      LIBOR + 0.240%(4)     LIBOR + 0.480%(4)            (5)             Actual/360 (6)
A-2..............       5.59000%      LIBOR + 0.270%(4)     LIBOR + 0.540%(4)            (5)             Actual/360 (6)
A-3..............       5.65000%      LIBOR + 0.330%(4)     LIBOR + 0.660%(4)            (5)             Actual/360 (6)
A-R..............       6.38819%             (7)                 (7)                     (5)               30/360 (8)
M-1..............       5.97000%      LIBOR + 0.650%(4)     LIBOR + 0.975%(4)            (5)             Actual/360 (6)
M-2..............       6.17000%      LIBOR + 0.850%(4)     LIBOR + 1.275%(4)            (5)             Actual/360 (6)
M-3..............       6.57000%      LIBOR + 1.250%(4)     LIBOR + 1.875%(4)            (5)             Actual/360 (6)
M-4..............       6.87000%      LIBOR + 1.550%(4)     LIBOR + 2.325%(4)            (5)             Actual/360 (6)
M-5..............       7.57000%      LIBOR + 2.250%(4)     LIBOR + 3.375%(4)            (5)             Actual/360 (6)
M-6..............       7.57000%      LIBOR + 2.250%(4)     LIBOR + 3.375%(4)            (5)             Actual/360 (6)

NON-OFFERED
CERTIFICATES (9)

L................          N/A               N/A                 N/A                     N/A                  N/A
P................          N/A               N/A                 N/A                     N/A                  N/A
C................          N/A               N/A                 N/A                     N/A                  N/A


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

(2)  Reflects the pass-through rate calculation up to and including the earliest
     possible distribution date on which the servicer has the option to purchase
     the mortgage loans as described in this prospectus supplement under
     "Description of the Certificates--Termination of the Issuing Entity;
     Optional Termination."

(3)  Reflects the pass-through rate calculation if the option to purchase the
     mortgage loans is not exercised by the servicer at the earliest possible
     distribution date as described in this prospectus supplement under
     "Description of the Certificates--Termination of the Issuing Entity;
     Optional Termination."

(4)  The pass-through rates on the LIBOR Certificates adjust monthly based on
     the level of one-month LIBOR, subject to the net rate cap. LIBOR for the
     related interest accrual period is calculated as described in this
     prospectus supplement under "Description of the Certificates -
     Determination of LIBOR."

(5)  The interest accrual period for any distribution date will be the period
     beginning on the preceding distribution date (or in the case of the first
     distribution date, on the closing date) and ending on the day immediately
     preceding that distribution date.

(6)  Interest will accrue at the rate described in this table on the basis of a
     360-day year and the actual number of days that elapsed in the interest
     accrual period.

(7)  The pass through rate for the Class A-R Certificates for the interest
     accrual period related to any distribution date will be a per annum rate
     equal to the weighted average adjusted net mortgage rate of the mortgage
     loans.

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

(9)  The Class L, Class P and Class C Certificates will not accrue any interest.

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

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DESIGNATIONS

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

 DESIGNATION             CLASS OF CERTIFICATES
-------------   ---------------------------------------
   Senior       Class A-1, Class A-2, Class A-3 and
Certificates:   Class A-R Certificates

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

    LIBOR       Senior and Subordinated Certificates
Certificates:   (other than the Class A-R Certificates)

   Offered      Senior and Subordinated Certificates
Certificates:

  Residual      Class A-R Certificates
Certificates:

 Non-offered    Class L, Class P and Class C
Certificates:   Certificates

The rights of the holders of the subordinated certificates to receive
distributions of principal and interest will be subordinate to the rights of the
holders of the senior certificates.

The Class L Certificates will be entitled to receive late payment fees paid by
borrowers with respect to the mortgage loans, to the extent the issuing entity
is entitled to those late payment fees. These amounts will not be available for
distribution to other classes of certificates.

The Class C Certificates will be entitled to receive any monthly excess cashflow
from the mortgage loans after required distributions are made to the senior and
subordinated certificates.

The Class P Certificates will be entitled to receive prepayment charges paid by
borrowers upon certain full or partial prepayment of the mortgage loans, to the
extent the issuing entity is entitled to those prepayment charges. These amounts
will not be available for distribution to other classes of certificates.

The Class L, Class C and Class P Certificates are not offered by this prospectus
supplement.

RECORD DATE

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

DENOMINATIONS

Senior Certificates (other than the Class A-R Certificates):

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

Subordinated Certificates:

$100,000 and multiples of $1 in excess thereof.

Class A-R Certificates:

$100.

REGISTRATION OF OFFERED CERTIFICATES

LIBOR Certificates

Book-entry form. Persons acquiring beneficial ownership interests in the LIBOR
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.

Residual Certificates

Fully registered certificated form. The residual 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 Residual Certificates" in this prospectus
supplement.

DISTRIBUTION DATES

We will make distributions on the 25th day of each month. If the 25th day of a
month is not a business day, then we will make distributions the next business
day. The first distribution date is scheduled for May 25, 2007.

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                                      S-10


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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-9.

On each distribution date, to the extent funds are available, each class of
LIBOR Certificates will be entitled to receive interest accrued at the
applicable pass-through rate during the related interest accrual period on its
class certificate balance immediately prior to that distribution date and any
interest carry forward amount, plus, any net rate carryover for that class and
any accrued interest on that amount. The residual certificates will not bear
interest.

Interest will accrue for each interest accrual period related to a distribution
date on each class of offered certificates at the lesser of (1) the applicable
annual rate as described in the table on page S-9 for that class of certificates
and (2) the net rate cap for that distribution date. The net rate cap is a
limitation generally based on the weighted average adjusted net mortgage rate of
the mortgage loans, net of any swap payments and swap termination payments
payable by the issuing entity to the swap counterparty (other than any swap
termination payments due to a swap counterparty trigger event) for that
distribution date.

The amount of interest distributable on a distribution date with respect to a
class of certificates will be reduced by the allocable share for that class of
(x) any net prepayment interest shortfalls, (y) any reductions due to the
application of the Servicemembers Civil Relief Act and similar state and local
laws not covered by excess cashflow, as described under "Description of the
Certificates - Interest" in this prospectus supplement, and (z) net deferred
interest for that distribution date.

Effect of negative amortization. If an increase in the mortgage index causes
interest to accrue on a mortgage loan for a given month in excess of the monthly
payment that the borrower elects to pay for that mortgage loan, the amount of
that excess will be added to the outstanding principal balance of that mortgage
loan in the form of deferred interest. For any distribution date, the net
deferred interest will be allocated among the classes of the certificates, pro
rata, based on the amount of interest accrued for each class, as described in
this prospectus supplement. For any distribution date the net deferred interest
is the excess, if any, of (i) the deferred interest with respect to all mortgage
loans for the calendar month prior to that distribution date, over (ii)
aggregate amount of principal prepayments in excess of the monthly interest only
payment received with respect to the mortgage loans during the applicable
period.

Interest carry forward amount is interest that was due but not distributed on
the prior distribution date. Any interest carry forward amount on the
certificates will be paid from interest funds, excess cashflow and any net swap
payments available for that purpose.

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

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 principal balance as of the first day of the prior
month. If the aggregate amount of interest shortfalls resulting from prepayments
in excess of a borrower's fully amortizing payment on the mortgage loans exceeds
the amount of the reduction in the servicer's servicing compensation, the
interest entitlement for each class of certificates will be reduced
proportionately by the amount of this excess.

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

For each class of LIBOR Certificates, any net rate carryover (which is interest
due on a prior distribution date that was not paid on a prior distribution date
due to the application of the net rate cap) will be payable from excess cashflow
as and to the extent described in this prospectus supplement and from payments
allocated to the issuing entity from the swap contract in the manner described
in this prospectus supplement.

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 on that date for
the distribution of principal. The allocation of principal among the classes of
certificates will differ, as described in this prospectus supplement, depending

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                                      S-11



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on whether the distribution date is before or on or after the stepdown date and
on the loss and delinquency performance of the mortgage loans.

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

AMOUNTS AVAILABLE FOR DISTRIBUTIONS ON THE CERTIFICATES

Amounts Available with respect to Interest Distributions

The amount available for interest distributions on the certificates on any
distribution date will be based on the "interest remittance amount." The
interest remittance amount for any distribution date will generally consist of
the following amounts (after the fees and expenses described under the next
heading are subtracted), in each case to the extent received, collected or paid
as provided in the pooling and servicing agreement:

o    the interest portion of monthly payments on the mortgage loans;

o    interest collected in connection with prepayments of the mortgage loans;

o    interest amounts advanced by the servicer;

o    any compensating interest paid by the servicer related to prepayments of
     the mortgage loans;

o    liquidation proceeds of the mortgage loans (to the extent allocable to
     interest); and

o    the lesser of (1) the aggregate amount of principal prepayments of amounts
     in excess of the interest only monthly payment on the mortgage loans and
     (2) the aggregate deferred interest on the mortgage loans.

Amounts Available with respect to Principal Distributions

The amount available for principal distributions on the certificates on any
distribution date will generally consist of the following amounts without
duplication, in each case to the extent received, collected or paid as provided
in the pooling and servicing agreement:

o    the principal portion of monthly payments on the mortgage loans;

o    principal advances by the servicer;

o    the excess, if any, of the principal prepayments of amounts in excess of
     the interest only monthly payment on the mortgage loans over the aggregate
     deferred interest for that distribution date;

o    the stated principal balance of any mortgage loans repurchased or purchased
     by the seller or the servicer, as applicable;

o    the excess, if any, of the stated principal balance of a deleted mortgage
     loan over the stated principal balance of the related substitute mortgage
     loan;

o    liquidation proceeds of the mortgage loans (to the extent allocable to
     principal);

o    subsequent recoveries; and

o    excess cashflow (to the extent available) to maintain the
     overcollateralization amount as described under "Description of the
     Certificates--Overcollateralization Provisions" in this prospectus
     supplement.

FEES AND EXPENSES

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

o    the servicing fee and additional servicing compensation due to the
     servicer;

o    the trustee fee due to the trustee;

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

o    net swap payment amounts payable to the swap counterparty;

o    all late payment fees (which are distributable only to the Class L
     Certificates);

o    all prepayment charges (which are distributable only to the Class P
     Certificates); and

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

These amounts will reduce the amount distributed to the certificateholders.

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                                      S-12



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Servicing Fee

The servicer will be paid a monthly fee (referred to as the servicing fee) with
respect to each mortgage loan of 0.375% per annum (referred to as the servicing
fee rate).

Additional Servicing Compensation

The servicer is also entitled to receive additional servicing compensation,
assumption fees and other similar charges (excluding prepayment charges and late
payment fees) and investment income earned on amounts on deposit in certain of
the issuing entity's accounts and excess proceeds with respect to liquidated
mortgage loans as described under "Description of the Certificates --Priority of
Distributions Among Certificates."

Source and Priority of Distributions

These amounts 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 INTEREST DISTRIBUTIONS

In general, on any distribution date, interest funds will be distributed as
follows:

          (i) to the swap account, the amount of any net swap payment and any
swap termination payment (other than a swap termination payment due to a swap
counterparty trigger event) payable to the swap counterparty under the swap
contract with respect to that distribution date;

          (ii) concurrently, to each class of interest-bearing senior
certificates, pro rata based on their respective interest entitlements for that
distribution date, current interest and the interest carry forward amount;

          (iii) sequentially, in the order of their numerical class
designations, to each class of subordinated certificates, current interest and
the interest carry forward amount due for each class for that distribution date;
and

          (iv) as part of the excess cashflow, as described under "Excess
Cashflow--Application of Excess Cashflow" below.

PRIORITY OF PRINCIPAL DISTRIBUTIONS

General

The manner of allocating principal distributions among the classes of
certificates will differ, as described in this prospectus supplement, depending
upon the occurrence of several different events or triggers:

o    whether a distribution date occurs before or on or after the "stepdown
     date," which is the earlier of:

          (1) the later of (x) the distribution date in May 2010 and (y) the
          first distribution date on which the senior enhancement percentage is
          equal to or greater than approximately (a) on any distribution date
          prior to the distribution date in May 2013, 13.125% and (b) on any
          distribution date on or after the distribution date in May 2013,
          10.500%; and

          (2) the first distribution date after the distribution date on which
          the aggregate class certificate balance of the senior certificates has
          been reduced to zero;

o    whether cumulative losses on the mortgage loans are higher than certain
     levels specified in this prospectus supplement (a "cumulative loss trigger
     event"); and

o    whether the rate of delinquencies of the mortgage loans over any sixty day
     period is higher than certain levels set forth in this prospectus
     supplement (a "delinquency trigger event").

A "TRIGGER EVENT" will be in effect on any distribution date if either (i) a
cumulative loss trigger event or (ii) a delinquency trigger event is in effect
for that distribution date.

Effect of the Stepdown Date If a Trigger Event is Not in Effect

On any distribution date on or after the stepdown date (and so long as no
trigger event is in effect), instead of allocating all amounts distributable as
principal on

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                                      S-13



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the certificates to the classes of senior certificates until those
classes are paid in full, a portion of those amounts distributable as principal
will be allocated to the classes of subordinated certificates.

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

Priority of Principal Distributions

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

          (i) to the swap account, the amount of any net swap payment and any
swap termination payment owed to the swap counterparty (other than a swap
termination payment due to a swap counterparty trigger event) to the extent
those amounts were not paid previously from the interest funds;

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

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

          (iv) sequentially, to the Class M-1, Class M-2, Class M-3, Class M-4,
Class M-5 and Class M-6 Certificates, in that order, until their respective
class certificate balances are reduced to zero; and

          (v) any remainder as part of the excess cashflow to be allocated as
described under "--Overcollateralization Provisions" below.

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

          (i) to the swap account, the amount of any net swap payment and any
swap termination payment owed to the swap counterparty (other than a swap
termination payment due to a swap counterparty trigger event) to the extent
those amounts were not paid previously from the interest funds;

          (ii) in an amount up to the senior principal distribution amount for
that distribution date, 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;

          (iii) sequentially, to the Class M-1, Class M-2, Class M-3, Class M-4,
Class M-5 and Class M-6 Certificates, in that order, the subordinated class
principal distribution target amount for each such class, in each case until its
class certificate balance is reduced to zero; and

          (iv) any remainder as part of the excess cashflow to be allocated as
described under "--Excess Cashflow--Application of Excess Cashflow" below.

THE SWAP CONTRACT

The supplemental interest trustee, on behalf of the supplemental interest trust,
will enter into an interest rate swap contract with Credit Suisse International.

On or prior to each distribution date to and including the swap contract
termination date, the supplemental interest trustee will be obligated to pay to
the swap counterparty an amount equal to the product of (a) 5.0175% per annum,
(b) 250, (c) the swap contract notional balance for that distribution date and
(d) the number of days in the related calculation period (calculated on the
basis of a 360-day year divided into twelve 30-day months) divided by 360. In
addition, on or prior to the distribution date to and including the swap
contract termination date, the swap counterparty will be obligated to pay to the
supplemental interest trustee an amount equal to the product of (a) one-month
LIBOR (or, in the case of the initial calculation period, the rate determined by
linear interpolation between one-month LIBOR and two-week LIBOR, in any case as
determined by the swap counterparty), (b) 250, (c) the swap contract notional
balance for that distribution date and (d) the number of days in the related
calculation period (calculated on the basis of a 360-day year and the actual
number of days that elapsed in the related calculation period) divided by 360.

On each distribution date, to the extent that the amount payable by the
supplemental interest trustee exceeds the amount payable by the swap
counterparty, the trustee will be required to deduct from the interest funds the
amount of that excess and, in its capacity as supplemental interest trustee, to
remit the amount of that excess to the swap counterparty for the swap contract.
To the extent that

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                                      S-14



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the amount payable by the swap counterparty exceeds the amount payable by the
supplemental interest trustee, the swap counterparty will be required to pay to
the supplemental interest trustee the amount of that excess. Any net payment
received by the supplemental interest trustee from the swap counterparty will be
used to cover unpaid current interest, interest carry forward amounts, net rate
carryover and unpaid realized losses on the LIBOR Certificates and to restore
and maintain overcollateralization at the required level.

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

LIMITED RECOURSE

The only source of funds available for interest and principal distributions on
the certificates will be the assets of the issuing entity and the supplemental
interest trust. The issuing entity will have no source of funds other than
collections and recoveries of the mortgage loans through insurance or otherwise.
No other entity will be required or expected to make any distributions on the
certificates.

OPTIONAL TERMINATION

The servicer may purchase all of the remaining assets of the issuing entity and
retire all outstanding classes of certificates following the distribution date
on which the aggregate stated principal balance of all 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. The NIM
Insurer may also have the right to purchase all of the remaining assets in the
issuing entity.

See "Description of the Certificates--Termination of the Issuing Entity;
Optional Termination" 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 the 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 at the request of the
related mortgagor, provided that the servicer purchases the mortgage loan from
the issuing entity immediately preceding the modification and that the
modification is in lieu of a refinancing. 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 the 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.

CREDIT ENHANCEMENT

The credit enhancement provided for the benefit of the holders of the
certificates consists solely of excess cashflow, overcollateralization,
subordination, and the loss allocation features.

OVERCOLLATERALIZATION

On the closing date, the aggregate stated principal balance of the mortgage
loans is expected to exceed the aggregate class certificate balance of the
certificates by approximately $2,420,570, which represents approximately 0.60%
of the aggregate stated principal balance of the mortgage loans as of the
cut-off date. This amount is referred to as "overcollateralization" and is
approximately equal to the initial level of overcollateralization required by
the pooling and servicing agreement.

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                                      S-15



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

See "Risk Factors--Excess Cashflow From the Mortgage Loans May Not Provide
Adequate Credit Enhancement" in this prospectus supplement.

EXCESS CASHFLOW

The mortgage loans are expected to generate more interest than is needed to
distribute interest on the certificates because the weighted average interest
rate of the mortgage loans is expected to be higher than the weighted average
pass-through rate on the classes of certificates, plus the weighted average
expense fee rate and net swap payments payable to the swap counterparty. The
"expense fee rate" is the sum of the servicing fee rate and the trustee fee
rate. Any interest payments received in respect of the mortgage loans in excess
of the amount that is needed to offset net deferred interest, to make net swap
payments, to distribute interest on the certificates in the amounts and order
described in this prospectus supplement and to pay the issuing entity expenses
will be used to reduce the aggregate class certificate balance of the
certificates, in order to maintain or restore the required level of
overcollateralization.

Application of Excess Cashflow

          The amount of any excess interest together with certain amounts of the
principal distribution amount not distributed to the certificates on any
distribution date will be applied as "excess cashflow" in order to pay principal
on the certificates, to pay net rate carryover amounts and to make other
payments as described in this prospectus supplement.

          Any excess cashflow will be distributed on each distribution date in
the following priority:

               (i) concurrently to the senior interest-bearing certificates, pro
     rata, based on their respective amounts of remaining current interest and
     interest carry forward amount, the remaining current interest and interest
     carry forward amounts for each such class;

               (ii) sequentially, to the Class M-1, Class M-2, Class M-3, Class
     M-4, Class M-5 and Class M-6 Certificates, in that order, to pay any
     remaining current interest and interest carry forward amounts for each such
     class;

               (iii) to the certificates then entitled to receive principal on
     that distribution date to the extent necessary to maintain or restore the
     required level of overcollateralization in the same priority in which they
     receive distributions of principal;

               (iv) sequentially, to the Class A-1, Class A-2 and Class A-3
     Certificates, in that order, the unpaid realized loss amount for each such
     class;

               (v) sequentially, to the Class M-1, Class M-2, Class M-3, Class
     M-4, Class M-5 and Class M-6 Certificates, in that order, the unpaid
     realized loss amount for each such class;

               (vi) concurrently, to the senior interest-bearing certificates,
     pro rata, any net rate carryover for each such class;

               (vii) sequentially, to the Class M-1, Class M-2, Class M-3, Class
     M-4, Class M-5 and Class M-6 Certificates, in that order, any net rate
     carryover for each such class;

               (viii) to the supplemental interest trust to pay any unpaid swap
     termination payments; and

               (ix) to the Class C and the Class A-R Certificates, as specified
     in the pooling and servicing agreement.

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

SUBORDINATION

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. The senior
certificates will have a distribution priority over the subordinated
certificates. Among the classes of subordinated certificates offered by this
prospectus supplement, the Class M-1 Certificates will have the highest
distribution priority.

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

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                                      S-16



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ALLOCATION OF LOSSES

Subordination is designed to provide the holders of certificates with a higher
distribution priority with protection against most losses realized when the
remaining unpaid principal balance of a mortgage loan exceeds the amount of
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 (to the extent that those losses exceed any monthly excess
cashflow and any overcollateralization) among the subordinated certificates,
beginning with the subordinated certificates with the lowest distribution
priority. After the aggregate class certificate balance of the subordinated
certificates is reduced to zero, realized losses (to the extent that those
losses exceed any monthly excess cashflow and any overcollateralization) will be
allocated sequentially to the Class A-3, Class A-2 and Class A-1 Certificates,
in that order, until their respective class certificate balances are reduced to
zero.

See "Description of the Certificates--Applied Realized Loss Amounts" and "Credit
Enhancement--Subordination" in this prospectus supplement.

TAX STATUS

For federal income tax purposes, the issuing entity (exclusive of the swap
contract and the swap account) will comprise one or more real estate mortgage
investment conduits in a tiered structure. The highest tier will be referred to
as the Master REMIC and each underlying tier (if any) will be referred to as an
underlying REMIC. Each underlying REMIC (if any) will hold mortgage loans (or
uncertificated regular interests) and will issue several classes of
uncertificated regular interests and a single uncertificated residual interest.
The Master REMIC will hold as assets regular interests issued by underlying
REMICs (or the mortgage loans if there are no underlying REMICs) and will issue
the several classes of certificates, which, other than the Class L and the Class
A-R Certificates, will represent the regular interests in the Master REMIC. The
rights of the LIBOR Certificates to receive payments of tax net rate carryover
will represent, for federal income tax purposes, separate contractual rights
coupled with REMIC regular interests within the meaning of Treasury regulation
Section 1.860G-2(i). Each class of residual certificates will represent
ownership of the residual interest in one or more REMICs described in the
pooling and servicing agreement.

The swap contract, the swap account and the supplemental interest trust will not
constitute any part of any REMIC created under the pooling and servicing
agreement.

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 the assets of such a benefit
plan, so long as certain conditions, including satisfying the requirements of an
investor based class exemption, are met.

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

LEGAL INVESTMENT

The offered certificates(other than the Class M-6 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. The Class
M-6 Certificates will not be rated in one of the two highest rating categories
by a nationally recognized statistical rating organization, and therefore, will
not be mortgage related securities for purposes of that Act.

See "Legal Investment" in the prospectus.

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


                                      S-17



                         SUMMARY OF TRANSACTION PARTIES



                                        --------------------
                                         SPONSOR AND SELLER
                                        IndyMac Bank, F.S.B.
                                        --------------------
                                                |
                                                | Mortgage Loans
                                                |
                                               \/
                                        --------------------      -------------------------------
                                              DEPOSITOR                   SWAP COUNTERPARTY
                                          IndyMac MBS, Inc.       Credit Securities International
                                        --------------------      -------------------------------
                                                |                         |
                                                |                         |       Net Swap
                                                |                         |       Payments
                                                | Mortgage Loans          |
                                               \/                         |
                         Mortgage    --------------------------           |
--------------------     Loan              ISSUING ENTITY                \/
      SERVICER           Servicing   IndyMac INDX Mortgage Loan    ---------------------------
IndyMac Bank, F.S.B.  ------------->       Trust 2007-FLX3         SUPPLEMENTAL INTEREST TRUST

                                               TRUSTEE
                                       Deutsche Bank National      ---------------------------
                                            Trust Company               |
--------------------                 --------------------------         |    Net Swap
                                                        |               |    Payments
                                        Distributions   |               |
                                                        |               |
                                                       \/              \/
                                                       ------------------
                                                       CERTIFICATEHOLDERS
                                                       ------------------



                                      S-18



                                  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   Borrowers may, at their option, prepay their
HOW BORROWERS REPAY THEIR        mortgage loans in whole or in part at any time.
MORTGAGE LOANS                   We cannot predict the rate at which borrowers
                                 will repay their mortgage loans. A prepayment
                                 of a mortgage loan, however, will usually
                                 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 prepayment of mortgage
                                 loans will affect the yields to maturity and
                                 weighted average lives of the certificates.

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

                                 o    The rate and timing of principal payments,
                                      including prepayments, relative to the
                                      amount and timing of the creation of
                                      deferred interest on the mortgage loans
                                      will affect the yields to maturity of the
                                      classes of certificates.

                                 o    Approximately 74.18% of the mortgage loans
                                      by cut-off date pool principal balance
                                      require the mortgagor to pay a charge if
                                      the mortgagor prepays the mortgage loan
                                      during periods ranging from one year to
                                      three years after the mortgage loan was
                                      originated. A prepayment charge may
                                      discourage a mortgagor from prepaying the
                                      mortgage loan during the applicable
                                      period. Prepayment charges will be
                                      distributed to the Class P Certificates
                                      and will not be available to the holders
                                      of other classes of certificates.

                                 o    The mortgage loans have fixed rates for a
                                      period from the date of origination and
                                      then adjust annually based upon a
                                      specified index. Additionally, for the
                                      first ten years of a mortgage loan,
                                      borrowers under the mortgage loans are
                                      permitted to pay varying amounts that are
                                      less than the amount required to fully


                                      S-19



                                      amortize their mortgage loans. These
                                      mortgage loans may have higher prepayments
                                      as they approach their first rate and
                                      payment adjustment dates because the
                                      related mortgagors may seek to avoid
                                      periodic changes to their monthly
                                      payments.

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

THE YIELD AND WEIGHTED AVERAGE   All of the mortgage loans are negative
MATURITY OF THE CERTIFICATES     amortization loans that offer the borrowers
WILL BE SUBJECT TO ANY           various payment options. The mortgage rates for
NEGATIVE AMORTIZATION ON THE     these loans are fixed for an initial period of
MORTGAGE LOANS                   three, five or seven years after origination.
                                 At the end of the initial fixed rate period for
                                 a mortgage loan, the mortgage rate will adjust
                                 annually based on one-year LIBOR plus the
                                 related margin, subject to lifetime, initial
                                 and annual adjustment rate caps. The borrower
                                 under each mortgage loan is required to make a
                                 minimum monthly payment that is subject to
                                 adjustment on a date specified in the mortgage
                                 note, subject to the conditions that (1) during
                                 the first ten years of the mortgage loan, the
                                 amount of the minimum monthly payment will be
                                 equal to a specified discount percentage
                                 (ranging from 45% to 70%) of the amount
                                 necessary to fully amortize the related
                                 mortgage loan over its remaining term at the
                                 current mortgage rate (such percentage, the
                                 "PAYMENT LIMIT"), (2) as of the tenth
                                 anniversary of the first due date and on the
                                 same day every year thereafter and on the final
                                 payment adjustment date, the minimum monthly
                                 payment will be recast, without regard to the
                                 payment limit, in order to fully amortize the
                                 then unpaid mortgage loan principal balance
                                 over the remaining term to maturity, and (3) if
                                 the unpaid stated principal balance of a
                                 mortgage loan exceeds 110% or 115% of the
                                 original stated principal balance of the
                                 mortgage loan set forth in the related mortgage
                                 note due to deferred interest (the "NEGATIVE
                                 AMORTIZATION LIMIT"), the minimum monthly
                                 payment will be recast (x) during the first ten
                                 years of the mortgage loan, to be equal to the
                                 interest only payment based on the unpaid
                                 stated principal balance and (y) after the
                                 first ten years of the mortgage loan, to
                                 amortize fully the then unpaid principal
                                 balance of the mortgage loan over its remaining
                                 term to maturity. Although the interest rates
                                 on mortgage loans adjust after the first three,
                                 five or seven years, their monthly payments and
                                 amortization schedules generally do not adjust
                                 (except due to the negative amortization limit)
                                 until after the first ten years and are subject
                                 to maximum interest rates and payment limits.
                                 Because interest accrued at the mortgage rate
                                 may be greater than the minimum monthly payment
                                 due, mortgage loans are subject to negative
                                 amortization. If borrowers only make the
                                 minimum monthly payments, a portion of the
                                 accrued interest on mortgage loans will become
                                 deferred interest.

                                 "DEFERRED INTEREST" is the excess, if any, of
                                 (x) the amount of interest accrued on such
                                 mortgage loan from the preceding due date to
                                 such due date over (y) the monthly payment paid
                                 for such due date. Deferred interest is added
                                 to the principal balance of the mortgage loan
                                 and bears interest at the applicable interest
                                 rate for that mortgage loan.


                                      S-20



                                 Deferred interest can result on the mortgage
                                 loans if interest rates rise more quickly than
                                 the minimum monthly payments are adjusted,
                                 because the minimum monthly payment is only a
                                 portion of the amount necessary to fully
                                 amortize the related mortgage loan over its
                                 remaining term.

                                 During the first ten years of the mortgage
                                 loan, there may be no amortization of principal
                                 even after the minimum payment has been recast
                                 because the recast payment will require the
                                 payment of interest only.

                                 If borrowers under the mortgage loans elect to
                                 make a payment larger than the payment
                                 necessary to fully amortize their loans over
                                 the original term to maturity, a larger portion
                                 of the monthly payment will be applied to the
                                 unpaid principal balance of the mortgage loan,
                                 which may cause the classes of certificates to
                                 amortize more quickly. Conversely, if the
                                 interest rates on the mortgage loans increase
                                 prior to an adjustment in the monthly payment
                                 or borrowers elect to make a payment less than
                                 the payment necessary to fully amortize their
                                 loans over the original term to maturity, a
                                 smaller portion of the monthly payment will be
                                 applied to the unpaid principal balance of the
                                 mortgage loan, which may cause the classes of
                                 certificates to amortize more slowly. During
                                 the first ten years following the origination
                                 of a mortgage loan, if the unpaid principal
                                 balance of that mortgage loan exceeds the
                                 original principal balance of that mortgage
                                 loan by the amount specified in the related
                                 mortgage note, the monthly payment due on that
                                 mortgage loan will be recast without regard to
                                 the payment limit. These features may affect
                                 the rate at which principal on the mortgage
                                 loans is paid and may create a greater risk of
                                 default if the borrower is unable to pay the
                                 monthly payments on the related increased
                                 principal balance.

HIGH BALANCE MORTGAGE LOANS      As of the cut off date, 15 mortgage loans
PRESENT GREATER RISK             constituting approximately 4.32% of the
                                 mortgage loans by cut-off date pool principal
                                 balance had principal balances from $1,000,001
                                 up to and including $1,500,000. Three mortgage
                                 loans constituting approximately 1.33% of the
                                 mortgage loans by cut-off date pool principal
                                 balance had principal balances from $1,500,001
                                 up to and including $2,000,000. Three mortgage
                                 loans constituting approximately 1.64% of the
                                 mortgage loans by cut-off date pool principal
                                 balance had principal balances from $2,000,001
                                 up to and including $2,750,000. You should
                                 consider the risk that the loss and delinquency
                                 experience on these high balance mortgage loans
                                 may have a disproportionate effect on the pool
                                 of mortgage loans.

ALLOCATION OF NET DEFERRED       The amount of deferred interest, if any, with
INTEREST MAY AFFECT YOUR YIELD   respect to mortgage loans for a given month
                                 will reduce the amount of interest collected on
                                 these mortgage loans and available to be
                                 distributed as a distribution of interest to
                                 the classes of certificates. The resulting
                                 reduction in interest collections on the
                                 mortgage loans will be offset, in part or in
                                 whole, by applying all principal prepayments in
                                 excess of the related interest only monthly
                                 payment received on the mortgage loans. For any
                                 distribution date, the net deferred interest on
                                 the mortgage loans will be allocated among the
                                 certificates in reduction of the interest
                                 payable to the certificates as described in
                                 "Description of the Certificates--Interest" in
                                 this prospectus


                                      S-21



                                 supplement. The amount of interest deducted
                                 from accrued interest attributable to net
                                 deferred interest will be added to the class
                                 certificate balance of each such class. Only
                                 the amount by which the principal prepayments
                                 in excess of the interest only monthly payment
                                 received on the mortgage loans exceeds the
                                 amount of deferred interest on the mortgage
                                 loans will be distributed as part of the
                                 principal distributions on the classes of
                                 certificates. In addition, the use of principal
                                 prepayments to offset the deferred interest may
                                 affect the amortization and weighted average
                                 lives of the certificates. We cannot predict
                                 the extent to which mortgagors will prepay
                                 their mortgage loans or the extent to which
                                 deferred interest will accrue on the mortgage
                                 loans, and therefore cannot predict the extent
                                 of the effect of net deferred interest on your
                                 certificates.

THE EFFECT OF PREPAYMENT         As further described under "The Mortgage Pool"
CHARGES ON THE LIKELIHOOD OF     in this prospectus supplement, approximately
PREPAYMENTS IS UNPREDICTABLE     74.18% of the mortgage loans by aggregate
                                 stated principal balance of the mortgage loans
                                 as of the cut-off date, require the borrower to
                                 pay a charge if the borrower prepays the
                                 mortgage loan during periods of up to three
                                 years after the mortgage loan was originated.
                                 The prepayment charges apply to principal
                                 prepayments in full resulting from sales and
                                 refinancings and in certain instances
                                 curtailments in accordance with the provisions
                                 of the related mortgage note during the
                                 applicable period after origination of the
                                 applicable mortgage loan.

                                 Prepayment charges, if any, received in respect
                                 of the mortgage loans will only be
                                 distributable to the Class P Certificates.
                                 These amounts will not be available for
                                 distribution on the other certificates.

                                 All other things being equal, the decline in
                                 market rates of interest relative to the
                                 interest rates on the mortgage loans with
                                 prepayment charges must be more significant
                                 than for other mortgage loans in order to make
                                 refinancing attractive. In addition, the
                                 mortgage loans are negative amortization loans
                                 which limit the increase in the borrower's
                                 monthly payment except in the circumstances
                                 described in this prospectus supplement. As a
                                 result, even if the interest rates on the
                                 mortgage loans are increasing, the minimum
                                 monthly payment made by the borrowers will not
                                 change to reflect the higher cost of the
                                 increased rate of interest for up to seven
                                 years after the increase in the interest rate.
                                 Finally, the index used to determine the
                                 interest rates on the mortgage loans is an
                                 average of the applicable reference rates which
                                 tends to "slow" the increase in adjustments to
                                 the interest rates on the mortgage loans and to
                                 "lag" the increase in market rates of interest
                                 generally.

                                 If prepayments are reduced there will be less
                                 cash available to offset deferred interest
                                 which may make it more likely that net deferred
                                 interest will be allocated among the
                                 certificates as described under "Description of
                                 the Certificates--Interest--Allocation of Net
                                 Deferred Interest."

                                 We cannot predict the effect that the
                                 prepayment charges will have on the rate and
                                 timing of prepayments on the mortgage loans,


                                      S-22



                                 although a prepayment charge may discourage a
                                 borrower from prepaying the mortgage loan
                                 during the applicable period.

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

                                 o    the extent of principal prepayments on the
                                      mortgage loans relative to the rate and
                                      timing of the creation of deferred
                                      interest on the mortgage loans,

                                 o    whether the borrower elects to make a
                                      payment greater than the required minimum
                                      monthly payment or the interest only
                                      monthly payment,

                                 o    the payment limit on the mortgage loans,

                                 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, and

                                 o    repurchases of mortgage loans for material
                                      breaches of representations and warranties
                                      and due to modifications of the mortgage
                                      loan.

                                 Because distributions on the certificates are
                                 dependent upon the payments on the 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 "--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 and substitution of
                                 mortgage loans.

THE YIELDS ON THE LIBOR          The pass-through rates on the LIBOR
CERTIFICATES WILL BE AFFECTED    Certificates for any distribution date will be
BY THE LEVEL OF LIBOR            equal to the value of one-month LIBOR plus the
                                 related margin, but subject to the net rate
                                 cap. For these classes of certificates your
                                 yield will be sensitive to:

                                 (1)  the level of one-month LIBOR;

                                 (2)  the timing of adjustment of the
                                      pass-through rate on your certificate as
                                      it relates to the interest rates on the
                                      mortgage loans and the level of the
                                      applicable mortgage index, the timing of
                                      adjustment of the interest rates on the
                                      mortgage loans, and periodic and lifetime
                                      limits on those adjustments,


                                      S-23



                                 (3)  the level of one-month LIBOR relative to
                                      the fixed rate used to calculate the
                                      payment to the swap counterparty, and

                                 (4)  other limitations on the pass-through
                                      rates of such certificates as described
                                      further in this prospectus supplement

                                 See "Description of the Certificates--Interest"
                                 and "Yield, Prepayment and Maturity
                                 Considerations" in this prospectus supplement
                                 for a description of factors that may influence
                                 the rate and timing of prepayments on the
                                 mortgage loans.

MODIFICATION OF MORTGAGE LOANS   The servicer has the right to modify any
BY THE SERVICER MAY ADVERSELY    mortgage loan in lieu of refinancing if it
AFFECT YOUR YIELD                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    The certificates are not insured by any
SUFFICIENT TO PROTECT SENIOR     financial guaranty insurance policy. The
CERTIFICATES FROM LOSSES         subordination features of the issuing entity
                                 are intended to enhance the likelihood that
                                 senior certificateholders will receive regular
                                 payments of interest and principal, as
                                 applicable.

                                 SUBORDINATION. Credit enhancement will be
                                 provided for the certificates, first, by the
                                 right of the holders of senior certificates to
                                 receive distributions of principal before the
                                 classes subordinated to them and, second, to
                                 the extent there is no overcollateralization in
                                 the issuing entity, by the allocation of
                                 realized losses on the mortgage loans to the
                                 subordinated certificates in the inverse order
                                 of their priority of distribution, beginning
                                 with the Class M-6 Certificates. This form of
                                 credit enhancement uses collections on the
                                 mortgage loans otherwise distributable to
                                 holders of the subordinated classes to
                                 distribute amounts due on the more senior
                                 classes of certificates. After the credit
                                 enhancement provided by excess cashflow and
                                 overcollateralization (if any) has been
                                 exhausted, collections on the mortgage loans
                                 otherwise distributable to the subordinated
                                 classes will comprise the sole source of funds
                                 from which this type of credit enhancement is
                                 provided to the senior certificates. The LIBOR
                                 Certificates also may benefit from net swap
                                 payments under the swap contract to the extent
                                 they are available for this purpose as
                                 described in this prospectus supplement.

                                 ALLOCATION OF LOSSES. Realized losses on the
                                 mortgage loans are allocated to the
                                 subordinated certificates, beginning with the
                                 class of subordinated certificates with the
                                 lowest distribution priority, until the class
                                 certificate balance of that class has been
                                 reduced to zero. This means that after the
                                 credit enhancement provided by excess cashflow
                                 and overcollateralization (if any) has been
                                 exhausted, realized losses on the mortgage
                                 loans will be allocated to the Class M-6
                                 Certificates until its class certificate
                                 balance is reduced to zero. Subsequent realized
                                 losses will be allocated to the next most
                                 junior


                                      S-24



                                 classes of subordinated certificates
                                 sequentially, until the class certificate
                                 balance of each succeeding class has been
                                 reduced to zero. If the aggregate class
                                 certificate balance of each class of
                                 subordinated certificates were to be reduced to
                                 zero, realized losses on the mortgage loans
                                 would be allocated sequentially to the Class
                                 A-3, Class A-2 and Class A-1 Certificates, in
                                 that order, until their respective class
                                 certificate balances are reduced to zero.

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

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

EXCESS CASHFLOW FROM THE         The amount by which the aggregate stated
MORTGAGE LOANS MAY NOT PROVIDE   principal balance of the mortgage loans exceeds
ADEQUATE CREDIT ENHANCEMENT      the aggregate class certificate balance of the
                                 offered certificates is called
                                 "OVERCOLLATERALIZATION." The initial level of
                                 overcollateralization (that is, the
                                 overcollateralization on the closing date) is
                                 expected to be approximately 0.60% of the
                                 aggregate stated principal balance of the
                                 mortgage loans as of the cut-off date. This
                                 amount approximately equals the initial level
                                 of overcollateralization required by the
                                 pooling and servicing agreement. The mortgage
                                 loans are expected to generate more interest
                                 than is needed to pay interest on the LIBOR
                                 Certificates in the amounts and priority
                                 described in this prospectus supplement and to
                                 make any net swap payments payable to the swap
                                 counterparty, because the weighted average
                                 interest rate on the mortgage loans is expected
                                 to be higher than the weighted average
                                 pass-through rate on the offered certificates
                                 plus the weighted average expense fee rate and
                                 the effective rate at which any net swap
                                 payments may be payable to the swap
                                 counterparty under the swap contract. In the
                                 event that the level of overcollateralization
                                 is reduced, such "EXCESS CASHFLOW" will be used
                                 to make additional principal distributions on
                                 the offered certificates to the extent
                                 described in this prospectus supplement.
                                 Overcollateralization is intended to provide
                                 limited protection to the holders of the
                                 offered certificates by absorbing losses from
                                 liquidated mortgage loans. However, we cannot
                                 assure you that enough excess cashflow will be
                                 generated on the mortgage loans to maintain or
                                 restore the required level of
                                 overcollateralization.

                                 The excess cashflow available on any
                                 distribution date will be affected by the
                                 actual amount of interest received, collected
                                 or advanced in respect of the mortgage loans
                                 for that distribution date. That amount will be
                                 influenced by changes in the weighted average
                                 of the mortgage rates resulting from
                                 prepayments and liquidations of the mortgage
                                 loans as well as from adjustments of the
                                 mortgage rates on the mortgage loans. The
                                 pass-through rate of each class of LIBOR
                                 Certificates is subject to a net rate cap which
                                 generally is based the weighted average
                                 adjusted net mortgage rate of the


                                      S-25



                                 mortgage loans during the applicable due
                                 period, net of any swap payments and swap
                                 termination payments payable by the issuing
                                 entity to the swap counterparty (other than any
                                 swap termination payments due to a swap
                                 counterparty trigger event). If the
                                 pass-through rate on one or more classes is
                                 limited by the net rate cap, it may be
                                 necessary to apply all or a portion of the
                                 interest funds available to distribute interest
                                 at the pass-through rates for such classes of
                                 certificates. As a result, interest may be
                                 unavailable for any other purpose.

                                 If the protection afforded by
                                 overcollateralization is insufficient, then the
                                 holders of the offered certificates could
                                 experience a loss on their investment.

YOUR YIELD ON THE CERTIFICATES   The pass-through rates on the LIBOR
WILL BE AFFECTED BY THE          Certificates may adjust monthly and are based
MORTGAGE RATES OF THE MORTGAGE   on one-month LIBOR, subject to the net rate
LOANS                            cap. The mortgage rate on each mortgage loan
                                 has a fixed rate period of three, five or seven
                                 years after the first payment date of that
                                 mortgage loan before the mortgage rate becomes
                                 subject to adjustment annually based on the
                                 one-year LIBOR index. Because the mortgage
                                 index may respond to economic and market
                                 factors different than those affecting
                                 one-month LIBOR, there is not necessarily a
                                 correlation in movement between the interest
                                 rates on those mortgage loans and the
                                 pass-through rates of the LIBOR certificates.
                                 For example, it is possible that the interest
                                 rates on certain of the mortgage loans may
                                 decline while the pass-through rates on the
                                 LIBOR Certificates are stable or rising. In
                                 addition, although it is possible that both the
                                 adjustable mortgage rates and the pass-through
                                 rates on the LIBOR Certificates may decline or
                                 increase during the same period, the adjustable
                                 mortgage rates may decline or increase more
                                 slowly than the pass-through rates of these
                                 certificates because of the difference between
                                 interest rate adjustment periods on those
                                 mortgage loans and pass-through rate adjustment
                                 periods on these certificates. In addition,
                                 prepayments of mortgage loans with relatively
                                 higher mortgage rates may reduce the net rate
                                 cap and consequently reduce the pass-through
                                 rate for one or more of these classes of
                                 certificates.

                                 It is intended that the amount by which a
                                 certificateholder's interest payment has been
                                 reduced by operation of the net rate cap will
                                 be paid first, from any excess cashflow and
                                 then, from any amounts allocated to the issuing
                                 entity in respect of the swap contract, to the
                                 extent such amounts are available for that
                                 purpose as described in this prospectus
                                 supplement. We cannot assure you that any
                                 excess cashflow or swap contract proceeds will
                                 be available, or sufficient, to make such
                                 payments.

CONSIDERATIONS REGARDING THE     Any amounts received by the supplemental
SWAP CONTRACT                    interest trustee from the swap counterparty
                                 under the swap contract will be applied as
                                 described in this prospectus supplement.
                                 However, no amounts will be payable under the
                                 swap contract on a distribution date unless the
                                 amount owed by the swap counterparty exceeds
                                 the amount owed to the swap counterparty. We
                                 cannot assure you that any amounts will be
                                 received under the swap contract, or that any
                                 amounts that are received will be sufficient to
                                 cover unpaid interest and net rate carryover or
                                 to maintain overcollateralization at the
                                 required level.


                                      S-26



                                 Any net payment payable to the swap
                                 counterparty under the terms of the swap
                                 contract will reduce amounts available for
                                 distribution to certificateholders.

                                 Payments due under the swap contract will be
                                 based on a scheduled notional amount that will
                                 decline over time. If the rate of prepayments
                                 on the mortgage loans is slower than
                                 anticipated, the schedule on which payments due
                                 under the swap contract are calculated may be
                                 less than the aggregate class certificate
                                 balance of the LIBOR Certificates, thereby
                                 decreasing the relative amount of any net swap
                                 payment payable by the swap counterparty to the
                                 supplemental interest trust to cover the
                                 amounts described above. Furthermore, if
                                 one-month LIBOR is less than 5.0175%, available
                                 funds that would otherwise be available to make
                                 distributions on the LIBOR Certificates will be
                                 used to cover the net swap payments due to the
                                 swap counterparty.

                                 Upon early termination of the swap contract,
                                 the swap counterparty or the supplemental
                                 interest trustee may be liable to make a swap
                                 termination payment to the other party
                                 (regardless of which party caused the
                                 termination). The swap termination payment will
                                 be computed in accordance with the procedures
                                 set forth in the swap contract. In the event
                                 that a swap termination payment, other than a
                                 swap termination payment resulting from a swap
                                 counterparty trigger event, is payable to the
                                 swap counterparty, that payment will be paid
                                 with respect to the related distribution date,
                                 and on any subsequent distribution dates until
                                 paid in full prior to distributions to holders
                                 of certificates. This feature may result in
                                 losses on the certificates. Due to the priority
                                 of the applications of the available funds, the
                                 subordinated certificates will bear the effects
                                 of any shortfalls resulting from a net swap
                                 payment or swap termination payment to the swap
                                 counterparty before those effects are borne by
                                 the senior certificates and one or more classes
                                 of subordinated certificates may suffer a loss
                                 as a result of that payment.

EFFECT OF CREDITWORTHINESS OF    The ratings of the swap counterparty are lower
SWAP COUNTERPARTY ON RATINGS     than "AAA". The ratings of the certificates
OF CERTIFICATES                  will depend in part upon the credit ratings of
                                 the swap counterparty. If a credit rating of
                                 the swap counterparty is qualified, reduced or
                                 withdrawn and the swap counterparty does not
                                 post collateral securing its obligations under
                                 the swap contract or a substitute swap
                                 counterparty is not obtained in accordance with
                                 the terms of the swap contract, the ratings of
                                 the certificates may be qualified, reduced or
                                 withdrawn. In that event, the value and
                                 marketability of those certificates will be
                                 adversely affected.

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

SECOND LIENS ON SOME OF THE      With respect to approximately 29.28% of the
MORTGAGED PROPERTIES MAY         mortgage loans, by cut-off date pool principal
ADVERSELY AFFECT YOU             balance, 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 ratio of such mortgage loans is
                                 approximately 76.14%, and the weighted average
                                 combined loan-to-value ratio (including


                                      S-27



                                 the second lien) is approximately 86.95%. 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      When a borrower makes a full or partial
WILL BE ALLOCATED TO THE         prepayment on a mortgage loan, the amount of
CERTIFICATES                     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 fee to offset this shortfall, but the
                                 reduction for any distribution date is limited
                                 to a portion of the servicing fee for the
                                 related month. If the aggregate amount of
                                 interest shortfalls resulting from prepayments
                                 exceeds the amount of the reduction in the
                                 servicing fee, the amount of interest available
                                 to make distributions of interest to the
                                 certificates will be reduced.

                                 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
                                 future time, will not be advanced by the
                                 servicer, and will reduce accrued interest on
                                 each class of certificates on a pro rata basis.
                                 Additionally, 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 the 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. These shortfalls will be allocated first
                                 to the excess cashflow on the mortgage loans
                                 for the related distribution date and then will
                                 be used to reduce current interest on each
                                 class of senior certificates and the
                                 subordinated certificates on pro rata basis,
                                 based on the amounts of interest payable to
                                 those senior certificates and the subordinated
                                 certificates.

                                 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."

RISKS RELATED TO NEWLY           The majority of the mortgage loans included in
ORIGINATED MORTGAGE LOANS AND    the issuing entity have been originated within
SERVICER'S REPURCHASE            the twelve months prior to the closing date. As
OBLIGATION RELATED TO EARLY      a result, more defaults may occur than if the
PAYMENT DEFAULT                  mortgage loans had been outstanding for a
                                 longer period of time. In addition, the


                                      S-28



                                 servicer has the obligation to pursue remedies
                                 against third parties arising from certain of
                                 the mortgage loans that experience an early
                                 payment default and may, as a result,
                                 repurchase such mortgage loans. The proceeds of
                                 any such repurchases will be treated as
                                 prepayments of the applicable mortgage loans
                                 and will have the same effect on the yield of
                                 the senior certificates as prepayments.
                                 Investors in the senior certificates should
                                 note that such obligation may be inconsistent
                                 with, and adverse to the interests of the
                                 holders of the senior certificates, and the
                                 servicer is required, if a mortgage loan is
                                 subject to an early payment default provision,
                                 to pursue remedies against third parties,
                                 without consideration of the interests of the
                                 senior certificates in connection with such
                                 obligation. Furthermore, the existence of such
                                 obligation may adversely affect the 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          The offered certificates may not be an
APPROPRIATE FOR SOME INVESTORS   appropriate investment for investors who do 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
                                      uncertain rate and timing of principal
                                      prepayments on the mortgage loans;

                                 o    The rate of principal distributions on and
                                      the weighted average lives of the offered
                                      certificates will be sensitive to the
                                      uncertain rate and timing of principal
                                      prepayments on the mortgage loans 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          The fees and non-interest expenses of a REMIC
ENTITIES SHOULD NOT INVEST IN    will be allocated pro rata to the residual
THE RESIDUAL CERTIFICATES        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 residual
                                 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-29



GEOGRAPHIC CONCENTRATIONS        Approximately 63.15% of the mortgage loans by
INCREASE RISK THAT CERTIFICATE   pool principal balance as of the cut-off date
YIELDS COULD BE IMPAIRED         are secured by property in California. Property
                                 in California may be more susceptible than
                                 homes located in other parts of the country to
                                 some types of uninsurable hazards, such as
                                 earthquakes, floods, mudslides and other
                                 natural disasters. In addition,

                                 o    economic conditions in California (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 California residential
                                      real estate market may reduce the values
                                      of properties located in California, which
                                      would result in an increase in the
                                      loan-to-value ratios. 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; and

                                 o    any increase in the market value of
                                      properties located in California 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    The structure of the servicing fee might affect
COULD AFFECT COLLECTIONS AND     the ability to find a replacement servicer.
RECOVERIES ON THE MORTGAGE       Although the trustee is required to replace the
LOANS                            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.

RIGHTS OF THE NIM INSURER        If there is a NIM Insurer, pursuant to the
                                 pooling and servicing agreement, unless the NIM
                                 Insurer fails to make a required payment under
                                 the certificate guaranty insurance policy
                                 insuring the net interest margin securities and
                                 the failure is continuing or the NIM Insurer is
                                 the subject of a bankruptcy proceeding (each
                                 such event, a "NIM Insurer Default"), the NIM
                                 Insurer will be entitled to exercise, among
                                 others, the following rights without the
                                 consent of holders of the offered certificates,
                                 and the holders of the offered certificates may
                                 exercise such rights only with the prior
                                 written consent of the NIM Insurer:

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


                                      S-30



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

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

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

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

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

                                 o    any amendment to the pooling and servicing
                                      agreement.

                                 Investors in the offered certificates should
                                 note that:

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

                                 o    the rights granted to the NIM Insurer are
                                      extensive,

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

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

                                 See "Rights of the NIM Insurer under Pooling
                                 and Servicing Agreement" in this prospectus
                                 supplement.

RELOCATION OF THE SERVICER'S     The servicer intends to relocate its default
DEFAULT MANAGEMENT SERVICES      management, collections, and loss mitigation
MAY RESULT IN INCREASED          functions from Pasadena, California to Texas in
DELINQUENCIES AND DEFAULTS       2007. Fewer than 70 of the servicer's employees
WHICH MAY ADVERSELY AFFECT THE   will be directly affected by this relocation.
YIELD ON THE CERTIFICATES        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


                                      S-31



                                 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       Recently, the residential mortgage market in
RESIDENTIAL MORTGAGE MARKET      the United States has experienced a variety of
MAY ADVERSELY AFFECT THE         difficulties and economic conditions that may
PERFORMANCE AND MARKET VALUE     adversely affect the performance of the
OF YOUR SECURITIES               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.

                                 In periods when the applicable index is
                                 increasing or because of the prior application
                                 of periodic caps, the monthly payments for
                                 borrowers with adjustable rate mortgage loans
                                 will increase on each payment adjustment date.
                                 Delinquency rates may increase when monthly
                                 payments on the mortgage loans increase.

                                 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. For
                                 mortgage loans with prepayment charges, the
                                 amount of the prepayment charge will increase
                                 the cost of refinancing. Borrowers who intend
                                 to sell their homes on or before the expiration
                                 of the fixed rate 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.

                                 Investors should note that delinquencies
                                 generally have been increasing with respect to
                                 securitizations sponsored by IndyMac Bank,
                                 F.S.B. See "Static Pool Data" in this
                                 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.

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-32



                                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 April 1, 2007 among
IndyMac Bank, as seller and servicer, the depositor and Deutsche Bank National
Trust Company, as trustee and supplemental interest 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 36 states.

          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 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 Sellers; Repurchases,
etc." in the prospectus. Under the pooling and servicing agreement, the
depositor will assign all 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 added to or 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 $403,645,670.36, which is
referred to as the "CUT-OFF DATE POOL PRINCIPAL BALANCE."

          The principal balance of each Mortgage Loan as of the Cut-off Date
reflects the application of scheduled payments of principal due on the Mortgage
Loan on or prior to the Cut-off Date, regardless of whether received, and any
amounts of Deferred Interest added to the Stated Principal Balance of such
Mortgage Loan as a result of negative amortization (as described below).
Whenever reference is made in this prospectus supplement to a percentage of some
or all of the Mortgage Loans, that percentage is determined on the basis of the
Stated Principal Balances of those Mortgage Loans as of the Cut-off Date, unless
otherwise specified. The Cut-off Date Pool Principal Balance of the Mortgage
Loans set forth above is subject to a variance of plus or minus ten percent.


                                      S-33



          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 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.

          With respect to approximately 25.82% of the Mortgage Loans by Cut-off
Date Pool Principal Balance, the mortgagors may prepay their Mortgage Loans at
any time without a prepayment charge. The remainder of the Mortgage Loans
require the payment of a prepayment charge on either certain types of
prepayments or on all prepayments generally within one to three years after
origination. The holder of the Class P Certificates will be entitled to all
prepayment charges received on the Mortgage Loans, and those amounts will not be
available for distribution on the other classes of certificates. Under certain
circumstances, as described in this prospectus supplement under "Servicing of
the Mortgage Loans--Prepayment Charges," 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 of each of the Mortgage Loans will be fixed for a
certain period of time after the origination of the Mortgage Loan. Each mortgage
note for the Mortgage Loans will provide for adjustments to the related Mortgage
Rate at the end of the initial fixed-rate period and annually thereafter (each
such date, an "ADJUSTMENT DATE") to equal the sum, rounded to the nearest
0.125%, of (1) the average of the London interbank offered rates for one-year
U.S. dollar deposits in the London market, generally as set forth in either The
Wall Street Journal or some other source generally accepted in the residential
mortgage loan origination business and specified in the related mortgage note,
or, if such rate ceases to be published in The Wall Street Journal or becomes
unavailable for any reason, then based upon a new index selected by the
Servicer, based on comparable information, in each case, as most recently
announced as of either 15 days prior to, or the first business day of the month
immediately preceding the month of, such Adjustment Date (the "ONE-YEAR LIBOR
INDEX"), and (2) the gross margin specified in the related mortgage note (the
"GROSS MARGIN"); provided, however, that the Mortgage Rate for the Mortgage
Loans will not increase or decrease by more than a certain amount specified in
the mortgage note (each limit on adjustments in the Mortgage Rate is referred to
as a "SUBSEQUENT PERIODIC RATE CAP"), with the exception of the initial
Adjustment Date for which the Mortgage Rate on each Mortgage Loan will not
increase or decrease by more the certain amount specified in the related
mortgage note (each limit on initial adjustments in the Mortgage Rate is
referred to as a "INITIAL PERIODIC RATE CAP"). Adjustments to the Mortgage Rate
for each Mortgage Loan are subject to a lifetime maximum interest rate (the
"MAXIMUM MORTGAGE RATE"). Each Mortgage Loan specifies a lifetime minimum
interest rate (the "MINIMUM MORTGAGE RATE"), which might be equal to the Gross
Margin for that Mortgage Loan. Due to the application of the Maximum Mortgage
Rates, the mortgage rate on each Mortgage Loan, as adjusted on any mortgage rate
adjustment date, may be less than the sum of the index and Gross Margin.

          Monthly Payment Adjustments. The borrower under each Mortgage Loan is
required to make a minimum monthly payment that is subject to adjustment on a
date specified in the mortgage note and annually thereafter, subject to the
conditions that (1) during the first ten years of the Mortgage Loan, the amount
of the minimum monthly payment will be equal to a discount percentage ranging
from 45% to 70% of the amount necessary to fully amortize the related Mortgage
Loan over its remaining term at the current mortgage rate (such percentage, the
"PAYMENT LIMIT"), (2) as of the tenth anniversary of the first due date and on
the same day every year thereafter (each such date, a "PAYMENT ADJUSTMENT
DATE"), the minimum monthly payment will be recast, without regard to the
payment limit, in order to fully amortize the then unpaid mortgage loan
principal balance over the remaining term to maturity, and (3) if the unpaid
stated principal balance of a mortgage loan exceeds 110% or 115% (such
percentage, the "NEGATIVE AMORTIZATION LIMIT") of the original stated principal
balance of the mortgage loan due to deferred interest, the minimum monthly
payment will be recast (x) during the first ten years of the mortgage loan, to
be equal to the interest only payment based on the unpaid stated principal
balance and (y) after the first ten years of the mortgage loan, to amortize
fully the then unpaid principal balance of the mortgage loan over its remaining
term to maturity. If borrowers only make the minimum monthly payments, a portion
of the accrued interest on Mortgage Loans will become deferred interest. The
Mortgage Loans permit the borrowers at any time to make payments in


                                      S-34



excess of the minimum payments. The monthly statements sent to the borrowers
shows for each Mortgage Loan the minimum payment (the "MINIMUM MONTHLY
PAYMENT"), the interest only payment (an "INTEREST ONLY MONTHLY PAYMENT"), and
the amount that would fully amortize the mortgage loan over remaining terms of
30 years (a "FULLY AMORTIZING MONTHLY PAYMENT").

          The month of the earliest first payment date, earliest stated maturity
date and latest stated maturity date of any Mortgage Loan are January 1, 2004,
December 1, 2033 and May 1, 2037, respectively.

          As of the Cut-off Date, none of the Mortgage Loans were delinquent 30
days. Since the later of their origination date and date of acquisition by the
seller, none of the Mortgage Loans (by Cut-off Date Pool Principal Balance) have
been one or more payments delinquent in the last 12 months and none of the
Mortgage Loans have been delinquent more than once. Whether a Scheduled Payment
with regard to a Mortgage Loan is considered "delinquent" is determined in
accordance with the MBA Method, as described in this prospectus supplement under
"Static Pool Data." No Mortgage Loan was subject to a buydown agreement.

          At origination, all of the Mortgage Loans had a Loan-to-Value Ratio of
less than 100%. All of the Mortgage Loans 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. 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. See
"--Underwriting Process" 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.


                                      S-35



          The following tables set forth information about the Mortgage Loans 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 as of
the Cut-off Date and have been rounded in order to total 100%.


                                      S-36



                                 MORTGAGE LOANS

                    MORTGAGE RATES FOR THE MORTGAGE LOANS(1)



                                                                PERCENT OF                            WEIGHTED     WEIGHTED
                                                AGGREGATE       AGGREGATE      AVERAGE     WEIGHTED   AVERAGE       AVERAGE
                                 NUMBER OF      PRINCIPAL       PRINCIPAL      CURRENT     AVERAGE      FICO       ORIGINAL
RANGE OF                         MORTGAGE        BALANCE         BALANCE      PRINCIPAL    MORTGAGE    CREDIT    LOAN-TO-VALUE
MORTGAGE RATES (%)                 LOANS       OUTSTANDING     OUTSTANDING     BALANCE       RATE      SCORE         RATIO
------------------------------   ---------   ---------------   -----------   -----------   --------   --------   -------------

4.501 - 5.000.................        1      $    400,485.66       0.10%     $400,485.66     5.000%     728          52.63%
5.001 - 5.500.................        1           211,309.44       0.05       211,309.44     5.125      814          74.04
5.501 - 6.000.................       21         8,127,992.67       2.01       387,047.27     5.865      732          65.38
6.001 - 6.500.................      329       145,868,676.09      36.14       443,369.84     6.316      732          69.09
6.501 - 7.000.................      337       139,051,323.13      34.45       412,615.20     6.809      720          70.71
7.001 - 7.500.................      222        89,101,668.76      22.07       401,358.87     7.311      701          73.42
7.501 - 8.000.................       58        18,596,661.59       4.61       320,632.10     7.725      695          77.34
8.001 - 8.500.................        7         1,800,953.22       0.45       257,279.03     8.241      662          74.92
8.501 - 9.000.................        1           486,599.80       0.12       486,599.80     8.625      663          74.05
                                    ---      ---------------     ------
   Total......................      977      $403,645,670.36     100.00%
                                    ===      ===============     ======


----------
(1)  As of the Cut-off Date, the weighted average Mortgage Rate of the Mortgage
     Loans was approximately 6.771% per annum.

              CURRENT PRINCIPAL BALANCES FOR THE MORTGAGE LOANS(1)



                                                                PERCENT OF                              WEIGHTED     WEIGHTED
                                                AGGREGATE       AGGREGATE       AVERAGE      WEIGHTED   AVERAGE       AVERAGE
                                 NUMBER OF      PRINCIPAL       PRINCIPAL       CURRENT      AVERAGE      FICO       ORIGINAL
RANGE OF CURRENT MORTGAGE        MORTGAGE        BALANCE         BALANCE       PRINCIPAL     MORTGAGE    CREDIT    LOAN-TO-VALUE
LOAN PRINCIPAL BALANCES ($)        LOANS       OUTSTANDING     OUTSTANDING      BALANCE        RATE      SCORE         RATIO
------------------------------   ---------   ---------------   -----------   -------------   --------   --------   -------------

0.01 - 50,000.00..............        1      $     42,079.60       0.01%     $   42,079.60     7.125%      786        11.67%
50,000.01 - 100,000.00........        5           455,648.26       0.11          91,129.65     7.051       720        65.49
100,000.01 - 150,000.00.......       54         6,947,478.87       1.72         128,657.02     6.739       730        63.07
150,000.01 - 200,000.00.......       77        13,765,941.48       3.41         178,778.46     6.860       719        65.43
200,000.01 - 250,000.00.......      100        22,750,719.41       5.64         227,507.19     6.937       711        71.17
250,000.01 - 300,000.00.......      118        32,352,413.25       8.02         274,172.99     6.827       713        70.70
300,000.01 - 350,000.00.......       93        30,212,182.38       7.48         324,862.18     6.807       717        69.65
350,000.01 - 400,000.00.......      116        43,500,033.01      10.78         375,000.28     6.902       709        73.23
400,000.01 - 450,000.00.......       74        31,362,821.31       7.77         423,821.91     6.831       708        73.02
450,000.01 - 500,000.00.......       84        39,723,020.59       9.84         472,893.10     6.845       714        73.79
500,000.01 - 550,000.00.......       58        30,375,649.96       7.53         523,718.10     6.643       722        73.31
550,000.01 - 600,000.00.......       45        25,835,758.72       6.40         574,127.97     6.733       707        75.75
600,000.01 - 650,000.00.......       44        27,646,519.20       6.85         628,329.98     6.669       717        73.04
650,000.01 - 700,000.00.......       23        15,536,264.46       3.85         675,489.76     6.671       732        73.12
700,000.01 - 750,000.00.......       14        10,143,583.13       2.51         724,541.65     6.714       721        74.31
750,000.01 - 800,000.00.......       15        11,564,302.29       2.86         770,953.49     6.701       718        72.32
800,000.01 - 850,000.00.......        7         5,787,677.90       1.43         826,811.13     6.537       751        68.31
850,000.01 - 900,000.00.......       10         8,738,047.06       2.16         873,804.71     6.587       722        52.80
900,000.01 - 950,000.00.......        5         4,655,561.97       1.15         931,112.39     6.526       722        69.57
950,000.01 - 1,000,000.00.....       13        12,797,904.17       3.17         984,454.17     6.478       731        68.60
1,000,000.01 - 1,250,000.00...       11        11,888,805.28       2.95       1,080,800.48     6.581       745        62.47
1,250,000.01 - 1,500,000.00...        4         5,550,058.22       1.37       1,387,514.56     6.447       766        67.75
1,500,000.01 - 1,750,000.00...        1         1,560,000.00       0.39       1,560,000.00     6.625       793        54.74
1,750,000.01 - 2,000,000.00...        2         3,820,000.00       0.95       1,910,000.00     7.262       733        65.67
2,000,000.01 - 2,250,000.00...        2         4,101,000.00       1.02       2,050,500.00     7.375       737        60.47
2,500,000.01 - 2,750,000.00...        1         2,532,199.84       0.63       2,532,199.84     6.750       778        60.17
                                    ---      ---------------     ------
   Total......................      977      $403,645,670.36     100.00%
                                    ===      ===============     ======


----------
(1)  As of the Cut-off Date, the average principal balance of the Mortgage Loans
     was approximately $413,148.08.


                                      S-37



             ORIGINAL LOAN-TO-VALUE RATIOS FOR THE MORTGAGE LOANS(1)



                                                                PERCENT OF                            WEIGHTED     WEIGHTED
                                                AGGREGATE       AGGREGATE      AVERAGE     WEIGHTED   AVERAGE       AVERAGE
                                 NUMBER OF      PRINCIPAL       PRINCIPAL      CURRENT      AVERAGE     FICO       ORIGINAL
RANGE OF ORIGINAL                MORTGAGE        BALANCE         BALANCE      PRINCIPAL    MORTGAGE    CREDIT    LOAN-TO-VALUE
LOAN-TO-VALUE RATIOS (%)           LOANS       OUTSTANDING     OUTSTANDING     BALANCE       RATE      SCORE         RATIO
------------------------------   ---------   ---------------   -----------   -----------   --------   --------   -------------

10.01 - 20.00.................        4      $    592,417.25       0.15%     $148,104.31     6.853%      770         17.22%
20.01 - 30.00.................        9         3,620,665.18       0.90       402,296.13     6.384       738         25.48
30.01 - 40.00.................       23         7,480,112.39       1.85       325,222.28     6.532       728         35.65
40.01 - 50.00.................       46        15,716,996.69       3.89       341,673.84     6.441       752         45.46
50.01 - 60.00.................       78        32,986,182.71       8.17       422,899.78     6.723       729         56.19
60.01 - 70.00.................      203        90,830,493.05      22.50       447,440.85     6.710       722         66.61
70.01 - 80.00.................      605       250,466,010.75      62.05       413,993.41     6.832       713         77.73
80.01 - 90.00.................        7         1,410,787.98       0.35       201,541.14     6.931       718         86.09
90.01 - 100.00................        2           542,004.36       0.13       271,002.18     6.351       718         96.31
                                    ---      ---------------    ------
   Total......................      977      $403,645,670.36    100.00%
                                    ===      ===============    ======


----------
(1)  As of the Cut-off Date, the weighted average original Loan-to-Value Ratio
     of the Mortgage Loans was approximately 70.93%.

             ORIGINAL TERM TO STATED MATURITY FOR THE MORTGAGE LOANS



                                                                PERCENT OF                            WEIGHTED     WEIGHTED
                                                AGGREGATE       AGGREGATE      AVERAGE     WEIGHTED    AVERAGE     AVERAGE
                                 NUMBER OF      PRINCIPAL       PRINCIPAL      CURRENT     AVERAGE      FICO       ORIGINAL
ORIGINAL TERM TO STATED          MORTGAGE        BALANCE         BALANCE      PRINCIPAL    MORTGAGE    CREDIT    LOAN-TO-VALUE
MATURITY (MONTHS)                  LOANS       OUTSTANDING     OUTSTANDING     BALANCE       RATE      SCORE        RATIO
------------------------------   ---------   ---------------   -----------   -----------   --------   --------   -------------

360...........................      977      $403,645,670.36      100.00%    $413,148.08    6.771%       719        70.93%
                                    ---      ---------------      ------
   Total......................      977      $403,645,670.36      100.00%
                                    ===      ===============      ======



                                      S-38



          REMAINING TERMS TO STATED MATURITY FOR THE MORTGAGE LOANS(1)



                                                                PERCENT OF                            WEIGHTED     WEIGHTED
                                                AGGREGATE       AGGREGATE      AVERAGE     WEIGHTED   AVERAGE      AVERAGE
                                 NUMBER OF      PRINCIPAL       PRINCIPAL      CURRENT     AVERAGE      FICO       ORIGINAL
REMAINING TERMS TO STATED        MORTGAGE        BALANCE         BALANCE      PRINCIPAL    MORTGAGE    CREDIT    LOAN-TO-VALUE
MATURITY (MONTHS)                  LOANS       OUTSTANDING     OUTSTANDING     BALANCE       RATE      SCORE         RATIO
------------------------------   ---------   ---------------   -----------   -----------   --------   --------   -------------

320...........................        2      $  1,334,508.60       0.33%     $667,254.30     6.346%      726         68.49%
322...........................        1           960,603.54       0.24       960,603.54     6.500       688         72.29
327...........................        1           179,277.66       0.04       179,277.66     6.000       781         79.96
329...........................        2         1,210,824.60       0.30       605,412.30     6.261       778         65.36
333...........................        2           709,753.11       0.18       354,876.56     5.929       668         78.76
334...........................        1           124,132.10       0.03       124,132.10     6.375       741         79.99
335...........................        3           931,890.59       0.23       310,630.20     6.233       745         77.32
336...........................        2           559,588.09       0.14       279,794.05     6.172       659         71.89
337...........................        1           142,528.93       0.04       142,528.93     6.500       712         88.64
338...........................        3         1,025,483.26       0.25       341,827.75     6.059       706         72.62
339...........................        1           280,431.64       0.07       280,431.64     5.875       780         67.14
341...........................        2           790,230.39       0.20       395,115.20     6.039       734         62.94
345...........................        2           590,672.34       0.15       295,336.17     6.310       717         73.37
346...........................        4         1,474,210.90       0.37       368,552.73     6.291       739         76.92
348...........................        1           138,216.36       0.03       138,216.36     6.250       718         58.61
350...........................        1           218,524.14       0.05       218,524.14     7.375       639         75.00
351...........................        1           466,860.30       0.12       466,860.30     6.875       760         75.00
352...........................        1           191,416.15       0.05       191,416.15     8.500       662         80.00
354...........................        2           736,652.94       0.18       368,326.47     7.125       777         69.94
356...........................        1           287,088.19       0.07       287,088.19     6.250       650         75.00
357...........................        6         1,755,804.45       0.43       292,634.08     6.950       748         77.01
358...........................       33        13,267,307.83       3.29       402,039.63     6.927       710         70.89
359...........................      373       152,315,887.48      37.74       408,353.59     6.812       722         70.94
360...........................      531       223,953,776.77      55.48       421,758.52     6.755       716         70.80
                                    ---      ---------------     ------
   Total......................      977      $403,645,670.36     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-39



   GEOGRAPHIC DISTRIBUTION OF THE MORTGAGED PROPERTIES FOR THE MORTGAGE LOANS



                                                                                                                 WEIGHTED
                                                                PERCENT OF                            WEIGHTED    AVERAGE
                                                AGGREGATE       AGGREGATE      AVERAGE     WEIGHTED    AVERAGE   ORIGINAL
                                 NUMBER OF      PRINCIPAL       PRINCIPAL      CURRENT     AVERAGE      FICO     LOAN-TO-
                                  MORTGAGE       BALANCE         BALANCE      PRINCIPAL    MORTGAGE    CREDIT      VALUE
        GEOGRAPHIC AREA            LOANS       OUTSTANDING     OUTSTANDING     BALANCE       RATE       SCORE      RATIO
------------------------------   ---------   ---------------   -----------   -----------   --------   --------   --------

Alaska........................        1      $    290,700.00       0.07%     $290,700.00     7.500%      670       77.01%
Arizona.......................       13         6,845,497.96       1.70       526,576.77     6.886       752       70.66
California....................      546       254,920,429.70      63.15       466,887.23     6.733       721       70.36
Colorado......................       16         6,560,519.84       1.63       410,032.49     7.053       708       77.25
Connecticut...................        7         3,170,981.44       0.79       452,997.35     6.828       703       61.36
Delaware......................        1           242,434.19       0.06       242,434.19     6.750       651       90.00
Florida.......................       86        26,460,711.96       6.56       307,682.70     6.796       717       70.86
Georgia.......................        9         2,425,492.29       0.60       269,499.14     6.802       706       77.53
Hawaii........................       13         6,247,509.52       1.55       480,577.66     6.783       705       67.75
Idaho.........................        4         1,905,028.75       0.47       476,257.19     6.436       707       68.94
Illinois......................       16         5,328,881.40       1.32       333,055.09     7.014       701       74.20
Indiana.......................        1           268,488.26       0.07       268,488.26     6.250       745       80.00
Kansas........................        1           241,500.00       0.06       241,500.00     7.125       652       78.41
Maine.........................        4         1,283,575.35       0.32       320,893.84     6.747       755       72.46
Maryland......................       36        11,263,432.52       2.79       312,873.13     6.966       697       74.87
Massachusetts.................       13         5,093,675.37       1.26       391,821.18     6.620       718       74.39
Michigan......................       22         5,729,150.94       1.42       260,415.95     6.741       746       76.01
Minnesota.....................        5         1,610,052.55       0.40       322,010.51     6.743       700       73.64
Mississippi...................        1           853,507.94       0.21       853,507.94     6.750       768       68.00
Missouri......................        2           426,761.79       0.11       213,380.90     6.688       754       61.55
Nevada........................       17         6,530,225.87       1.62       384,130.93     6.862       711       71.14
New Hampshire.................        1           257,600.00       0.06       257,600.00     6.500       758       80.00
New Jersey....................       30        11,543,569.47       2.86       384,785.65     6.922       703       69.44
New Mexico....................        2           494,000.00       0.12       247,000.00     7.200       656       73.69
New York......................       22         6,923,765.67       1.72       314,716.62     6.888       703       67.71
North Carolina................        2           513,530.65       0.13       256,765.33     6.968       767       69.59
Oregon........................       13         3,706,883.36       0.92       285,144.87     6.866       715       70.54
Pennsylvania..................        5         1,547,734.15       0.38       309,546.83     6.839       682       69.44
Rhode Island..................        1           287,088.19       0.07       287,088.19     6.250       650       75.00
South Carolina................        6         2,813,336.36       0.70       468,889.39     6.771       732       77.46
Tennessee.....................        1           416,500.00       0.10       416,500.00     6.875       695       69.65
Texas.........................        3           422,763.40       0.10       140,921.13     7.172       756       75.03
Utah..........................        2           828,000.00       0.21       414,000.00     6.711       719       80.00
Virginia......................       33        12,807,281.74       3.17       388,099.45     6.767       725       72.97
Washington....................       41        13,246,326.97       3.28       323,081.15     6.779       714       71.59
Wisconsin.....................        1           138,732.76       0.03       138,732.76     7.500       642       80.00
                                    ---      ---------------     ------
   Total......................      977      $403,645,670.36     100.00%
                                    ===      ===============     ======



                                      S-40



            MORTGAGORS' FICO CREDIT SCORES FOR THE MORTGAGE LOANS(1)



                                                                                                                 WEIGHTED
                                                                PERCENT OF                            WEIGHTED    AVERAGE
                                                AGGREGATE       AGGREGATE      AVERAGE     WEIGHTED    AVERAGE   ORIGINAL
                                 NUMBER OF      PRINCIPAL       PRINCIPAL      CURRENT     AVERAGE      FICO     LOAN-TO-
RANGE OF FICO                     MORTGAGE       BALANCE         BALANCE      PRINCIPAL    MORTGAGE    CREDIT      VALUE
CREDIT SCORES                      LOANS       OUTSTANDING     OUTSTANDING     BALANCE       RATE       SCORE      RATIO
------------------------------   ---------   ---------------   -----------   -----------   --------   --------   --------

621 - 640.....................       45      $ 15,942,805.21       3.95%     $354,284.56     7.081%      633       72.50%
641 - 660.....................       78        29,211,775.28       7.24       374,509.94     7.007       651       72.88
661 - 680.....................      119        48,357,291.24      11.98       406,363.79     6.941       670       72.20
681 - 700.....................      139        55,855,262.79      13.84       401,836.42     6.889       689       72.07
701 - 720.....................      151        59,894,115.27      14.84       396,649.77     6.765       710       73.23
721 - 740.....................      123        53,833,436.18      13.34       437,670.21     6.674       730       72.76
741 - 760.....................      124        53,711,867.96      13.31       433,160.23     6.634       751       68.99
761 - 780.....................       90        37,162,947.41       9.21       412,921.64     6.612       771       66.25
781 - 800.....................       76        37,663,475.50       9.33       495,572.05     6.652       788       69.15
801 - 820.....................       32        12,012,693.52       2.98       375,396.67     6.488       807       62.66
                                    ---      ---------------     ------
   Total......................      977      $403,645,670.36     100.00%
                                    ===      ===============     ======


----------
(1)  As of the Cut-off Date, the weighted average FICO Credit Score of the
     Mortgage Loans was approximately 719.

              TYPES OF MORTGAGED PROPERTIES FOR THE MORTGAGE LOANS



                                                                                                                 WEIGHTED
                                                                PERCENT OF                            WEIGHTED    AVERAGE
                                                AGGREGATE       AGGREGATE      AVERAGE     WEIGHTED    AVERAGE   ORIGINAL
                                 NUMBER OF      PRINCIPAL       PRINCIPAL      CURRENT     AVERAGE      FICO     LOAN-TO-
                                  MORTGAGE       BALANCE         BALANCE      PRINCIPAL    MORTGAGE    CREDIT      VALUE
         PROPERTY TYPE             LOANS       OUTSTANDING     OUTSTANDING     BALANCE       RATE       SCORE      RATIO
------------------------------   ---------   ---------------   -----------   -----------   --------   --------   --------

Single Family Residence.......      659      $273,828,895.11      67.84%     $415,521.84     6.780%      717       70.80%
Planned Unit Development
(PUD).........................      195        89,487,165.93      22.17       458,908.54     6.745       722       70.41
Condominium High Rise.........        8         4,226,496.21       1.05       528,312.03     6.610       733       69.12
Condominium Low Rise..........       80        23,778,874.64       5.89       297,235.93     6.798       729       74.45
Two-to Four-Family Residence..       27        10,138,876.59       2.51       375,513.95     6.707       716       70.85
Townhouse.....................        8         2,185,361.88       0.54       273,170.24     7.014       697       74.33
                                    ---      ---------------     ------
   Total......................      977      $403,645,670.36     100.00%
                                    ===      ===============     ======


                         PURPOSES OF THE MORTGAGE LOANS



                                                                                                                 WEIGHTED
                                                                PERCENT OF                            WEIGHTED    AVERAGE
                                                AGGREGATE       AGGREGATE      AVERAGE     WEIGHTED    AVERAGE   ORIGINAL
                                 NUMBER OF      PRINCIPAL       PRINCIPAL      CURRENT     AVERAGE      FICO     LOAN-TO-
                                  MORTGAGE       BALANCE         BALANCE      PRINCIPAL    MORTGAGE    CREDIT      VALUE
         LOAN PURPOSE              LOANS       OUTSTANDING     OUTSTANDING     BALANCE       RATE       SCORE      RATIO
------------------------------   ---------   ---------------   -----------   -----------   --------   --------   --------

Refinance (Cash Out)..........      572      $215,845,035.65      53.47%     $377,351.46     6.823%      716       68.40%
Refinance (Rate/Term).........      299       133,833,533.21      33.16       447,603.79     6.727       720       73.21
Purchase......................      106        53,967,101.50      13.37       509,123.60     6.668       728       75.39
                                    ---      ---------------     ------
   Total......................      977      $403,645,670.36     100.00%
                                    ===      ===============     ======



                                      S-41



                    OCCUPANCY TYPES FOR THE MORTGAGE LOANS(1)



                                                                PERCENT OF                            WEIGHTED     WEIGHTED
                                                AGGREGATE       AGGREGATE      AVERAGE     WEIGHTED    AVERAGE     AVERAGE
                                 NUMBER OF      PRINCIPAL       PRINCIPAL      CURRENT     AVERAGE      FICO       ORIGINAL
                                 MORTGAGE        BALANCE         BALANCE      PRINCIPAL    MORTGAGE    CREDIT    LOAN-TO-VALUE
       OCCUPANCY TYPE              LOANS       OUTSTANDING     OUTSTANDING     BALANCE       RATE       SCORE       RATIO
------------------------------   ---------   ---------------   -----------   -----------   --------   --------   -------------

Primary Home..................      906      $382,334,164.22      94.72%     $422,002.39    6.777%     718           71.28%
Investment....................       52        13,450,256.05       3.33       258,658.77    6.706      739           64.66
Secondary Home................       19         7,861,250.09       1.95       413,750.00    6.569      743           64.32
                                    ---      ---------------     ------
   Total......................      977      $403,645,670.36     100.00%
                                    ===      ===============     ======


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

                 LOAN DOCUMENTATION TYPES FOR THE MORTGAGE LOANS



                                                                PERCENT OF                            WEIGHTED     WEIGHTED
                                                AGGREGATE       AGGREGATE      AVERAGE     WEIGHTED   AVERAGE      AVERAGE
                                 NUMBER OF      PRINCIPAL       PRINCIPAL      CURRENT     AVERAGE     FICO        ORIGINAL
                                 MORTGAGE        BALANCE         BALANCE      PRINCIPAL    MORTGAGE   CREDIT     LOAN-TO-VALUE
      TYPE OF PROGRAM              LOANS       OUTSTANDING     OUTSTANDING     BALANCE      RATE       SCORE        RATIO
------------------------------   ---------   ---------------   -----------   -----------   --------   --------   -------------

Full/Alternate................      134      $ 46,154,024.60      11.43%     $344,433.02    6.706%      720        74.94%
FastForward...................       10         2,550,979.06       0.63       255,097.91    6.542       773        62.83
Bank Statement................        2         1,926,135.30       0.48       963,067.65    6.250       780        63.52
Stated Income.................      657       289,075,908.91      71.62       439,993.77    6.773       718        72.10
No Income/No Asset............      174        63,938,622.49      15.84       367,463.35    6.833       717        63.28
                                    ---      ---------------     ------
   Total......................      977      $403,645,670.36     100.00%
                                    ===      ===============     ======


                       LOAN AGES FOR THE MORTGAGE LOANS(1)



                                                                PERCENT OF                            WEIGHTED     WEIGHTED
                                                AGGREGATE       AGGREGATE      AVERAGE     WEIGHTED    AVERAGE     AVERAGE
                                 NUMBER OF      PRINCIPAL       PRINCIPAL      CURRENT     AVERAGE      FICO       ORIGINAL
                                 MORTGAGE        BALANCE         BALANCE      PRINCIPAL    MORTGAGE    CREDIT    LOAN-TO-VALUE
     LOAN AGE (MONTHS)             LOANS       OUTSTANDING     OUTSTANDING     BALANCE       RATE       SCORE       RATIO
------------------------------   ---------   ---------------   -----------   -----------   --------   --------   -------------

0.............................      531      $223,953,776.77      55.48%     $421,758.52    6.755%       716        70.80%
1 - 5.........................      413       167,626,087.95      41.53       405,874.30    6.822        722        71.01
6 - 10........................        5         1,613,453.53       0.40       322,690.71    7.250        740        73.28
11 - 15.......................        7         2,203,099.60       0.55       314,728.51    6.293        732        74.82
16 and more...................       21         8,249,252.51       2.04       392,821.55    6.206        723        71.29
                                    ---      ---------------     ------
   Total......................      977      $403,645,670.36     100.00%
                                    ===      ===============     ======


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

                  PREPAYMENT CHARGE TERMS OF THE MORTGAGE LOANS



                                                                PERCENT OF                            WEIGHTED     WEIGHTED
                                                AGGREGATE       AGGREGATE      AVERAGE     WEIGHTED   AVERAGE      AVERAGE
                                 NUMBER OF      PRINCIPAL       PRINCIPAL      CURRENT     AVERAGE     FICO        ORIGINAL
     PREPAYMENT CHARGE           MORTGAGE        BALANCE         BALANCE      PRINCIPAL    MORTGAGE   CREDIT     LOAN-TO-VALUE
       TERM (MONTHS)               LOANS       OUTSTANDING     OUTSTANDING     BALANCE       RATE      SCORE        RATIO
------------------------------   ---------   ---------------   -----------   -----------   --------   --------   -------------

None..........................      204      $104,218,073.36      25.82%     $510,872.91     6.841%      725        69.26%
12 - Hard.....................      200        88,214,919.34      21.85       441,074.60     6.747       718        72.82
24 - Hard.....................       44        19,440,098.40       4.82       441,820.42     6.661       730        70.74
36 - Hard.....................      529       191,772,579.26      47.51       362,519.05     6.754       715        70.99
                                    ---      ---------------     ------
   Total......................      977      $403,645,670.36     100.00%
                                    ===      ===============     ======



                                      S-42



                     GROSS MARGINS FOR THE MORTGAGE LOANS(1)



                                                                PERCENT OF                            WEIGHTED     WEIGHTED
                                                AGGREGATE       AGGREGATE      AVERAGE     WEIGHTED   AVERAGE      AVERAGE
                                 NUMBER OF      PRINCIPAL       PRINCIPAL      CURRENT     AVERAGE      FICO       ORIGINAL
                                 MORTGAGE        BALANCE         BALANCE      PRINCIPAL    MORTGAGE    CREDIT    LOAN-TO-VALUE
 RANGE OF GROSS MARGINS (%)        LOANS       OUTSTANDING     OUTSTANDING     BALANCE       RATE      SCORE         RATIO
------------------------------   ---------   ---------------   -----------   -----------   --------   --------   -------------

2.500 - 2.999.................      971      $401,494,557.52      99.47%     $413,485.64    6.770%      719         70.90%
3.000 - 3.499.................        2           835,131.74       0.21       417,565.87    6.793       687         79.43
3.500 - 3.999.................        3           860,981.10       0.21       286,993.70    7.580       656         71.06
4.000 - 4.999.................        1           455,000.00       0.11       455,000.00    6.250       684         79.13
                                    ---      ---------------     ------
   Total......................      977      $403,645,670.36     100.00%
                                    ===      ===============     ======


----------
(1)  As of the Cut-off Date, the weighted average Gross Margin of the Mortgage
     Loans was approximately 2.754%.

          MONTHS TO INITIAL RATE ADJUSTMENT DATE FOR THE MORTGAGE LOANS



                                                               PERCENT OF                             WEIGHTED     WEIGHTED
                                                AGGREGATE       AGGREGATE      AVERAGE     WEIGHTED   AVERAGE      AVERAGE
                                 NUMBER OF      PRINCIPAL       PRINCIPAL      CURRENT     AVERAGE      FICO       ORIGINAL
 RANGE OF MONTHS TO INITIAL      MORTGAGE        BALANCE         BALANCE      PRINCIPAL    MORTGAGE    CREDIT    LOAN-TO-VALUE
      ADJUSTMENT DATE              LOANS       OUTSTANDING     OUTSTANDING     BALANCE       RATE      SCORE        RATIO
------------------------------   ---------   ---------------   -----------   -----------   --------   --------   -------------

31 - 40.......................       52      $ 22,113,185.12       5.48%     $425,253.56     6.921%      731         70.62%
41 - 50.......................        1           218,524.14       0.05       218,524.14     7.375       639         75.00
51 - 60.......................      818       342,532,440.11      84.86       418,743.81     6.778       717         71.02
61 - 70.......................        2           616,000.00       0.15       308,000.00     6.583       716         80.00
71 - 80.......................        1           191,416.15       0.05       191,416.15     8.500       662         80.00
81 - 90.......................      103        37,974,104.84       9.41       368,680.63     6.611       734         70.07
                                    ---      ---------------     ------
   Total......................      977      $403,645,670.36     100.00%
                                    ===      ===============     ======


                MAXIMUM MORTGAGE RATES FOR THE MORTGAGE LOANS(1)



                                                                PERCENT OF                            WEIGHTED     WEIGHTED
                                                AGGREGATE       AGGREGATE      AVERAGE     WEIGHTED   AVERAGE      AVERAGE
                                 NUMBER OF      PRINCIPAL       PRINCIPAL      CURRENT     AVERAGE      FICO       ORIGINAL
 RANGE OF MAXIMUM MORTGAGE        MORTGAGE       BALANCE         BALANCE      PRINCIPAL    MORTGAGE    CREDIT    LOAN-TO-VALUE
         RATE (%)                  LOANS       OUTSTANDING     OUTSTANDING     BALANCE       RATE      SCORE       RATIO
------------------------------   ---------   ---------------   -----------   -----------   --------   --------   -------------

10.000 - 10.499...............        2      $    611,795.10       0.15%     $305,897.55     5.043%      758         60.02%
10.500 - 10.999...............       15         6,661,183.85       1.65       444,078.92     5.840       735         64.04
11.000 - 11.499...............      232       103,166,556.17      25.56       444,683.43     6.249       734         68.87
11.500 - 11.999...............      352       147,102,395.28      36.44       417,904.53     6.696       721         70.30
12.000 - 12.499...............      229        88,840,549.19      22.01       387,950.00     7.120       707         73.25
12.500 - 12.999...............      114        43,369,066.47      10.74       380,430.41     7.476       699         73.56
13.000 - 13.499...............       24        10,889,279.31       2.70       453,719.97     7.389       728         72.75
13.500 - 13.999...............        6         1,752,224.14       0.43       292,037.36     7.756       675         77.55
14.000 - 14.499...............        2           766,021.05       0.19       383,010.53     8.125       637         74.99
14.500 - 14.999...............        1           486,599.80       0.12       486,599.80     8.625       663         74.05
                                    ---      ---------------     ------
   Total......................      977      $403,645,670.36     100.00%
                                    ===      ===============     ======


----------
(1)  As of the Cut-off Date, the weighted average Maximum Mortgage Rate of the
     Mortgage Loans was approximately 11.825%.


                                      S-43



                    PAYMENT LIMITS FOR THE MORTGAGE LOANS(1)



                                                                                                                 WEIGHTED
                                                                PERCENT OF                            WEIGHTED    AVERAGE
                                                AGGREGATE       AGGREGATE      AVERAGE     WEIGHTED    AVERAGE   ORIGINAL
                                 NUMBER OF      PRINCIPAL       PRINCIPAL      CURRENT     AVERAGE      FICO     LOAN-TO-
                                  MORTGAGE       BALANCE         BALANCE      PRINCIPAL    MORTGAGE    CREDIT      VALUE
       PAYMENT LIMIT(%)            LOANS       OUTSTANDING     OUTSTANDING     BALANCE       RATE       SCORE      RATIO
------------------------------   ---------   ---------------   -----------   -----------   --------   --------   --------

45............................       10      $  5,172,896.28       1.28%     $517,289.63     6.271%      717       70.94%
50............................       47        20,294,000.83       5.03       431,787.25     6.889       733       71.36
55............................      666       284,163,903.60      70.40       426,672.53     6.772       716       72.44
60............................      228        86,634,739.33      21.46       379,976.93     6.776       722       66.40
65............................       23         6,722,267.07       1.67       292,272.48     6.658       730       62.62
70............................        3           657,863.25       0.16       219,287.75     6.869       750       84.40
                                    ---      ---------------     ------
   Total......................      977      $403,645,670.36     100.00%
                                    ===      ===============     ======


------------
(1)  As of the Cut-off Date, the weighted average Payment Limit of the Mortgage
     Loans was approximately 55.885%.

               NEGATIVE AMORTIZATION LIMITS FOR THE MORTGAGE LOANS



                                                                                                                 WEIGHTED
                                                                PERCENT OF                            WEIGHTED    AVERAGE
                                                AGGREGATE       AGGREGATE      AVERAGE     WEIGHTED    AVERAGE   ORIGINAL
                                 NUMBER OF      PRINCIPAL       PRINCIPAL      CURRENT     AVERAGE      FICO     LOAN-TO-
                                  MORTGAGE       BALANCE         BALANCE      PRINCIPAL    MORTGAGE    CREDIT      VALUE
   NEGATIVE AMORTIZATION(%)        LOANS       OUTSTANDING     OUTSTANDING     BALANCE       RATE       SCORE      RATIO
------------------------------   ---------   ---------------   -----------   -----------   --------   --------   --------

110...........................       29      $ 10,806,807.26       2.68%     $372,648.53     6.266%      722       72.06%
115...........................      948       392,838,863.10      97.32       414,386.99     6.785       719       70.90
                                    ---      ---------------     ------
   Total......................      977      $403,645,670.36     100.00%
                                    ===      ===============     ======


              INITIAL PERIODIC RATE CAPS FOR THE MORTGAGE LOANS(1)



                                                                                                                 WEIGHTED
                                                                PERCENT OF                            WEIGHTED    AVERAGE
                                                AGGREGATE       AGGREGATE      AVERAGE     WEIGHTED    AVERAGE   ORIGINAL
                                 NUMBER OF      PRINCIPAL       PRINCIPAL      CURRENT     AVERAGE      FICO     LOAN-TO-
                                  MORTGAGE       BALANCE         BALANCE      PRINCIPAL    MORTGAGE    CREDIT      VALUE
 INITIAL PERIODIC RATE CAP(%)      LOANS       OUTSTANDING     OUTSTANDING     BALANCE       RATE       SCORE      RATIO
------------------------------   ---------   ---------------   -----------   -----------   --------   --------   --------

2.000.........................       52      $ 22,113,185.12       5.48%     $425,253.56     6.921%      731       70.62%
5.000.........................      925       381,532,485.24      94.52       412,467.55     6.762       718       70.95
                                    ---      ---------------     ------
   Total......................      977      $403,645,670.36     100.00%
                                    ===      ===============     ======


----------
(1)  As of the Cut-off Date, the weighted average Initial Periodic Rate Cap of
     the Mortgage Loans was approximately 4.836%.


                                      S-44



              SUBSEQUENT PERIODIC RATE CAPS FOR THE MORTGAGE LOANS



                                                                                                                 WEIGHTED
                                                                PERCENT OF                            WEIGHTED    AVERAGE
                                                AGGREGATE       AGGREGATE      AVERAGE     WEIGHTED    AVERAGE   ORIGINAL
                                 NUMBER OF      PRINCIPAL       PRINCIPAL      CURRENT     AVERAGE      FICO     LOAN-TO-
   SUBSEQUENT PERIODIC RATE       MORTGAGE       BALANCE         BALANCE      PRINCIPAL    MORTGAGE    CREDIT      VALUE
            CAP(%)                 LOANS       OUTSTANDING     OUTSTANDING     BALANCE       RATE       SCORE      RATIO
------------------------------   ---------   ---------------   -----------   -----------   --------   --------   --------

2.000.........................      977      $403,645,670.36     100.00%     $413,148.08     6.771%      719       70.93%
                                    ---      ---------------     ------
   Total......................      977      $403,645,670.36     100.00%
                                    ===      ===============     ======


                   ORIGINATION CHANNELS FOR THE MORTGAGE LOANS



                                                                                                                 WEIGHTED
                                                                PERCENT OF                            WEIGHTED    AVERAGE
                                                AGGREGATE       AGGREGATE      AVERAGE     WEIGHTED    AVERAGE   ORIGINAL
                                 NUMBER OF      PRINCIPAL       PRINCIPAL      CURRENT     AVERAGE      FICO     LOAN-TO-
                                  MORTGAGE       BALANCE         BALANCE      PRINCIPAL    MORTGAGE    CREDIT      VALUE
      ORIGINATION CHANNEL          LOANS       OUTSTANDING     OUTSTANDING     BALANCE       RATE       SCORE      RATIO
------------------------------   ---------   ---------------   -----------   -----------   --------   --------   --------

Correspondent.................      291      $121,868,662.35      30.19%     $418,792.65     6.899%      723       70.10%
Consumer Direct...............       84        28,916,636.71       7.16       344,245.68     6.445       714       68.45
Mortgage Professionals........      602       252,860,371.30      62.64       420,033.84     6.746       717       71.61
                                    ---      ---------------     ------
   Total......................      977      $403,645,670.36     100.00%
                                    ===      ===============     ======



                                      S-45



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 interest of the depositor in each Mortgage
Loan and all interest in all other assets included in IndyMac INDX Mortgage Loan
Trust 2007-FLX3. 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
will not include any scheduled payments 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 mortgage 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
they are 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)
generally will not be submitted for recording in a public office for real
property records (except with respect to any Mortgage Loan located in Maryland)
unless such failure to record would, as certified to the trustee in writing by
the servicer, result in a withdrawal or a downgrading by any rating agency of
the rating on any class of certificates. 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 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, 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 the 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 Maximum Mortgage Rate not more than 1% per annum higher than and not
     lower than the Maximum Mortgage Rate of the deleted Mortgage Loan,

o    have the same negative amortization limit, payment adjustment intervals and
     recast intervals as that of the deleted Mortgage Loan,

o    have the same index and Payment Limit as the deleted Mortgage Loan and a
     Gross Margin not more than 1% per annum higher than, and not lower than
     that of the deleted Mortgage Loan,


                                      S-46



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

o    have a remaining term to maturity no greater than one year more than or one
     year less than that of the deleted Mortgage Loan, and

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 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.


                                      S-47



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 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.


                                      S-48



          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 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 one year (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 verification of 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


                                      S-49



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.

          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.


                                      S-50



          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.

                         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 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 mortgage loans, "SQ2-" as primary servicer of subprime mortgage loans
and "SQ2-" as a special servicer and (z) by S&P, "strong/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 any servicing transfer were to occur, 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") is equal to
approximately 0.3825% per annum. The expense fees consist of (a) the servicing
fee and (b) fees payable to the trustee in respect of its activities as trustee
under the pooling and servicing agreement in an amount of 0.0075% per annum of
the Stated Principal Balance of each Mortgage Loan (the "TRUSTEE FEE"). The
servicing fee rate will be 0.375% per annum. 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 assumption fees
and other similar charges (excluding prepayment charges and late payment fees).
The Servicer will be entitled to receive all reinvestment income earned on
amounts on deposit in the collection account, 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 Expense Fee Rate.


                                      S-51



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 month of the
Cut-off Date, principal prepayments in excess of a Fully Amortizing Monthly
Payment 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 in excess of a
Fully Amortizing Monthly Payment 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 in excess of a Fully Amortizing Monthly Payment, the Servicer
will be required to reduce its servicing compensation, but the reduction for any
Distribution Date will be limited to an amount (the "COMPENSATING INTEREST")
equal to the product of

          o    0.1250% 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 in excess of a Fully
Amortizing Monthly Payment in any month exceed the Compensating Interest for
such month, the amount of interest to be 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 funds in the Certificate
Account that are not required to be distributed on that 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 day of the month)

          minus

          o    the servicing fee for those Mortgage Loans for the period

          plus

          o    an amount equivalent to interest (net of the servicing fee) 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 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


                                      S-52



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 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 and the modification
is in lieu of a refinancing. Modification of a Mortgage Loan may be made 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 the Mortgage Loans are hard prepayment charges,
which require the payment of a prepayment charge in connection with any
prepayment, regardless of the reason for that prepayment. Any prepayment charges
paid on the Mortgage Loans will not be distributed to any of the offered
certificates, but will be distributed to the Class P Certificates.

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


                                      S-53



backed by 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     $39.16 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 its 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.

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


                                      S-54



                                  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
will form the IndyMac INDX Mortgage Loan Trust 2007-FLX3, 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 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
in which residential mortgages comprised the asset pool and has significant
experience in this area. DBNTC has also acted as calculation agent and custodian
in 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. 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
proceedings 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 IN07F3.
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,


                                      S-55



(y) preparing and filing all income tax returns on behalf of the issuing entity
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

          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 Swap Counterparty, the Servicer and each
Rating Agency not less than 60 days before the specified resignation date. The
resignation will 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.


                                      S-56



          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.

                             THE SWAP COUNTERPARTY

          Credit Suisse International (the "SWAP COUNTERPARTY") was incorporated
in England and Wales under the Companies Act 1985 on May 9, 1990 with registered
no. 2500199 and was re-registered as unlimited under the name "Credit Suisse
Financial Products" on July 6, 1990. Its registered office and principal place
of business is at One Cabot Square, London E14 4QJ. Credit Suisse International
is an English bank and is regulated as a European Union credit institution by
The Financial Services Authority ("FSA") under the Financial Services and
Markets Act 2000. The FSA has issued a scope of permission notice authorizing
Credit Suisse International to carry out specified regulated investment
activities. Effective as of March 27, 2000, Credit Suisse Financial Products was
renamed "Credit Suisse First Boston International" and, effective as of January
16, 2006, was renamed "Credit Suisse International." These changes were
renamings only.

          Credit Suisse International is an unlimited liability company and, as
such, its shareholders have a joint, several and unlimited obligation to meet
any insufficiency in the assets of Credit Suisse International in the event of
its liquidation. Credit Suisse International's ordinary voting shares are owned,
as to 56%, by Credit Suisse, as to 24%, by Credit Suisse (International) Holding
AG and, as to 20%, by Credit Suisse Group. Credit Suisse International commenced
business on July 16, 1990. Its principal business is banking, including the
trading of derivative products linked to interest rates, equities, foreign
exchange, commodities and credit.

          Credit Suisse International has been assigned a senior unsecured debt
rating of "AA-" by Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc., a senior debt rating of "Aa3" by Moody's Investors
Service Inc. and a long-term rating of "AA-" by Fitch Ratings. Credit Suisse
International is an affiliate of the underwriter.

          The information contained in the preceding paragraphs has been
provided by the Swap Counterparty for use in this prospectus supplement. The
Swap Counterparty does not undertake any obligation to update such information.
The Swap Counterparty has not been involved in the preparation of, and does not
accept responsibility for, this prospectus supplement or the prospectus.

          The rights and obligations of the Swap Counterparty are as set forth
in the documentation associated with the corridor contract, including, without
limitation, an ISDA Master Agreement (1992-Multicurrency-Cross Border), dated
April 27, 2007, the Schedule and the Credit Support Annex thereto (together,
with the related ISDA Master Agreement, the "ISDA MASTER AGREEMENT") and the
confirmation thereunder. The Swap Contract is subject to certain ISDA
definitions, as published by the International Swaps and Derivatives
Association, Inc. The Swap Contract will not be an asset of the issuing entity
but will instead be an asset of the supplemental interest trust created under
the pooling and servicing agreement.

          Significance Percentage of the Swap Contract.

          Based upon a reasonable good faith estimate of maximum probable
exposure, the significance percentage of the Swap Contract is less than 10%. The
"significance percentage" for the Swap Contract is the percentage that the
significance estimate of the Swap Contract represents of the aggregate Class
Certificate Balance of the LIBOR Certificates. The "significance estimate" of
the Swap Contract is determined based on a reasonable good-faith


                                      S-57



estimate of the maximum probable exposure of the Swap Contract made in
substantially the same manner as that used in IndyMac Bank's internal risk
management process in respect of similar instruments.

                         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 undivided beneficial ownership interests in 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. In addition, the LIBOR
Certificates will represent the rights to receive certain payments from a trust
referred to as the supplemental interest trust, the primary asset of which will
be the supplemental interest trustee's rights under the Swap Contract.

          The Mortgage Pass-Through Certificates, Series 2007-FLX3 will consist
of the Class A-1, Class A-2, Class A-3, Class A-R, Class M-1, Class M-2, Class
M-3, Class M-4, Class M-5, Class M-6, Class L, Class P and Class C Certificates.
Only the classes of certificates listed on the cover page are offered by this
prospectus supplement. The Class P, Class L and Class C Certificates (which are
sometimes referred to in this prospectus supplement as the "PRIVATE
CERTIFICATES") are not offered by this prospectus supplement.

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



          DESIGNATION                              CLASSES OF CERTIFICATES
--------------------------   -------------------------------------------------------------------

    Senior Certificates                        Class A-1, Class A-2, Class A-3 and
                                                   Class A-R Certificates
Subordinated Certificates    Class M-1, Class M-2, Class M-3, Class M-4, Class M-5 and Class M-6
                                                        Certificates
    LIBOR Certificates       Senior Certificates (other than the Residual Certificates) and the
                                                  Subordinated Certificates
   Offered Certificates               LIBOR Certificates and the Residual Certificates
   Residual Certificates                           Class A-R Certificates
   Private Certificates                   Class L, Class P and Class C Certificates


The certificates are generally referred to as the following types:



           CLASS                                     TYPE
--------------------------   ---------------------------------------------------

Class A-1 Certificates:          Senior/Super Senior/Floating Pass-Through Rate
Class A-2 Certificates:      Senior/Support/Super Senior/Floating Pass-Through Rate
Class A-3 Certificates:             Senior/Support/Floating Pass-Through Rate
Class A-R Certificates:                       Senior/REMIC Residual
Subordinated Certificates:           Subordinate/ Floating Pass-Through Rate
Class L Certificates:                           Late Payment Fees
Class P Certificates:                          Prepayment Charges
Class C Certificates:                               Residual



                                      S-58



          The Class L, Class C and Class P Certificates are not offered by this
prospectus supplement. The Private Certificates will not bear interest. The
Class L Certificates will be entitled to all late payment fees, and the Class P
Certificates will be entitled to all prepayment charges received in respect of
the Mortgage Loans and such amounts will not be available for distribution to
the holders of the offered certificates and the other private certificates. The
Class C Certificates will be entitled to receive any excess cashflow from the
mortgage loans after all required distributions are made on the offered
certificates. 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 Offered Certificates are set forth on the cover page of this
prospectus supplement.

CALCULATION OF CLASS CERTIFICATE BALANCE

          The "CLASS CERTIFICATE BALANCE" of any class of 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; and

          o    the amount of Applied Realized Loss Amounts allocated to that
               class,

and, increased by

          o    the amount of Net Deferred Interest allocated to that class,

provided, however, to the extent Applied Realized Loss Amounts have been
allocated to the Class Certificate Balance of any class of certificates, its
Class Certificate Balance will be increased on each Distribution Date
sequentially by class in the order of distribution priority by the amount of
Subsequent Recoveries (if any) on the Mortgage Loans collected during the period
beginning on the second day of the calendar month preceding the calendar month
in which that Distribution Date occurs and ending on the Due Date in the month
in which that Distribution Date occurs (but not by more than the amount of the
Unpaid Realized Loss Amount for that class). After such allocation, a
corresponding decrease will be made on that Distribution Date to the Unpaid
Realized Loss Amount for any class that had its Class Certificate Balance
increased by such allocation of Subsequent Recoveries.

          Although Subsequent Recoveries, if any, will be allocated to increase
the Class Certificate Balance of a class of certificates, as described above,
such Subsequent Recoveries will be included in the Principal Remittance Amount
and will be distributed in the priority set forth below under "--Distributions
of Principal," and therefore such Subsequent Recoveries may not to be used to
make any principal distributions on the class or classes of certificates for
which the Class Certificate Balances have been increased by allocation of
Subsequent Recoveries as described above. Additionally, holders of those
certificates will not be entitled to any payment in respect of interest that
would have accrued on the amount of the increase in Class Certificate Balance
for any Interest Accrual Period preceding the Distribution Date on which such
increase occurs.

BOOK-ENTRY CERTIFICATES

          The Offered Certificates (other than the Residual Certificates) will
be book-entry certificates (the "BOOK-ENTRY CERTIFICATES"). The Residual
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") in the
United States, or, upon request, through Clearstream, Luxembourg (as defined in
this prospectus supplement) or the Euroclear System ("EUROCLEAR") in Europe, 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 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


                                      S-59



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 for the senior certificates (other than the Residual Certificates) and
of $100,000 for the subordinated certificates and integral multiples of $1 in
excess thereof. 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
Certificate 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 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
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 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
Consequences to Holders of the Certificates--Tax Consequences to Foreign
Certificateholders" and "Description


                                      S-60



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 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 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 January 10, 2000, Cedelbank's parent company, Clearstream,
Luxembourg International, societe anonyme ("CI") merged its clearing, settlement
and custody business with that of Deutsche Borse Clearing AG ("DBC"). The merger
involved the transfer by CI of substantially all of its assets and liabilities
(including its shares in CB) to a new Luxembourg company, New Clearstream,
Luxembourg International, societe anonyme ("NEW CI"), which is 50% owned by CI
and 50% owned by DBC's parent company Deutsche Borse AG. The shareholders of
these two entities are banks, securities dealers and financial institutions.
Clearstream, Luxembourg International currently has 92 shareholders, including
U.S. financial institutions or their subsidiaries. No single entity may own more
than 5 percent of Clearstream, Luxembourg International's stock.

          Further to the merger, the Board of Directors of New 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


                                      S-61



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.

          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 Participants in
accordance with DTC's normal procedures. Each 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 Treatment of Foreign
Investors" and "Miscellaneous Tax Aspects-- 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.


                                      S-62



          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 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 "--Payments on Issuing Entity Assets--Deposits to Securities
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 the Interest Remittance
Amount and the Principal Remittance Amount for that Distribution Date,
prepayment charges and late payment fees and will deposit such amounts in the
Distribution Account. The holders of the Class P Certificates will be entitled
to all prepayment charges, and the holders of the Class L Certificates will be
entitled to all late payment fees received on the Mortgage Loans and such
amounts will not be available for distribution to the holders of the other
certificates. There is no independent verification of the transaction accounts
or the transaction activity with respect to the Distribution Account.


                                      S-63



          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 "The Trustee" 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.

THE SWAP ACCOUNT

          The trustee, in its capacity as trustee of the supplemental interest
trust (the "SUPPLEMENTAL INTEREST TRUST" and the trustee, in such capacity, the
"SUPPLEMENTAL INTEREST TRUSTEE"), will establish and maintain one account as
part of the supplemental interest trust, the Swap Account (the "SWAP ACCOUNT")
on behalf of the holders of the LIBOR Certificates and the Swap Counterparty.

          With respect to each Distribution Date, the trustee will deposit into
the Swap Account any portion of the Interest Funds for that Distribution Date
(and, if necessary, any portion of the Principal Remittance Amount for that
Distribution Date) that are to be remitted to the supplemental interest trustee
for payment to the Swap Counterparty or any amounts received from the Swap
Counterparty, as the case may be depending on whether a Net Swap Payment is due
to the Swap Counterparty or from the Swap Counterparty, as described below under
"-- The Swap Contract." With respect to each Distribution Date, following the
deposit to the Swap Account described in the preceding sentence, the
supplemental interest trustee will make either a corresponding withdrawal from
the Swap Account for payment to the Swap Counterparty or distribution to the
holders of the LIBOR Certificates, as the case may be depending on whether a Net
Swap Payment is due to the Swap Counterparty or from the Swap Counterparty.

INVESTMENTS OF AMOUNTS HELD IN ACCOUNTS

          The Certificate Account. All funds in the Certificate Account may be
invested in permitted investments at the direction of the Servicer. All income
and gain net of any losses realized will be for the benefit of the Servicer as
additional servicing compensation and will be remitted to it monthly as
described in this prospectus supplement.

          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 out of the Servicer's own funds immediately as realized. The trustee
will not be liable for the amount of any loss incurred in respect of any
investment or lack of investment of funds held in the Certificate Account and
made in accordance with the pooling and servicing agreement.

          The Distribution Account, Swap Account and Carryover Reserve Fund.
Funds in the Distribution Account, the Swap Account and the Carryover Reserve
Fund will not be invested.


                                      S-64



FEES AND EXPENSES

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



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

FEES

Servicing Fee /        0.375% per annum of the Stated          Compensation       Interest collected with        Monthly
Servicer               Principal Balance of each Mortgage                         respect to each Mortgage
                       Loan (3)                                                   Loan and any Liquidation
                                                                                  Proceeds or Subsequent
                                                                                  Recoveries that are
                                                                                  allocable to accrued and
                                                                                  unpaid interest (4)

Additional Servicing   o    Prepayment Interest Excess (5)     Compensation       Interest collections with      Time to time
Compensation /                                                                    respect to certain Mortgage
Servicer                                                                          Loans prepaid in full

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

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

                       o    Excess Proceeds (6)                Compensation       Liquidation Proceeds and       Time to time
                                                                                  Subsequent Recoveries

Trustee Fee /          0.0075% per annum of the Stated         Compensation       Interest Remittance Amount     Monthly
Trustee                Principal Balance of each Mortgage
                       Loan

EXPENSES

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



                                      S-65





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

Advances / Servicer    To the extent of funds available, the   Reimbursement of   With respect to each           Time to time
                       amount of any Advances.                 Expenses           Mortgage 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        Amounts for which the seller, the       Indemnification    Amounts on deposit on the      Time to time
expenses / the         Servicer, the NIM Insurer and the                          Certificate Account on any
Seller, the            depositor are entitled to                                  Distribution Account Deposit
Servicer, the          indemnification(8)                                         Date, following the transfer
Depositor and the                                                                 to the Distribution Account
NIM Insurer


----------
(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" 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 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 Fee 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 Loan plus (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,
     the Seller and the NIM Insurer."


                                      S-66



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 May 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" for (a) the LIBOR Certificates,
as long as these certificates are Book-Entry Certificates, is the business day
immediately prior to that Distribution Date and (b) any Definitive Certificates
is the last business day of the month immediately preceding the month of that
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 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.

          On each Distribution Date, the Trustee will withdraw all prepayment
charges in the Distribution Account and distribute them to the Class P
Certificates.

          The "INTEREST REMITTANCE AMOUNT" for any Distribution Date is equal
to:

               (a) the sum, without duplication, of:

                    (1) all interest on the Mortgage Loans due on the related
               Due Date and received on or prior to the related Determination
               Date, less the Servicing Fees,

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

                    (3) all advances relating to interest in respect of the
               Mortgage Loans,

                    (4) amounts paid by the Servicer in respect of Compensating
               Interest, and

                    (5) liquidation proceeds on the Mortgage Loans received
               during the related Prepayment Period (to the extent such
               liquidation proceeds relate to interest),

               minus

               (b) all advances in respect of the Mortgage Loans relating to
          interest and certain expenses reimbursed since the prior Due Date,

               plus

               (c) the lesser of (i) the Principal Prepayment Amount for that
          Distribution Date and (ii) aggregate Deferred Interest for that
          Distribution Date.


                                      S-67



          The "PRINCIPAL REMITTANCE AMOUNT" for any Distribution Date is equal
to the following (but not less than zero):

               (a) the sum, without duplication, of:

                    (1) the principal collected or advanced on the Mortgage
               Loans with respect to the related Due Date and any principal
               prepayments not constituting Net Prepayments,

                    (2) the Net Prepayments for that Distribution Date;

                    (3) the Stated Principal Balance of each Mortgage Loan that
               was repurchased by the seller or purchased by the Servicer with
               respect to that Distribution Date;

                    (4) any Substitution Adjustment Amounts in respect of
               Mortgage Loans, and

                    (5) all liquidation proceeds in respect of Mortgage Loans
               (to the extent such liquidation proceeds related to principal)
               and all Subsequent Recoveries in respect of Mortgage Loans
               received during the related Prepayment Period

               minus

               (b) all non-recoverable advances relating to principal on the
          Mortgage Loans and certain expenses reimbursed since the prior Due
          Date.

          "PREPAYMENT INTEREST EXCESS" means with respect to any Mortgage Loan
and principal prepayment received by the Servicer from the first day through the
fifteenth day of any calendar month (other than the calendar month in which the
Cut-off Date occurs), all amounts paid by the related mortgagor in respect of
interest on such principal prepayment.

INTEREST

          General. On each Distribution Date, the interest distributable with
respect to the LIBOR Certificates is the Current Interest for that Distribution
Date and any Interest Carry Forward Amount for that Distribution Date.

          The Pass-Through Rates for the LIBOR Certificates are variable rates
that may change from Distribution Date to Distribution Date. Additionally, the
Pass-Through Rates for the LIBOR Certificates are subject to increase after the
first possible Optional Termination Date. On each Distribution Date, the
Pass-Through Rate for each class of LIBOR Certificates will be subject to the
Net Rate Cap. If the Pass-Through Rate for a class of LIBOR Certificates is
limited by the Net Rate Cap, each holder of the applicable certificates will be
entitled to receive the resulting shortfall only from remaining excess cashflow
(if any) and to the extent described in this prospectus supplement under "--
Overcollateralization Provisions" and from payments (if any) allocated to the
issuing entity in respect of the Swap Contract that are available for that
purpose.

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

          (i) to the Swap Account, the amount of any Net Swap Payment and Swap
Termination Payments (other than a Swap Termination Payment due to a Swap
Counterparty Trigger Event) payable to the Swap Counterparty under the Swap
Contract with respect to that Distribution Date;

          (ii) concurrently, to each class of senior interest-bearing
certificates, pro rata, the Current Interest and Interest Carry Forward Amount
for each such class and that Distribution Date;


                                      S-68



          (iii) sequentially, to the Class M-1, Class M-2, Class M-3, Class M-4,
Class M-5 and Class M-6 Certificates, in that order, based on the Current
Interest and Interest Carry Forward Amount for each such class and that
Distribution Date, the unpaid Current Interest and the Interest Carry Forward
Amount for each such class; and

          (iv) for application as part of the Excess Cashflow for that
Distribution Date, as described under "Overcollateralization Provisions" below,
any such Interest Funds remaining undistributed for that Distribution Date.

          Pass-Through Rates. The classes of certificates will have the
respective pass-through rates described below (each, a "PASS-THROUGH RATE").

          LIBOR Certificates.

          The Pass-Through Rate with respect to each Interest Accrual Period and
each class of LIBOR Certificates will be a per annum rate equal to the lesser
of:

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

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

          The "PASS-THROUGH MARGIN" for each class of LIBOR Certificates is as
follows:

CLASS OF LIBOR CERTIFICATES                    PASS-THROUGH MARGIN
--------------------------------------------   -------------------
                                                   (1)     (2)
                                                  -----   -----
Class A-1...................................      0.240%  0.480%
Class A-2...................................      0.270%  0.540%
Class A-3...................................      0.330%  0.660%
Class M-1...................................      0.650%  0.975%
Class M-2...................................      0.850%  1.275%
Class M-3...................................      1.250%  1.875%
Class M-4...................................      1.550%  2.325%
Class M-5...................................      2.250%  3.375%
Class M-6...................................      2.250%  3.375%

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

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

          Definitions Related to Interest Calculations.

          "ADJUSTED NET MORTGAGE RATE" with respect to each Mortgage Loan and
any Distribution Date is equal to the Mortgage Rate on that Mortgage Loan as of
the Due Date in the prior month minus the Expense Fee Rate.

          "CURRENT INTEREST" with respect to each class of LIBOR Certificates
and each Distribution Date, is (x) the interest accrued at the applicable
Pass-Through Rate for the applicable Interest Accrual Period on the Class
Certificate Balance of that class immediately prior to that Distribution Date
minus (y) the Net Interest Shortfalls allocated to that class minus (z) the Net
Deferred Interest, if any, allocated to that class for that Distribution Date.

          The "INTEREST ACCRUAL PERIOD" for each class of LIBOR Certificates and
for any Distribution Date will be the period commencing on the Distribution Date
in the month prior to the month in which that Distribution Date occurs (or the
Closing Date, in the case of the first Distribution Date) and ending on the day
preceding that Distribution Date. Interest on the LIBOR Certificates will be
calculated on the basis of a 360-day year and the actual number of days that
elapsed in that Interest Accrual Period.


                                      S-69



          "INTEREST CARRY FORWARD AMOUNT," with respect to each class of LIBOR
Certificates and each Distribution Date, is the sum of:

               (i) the excess of:

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

                    (b) the amount actually distributed to that class with
               respect to interest on prior Distribution Dates; and

               (ii) interest for the applicable Interest Accrual Period on the
          amount described above based on the Pass-Through Rate for the
          applicable class of LIBOR Certificates.

          The "INTEREST FUNDS" for any Distribution Date are equal to the
Interest Remittance Amount minus the Trustee Fee for that Distribution Date.

          The "NET PREPAYMENT INTEREST SHORTFALL" with respect to any
Distribution Date is the amount by which the aggregate of the prepayment
interest shortfalls experienced by the Mortgage Loans during the related
Prepayment Period exceeds the Compensating Interest for that Distribution Date.

          The "NET INTEREST SHORTFALL" with respect to any Distribution Date is
equal to the sum of:

          o    any net prepayment interest shortfalls 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 to the extent not covered by Excess
               Cashflow.

          The "NET RATE CAP" for each Distribution Date is the product of (A)
the excess of (x) the Weighted Average Adjusted Net Mortgage Rate of the
Mortgage Loans over (y) a fraction the numerator of which is any Net Swap
Payment and Swap Termination Payment payable to the Swap Counterparty (other
than any Swap Termination Payment due to a Swap Counterparty Trigger Event), if
any, and the denominator of which is the aggregate Stated Principal Balance of
the Mortgage Loans as of the Due Date in the prior month (after giving effect to
principal prepayments received in the Prepayment Period related to that prior
Due Date) multiplied by 12 and (B) a fraction, the numerator of which is 30, and
the denominator of which is the actual number of days in the related Interest
Accrual Period.

          The "NET RATE CARRYOVER" for a class of Offered Certificates on any
Distribution Date is the excess of:

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

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

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

          The "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 servicing fee rate, on the Stated
Principal Balance of the Mortgage Loan.

          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 laws. See "Certain Legal Aspects of the
Mortgage Loans--Servicemembers Civil Relief Act" in the prospectus.


                                      S-70



          "WEIGHTED AVERAGE ADJUSTED NET MORTGAGE RATE" for each Distribution
Date is the average of the Adjusted Net Mortgage Rates on the Mortgage Loans,
weighted on the basis of their respective Stated Principal Balances as of the
Due Date in the prior calendar month (after giving effect to principal
prepayments received in the Prepayment Period related to that prior Due Date).

          Allocation of Net Deferred Interest

          With respect to each Mortgage Loan and each related Due Date,
"DEFERRED INTEREST" will be the excess, if any, of the amount of interest
accrued on such Mortgage Loan from the preceding Due Date to such Due Date over
the monthly payment made for such Due Date. This excess may occur because
interest accrued at the mortgage rate may be greater than the Monthly Payment
made by the borrower, resulting in negative amortization. See "The Mortgage
Loans - General" in this prospectus supplement.

          With respect to each Distribution Date, the "NET DEFERRED INTEREST" is
equal to the excess, if any, of the aggregate Deferred Interest that accrued on
the Mortgage Loans as described above, over the Principal Prepayment Amount for
that Distribution Date. For each Distribution Date, the "PRINCIPAL PREPAYMENT
AMOUNT" is equal to the sum of all voluntary principal prepayments in excess of
the Interest Only Monthly Payment received on the Mortgage Loans during the
related Prepayment Period, including the purchase price of any Mortgage Loans
repurchased due to modifications in lieu of refinancing. For any Distribution
Date, the "NET PREPAYMENTS" are equal to the excess, if any, of the (i)
Principal Prepayment Amount over (ii) the aggregate amount of Deferred Interest
accrued on the Mortgage Loans from the preceding Due Date to the Due Date
related to that Distribution Date.

          To the extent that there is Net Deferred Interest on a Distribution
Date, the Net Deferred Interest on the Mortgage Loans will be allocated among
the classes of LIBOR Certificates, pro rata, according to the interest accrued
on each such class in reduction of the amount of interest otherwise
distributable to that class; provided, however, the amount of Net Deferred
Interest allocated to any class of certificates on a Distribution Date will not
exceed the amount of Current Interest (prior to reduction for Net Deferred
Interest) for such class for that Distribution Date. Thereafter, that excess
amount will be allocated among the classes of certificates, in proportion to,
and up to, the amount of any remaining interest otherwise distributable on the
certificates.

          Any Net Deferred Interest allocated to a class of certificates will be
added to the Class Certificate Balance of the applicable class of certificates.

PRINCIPAL

          Distributions of Principal. On each Distribution Date, an amount up to
the Principal Distribution Amount for that Distribution Date is required to be
distributed (with the Principal Remittance Amount being applied first and the
Extra Principal Distribution Amount being applied thereafter) as follows until
such Principal Distribution Amount has been fully distributed:

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

               (i) to the Swap Account, the amount of any Net Swap Payment and
               any Swap Termination Payment (other than a Swap Termination
               Payment due to a Swap Counterparty Trigger Event) payable to the
               Swap Counterparty with respect to that Distribution Date not
               previously paid from the Interest Funds;

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

               (iii) 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;


                                      S-71



               (iv) sequentially, to the Class M-1, Class M-2, Class M-3, Class
               M-4, Class M-5 and Class M-6 Certificates, in that order, until
               their respective Class Certificate Balances are reduced to zero;
               and

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

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

               (i) to the Swap Account, the amount of any Net Swap Payment and
               any Swap Termination Payment (other than a Swap Termination
               Payment due to a Swap Counterparty Trigger Event) payable to the
               Swap Counterparty with respect to that Distribution Date not
               previously paid from the Interest Funds;

               (ii) in an amount up to the Senior Principal Distribution Amount
               for that Distribution Date, 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; and

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

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

          Definitions Related to Principal Distributions.

          "STATED PRINCIPAL BALANCE"" means for any Mortgage Loan and Due Date,
the unpaid principal balance of the Mortgage Loan as of that Due Date, as
specified in its amortization schedule at that time (before any adjustment to
the amortization schedule for any moratorium or similar waiver or grace period),
after giving effect to (i) the payment of principal due on that Due Date,
irrespective of any delinquency in payment by the related mortgagor and (ii)
prepayments of principal and the principal portion of liquidation proceeds
received with respect to that Mortgage Loan through the last day of the
Prepayment Period in which the Due Date occurs and increased by any Deferred
Interest added to the principal balance on or prior to that Due Date. The Stated
Principal Balance of a Liquidated Mortgage Loan is zero.

          The "POOL PRINCIPAL BALANCE"" equals the aggregate Stated Principal
Balances of the Mortgage Loans.

          "PREPAYMENT PERIOD" means, with respect to any Distribution Date and
related Due Date, the period from the sixteenth day of the calendar month
immediately preceding the month in which the Distribution Date occurs (or in the
case of the first Distribution Date, from April 1, 2007) through the fifteenth
day of the calendar month in which the Distribution Date occurs.

          "PRINCIPAL DISTRIBUTION AMOUNT" with respect to each Distribution Date
is sum of (i) the (a) Principal Remittance Amount for that Distribution Date,
minus (b) the Overcollateralization Release Amount for that Distribution Date
and (ii) the Extra Principal Distribution Amount for that Distribution Date.

          "SENIOR PRINCIPAL DISTRIBUTION AMOUNT" for any Distribution Date, an
amount equal to the lesser of: (i) the Principal Distribution Amount for that
Distribution Date; and (ii) the excess of (a) the aggregate Class Certificate
Balance of the Senior Certificates immediately prior to that Distribution Date
over (b) the lesser of (x) the product of (1) 86.875% for any Distribution Date
prior to the Distribution Date in May 2013 and 89.500% for any Distribution Date
on or after the Distribution Date in May 2013 and (2) the aggregate Stated
Principal Balance of the Mortgage Loans as of the Due Date in the month prior to
the month of that Distribution Date (after giving effect to principal
prepayments in the Prepayment Period related to that prior Due Date) and (y) the
aggregate Stated Principal Balance


                                      S-72



of the Mortgage Loans as of the Due Date related to the month of that
Distribution Date (after giving effect to principal prepayments in the
Prepayment Period related to that prior Due Date), less the OC floor.

          "SUBORDINATED CLASS PRINCIPAL DISTRIBUTION TARGET AMOUNT"" for any
class of subordinated certificates and Distribution Date will equal the excess
of:

          (1) the sum of: (a) the aggregate Class Certificate Balance of the
Senior Certificates (after taking into account the distribution of the Senior
Principal Distribution Amount for that Distribution Date), (b) the aggregate
Class Certificate Balance of any class(es) of Subordinated Certificates that are
senior to the subject class (in each case, after taking into account
distribution of the Subordinated Class Principal Distribution Target Amount(s)
for such more senior class(es) of certificates for such Distribution Date), and
(c) the Class Certificate Balance of the subject class of Subordinated
Certificates immediately prior to such Distribution Date over

          (2) the lesser of (a) the product of (x) the Stepdown Target
Subordination Percentage for the subject class of certificates and (y) the
aggregate Stated Principal Balance of the Mortgage Loans for that Distribution
Date and (b) the aggregate Stated Principal Balance of the Mortgage Loans for
that Distribution Date minus the OC Floor;

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

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



                                  Initial Target   Stepdown Target   Stepdown Target
                                   Subordination    Subordination     Subordination
                                    Percentage      Percentage (1)    Percentage (2)
                                  --------------   ---------------   ---------------

Class M-1......................        2.950%           7.375%           5.900%
Class M-2......................        2.550%           6.374%           5.099%
Class M-3......................        1.800%           4.501%           3.601%
Class M-4......................        1.450%           3.624%           2.900%
Class M-5......................        0.951%           2.376%           1.901%
Class M-6......................        0.600%           1.500%           1.200%


----------
(1)  For any Distribution Date occurring on or after the Distribution Date
     occurring in May 2010 and prior to the Distribution Date occurring in May
     2013.

(2)  For any Distribution Date occurring on or after the Distribution Date
     occurring in May 2013.

          The Initial Target Subordination Percentages will not be used to
calculate distributions on the Subordinated Certificates, but rather are
presented in order to provide a better understanding of the credit enhancement
provided by the Subordinated Certificates and the Overcollateralization Amount.
The Initial Target Subordination Percentage for any class of Subordinated
Certificates is equal to a fraction, expressed as a percentage, the numerator of
which is equal to the aggregate initial Class Certificate Balance of any
class(es) of certificates subordinate to the subject class plus the initial
Overcollateralization Target Amount and the denominator of which is equal to the
sum of the aggregate Stated Principal Balance of the Mortgage Loans as of the
cut-off date.

          "EXTRA PRINCIPAL DISTRIBUTION AMOUNT" with respect to any Distribution
Date is the lesser of (i) the excess of (x) the Interest Remittance Amount for
that Distribution Date over (y) the aggregate amount of Current Interest and
Interest Carry Forward Amount for that Distribution Date and (ii) the
Overcollateralization Deficiency Amount for that Distribution Date.

          "OC FLOOR"" means an amount equal to 0.50% of the Cut-off Date Pool
Principal Balance.


                                      S-73



          "OVERCOLLATERALIZATION DEFICIENCY AMOUNT, " with respect to any
Distribution Date equals the amount, if any, by which the Overcollateralization
Target Amount exceeds the Overcollateralized Amount on that Distribution Date
(after giving effect to distributions of the Principal Remittance Amount on that
Distribution Date).

          "OVERCOLLATERALIZATION TARGET AMOUNT" means with respect to any
Distribution Date (a) prior to the Stepdown Date, an amount equal to 0.60% of
the aggregate Stated Principal Balance of the Mortgage Loans as of the cut-off
date and (b) on or after the Stepdown Date, the greater of (i) (x) for any
Distribution Date prior to the Distribution Date in May 2013, an amount equal to
1.50% of the aggregate Stated Principal Balance of the Mortgage Loans as of the
Due Date in the month of that Distribution Date (after giving effect to
principal prepayments received in the related Prepayment Period) and (y) for any
Distribution Date on or after the Distribution Date in May 2013, an amount equal
to 1.20% of the aggregate Stated Principal Balance of the Mortgage Loans as of
the Due Date in the month of that Distribution Date (after giving effect to
principal prepayments received in the related Prepayment Period) and (ii) the OC
Floor; provided, however, that if a Trigger Event is in effect on any
Distribution Date, the Overcollateralization Target Amount will be the
Overcollateralization Target Amount as in effect for the prior Distribution
Date.

          "OVERCOLLATERALIZED AMOUNT" for any Distribution Date is the amount,
if any, by which (x) the Pool Principal Balance in the Mortgage Pool as of the
Due Date in the month of that Distribution Date (after giving effect to
principal prepayments received in the related Prepayment Period) exceeds (y) the
aggregate Class Certificate Balance of the Offered Certificates (after giving
effect to distributions of the Principal Distribution Amount (excluding the
Extra Principal Distribution Amount) on that Distribution Date).

          "OVERCOLLATERALIZATION RELEASE AMOUNT" means with respect to any
Distribution Date for which the Excess Overcollateralization Amount is, or would
be after taking into account all other distributions to be made on that
Distribution Date, greater than zero, an amount equal to the lesser of (x) the
Excess Overcollateralization Amount for that Distribution Date and (y) the
Principal Remittance Amount for that Distribution Date.

          "EXCESS OVERCOLLATERALIZATION AMOUNT" with respect to any Distribution
Date will equal the excess, if any, of the Overcollateralized Amount on that
Distribution Date over the Overcollateralization Target Amount on that
Distribution Date

          "STEPDOWN DATE" is the earlier to occur of (x) the Distribution Date
following the Distribution Date on which the aggregate Class Certificate Balance
of the Senior Certificates is reduced to zero and (y) the later to occur of (i)
the Distribution Date in May 2010 and (ii) the first Distribution Date on which
the Senior Enhancement Percentage is equal to or greater than approximately (a)
on any Distribution Date prior to the Distribution Date in May 2013, 13.125% and
(b) on any Distribution Date on or after the Distribution Date in May 2013,
10.500%.

          A "TRIGGER EVENT" is in effect with respect to a Distribution Date on
or after the Stepdown Date if either a Delinquency Trigger Event is in effect
with respect to that Distribution Date or a Cumulative Loss Trigger Event is in
effect with respect to that Distribution Date.

          A "DELINQUENCY TRIGGER EVENT" is in effect with respect to any
Distribution Date on or after the Stepdown Date if the Rolling Three Month
Delinquency Rate as of the last day of the immediately preceding month equals or
exceeds 40.00% of the Senior Enhancement Percentage for such Distribution Date.

          The "SENIOR ENHANCEMENT PERCENTAGE" with respect to a Distribution
Date on or after the Stepdown Date is equal to a fraction (expressed as a
percentage) of:

               (1) the numerator of which is the sum of the aggregate Class
          Certificate Balance of the subordinated certificates and the
          Overcollateralized Amount (which, for purposes of this definition
          only, shall not be less than zero) and

               (2) the denominator of which is the Pool Principal Balance for
          the preceding Distribution Date, in each case after giving effect to
          distributions on that Distribution Date.


                                      S-74



          A "CUMULATIVE LOSS TRIGGER EVENT" is in effect with respect to a
Distribution Date on or after the Stepdown Date if the aggregate amount of
Realized Losses on the Mortgage Loans from (and including) the Cut-off Date for
each such Mortgage Loan to (and including) the related Due Date (reduced by the
aggregate amount of Subsequent Recoveries received from the Cut-off Date through
the Prepayment Period related to that Due Date) exceeds the applicable
percentage, for that Distribution Date, of the Cut-off Date Pool Principal
Balance, as set forth below:



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

May 2010 - April 2011.............   0.15% with respect to May 2010, plus an additional 1/12th of
                                     0.25% for each month thereafter through April 2011
May 2011 - April 2012.............   0.40% with respect to May 2011, plus an additional 1/12th of
                                     0.30% for each month thereafter through April 2012
May 2012- April 2013..............   0.70% with respect to May 2012, plus an additional 1/12th of
                                     0.30% for each month thereafter through April 2013
May 2013 - April 2014.............   1.00% with respect to May 2013, plus an additional 1/12th of
                                     0.35% for each month thereafter through April 2014
May 2014- April 2015..............   1.35% with respect to May 2014, plus an additional 1/12th of
                                     0.15% for each month thereafter through April 2015
May 2015 and thereafter...........   1.50%


          "UNPAID REALIZED LOSS AMOUNT" means for any class of certificates (x)
the portion of the aggregate Applied Realized Loss Amount previously allocated
to that class remaining unpaid from prior Distribution Dates minus (y) any
increase in the Class Certificate Balance of that class due to the allocation of
Subsequent Recoveries to the Class Certificate Balance of that class.

          A "REALIZED LOSS" with respect to a Distribution Date and any
defaulted Mortgage Loan, is the excess of the Stated Principal Balance of such
defaulted Mortgage Loan over the liquidation proceeds allocated to principal
that have been received with respect to such Mortgage Loan on or at any time
prior to the Due Date after such Mortgage Loan has been liquidated.

          The "ROLLING SIXTY DAY DELINQUENCY RATE" with respect to any
Distribution Date, is an amount equal to the average of the Delinquency Rates
for that Distribution Date and the two immediately preceding Distribution Dates.

          "SUBSEQUENT RECOVERIES" are unexpected recoveries received after the
determination by the Servicer that it has received all proceeds it expects to
receive, with respect to the liquidation of a Mortgage Loan that resulted in a
Realized Loss (other than the amount of such net recoveries representing any
profit realized by the Servicer in connection with the liquidation of any
Mortgage Loan and net of reimbursable expenses) in a month prior to the month of
the receipt of such recoveries.

OVERCOLLATERALIZATION PROVISIONS

          The Weighted Average Adjusted Net Mortgage Rate for the Mortgage Loans
is generally expected to be higher than the weighted average of the Pass-Through
Rates on the Offered Certificates. As a result, interest collections on the
Mortgage Loans are expected to be generated in excess of the amount of interest
payable to the holders of the Offered Certificates and the fees and expenses
payable by the issuing entity and any Net Swap Payments payable to the Swap
Counterparty. The Excess Cashflow, if any, will be applied on each Distribution
Date as a payment of principal on the class or classes of certificates then
entitled to receive distributions in respect of principal, but only to the
limited extent hereafter described.

          The "EXCESS CASHFLOW" with respect to any Distribution Date is the sum
of (i) the Interest Funds remaining after the distribution of interest to the
holders of the certificates for that Distribution Date as described under "--


                                      S-75



Interest" above and (ii) any remaining Principal Distribution Amount for that
date after distributions to the holders of the certificates as described under
"--Principal" above.

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

               (1) concurrently, to the classes of senior interest-bearing
          certificates, any Current Interest and Interest Carry Forward Amount
          remaining unpaid, pro rata based on their respective entitlements;

               (2) sequentially, to the Class M-1, Class M-2, Class M-3, Class
          M-4, Class M-5 and Class M-6 Certificates, in that order, in each case
          in an amount equal to any Current Interest and Interest Carry Forward
          Amount remaining unpaid for such class;

               (3) concurrently to the certificates then entitled to receive
          principal on that Distribution Date to the extent necessary to
          maintain or restore the required level of overcollateralization in the
          same priority in which they receive distributions of principal;

               (4) sequentially, to the Class A-1, Class A-2 and Class A-3
          Certificates, in that order, the Unpaid Realized Loss Amount for each
          such class;

               (5) sequentially, to the Class M-1, Class M-2, Class M-3, Class
          M-4, Class M-5 and Class M-6 Certificates, in that order, the Unpaid
          Realized Loss Amount for each such class;

               (6) concurrently, to the classes of Senior Certificates (other
          than the Residual Certificates), pro rata, any Net Rate Carryover for
          each such class;

               (7) sequentially, to the Class M-1, Class M-2, Class M-3, Class
          M-4, Class M-5 and Class M-6 Certificates, in that order, any Net Rate
          Carryover for each such class;

               (8) to the supplemental interest trust, any unpaid Swap
          Termination Payments due to a Swap Counterparty Trigger Event; and

               (9) to the Class C and the Class A-R Certificates, as specified
          in the pooling and servicing agreement.

THE SWAP CONTRACT

          DBNTC, as supplemental interest trustee on behalf of the supplemental
interest trust will enter into an interest rate swap transaction, as evidenced
by a confirmation (the "SWAP CONTRACT") with the Swap Counterparty, for the
benefit of the LIBOR Certificates. The supplemental interest trustee and the
Swap Counterparty will also enter into a 1992 ISDA Master Agreement
(Multicurrency - Cross Border), and Schedule (the "SCHEDULE") and Credit Support
Annex (the "CREDIT SUPPORT ANNEX") thereto (collectively, the "ISDA MASTER
AGREEMENT"). The Swap Contract is subject to certain ISDA definitions.

          On or prior to each Distribution Date through and including the
Distribution Date in April 2014 (the "SWAP CONTRACT TERMINATION DATE"), the
supplemental interest trustee will be obligated to pay to the Swap Counterparty
an amount equal to the product of:

               (a) a fixed rate of 5.0175% per annum,

               (b) 250,

               (c) the Swap Contract Notional Balance for that Distribution Date
          and


                                      S-76



               (d) the number of days in the related calculation period
          (calculated on the basis of a 360-day year divided into twelve 30-day
          months) divided by 360.

          In addition, on or prior to each Distribution Date to and including
the Swap Contract Termination Date, the Swap Counterparty will be obligated to
pay to the supplemental interest trustee an amount equal to the product of:

               (a) One-Month LIBOR (or, in the case of the initial calculation
          period, the rate determined by linear interpolation between One-Month
          LIBOR and two-week LIBOR, in any case as determined by the Swap
          Counterparty),

               (b) 250,

               (c) the Swap Contract Notional Balance for that Distribution Date
          and

               (d) the number of days in the related calculation period
          (calculated on the basis of a 360-day year and the actual number of
          days that elapsed in the related calculation period) divided by 360.

          The "SWAP CONTRACT NOTIONAL BALANCE" for each Distribution Date is as
described in the following table (the "SWAP TABLE").


                                      S-77



                                    SWAP CONTRACT
  MONTH OF DISTRIBUTION DATE     NOTIONAL BALANCE ($)
------------------------------   --------------------
May 2007 .....................         1,604,000
June 2007 ....................         1,586,113
July 2007 ....................         1,568,046
August 2007 ..................         1,549,902
September 2007 ...............         1,531,698
October 2007 .................         1,513,449
November 2007 ................         1,495,173
December 2007 ................         1,476,795
January 2008 .................         1,458,425
February 2008 ................         1,440,079
March 2008 ...................         1,421,775
April 2008 ...................         1,403,461
May 2008 .....................         1,378,510
June 2008 ....................         1,351,919
July 2008 ....................         1,326,072
August 2008 ..................         1,300,945
September 2008 ...............         1,276,499
October 2008 .................         1,252,728
November 2008 ................         1,229,610
December 2008 ................         1,207,127
January 2009 .................         1,185,256
February 2009 ................         1,163,979
March 2009 ...................         1,143,270
April 2009 ...................         1,123,057
May 2009 .....................         1,101,634
June 2009 ....................         1,075,095
July 2009 ....................         1,049,259
August 2009 ..................         1,024,108
September 2009 ...............           999,596
October 2009 .................           975,729
November 2009 ................           952,489
December 2009 ................           929,857
January 2010 .................           907,816
February 2010 ................           886,348
March 2010 ...................           865,428
April 2010 ...................           844,988
May 2010 .....................           822,711
June 2010 ....................           792,979
July 2010 ....................           764,337
August 2010 ..................           736,737
September 2010 ...............           710,141
October 2010 .................           684,509
November 2010 ................           659,878
December 2010 ................           636,276
January 2011 .................           613,501
February 2011 ................           591,480
March 2011 ...................           570,228
April 2011 ...................           549,690
May 2011 .....................           529,870
June 2011 ....................           510,742
July 2011 ....................           492,281
August 2011 ..................           474,457
September 2011 ...............           457,227
October 2011 .................           440,596
November 2011 ................           424,511
December 2011 ................           408,989
January 2012 .................           394,005
February 2012 ................           379,544
March 2012 ...................           365,575
April 2012 ...................           352,028
May 2012 .....................            47,659
June 2012 ....................            46,741
July 2012 ....................            45,839
August 2012 ..................            44,952
September 2012 ...............            44,080
October 2012 .................            43,223
November 2012 ................            42,380
December 2012 ................            41,550
January 2013 .................            40,724
February 2013 ................            39,912
March 2013 ...................            39,113
April 2013 ...................            38,321
May 2013 .....................            37,528
June 2013 ....................            36,747
July 2013 ....................            35,979
August 2013 ..................            35,179
September 2013 ...............            34,395
October 2013 .................            33,624
November 2013 ................            32,868
December 2013 ................            32,125
January 2014 .................            31,396
February 2014 ................            30,464
March 2014 ...................            29,022
April 2014 ...................            17,866
May 2014 and thereafter ......              0.00

Net Swap Payments; Application of Net Swap Payments

          With respect to the Swap Contract, the supplemental interest trustee
or the Swap Counterparty, as the case may be, will only be required to make a
"NET SWAP PAYMENT" to the other party that is equal to the excess of the payment
that it is obligated to make to the other party as described above over the
payment that it is entitled to receive from that other party as also described
in the two preceding subsections.


                                      S-78



          In the event that a Net Swap Payment and/or a Swap Termination Payment
(other than a Swap Termination Payment due to a Swap Counterparty Trigger Event)
is payable to the Swap Counterparty with respect to any Distribution Date and
Swap Contract, the trustee will deduct from Interest Funds the amount of such
Net Swap Payment or Swap Termination Payment (other than a Swap Termination
Payment due to a Swap Counterparty Trigger Event) as described under clause (1)
under "--Interest" above (and to the extent that Interest Funds are
insufficient, the trustee will deduct from the Principal Remittance Amount, any
additional amounts necessary to make such Net Swap Payment and/or Swap
Termination Payment due to the Swap Counterparty) and deposit the amount of such
Net Swap Payment or Swap Termination Payment in the Swap Account.

          In the event that a Swap Termination Payment due to a Swap
Counterparty Trigger Event is payable to the Swap Counterparty with respect to
any Distribution Date, the amount of such Swap Termination Payment will be paid
as and when described under clause (8) under "--Overcollateralization
Provisions" above.

          In the event that a Net Swap Payment is payable from the Swap
Counterparty with respect to any Distribution Date, the supplemental interest
trustee will deposit such payment into the Swap Account. The supplemental
interest trustee will make a corresponding withdrawal of such amount for
distribution to the holders of the LIBOR Certificates to pay any (a) Current
Interest and Interest Carry Forward Amounts with respect to the LIBOR
Certificates and (b) any Net Rate Carryover with respect to the LIBOR
Certificates, in each case that remain unpaid following distribution of the
Interest Funds and the Excess Cashflow for that Distribution Date, as well as
(d) the lesser of (x) any remaining Overcollateralization Deficiency Amount that
remains following distribution of the Interest Funds and the Excess Cashflow for
that Distribution Date and (y) the cumulative amount of Realized Losses
allocated to the certificates. Any portion of any Net Swap Payment not withdrawn
by the supplemental interest trustee from the Swap Account for distribution to
the LIBOR Certificates with respect to any Distribution Date will remain in the
Swap Account for distribution to the LIBOR Certificates on future Distribution
Dates for the purposes described in this paragraph.

          Distributions From the Swap Account

          On each Distribution Date, following the distributions of Excess
Cashflow described under " --Overcollateralization Provisions," the supplemental
interest trustee shall distribute any amounts on deposit in the Swap Account in
the following amounts and order of priority:

(1)  to the Swap Counterparty, any Net Swap Payments and Swap Termination
     Payments (other than any Swap Termination Payments due to a Swap
     Counterparty Trigger Event);

(2)  concurrently, to the classes of senior interest-bearing certificates, any
     Current Interest and Interest Carry Forward Amount remaining unpaid, pro
     rata based on their respective entitlements;

(3)  sequentially, to the Class M-1, Class M-2, Class M-3, Class M-4, Class M-5
     and Class M-6 Certificates, in that order, in each case in an amount equal
     to any Current Interest and Interest Carry Forward Amount remaining unpaid
     for such class;

(4)  to the class or classes of certificates then entitled to receive
     distributions in respect of principal, any remaining Overcollateralization
     Deficiency Amount;

(5)  sequentially, to the Class A-1, Class A-2 and Class A-3 Certificates, in
     that order, the Unpaid Realized Loss Amount for each such class;

(6)  sequentially, to the Class M-1, Class M-2, Class M-3, Class M-4, Class M-5
     and Class M-6 Certificates, in that order, the Unpaid Realized Loss Amount
     for each such class;

(7)  concurrently, to the classes of Senior Certificates (other than the Class
     A-R Certificates), pro rata, any Net Rate Carryover for each such class;

(8)  sequentially, to the Class M-1, Class M-2, Class M-3, Class M-4, Class M-5
     and Class M-6 Certificates, in that order, any Net Rate Carryover for each
     such class;


                                      S-79



(9)  to the supplemental interest trust, any unpaid Swap Termination Payments
     due to a Swap Counterparty Trigger Event; and

(10) to the holders of the Class C Certificates, any remaining amounts in the
     Swap Account.

          Notwithstanding the foregoing priority of distribution, the cumulative
amount paid with respect to clause (4) above shall not, on any Distribution
Date, exceed the cumulative amount of Realized Losses incurred on the Mortgage
Loans as of that Distribution Date.

Early Termination of the Swap Contract; Swap Termination Payments

          The Swap Contract will be subject to early termination upon an event
of default or a termination event under the Swap Contract. Events of default
under the Swap Contract include, among other things:

o    failure to make a payment due under the Swap Contract, three business days
     after notice of such failure is received,

o    certain insolvency or bankruptcy events, and

o    a merger by the Swap Counterparty without an assumption of its obligations
     under the Swap Contract.

         Termination events under the Swap Contract include, among other things:

o    illegality (which generally relates to changes in law causing it to become
     unlawful for either party to perform its obligations under the Swap
     Contract),

o    a tax event (which generally relates to either party to the Swap Contract
     receiving a payment under the Swap Contract from which an amount has been
     deducted or withheld for or on account of taxes or paying an additional
     amount on account of an indemnifiable tax),

o    a tax event upon merger (which generally relates to either party receiving
     a payment under the Swap Contract from which an amount has been deducted or
     withheld for or on account of taxes or paying an additional amount on
     account of an indemnifiable tax, in each case, resulting from a merger).

          In addition to the termination events specified above, the Swap
Contract will be subject to Additional Termination Events (as defined in the
related ISDA Master Agreement). These Additional Termination Events will occur
under the Swap Contract if:

o    there is an amendment to the pooling and servicing agreement that could
     reasonably be expected to materially adversely affect the Swap Counterparty
     that is made without the prior written consent of that Swap Counterparty;

o    the rating, by any Rating Agency, of the Swap Counterparty's unsecured,
     long-term senior debt obligations or its unsecured, short-term debt
     obligations falls below a certain level or levels established by such
     Rating Agency (a "SWAP COUNTERPARTY RATING DOWNGRADE") as specified in the
     Swap Contract and the Swap Counterparty does not take certain action as
     specified in the Swap Contract, at its own expense, which may include (a)
     causing another entity to replace the Swap Counterparty that meets or
     exceeds the ratings requirements of the Rating Agencies, and that is
     approved by the supplemental interest trustee on terms substantially
     similar to the Swap Contract; (b) obtaining a guaranty of, or a contingent
     agreement of another person to honor the Swap Counterparty's obligations
     under the Swap Contract that satisfies the ratings requirements of the
     Rating Agencies, provided that such other person is approved by the
     supplemental interest trustee; (c) posting collateral in the amount and at
     the times required under the Credit Support Annex; or

o    the Swap Counterparty fails to deliver any information, report,
     certification or accountants' consent when and as required under the
     Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT") and Item
     1115(b)(1) or (b)(2) of the Asset Backed Securities Regulation, 17 C.F.R.
     Sections 229.1100-229.1123 ("REGULATION AB") with respect to certain
     reporting obligations of the depositor with respect to the issuing entity,
     which continues unremedied for the time period provided in the Swap
     Contract, and the Swap Counterparty fails to transfer the Swap Contract at
     its sole cost and expense, in whole, but not in part, to a counterparty
     that (i) has agreed to deliver any information, report, certification


                                      S-80



     or accountants' consent when and as required under the Exchange Act and
     Regulation AB with respect to certain reporting obligations of the
     depositor and the issuing entity, (ii) satisfies any rating requirement set
     forth in the Swap Contract, and (iii) is approved by the depositor (which
     approval shall not be unreasonably withheld and which approval is not
     needed if such assignment is to a subsidiary of the Swap Counterparty,
     provided the depositor is given notice) and any Rating Agency, if
     applicable.

          "SWAP COUNTERPARTY TRIGGER EVENT" means an event of default under the
Swap Contract with respect to which the Swap Counterparty is the sole defaulting
party or a termination event under the Swap Contract (other than illegality, a
tax event or a tax event upon merger of the Swap Counterparty) with respect to
which the Swap Counterparty is the sole affected party or with respect to a
termination resulting from a Swap Counterparty Rating Downgrade.

          A "SWAP TERMINATION PAYMENT" is a termination payment required to be
made by either the supplemental interest trustee or the Swap Counterparty
pursuant to the Swap Contract as a result of an early termination of the Swap
Contract due to an event of default or termination event attributable to either
party. In the event that a Swap Termination Payment is payable by the Swap
Counterparty in connection with the termination of the Swap Contract and such
amount is not sufficient to procure a replacement swap contract, that Swap
Termination Payment will be deposited in the Swap Account and distributed to the
holders of the classes of LIBOR Certificates on future Distribution Dates to pay
amounts as discussed above under "--Net Swap Payments; Application of Net Swap
Payments and Distributions From the Swap Account."

Additional Matters Regarding the Swap Contract

          The certificates do not represent an obligation of the Swap
Counterparty or the supplemental interest trustee. The holders of the
certificates are not parties to or beneficiaries under the Swap Contract and
will not have any right to proceed directly against the Swap Counterparty or the
supplemental interest trustee in respect of their obligations under either the
Swap Contract.

          The Swap Contract will be filed with the SEC as an exhibit to a
Current Report on Form 8-K after the closing date.

DETERMINATION OF LIBOR

          LIBOR applicable to an Interest Accrual Period for the LIBOR
Certificates will be determined on the second London Business Day prior to the
commencement of such Interest Accrual Period (a "LIBOR DETERMINATION DATE"). On
each LIBOR Determination Date the Trustee, as calculation agent (in such
capacity, the "CALCULATION AGENT"), will establish LIBOR for the Interest
Accrual Period on the basis of the British Bankers' Association ("BBA")
"INTEREST SETTLEMENT RATE" for one-month deposits in U.S. 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 sixteen
BBA designated banks as being, in the view of such banks, the offered rate at
which deposits are being quoted to prime banks in the London interbank market.
Such Interest Settlement Rates are calculated by eliminating the four highest
rates and the four lowest rates, averaging the eight remaining rates, carrying
the result (expressed as a percentage) out to six decimal places, and rounding
to five decimal places. "REUTERS PAGE LIBOR01" means the display page designated
as the "LIBOR01" page on Reuters (or such other page as may replace that page on
that service for the purpose of displaying comparable rates or prices). "LONDON
BUSINESS DAY" means any day on which dealings in deposits of United States
dollars are transacted in the London interbank market.

          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 method described in prospectus under
"Description of the Securities--Indices Applicable to Floating Rate and Inverse
Floating Rate Classes--LIBOR."

          If on the initial LIBOR Determination Date, the Calculation Agent is
required but unable to determine LIBOR in the manner provided in the prospectus,
LIBOR for the initial LIBOR Determination Date will be 5.3200%.


                                      S-81



CARRYOVER RESERVE FUND

          The Pooling and Servicing Agreement establishes an account (the
"CARRYOVER RESERVE FUND"), which is held in trust by the trustee on behalf of
the holders of the certificates. On the closing date, the depositor will deposit
or cause to be deposited $1,000 in the Carryover Reserve Fund. The Carryover
Reserve Fund will not be an asset of any REMIC.

          On each Distribution Date, to the extent that Excess Cashflow is
available as described under "--Overcollateralization Provisions" above, the
trustee will deposit in the Carryover Reserve Fund the amount needed to pay any
Net Rate Carryover on the Offered Certificates as described under
"--Overcollateralization Provisions" above.

APPLIED REALIZED LOSS AMOUNTS

          If on any Distribution Date, after giving effect to the distributions
described above, the aggregate Class Certificate Balance of the offered
certificates exceeds the Pool Principal Balance, the amount of such excess will
be applied to reduce the Class Certificate Balances of the Certificates,
sequentially, to the Class M-6, Class M-5, Class M-4, Class M-3, Class M-2,
Class M-1, Class A-3, Class A-2 and Class A-1 Certificates, in that order, until
their respective Class Certificate Balances are reduced to zero. Any such
reduction described in this paragraph is an "APPLIED REALIZED LOSS AMOUNT."

          Interest on any class of certificates, the Class Certificate Balance
of which has been reduced through the application of Applied Realized Loss
Amounts as described above, will accrue for the related class of certificates on
the Class Certificate Balance as so reduced unless the Class Certificate Balance
is subsequently increased due to the allocation of Subsequent Recoveries to the
Class Certificate Balance of such class as described in the definition of Class
Certificate Balance above.

RELIEF ACT REDUCTIONS

          On any Distribution Date, any Relief Act Reductions will be allocated
first to Excess Cashflow on the Mortgage Loans for the related Distribution Date
and thereafter as a reduction of Current Interest for the LIBOR Certificates,
pro rata, on the basis of the respective amounts of interest accrued on those
certificates for that Distribution Date. The LIBOR Certificates will not be
entitled to reimbursement for the allocation of any Relief Act Reductions
described in the preceding sentence.

RESIDUAL CERTIFICATES

          The Class A-R Certificates will remain outstanding for so long as the
issuing entity will exist. On each Distribution Date the holders of each Class
of Class A-R Certificates will be entitled to receive certain distributions as
provided in the pooling and servicing agreement. It is not anticipated that
there will be any significant amounts remaining for such distribution to the
Class A-R Certificates.


                                      S-82



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    the issuing entity consists of 74 Mortgage Loans with the following
     characteristics:



                                 CURRENT     REMAINING
    CURRENT                   ADJUSTED NET    TERM TO                GROSS         MAXIMUM
   PRINCIPAL      MORTGAGE      MORTGAGE     MATURITY    LOAN AGE    MARGIN        MORTGAGE
  BALANCE ($)     RATE (%)      RATE (%)     (MONTHS)    (MONTHS)      (%)         RATE (%)
--------------   ----------   ------------   ---------   --------   ----------   -----------

 11,436,400.81   7.04356175    6.66106175       360          0      2.75000000   13.04356175
    395,835.84   6.87500000    6.49250000       359          1      2.75000000   12.87500000
  4,823,164.75   6.75884716    6.37634716       360          0      2.75000000   12.75884716
    469,770.05   8.12500000    7.74250000       359          1      2.75000000   14.12500000
    321,502.89   6.12500000    5.74250000       359          1      2.75000000   12.12500000
    115,281.11   6.87500000    6.49250000       359          1      2.75000000   12.87500000
  3,331,418.61   6.63025042    6.24775042       359          1      2.79952845   12.63025042
    266,232.66   6.75000000    6.36750000       359          1      2.75000000   12.75000000
    953,578.40   7.02646505    6.64396505       360          0      2.75000000   13.02646505
 73,149,700.28   6.82097587    6.43847587       360          0      2.75188357   11.82097587
  9,697,644.61   6.99488585    6.61238585       359          1      2.75000000   11.99488585
    600,000.00   6.75000000    6.36750000       360          0      2.75000000   11.75000000
    417,882.39   6.87500000    6.49250000       359          1      2.75000000   11.87500000
    695,597.13   6.67369917    6.29119917       359          1      2.75000000   11.67369917
 59,932,007.06   6.74827652    6.36577652       359          1      2.75000000   11.74827652
    416,000.00   7.87500000    7.49250000       360          0      2.75000000   12.87500000
    545,000.00   7.00000000    6.61750000       360          0      2.75000000   12.00000000
  8,849,311.01   6.97002712    6.58752712       360          0      2.75000000   11.97002712
    470,298.01   6.50000000    6.11750000       360          0      2.75000000   11.50000000
  2,170,219.29   6.86041736    6.47791736       359          1      2.75000000   11.86041736
    360,719.68   6.62500000    6.24250000       358          2      2.75000000   11.62500000
  9,261,493.94   6.61079783    6.22829783       360          0      2.75000000   11.61079783
  3,364,249.04   7.00726054    6.62476054       359          1      2.75000000   12.00726054
    466,860.30   6.87500000    6.49250000       351          9      2.75000000   11.87500000
  3,345,438.74   6.91134107    6.52884107       360          0      2.75000000   11.91134107
    853,507.94   6.75000000    6.36750000       358          2      2.75000000   11.75000000
  6,234,563.06   6.72523677    6.34273677       360          0      2.75000000   11.72523677
  1,650,914.56   7.14064692    6.75814692       359          1      2.83411940   12.14064692
115,630,931.64   6.77867172    6.39617172       360          0      2.75556495   11.77867172
  1,409,129.46   6.49062887    6.10812887       360          0      2.75000000   11.49062887
  2,716,542.63   6.83904461    6.45654461       360          0      2.75000000   11.83904461
 29,810,983.07   6.77228561    6.38978561       359          1      2.75000000   11.77228561
    165,347.72   7.62500000    7.24250000       359          1      2.75000000   12.62500000
    700,270.58   7.10462592    6.72212592       359          1      2.75000000   12.10462592
    138,216.36   6.25000000    5.86750000       348         12      2.75000000   11.25000000
    478,162.87   6.37500000    5.99250000       346         14      2.75000000   11.37500000
    246,143.07   6.25000000    5.86750000       346         14      2.75000000   11.25000000
    394,444.30   6.25000000    5.86750000       346         14      2.75000000   11.25000000
    355,460.66   6.25000000    5.86750000       346         14      2.75000000   11.25000000
    284,474.61   6.37500000    5.99250000       345         15      2.75000000   11.37500000
    306,197.73   6.25000000    5.86750000       345         15      2.75000000   11.25000000


                 MONTHS TO      MONTHS TO                  INITIAL       ORIGINAL
    CURRENT      NEXT RATE    NEXT PAYMENT     ASSUMED     PERIODIC      PRINCIPAL                   NEGATIVE
   PRINCIPAL     ADJUSTMENT    ADJUSTMENT      MONTHLY       RATE         BALANCE       PAYMENT    AMORTIZATION
  BALANCE ($)       DATE          DATE       PAYMENT ($)   CAP (%)          ($)        LIMIT (%)     LIMIT (%)
--------------   ----------   ------------   -----------   --------   --------------   ---------   ------------

 11,436,400.81       36            37         38,203.83       2        11,428,750.00       50           115
    395,835.84       35            36          1,427.18       2           395,000.00       55           115
  4,823,164.75       36            37         15,653.02       2         4,819,992.00       50           115
    469,770.05       35            36          1,915.27       2           469,000.00       55           115
    321,502.89       35            36            974.73       2           320,840.00       50           115
    115,281.11       35            36            377.73       2           115,000.00       50           115
  3,331,418.61       35            36         10,671.65       2         3,328,224.00       50           115
    266,232.66       35            36            861.34       2           265,600.00       50           115
    953,578.40       36            37          3,498.83       2           953,000.00       55           115
 73,149,700.28       60            61        262,741.86       5        73,091,252.00       55           115
  9,697,644.61       59            60         38,653.68       5         9,684,100.00       60           115
    600,000.00       60            61          1,751.22       5           600,000.00       45           115
    417,882.39       59            60          1,506.67       5           417,000.00       55           115
    695,597.13       59            60          2,459.06       5           694,750.00       55           115
 59,932,007.06       59            60        213,632.37       5        59,872,306.00       55           115
    416,000.00       60            61          1,658.96       5           416,000.00       55           115
    545,000.00       60            61          2,175.54       5           545,000.00       60           115
  8,849,311.01       60            61         35,200.70       5         8,841,158.00       60           115
    470,298.01       60            61          1,640.85       5           472,000.00       55           115
  2,170,219.29       59            60          7,819.75       5         2,167,000.00       55           115
    360,719.68       58            59          1,267.82       5           360,000.00       55           115
  9,261,493.94       60            61         32,548.51       5         9,254,050.00       55           115
  3,364,249.04       59            60         13,438.13       5         3,361,750.00       60           115
    466,860.30       51            52          1,374.62       5           465,000.00       45           115
  3,345,438.74       60            61         12,127.02       5         3,342,909.00       55           115
    853,507.94       58            59          3,032.20       5           850,000.00       55           115
  6,234,563.06       60            61         22,170.90       5         6,228,500.00       55           115
  1,650,914.56       59            60          6,108.53       5         1,645,350.00       55           115
115,630,931.64       60            61        413,694.38       5       115,568,115.00       55           115
  1,409,129.46       60            61          4,890.69       5         1,408,000.00       55           115
  2,716,542.63       60            61         10,664.05       5         2,714,500.00       60           115
 29,810,983.07       59            60        116,265.06       5        29,789,050.00       60           115
    165,347.72       59            60            700.72       5           165,000.00       60           115
    700,270.58       59            60          3,058.35       5           699,650.00       65           115
    138,216.36       58            59            470.96       5           137,722.39       55           110
    478,162.87       58            59          1,653.64       5           476,413.70       55           110
    246,143.07       58            59             841.3       5           245,520.67       55           110
    394,444.30       58            59          1,357.65       5           396,209.95       55           110
    355,460.66       58            59          1,213.68       5           354,195.20       55           110
    284,474.61       58            59            984.79       5           283,434.98       55           110
    306,197.73       58            59          1,047.43       5           305,363.70       55           110



                                      S-83





                                 CURRENT     REMAINING
    CURRENT                   ADJUSTED NET    TERM TO                GROSS         MAXIMUM
   PRINCIPAL      MORTGAGE      MORTGAGE     MATURITY    LOAN AGE    MARGIN        MORTGAGE
  BALANCE ($)     RATE (%)      RATE (%)     (MONTHS)    (MONTHS)      (%)         RATE (%)
--------------   ----------   ------------   ---------   --------   ----------   -----------

    518,337.42   6.12500000    5.74250000       341         19      2.75000000   11.12500000
    271,892.97   5.87500000    5.49250000       341         19      2.75000000   10.87500000
    280,431.64   5.87500000    5.49250000       339         21      2.75000000   10.87500000
    388,764.15   5.87500000    5.49250000       338         22      2.75000000   10.87500000
    636,719.11   6.17178762    5.78928762       338         22      2.75000000   11.17178762
    454,611.33   6.12500000    5.74250000       336         24      2.75000000   11.12500000
    142,528.93   6.50000000    6.11750000       337         23      2.75000000   11.50000000
    655,788.17   6.17376240    5.79126240       335         25      2.75000000   11.17376240
    709,753.11   5.92934009    5.54684009       333         27      2.75000000   10.92934009
    104,976.76   6.37500000    5.99250000       336         24      2.75000000   11.37500000
    276,102.42   6.37500000    5.99250000       335         25      2.65000000   11.37500000
    354,455.15   7.50000000    7.11750000       358          2      2.75000000   12.50000000
  4,920,684.92   6.72025270    6.33775270       360          0      2.75000000   11.72025270
    159,506.00   7.25000000    6.86750000       359          1      2.75000000   12.25000000
    124,132.10   6.37500000    5.99250000       334         26      2.85000000   11.37500000
    350,568.49   6.50000000    6.11750000       359          1      2.75000000   11.50000000
  3,518,376.49   6.87738402    6.49488402       359          1      2.75000000   11.87738402
  2,383,000.00   6.56231641    6.17981641       360          0      2.75000000   11.56231641
  2,357,351.16   6.49250125    6.11000125       359          1      2.75000000   11.49250125
  2,736,479.42   6.71533724    6.33283724       359          1      2.75000000   11.71533724
  1,008,423.81   6.58861346    6.20611346       359          1      2.75000000   11.58861346
    406,730.91   6.91802599    6.53552599       358          2      2.75000000   11.91802599
 15,620,046.99   6.50874943    6.12624943       360          0      2.78641154   11.50874943
    212,543.91   6.50000000    6.11750000       357          3      2.75000000   11.50000000
    327,000.00   6.82568807    6.44318807       359          1      2.75000000   11.82568807
    236,641.33   7.37500000    6.99250000       359          1      2.75000000   12.37500000
  2,915,849.16   6.51897711    6.13647711       360          0      2.75000000   11.51897711
    657,863.25   6.86878167    6.48628167       360          0      2.75000000   11.86878167
  1,210,824.60   6.26119430    5.87869430       329         31      2.75000000   11.26119430
    179,277.66   6.00000000    5.61750000       327         33      2.75000000   11.00000000
    823,745.37   6.25000000    5.86750000       320         40      2.75000000   11.25000000
    510,763.23   6.50000000    6.11750000       320         40      2.75000000   11.50000000
    960,603.54   6.50000000    6.11750000       322         38      2.75000000   11.50000000


                 MONTHS TO      MONTHS TO                  INITIAL       ORIGINAL
    CURRENT      NEXT RATE    NEXT PAYMENT     ASSUMED     PERIODIC      PRINCIPAL                   NEGATIVE
   PRINCIPAL     ADJUSTMENT    ADJUSTMENT      MONTHLY       RATE         BALANCE       PAYMENT    AMORTIZATION
  BALANCE ($)       DATE          DATE       PAYMENT ($)   CAP (%)          ($)        LIMIT (%)     LIMIT (%)
--------------   ----------   ------------   -----------   --------   --------------   ---------   ------------

    518,337.42       55            56          1,425.20       5           513,906.77       45           110
    271,892.97       55            56            890.66       5           269,722.53       55           110
    280,431.64       55            56            922.17       5           278,646.64       55           110
    388,764.15       55            56          1,048.31       5           386,716.13       45           110
    636,719.11       55            56          2,188.07       5           640,348.76       55           110
    454,611.33       55            56          1,266.33       5           454,178.80       45           110
    142,528.93       57            58            502.26       5           141,728.30       55           110
    655,788.17       55            56          2,239.59       5           653,112.59       55           110
    709,753.11       55            56          1,941.30       5           708,030.16       45           110
    104,976.76       58            59            369.86       5           105,468.49       55           110
    276,102.42       58            59            966.55       5           275,321.88       55           110
    354,455.15       82            83          1,480.94       5           353,000.00       60           110
  4,920,684.92       84            85         19,091.62       5         4,919,500.00       60           115
    159,506.00       83            84            706.14       5           159,250.00       65           115
    124,132.10       58            59            438.54       5           124,785.80       55           110
    350,568.49       83            84          1,327.34       5           350,000.00       60           115
  3,518,376.49       83            84         13,853.14       5         3,511,500.00       60           115
  2,383,000.00       84            85          9,857.01       5         2,383,000.00       65           115
  2,357,351.16       83            84          8,918.93       5         2,353,000.00       60           115
  2,736,479.42       83            84         10,602.43       5         2,733,700.00       60           115
  1,008,423.81       83            84          3,853.74       5         1,006,750.00       60           115
    406,730.91       82            83          1,604.55       5           405,300.00       60           115
 15,620,046.99       84            85         59,294.62       5        15,617,301.00       60           115
    212,543.91       81            82            805.51       5           212,400.00       60           115
    327,000.00       83            84          1,389.70       5           327,000.00       65           115
    236,641.33       83            84          1,060.62       5           236,250.00       65           115
  2,915,849.16       84            85         12,008.90       5         2,914,750.00       65           115
    657,863.25       84            85          3,024.18       5           658,000.00       70           115
  1,210,824.60       55            56          3,453.47       5         1,212,219.47       45           110
    179,277.66       55            56            611.47       5           179,898.95       55           110
    823,745.37       55            56          2,348.31       5           816,754.04       45           110
    510,763.23       55            56          1,830.99       5           508,401.52       55           110
    960,603.54       58            59          3,450.97       5           957,127.21       55           110



                                      S-84



               o    the Mortgage Loans prepay at the specified percentage of
                    CPR,

               o    no defaults or delinquencies in the payment by mortgagors of
                    principal of and interest on the Mortgage Loans are
                    experienced,

               o    scheduled payments on the Mortgage 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    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 initial Class Certificate Balance 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,"

               o    interest accrues on each interest-bearing class 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    the Subsequent Periodic Rate Cap for the Mortgage Loans is
                    2.000%,

               o    there are 120 months until the recast date,

               o    the one-month LIBOR and one-year LIBOR indices are 5.3200%
                    and 5.2419%, respectively,

               o    the interest rates on the Mortgage Loans adjust according to
                    the one-year LIBOR index;

               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 Swap Contract terminates on the swap contract
                    termination date,

               o    the closing date of the sale of the certificates is April
                    27, 2007,

               o    the seller is not required to repurchase or substitute for
                    any Mortgage Loan,

               o    the Servicer does not exercise the option to repurchase the
                    Mortgage Loans described in this prospectus supplement under
                    "--Termination of the Issuing Entity; Optional Termination"
                    other than as specified in the rows entitled "Weighted
                    Average Life (in years) to Call" in the decrement tables in
                    this prospectus supplement or as otherwise specified,

               o    no class of certificates becomes a Restricted Class,

               o    the minimum Monthly Payment is received on each Mortgage
                    Loan,

               o    if the Negative Amortization Limit is reached, the Minimum
                    Monthly Payment becomes an interest only payment until ten
                    years after the date of origination of the Mortgage Loan,
                    and

               o    the Minimum Mortgage Rate for a Mortgage Loan is equal to
                    its Gross Margin.

          The 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. The
Prepayment Assumption ("PREPAYMENT ASSUMPTION") does not purport to be a
historical description of prepayment experience or a prediction of the
anticipated rate of prepayment of any pool of mortgage loans, including the
mortgage loans. The Prepayment Assumption assumes a constant prepayment rate
("CPR") of 25%


                                      S-85



per annum of the then outstanding principal balance of the Mortgage Loans in
each month during the life of the Mortgage Loans.

          Although it is assumed that each of the Mortgage Loans prepays at the
specified percentage of CPR, 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    the Class A-R Certificates will be allocated 1% of all
                    voting rights in respect of the certificates, and

               o    the other classes of certificates will be allocated the
                    remaining voting rights in proportion to their respective
                    Class Certificate Balances (collectively, the "VOTING
                    RIGHTS").

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

TERMINATION OF THE ISSUING ENTITY; OPTIONAL TERMINATION

          The Servicer will have the right to purchase all remaining Mortgage
Loans and real estate owned by the issuing entity and thereby effect early
retirement of the certificates, on any Distribution Date after the date on which
the aggregate Stated Principal Balance of the Mortgage Loans and real estate
owned by the issuing entity is less than 10% of the Cut-off Date Pool Principal
Balance (such Distribution Date the "OPTIONAL TERMINATION DATE"). If the
Servicer exercises such option, the purchase price distributed with respect to
each certificate will be 100% of its then outstanding certificate balance plus
any unpaid accrued interest on such certificate 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 real estate or delinquent Mortgage Loans and the appraised value is
less than the Stated Principal Balance of the applicable Mortgage Loan.
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 any real estate or delinquent Mortgage Loans and
such appraised value is less than the aggregate Stated Principal Balance of the
Mortgage Loans.

          The issuing entity also is required to 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 properties, or (ii) the distribution of all funds with
respect to the last Mortgage Loan and the remittance of all funds due under the
pooling and servicing agreement; provided, however, that in no event will the
issuing entity established by the pooling and servicing agreement 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 funds or
assets in the issuing entity other than the 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


                                      S-86



which such presentation and surrender must be made, and (d) that the Record Date
otherwise applicable to that 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 to the Servicer or
its designee the mortgage loan files.

          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 the 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 Class A-R certificateholders, 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, THE SELLER AND THE NIM
INSURER

          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 and any NIM Insurer.

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 Securities--f. Tax-Related Restrictions on Transfers of
Residual Certificates--Disqualified Organizations" and "--Noneconomic Residual
Certificates." The Class A-R Certificates (in addition to other ERISA-restricted
classes of certificates, as provided 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.

RIGHTS OF THE NIM INSURER UNDER THE POOLING AND SERVICING AGREEMENT

          After the closing date, a separate trust or trusts (or other form of
entity) may be established to issue net interest margin securities secured by
all or a portion of the Class P and Class C Certificates. Those net interest


                                      S-87



margin securities may or may not have the benefit of a financial guaranty
insurance policy. The insurer or insurers (the "NIM Insurer") that would issue a
policy will be a third party beneficiary of the Pooling and Servicing Agreement
and will have a number of rights under the Pooling and Servicing Agreement,
which will include the following:

               o    the right to consent to the Servicer's exercise of its
                    discretion to waive assumption fees, late payment or other
                    charges in connection with a Mortgage Loan or to arrange for
                    the extension of due dates for payments due on a mortgage
                    note for no more than 270 days, if the waivers or extensions
                    relate to more than 5% of the Mortgage Loans;

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

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

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

               o    each of the rights under "Risk Factors--Rights of the NIM
                    Insurer" in this prospectus supplement.

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

                  YIELD, PREPAYMENT AND MATURITY CONSIDERATIONS

GENERAL

          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, pro rata. If, as a result of shortfalls on the Mortgage Loans, the
sum of the aggregate of the Class Certificate Balances of all classes of
certificates exceeds the Pool Principal Balance, 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.

PREPAYMENT CONSIDERATIONS AND RISKS

          The rate of principal distributions on the Offered Certificates, the
aggregate amount of distributions on the Offered Certificates and the yield to
maturity of the Offered Certificates will be related to the rate and timing of
payments of principal on the Mortgage Loans. The rate of principal payments on
the Mortgage Loans will in turn be affected by the amortization schedules of the
Mortgage Loans, the rate and timing of the creation of Deferred Interest 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. A
substantial majority of the Mortgage Loans have a prepayment charge if the
related mortgagor prepays such Mortgage Loan during a period ranging from one
year to three years after origination. Because a substantial majority 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. The holders of the Class P Certificates will be entitled to
all prepayment charges received on the Mortgage Loans, and those amounts will
not be available for distribution on the other classes of 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 Loans are subject
to the "due-on-sale" provisions included therein. However, the Servicer may
choose not to


                                      S-88



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.

          The negative amortization of the Mortgage Loans may affect the yields
on the classes of certificates. During periods in which the outstanding
principal balance of a Mortgage Loan is increasing due to the addition of
Deferred Interest to it, such increasing principal balance of that Mortgage Loan
may approach or exceed the value of the related mortgaged property, thus
increasing the likelihood of defaults as well as the amount of any loss
experienced with respect to any such Mortgage Loan that is required to be
liquidated. Furthermore, each Mortgage Loan provides for the payment of any
remaining unamortized principal balance of such Mortgage Loan (due to the
addition of Deferred Interest, if any, to the principal balance of such Mortgage
Loan) in a single payment at the maturity of the Mortgage Loan. Because the
mortgagors may be required to make a larger single payment upon maturity, it is
possible that the default risk associated with the Mortgage Loans is greater
than that associated with fully amortizing mortgage loans.

          In addition, because the Mortgage Rates on the Mortgage Loans adjust
at a different time than the monthly payments thereon and the Payment Caps may
limit the amount by which the monthly payments may adjust, the amount of a
monthly payment may be more or less than the amount necessary to fully amortize
the principal balance of the Mortgage Loans over its then remaining term at the
applicable Mortgage Rate. Accordingly, the Mortgage Loans may be subject to
negative amortization or reduced amortization (if the monthly payment due on a
Due Date is sufficient to pay interest accrued during the related Interest
Accrual Period at the applicable Mortgage Rate but is not sufficient to reduced
principal in accordance with a fully amortizing schedule); or accelerated
amortization (if the monthly payment due on a Due Date is greater than the
amount necessary to pay interest accrued during the related Interest Accrual
Period at the applicable Mortgage Rate and to reduce principal in accordance
with a fully amortizing schedule). In the event of negative amortization,
Deferred Interest is added to the principal balance of such Mortgage Loan and,
if such Deferred Interest is not offset by subsequent accelerated amortization,
at the final payment adjustment date, it may result in payments during the
period prior to the maturity date of the loan greater than, and potentially
substantially greater than, the monthly payment due for the immediately
preceding year.

          Prepayments, liquidations and purchases of the Mortgage Loans will
result in distributions on the certificates 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
Offered Certificates may vary from the anticipated yield will depend upon the
degree to which the offered 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. Further, an
investor should consider the risk that, in the case of any offered certificate
purchased at a discount, a slower than anticipated rate of principal payments
(including prepayments) on the Mortgage Loans could result in an actual yield to
the investor that is lower than the anticipated yield and, in the case of any
other offered certificate purchased at a premium, a faster than anticipated rate
of principal payments could result in an actual yield to the investor that is
lower than the anticipated yield.

          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 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. Furthermore, with respect to up to 30% of the
Mortgage Loans, 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


                                      S-89



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.

          The Mortgage Loans will consist of adjustable rate mortgage loans
subject to initial fixed rate periods of varying lengths. Adjustable rate
mortgage loans may be subject to a greater rate of principal prepayment in a
declining interest rate environment. For example, if prevailing interest rates
fall significantly, adjustable rate mortgage loans could be subject to higher
prepayment rates than if prevailing interest rates remain constant because the
availability of fixed rate mortgage loans at a lower fixed interest rate.
Prepayments on the Mortgage Loans may differ as they approach their respective
first Adjustment Dates.

          Although the Mortgage Rates are subject to adjustment after varying
lengths of initial fixed rate periods, such Mortgage Rates adjust less
frequently than the Pass-Through Rates on the LIBOR Certificates and adjust by
reference to the Mortgage Index. Changes in one-month LIBOR may not correlate
with changes in the Mortgage Index and also may not correlate with prevailing
interest rates. It is possible that an increased level of one-month LIBOR could
occur simultaneously with a lower level of prevailing interest rates which would
be expected to result in faster prepayments, thereby reducing the weighted
average lives of the classes of LIBOR Certificates. The Mortgage Rate applicable
to all of the Mortgage Loans and any Adjustment Date will be based on the
Mortgage Index value most recently announced as of a date generally 15 days
prior to such Adjustment Date. Thus, if the Mortgage Index value rises, the lag
in time before the corresponding Mortgage Rate increases will, all other things
being equal, slow the upward adjustment of the Pass-Through Rates on the LIBOR
Certificates. In addition, the Mortgage Loans will have Mortgage Rates that will
not adjust for a substantial period of time after origination. See "The Mortgage
Pool" in this prospectus supplement.

          The rate and timing of principal prepayments relative to the rate and
timing of the creation of Deferred Interest on the Mortgage Loans will also
affect the yields to maturity on the classes of certificates. To the extent that
Net Deferred Interest exists, it will reduce the interest distributed on the
LIBOR Certificates in the manner described in this prospectus supplement. We
cannot assure you as to the rate, timing or amount of Net Deferred Interest or
as to the resulting effect on the yield to maturity or the weighted average life
of any class of certificates. The amount of the Deferred Interest on the
Mortgage Loans is offset by using all or a portion of the Principal Prepayment
Amount to make distributions of Current Interest on the certificates. On any
Distribution Date, to the extent that the aggregate Deferred Interest on the
Mortgage Loans as of the related Due Date exceeds the Principal Prepayment
Amount for that Distribution Date, such excess amounts will be deducted from the
interest distributed on the certificates.

          Any proceeds from the Swap Contract are intended to provide amounts to
cover any unpaid Net Rate Carryover on the LIBOR Certificates, Unpaid Realized
Loss Amounts on the certificates and to restore or maintain
overcollateralization. However, any such Swap Payment payable by the Swap
Counterparty will be based on the Swap Contract Notional Balance and not based
on the aggregate Stated Principal Balances of the Mortgage Loans. Therefore, the
Swap Contract may not provide sufficient funds to cover any unpaid Net Rate
Carryover with respect to the LIBOR Certificates and to restore or maintain
overcollateralization for those certificates. See "Description of the
Certificates--The Swap Contract" in this prospectus supplement.

          The timing of changes in the rate of prepayments on the Mortgage Loans
may significantly affect an investor's actual yield to maturity, even if the
average rate of principal payments on the Mortgage Loans 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 distributions 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
distributions.

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 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 the Class Certificate Balance of the Certificate referred to in clause (a).


                                      S-90



          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 distributions, 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,
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 of the classes of Offered Certificates (other than the
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
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
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 A-1, CLASS A-2 AND CLASS A-3             CLASS M-1
                                        PERCENTAGE OF CPR                 PERCENTAGE OF CPR
                              ---------------------------------   ---------------------------------
DISTRIBUTION DATE              15%     20%    25%    30%    40%    15%     20%    25%    30%    40%
---------------------------   -----   ----   ----   ----   ----   -----   ----   ----   ----   ----

Initial Percentage.........     100    100    100    100    100     100    100    100    100    100
April 2008.................      86     81     76     70     59     100    100    100    100    100
April 2009.................      75     65     57     49     34     100    100    100    100    100
April 2010.................      64     53     43     34     19     100    100    100    100    100
April 2011.................      56     42     32     24     13     100    100     88     67     36
April 2012.................      48     34     25     18      8     100     93     68     48     22
April 2013.................      40     28     19     12      5     100     75     51     34      9
April 2014.................      35     23     14      9      3      73     48     31     19      0
April 2015.................      29     18     11      6      2      62     38     23      8      0
April 2016.................      25     15      8      4      1      53     31     17      0      0
April 2017.................      21     12      6      3      *      45     25      8      0      0
April 2018.................      18      9      4      2      0      37     19      0      0      0
April 2019.................      15      7      3      1      0      31     13      0      0      0
April 2020.................      12      6      2      1      0      26      5      0      0      0
April 2021.................      10      4      1      *      0      21      0      0      0      0
April 2022.................       8      3      1      0      0      17      0      0      0      0
April 2023.................       7      2      *      0      0      11      0      0      0      0
April 2024.................       6      2      *      0      0       5      0      0      0      0
April 2025.................       4      1      0      0      0       0      0      0      0      0
April 2026.................       3      1      0      0      0       0      0      0      0      0
April 2027.................       3      *      0      0      0       0      0      0      0      0
April 2028.................       2      *      0      0      0       0      0      0      0      0
April 2029.................       1      0      0      0      0       0      0      0      0      0
April 2030.................       1      0      0      0      0       0      0      0      0      0
April 2031.................       1      0      0      0      0       0      0      0      0      0
April 2032.................       *      0      0      0      0       0      0      0      0      0
April 2033.................       *      0      0      0      0       0      0      0      0      0
April 2034.................       0      0      0      0      0       0      0      0      0      0
April 2035.................       0      0      0      0      0       0      0      0      0      0
April 2036.................       0      0      0      0      0       0      0      0      0      0
April 2037 and thereafter..       0      0      0      0      0       0      0      0      0      0
Weighted Average Life (in
years) to Maturity**.......    6.23   4.58   3.54   2.84   1.95   10.30   7.96   6.35   5.21   4.03
Weighted Average to Life
(in years) to Call***......    5.85   4.26   3.27   2.62   1.79    9.92   7.66   6.09   5.01   3.81


----------
*    Indicates a value greater than 0% and less than 0.5%

**   Determined as specified under "Yield, Prepayment and Maturity
     Considerations--Weighted Average Lives of the Offered Certificates" in this
     prospectus supplement.

***  Determined as specified under "Yield, Prepayment and Maturity
     Considerations--Weighted Average Lives of the Offered Certificates" in this
     prospectus supplement and assumes that the Servicer exercises the option to
     repurchase the Mortgage Loans on the earliest possible Distribution Date.


                                      S-92



            PERCENT OF INITIAL CLASS CERTIFICATE BALANCES OUTSTANDING



                                           CLASS M-2                           CLASS M-3
                                        PERCENTAGE OF CPR                 PERCENTAGE OF CPR
                              ---------------------------------   --------------------------------
DISTRIBUTION DATE              15%     20%    25%    30%    40%    15%    20%    25%    30%    40%
---------------------------   -----   ----   ----   ----   ----   ----   ----   ----   ----   ----

Initial Percentage.........     100    100    100    100    100    100    100    100    100    100
April 2008.................     100    100    100    100    100    100    100    100    100    100
April 2009.................     100    100    100    100    100    100    100    100    100    100
April 2010.................     100    100    100    100    100    100    100    100    100    100
April 2011.................     100    100     88     67     36    100    100     88     67     36
April 2012.................     100     93     68     48     22    100     93     68     48      9
April 2013.................     100     75     51     34      0    100     75     51     34      0
April 2014.................      73     48     31     14      0     73     48     31      0      0
April 2015.................      62     38     23      0      0     62     38     11      0      0
April 2016.................      53     31      2      0      0     53     31      0      0      0
April 2017.................      45     25      0      0      0     45     17      0      0      0
April 2018.................      37     17      0      0      0     37      0      0      0      0
April 2019.................      31      0      0      0      0     31      0      0      0      0
April 2020.................      26      0      0      0      0     21      0      0      0      0
April 2021.................      21      0      0      0      0      6      0      0      0      0
April 2022.................       4      0      0      0      0      0      0      0      0      0
April 2023.................       0      0      0      0      0      0      0      0      0      0
April 2024.................       0      0      0      0      0      0      0      0      0      0
April 2025.................       0      0      0      0      0      0      0      0      0      0
April 2026.................       0      0      0      0      0      0      0      0      0      0
April 2027.................       0      0      0      0      0      0      0      0      0      0
April 2028.................       0      0      0      0      0      0      0      0      0      0
April 2029.................       0      0      0      0      0      0      0      0      0      0
April 2030.................       0      0      0      0      0      0      0      0      0      0
April 2031.................       0      0      0      0      0      0      0      0      0      0
April 2032.................       0      0      0      0      0      0      0      0      0      0
April 2033.................       0      0      0      0      0      0      0      0      0      0
April 2034.................       0      0      0      0      0      0      0      0      0      0
April 2035.................       0      0      0      0      0      0      0      0      0      0
April 2036.................       0      0      0      0      0      0      0      0      0      0
April 2037 and thereafter..       0      0      0      0      0      0      0      0      0      0
Weighted Average Life (in
years) to Maturity*........   10.01   7.72   6.16   5.05   3.92   9.75   7.51   5.98   4.91   3.80
Weighted Average to Life
(in years) to Call**.......    9.91   7.65   6.09   5.01   3.79   9.75   7.51   5.98   4.91   3.76


----------
*    Determined as specified under "Yield, Prepayment and Maturity
     Considerations--Weighted Average Lives of the Offered Certificates" in this
     prospectus supplement.

**   Determined as specified under "Yield, Prepayment and Maturity
     Considerations--Weighted Average Lives of the Offered Certificates" in this
     prospectus supplement and assumes that the Servicer exercises the option to
     repurchase the Mortgage Loans on the earliest possible Distribution Date.


                                      S-93



            PERCENT OF INITIAL CLASS CERTIFICATE BALANCES OUTSTANDING



                                           CLASS M-4                     CLASS M-5
                                       PERCENTAGE OF CPR             PERCENTAGE OF CPR
                                 ----------------------------  ----------------------------
DISTRIBUTION DATE                 15%   20%   25%   30%   40%   15%   20%   25%   30%   40%
------------------------------   ----  ----  ----  ----  ----  ----  ----  ----  ----  ----

Initial Percentage ...........    100   100   100   100   100   100   100   100   100   100
April 2008 ...................    100   100   100   100   100   100   100   100   100   100
April 2009 ...................    100   100   100   100   100   100   100   100   100   100
April 2010 ...................    100   100   100   100   100   100   100   100   100   100
April 2011 ...................    100   100    88    67    36   100   100    88    67     4
April 2012 ...................    100    93    68    48     0   100    93    68    39     0
April 2013 ...................    100    75    51    30     0   100    75    48     0     0
April 2014 ...................     73    48    14     0     0    73    39     0     0     0
April 2015 ...................     62    38     0     0     0    62    11     0     0     0
April 2016 ...................     53    15     0     0     0    53     0     0     0     0
April 2017 ...................     45     0     0     0     0    31     0     0     0     0
April 2018 ...................     37     0     0     0     0     9     0     0     0     0
April 2019 ...................     17     0     0     0     0     0     0     0     0     0
April 2020 ...................      0     0     0     0     0     0     0     0     0     0
April 2021 ...................      0     0     0     0     0     0     0     0     0     0
April 2022 ...................      0     0     0     0     0     0     0     0     0     0
April 2023 ...................      0     0     0     0     0     0     0     0     0     0
April 2024 ...................      0     0     0     0     0     0     0     0     0     0
April 2025 ...................      0     0     0     0     0     0     0     0     0     0
April 2026 ...................      0     0     0     0     0     0     0     0     0     0
April 2027 ...................      0     0     0     0     0     0     0     0     0     0
April 2028 ...................      0     0     0     0     0     0     0     0     0     0
April 2029 ...................      0     0     0     0     0     0     0     0     0     0
April 2030 ...................      0     0     0     0     0     0     0     0     0     0
April 2031 ...................      0     0     0     0     0     0     0     0     0     0
April 2032 ...................      0     0     0     0     0     0     0     0     0     0
April 2033 ...................      0     0     0     0     0     0     0     0     0     0
April 2034 ...................      0     0     0     0     0     0     0     0     0     0
April 2035 ...................      0     0     0     0     0     0     0     0     0     0
April 2036 ...................      0     0     0     0     0     0     0     0     0     0
April 2037 and thereafter ....      0     0     0     0     0     0     0     0     0     0
Weighted Average Life (in
years) to Maturity* ..........   9.35  7.18  5.72  4.81  3.62  8.72  6.67  5.43  4.55  3.39
Weighted Average to Life
(in years) to Call** .........   9.35  7.18  5.72  4.81  3.62  8.72  6.67  5.43  4.55  3.39


----------
*    Determined as specified under "Yield, Prepayment and Maturity
     Considerations--Weighted Average Lives of the Offered Certificates" in this
     prospectus supplement.

**   Determined as specified under "Yield, Prepayment and Maturity
     Considerations--Weighted Average Lives of the Offered Certificates" in this
     prospectus supplement and assumes that the Servicer exercises the option to
     repurchase the Mortgage Loans on the earliest possible Distribution Date.


                                      S-94



            PERCENT OF INITIAL CLASS CERTIFICATE BALANCES OUTSTANDING

                                              CLASS M-6
                                         PERCENTAGE OF CPR
                                 --------------------------------
DISTRIBUTION DATE                 15%    20%    25%    30%    40%
-----------------                ----   ----   ----   ----   ----
Initial Percentage ...........    100    100    100    100    100
April 2008 ...................    100    100    100    100    100
April 2009 ...................    100    100    100    100    100
April 2010 ...................    100    100    100    100    100
April 2011 ...................    100    100     88     38      0
April 2012 ...................    100     93     41      0      0
April 2013 ...................    100     61      0      0      0
April 2014 ...................     57      0      0      0      0
April 2015 ...................     27      0      0      0      0
April 2016 ...................      1      0      0      0      0
April 2017 ...................      0      0      0      0      0
April 2018 ...................      0      0      0      0      0
April 2019 ...................      0      0      0      0      0
April 2020 ...................      0      0      0      0      0
April 2021 ...................      0      0      0      0      0
April 2022 ...................      0      0      0      0      0
April 2023 ...................      0      0      0      0      0
April 2024 ...................      0      0      0      0      0
April 2025 ...................      0      0      0      0      0
April 2026 ...................      0      0      0      0      0
April 2027 ...................      0      0      0      0      0
April 2028 ...................      0      0      0      0      0
April 2029 ...................      0      0      0      0      0
April 2030 ...................      0      0      0      0      0
April 2031 ...................      0      0      0      0      0
April 2032 ...................      0      0      0      0      0
April 2033 ...................      0      0      0      0      0
April 2034 ...................      0      0      0      0      0
April 2035 ...................      0      0      0      0      0
April 2036 ...................      0      0      0      0      0
April 2037 and thereafter ....      0      0      0      0      0
Weighted Average Life (in
years) to Maturity* ..........   7.32   5.90   4.84   3.86   3.09
Weighted Average to Life
(in years) to Call** .........   7.32   5.90   4.84   3.86   3.09

----------
*    Determined as specified under "Yield, Prepayment and Maturity
     Considerations--Weighted Average Lives of the Offered Certificates" in this
     prospectus supplement.

**   Determined as specified under "Yield, Prepayment and Maturity
     Considerations--Weighted Average Lives of the Offered Certificates" in this
     prospectus supplement and assumes that the Servicer exercises the option to
     repurchase the Mortgage Loans on the earliest possible Distribution Date.


                                      S-95



FINAL SCHEDULED DISTRIBUTION DATE

          The "FINAL SCHEDULED DISTRIBUTION DATE" for the certificates is the
Distribution Date in June 2037 which is the Distribution Date occurring in the
month following the month in which the latest stated maturity for any Mortgage
Loan occurs. 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 Mortgage Loans, the Class
Certificate Balance 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 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 pool are consistent with an investor's expectations. 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 (other than the Class P and Class L Certificates),
following all distributions and the allocation of Realized Losses on the
Mortgage Loans on a Distribution Date, exceeds the Pool Principal Balance 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. See "Description of the
Certificates--Allocation of Losses" in this prospectus supplement.

                                LEGAL PROCEEDINGS

          There are no legal proceedings against IndyMac Bank, F.S.B., 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

          The following discussion and the discussion in the prospectus under
the caption "Material Federal Income Tax Consequences" is the opinion of Sidley
Austin LLP ("Tax Counsel") on the anticipated material federal income tax
consequences of the purchase, ownership, and disposition of the offered
certificates. It is based on the current provisions and interpretations of the
Code and the accompanying Treasury regulations and on current judicial and
administrative rulings. All of these authorities are subject to change and any
change can apply retroactively.

          For federal income tax purposes, the issuing entity (exclusive of the
Swap Contract and Swap Account) 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 L and Class A-R Certificates, the "REGULAR CERTIFICATES"). The Regular
Certificates will be designated as the regular interests in the Master REMIC. In
addition, each class of LIBOR Certificates will represent a beneficial interest
in the right to receive certain payments of Tax Net Rate Carryover (the "BASIS
RISK CONTRACT COMPONENT"), as defined below. The rights of the LIBOR
Certificates to receive payments of such Tax Net Rate Carryover will represent,
for


                                      S-96



federal income tax purposes, separate contractual rights coupled with REMIC
regular interests within the meaning of Treasury regulation Section.
1.860G-2(i). The Class A-R Certificates will represent the beneficial ownership
of the residual interest in one or more REMICs described in the Pooling and
Servicing Agreement.

          The Swap Contract, the Swap Account, the supplemental interest trust
and the Carryover Reserve Fund will not constitute any part of any REMIC created
under the pooling and servicing agreement.

TAXATION OF THE REGULAR INTEREST COMPONENT OF THE LIBOR CERTIFICATES

          A holder of a class of LIBOR Certificates will be treated for federal
income tax purposes as owning an interest in the corresponding class of regular
interests in the Master REMIC (this interest is referred herein as the "regular
interest component" of the LIBOR Certificate). The regular interest component of
a LIBOR Certificate will be entitled to receive interest and principal
distributions at the times and in the amounts equal to those made on the LIBOR
Certificate to which it corresponds, except that (i) the maximum rate at which
that regular interest component will accrue interest will equal the Net Rate Cap
computed for this purpose without regard to any Swap Termination Payments paid
by the issuing entity, adjusting the Swap Contract Notional Balance so that it
is limited on each Distribution Date to the lesser of the scheduled amount in
the Swap Table and the aggregate Stated Principal Balance of the Mortgage Loans
and adjusting the fixed rate payable under the Swap Contract so that it is
subject to a cap equal to the Weighted Average Adjusted Net Mortgage Rate (the
"REMIC CAP"), (ii) net rate carryover will be deemed to include the excess, if
any, of the lesser of the Pass-Through Rate and the Net Rate Cap over the REMIC
Cap ("TAX NET RATE CARRYOVER") and (iii) any amounts paid to the Swap
Counterparty due to any excess of the REMIC Cap over the Net Rate Cap will be
treated as being payable first from Net Monthly Excess Cashflow and second from
amounts distributed on the regular interests. As a result of the foregoing, the
amount of distributions on the regular interest component of a LIBOR Certificate
may exceed the actual amount of distributions on the LIBOR Certificate.

          A holder of a LIBOR Certificate must allocate its purchase price for
the LIBOR Certificate between its components--the regular interest component and
the basis risk contract component. To the extent the basis risk contract
component has significant value, the regular interest component will, in the
case of the LIBOR Certificates, be viewed as having been issued with lesser
premium or an additional amount of original issue discount ("OID") (which could
cause the total amount of OID to exceed a statutorily defined de minimis
amount).

          Upon the sale, exchange, or other disposition of a LIBOR Certificate,
the holder must allocate the amount realized between the components of the LIBOR
Certificate based on the relative fair market values of those components at the
time of sale. Any amount that is so allocated to the basis risk contract
component will be considered a "termination payment" under certain Treasury
Regulations which address the tax treatment of notional principal contracts.
Assuming that a LIBOR Certificate is held as a "capital asset" within the
meaning of Section 1221 of the Code, gain or loss on the disposition of an
interest in the basis risk contract component should be capital gain or loss in
an amount equal to the termination payment it is deemed to have received less
the unamortized portion of the premium it is deemed to have paid and gain or
loss on the regular interest component will be treated as described in the
prospectus under "Federal Income Tax Consequences--Gain or Loss on Disposition".

          Interest on the regular interest component of a LIBOR Certificate must
be included in income by a holder under the accrual method of accounting,
regardless of the holder's regular method of accounting. In addition, the
regular interest components of the LIBOR Certificates could be considered to
have been issued with OID. For purposes of determining the amount and rate of
accrual of OID and market discount, the issuing entity intends to assume that
there will be prepayments on the Mortgage Loans at a rate equal to 100% of the
Prepayment Assumption. No representation is made as to whether the 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.

          If the holders of any Regular Certificates are treated as acquiring
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.


                                      S-97



STATUS OF THE LIBOR CERTIFICATES

          The regular interest components of the offered certificates will be
treated as assets described in Section 7701(a)(19)(C) of the Code for a
"domestic building and loan association," and as "real estate assets" under
Section 856(c)(5)(B) of the Code for a "real estate investment trust" ("REIT"),
generally, in the same proportion that the assets of the issuing entity,
exclusive of Carryover Reserve Fund and the Supplemental Interest Trust, would
be so treated. In addition, to the extent the regular interest component of a
LIBOR Certificate represents real estate assets under Section 856(c)(5)(B) of
the Code, the interest derived from that component would be interest on
obligations secured by interests in real property for purposes of Section
856(c)(3)(B) of the Code for a REIT. In addition, the regular interest
components of the LIBOR Certificates will be treated as assets described in
Section 860G(a)(3) of the Code. The basis risk contract components of the LIBOR
Certificates will not, however, qualify as assets described in Section
7701(a)(19)(C) of the Code, as real estate assets under Section 856(c)(5)(B) of
the Code or as assets described in Section 860G(a)(3) of the Code.

THE BASIS RISK CONTRACT COMPONENTS

          The following discussion assumes that the rights of the holders of the
LIBOR Certificates under the basis risk contract will be treated as rights under
a notional principal contract rather than as a partnership for federal income
tax purposes. If these rights were treated as representing the beneficial
interests in an entity taxable as a partnership for federal income tax purposes,
then there could be different tax timing consequences to all such
certificateholders and different withholding tax consequences on payments of Tax
Net Rate Carryover to holders of the LIBOR Certificates who are non-U.S.
Persons. Prospective investors in the LIBOR Certificates are encouraged to
consult their tax advisors regarding their appropriate tax treatment.

          As indicated above, a portion of the purchase price paid by a holder
to acquire a LIBOR Certificate will be attributable to the basis risk contract
component of such certificate. As of the closing date, the basis risk contract
components are expected to have an insubstantial value relative to the regular
interest components. The portion of the overall purchase price attributable to
the basis risk contract component must be amortized over the life of such
certificate, taking into account the declining balance of the related regular
interest component. Treasury regulations concerning notional principal contracts
provide alternative methods for amortizing the purchase price of an interest
rate swap contract. Under the level yield method, the price paid for an interest
rate cap is amortized over the life of the cap as though it were the principal
amount of a loan bearing interest at a reasonable rate. Holders are urged to
consult their tax advisors concerning the methods that can be employed to
amortize the portion of the purchase price paid for the basis risk contract
component of a LIBOR Certificate.

          Any Tax Net Rate Carryover paid to a holder of a LIBOR Certificate
will be treated as periodic payments on an interest rate swap contract. To the
extent the sum of such periodic payments for any year exceeds that year's
amortized cost of the related basis risk contract component, such excess is
ordinary income. Conversely, to the extent that the amount of that year's
amortized cost exceeds the sum of the periodic payments, such excess shall
represent a net deduction for that year. Although not clear, net income or a net
deduction with respect to the basis risk contract should be treated as ordinary
income or as an ordinary deduction.

          A beneficial owner's ability to recognize a net deduction with respect
to the basis risk contract component of a LIBOR Certificate or any such
guarantee payment may be limited under Sections 67 and/or 68 of the Code in the
case of (1) estates and trusts and (2) individuals owning an interest in such
component directly or through a "pass-through entity" (other than in connection
with such individual's trade or business). Pass-through entities include
partnerships, S corporations, grantor trusts and non-publicly offered regulated
investment companies, but do not include estates, nongrantor trusts,
cooperatives, real estate investment trusts and publicly offered regulated
investment companies. Further, a beneficial owner will not be able to recognize
a net deduction with respect to the basis risk contract component or any such
guarantee payment in computing the beneficial owner's alternative minimum tax
liability. Because a beneficial owner of a LIBOR Certificate will be required to
include in income the amount deemed to have been paid by such owner pursuant to
the basis risk contract or such guarantee but may not be able to deduct that
amount from income, a beneficial owner of a LIBOR Certificate may have income
that exceeds cash distributions on the LIBOR Certificate, in any period over the
term of the LIBOR Certificate. As a result, the LIBOR Certificates may not be a
suitable investment for any taxpayer whose net deduction with respect to the
basis risk contract or guarantee would be subject to the limitations described
above. Subject to the foregoing, if for any year the amount of that year's
amortized cost exceeds the sum of the periodic payments, such excess is
allowable as an ordinary deduction.


                                      S-98



TAXATION OF THE CLASS A-R CERTIFICATES

          The holders of the Class A-R Certificates must include the taxable
income of each related REMIC and the Master REMIC in their federal taxable
income. The resulting tax liability of the holders may exceed cash distributions
to them during certain periods. All or a portion of the taxable income from a
Residual Certificate recognized by a holder may be treated as "excess inclusion"
income, which with limited exceptions, cannot be reduced by deductions
(including net operating losses) and in all cases is subject to U.S. federal
income tax.

          In computing alternative minimum taxable income, the special rule
providing that taxable income cannot be less than the sum of the taxpayer's
excess inclusions for the year does not apply. However, a taxpayer's alternative
minimum taxable income cannot be less than the sum of the taxpayer's excess
inclusions for the year. In addition, the amount of any alternative minimum tax
net operating loss is determined without regard to any excess inclusions.

          Effective August 1, 2006, temporary regulations issued by the Internal
Revenue Service (the "TEMPORARY REGULATIONS") have modified the general rule
that excess inclusions from a REMIC residual interest are not includible in the
income of a foreign person (or subject to withholding tax) until paid or
distributed. The new regulations accelerate the time both for reporting, and tax
withholding on, excess inclusions allocated to the foreign equity holders of
partnerships and certain other pass-through entities. The new rules also provide
that excess inclusions are United States sourced income. The timing rules apply
to a particular 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 residual interest held by a foreign person
as a shareholder of a real estate investment trust or regulated investment
company, as a participant in a common trust fund or as a patron in an
organization subject to part I of subchapter T (cooperatives), the amount of
excess inclusion allocated to the foreign person must be taken into income at
the same time that other income from the trust, company, fund, or organization
would be taken into account.

          Under the Temporary regulations, excess inclusions allocated to a
foreign person (whether as a partner or holder of an interest in a pass-through
entity) are expressly made subject to withholding tax. In addition, in the case
of excess inclusions allocable to a foreign person as a partner, the Temporary
regulations eliminate an important exception to the withholding requirements
under which a withholding agent unrelated to a payee is obligated to withhold on
a payment only to the extent that the withholding agent has control over the
payee's money or property and knows the facts giving rise to the payment.

          Purchasers of a Residual Certificate are encouraged to consider
carefully the tax consequences of an investment in Class A-R 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 are encouraged to consult their tax advisors
regarding whether a Residual Certificate will be treated as a "noneconomic"
residual interest, as a "tax avoidance potential" residual interest or both.
Among other things, holders of Class A-R Certificates that are treated as
noneconomic residual interests should be aware of REMIC regulations that govern
the treatment of "inducement fees" and that may affect their ability to transfer
the 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 Certificates - Excess Inclusions" in the prospectus.


                                      S-99



                              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.

          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" in the issuing entity and an additional right to payments from
proceeds of the Swap Contract for the purpose of the Plan Assets Regulation.

          The U.S. Department of Labor has granted to the underwriter an
administrative exemption (an "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 rights to payments from
proceeds of the Swap Contract, 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 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). A certificate that satisfies the requirements of the Exemption
other than the ratings requirement may be eligible for purchase by an insurance
company investing assets of its general account that include plan assets when
the requirements of Sections I and III of Prohibited Transaction Class Exemption
95-60 are met.


                                     S-100



          The Swap Contract does not meet all of the requirements under the
Exemption and has not been included in the issuing entity, and consequently the
right to payments from the Swap Contract is not eligible for the exemptive
relief available under the Exemption. For ERISA purposes, an interest in an
Offered Certificate should represent a beneficial interest in two assets: (i)
the right to receive payments from the issuing entity with respect to the
applicable class and without taking into account payments from proceeds of the
Swap Contract and (ii) the right to receive payments from proceeds of the Swap
Contract. A Plan's purchase and holding of an Offered Certificate could
constitute or otherwise result in a prohibited transaction under ERISA and
Section 4975 of the Code unless an exemption is available.

          Accordingly, so long as the Swap Contract is in effect, no Plan or
other person using plan assets may acquire or hold any interest in an Offered
Certificate unless, in addition to satisfying the conditions, above, of the
Exemption, such acquisition and holding are eligible for the exemptive relief
available under Department of Labor Prohibited Transaction Class Exemption
("PTCE") 84-14 (for transactions effected by independent "qualified professional
asset managers", PTCE 90-1 (for transactions by insurance company pooled
separate accounts), PTCE 91-38 (for transactions by bank collective investment
funds), PTCE 95-60 (for transactions by insurance company general accounts),
PTCE 96-23 (for transactions effected by "in-house asset managers") or the
service provider exemption provided by Section 408(b)(17) of ERISA and Section
4975(d)(20) of the Code (collectively, the "Investor-Based Exemptions") or a
similar exemption. It should be noted, however, that even if the conditions
specified in one or more Investor-Based Exemptions are met, the scope of relief
may not necessarily cover all acts that might be construed as prohibited
transactions. Plan fiduciaries should consult legal counsel concerning these
issues.

          As long as the Swap Contract is in effect each beneficial owner of an
Offered Certificate or any interest in such Offered Certificate, by its
acceptance and holding of such Offered Certificate or interest therein, will be
deemed to have represented that either (i) it is not a Plan or a person
investing plan assets in such Offered Certificate, or (ii) its acquisition and
holding of such Offered Certificate are eligible for the exemptive relief
available under at least one of the Investor-Based Exemptions.

          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 ANY 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 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.

          IF THE REPRESENTATION IS NOT TRUE, OR ANY ATTEMPT TO TRANSFER TO A
PLAN OR PERSON ACTING ON BEHALF OF A PLAN OR USING THE PLAN'S ASSETS IS
INITIATED WITHOUT THE REQUIRED OPINION OF COUNSEL, THE ATTEMPTED TRANSFER OR
ACQUISITION SHALL BE VOID.

          Prospective Plan investors are encouraged to consult with their legal
advisors concerning the impact of ERISA and the Code, the effect of the Plan
Assets Regulation and the applicability of the Exemption described in the
prospectus, and the potential consequences in their specific circumstances,
before making an investment in any


                                     S-101



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 the issuing entity, represented by an
interest in the Offered Certificates is appropriate for the Plan, taking into
account the overall investment policy of the Plan and the composition of the
Plan's investment portfolio.

          The sale of Offered Certificates to a Plan is 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 Credit Suisse Securities (USA) LLC ("CREDIT
SUISSE" or the "UNDERWRITER"), the depositor has agreed to sell the Offered
Certificates to the underwriter and the underwriter has agreed to purchase the
Offered Certificates from the depositor.

          Distribution of the Offered 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 Offered 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 Offered Certificates may be deemed to be underwriters, and
any discounts, commissions or concessions received by them, and any profits or
resale of the Offered 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 Offered Certificates purchased by it but the underwriter
has no obligation to do so. We cannot give any 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, liabilities, customarily
indemnified against, including liabilities under the Securities Act of 1933, as
amended.

                                 USE OF PROCEEDS

          It is expected that the proceeds to the depositor from the sale of the
Offered Certificates will be approximately 100.00% of the aggregate Class
Certificate Balance of the Offered Certificates, before deducting issuance
expenses payable by the depositor. The depositor will apply the net proceeds of
the sale of the Offered Certificates against the purchase price of the Mortgage
Loans on the closing date.

                                  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.


                                     S-102



                                     RATINGS

          It is a condition to the issuance of the Offered Certificates that
they be assigned ratings not lower than the following by S&P and Moody's.

                           CLASS   MOODY'S/S&P
                           -----   -----------
                           A-1       Aaa/AAA
                           A-2       Aaa/AAA
                           A-3       Aaa/AAA
                           M-1       Aa2/AA
                           M-2       Aa3/AA-
                           M-3        A1/A
                           M-4        A2/A-
                           M-5      Baa1/BBB
                           M-6      Baa2/BBB-

          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 ratings take into consideration the credit quality
of the related mortgage pool, including any credit support providers, structural
and legal aspects associated with the certificates, and the extent to which the
payment stream on the mortgage pool is adequate to make the payments required by
the certificates.

          The ratings assigned by Moody's to mortgage pass-through certificates
address the likelihood of the receipt by certificateholders of all distributions
to which such certificateholders are entitled under the transaction structure.
Moody's ratings reflect its analysis of the riskiness of the Mortgage Loans and
its analysis of the structure of the transaction as set forth in the operative
documents. Moody's ratings do not address the effect on the certificates' yield
attributable to prepayments or recoveries on the underlying Mortgage Loans.

          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 nor the likelihood of payment of rate carryover.

          The rating agencies have stated that their standard policy is to
monitor ratings on public offered securities for which a rating as been
provided, unless the depositor has requested a rating without ongoing
surveillance. A rating agency will monitor the rating it issues on an ongoing
basis and may update the rating after conducting its regular review of the
depositor's or issuing entity's creditworthiness or after conducting a review of
the status of the rating upon becoming aware of any information that might
reasonably be expected to result in a change of rating. The depositor has not
requested that any rating agency not monitor their ratings of the Offered
Certificates, and the depositor has not requested that any rating agency use any
monitoring procedures other than their standard procedures.

          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-103



                             INDEX OF DEFINED TERMS

Adjusted Net Mortgage Rate ........................................         S-69
Adjustment Date ...................................................         S-34
advance ...........................................................         S-52
Applied Realized Loss Amount ......................................         S-82
basis risk contract component .....................................         S-96
BBA ...............................................................         S-81
Book-Entry Certificates ...........................................         S-59
Calculation Agent .................................................         S-81
Carryover Reserve Fund ............................................         S-82
Certificate Account ...............................................         S-63
Certificate Owners ................................................         S-59
CI ................................................................         S-61
Class Certificate Balance .........................................         S-59
Clearstream, Luxembourg ...........................................         S-61
Compensating Interest .............................................         S-52
Cooperative .......................................................         S-62
CPR ...............................................................         S-85
Credit Suisse .....................................................        S-102
Credit Support Annex ..............................................         S-76
cumulative loss trigger event .....................................         S-13
Cumulative Loss Trigger Event .....................................         S-75
Current Interest ..................................................         S-69
Cut-off Date Pool Principal Balance ...............................         S-33
DBC ...............................................................         S-61
DBNTC .............................................................         S-55
Deferred interest .................................................         S-20
Deferred Interest .................................................         S-71
Definitive Certificate ............................................         S-60
delinquency trigger event .........................................         S-13
Delinquency Trigger Event .........................................         S-74
Distribution Account ..............................................         S-63
Distribution Date .................................................         S-67
DTC ...............................................................         S-59
DTC Rules .........................................................         S-60
Due Date ..........................................................         S-34
ERISA .............................................................        S-100
Euroclear .........................................................         S-59
Euroclear Operator ................................................         S-62
Euroclear Participants ............................................         S-62
European Depositaries .............................................         S-60
Excess Cashflow ...................................................   S-25, S-75
Excess Overcollateralization Amount ...............................         S-74
Excess Proceeds ...................................................         S-66
Exchange Act ......................................................         S-80
Expense Fee Rate ..................................................         S-51
Extra Principal Distribution Amount ...............................         S-73
FICO Credit Scores ................................................         S-35
Final Scheduled Distribution Date .................................         S-96
Financial Intermediary ............................................         S-60
Fully Amortizing Monthly Payment ..................................         S-35
Gross Margin ......................................................         S-34
Indirect Participants .............................................         S-60
IndyMac Bank ......................................................         S-33
Initial Periodic Rate Cap .........................................         S-34
Initial Target Subordination Percentage ...........................         S-73
Interest Accrual Period ...........................................         S-69
Interest Funds ....................................................         S-70
Interest Only Monthly Payment .....................................         S-35
Interest Remittance Amount ........................................         S-67
Interest Settlement Rate ..........................................         S-81
Investor Based Exemptions .........................................        S-101
ISDA Master Agreement .............................................   S-57, S-76
LIBOR Determination Date ..........................................         S-81
Loan-to-Value Ratio ...............................................         S-35
London Business Day ...............................................         S-81
Maximum Mortgage Rate .............................................         S-34
MBA Method ........................................................         S-54
Minimum Monthly Payment ...........................................         S-35
Minimum Mortgage Rate .............................................         S-34
Mortgage Loans ....................................................         S-33
Mortgage Notes ....................................................         S-33
Mortgaged Properties ..............................................         S-33
negative amortization limit .......................................         S-20
Negative Amortization Limit .......................................         S-34
Net Deferred Interest .............................................         S-71
Net Interest Shortfall ............................................         S-70
net prepayment interest shortfall .................................         S-70
Net Prepayments ...................................................         S-71
New CI ............................................................         S-61
New Swap Payment ..................................................         S-78
NIM Insurer .......................................................         S-88
OC Floor ..........................................................         S-73
OID ...............................................................         S-97
One-Year LIBOR Index ..............................................         S-34
Optional Termination Date .........................................         S-86
OTS Method ........................................................         S-54
overcollateralization .............................................         S-25
Overcollateralization Deficiency Amount ...........................         S-74
Overcollateralization Release Amount ..............................         S-74
Overcollateralization Target Amount ...............................         S-74
Overcollateralized Amount .........................................         S-74
Participants ......................................................         S-60
Pass-Through Rate .................................................         S-69
Payment Adjustment Date ...........................................         S-34
payment limit .....................................................         S-20
Payment Limit .....................................................         S-34
Plan ..............................................................        S-100
Pool Principal Balance ............................................         S-72
Prepayment Assumption .............................................         S-85
Prepayment Interest Excess ........................................         S-68
prepayment interest shortfall .....................................         S-70
Prepayment Period .................................................         S-72
Principal Distribution Amount .....................................         S-72
Principal Prepayment Amount .......................................         S-71
Principal Remittance Amount .......................................         S-68
Private Certificates ..............................................         S-58
PTCE ..............................................................        S-101
PTCE 95-60 ........................................................        S-101
Realized Loss .....................................................         S-75
Record Date .......................................................         S-67
Regular Certificates ..............................................         S-96
Regulation AB .....................................................         S-80
REIT ..............................................................         S-98
Relevant Depositary ...............................................         S-60


                                     S-104



Relief Act Reduction ..............................................         S-70
REMIC Cap .........................................................         S-97
Reuters Page LIBOR01 ..............................................         S-81
Rolling Sixty Day Delinquency Rate ................................         S-75
Schedule ..........................................................         S-76
Scheduled Payments ................................................         S-34
Senior Enhancement Percentage .....................................         S-74
Senior Principal Distribution Amount ..............................         S-72
Servicer ..........................................................         S-51
significance estimate .............................................         S-57
significance percentage ...........................................         S-57
Stated Principal Balance ..........................................         S-72
Stepdown Date .....................................................         S-74
Stepdown Target Subordination Percentage ..........................         S-73
Subordinated Class Principal Distribution Target Amount ...........         S-73
Subsequent Periodic Rate Cap ......................................         S-34
Subsequent Recoveries .............................................         S-75
Substitution Adjustment Amount ....................................         S-46
supplemental interest trust .......................................         S-64
supplemental interest trustee .....................................         S-64
Swap Account ......................................................         S-64
Swap Contract .....................................................         S-76
Swap Contract Notional Balance ....................................         S-77
Swap Contract Termination Date ....................................         S-76
Swap Counterparty .................................................         S-57
Swap Counterparty Rating Downgrade ................................         S-80
Swap Counterparty Trigger Event ...................................         S-81
Swap Table ........................................................         S-77
Swap Termination Payment ..........................................         S-81
Tax Net Rate Carryover ............................................         S-97
Temporary regulations .............................................         S-99
Terms and Conditions ..............................................         S-62
trigger event .....................................................         S-13
Trigger Event .....................................................         S-74
Trustee ...........................................................         S-55
Trustee Fee .......................................................         S-51
underlying REMIC Regular Interests ................................         S-96
underwriter .......................................................        S-102
Unpaid Realized Loss Amount .......................................         S-75
Voting Rights .....................................................         S-86
Weighted Average Adjusted Net Mortgage Rate .......................         S-71


                                     S-105



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.

March 29, 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 ..................................................    71
   Hazard Insurance .....................................................    71
   Realization upon Defaulted Mortgage Loans ............................    72
   Servicing and Other Compensation and Payment of Expenses .............    75
   Evidence as to Compliance ............................................    76
   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 ..............................................................    89
   Taxation of Debt Securities ..........................................    89
   REMIC Securities .....................................................    96
   Tax Status as a Grantor Trust ........................................   104
   Final Trust Reporting Regulations ....................................   111
   Tax Characterization of the Issuing Entity as a Partnership ..........   111
   Tax Consequences to Holders of the Notes .............................   112
   Tax Consequences to Holders of the Certificates ......................   114
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 ................................................   125


                                        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
     PAYMENTS -- NO RECOURSE     provide that securities will be payable from
     TO SELLERS, DEPOSITOR OR    other issuing entities in addition to their
     SERVICER                    associated issuing 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.
--------------------------------------------------------------------------------


                                        5



--------------------------------------------------------------------------------
                                 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,
     YOU                         thus, will require substantial principal
                                 payments (that is, balloon payments) at their
                                 stated maturity. Loans with balloon payments
                                 involve a greater degree of risk than fully
                                 amortizing loans because typically the borrower
                                 must be able to refinance the loan or sell the
                                 property to make the balloon payment at
                                 maturity. The ability of a borrower to do this
                                 will depend on factors such as mortgage rates
                                 at the time of sale or refinancing, the
                                 borrower's equity in the property, the relative
                                 strength of the local housing market, the
                                 financial condition of the borrower, and tax
                                 laws. Losses on these loans that are not
                                 otherwise covered by a credit enhancement will
                                 be borne by the holders of one or more classes
                                 of securities.

     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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                                 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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                                 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
     CREDIT                      draw 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        The value of the properties underlying the
   Declines In Property Values   loans held in the issuing entity may decline
   May Adversely Affect You      over time. Among the factors that could
                                 adversely affect the value of the properties
                                 are:

                                 o   an overall decline in the residential real
                                     estate market in the areas in which they
                                     are located,

                                 o   a decline in their general condition from
                                     the failure of borrowers to maintain their
                                     property adequately, and

                                 o   natural disasters that are not covered by
                                     insurance, such as earthquakes and floods.

                                 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
   Adversely Affect You          held 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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                                                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
   of Liquidation Expenses       generally do not vary directly with the
   May Adversely Affect You      outstanding principal balance of the loan at
                                 the time of default. Therefore, if a servicer
                                 takes the same steps for a defaulted loan
                                 having a small remaining principal balance as
                                 it does for a defaulted loan having a large
                                 remaining principal balance, the amount
                                 realized after expenses is smaller as a
                                 percentage of the outstanding principal balance
                                 of the small loan than it is for the defaulted
                                 loan having a large remaining principal
                                 balance.

   Consumer Protection Laws      Federal, state and local laws extensively
   May Adversely Affect You      regulate 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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                                 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 YOUR   loans that were originated with loan-to-value
SECURITIES ARE BACKED BY         ratios or combined loan-to-value ratios in
PARTIALLY UNSECURED HOME         excess of the value of the related mortgaged
EQUITY LOANS                     property. Under these circumstances, the
                                 issuing entity 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
ENVIRONMENTAL LAWS               activities that may affect the environment,
                                 health, and safety. In certain circumstances,
                                 these laws and regulations impose obligations
                                 on "owners" or "operators" of residential
                                 properties such as those that secure the loans
                                 held in the 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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                                 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                 Securities issued in book-entry form may have
   REGISTRATION Limit on         only limited liquidity in the resale market,
   Liquidity                     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 NOT    The prospectus supplement for a series of
BE USED TO COVER LOSSES ON THE   securities may provide that on the closing date
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 IN     Any amounts remaining in a pre-funding account
ANY PRE-FUNDING ACCOUNT WILL     at the end of the period specified in the
BE PAID AS PRINCIPAL TO          applicable prospectus supplement will be
SECURITYHOLDERS                  distributed as a prepayment of principal to the
                                 related 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
SECURITIES MAY NOT EXIST         series will specify the classes in which the
                                 underwriter intends to make a secondary market,
                                 but no underwriter will have any obligation to
                                 do so. We can give no assurance that a
                                 secondary market for the securities will
                                 develop or, if it develops, that it will
                                 continue. Consequently, you may not be able to
                                 sell your securities readily or at prices that
                                 will enable you to realize your desired yield.
                                 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 MAY     The seller and the depositor will take steps to
AFFECT THE TIMING AND AMOUNT     structure the transfer of the loans held in the
OF DISTRIBUTIONS ON THE          issuing entity by the seller to the depositor
SECURITIES                       as a 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
REQUIRED TO INCLUDE ORIGINAL     be, securities issued with original issue
ISSUE DISCOUNT IN ORDINARY       income discount for federal tax purposes. A
GROSS INCOME AS IT ACCRUES       holder of debt securities issued with original
                                 issue 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
MARKET VALUE OF THE ISSUING      than the principal amount of the securities of
ENTITY ASSETS                    that series then outstanding, plus accrued
                                 interest. In the case of a series of notes,
                                 after an event of default and a sale of the
                                 assets relating to a series of securities, the
                                 trustee, the 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 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


                                       46



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


                                       61



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.


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          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    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    an account or accounts in a depository institution or trust
               company in which are insured by the FDIC (to the limits
               established by the FDIC) and the uninsured deposits in which
               accounts are otherwise secured such that, as evidenced by an
               opinion of counsel delivered to the trustee and to each rating
               agency, the securityholders have a claim with respect to the
               funds in the Security Account or a perfected first priority
               security interest against any collateral (which shall be limited
               to permitted investments) securing the funds that is superior to
               the claims of any other depositors or creditors of the depository
               institution or trust company in 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 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):


                                       67



          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 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;


                                       68



          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. 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


                                       69



          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 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


                                       70



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 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


                                       71



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.

          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


                                       72



                    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 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


                                       73



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 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.


                                       74



          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 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


                                       75



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

          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


                                       76



          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.

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


                                       77



               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.

          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


                                       78



          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.

          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


                                       79



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, 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,


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               (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
          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


                                       81



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, 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.


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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.

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


                                       83



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 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.


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          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, 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.


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          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.

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


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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" 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


                                       87



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.

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.


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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."

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


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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 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


                                       90



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

          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:


                                       91



          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.

          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


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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.

          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


                                       93



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 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


                                       94



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.

          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."


                                       95



          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.

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


                                       96



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 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.


                                       97



          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 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


                                       98



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."

          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


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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.

          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.


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          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 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.


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     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 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


                                      102



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.

          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


                                      103



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.

          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).


                                      104



          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.

          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


                                      105



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 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


                                      106



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 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.


                                      107



          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."

          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.


                                      108



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 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.


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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.

          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,


                                      110



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.

          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


                                      111



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.

          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


                                      112



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.

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.


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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 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.


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          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
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.


                                      115



          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.

          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


                                      116



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 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


                                      117



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 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


                                      118



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;

          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


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          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:

          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


                                      120



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.

          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


                                       121



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
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


                                       122



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

          (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.


                                       123



          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.


                                       124



                            INDEX OF PRINCIPAL TERMS

                                                                            PAGE
                                                                            ----
1986 Act ........................................................            107
2001 Act ........................................................            101
2003 Act ........................................................            101
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 ...............................................            109
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 ................................................             68
Issuing Entity Assets ...........................................             19
Legislative History .............................................            108
Liquidated Mortgage .............................................             76
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 .................................................            110
offshore location ...............................................            103
OID .............................................................            104
OID Regulations .................................................            107
old partnership .................................................            115
OTS .............................................................             48
Payment Lag Securities ..........................................             94
phantom income ..................................................             98
Plan ............................................................            117
Plan Assets Regulation ..........................................            117
pre-issuance accrued interest ...................................             95
Prepayment Assumption ...........................................            108
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 ................................................             97
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 ...............................................            113


                                       125



                   INDYMAC INDX MORTGAGE LOAN TRUST 2007-FLX3
                                 ISSUING ENTITY

                                INDYMAC MBS, INC.
                                    DEPOSITOR

                            [Indymac Bank (SM) LOGO]
                          SPONSOR, SELLER AND SERVICER

                                  $401,225,100
                                  (APPROXIMATE)

              MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2007-FLX3

                                   ----------

                              PROSPECTUS SUPPLEMENT

                                   ----------

                                  CREDIT SUISSE

     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-FLX3
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-FLX3 and with
respect to their unsold allotments or subscriptions. In addition, all dealers
selling the Mortgage Pass-Through Certificates Series 2007-FLX3 will be required
to deliver a prospectus supplement and prospectus until ninety days after the
date of this prospectus supplement.

                                 APRIL 27, 2007