PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED JUNE 10, 2005)


                           $830,025,000 (APPROXIMATE)

                   AEGIS ASSET BACKED SECURITIES TRUST 2005-3
                              MORTGAGE BACKED NOTES

                                [GRAPHIC OMITTED]
                                      AEGIS
                              MORTGAGE CORPORATION


<TABLE>

  AEGIS MORTGAGE CORPORATION,     AEGIS ASSET BACKED SECURITIES CORPORATION,
             SPONSOR                              DEPOSITOR
</TABLE>

                             WELLS FARGO BANK, N.A.,
                                 MASTER SERVICER
                                ----------------

   The trust will issue notes including the following classes offered hereby:

      o Three classes of senior notes.

      o Nine classes of subordinate notes.

     The classes of notes offered by this prospectus supplement are listed,
together with their initial class principal amounts and interest rates, under
"Summary of Terms--The Offered Notes" on page S-3 of this prospectus supplement.
This prospectus supplement and the accompanying prospectus relate only to the
offering of the notes listed in the table on page S-3 and not to the other
classes of notes and the ownership certificate that will be issued by the trust
as described in this prospectus supplement. Principal and interest on each class
of offered notes will be payable monthly beginning in July 2005. Credit
enhancement for the offered notes will include excess interest,
overcollateralization and subordination features. Amounts payable under an
interest rate swap agreement and an interest rate cap agreement, each provided
by Credit Suisse First Boston International, will be applied in the same manner
as interest collections on the mortgage loans to pay interest due on the notes,
maintain overcollateralization and cover certain losses.

     The assets of the trust will primarily consist of a pool of conventional,
first and second lien, adjustable and fixed rate, fully amortizing and balloon,
residential mortgage loans that were originated in accordance with underwriting
guidelines that are not as strict as Fannie Mae and Freddie Mac guidelines.

-------------------------------------------------------------------------------
     INVESTING IN THE OFFERED NOTES INVOLVES RISKS. YOU SHOULD CONSIDER
CAREFULLY THE FACTORS DISCUSSED UNDER "RISK FACTORS" BEGINNING ON PAGE S-12 OF
THIS PROSPECTUS SUPPLEMENT AND PAGE 4 OF THE ACCOMPANYING PROSPECTUS.

     The notes will represent obligations of the trust only and will not
represent obligations of any other entity.
-------------------------------------------------------------------------------

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

     The notes offered by this prospectus supplement will be purchased by the
underwriters from Aegis Asset Backed Securities Corporation, and are being
offered from time to time for sale to the public in negotiated transactions or
otherwise at varying prices to be determined at the time of sale. The
underwriters have the right to reject any order. Proceeds to Aegis Asset Backed
Securities Corporation from the sale of these notes will be approximately
99.75% of their initial total class principal amount before deducting expenses.

     On or about June 28, 2005, delivery of the notes offered by this
prospectus supplement will be made through the book-entry facilities of The
Depository Trust Company, Clearstream Banking Luxembourg and the Euroclear
System.

LEHMAN BROTHERS

                  BEAR, STEARNS & CO. INC.

                                    CREDIT SUISSE FIRST BOSTON

                                                            UBS INVESTMENT BANK

            The date of this prospectus supplement is June 10, 2005.


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

     We provide information to you about the notes offered by this prospectus
supplement in two separate documents that progressively provide more detail: (1)
the accompanying prospectus, which provides general information, some of which
may not apply to your notes and (2) this prospectus supplement, which describes
the specific terms of your notes.

     IF INFORMATION VARIES BETWEEN THIS PROSPECTUS SUPPLEMENT AND THE
ACCOMPANYING PROSPECTUS, YOU SHOULD RELY ON THE INFORMATION IN THIS PROSPECTUS
SUPPLEMENT.

     You should rely only on the information contained or incorporated by
reference in this prospectus supplement and the accompanying prospectus. We
have not authorized anyone to provide you with different information.

     We are not offering the notes in any state where the offer is not
permitted. We do not claim that the information in this prospectus supplement
and prospectus is accurate as of any date other than the dates stated on their
respective covers.

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

     Dealers will deliver a prospectus supplement and prospectus when acting as
an underwriter of the notes and with respect to their unsold allotments or
subscriptions. In addition, all dealers selling the notes will be required to
deliver a prospectus supplement and prospectus for ninety days following the
date of this prospectus supplement.

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

     We include cross-references in this prospectus supplement and the
accompanying prospectus to captions in these materials where you can find
further related discussions. The following table of contents and the table of
contents included in the accompanying prospectus provide the pages on which
these captions are located.

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

     This prospectus supplement and the accompanying prospectus contain
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933. Specifically, forward-looking statements, together with related
qualifying language and assumptions, are found in the materials, including
tables, under the headings "Risk Factors" and "Yield, Prepayment and Weighted
Average Life" in this prospectus supplement and "Risk Factors" and "Yield and
Prepayment Considerations" in the prospectus. Forward-looking statements are
also found in other places throughout this prospectus supplement and the
prospectus, and may be identified by accompanying language, including
"expects," "intends," "anticipates," "estimates" or analogous expressions, or
by qualifying language or assumptions. These statements involve known and
unknown risks, uncertainties and other important factors that could cause the
actual results or performance to differ materially from the forward-looking
statements. These risks, uncertainties and other factors include, among others,
general economic and business conditions, competition, changes in political,
social and economic conditions, regulatory initiatives and compliance with
governmental regulations, customer preference and various other matters, many
of which are beyond the depositor's control. These forward-looking statements
speak only as of the date of this prospectus supplement. The depositor
expressly disclaims any obligation or undertaking to distribute any updates or
revisions to any forward-looking statements to reflect changes in the
depositor's expectations with regard to those statements or any change in
events, conditions or circumstances on which any forward-looking statement is
based.


                                      S-ii


                               TABLE OF CONTENTS

                             PROSPECTUS SUPPLEMENT


<TABLE>

                                             PAGE
                                            -----

Summary of Terms ........................    S-1
Risk Factors ............................   S-12
Description of the Trust ................   S-28
   General ..............................   S-28
   The Owner Trustee ....................   S-28
   The Ownership Certificate ............   S-29
Description of the Notes ................   S-29
   General ..............................   S-29
   Book-Entry Registration ..............   S-30
   Payments of Interest .................   S-31
   Determination of LIBOR ...............   S-36
   Payments of Principal ................   S-36
   Credit Enhancement ...................   S-43
   Maturity Date ........................   S-48
   Optional Purchase of Mortgage
      Loans .............................   S-48
   The Administrator and the
      Custodian .........................   S-49
   The Indenture Trustee ................   S-49
Fees and Expenses of the Trust ..........   S-50
Description of the Mortgage Pool ........   S-51
   General ..............................   S-51
   Adjustable Rate Mortgage Loans .......   S-52
   The Index ............................   S-53
   Certain Characteristics of the
      Mortgage Loans ....................   S-53
Additional Information ..................   S-53
Aegis REIT Corporation ..................   S-54
Aegis Mortgage Corporation ..............   S-54
Underwriting Standards ..................   S-54
   General Standards for First and
      Second Lien Mortgage Loans ........   S-54
   Guide Standards ......................   S-55
   Loan Programs ........................   S-56
   Exceptions ...........................   S-59
The Master Servicer .....................   S-59
The Servicer and the Subservicer ........   S-59
   General ..............................   S-59
   Ocwen Federal Bank FSB ...............   S-60
Servicing of the Mortgage Loans .........   S-63
   General ..............................   S-63
   The Subservicer ......................   S-63
   Servicing Account and Collection
      Account ...........................   S-63
   Servicing Compensation and
      Payment of Expenses ...............   S-63
</TABLE>

<TABLE>

                                             PAGE
                                            -----

   Prepayment Interest Shortfalls .......   S-64
   Advances .............................   S-64
   Advance Facility .....................   S-65
   Collection of Taxes, Assessments
      and Similar Items .................   S-65
   Waiver or Modification of
      Mortgage Loan Terms ...............   S-65
   Insurance Coverage ...................   S-65
   Evidence as to Compliance ............   S-65
   Custody of the Mortgage Files ........   S-66
   Termination of Servicer ..............   S-66
   The Credit Risk Manager ..............   S-66
   Optional Purchase of Distressed
      Mortgage Loans ....................   S-66
   Special Servicer for Distressed
      Mortgage Loans ....................   S-66
The Sale Agreement and the
   Transfer and Servicing Agreement......   S-67
   General ..............................   S-67
   Administration .......................   S-67
   Reports to Securityholders ...........   S-67
   Delivery and Substitution of
      Mortgage Loans ....................   S-68
   Voting Rights ........................   S-68
   Termination of the Trust .............   S-68
   Sale of the Mortgage Loans ...........   S-69
   Events of Default; Servicer
      Termination Events ................   S-70
The Trust Agreement and the
   Indenture ............................   S-71
   General ..............................   S-71
   Certain Matters under the
      Agreements ........................   S-71
   Administration .......................   S-75
   Amendment ............................   S-75
Yield, Prepayment and Weighted
   Average Life .........................   S-75
   General ..............................   S-75
   Overcollateralization ................   S-78
   Subordination of the Offered
      Subordinate Notes .................   S-78
   Weighted Average Life ................   S-78
Material Federal Income Tax
   Considerations .......................   S-89
   Tax Classification of the Trust and
      of the Notes ......................   S-89
</TABLE>

                                      S-iii



<TABLE>

                                               PAGE
                                              ------

   Tax Consequences to Holders of
      the Notes ...........................   S-89
   State and Local Income Tax
      Considerations ......................   S-89
Legal Investment Considerations ...........   S-90
ERISA Considerations ......................   S-90
   General ................................   S-90
   Purchases of the Offered Notes .........   S-90
Use of Proceeds ...........................   S-91
Underwriting ..............................   S-92
</TABLE>

<TABLE>

                                               PAGE
                                              ------

Legal Matters .............................    S-92
Ratings ...................................    S-93
Index of Principal Terms ..................    S-94
Annex A Swap Agreement
   Scheduled Notional Amounts .............   S-A-1
Annex B Cap Agreement Scheduled
   Notional Amounts .......................   S-B-1
Annex C Certain Characteristics of
   the Mortgage Loans .....................   S-C-1
</TABLE>


                                      S-iv


                                SUMMARY OF TERMS

 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 THE OFFERING OF THE
   NOTES, IT IS NECESSARY THAT YOU READ CAREFULLY THIS ENTIRE DOCUMENT AND THE
   ACCOMPANYING PROSPECTUS.

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

 o WHENEVER WE REFER TO A PERCENTAGE OF SOME OR ALL OF THE MORTGAGE LOANS IN
   THE TRUST, THAT PERCENTAGE HAS BEEN CALCULATED ON THE BASIS OF THE TOTAL
   SCHEDULED PRINCIPAL BALANCE OF THOSE MORTGAGE LOANS AS OF JUNE 1, 2005,
   UNLESS WE SPECIFY OTHERWISE. WE EXPLAIN IN THIS PROSPECTUS SUPPLEMENT UNDER
   "DESCRIPTION OF THE NOTES--PAYMENTS OF PRINCIPAL" HOW THE SCHEDULED
   PRINCIPAL BALANCE OF A MORTGAGE LOAN IS DETERMINED. WHENEVER WE REFER IN
   THIS SUMMARY OF TERMS OR IN THE RISK FACTORS SECTION OF THIS PROSPECTUS
   SUPPLEMENT TO THE TOTAL PRINCIPAL BALANCE OF ANY MORTGAGE LOANS, WE MEAN
   THE TOTAL OF THEIR SCHEDULED PRINCIPAL BALANCES UNLESS WE SPECIFY
   OTHERWISE.



PARTIES


SPONSOR

       Aegis Mortgage Corporation.


ORIGINATORS

       Aegis Funding Corporation, Aegis Lending Corporation and various other
banks, savings and loans and other mortgage lending institutions originated the
mortgage loans to be included in the trust estate.


SELLER

       Aegis REIT Corporation.


DEPOSITOR

       Aegis Asset Backed Securities Corporation. The Depositor maintains its
principal offices at 3250 Briarpark, Suite 400, Houston, Texas 77042. Its
telephone number is (713) 787-0100.


ISSUER

       Aegis Asset Backed Securities Trust 2005-3, a Delaware statutory trust.


OWNER TRUSTEE

       Wilmington Trust Company.


INDENTURE TRUSTEE

       Wachovia Bank, National Association. The notes will be issued, and the
mortgage loans will be pledged to the indenture trustee as collateral for the
notes, under an indenture.


ADMINISTRATOR

       Wells Fargo Bank, N.A. will perform certain administrative functions on
behalf of the owner trustee, the trust and the indenture trustee under the
trust agreement, indenture and transfer and servicing agreement.


CUSTODIAN

       Wells Fargo Bank, N.A.


MASTER SERVICER

       Wells Fargo Bank, N.A.


SERVICER

       Ocwen Federal Bank FSB. It is anticipated that on or about July 1, 2005,
Ocwen Loan Servicing, LLC will be the Servicer.


SUBSERVICER

       Aegis Mortgage Corporation.


CREDIT RISK MANAGER

       The Murrayhill Company will monitor and advise the subservicer with
respect to default management of the mortgage loans.


                                      S-1


SWAP COUNTERPARTY

       The trust will enter into an interest rate swap agreement with Credit
Suisse First Boston International to protect against certain interest rate risk
from the payment date in July 2005 through the payment date in September 2009.

CAP COUNTERPARTY

       The trust will enter into an interest rate cap agreement with Credit
Suisse First Boston International to protect against certain interest rate risk
from the payment date in July 2005 through the payment date in September 2009.


                                      S-2


                               THE OFFERED NOTES


CLASSES OF NOTES


     Aegis Asset Backed Securities Trust 2005-3 will issue on the closing date
the classes of notes listed in the table below, together with the Class N1 and
N2 Notes and an ownership certificate evidencing the entire equity interest in
the trust. Only the classes of notes listed in the table below are offered by
this prospectus supplement.




<TABLE>

                                      INTEREST RATE            INTEREST RATE
                    CLASS            FORMULA (UNTIL           FORMULA (AFTER
                  PRINCIPAL              INITIAL                  INITIAL              CUSIP         MATURITY
    CLASS         AMOUNT(1)         PURCHASE DATE)(2)        PURCHASE DATE)(4)         NUMBER         DATE(5)
------------   ---------------   ----------------------   ----------------------   -------------   ------------

A1 .........    $301,758,000     LIBOR plus 0.100%(3)     LIBOR plus 0.200%(3)     00764M FN 2      8/25/2035
A2 .........    $320,777,000     LIBOR plus 0.240%(3)     LIBOR plus 0.480%(3)     00764M FP 7      8/25/2035
A3 .........    $ 40,890,000     LIBOR plus 0.370%(3)     LIBOR plus 0.740%(3)     00764M FQ 5      8/25/2035
M1 .........    $ 34,000,000     LIBOR plus 0.470%(3)     LIBOR plus 0.705%(3)     00764M FR 3      8/25/2035
M2 .........    $ 30,175,000     LIBOR plus 0.480%(3)     LIBOR plus 0.720%(3)     00764M FS 1      8/25/2035
M3 .........    $ 19,125,000     LIBOR plus 0.490%(3)     LIBOR plus 0.735%(3)     00764M FT 9      8/25/2035
M4 .........    $ 17,425,000     LIBOR plus 0.640%(3)     LIBOR plus 0.960%(3)     00764M FU 6      8/25/2035
M5 .........    $ 15,725,000     LIBOR plus 0.670%(3)     LIBOR plus 1.005%(3)     00764M FV 4      8/25/2035
M6 .........    $ 15,725,000     LIBOR plus 0.700%(3)     LIBOR plus 1.050%(3)     00764M FW 2      8/25/2035
B1 .........    $ 13,600,000     LIBOR plus 1.200%(3)     LIBOR plus 1.800%(3)     00764M FX 0      8/25/2035
B2 .........    $ 11,475,000     LIBOR plus 1.350%(3)     LIBOR plus 2.025%(3)     00764M FY 8      8/25/2035
B3 .........    $  9,350,000     LIBOR plus 1.800%(3)     LIBOR plus 2.700%(3)     00764M FZ 5      8/25/2035
</TABLE>

----------
(1)  These amounts are approximate, as described in this prospectus supplement.

(2)  Reflects the interest rate formula up to and including the earliest
     possible payment date on which the holder of the ownership certificate (or
     if the holder of the ownership certificate does not do so, the servicer)
     has the option to purchase the mortgage loans as described below under
     "--Optional Purchase of Mortgage Loans."

(3)  Interest will accrue on these classes of notes based on an interest rate
     equal to the least of (a) one-month LIBOR plus the applicable margin as
     specified in the third or fourth column of this table, as applicable, (b)
     the available funds cap and (c) 15.00%, as described below under "--The
     Notes--Payments on the Notes--Interest Payments." The margins may be
     increased from the applicable levels specified in the third column of this
     table to the applicable levels specified in the fourth column of this
     table, as described below under "--The Notes--Payments on the Notes--
     Interest Payments."

(4)  Reflects the interest rate formula if the option to purchase the mortgage
     loans is not exercised by the holder of the ownership certificate (or the
     servicer) at the earliest possible payment date as described below under
     "--Optional Purchase of Mortgage Loans."

(5)  Reflects the scheduled maturity date of the offered notes, which is the
     second payment date after the date of the last scheduled payment of the
     latest maturing mortgage loan.


                                      S-3


       The notes offered by this prospectus supplement will be issued in
book-entry form.

       See "Description of the Notes--General" in this prospectus supplement
for the minimum denominations and the incremental denominations of each class
of offered notes.

       The notes will represent obligations of the trust and will be secured by
collateral consisting primarily of conventional, first and second lien,
adjustable and fixed rate, fully amortizing and balloon, residential mortgage
loans having a total principal balance as of the cut-off date, which is June 1,
2005, of approximately $850,001,329.

       The trust will also issue an ownership certificate which will not be
entitled to monthly payments of principal and interest, but rather solely to
any excess cashflow remaining after all payments on the notes and certain other
fees and expenses of the trust have been made on the related payment date.

       The ownership certificate and the Class N1 and N2 Notes are not offered
by this prospectus supplement. The offered notes will have an approximate total
initial principal amount of $830,025,000. Any difference between the total
principal amount of the offered notes on the date they are issued and the
approximate total principal amount of the offered notes as reflected in this
prospectus supplement will not exceed 5%.


PAYMENTS ON THE NOTES

       Principal and interest on the notes will be paid on the 25th day of each
month, or if the 25th day is not a business day, on the next business day
thereafter, beginning in July 2005.

       The rights of holders of the Class M1, M2, M3, M4, M5, M6, B1, B2 and B3
Notes to receive payments of principal and interest will be subordinate to the
rights of the holders of notes having a higher priority of payment, as described
in this Summary of Terms under "--Enhancement of Likelihood of Payment on the
Notes--Subordination of Payments" below. We refer to these notes as offered
"subordinate" notes, and we refer to the Class A1, A2 and A3 Notes as offered
"senior" notes.

       The Class N1 and N2 Notes will be entitled to excess cashflow remaining
after required payments are made on the offered notes, and after certain fees
and expenses are paid, as provided in the transfer and servicing agreement.


Interest Payments

       Interest will accrue on each class of offered notes at the applicable
annual rate determined as follows on the principal amount of that class: the
least of (1) the applicable annual rate as described in the third column of the
table on page S-3, (2) the available funds cap (as described below) and (3)
15.00%.

       If the option to purchase the mortgage loans is not exercised as
described under "--Optional Purchase of Mortgage Loans" below, then with
respect to the following payment date and each payment date thereafter, the
interest rate calculation described in the paragraph above will be increased
for each class of notes by substituting in clause (1) the applicable annual
rate as described in the fourth column of the table on page S-3, subject in
each case to the limitations described above.

       For a complete description of the optional purchase of the mortgage
loans, see "Description of the Notes--Optional Purchase of Mortgage Loans" in
this prospectus supplement.

       The available funds cap is a limitation generally based on the amount of
interest collections received from the mortgage loans during the applicable
collection period, net of certain fees and expenses of the trust.

       For a complete description of the available funds cap and the priority
of payments of interest, see "Description of the Notes--Payments of Interest"
in this prospectus supplement.

The Interest Rate Swap Agreement

       On or before the closing date, the trust will enter into an interest
rate swap agreement with Credit Suisse First Boston International, as swap
counterparty. Under the interest rate swap agreement, on each payment date,
beginning on the payment date in July 2005 and ending on the payment date in
September 2009, the trust will be obligated to make fixed payments at a rate of
4.0110% and the swap counterparty will be obligated to make floating payments
at LIBOR (as determined pursuant to the interest rate swap agreement), in each
case calculated on a


                                      S-4


scheduled notional amount and adjusted to a monthly basis. To the extent that a
fixed payment exceeds a floating payment on any payment date, amounts otherwise
available to noteholders will be applied to make a net payment to the swap
counterparty, and to the extent that a floating payment exceeds a fixed payment
on any payment date, the swap counterparty will owe a net payment to the trust.
Any net amounts received by the trust under the interest rate swap agreement
will be applied in the same manner as interest collections on the mortgage
loans to pay interest due on the notes, maintain overcollateralization and
cover losses as described in this prospectus supplement.

       See "Description of the Notes--Payments of Interest--The Interest Rate
Swap Agreement" in this prospectus supplement.


The Interest Rate Cap Agreement

       On or before the closing date, the trust will enter into an interest
rate cap agreement with Credit Suisse First Boston International, as cap
counterparty. Under the interest rate cap agreement, the cap counterparty will
be required to make monthly payments to the trust for certain periods if
one-month LIBOR moves above certain specified rates. The interest rate cap
agreement will provide only temporary, limited protection against upward
movements in one-month LIBOR, as described in this prospectus supplement. Any
amounts received by the trust under the interest rate cap agreement will be
applied in the same manner as interest collections on the mortgage loans to pay
interest due on the notes, maintain overcollateralization and cover losses as
described in this prospectus supplement.

       See "Description of the Notes--Payments of Interest--The Interest Rate
Cap Agreement" in this prospectus supplement.


Principal Payments

       The amount of principal payable on each class of notes will be
determined by (1) funds received or advanced on the mortgage loans that are
available to make payments of principal on the notes, (2) formulas that
allocate portions of principal payments received on the mortgage loans among
different classes of notes and (3) the application of excess interest, swap
payments and cap payments to pay principal on the notes, as described in this
prospectus supplement.

       Funds received on the mortgage loans may consist of monthly scheduled
payments as well as unscheduled payments resulting from prepayments by
borrowers, liquidation of defaulted mortgage loans, or purchases of mortgage
loans under the circumstances described in this prospectus supplement.

       The manner of allocating payments of principal on the mortgage loans
will differ, as described in this prospectus supplement, depending upon the
occurrence of several different events or triggers, including:

 o    whether a payment date occurs before, or on or after the "stepdown date,"
      which is the earlier of (1) the payment date on which the total principal
      amount of the senior notes has been reduced to zero and (2) the later of
      (a) the payment date in July 2008 and (b) the first payment date on which
      (i) (A) the amount by which the total principal balance of the
      subordinate notes plus any overcollateralization amount exceeds the total
      amount of any principal deficiencies divided by (B) the total principal
      balance of the mortgage loans in the trust equals or exceeds (ii) the
      percentage specified in this prospectus supplement;

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

 o    whether a "delinquency event" occurs when the delinquency and loss
      performance of the mortgage loans over any three-month period is worse
      than certain levels set by the rating agencies as specified in this
      prospectus supplement.

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


LIMITED RECOURSE

       The only source of cash available to make interest and principal
payments on the notes will be the assets of the trust pledged to secure the
notes. The trust will have no source of cash other than collections and
recoveries on the mortgage


                                      S-5


loans through insurance or otherwise and any payments received under the
interest rate swap agreement and the interest rate cap agreement described
below (and, for the benefit of the Class N1 and N2 Notes only, an additional
interest rate cap agreement, as provided in the transfer and servicing
agreement). No other entity will be required or expected to make any payments
on the notes. Unless otherwise specified, references in this prospectus
supplement to the interest rate cap agreement or the cap agreement are to the
first interest rate cap agreement described above, and not to the additional
interest rate cap agreement that will be entered into for the benefit of the
Class N1 and N2 Notes only.


ENHANCEMENT OF LIKELIHOOD OF PAYMENT ON THE NOTES

       In order to enhance the likelihood that holders of more senior classes
of notes will receive regular payments of interest and principal, the payment
structure includes excess interest, overcollateralization, subordination and
loss allocation features, as well as interest rate swap and cap agreements. The
notes will not be insured by any surety bond.

       The Class B3 Notes are more likely to experience losses than the Class
B2, B1, M6, M5, M4, M3, M2 and M1 Notes and the senior notes. The Class B2
Notes are more likely to experience losses than the Class B1, M6, M5, M4, M3,
M2 and M1 Notes and the senior notes. The Class B1 Notes are more likely to
experience losses than the Class M6, M5, M4, M3, M2 and M1 Notes and the senior
notes. The Class M6 Notes are more likely to experience losses than the Class
M5, M4, M3, M2 and M1 Notes and the senior notes. The Class M5 Notes are more
likely to experience losses than the Class M4, M3, M2 and M1 Notes and the
senior notes. The Class M4 Notes are more likely to experience losses than the
Class M3, M2 and M1 Notes and the senior notes. The Class M3 Notes are more
likely to experience losses than the Class M2 and M1 Notes and the senior
notes. The Class M2 Notes are more likely to experience losses than the Class
M1 Notes and the senior notes. The Class M1 Notes are more likely to experience
losses than the senior notes.

       See "Risk Factors--Potential Inadequacy of Credit Enhancement," and
"Description of the Notes--Credit Enhancement" and "--Payments of Interest--The
Interest Rate Swap Agreement" in this prospectus supplement for a more detailed
description of the forms of credit enhancement available to the notes.

Excess Interest

       The mortgage loans owned by the trust will bear interest each month
that, in the aggregate, is expected to exceed the amount needed to pay monthly
interest on the offered notes and certain fees and expenses of the trust. This
"excess interest" received from the mortgage loans each month will be available
to absorb realized losses on the mortgage loans and to maintain
overcollateralization at the required levels.

       See "Risk Factors--Potential Inadequacy of Credit Enhancement" and
"Description of the Notes--Credit Enhancement--Excess Interest" in this
prospectus supplement.

Overcollateralization

       We refer to the amount, if any, by which the total principal balance of
the mortgage loans exceeds the total principal amount of the offered notes at
any time as "overcollateralization." On the closing date, this amount will be
approximately $19,975,000, which represents approximately 2.35% of the total
principal balance of the mortgage loans as of the cut-off date.

       To the extent described in this prospectus supplement, a portion of
interest received on the mortgage loans in excess of the amount needed to pay
interest on the notes and certain expenses and fees of the trust will be
applied to reduce the principal amounts of the offered notes and to maintain
the level of overcollateralization set by the rating agencies. We cannot assure
you that sufficient excess interest will be generated to maintain the required
overcollateralization.

       See "Risk Factors--Potential Inadequacy of Credit Enhancement" and
"Description of the Notes--Credit Enhancement--Overcollateralization" in this
prospectus supplement.

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

Subordination of Payments

       The senior notes will have a payment priority as a group over other
notes. The Class


                                      S-6


M1 Notes will have a payment priority over the Class M2, M3, M4, M5, M6, B1, B2
and B3 Notes; the Class M2 Notes will have a payment priority over the Class
M3, M4, M5, M6, B1, B2 and B3 Notes; the Class M3 Notes will have a payment
priority over the Class M4, M5, M6, B1, B2 and B3 Notes; the Class M4 Notes
will have a payment priority over the Class M5, M6, B1, B2 and B3 Notes; the
Class M5 Notes will have a payment priority over the Class M6, B1, B2 and B3
Notes; the Class M6 Notes will have a payment priority over the Class B1, B2
and B3 Notes; the Class B1 Notes will have a payment priority over the Class B2
and B3 Notes; and the Class B2 Notes will have a payment priority over the
Class B3 Notes. Each class of offered notes will have a payment priority over
the Class N1 and N2 Notes.

       As described in this prospectus supplement, if losses on the mortgage
loans exceed excess interest and overcollateralization, the subordinate notes
will incur principal deficiencies in inverse order of seniority, which will
reduce the amount of note interest accrued on that class and will represent an
ultimate loss of principal on the notes of that class unless excess interest
becomes available to pay the amount of the principal deficiency.

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

The Interest Rate Swap and Cap Agreements

       The interest rate swap and cap agreements are primarily intended to
provide limited protection against certain interest rate risks and not to
provide credit enhancement. Any amounts received by the trust under the
interest rate swap agreement or the interest rate cap agreement will be applied
in the same manner as interest collections on the mortgage loans to pay
interest due on the notes, maintain overcollateralization and cover losses, as
described in this prospectus supplement.

       See "Description of the Notes--Payments of Interest--The Interest Rate
Swap Agreement" in this prospectus supplement.

FEES AND EXPENSES

       Before payments are made on the notes, the servicer will be paid a
monthly fee calculated as 0.50% annually on the total principal balance of the
mortgage loans (subject to reduction as described in this prospectus
supplement).

       The master servicer, the owner trustee and the indenture trustee will
also receive certain fees, but these fees will be paid from investment income
on funds held in the collection account. The administrator will be entitled to
the investment income on certain accounts maintained by it.

       The servicer, the master servicer, the indenture trustee, the owner
trustee, the administrator and the custodian will also be entitled to
reimbursement of certain expenses from the trust before payments on the notes
are made.

       After payments of interest on the notes have been made, the credit risk
manager will be paid a monthly fee calculated as 0.015% annually on the total
principal balance of the mortgage loans.

       See "Fees and Expenses of the Trust" in this prospectus supplement.

THE MORTGAGE LOANS

       On the closing date, the assets of the trust will consist primarily of a
pool of conventional, first and second lien, adjustable and fixed rate, fully
amortizing and balloon, residential mortgage loans with a total principal
balance as of the cut-off date, of approximately $850,001,329. The mortgage
loans will be secured by mortgages, deeds of trust or other security
instruments, all of which are referred to in this prospectus supplement as
mortgages.

       Approximately 14.62% of the mortgage loans have fixed interest rates,
and the remainder have interest rates that adjust at the intervals and based on
the indices described in this prospectus supplement. Approximately 98.41% of
the mortgage loans have original terms to maturity of greater than 15 years and
not greater than 30 years, and approximately 1.59% of the mortgage loans have
original terms to maturity of not greater than 15 years.

       Approximately 19.91% of the mortgage loans provide for monthly payments
of interest, but not principal, for specified periods of time as described in
this prospectus supplement.

       Approximately 6.16% of the mortgage loans are secured by second liens on
the mortgaged


                                      S-7


properties. Substantially all of the related first lien loans are included in
the trust.

       The mortgage loans were generally originated or acquired in accordance
with underwriting guidelines that are less restrictive than Fannie Mae and
Freddie Mac guidelines. As a result, the mortgage loans are likely to
experience higher rates of delinquency, foreclosure and bankruptcy than
mortgage loans underwritten in accordance with higher standards.


       The mortgage loans in the trust will not be insured or guaranteed by any
government agency.


       It is expected that the mortgage loans in the trust will have the
following approximate characteristics as of the cut-off date:


                                      S-8


            SUMMARY OF CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS



<TABLE>

                                                                                 WEIGHTED          TOTAL
                                                     RANGE OR TOTAL              AVERAGE         PERCENTAGE
                                              ---------------------------   -----------------   -----------

Number of Mortgage Loans ..................                   6,953                       -               -
Fixed Rate Mortgage Loans .................         $124,286,032(1)                       -          14.62%
Adjustable Rate Mortgage Loans ............         $725,715,297(1)                       -          85.38%
Total Scheduled Principal Balance .........            $850,001,329                       -               -
Scheduled Principal Balances ..............   $12,188 to $1,000,000             $122,250(2)               -
Mortgage Rates ............................       5.097% to 12.740%               8.041%                  -
Original Terms to Maturity (in
 months) ..................................              120 to 360                     355               -
Remaining Terms to Maturity (in
 months) ..................................              119 to 360                     355               -
Original Loan-to-Value Ratios(3) ..........          12.12% to 100%                  79.51%               -
Second Lien Mortgage Loans ................         $ 52,322,830(1)                       -           6.16%
Interest Only Mortgage Loans ..............         $169,223,987(1)                       -          19.91%
Balloon Mortgage Loans ....................         $  4,082,743(1)                       -           0.48%
Geographic Distribution in Excess of
 10.00% of the Total Scheduled
 Principal Balance:
Number of Mortgage Loans in
 California ...............................                     435                       -          11.58%
Number of Mortgage Loans in the
 Maximum Single Zip Code
 Concentration ............................                      11                       -           0.29%
Credit Scores .............................              500 to 810                     611               -
Mortgage Loans with Prepayment
 Penalties at Origination .................         $550,884,042(1)                                  64.81%
Gross Margins .............................       1.000% to 11.197%                6.697(4)               -
Maximum Mortgage Rates ....................       9.490% to 18.447%               13.930(4)               -
Minimum Mortgage Rates ....................       3.370% to 12.447%                7.867(4)               -
Months to Next Mortgage Rate
 Adjustment ...............................                13 to 60                   24(4)               -
Initial Caps ..............................        1.000% to 3.000%                2.962(4)               -
Periodic Caps .............................        1.000% to 3.000%                1.007(4)               -
</TABLE>

----------
(1)  Total principal balance of mortgage loans of the applicable type as of the
     cut-off date.

(2)  Arithmetic average.

(3)  Reflects loan-to-value ratios for first lien mortgage loans and combined
     loan-to-value ratios for junior lien mortgage loans.

(4)  The weighted average is based only on the adjustable rate mortgage loans.


                                      S-9


       See "Description of the Mortgage Pool" in this prospectus supplement for
a general description of the mortgage loans expected to be included in the
trust.


SERVICING OF THE MORTGAGE LOANS

       The mortgage loans will be master serviced by Wells Fargo Bank, N.A. The
master servicer will oversee the servicing of the mortgage loans by the
servicer, but will not be ultimately responsible for the servicing of the
mortgage loans, except as provided in the transfer and servicing agreement and
described in this prospectus supplement.

       The mortgage loans will be serviced by Ocwen Federal Bank FSB and any
successor in interest as described in this prospectus supplement. On the
closing date, Ocwen Federal Bank FSB will enter into a subservicing agreement
with Aegis Mortgage Corporation for the servicing of the mortgage loans.

       In its capacity as seller, Aegis REIT Corporation will retain ownership
of the servicing rights and will have the right to terminate Ocwen as servicer
at any time.

       If the servicer is removed due to default or otherwise, a successor
servicer acceptable to the master servicer and the rating agencies will assume
responsibility for the servicing of the mortgage loans, as described in this
prospectus supplement.

       See "The Servicer and the Subservicer," "Servicing of the Mortgage
Loans" and "The Sale Agreement and the Transfer and Servicing Agreement--Events
of Default; Servicer Termination Events" in this prospectus supplement.


OPTIONAL PURCHASE OF MORTGAGE LOANS

       The holder of the ownership certificate (or the servicer, if the holder
of the ownership certificate does not do so) may purchase the mortgage loans on
the later of (1) any payment date following the month in which the total
principal balance of the mortgage loans declines to less than 10% of their
initial total principal balance and (2) the payment date in September 2009
(provided, in each case, that the Class N1 and N2 Notes have been paid in
full).

       If the mortgage loans are purchased, noteholders will be paid accrued
interest and principal in an amount not to exceed the purchase price.

       If the option to purchase the mortgage loans is not exercised on the
earliest possible payment date as described above, then, beginning with the
next succeeding payment date and thereafter, the interest rates of the offered
notes will be increased as described in this prospectus supplement.

       See "Description of the Notes--Optional Purchase of Mortgage Loans" in
this prospectus supplement for a description of the purchase price to be paid
for the mortgage loans.

       See the table on page S-3 for a description of the increased interest
rates to be paid on the offered notes in the event that the purchase option
with respect to the mortgage loans is not exercised as described above.


FINANCING

       Certain of the underwriters, or affiliates of certain of the
underwriters, have provided financing for certain of the mortgage loans. A
portion of the proceeds of the sale of the offered notes will be used to repay
this financing.

TAX STATUS

       For federal income tax purposes the notes will be characterized as debt.
Each noteholder, by its acceptance of a note, will agree to treat the notes as
debt.

       The trust will be classified as a taxable mortgage pool. The trust will
not, however, be subject to federal income tax as a corporation as long as the
ownership certificate is owned exclusively by a "real estate investment trust"
or by a "qualified REIT subsidiary." The seller will represent that it will
file with its federal income tax return for its taxable year ending December
31, 2004, an election to be a REIT, that it has been organized in conformity
with the requirements for REIT qualification set forth in the Internal Revenue
Code of 1986, that it has operated and will continue to operate in a manner
that enables it to qualify as a REIT and that it will not undertake any action
that would cause the trust to be subject to federal income


                                      S-10


tax. The seller will further represent that it will own the ownership
certificate directly, or indirectly through a "qualified REIT subsidiary."
Moreover, the trust agreement will set forth restrictions on the
transferability of the ownership certificate to ensure that it will only be
held by a "real estate investment trust" or a "qualified REIT subsidiary."

       See "Risk Factors-Trust Could Become a Taxable Entity" in this
prospectus supplement and "Material Federal Income Tax Considerations" in this
prospectus supplement and in the accompanying prospectus for additional
information concerning the application of federal income tax laws to the notes.


ERISA CONSIDERATIONS

       Generally, all of the notes offered by this prospectus supplement may be
purchased by employee benefit plans or other retirement arrangements subject to
the Employee Retirement Income Security Act of 1974 or Section 4975 of the
Internal Revenue Code of 1986. You should consult with your counsel with
respect to the legal consequences of such plan's or arrangement's acquisition
and ownership of notes.

       See "ERISA Considerations" in this prospectus supplement and in the
prospectus for a more complete discussion of these issues.


LEGAL INVESTMENT CONSIDERATIONS

       The notes will not constitute "mortgage related securities" for purposes
of the Secondary Mortgage Market Enhancement Act of 1984.

       There may be other restrictions on the ability of certain types of
investors to purchase the notes that prospective investors should also
consider.

       See "Legal Investment Considerations" in this prospectus supplement and
"Legal Investment" in the prospectus.


RATINGS OF THE NOTES

       Each class of offered notes will initially have the following ratings
from Dominion Bond Rating Service, Fitch Ratings, Moody's Investors Service and
Standard and Poor's Ratings Services.


<TABLE>

           DOMINION
             BOND
            RATING                        STANDARD
            SERVICE     FITCH   MOODY'S   & POOR'S
  CLASS     RATING     RATING    RATING    RATING
-------- ------------ -------- --------- ---------

    A1       AAA         AAA      Aaa       AAA
    A2       AAA         AAA      Aaa       AAA
    A3       AAA         AAA      Aaa       AAA
    M1    AA (high)      AA+      Aa1       AA+
    M2       AA          AA       Aa2       AA
    M3    AA (low)       AA-      Aa3        AA-
    M4    A (high)       A+        A1        A+
    M5        A          A         A2        A
    M6     A (low)       A-        A3        A-
    B1   BBB (high)     BBB+      Baa1      BBB+
    B2       BBB        BBB       Baa2      BBB
    B3    BBB (low)     BBB-      Baa3      BBB-
</TABLE>

       These ratings are not recommendations to buy, sell or hold these notes.
A rating may be changed or withdrawn at any time by the assigning rating
agency.

       The ratings do not address the possibility that, as a result of
principal prepayments, the yield on your notes may be lower than anticipated.

       The ratings do not address the payment of any basis risk shortfalls with
respect to the offered notes.

       See "Ratings" in this prospectus supplement for a more complete
discussion of the note ratings.


                                      S-11


                                 RISK FACTORS

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


RISKS RELATED TO HIGHER EXPECTED
 DELINQUENCIES OF THE MORTGAGE
 LOANS........................   In general, the underwriting guidelines
                                 applied to the mortgage loans to be included in
                                 the trust are not as strict as Fannie Mae or
                                 Freddie Mac guidelines, so the mortgage loans
                                 are likely to experience rates of delinquency,
                                 foreclosure and bankruptcy that are higher, and
                                 that may be substantially higher, than those
                                 experienced by mortgage loans underwritten in
                                 accordance with higher standards. The
                                 originators' underwriting of the mortgage loans
                                 generally consisted of analyzing the
                                 creditworthiness of a borrower based on both a
                                 credit score and mortgage history, the income
                                 sufficiency of a borrower's projected family
                                 income relative to the mortgage payment and to
                                 other fixed obligations, including in certain
                                 instances rental income from investment
                                 property, and the adequacy of the mortgaged
                                 property expressed in terms of loan-to-value
                                 ratio, to serve as the collateral for a
                                 mortgage loan.

                                 Changes in the values of mortgaged properties
                                 related to the mortgage loans may have a
                                 greater effect on the delinquency,
                                 foreclosure, bankruptcy and loss experience of
                                 the mortgage loans in the trust than on
                                 mortgage loans originated under stricter
                                 guidelines. We cannot assure you that the
                                 values of the mortgaged properties have
                                 remained or will remain at levels in effect on
                                 the dates of origination of the related
                                 mortgage loans.

                                 See "Description of the Mortgage
                                 Pool--General" in this prospectus supplement
                                 for a description of the characteristics of
                                 the mortgage loans and "Aegis Mortgage
                                 Corporation--Underwriting Standards" in this
                                 prospectus supplement for a general
                                 description of the underwriting standards
                                 applied in originating the mortgage loans.


MORTGAGE LOAN INTEREST RATES MAY
 LIMIT INTEREST RATES ON THE
 NOTES........................   The offered notes will accrue interest at
                                 interest rates based on the one-month LIBOR
                                 index plus a specified margin, but these
                                 interest rates are subject to limitation. The
                                 available funds cap, which is a limitation
                                 based on the amount of interest collections
                                 received during the applicable period, net of
                                 certain fees and expenses of the trust, will
                                 limit the interest rates on the offered notes.

                                 All of the mortgage loans to be included in
                                 the mortgage pool will have interest rates
                                 that either are fixed or adjust based on a
                                 six-month LIBOR index, as described under
                                 "Description of the Mortgage Pool--The Index"
                                 in this prospectus supplement. The adjustable
                                 rate mortgage loans


                                      S-12


                                 may also have periodic maximum and minimum
                                 limitations on adjustments to their interest
                                 rates, and the first interest rate adjustment
                                 date for substantially all of the adjustable
                                 rate mortgage loans will occur approximately
                                 two, approximately three or approximately five
                                 years after their first payment date. If as a
                                 result of these factors, or due to
                                 delinquencies in payment, the interest rates
                                 on the offered notes are limited by the
                                 available funds cap, the notes will accrue
                                 less interest than if the interest rates were
                                 not subject to the available funds cap
                                 described in this prospectus supplement.

                                 The interest rates on the offered notes are
                                 also subject to a fixed rate cap. The fixed
                                 rate cap limits the interest rates on the
                                 offered notes to a maximum annual rate of
                                 15.00%. If the interest rate for any class of
                                 offered notes at any time is limited by the
                                 fixed rate cap, the market value of those
                                 notes may be temporarily or permanently
                                 reduced.

                                 A variety of factors could limit the interest
                                 rates and adversely affect the yields on and
                                 market values of the offered notes. These
                                 factors include:

                                 o  The interest rates for the offered notes
                                    adjust monthly, while the interest rates on
                                    the mortgage loans to be included in the
                                    mortgage pool adjust less frequently or do
                                    not adjust at all. Consequently, the
                                    available funds cap limitation on the
                                    interest rates on these notes may prevent
                                    increases in the interest rates on the
                                    related notes for extended periods in a
                                    rising interest rate environment.

                                 o  The interest rates on the adjustable rate
                                    mortgage loans to be included in the
                                    mortgage pool may respond to economic and
                                    market factors that differ from those that
                                    affect one-month LIBOR. It is possible that
                                    the interest rates on the adjustable rate
                                    mortgage loans may decline while one-month
                                    LIBOR is stable or rising, or that one-month
                                    LIBOR will increase more rapidly than the
                                    interest rates on the adjustable rate
                                    mortgage loans.

                                 o  To the extent that mortgage loans are
                                    delinquent in payment or subject to default
                                    or prepayment, the interest rates on the
                                    offered notes may be reduced as a result of
                                    the available funds cap limitation described
                                    in this prospectus supplement.

                                 If the interest rates on the offered notes are
                                 limited for any payment date, the resulting
                                 basis risk shortfalls may be paid to holders
                                 of those notes on future payment dates, but
                                 only if there is enough cashflow generated
                                 from excess interest (and in limited
                                 circumstances, principal) on the mortgage
                                 loans to fund those shortfalls or payments are
                                 received under the interest rate swap
                                 agreement or the interest rate cap agreement
                                 (and, for the benefit of the Class N1 and N2
                                 Notes only, an additional interest rate cap


                                      S-13


                                 agreement) in an amount sufficient to cover
                                 those shortfalls.

                                 See "Description of the Notes--Payments of
                                 Interest" and "--Credit Enhancement--
                                 Overcollateralization" in this prospectus
                                 supplement. For a general description of the
                                 interest rates of the mortgage loans, see
                                 "Description of the Mortgage Pool" in this
                                 prospectus supplement.


RISKS RELATED TO JUNIOR LIEN
 MORTGAGE LOANS...............   Approximately 6.16% of the mortgage loans are
                                 secured by second liens on the related
                                 mortgaged properties. These junior lien
                                 mortgage loans were generally originated at the
                                 same time as origination of the first lien
                                 mortgage loans with respect to the related
                                 mortgaged properties, substantially all of
                                 which are included in the trust. The weighted
                                 average of the original combined loan-to-value
                                 ratios of the junior lien mortgage loans and
                                 the original loan-to-value ratios of the
                                 related first lien mortgage loans is
                                 approximately 83.87%.

                                 The junior lien mortgage loans are subordinate
                                 to the rights of the mortgagee under the
                                 related first lien mortgage loans. Generally,
                                 the holder of a junior lien mortgage loan will
                                 be subject to a loss of its mortgage if the
                                 holder of the first mortgage is successful in
                                 foreclosure of its mortgage, because no junior
                                 liens or encumbrances survive such a
                                 foreclosure. Furthermore, any liquidation,
                                 insurance or condemnation proceeds received
                                 with respect to any mortgaged property will be
                                 available to satisfy the outstanding balance
                                 of the junior lien mortgage loans only to the
                                 extent that the claim of the first mortgage
                                 has been satisfied in full, including any
                                 related foreclosure costs. Accordingly, if
                                 liquidation proceeds are insufficient to
                                 satisfy the mortgage loan secured by the
                                 junior mortgage and the related first lien
                                 mortgage loan, and if the credit enhancement
                                 provided by excess interest and
                                 overcollateralization has been exhausted or is
                                 otherwise unavailable to cover the loss,
                                 noteholders will bear:

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

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

                                 The existence of the junior lien mortgage
                                 loans also presents additional risks. Defaults
                                 on first lien loans may be triggered by
                                 defaults on related junior lien loans.
                                 Borrowers who are in default may be more
                                 likely to submit to foreclosure proceedings
                                 because they have little or no equity in their
                                 properties.

                                      S-14


RISKS RELATED TO MORTGAGE LOANS
 WITH INTEREST ONLY PAYMENTS...  Approximately 19.91% of the mortgage loans
                                 provide for monthly payments of interest, but
                                 not principal, for a period of up to five years
                                 following origination, after which the monthly
                                 payments will be increased to amounts
                                 sufficient to pay interest and to amortize the
                                 principal balances over the remaining terms.

                                 The presence of these mortgage loans will,
                                 absent other considerations, result in longer
                                 weighted average lives of the notes than would
                                 have been the case had these loans not been
                                 included in the trust. If you purchase a note
                                 at a discount, you should consider that the
                                 extension of weighted average lives could
                                 result in a lower yield than would be the case
                                 if these mortgage loans provided for payment
                                 of principal and interest on every payment
                                 date. In addition, a borrower may view the
                                 absence of any obligation to make a payment of
                                 principal during the interest only period as a
                                 disincentive to prepayment.

                                 If a recalculated monthly payment as described
                                 above is substantially higher than a
                                 borrower's previous interest only monthly
                                 payment, that loan may be subject to an
                                 increased risk of delinquency, default and
                                 loss.


RISKS RELATED TO SIMULTANEOUS
 SECOND LIENS.................   With respect to approximately 25.33% of the
                                 mortgage loans, all of which are secured by
                                 first liens, including loans that provide for
                                 interest only payments, at the time of
                                 origination the originators also originated
                                 second lien loans that will, in most cases, be
                                 included in the trust. However, other borrowers
                                 whose first lien loans are included in the
                                 trust may have obtained secondary mortgage
                                 financing. Investors should consider that
                                 borrowers who have less equity in their homes
                                 may be more likely to default, and may be more
                                 likely to submit to foreclosure proceedings.


RISK OF LOSS ASSOCIATED WITH
 HIGHER LOAN-TO-VALUE RATIOS..   Mortgage loans with higher loan-to-value
                                 ratios may present a greater risk of loss than
                                 mortgage loans with loan-to-value ratios of
                                 80.00% or below. Approximately 32.57% of the
                                 mortgage loans had loan-to-value ratios (with
                                 respect to the first liens) or combined
                                 loan-to-value ratios (with respect to the
                                 junior liens) in excess of 80.00%, but no more
                                 than 100.00%, at origination.
RISKS RELATED
 TO SUBSERVICING...............  The servicer will contract with Aegis Mortgage
                                 Corporation as subservicer to perform the
                                 direct servicing of the mortgage loans. The
                                 subservicer has only limited experience
                                 servicing mortgage loans in its portfolio and
                                 limited experience servicing mortgage loans in
                                 a securitization, which could lead to higher
                                 levels of delinquencies and defaults on the
                                 mortgage loans than would be the case if the
                                 mortgage loans were directly serviced by a more
                                 experienced servicer. The servicer will


                                      S-15


                                 monitor the performance of the subservicer,
                                 but if substantial losses occur as a result of
                                 delinquencies and defaults on the mortgage
                                 loans, you may suffer losses.

                                 While Aegis Mortgage Corporation in its
                                 capacity as subservicer will service the
                                 mortgage loans under the supervision of the
                                 servicer, Aegis REIT Corporation, a subsidiary
                                 of Aegis Mortgage Corporation, as owner of the
                                 servicing rights will have the right to
                                 terminate the servicer at any time without
                                 cause. This relationship among Aegis Mortgage
                                 Corporation, Aegis REIT Corporation and the
                                 servicer could affect the manner in which the
                                 servicer fulfills its oversight
                                 responsibilities.

                                 See "The Servicer and the Subservicer--Aegis
                                 Mortgage Corporation" and "Servicing of the
                                 Mortgage Loans--The Subservicer" in this
                                 prospectus supplement.


RISKS RELATED TO POTENTIAL
 INADEQUACY OF CREDIT
 ENHANCEMENT AND
 OTHER SUPPORT.................  The notes are not insured by any surety bond.
                                 The credit enhancement features described in
                                 this prospectus supplement are intended to
                                 enhance the likelihood that holders of more
                                 senior classes of notes will receive regular
                                 payments of interest and principal, but are
                                 limited in nature and may be insufficient to
                                 cover all losses on the mortgage loans.

                                 EXCESS INTEREST AND OVERCOLLATERALIZATION. In
                                 order to maintain overcollateralization after
                                 losses have occurred on the mortgage loans it
                                 will be necessary that the mortgage loans
                                 generate more interest than is needed to pay
                                 interest on the offered notes, fees and
                                 expenses of the trust and any net swap
                                 payments payable to the swap counterparty by
                                 the trust. We expect that the mortgage loans
                                 will generate more interest than is needed to
                                 pay these amounts, at least during certain
                                 periods, because the weighted average of the
                                 interest rates on the mortgage loans is
                                 expected to be higher than the weighted
                                 average of the interest rates on the notes.
                                 Any remaining interest generated by the
                                 mortgage loans will, in effect, absorb losses
                                 on the mortgage loans, and will be applied to
                                 maintain overcollateralization.

                                 We cannot assure you, however, that the
                                 mortgage loans, together with amounts
                                 available from the interest rate swap
                                 agreement and the interest rate cap agreement,
                                 will generate enough excess interest in all
                                 periods to maintain the overcollateralization
                                 level required by the rating agencies. The
                                 following factors will affect the amount of
                                 excess interest that the mortgage loans will
                                 generate:

                                    Prepayments. Every time a mortgage loan is
                                    prepaid, total excess interest after the
                                    date of prepayment will be reduced because
                                    that mortgage loan will no longer be
                                    outstanding and generating interest, or, in
                                    the case


                                      S-16


                                    of a partial prepayment, will be generating
                                    less interest. The effect on your notes of
                                    this reduction will be influenced by the
                                    amount of prepaid loans and the
                                    characteristics of the prepaid loans.
                                    Prepayment of a disproportionately high
                                    number of high interest rate mortgage loans
                                    would have a greater negative effect on
                                    future excess interest.

                                    Defaults, Delinquencies and Liquidations. If
                                    the rates of delinquencies, defaults or
                                    losses on the mortgage loans turn out to be
                                    higher than expected, excess interest will
                                    be reduced by the amount necessary to
                                    compensate for any shortfalls in cash
                                    available to pay noteholders. Every time a
                                    mortgage loan is liquidated or written off,
                                    excess interest is reduced because the
                                    mortgage loan will no longer be outstanding
                                    and generating interest. Defaults on a
                                    disproportionately high number of high
                                    interest rate mortgage loans would have a
                                    greater negative effect on future excess
                                    interest.

                                    Increases in LIBOR. Substantially all of
                                    the mortgage loans have either fixed
                                    interest rates or interest rates that
                                    adjust based on a six-month LIBOR index and
                                    not the one-month LIBOR index used to
                                    determine the interest rates on the offered
                                    notes. As a result of an increase in
                                    one-month LIBOR, the interest rate on the
                                    related offered notes may increase relative
                                    to interest rates on the mortgage loans,
                                    requiring that more of the interest
                                    generated by the mortgage loans be applied
                                    to cover interest on the notes.

                                 See "Description of the Notes--Credit
                                 Enhancement-- Overcollateralization" in this
                                 prospectus supplement.

                                    Limitations on Adjustments of Mortgage
                                    Rates. The adjustable rate mortgage loans
                                    to be included in the trust may have
                                    periodic maximum and minimum limitations on
                                    adjustments to their interest rates. Due to
                                    the application of these limitations, in a
                                    rising interest rate environment the
                                    interest rates on the adjustable rate
                                    mortgage loans may increase more slowly
                                    than the level of one-month LIBOR and the
                                    corresponding interest rates on the offered
                                    notes, requiring that more of the interest
                                    generated by the adjustable rate mortgage
                                    loans be applied to cover interest on the
                                    notes.

                                 See "Description of the Mortgage Pool--
                                 Adjustable Rate Mortgage Loans" in this
                                 prospectus supplement.

                                 THE INTEREST RATE SWAP AND CAP AGREEMENTS. Any
                                 amounts received under the interest rate swap
                                 and cap agreements will be applied as
                                 described in this prospectus supplement in the
                                 same manner as interest collections on the
                                 mortgage loans to pay interest due on the
                                 notes, maintain overcollateralization and
                                 cover losses. In general,


                                      S-17


                                 however, no amounts will be payable to the
                                 trust by the swap counterparty unless the
                                 floating amount owed by the swap counterparty
                                 on a payment date exceeds the fixed amount
                                 owed to the swap counterparty. This will not
                                 occur except in periods when one-month LIBOR
                                 (as determined pursuant to the interest rate
                                 swap agreement) generally exceeds 4.0110%.
                                 Amounts will be payable to the trust by the
                                 cap counterparty from the payment date in July
                                 2005 through and including the payment date in
                                 September 2009. We cannot assure you that any
                                 amounts will be received under the interest
                                 rate swap and cap agreements, or that any such
                                 amounts that are received will be sufficient
                                 to maintain required overcollateralization or
                                 to cover interest shortfalls and losses on the
                                 mortgage loans.

                                 See "Description of the Notes--Payments of
                                 Interest--The Interest Rate Swap Agreement"
                                 and "--The Interest Rate Cap Agreement" in
                                 this prospectus supplement.

                                 SUBORDINATION. Subordination in right of
                                 payment of the subordinate notes provides a
                                 form of credit enhancement for the senior
                                 notes and for each class of subordinate notes
                                 having a higher priority of payment. However,
                                 if this subordination is insufficient to
                                 absorb losses in excess of excess interest and
                                 any overcollateralization, then holders of
                                 subordinate notes, particularly the Class B3
                                 notes, may never receive all of their
                                 principal payments. You should consider the
                                 following:

                                 o  if you buy a Class B3 Note and losses on the
                                    mortgage loans exceed excess interest and
                                    any overcollateralization that has been
                                    created, your note will incur a principal
                                    deficiency; although the principal
                                    deficiency will not reduce the principal
                                    amount of your note, interest accrued on the
                                    amount of the principal deficiency and the
                                    portion of the note principal amount
                                    represented by the principal deficiency will
                                    not be repaid unless future amounts of
                                    excess interest are available to pay it;

                                 o  if you buy a Class B2 Note and losses on the
                                    mortgage loans exceed excess interest and
                                    any overcollateralization that has been
                                    created, plus the total class principal
                                    amount of the Class B3 Notes, your note will
                                    incur a principal deficiency; although the
                                    principal deficiency will not reduce the
                                    principal amount of your note, interest
                                    accrued on the amount of the principal
                                    deficiency and the portion of the note
                                    principal amount represented by the
                                    principal deficiency will not be repaid
                                    unless future amounts of excess interest are
                                    available to pay it;

                                 o  if you buy a Class B1 Note and losses on the
                                    mortgage loans exceed excess interest and
                                    any overcollateralization that has been
                                    created, plus the total class principal
                                    amount of the Class B3 and B2


                                      S-18


                                    Notes, your note will incur a principal
                                    deficiency; although the principal
                                    deficiency will not reduce the principal
                                    amount of your note, interest accrued on
                                    the amount of the principal deficiency and
                                    the portion of the note principal amount
                                    represented by the principal deficiency
                                    will not be repaid unless future amounts of
                                    excess interest are available to pay it;

                                 o  you buy a Class M6 Note and losses on the
                                    mortgage loans exceed excess interest and
                                    any overcollateralization that has been
                                    created, plus the total class principal
                                    amount of the Class B3, B2 and B1 Notes,
                                    your note will incur a principal deficiency;
                                    although the principal deficiency will not
                                    reduce the principal amount of your note,
                                    interest accrued on the amount of the
                                    principal deficiency and the portion of the
                                    note principal amount represented by the
                                    principal deficiency will not be repaid
                                    unless future amounts of excess interest are
                                    available to pay it;

                                 o  you buy a Class M5 Note and losses on the
                                    mortgage loans exceed excess interest and
                                    any overcollateralization that has been
                                    created, plus the total class principal
                                    amount of the Class B3, B2, B1 and M6 Notes,
                                    your note will incur a principal deficiency;
                                    although the principal deficiency will not
                                    reduce the principal amount of your note,
                                    interest accrued on the amount of the
                                    principal deficiency and the portion of the
                                    note principal amount represented by the
                                    principal deficiency will not be repaid
                                    unless future amounts of excess interest are
                                    available to pay it;

                                 o  you buy a Class M4 Note and losses on the
                                    mortgage loans exceed excess interest and
                                    any overcollateralization that has been
                                    created, plus the total class principal
                                    amount of the Class B3, B2, B1, M6 and M5
                                    Notes, your note will incur a principal
                                    deficiency; although the principal
                                    deficiency will not reduce the principal
                                    amount of your note, interest accrued on the
                                    amount of the principal deficiency and the
                                    portion of the note principal amount
                                    represented by the principal deficiency will
                                    not be repaid unless future amounts of
                                    excess interest are available to pay it;

                                 o  you buy a Class M3 Note and losses on the
                                    mortgage loans exceed excess interest and
                                    any overcollateralization that has been
                                    created, plus the total class principal
                                    amount of the Class B3, B2, B1, M6, M5 and
                                    M4 Notes, your note will incur a principal
                                    deficiency; although the principal
                                    deficiency will not reduce the principal
                                    amount of your note, interest accrued on the
                                    amount of the principal deficiency and the
                                    portion of the note principal amount
                                    represented by the principal deficiency will
                                    not be repaid unless


                                      S-19


                                    future amounts of excess interest are
                                    available to pay it;

                                 o  you buy a Class M2 Note and losses on the
                                    mortgage loans exceed excess interest and
                                    any overcollateralization that has been
                                    created, plus the total class principal
                                    amount of the Class B3, B2, B1, M6, M5, M4
                                    and M3 Notes, your note will incur a
                                    principal deficiency; although the principal
                                    deficiency will not reduce the principal
                                    amount of your note, interest accrued on the
                                    amount of the principal deficiency and the
                                    portion of the note principal amount
                                    represented by the principal deficiency will
                                    not be repaid unless future amounts of
                                    excess interest are available to pay it; and

                                 o  you buy a Class M1 Note and losses on the
                                    mortgage loans exceed excess interest and
                                    any overcollateralization that has been
                                    created, plus the total class principal
                                    amount of the Class B3, B2, B1, M6, M5, M4,
                                    M3 and M2 Notes, your note will incur a
                                    principal deficiency; although the principal
                                    deficiency will not reduce the principal
                                    amount of your note, interest accrued on the
                                    amount of the principal deficiency and the
                                    portion of the note principal amount
                                    represented by the principal deficiency will
                                    not be repaid unless future amounts of
                                    excess interest are available to pay it.

                                 If overcollateralization is restored to the
                                 required amount and the mortgage loans
                                 generate interest in excess of the amount
                                 needed to pay interest and principal on the
                                 offered notes and the fees, expenses and
                                 reimbursements owed by the trust, then excess
                                 interest will be applied to pay deferred
                                 interest on principal deficiency amounts and
                                 will be allocated to the classes of
                                 subordinate notes in sequential order of
                                 priority. We cannot assure you, however, that
                                 excess interest will be generated in an amount
                                 sufficient to make these payments.

                                 See "Description of the Notes--Credit
                                 Enhancement-- Subordination" and
                                 "--Application of Realized Losses" in this
                                 prospectus supplement.


RISKS RELATED TO THE INTEREST
 RATE SWAP AGREEMENT..........   Any net amount payable to the swap
                                 counterparty under the terms of the interest
                                 rate swap agreement will reduce amounts
                                 available for payment to noteholders, and may
                                 reduce the interest rates of the notes. If the
                                 rate of prepayments on the mortgage loans is
                                 faster than anticipated, the scheduled notional
                                 amount on which payments due under the interest
                                 rate swap agreement are calculated may exceed
                                 the total principal balance of the mortgage
                                 loans, thereby increasing the relative
                                 proportion of interest collections on the loans
                                 that must be applied to make net payments to
                                 the swap counterparty. The


                                      S-20


                                 combination of a rapid rate of prepayment and
                                 low prevailing interest rates could adversely
                                 affect the yields on the notes.

                                 In addition, any termination payment payable
                                 to the swap counterparty in the event of early
                                 termination of the interest rate swap
                                 agreement will reduce amounts available for
                                 payments to noteholders.

                                 See "Description of the Notes--Payments of
                                 Interest," "--Payments of Principal" and
                                 "--Supplemental Interest Trust."


RISKS RELATED TO CREDIT RATING
 OF SWAP COUNTERPARTY AND
 CAP COUNTERPARTY..............  The swap counterparty or its credit support
                                 provider under the interest rate swap
                                 agreement, if applicable, will have, as of the
                                 closing date, a senior unsecured debt rating of
                                 "A+" from S&P, a senior debt rating of "Aa3"
                                 from Moody's and a long-term rating of "AA-"
                                 from Fitch. The ratings on the offered notes
                                 are dependent in part upon the credit ratings
                                 of the swap counterparty (or its credit support
                                 provider, if applicable). If a credit rating of
                                 the swap counterparty (or its credit support
                                 provider, if applicable) is qualified, reduced
                                 or withdrawn and a substitute counterparty is
                                 not obtained in accordance with the terms of
                                 the interest rate swap agreement, the ratings
                                 of the offered notes may be qualified, reduced
                                 or withdrawn. In such event, the value and
                                 marketability of the offered notes will be
                                 adversely affected.

                                 Similarly, the ratings on the offered notes
                                 will depend in part upon the rating of the cap
                                 counterparty or its credit support provider,
                                 if applicable, under the interest rate cap
                                 agreement.

                                 See "Description of the Notes--Payments of
                                 Interest--The Interest Rate Swap Agreement"
                                 and "--The Interest Rate Cap Agreement."


RISK RELATED TO
 UNPREDICTABILITY AND
 EFFECT OF PREPAYMENTS........   The rate of prepayments on the mortgage loans
                                 will be sensitive to prevailing interest rates.
                                 Generally, if prevailing interest rates
                                 decline, mortgage loan prepayments may increase
                                 due to the availability of refinancing at lower
                                 interest rates. If prevailing interest rates
                                 rise, prepayments on the mortgage loans may
                                 decrease.

                                 Borrowers may prepay their mortgage loans in
                                 whole or in part at any time; however,
                                 approximately 64.81% of the mortgage loans to
                                 be included in the mortgage pool require the
                                 borrower to pay a prepayment premium in
                                 connection with any voluntary prepayments in
                                 full, and certain voluntary prepayments in
                                 part, made during a stated period that ranges
                                 from one to five years after origination.
                                 These prepayment premiums may discourage


                                      S-21


                                 borrowers from prepaying their mortgage loans
                                 during the applicable period.

                                 Prepayments on the mortgage loans may occur as
                                 a result of solicitations of the borrowers by
                                 mortgage loan originators, including the
                                 subservicer and its affiliates, as described
                                 under "Yield, Prepayment and Weighted Average
                                 Life" in this prospectus supplement.

                                 The timing of prepayments of principal may
                                 also be affected by liquidations of or
                                 insurance payments on the mortgage loans. In
                                 addition, the seller of the mortgage loans to
                                 the depositor may be required to repurchase
                                 mortgage loans from the trust in the event
                                 that certain breaches of representations and
                                 warranties occur and are not cured, and the
                                 holder of the ownership certificate (or the
                                 servicer, if the holder of the ownership
                                 certificate does not do so) will have the
                                 option to purchase mortgage loans under
                                 certain circumstances. These purchases will
                                 have the same effect on noteholders as
                                 prepayments of mortgage loans.

                                 A prepayment of a mortgage loan will usually
                                 result in a payment of principal on the
                                 offered notes.

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

                                 The prepayment experience of the mortgage
                                 loans may differ significantly from that of
                                 other residential mortgage loans.

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


RISKS RELATED TO DELAY IN RECEIPT
 OF LIQUIDATION PROCEEDS;
 LIQUIDATION PROCEEDS MAY BE
 LESS THAN MORTGAGE LOAN
 BALANCE......................   Substantial delays could be encountered in
                                 connection with the liquidation of delinquent
                                 mortgage loans. Further, reimbursement of
                                 advances made by or on behalf of the servicer
                                 and liquidation expenses such as legal fees,
                                 real estate taxes and maintenance and
                                 preservation expenses may reduce the portion of
                                 liquidation proceeds payable to noteholders. If
                                 a mortgaged property fails to provide adequate
                                 security for the related mortgage loan, you
                                 could incur a loss on your investment if the
                                 applicable credit enhancement is insufficient
                                 to cover the loss.


                                      S-22


RISKS RELATED TO GEOGRAPHIC
 CONCENTRATION OF
 MORTGAGE LOANS................  Approximately 11.58% and 9.18% of the mortgage
                                 loans to be included in the mortgage pool are
                                 secured by properties located in California and
                                 Florida, respectively. The rate of
                                 delinquencies, defaults and losses on the
                                 mortgage loans may be higher than if fewer of
                                 the mortgage loans were concentrated in these
                                 states because the following conditions, among
                                 others, will have a disproportionate impact on
                                 the mortgage loans in general:

                                 o  weak economic conditions, which may or may
                                    not affect real property values, may affect
                                    the ability of borrowers to repay their
                                    loans on time.

                                 o  declines in the residential real estate
                                    markets in these states may reduce the
                                    values of properties located in these
                                    states, which would result in an increase in
                                    the loan-to-value ratios.

                                 o  properties in California may be more
                                    susceptible than homes located in other
                                    parts of the country to certain types of
                                    uninsurable hazards, such as earthquakes, as
                                    well as floods, wildfires, mudslides and
                                    other natural disasters. Properties in
                                    Florida may be more susceptible to
                                    hurricanes and other storms.

                                 o  any increase in the market value of
                                    properties located in a particular state
                                    would reduce the loan-to-value ratios of the
                                    mortgage loans 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.

                                 Natural disasters affect regions of the United
                                 States from time to time, and may result in
                                 increased losses on mortgage loans in those
                                 regions, or in insurance payments that will
                                 constitute prepayments of principal of those
                                 mortgage loans.

                                 See "Yield, Prepayment and Weighted Average
                                 Life" in this prospectus supplement. For
                                 additional information regarding the
                                 geographic concentration of the mortgage loans
                                 to be included in the mortgage pool, see the
                                 geographic distribution table under
                                 "Description of the Mortgage Pool" in this
                                 prospectus supplement.


TRUST COULD BECOME A TAXABLE
 ENTITY.......................   For U.S. federal income tax purposes, the
                                 trust will be a taxable mortgage pool. As long
                                 as the sole class of equity interest in a
                                 taxable mortgage pool is held, directly or
                                 indirectly, through one or more wholly owned
                                 "qualified REIT subsidiaries" or by an entity
                                 that qualifies as a "real estate investment
                                 trust" under the rules set out in the Internal
                                 Revenue Code of 1986, as amended, the taxable
                                 mortgage pool will not be subject to federal
                                 income tax.


                                      S-23


                                 The seller will hold through Aegis Equity
                                 Holding Corporation, its direct wholly owned
                                 qualified REIT subsidiary, a 100% ownership
                                 interest in the ownership certificate. The
                                 seller will represent that it will file with
                                 its federal income tax return for its taxable
                                 year ending December 31, 2004, an election to
                                 be a REIT, that it has been organized in
                                 conformity with the requirements for REIT
                                 qualification set forth in the Internal
                                 Revenue Code of 1986, that it has operated and
                                 will continue to operate in a manner that
                                 enables it to qualify as a REIT and that it
                                 will not undertake any action that would cause
                                 the trust to be subject to federal income tax.


                                 Under the terms of the trust agreement, the
                                 ownership certificate may be transferred only
                                 to an entity that qualifies as either a "real
                                 estate investment trust" or a "qualified REIT
                                 subsidiary." The provisions of the Internal
                                 Revenue Code pertaining to real estate
                                 investment trusts are, however, highly
                                 technical and complex. If the seller were to
                                 fail to qualify as a real estate investment
                                 trust, or if the seller were to transfer the
                                 ownership certificate to an entity that did
                                 not qualify as a real estate investment trust
                                 or a qualified REIT subsidiary, the trust
                                 could become subject to federal income tax as
                                 though it were a corporation. Any tax imposed
                                 on the trust would reduce cashflow that would
                                 be available to make payments on the notes and
                                 could cause losses which could adversely
                                 affect the notes, in particular the
                                 subordinate notes. The failure of the holder
                                 of the ownership certificate to qualify as a
                                 real estate investment trust or a qualified
                                 REIT subsidiary would constitute an event of
                                 default under the indenture.

                                 See "Material Federal Income Tax
                                 Considerations" in this prospectus supplement.



RISKS RELATED TO LIMITED
 ABILITY TO RESELL NOTES......   The underwriters are not required to assist
                                 in any resale of the offered notes, although
                                 they may do so. A secondary market for any
                                 class of offered notes may not develop. If a
                                 secondary market does develop, it might not
                                 continue or it might not be sufficiently liquid
                                 to allow you to resell any of your notes.


RISKS RELATED TO MILITARY
 ACTION AND TERRORIST
 ATTACKS......................   The effects that military action by U.S.
                                 forces in Iraq, Afghanistan or other regions,
                                 terrorist attacks in the United States or other
                                 incidents and related military action may have
                                 on the performance of the mortgage loans or on
                                 the values of mortgaged properties cannot be
                                 determined at this time. Investors should
                                 consider the possible effects on delinquency,
                                 default and prepayment experience of the
                                 mortgage loans. Federal agencies and
                                 non-government lenders may defer, reduce or
                                 forgive payments and delay foreclosure
                                 proceedings in respect of loans to borrowers
                                 affected in some way by possible future events.
                                 In addition,


                                      S-24


                                 activation of additional U.S. military
                                 reservists or members of the National Guard
                                 may significantly increase the proportion of
                                 mortgage loans whose mortgage rates are
                                 reduced by application of the Servicemembers
                                 Civil Relief Act or similar state or local
                                 laws. The amount of interest available for
                                 payment to holders of the offered notes will
                                 be reduced by any reductions in the amount of
                                 interest collectible as a result of
                                 application of the Servicemembers Civil Relief
                                 Act or similar state or local laws and none of
                                 the master servicer, the servicer, the
                                 subservicer or any other party will be
                                 required to fund any interest shortfall caused
                                 by any such reduction.


VIOLATION OF VARIOUS FEDERAL,
 STATE AND  LOCAL LAWS MAY
 RESULT IN LOSSES ON THE
 MORTGAGE LOANS...............   Applicable state laws generally regulate
                                 interest rates and other charges, require
                                 certain disclosure, and require licensing of
                                 the seller and its lending affiliates. In
                                 addition, other state laws, public policy and
                                 general principles of equity relating to the
                                 protection of consumers, unfair and deceptive
                                 practices and debt collection practices may
                                 apply to the origination, servicing and
                                 collection of the mortgage loans.

                                 The mortgage loans are also subject to various
                                 federal laws, including:

                                 o  the federal Truth-in-Lending Act and
                                    Regulation Z promulgated thereunder, which
                                    require certain disclosures to borrowers
                                    regarding the terms of the mortgage loans;

                                 o  the Equal Credit Opportunity Act and
                                    Regulation B promulgated thereunder, which
                                    prohibit discrimination on the basis of age,
                                    race, color, sex, religion, marital status,
                                    national origin, receipt of public
                                    assistance or the exercise of any right
                                    under the Consumer Credit Protection Act, in
                                    the extension of credit; and

                                 o  the Fair Credit Reporting Act, which
                                    regulates the use and reporting of
                                    information related to the borrower's credit
                                    experience.

                                 Violations of certain provisions of these
                                 federal laws may limit the ability of the
                                 servicer to collect all or part of the
                                 principal of or interest on the mortgage loans
                                 and in addition could subject the trust to
                                 damages and administrative enforcement.

                                 The seller will represent that each mortgage
                                 loan was originated in compliance with
                                 applicable federal, state and local laws and
                                 regulations. In the event of a breach of this
                                 representation, the seller will be obligated
                                 to cure such breach or repurchase or replace
                                 the affected mortgage loan in the manner
                                 described under "The Sale Agreement and the
                                 Transfer and Servicing Agreement--Sale of
                                 Mortgage Loans" in this prospectus supplement.



                                      S-25


RISKS RELATED TO PREDATORY
 LANDING LAWS/HIGH COST LOANS... Various federal, state and local laws have
                                 been enacted that are designed to discourage
                                 predatory lending practices. The federal Home
                                 Ownership and Equity Protection Act of 1994,
                                 commonly known as HOEPA, prohibits inclusion of
                                 certain provisions in mortgage loans that have
                                 mortgage rates or origination costs in excess
                                 of prescribed levels, and requires that
                                 borrowers be given certain disclosures prior to
                                 the origination of the mortgage loans. Some
                                 states have enacted, or may enact, similar laws
                                 or regulations, which in some cases impose
                                 restrictions and requirements greater than
                                 those in HOEPA.

                                 In addition, under the anti-predatory lending
                                 laws of some states, the origination of
                                 certain mortgage loans (including loans that
                                 are not classified as "high cost" loans under
                                 applicable law) must satisfy a net tangible
                                 benefits test with respect to the related
                                 borrower. This test may be highly subjective
                                 and open to interpretation. As a result, a
                                 court may determine that a mortgage loan does
                                 not meet the test even if the originator
                                 reasonably believed that the test was
                                 satisfied.

                                 Failure to comply with these laws, to the
                                 extent applicable to any of the mortgage
                                 loans, could subject the trust, as an assignee
                                 of the mortgage loans, to monetary penalties
                                 and could result in the borrowers rescinding
                                 the affected mortgage loans. Lawsuits have
                                 been brought in various states making claims
                                 against assignees of high cost loans for
                                 violations of state law. Named defendants in
                                 these cases have included numerous
                                 participants within the secondary mortgage
                                 market, including some securitization trusts.

                                 The seller will represent that the trust does
                                 not include any mortgage loans that are
                                 subject to HOEPA or that would be classified
                                 as "high cost" loans under any similar state
                                 or local predatory or abusive lending law.
                                 There may be mortgage loans in the trust that
                                 are subject to the state or local requirement
                                 that the loan provide a net tangible benefit
                                 (however denominated) to the borrower; the
                                 seller will represent that these mortgage
                                 loans are in compliance with applicable
                                 requirements. If it is determined that the
                                 trust includes loans subject to HOEPA or
                                 otherwise classified as high cost loans, or
                                 which do not comply with any net tangible
                                 benefit requirements prescribed by the laws of
                                 any particular state or municipality, the
                                 seller will be required to repurchase the
                                 affected loans and to pay any liabilities
                                 incurred by the trust due to any violations of
                                 these laws. If the loans are found to have
                                 been originated in violation of predatory or
                                 abusive lending laws and the seller does not
                                 repurchase the affected loans and pay any
                                 related liabilities, noteholders could incur
                                 losses.

                                      S-26


LIMITED OBLIGATIONS...........   The assets of the trust are the sole source
                                 of payments on the notes. The notes are not the
                                 obligations of any other entity. None of the
                                 seller, the depositor, the underwriters, the
                                 indenture trustee, the administrator, the
                                 master servicer, the servicer or any of their
                                 affiliates will have any obligation to replace
                                 or supplement the credit enhancement, or take
                                 any other action to maintain the rating of the
                                 notes. If credit enhancement is not available,
                                 holders of notes may suffer losses on their
                                 investments.

                                      S-27


                           DESCRIPTION OF THE TRUST

GENERAL

     Aegis Asset Backed Securities Trust 2005-3 (the "Trust" or the "Issuer")
will be a statutory trust formed under the laws of the State of Delaware
pursuant to a trust agreement dated as of June 1, 2005 (the "Trust Agreement"),
among Aegis Asset Backed Securities Corporation, as depositor (the
"Depositor"), Wilmington Trust Company, as owner trustee (the "Owner Trustee"),
and Wells Fargo Bank, N.A., as administrator (in such capacity, the
"Administrator"). The Trust will not engage in any activity other than
acquiring, holding and managing the Mortgage Loans (as defined herein) and the
other assets of the Trust and proceeds therefrom (such Mortgage Loans, assets
and proceeds, collectively, the "Trust Estate"), issuing the Securities (as
defined herein), making payments on the Securities, and related activities.

     The Trust will not have any employees, officers or directors. The
Indenture Trustee, the Owner Trustee, the Depositor, the Administrator, the
Master Servicer, the Servicer, the Subservicer and the Custodian will act on
behalf of the Trust, and may only perform those actions on behalf of the Trust
that are specified in the Trust Agreement and in the Transfer and Servicing
Agreement, the Indenture, the Administration Agreement and the Subservicing
Agreement (each as defined herein). See "The Master Servicer," "The Servicer
and the Subservicer," "Servicing of the Mortgage Loans," "The Sale Agreement
and the Transfer and Servicing Agreement" and "The Trust Agreement and the
Indenture" in this prospectus supplement.

     On or about June 28, 2005 (the "Closing Date"), the Trust will purchase
the Mortgage Loans from the Depositor pursuant to the Transfer and Servicing
Agreement. See "The Sale Agreement and the Transfer and Servicing Agreement"
herein.

     On the Closing Date, the Issuer will pledge the Trust Estate to the
Indenture Trustee (as defined herein) as security for the issuance of the Aegis
Asset Backed Securities Trust 2005-3 Mortgage Backed Notes (the "Notes"), with
the class designations specified under "Description of the Notes--General,"
pursuant to an indenture dated as of the Cut-off Date (as defined herein) (the
"Indenture") among the Issuer, the Indenture Trustee and the Administrator. The
Depositor will sell the Notes to the Underwriters (as defined herein) and apply
the net proceeds of such sale to the purchase of the Mortgage Loans.

     Other than the Trust Estate pledged as collateral for the Notes, the Trust
will not have any significant assets available for payment of the Notes.

     The Trust's principal offices are located in Wilmington, Delaware, in care
of Wilmington Trust Company, as Owner Trustee, at the address set forth below
under "--The Owner Trustee."

     If the assets of the Trust are insufficient to pay the Noteholders (as
defined herein) all principal and interest owed, holders of some or all classes
of Notes will not receive all of their expected payments of interest and
principal and will suffer a loss. The risk of loss to holders of the
Subordinate Notes (as defined herein) is greater than to holders of the Senior
Notes (as defined herein). See "Risk Factors--Risks Related to Potential
Inadequacy of Credit Enhancement--Subordination" above. The terms of the Trust
Agreement (to the extent such provisions are held to be enforceable) limit the
power of the Owner Trustee or the holder of the Ownership Certificate (as
defined below) to file a voluntary bankruptcy petition with respect to the
Trust while any Notes are outstanding. In addition, under the Indenture, the
Indenture Trustee and the Noteholders (by their acceptance of the Notes)
covenant not to institute a bankruptcy proceeding against the Trust. In the
event of bankruptcy of Aegis REIT Corporation or Aegis Mortgage Corporation, it
is not anticipated that the Trust Estate would become part of the bankruptcy
estate or subject to the bankruptcy control of a third party.


THE OWNER TRUSTEE

     Wilmington Trust Company will act not in its individual capacity but
solely as the Owner Trustee under the Trust Agreement. Wilmington Trust Company
is a Delaware banking corporation and its principal offices are located at
Rodney Square North, 1100 North Market Street, Wilmington,


                                      S-28


Delaware 19890. The Owner Trustee will be paid a fixed annual fee (the "Owner
Trustee Fee") from income on funds held in the Collection Account (as defined
herein) and will be entitled to reimbursement from the Trust for expenses and
certain other amounts prior to payment of any amounts to Noteholders.

     The Administrator and the Depositor will perform on behalf of the Owner
Trustee and the Trust certain administrative functions required under the
Indenture, the Trust Agreement and the Transfer and Servicing Agreement
pursuant to the terms of an administration agreement (the "Administration
Agreement") among the Trust, the Depositor and the Administrator.


THE OWNERSHIP CERTIFICATE

     The equity ownership in the Trust will be evidenced by a single ownership
certificate (the "Ownership Certificate"). The holder of the Ownership
Certificate (the "Residual Holder") will be entitled to receive on each Payment
Date (as defined herein) any remaining cashflow from Mortgage Loan collections
after all principal and interest on the Notes and other expenses of the Trust
for such Payment Date have been made.



                           DESCRIPTION OF THE NOTES


GENERAL

     The Issuer will issue pursuant to the Indenture Notes having the following
class designations: Class A1, Class A2, Class A3, Class M1, Class M2, Class M3,
Class M4, Class M5, Class M6, Class B1, Class B2, Class B3, Class N1 and Class
N2 (each, a "Class"). The Class A1, Class A2 and Class A3 Notes are referred to
herein as the "Senior Notes" or the "Class A Notes"; the Class M1, Class M2,
Class M3, Class M4, Class M5, Class M6, Class B1, Class B2 and Class B3 Notes
are collectively referred to herein as the "Offered Subordinate Notes"; the
Class N1 Notes, together with the Class N2 Notes, are sometimes collectively
referred to herein as the "Class N Notes"; and the Offered Subordinate Notes,
together with the Class N Notes, are sometimes collectively referred to herein
as the "Subordinate Notes." The Notes and the Ownership Certificate (see
"Description of the Trust--The Ownership Certificate" above) are collectively
referred to herein as the "Securities." Only the Senior Notes and the Offered
Subordinate Notes (collectively, the "Offered Notes") are offered hereby. The
Class N Notes and the Ownership Certificate are not offered pursuant to this
prospectus supplement.

     The Notes will be secured by the Trust Estate. The Trust Estate will
consist primarily of (1) a pool (the "Mortgage Pool") of conventional,
adjustable and fixed rate, fully amortizing and balloon, first and second lien
residential mortgage loans (the "Mortgage Loans"; (2) such assets as from time
to time are deposited in respect of the Mortgage Loans in a note payment
account maintained by or on behalf of the Indenture Trustee (the "Note Payment
Account"); (3) property acquired by foreclosure of Mortgage Loans or deed in
lieu of foreclosure; (4) the rights of the Depositor under the Sale Agreement,
as described under "The Sale Agreement and the Transfer and Servicing
Agreement--Sale of Mortgage Loans"; (5) an interest rate swap agreement, as
described under "--Payments of Interest--The Interest Rate Swap Agreement"; (6)
an interest rate cap agreement, as described under "--Payments of Interest--The
Interest Rate Cap Agreement," (7) for the benefit of the Class N Notes only, an
additional interest rate cap agreement, as provided in the Transfer and
Servicing Agreement; and (8) all proceeds of the foregoing.

     Each Class of Offered Notes will be issued in the respective approximate
initial total principal amount specified in the table on page S-3. The initial
total Class Principal Amount (as defined herein) of the Offered Notes may be
increased or decreased by up to five percent to the extent that the Cut-off
Date Balance (as defined herein) of the Mortgage Loans is correspondingly
increased or decreased as described under "Description of the Mortgage Pool"
herein.

     The Class N Notes will be paid interest and principal on each Payment Date
after certain required payments are made as described under "--Payments of
Interest--Interest Payment


                                      S-29


Priorities," "--Payments of Principal--Principal Payment Priorities" and
"--Credit Enhancement--Application of Monthly Excess Cashflow" below, from any
cashflow from Mortgage Loan collections attributable to Prepayment Premiums (as
defined herein) on the Mortgage Loans, and from an interest rate cap agreement
for the benefit of the Class N Notes only, as provided in the Transfer and
Servicing Agreement. The Ownership Certificate will be entitled to receive on
each Payment Date any remaining monthly excess cashflow from Mortgage Loan
collections after all principal and interest on the Notes and expenses of the
Trust for such Payment Date have been made.

     Payments on the Notes will be made on the 25th day of each month or, if
the 25th day is not a Business Day, on the next succeeding Business Day,
beginning in July 2005 (each, a "Payment Date"), to Noteholders of record on
the applicable Record Date. The "Record Date" for the Notes and each Payment
Date will be the close of business on the Business Day immediately preceding
such Payment Date. A "Business Day" is generally any day other than a Saturday
or Sunday or a day on which banks in New York, Delaware, Minnesota, Maryland,
Texas or North Carolina (or, as to the Servicer, such other states as are
specified in the Transfer and Servicing Agreement) are closed.

     Payments on the Offered Notes will be made to each registered holder
entitled thereto, by wire transfer in immediately available funds; provided
that the final payment in respect of any Note will be made only upon
presentation and surrender of such Note at the office of the Administrator, in
its capacity as Note Registrar (as defined herein).

     The Senior Notes will be issued in minimum denominations in principal
amount of $25,000 and integral multiples of $1 in excess thereof. The Offered
Subordinate Notes will be issued in minimum denominations in principal amount
of $50,000 and integral multiples of $1 in excess thereof.

BOOK-ENTRY REGISTRATION

     The Offered Notes will be issued, maintained and transferred on the
book-entry records of The Depository Trust Company ("DTC") and its participants
("DTC Participants") and for such purpose are referred to as "Book-Entry
Notes." Each Class of Book-Entry Notes will be represented by one or more
global notes that equal in the aggregate the initial Class Principal Amount of
the related Class registered in the name of the nominee of DTC. The Depositor
has been informed by DTC that DTC's nominee will be Cede & Co. No person
acquiring an interest in a Book-Entry Note (each, a "Beneficial Owner") will be
entitled to receive a physical note representing such person's interest (a
"Definitive Note"), except as set forth below under "--Book-Entry
Registration--Definitive Notes." Unless and until Definitive Notes are issued
for the Book-Entry Notes under the limited circumstances described herein, all
references to actions by Noteholders with respect to the Book-Entry Notes shall
refer to actions taken by DTC upon instructions from its DTC Participants, and
all references herein to payments, notices, reports and statements to
Noteholders with respect to the Book-Entry Notes shall refer to payments,
notices, reports and statements to DTC or Cede & Co., as the registered holder
of the Book-Entry Notes, for payment to Beneficial Owners by DTC in accordance
with DTC procedures.

     Beneficial Owners will hold their Notes through DTC in the United States,
or Clearstream Banking Luxembourg ("Clearstream Luxembourg") or the Euroclear
System ("Euroclear") in Europe if they are participants of such systems, or
indirectly through organizations that are participants in such systems.
Clearstream Luxembourg and Euroclear will hold omnibus positions on behalf of
their participants through customers' securities accounts in Clearstream
Luxembourg's and Euroclear's names on the books of their respective
depositaries which in turn will hold such positions in customers' securities
accounts in the depositaries names on the books of DTC. Citibank, N.A.
generally, but not exclusively, will act as depositary for Clearstream
Luxembourg and JPMorgan Chase Bank, N.A. generally, but not exclusively, will
act as depositary for Euroclear (in such capacities, individually the "Relevant
Depositary" and collectively, the "European Depositaries"). Except as described
below, no Beneficial Owner will be entitled to receive a physical note
representing such Note. Unless and until Definitive Notes are issued, it is
anticipated that the only "Noteholder" of the Book-Entry Notes will be Cede &
Co., as nominee of DTC. Beneficial Owners will not be Noteholders as that term
is used in the Indenture. Beneficial Owners are only permitted to exercise
their rights indirectly through DTC Participants and DTC.


                                      S-30


     The Beneficial Owner's ownership of a Book-Entry Note will be recorded on
the records of the brokerage firm, bank, thrift institution or other financial
intermediary (each, a "Financial Intermediary") that maintains the Beneficial
Owner's account for such purpose. In turn, the Financial Intermediary's
ownership of such Book-Entry Note will be recorded on the records of DTC (or of
a DTC Participant) 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. Beneficial Owners will
receive all payments of principal of, and interest on, the Book-Entry Notes
from the Administrator through DTC and DTC Participants. See "Description of
the Securities--Book-Entry Registration of Securities" in the prospectus.

PAYMENTS OF INTEREST

     CALCULATION OF INTEREST. The amount of interest payable on each Payment
Date in respect of each Class of Offered Notes will equal the Accrued Note
Interest (as defined herein) for such Class on such date. Interest will accrue
on the Offered Notes on the basis of a 360-day year and the actual number of
days elapsed in each Accrual Period (as defined below).

    o "Accrued Note Interest" with respect to any Class of Offered Notes and
      any Payment Date will equal the aggregate amount of interest accrued at
      the applicable Interest Rate (as defined below) during the related
      Accrual Period on the Class Principal Amount of such Class immediately
      prior to such Payment Date; provided, however, that for any Class of
      Offered Subordinate Notes, Accrued Note Interest will be reduced by the
      amount, if any, specified in clause (a) of the definition of Deferred
      Interest for such Class and Payment Date.

    o The "Accrual Period" applicable to each Class of Offered Notes with
      respect to each Payment Date will be the period beginning on the
      immediately preceding Payment Date (or on the Closing Date, in the case
      of the first Accrual Period) and ending on the day immediately preceding
      the related Payment Date.

    o The "Interest Rate" for each of the Offered Notes will be the applicable
      annual rate described under "Summary of Terms--The Offered
      Notes--Payments on the Notes--Interest Payments."

     DEFINITIONS RELATING TO INTEREST PAYMENT PRIORITIES.

    o The "Class Principal Amount" of any Class of Notes as of any Payment
      Date will be its initial Class Principal Amount as of the Closing Date,
      as reduced by all amounts previously paid on that Class in respect of
      principal prior to such Payment Date.

    o The "Available Funds Cap" with respect to each Payment Date will be an
      annual rate equal to (i) (a) 360 divided by (b) the actual number of days
      in the Accrual Period, multiplied by (ii) (a) (1) the Interest Remittance
      Amount for such Payment Date minus (2) any Net Swap Payments paid by the
      Trust pursuant to the Swap Agreement on such Payment Date, divided by (b)
      the excess of (1) the aggregate Class Principal Amount of the Offered
      Notes as of the first day of the related Accrual Period over (2) the
      Total Principal Deficiency Amount (as defined herein) immediately
      preceding such Payment Date.

    o The "Net Mortgage Rate" for any Mortgage Loan at any time equals the
      Mortgage Rate thereof minus the Servicing Fee Rate.

    o The "Mortgage Rate" for any Mortgage Loan is its applicable interest
      rate determined as provided in the related mortgage note, as reduced by
      any application of the Servicemembers Civil Relief Act, as such may be
      amended from time to time (the "Relief Act"), or similar state or local
      laws.

    o The "Pool Balance" as of any date of determination will be equal to the
      aggregate of the Scheduled Principal Balances (as defined herein) of the
      Mortgage Loans as of such date.

     INTEREST PAYMENT PRIORITIES. The Interest Remittance Amount (as defined
below) will be paid on each Payment Date in the following order of priority:


                                      S-31


          (1) to the Swap Counterparty, any Net Swap Payment or Swap Termination
     Payment (each as defined herein) owed to the Swap Counterparty for such
     Payment Date, including amounts remaining unpaid from previous Payment
     Dates, pursuant to the Swap Agreement, to the extent that any such Swap
     Termination Payment is not due to a Swap Counterparty Trigger Event;

          (2) concurrently, pro rata, to the Senior Notes, Accrued Note Interest
     for each such Class for such Payment Date;

          (3) to the Class M1 Notes, Accrued Note Interest for such Class for
     such Payment Date;

          (4) to the Class M2 Notes, Accrued Note Interest for such Class for
     such Payment Date;

          (5) to the Class M3 Notes, Accrued Note Interest for such Class for
     such Payment Date;

          (6) to the Class M4 Notes, Accrued Note Interest for such Class for
     such Payment Date;

          (7) to the Class M5 Notes, Accrued Note Interest for such Class for
     such Payment Date;

          (8) to the Class M6 Notes, Accrued Note Interest for such Class for
     such Payment Date;

          (9) to the Class B1 Notes, Accrued Note Interest for such Class for
     such Payment Date;

          (10) to the Class B2 Notes, Accrued Note Interest for such Class for
     such Payment Date;

          (11) to the Class B3 Notes, Accrued Note Interest for such Class for
     such Payment Date;

          (12) to the Credit Risk Manager, the Credit Risk Manager's Fee;

          (13) to the Indenture Trustee, any previously unreimbursed
     extraordinary costs, liabilities and expenses to the extent provided in the
     Transfer and Servicing Agreement; and

          (14) for application as part of Monthly Excess Cashflow for such
     Payment Date, as described under "--Credit Enhancement--Application of
     Monthly Excess Cashflow" below, any Interest Remittance Amount remaining
     after application pursuant to clauses (1) through (13) above (such amount,
     the "Monthly Excess Interest" for such Payment Date).

     The "Interest Remittance Amount" with respect to any Payment Date will
equal (a) the sum of (1) all interest collected (other than Payaheads (as
defined herein) and Prepayment Premiums) or advanced in respect of Scheduled
Payments (as defined herein) on the Mortgage Loans during the related
Collection Period (as defined herein) minus (w) the Servicing Fee with respect
to the Mortgage Loans, (x) previously unreimbursed Delinquency Advances (as
defined herein) and other amounts due to the Servicer or the Master Servicer
with respect to the Mortgage Loans, to the extent allocable to interest, and
(y) previously unreimbursed Servicing Advances (as defined herein), (2) all
Compensating Interest (as defined herein) paid by the Servicer or the Master
Servicer with respect to the Mortgage Loans for the related Prepayment Period
(as defined herein), (3) the portion of any Purchase Price or Substitution
Amount (each as defined herein) paid with respect to the Mortgage Loans during
the related Prepayment Period allocable to interest, (4) any Net Swap Payment
or Swap Termination Payment paid by the Swap Counterparty during the related
Collection Period, (5) any amount paid by the Cap Counterparty with respect to
such Payment Date and (6) all Net Liquidation Proceeds, Insurance Proceeds
(each as defined herein) and any other recoveries collected with respect to the
Mortgage Loans during the related Prepayment Period, to the extent allocable to
interest, as reduced (but not below zero) by (b) other costs, expenses, fees or
liabilities reimbursable to the Master Servicer, the Administrator, the
Custodian, the Servicer, the Owner Trustee or the Indenture Trustee to the
extent provided (and, in the case of the Indenture Trustee, up to the amount of
the dollar limitation specified) in the Transfer and Servicing Agreement.

     o    A "Payahead" is generally any Scheduled Payment intended by the
          related borrower to be applied in a Collection Period subsequent to
          the Collection Period in which such payment was received.

     o    The "Substitution Amount" will be generally equal to the amount, if
          any, by which the Scheduled Principal Balance of a Mortgage Loan
          required to be removed from the Mortgage Pool due to a breach of a
          representation or warranty or defective documentation exceeds the


                                      S-32


          Scheduled Principal Balance of the related substitute Mortgage Loan,
          plus unpaid interest accrued thereon, and any unpaid Advances, unpaid
          Servicing Fees, and interest with respect thereto, and the amount of
          any costs and damages incurred by the Trust in connection with any
          violation of any applicable federal, state or local predatory or
          abusive lending law in connection with the origination of a Mortgage
          Loan required to be so removed.

     BASIS RISK SHORTFALLS. With respect to each Payment Date and any Class of
Offered Notes, an amount equal to the sum of (1) the excess, if any, of (a)
Accrued Note Interest (without regard to the Available Funds Cap) over (b) the
aggregate of interest accrued on such Class at an interest rate equal to the
Available Funds Cap, (2) any amount described in clause (1) above for such Class
remaining unpaid from prior Payment Dates and (3) interest on the amount in
clause (2) above at such class's applicable Interest Rate (without regard to the
Available Funds Cap) (such excess, a "Basis Risk Shortfall").

     THE INTEREST RATE SWAP AGREEMENT. On or prior to the Closing Date, the
Issuer will enter into an interest rate swap agreement documented pursuant to an
ISDA Master Agreement (Multicurrency -- Cross Border) (the "ISDA Master
Agreement"), the terms of which will be incorporated into the terms of a
confirmation (the "Swap Agreement") with Credit Suisse First Boston
International ("CSFBi," and together with any successor, the "Swap
Counterparty").

     Under the Swap Agreement, on each Payment Date, the Administrator, on
behalf of the Trust, will be obligated to pay to the Swap Counterparty a fixed
amount equal to the product of (a) 4.0110%, (b) the Scheduled Notional Amount
(as defined below) for that Payment Date, and (c) a fraction, the numerator of
which is 30 (or, for the first Payment Date, the number of days from and
including the Closing Date to but excluding the first Payment Date) and the
denominator of which is 360, and the Swap Counterparty will be obligated to pay
to the Administrator, on behalf of Trust, a floating amount equal to the product
of (x) LIBOR (as determined pursuant to the Swap Agreement), (y) the Scheduled
Notional Amount for that Payment Date, and (z) a fraction, the numerator of
which is the actual number of days elapsed from the previous Payment Date to but
excluding the current Payment Date (or, for the first Payment Date, the actual
number of days elapsed from the Closing Date to but excluding the first Payment
Date), and the denominator of which is 360. A net payment will be required to be
made on each Payment Date (each such net payment, a "Net Swap Payment") (a) by
the Trust to the Swap Counterparty, to the extent that the fixed amount exceeds
the corresponding floating amount, or (b) by the Swap Counterparty to the Trust,
to the extent that the floating amount exceeds the corresponding fixed amount.

     The "Scheduled Notional Amount" is set forth with respect to each Payment
Date on Annex A. The initial Scheduled Notional Amount will be $825,775,000. The
Swap Agreement will terminate immediately following the Payment Date in
September 2009 unless terminated earlier upon the occurrence of a Swap Default
or a Termination Event (each as defined below).

     CSFBi 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. CSFBi is an authorized institution under the Banking Act 1987
and is regulated by The Financial Services Authority. Effective as of March 27,
2000, Credit Suisse Financial Products was renamed "Credit Suisse First Boston
International." This change was a renaming only.

     CSFBi is an unlimited company and, as such, its shareholders have a joint,
several and unlimited obligation to meet any insufficiency in the assets of
CSFBi in the event of its liquidation. CSFBi's ordinary voting shares are
owned, as to 56%, by Credit Suisse First Boston, as to 24%, by Credit Suisse
First Boston (International) Holding AG and, as to 20%, by Credit Suisse Group.
CSFBi 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.

     The respective obligations of the Swap Counterparty and the Trust to pay
specified amounts due under the Swap Agreement will be subject to the following
conditions precedent: (1) no Swap Default


                                      S-33


or event that with the giving of notice or lapse of time or both would become a
Swap Default shall have occurred and be continuing with respect to the Swap
Agreement and (2) no "Early Termination Date" (as defined in the ISDA Master
Agreement) has occurred or been effectively designated with respect to the Swap
Agreement.

     "Events of Default" under the Swap Agreement (each a "Swap Default")
include the following standard events of default under the ISDA Master
Agreement:

     o    "Failure to Pay,"

     o    "Bankruptcy," and

     o    "Merger without Assumption" (but only with respect to the Swap
          Counterparty),as described in Sections 5(a)(i), 5(a)(vii) and
          5(a)(viii) of the ISDA Master Agreement.

     "Termination Events" under the Swap Agreement (each a "Termination Event")
consist of the following standard events under the ISDA Master Agreement:

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

     o    "Tax Event" (which generally relates to either party to the Swap
          Agreement receiving a payment under the Swap Agreement from which an
          amount has been deducted or withheld for or on account of taxes) and

     o    "Tax Event Upon Merger" (which generally relates to the Swap
          Counterparty's receiving a payment under the Swap Agreement from which
          an amount has been deducted or withheld for or on account of taxes
          resulting from a merger),

as described in Sections 5(b)(i), 5(b)(ii) and 5(b)(iii) of the ISDA Master
Agreement. In addition, there are "Additional Termination Events" (as defined
in the Swap Agreement) relating to the Trust, including if the Trust should
terminate, if the Transfer and Servicing Agreement or other transaction
documents are amended in a manner adverse to the Swap Counterparty without the
prior written consent of the Swap Counterparty where written consent is
required or if, pursuant to the terms of the Transfer and Servicing Agreement,
either the Residual Holder or the Servicer exercises the option to purchase the
Mortgage Loans. With respect to the Swap Counterparty, an Additional
Termination Event will occur if the Swap Counterparty fails to comply with the
Downgrade Provisions (as defined below).

     Upon the occurrence of any Swap Default under the Swap Agreement, the
non-defaulting party will have the right to designate an Early Termination
Date. With respect to Termination Events, an Early Termination Date may be
designated by one of the parties (as specified in the Swap Agreement) and will
occur only upon notice and, in some circumstances, after any affected party has
used reasonable efforts to transfer its rights and obligations under the Swap
Agreement to a related entity within a specified period after notice has been
given of the Termination Event, all as set forth in the Swap Agreement. The
occurrence of an Early Termination Date under the Swap Agreement will
constitute a "Swap Early Termination."

     Upon any Swap Early Termination, the Trust or the Swap Counterparty may be
liable to make a termination payment (the "Swap Termination Payment") to the
other (regardless, if applicable, of which of the parties has caused the
termination). The Swap Termination Payment will be based on the value of the
Swap Agreement computed in accordance with the procedures set forth in the Swap
Agreement taking into account the present value of the unpaid amounts that
would have been owed by the Trust under the remaining scheduled term of the
Swap Agreement. In the event that the Trust is required to make a Swap
Termination Payment, that payment will be paid from the Trust on the related
Payment Date, and on any subsequent Payment Dates until paid in full, prior to
payments to Noteholders.

     A "Swap Counterparty Trigger Event" will have occurred upon the occurrence
of any of the following events: (i) a Swap Default with respect to which the
Swap Counterparty is a "Defaulting Party" (as defined in the Swap Agreement),
(ii) a Termination Event with respect to which the Swap


                                      S-34


Counterparty is the sole "Affected Party" (as defined in the Swap Agreement) or
(iii) an Additional Termination Event with respect to which the Swap
Counterparty is the sole Affected Party.

     If the Swap Counterparty's long-term or short-term credit rating by any
Rating Agency falls below the applicable levels specified in the Swap
Agreement, the Swap Counterparty will be required either to (1) post collateral
securing its obligations under the Swap Agreement or (2) obtain a substitute
swap counterparty acceptable to the Indenture Trustee and the Rating Agencies
that will assume the obligations of the Swap Counterparty under the Swap
Agreement, all as provided in the Swap Agreement (such provisions, the
"Downgrade Provisions").

     THE INTEREST RATE CAP AGREEMENT. On or prior to the Closing Date, the
Issuer will enter into an interest rate cap agreement for the benefit of the
Notes (the "Cap Agreement") with Credit Suisse First Boston International (in
such capacity, the "Cap Counterparty"). The Cap Agreement will terminate after
the payment date in September 2009.

     Under the terms of the Cap Agreement, in exchange for a fixed payment made
on behalf of the Trust on the Closing Date, the Cap Counterparty will be
obligated to pay to the Trust at least two Business Days prior to each Payment
Date on which one-month LIBOR exceeds 3.8558%, commencing and ending with the
Payment Dates specified in Annex B to this prospectus supplement, one month's
interest calculated at an annual rate equal to the product of (1) the excess,
if any, of (a) the lesser of (x) one-month LIBOR and (y) 4.0110% over (b)
3.8558%, (2) a scheduled notional amount for such Payment Date, as set forth in
Annex B to this prospectus supplement and (3) a fraction, the numerator of
which is the actual number of days elapsed from the previous Payment Date to
but excluding the current Payment Date (or, for the first Payment Date, the
actual number of days elapsed from the Closing Date to but excluding the first
Payment Date), and the denominator of which is 360. The initial notional amount
for the Cap Agreement will decline each month as specified in Annex B to this
prospectus supplement.

     It is intended that payments under the Cap Agreement provide limited
protection against upward movements in one-month LIBOR only for the periods
specified in Annex B to this prospectus supplement.

     THE CLASS N CAP AGREEMENT. On or prior to the Closing Date, the Issuer
will also enter into an interest rate cap agreement (the "Class N Cap
Agreement") for the benefit of the Class N Notes only, as provided in the
Transfer and Servicing Agreement. The Class N Cap Agreement will terminate
after the payment date in May 2007.

     PREPAYMENT INTEREST SHORTFALLS. When a principal prepayment is made on a
Mortgage Loan, the borrower is charged interest only to the date of such
prepayment, instead of for a full month, with a resulting reduction in interest
payable for the month during which the prepayment is made. Prepayments in full
or in part are generally applied as of the date of receipt. Full or partial
prepayments (or proceeds of other liquidations) received in any Prepayment
Period, in the case of any prepayments in full, or in any Collection Period, in
the case of any partial prepayments, will be available to make payments to
Noteholders on the Payment Date following the Prepayment Period or Collection
Period, as applicable. To the extent that, as a result of a full or partial
prepayment, a borrower is not required to pay a full month's interest on the
amount prepaid, a shortfall in the amount available to make payments of
interest on the Notes could result. The amount by which one month's interest at
the Mortgage Rate (as reduced by the related Servicing Fee Rate) on a Mortgage
Loan as to which a voluntary prepayment has been made exceeds the amount of
interest actually received in connection with such prepayment is a "Prepayment
Interest Shortfall."

     With respect to prepayments in full received from a borrower during any
Prepayment Period, the Servicer will be obligated to fund any resulting
Prepayment Interest Shortfalls (such payment obligation being limited to the
aggregate of the Servicing Fees received on the Mortgage Loans for the
applicable Payment Date). The Servicer is obligated to reduce its servicing
compensation for the related Payment Date to the extent necessary to fund any
Prepayment Interest Shortfalls. The Master Servicer is obligated to fund any
Prepayment Interest Shortfalls required to be paid but not paid by the
Servicer, but only up to the amount of the Master Servicer's compensation. See
"Servicing of the


                                      S-35


Mortgage Loans--Prepayment Interest Shortfalls" herein. Any such payment by the
Servicer or the Master Servicer is referred to herein as "Compensating
Interest." Any Prepayment Interest Shortfalls not funded by the Servicer or the
Master Servicer ("Net Prepayment Interest Shortfalls") will reduce the Interest
Remittance Amount available for payment on the related Payment Date.


DETERMINATION OF LIBOR

     On the second LIBOR Business Day (as defined below) preceding the
commencement of each Accrual Period (each such date, a "LIBOR Determination
Date"), the Administrator will determine one-month LIBOR based on the "Interest
Settlement Rate" for U.S. dollar deposits of one-month maturity set by the
British Bankers' Association (the "BBA") as of 11:00 a.m. (London time) on the
LIBOR Determination Date ("LIBOR").

     The BBA's Interest Settlement Rates are currently displayed on the
Moneyline Telerate Service page 3750 (such page, or such other page as may
replace page 3750 on that service or such other service as may be nominated by
the BBA as the information vendor for the purpose of displaying the BBA's
Interest Settlement Rates for deposits in U.S. dollars, the "Designated
Telerate Page"). Such Interest Settlement Rates are also currently available on
Reuters Monitor Money Rates Service page "LIBOR01" and Bloomberg L.P. page
"BBAM." The BBA's Interest Settlement Rates currently are rounded to five
decimal places.

     A "LIBOR Business Day" is any day on which banks in London and New York
are open for conducting transactions in foreign currency and exchange.

     With respect to any LIBOR Determination Date, if the BBA's Interest
Settlement Rate does not appear on the Designated Telerate Page as of 11:00
a.m. (London time) on such date, or if the Designated Telerate Page is not
available on such date, the Administrator will obtain such rate from the
Reuters or Bloomberg page. If such rate is not published for such LIBOR
Determination Date, LIBOR for such date will be the most recently published
Interest Settlement Rate. In the event that the BBA no longer sets an Interest
Settlement Rate, the Administrator will designate an alternative index that has
performed, or that the Administrator expects to perform, in a manner
substantially similar to the BBA's Interest Settlement Rate.

     The establishment of LIBOR on each LIBOR Determination Date by the
Administrator and the Administrator's calculation of the rate of interest
applicable to the Offered Notes for the related Accrual Period will (in the
absence of manifest error) be final and binding.


PAYMENTS OF PRINCIPAL

     GENERAL DEFINITIONS. Payments of principal on the Offered Notes will be
made from the Principal Payment Amount and from Monthly Excess Cashflow, as
described under "--Credit Enhancement--Application of Monthly Excess Cashflow"
below.

     o    The "Principal Payment Amount" for any Payment Date will be equal to
          the Principal Remittance Amount for such date minus the
          Overcollateralization Release Amount (as defined below), if any, for
          such Payment Date.

     o    The "Principal Remittance Amount" for any Payment Date will be equal
          to (a) the sum of (1) all principal collected (other than Payaheads)
          or advanced in respect of Scheduled Payments on the Mortgage Loans
          during the related Collection Period minus previously unreimbursed
          Delinquency Advances and other amounts due to the Servicer or the
          Master Servicer with respect to such Mortgage Loans, to the extent
          allocable to principal, (2) the principal portion of all prepayments
          in full or in part received on the Mortgage Loans during the related
          Prepayment Period or Collection Period, as applicable (exclusive of
          any related Prepayment Premiums), (3) the outstanding principal
          balance of each Mortgage Loan that was repurchased by the Seller
          during the related Prepayment Period, (4) the portion of any
          Substitution Amount paid with respect to any replaced Mortgage Loan
          during the related Prepayment Period allocable to principal, and (5)
          all Net Liquidation Proceeds, Insurance


                                      S-36


          Proceeds and any other recoveries collected with respect to the
          Mortgage Loans during the related Prepayment Period, to the extent
          allocable to principal, minus (b) any other costs, expenses or
          liabilities reimbursable to the Master Servicer, the Servicer, the
          Administrator, the Custodian, the Owner Trustee or the Indenture
          Trustee (and, in the case of the Indenture Trustee, up to the
          applicable dollar limitation) and not reimbursed from amounts
          allocable to interest on the Mortgage Loans or otherwise.

     o    The "Collection Period" with respect to any Payment Date is the
          one-month period beginning on the second day of the calendar month
          immediately preceding the month in which such Payment Date occurs and
          ending on the first day of the month in which such Payment Date
          occurs.

     o    "Insurance Proceeds" means any amounts paid by an insurer under a
          primary mortgage insurance policy, any standard hazard insurance
          policy, flood insurance policy or any other insurance policy relating
          to the Mortgage Loans or related Mortgaged Properties (as defined
          herein) other than amounts to cover expenses incurred by the Servicer
          in connection with procuring such proceeds, applied to the restoration
          and repair of the related Mortgaged Property or to be paid to the
          borrower pursuant to the mortgage note or state law.

     o    "Net Liquidation Proceeds" means all amounts, net of (1) unreimbursed
          expenses, (2) unreimbursed Advances and (3) in the case of a
          liquidated Junior Lien Mortgage Loan (as defined herein), the amount
          necessary to repay the related senior lien mortgage loan, received and
          retained in connection with the liquidation of defaulted Mortgage
          Loans, through insurance or condemnation proceeds, by foreclosure or
          otherwise, together with any net proceeds received on a monthly basis
          with respect to any Mortgaged Properties acquired by foreclosure or
          deed in lieu of foreclosure.

     o    The "Prepayment Period" for any Payment Date is the immediately
          preceding calendar month.

     o    The "Determination Date" with respect to each Payment Date is the 18th
          day of the month in which that Payment Date occurs, or if the 18th day
          is not a Business Day, the immediately preceding Business Day.

     o    A "Scheduled Payment" with respect to any Mortgage Loan is the monthly
          scheduled payment of interest and principal specified in the related
          mortgage note.

     o    The "Scheduled Principal Balance" of any Mortgage Loan as of any date
          of determination will be generally equal to its outstanding principal
          balance as of the Cut-off Date, after giving effect to Scheduled
          Payments due on or before such date, whether or not received, reduced
          by (1) the principal portion of all Scheduled Payments due on or
          before the due date in the Collection Period immediately preceding
          such date of determination, whether or not received, and (2) all
          amounts allocable to unscheduled principal payments received on or
          before the last day of the Prepayment Period immediately preceding
          such date of determination.

     PRINCIPAL PAYMENT PRIORITIES. The Principal Payment Amount will be paid on
each Payment Date as follows:

     A. On each Payment Date (a) prior to the Stepdown Date or (b) with respect
to which a Trigger Event is in effect, in each case until the aggregate Class
Principal Amount of the Offered Notes equals the Target Amount for such Payment
Date, in the following order of priority:

       (1) to the Swap Counterparty, any Net Swap Payment or Swap Termination
    Payment owed to the Swap Counterparty (to the extent payable but not paid
    from the Interest Remittance Amount in accordance with priority (1) under
    "--Interest Payment Priorities" above);

       (2) to the Class A1, Class A2 and Class A3 Notes, sequentially, in that
    order, in reduction of their Class Principal Amounts, until the Class
    Principal Amount of each such Class has been reduced to zero;

       (3) to the Class M1 Notes, in reduction of their Class Principal Amount,
    until the Class Principal Amount of such Class has been reduced to zero;


                                      S-37


       (4) to the Class M2 Notes, in reduction of their Class Principal Amount,
    until the Class Principal Amount of such Class has been reduced to zero;

       (5) to the Class M3 Notes, in reduction of their Class Principal Amount,
    until the Class Principal Amount of such Class has been reduced to zero;

       (6) to the Class M4 Notes, in reduction of their Class Principal Amount,
    until the Class Principal Amount of such Class has been reduced to zero;

       (7) to the Class M5 Notes, in reduction of their Class Principal Amount,
    until the Class Principal Amount of such Class has been reduced to zero;

       (8) to the Class M6 Notes, in reduction of their Class Principal Amount,
    until the Class Principal Amount of such Class has been reduced to zero;

       (9) to the Class B1 Notes, in reduction of their Class Principal Amount,
    until the Class Principal Amount of such Class has been reduced to zero;

       (10) to the Class B2 Notes, in reduction of their Class Principal
     Amount, until the Class Principal Amount of such Class has been reduced to
     zero;

       (11) to the Class B3 Notes, in reduction of their Class Principal
     Amount, until the Class Principal Amount of such Class has been reduced to
     zero; and

       (12) for application as part of Monthly Excess Cashflow for such Payment
     Date, as described under "--Credit Enhancement-Application of Monthly
     Excess Cashflow" below, remaining after application pursuant to clauses
     (1) through (11) above.

     B. On each Payment Date (a) on or after the Stepdown Date and (b) with
respect to which a Trigger Event is not in effect, in the following order of
priority:

       (1) to the Swap Counterparty, any Net Swap Payment or Swap Termination
    Payment owed to the Swap Counterparty (to the extent payable but not paid
    from the Interest Remittance Amounts in accordance with priority (1) under
    "--Interest Payment Priorities" above);

       (2) (a) so long as any of the Offered Subordinate Notes are outstanding,
    to the Class A1, Class A2 and Class A3 Notes, sequentially, in that order,
    in reduction of their respective Class Principal Amounts, an amount equal
    to the lesser of (x) the Principal Payment Amount for such Payment Date
    and (y) the Senior Principal Payment Amount for such Payment Date, until
    the Class Principal Amount of each such Class has been reduced to zero; or
    (b) otherwise to the Class A1, Class A2 and Class A3 Notes, sequentially,
    in that order, in reduction of their respective Class Principal Amounts,
    the Principal Payment Amount for such Payment Date, until the Class
    Principal Amount of each such Class has been reduced to zero;

       (3) to the Class M1 Notes, in reduction of their Class Principal Amount,
    an amount equal to the lesser of (x) the excess of (a) the Principal
    Payment Amount for such Payment Date over (b) the amount paid to the
    Senior Notes on such Payment Date pursuant to clause (2) above, and (y)
    the M1 Principal Payment Amount for such Payment Date, until the Class
    Principal Amount of such Class has been reduced to zero;

       (4) to the Class M2 Notes, in reduction of their Class Principal Amount,
    an amount equal to the lesser of (x) the excess of (a) the Principal
    Payment Amount for such Payment Date over (b) the amount paid to the
    Senior Notes and the Class M1 Notes on such Payment Date pursuant to
    clauses (2) and (3) above, and (y) the M2 Principal Payment Amount for
    such Payment Date, until the Class Principal Amount of such Class has been
    reduced to zero;

       (5) to the Class M3 Notes, in reduction of their Class Principal Amount,
    an amount equal to the lesser of (x) the excess of (a) the Principal
    Payment Amount for such Payment Date over (b) the amount paid to the
    Senior Notes and the Class M1 and Class M2 Notes on such Payment Date
    pursuant to clauses (2), (3) and (4) above, and (y) the M3 Principal
    Payment Amount for such Payment Date, until the Class Principal Amount of
    such Class has been reduced to zero;

       (6) to the Class M4 Notes, in reduction of their Class Principal Amount,
    an amount equal to the lesser of (x) the excess of (a) the Principal
    Payment Amount for such Payment Date over


                                      S-38


   (b) the amount paid to the Senior Notes and the Class M1, Class M2 and
   Class M3 Notes on such Payment Date pursuant to clauses (2), (3), (4) and
   (5) above, and (y) the M4 Principal Payment Amount for such Payment Date,
   until the Class Principal Amount of such Class has been reduced to zero;

       (7) to the Class M5 Notes, in reduction of their Class Principal Amount,
    an amount equal to the lesser of (x) the excess of (a) the Principal
    Payment Amount for such Payment Date over (b) the amount paid to the
    Senior Notes and the Class M1, Class M2, Class M3 and Class M4 Notes on
    such Payment Date pursuant to clauses (2), (3), (4), (5) and (6) above,
    and (y) the M5 Principal Payment Amount for such Payment Date, until the
    Class Principal Amount of such Class has been reduced to zero;

       (8) to the Class M6 Notes, in reduction of their Class Principal Amount,
    an amount equal to the lesser of (x) the excess of (a) the Principal
    Payment Amount for such Payment Date over (b) the amount paid to the
    Senior Notes and the Class M1, Class M2, Class M3, Class M4 and Class M5
    Notes on such Payment Date pursuant to clauses (2), (3), (4), (5), (6) and
    (7) above, and (y) the M6 Principal Payment Amount for such Payment Date,
    until the Class Principal Amount of such Class has been reduced to zero;

       (9) to the Class B1 Notes, in reduction of their Class Principal Amount,
    an amount equal to the lesser of (x) the excess of (a) the Principal
    Payment Amount for such Payment Date over (b) the amount paid to the
    Senior Notes and the Class M1, Class M2, Class M3, Class M4, Class M5 and
    Class M6 Notes on such Payment Date pursuant to clauses (2), (3), (4),
    (5), (6), (7) and (8) above, and (y) the B1 Principal Payment Amount for
    such Payment Date, until the Class Principal Amount of such Class has been
    reduced to zero;

       (10) to the Class B2 Notes, in reduction of their Class Principal
     Amount, an amount equal to the lesser of (x) the excess of (a) the
     Principal Payment Amount for such Payment Date over (b) the amount paid to
     the Senior Notes and the Class M1, Class M2, Class M3, Class M4, Class M5,
     Class M6 and Class B1 Notes on such Payment Date pursuant to clauses (2),
     (3), (4), (5), (6), (7), (8) and (9) above, and (y) the B2 Principal
     Payment Amount for such Payment Date, until the Class Principal Amount of
     such Class has been reduced to zero;

       (11) to the Class B3 Notes, in reduction of their Class Principal
     Amount, an amount equal to the lesser of (x) the excess of (a) the
     Principal Payment Amount for such Payment Date over (b) the amount paid to
     the Senior Notes and the Class M1, Class M2, Class M3, Class M4, Class M5,
     Class M6, Class B1 and Class B2 Notes on such Payment Date pursuant to
     clauses (2), (3), (4), (5), (6), (7), (8), (9) and (10) above, and (y) the
     B3 Principal Payment Amount for such Payment Date, until the Class
     Principal Amount of such Class has been reduced to zero; and

       (12) for application as part of Monthly Excess Cashflow for such Payment
     Date, as described under "--Credit Enhancement-Application of Monthly
     Excess Cashflow" below, any Principal Payment Amount remaining after
     application pursuant to clauses (1) through (11) above.

     Notwithstanding the foregoing, on any Payment Date on which the Class
Principal Amount of each Class of Notes having a higher priority of payment has
been reduced to zero, any remaining Principal Payment Amount will be paid to
the remaining Notes, in the order of priority set forth above, until the Class
Principal Amount of each such Class has been reduced to zero.


     DEFINITIONS RELATING TO PRINCIPAL PAYMENT PRIORITIES.

     o    The "Target Amount" for any Payment Date will be equal to the Pool
          Balance as of such Payment Date minus the Targeted
          Overcollateralization Amount for such Payment Date.

     o    A "Trigger Event" is in effect with respect to any Payment Date if (a)
          a Delinquency Event has occurred for such Payment Date or (b) a
          Cumulative Loss Trigger Event has occurred for such Payment Date.


                                      S-39


     o    A "Delinquency Event" will have occurred with respect to any Payment
          Date, if the Rolling Three Month Delinquency Rate as of the last day
          of the immediately preceding calendar month equals or exceeds 34.20%
          of the Senior Enhancement Percentage for such Payment Date.

     o    The "Rolling Three Month Delinquency Rate" with respect to any Payment
          Date will be the average of the Delinquency Rates for each of the
          three (or one and two, in the case of the first and second Payment
          Dates, respectively) immediately preceding months.

     o    The "Delinquency Rate" for any month will be the fraction, expressed
          as a percentage, the numerator of which is the aggregate outstanding
          principal balance of all Mortgage Loans 60 or more days delinquent
          (including all foreclosures, bankruptcies and REO Properties) as of
          the close of business on the last day of such month (as reported to
          the Master Servicer by the Servicer or the Subservicer on its behalf),
          and the denominator of which is the Pool Balance as of the close of
          business on the last day of such month.

     o    A "Cumulative Loss Trigger Event" will have occurred with respect to
          any Payment Date beginning in July 2007 if the fraction, expressed as
          a percentage, obtained by dividing (x) the aggregate amount of
          Realized Losses incurred on the Mortgage Loans from the Cut-off Date
          through the last day of the related Collection Period by (y) the
          Cut-off Date Balance, exceeds the applicable percentages described
          below with respect to such Payment Date:


<TABLE>

      PAYMENT DATE                                  LOSS PERCENTAGE
      -------------------------------------------- ----------------

      July 2007 through June 2008 ..........        1.75%
      July 2008 through June 2009 ..........        4.00%
      July 2009 through June 2010 ..........        6.00%
      July 2010 through June 2011 ..........        7.40%
      July 2011 and thereafter .............        7.80%
</TABLE>

     o    The "Stepdown Date" is the earlier to occur of (i) the Payment Date on
          which the aggregate Class Principal Amount of the Senior Notes has
          been reduced to zero; and (ii) the later to occur of (x) the Payment
          Date in July 2008 and (y) the first Payment Date on which the Senior
          Enhancement Percentage (calculated for this purpose after giving
          effect to payments or other recoveries in respect of the Mortgage
          Loans during the related Collection Period but before giving effect to
          payments on the Notes on such Payment Date) is greater than or equal
          to approximately 43.90%.

     o    The "Senior Principal Payment Amount" with respect to any Payment Date
          will be equal to the lesser of (x) the Principal Payment Amount and
          (y) the amount, if any, by which (A) the aggregate Class Principal
          Amount of the Senior Notes immediately prior to that Payment Date
          exceeds (B) the Senior Target Amount (as defined below).

    o The "M1 Principal Payment Amount" with respect to any Payment Date will
      be equal to the amount, if any, by which (x) the sum of (i) the aggregate
      Class Principal Amount of the Senior Notes, in each case after giving
      effect to payments on such Payment Date and (ii) the Class Principal
      Amount of the Class M1 Notes immediately prior to such Payment Date
      exceeds (y) the M1 Target Amount (as defined below).

    o The "M2 Principal Payment Amount" with respect to any Payment Date will
      be equal to the amount, if any, by which (x) the sum of (i) the aggregate
      Class Principal Amount of the Senior Notes and the Class M1 Notes, in
      each case after giving effect to payments on such Payment Date, and (ii)
      the Class Principal Amount of the Class M2 Notes immediately prior to
      such Payment Date exceeds (y) the M2 Target Amount (as defined below).


                                      S-40


     o    The "M3 Principal Payment Amount" with respect to any Payment Date
          will be equal to the amount, if any, by which (x) the sum of (i) the
          aggregate Class Principal Amount of the Senior Notes and the Class M1
          and Class M2 Notes, in each case after giving effect to payments on
          such Payment Date, and (ii) the Class Principal Amount of the Class M3
          Notes immediately prior to such Payment Date exceeds (y) the M3 Target
          Amount (as defined below).

     o    The "M4 Principal Payment Amount" with respect to any Payment Date
          will be equal to the amount, if any, by which (x) the sum of (i) the
          aggregate Class Principal Amount of the Senior Notes and the Class M1,
          Class M2 and Class M3 Notes, in each case after giving effect to
          payments on such Payment Date, and (ii) the Class Principal Amount of
          the Class M4 Notes immediately prior to such Payment Date exceeds (y)
          the M4 Target Amount (as defined below).

     o    The "M5 Principal Payment Amount" with respect to any Payment Date
          will be equal to the amount, if any, by which (x) the sum of (i) the
          aggregate Class Principal Amount of the Senior Notes and the Class M1,
          Class M2, Class M3 and Class M4 Notes, in each case after giving
          effect to payments on such Payment Date, and (ii) the Class Principal
          Amount of the Class M5 Notes immediately prior to such Payment Date
          exceeds (y) the M5 Target Amount (as defined below).

     o    The "M6 Principal Payment Amount" with respect to any Payment Date
          will be equal to the amount, if any, by which (x) the sum of (i) the
          aggregate Class Principal Amount of the Senior Notes and the Class M1,
          Class M2, Class M3, Class M4 and Class M5 Notes, in each case after
          giving effect to payments on such Payment Date, and (ii) the Class
          Principal Amount of the Class M6 Notes immediately prior to such
          Payment Date exceeds (y) the M6 Target Amount (as defined below).

     o    The "B1 Principal Payment Amount" with respect to any Payment Date
          will be equal to the amount, if any, by which (x) the sum of (i) the
          aggregate Class Principal Amount of the Senior Notes and the Class M1,
          Class M2, Class M3, Class M4, Class M5 and Class M6 Notes, in each
          case after giving effect to payments on such Payment Date, and (ii)
          the Class Principal Amount of the Class B1 Notes immediately prior to
          such Payment Date exceeds (y) the B1 Target Amount (as defined below).

     o    The "B2 Principal Payment Amount" with respect to any Payment Date
          will be equal to the amount, if any, by which (x) the sum of (i) the
          aggregate Class Principal Amount of the Senior Notes and the Class M1,
          Class M2, Class M3, Class M4, Class M5, Class M6 and Class B1 Notes,
          in each case after giving effect to payments on such Payment Date, and
          (ii) the Class Principal Amount of the Class B2 Notes immediately
          prior to such Payment Date exceeds (y) the B2 Target Amount (as
          defined below).

     o    The "B3 Principal Payment Amount" with respect to any Payment Date
          will be equal to the amount, if any, by which (x) the sum of (i) the
          aggregate Class Principal Amount of the Senior Notes and the Class M1,
          Class M2, Class M3, Class M4, Class M5, Class M6, Class B1 and Class
          B2 Notes, in each case after giving effect to payments on such Payment
          Date, and (ii) the Class Principal Amount of the Class B3 Notes
          immediately prior to such Payment Date exceeds (y) the B3 Target
          Amount (as defined below).

     o    The "Overcollateralization Amount" with respect to any Payment Date
          will be equal to the amount, if any, by which (x) the Pool Balance for
          such Payment Date exceeds (y) the aggregate Class Principal Amount of
          the Offered Notes after giving effect to payments on such Payment
          Date.

     o    The "Overcollateralization Deficiency" with respect to any Payment
          Date will be equal to the amount, if any, by which (x) the Targeted
          Overcollateralization Amount for such Payment Date exceeds (y) the
          Overcollateralization Amount for such Payment Date, calculated for
          this purpose after giving effect to the reduction on such Payment Date
          of the Class Principal Amounts of the Offered Notes resulting from the
          payment of the Principal Payment Amount on such Payment Date.


                                      S-41


     o    The "Overcollateralization Release Amount" with respect to any Payment
          Date will be equal to the lesser of (x) the Principal Remittance
          Amount for such Payment Date and (y) the amount, if any, by which (1)
          the Overcollateralization Amount for such date (calculated for this
          purpose on the basis of the assumption that 100% of the Principal
          Remittance Amount for such date is applied on such date in reduction
          of the aggregate Class Principal Amount of the Offered Notes) exceeds
          (2) the Targeted Overcollateralization Amount for such date.

     o    The "Senior Enhancement Percentage" with respect to any Payment Date
          will be the fraction, expressed as a percentage, the numerator of
          which is the amount, if any, by which (1) the sum of the aggregate
          Class Principal Amount of the Offered Subordinate Notes and the
          Overcollateralization Amount (which, for purposes of this definition
          only, will not be less than zero) exceeds (2) the Total Principal
          Deficiency Amount, in each case after giving effect to payments on
          such Payment Date, and the denominator of which is the Pool Balance
          for such Payment Date.

     o    The "Targeted Overcollateralization Amount" with respect to any
          Payment Date will be equal to (x) prior to the Stepdown Date,
          approximately $19,975,000, (y) on or after the Stepdown Date and if a
          Trigger Event is not in effect, the greater of (1) approximately
          $4,250,000 and (2) approximately 4.70% of the Pool Balance and (z) on
          or after the Stepdown Date and if a Trigger Event is in effect, the
          Targeted Overcollateralization Amount for the immediately preceding
          Payment Date.

     o    The "Senior Target Amount" with respect to any Payment Date will be
          equal to the lesser of (a) the product of (1) approximately 56.10% and
          (2) the Pool Balance for such Payment Date and (b) the amount, if any,
          by which (i) the Pool Balance for such Payment Date exceeds (ii) 0.50%
          of the Cut-off Date Balance.

     o    The "M1 Target Amount" with respect to any Payment Date will be equal
          to the lesser of (a) the product of (1) approximately 64.10% and (2)
          the Pool Balance for such Payment Date and (b) the amount, if any, by
          which (i) the Pool Balance for such Payment Date exceeds (ii) 0.50% of
          the Cut-off Date Balance.

     o    The "M2 Target Amount" with respect to any Payment Date will be equal
          to the lesser of (a) the product of (1) approximately 71.20% and (2)
          the Pool Balance for such Payment Date and (b) the amount, if any, by
          which (i) the Pool Balance for such Payment Date exceeds (ii) 0.50% of
          the Cut-off Date Balance.

     o    The "M3 Target Amount" with respect to any Payment Date will be equal
          to the lesser of (a) the product of (1) approximately 75.70% and (2)
          the Pool Balance for such Payment Date and (b) the amount, if any, by
          which (i) the Pool Balance for such Payment Date exceeds (ii) 0.50% of
          the Cut-off Date Balance.

     o    The "M4 Target Amount" with respect to any Payment Date will be equal
          to the lesser of (a) the product of (1) approximately 79.80% and (2)
          the Pool Balance for such Payment Date and (b) the amount, if any, by
          which (i) the Pool Balance for such Payment Date exceeds (ii) 0.50% of
          the Cut-off Date Balance.

     o    The "M5 Target Amount" with respect to any Payment Date will be equal
          to the lesser of (a) the product of (1) approximately 83.50% and (2)
          the Pool Balance for such Payment Date and (b) the amount, if any, by
          which (i) the Pool Balance for such Payment Date exceeds (ii) 0.50% of
          the Cut-off Date Balance.

     o    The "M6 Target Amount" with respect to any Payment Date will be equal
          to the lesser of (a) the product of (1) approximately 87.20% and (2)
          the Pool Balance for such Payment Date and (b) the amount, if any, by
          which (i) the Pool Balance for such Payment Date exceeds (ii) 0.50% of
          the Cut-off Date Balance.

     o    The "B1 Target Amount" for any Payment Date will be equal to the
          lesser of (a) the product of (1) approximately 90.40% and (2) the Pool
          Balance for such Payment Date and (b) the amount, if any, by which (i)
          the Pool Balance for such Payment Date exceeds (ii) 0.50% of the
          Cut-off Date Balance.


                                      S-42


     o    The "B2 Target Amount" with respect to any Payment Date will be equal
          to the lesser of (a) the product of (1) approximately 93.10% and (2)
          the Pool Balance for such Payment Date and (b) the amount, if any, by
          which (i) the Pool Balance for such Payment Date exceeds (ii) 0.50% of
          the Cut-off Date Balance.

     o    The "B3 Target Amount" with respect to any Payment Date will be equal
          to the lesser of (a) the product of (1) approximately 95.30% and (2)
          the Pool Balance for such Payment Date and (b) the amount, if any, by
          which (i) the Pool Balance for such Payment Date exceeds (ii) 0.50% of
          the Cut-off Date Balance.

CREDIT ENHANCEMENT

     Credit enhancement for the Offered Notes consists of, the subordination of
the Subordinate Notes, the priority of application of Realized Losses (as
defined herein), excess interest, interest rate swap and cap agreements and
overcollateralization, in each case as described herein.

     SUBORDINATION. The rights of holders of the Subordinate Notes to receive
payments with respect to the Mortgage Loans will be subordinated, to the extent
described herein, to such rights of holders of each Class of Offered Notes
having a higher priority of payment, as described under "--Payments of
Interest" and "--Payments of Principal." This subordination is intended to
enhance the likelihood of regular receipt by holders of Offered Notes having a
higher priority of payment of the full amount of interest and principal payable
thereon, and to afford such Noteholders limited protection against Realized
Losses incurred with respect to the Mortgage Loans.

     The limited protection afforded to holders of Offered Notes by means of
the subordination of Subordinate Notes having a lower priority of payment will
be accomplished by the preferential right of holders of more senior classes of
Notes to receive, prior to any payment in respect of interest or principal,
respectively, being made on any Payment Date in respect of Notes having a lower
priority of payment, the amounts of interest due them and principal available
for payment, respectively, on such Payment Date.

     REALIZED LOSSES. If a Mortgage Loan becomes a Liquidated Mortgage Loan
during any Collection Period, the related Net Liquidation Proceeds, to the
extent allocable to principal, may be less than the outstanding principal
balance of that Mortgage Loan. The amount of such insufficiency is a "Realized
Loss." Realized Losses on Mortgage Loans will have the effect of reducing
amounts payable in respect of, first, the Ownership Certificate; second, the
Class N Notes; third, the Class B3 Notes; fourth, the Class B2 Notes; fifth,
the Class B1 Notes; sixth, the Class M6 Notes; seventh, the Class M5 Notes;
eighth, the Class M4 Notes; ninth, the Class M3 Notes; tenth, the Class M2
Notes; and eleventh, the Class M1 Notes, before reducing amounts payable in
respect of the Senior Notes.

     o    A "Liquidated Mortgage Loan" is, in general, a defaulted Mortgage Loan
          as to which the Servicer has determined that all amounts that it
          expects to recover in respect of such Mortgage Loan have been
          recovered (exclusive of any possibility of a deficiency judgment).

     To the extent that Realized Losses are incurred, those Realized Losses
will reduce the Pool Balance, and thus may reduce the Overcollateralization
Amount. As described herein, the Overcollateralization Amount is increased and
maintained by application of Monthly Excess Cashflow to make payments of
principal on the Offered Notes.

     Realized Losses will not reduce the Class Principal Amount of any Note;
however, Realized Losses will result in the allocation of Principal Deficiency
Amounts and, under certain loss scenarios, there may not be sufficient
principal and interest collected from the Mortgage Loans to pay the Notes all
principal and interest to which they are entitled.

     EXCESS INTEREST. The Mortgage Loans bear interest each month that in the
aggregate is expected to exceed the amount needed to pay monthly interest on
the related Offered Notes, the fees, if any, and expenses of the Master
Servicer, the Servicer, the Administrator, the Credit Risk Manager, the
Custodian, the Owner Trustee and the Indenture Trustee and any Net Swap
Payments payable to the Swap Counterparty by the Trust. Such excess interest
from the Mortgage Loans each month will be available to absorb Realized Losses
on the Mortgage Loans and to maintain overcollateralization at the required
levels.


                                      S-43


     SWAP AGREEMENT AND CAP AGREEMENT. Amounts received by the Trust under the
Swap Agreement and the Cap Agreement will be applied in the same manner as
interest collections on the Mortgage Loans to pay interest on the Notes, cover
losses and maintain overcollateralization at required levels as described under
"--Payments of Interest--The Interest Rate Swap Agreement" and "--The Interest
Rate Cap Agreement" above.

     OVERCOLLATERALIZATION. The weighted average of the Net Mortgage Rates of
the Mortgage Loans is currently, and generally in the future is expected to be,
higher than the weighted average interest rate on the Offered Notes. As
described below, the application of interest collections as payments of
principal will cause the aggregate Class Principal Amount of the Offered Notes
to amortize more rapidly than the Pool Balance, thus maintaining
overcollateralization (i.e., the excess of the Pool Balance over the aggregate
Class Principal Amount of the Offered Notes). However, Realized Losses may
reduce overcollateralization, and could result in an Overcollateralization
Deficiency.

     As described herein, on and after the Stepdown Date, to the extent that
the Overcollateralization Amount exceeds the related Targeted
Overcollateralization Amount, a portion of the Principal Remittance Amount will
not be applied in reduction of the Class Principal Amounts of the Offered
Notes, but will instead be applied as described below.

     APPLICATION OF MONTHLY EXCESS CASHFLOW. The sum (without duplication) of
Monthly Excess Interest for any Payment Date, the Overcollateralization Release
Amount and any Principal Payment Amount remaining after application as
described under "--Payments of Principal--Principal Payment Priorities" above
for any Payment Date will constitute the "Monthly Excess Cashflow" for such
Payment Date, which will (together with certain other amounts to the extent
specified below), on each Payment Date, be paid in the following order of
priority:

       (1) on each Payment Date occurring (a) before the Stepdown Date or (b)
    on or after the Stepdown Date but for which a Trigger Event is in effect,
    in each case until the aggregate Class Principal Amount of the Offered
    Notes equals the Pool Balance for such Payment Date minus the Targeted
    Overcollateralization Amount for such Payment Date, in the following order
    of priority:

          (a) to the Class A1, Class A2 and Class A3 Notes, sequentially, in
        that order, in reduction of their respective Class Principal Amounts,
        until the Class Principal Amount of each such Class has been reduced to
        zero;

          (b) to the Class M1 Notes, in reduction of their Class Principal
        Amount, until the Class Principal Amount of such Class has been reduced
        to zero;

          (c) to the Class M2 Notes, in reduction of their Class Principal
        Amount, until the Class Principal Amount of such Class has been reduced
        to zero;

          (d) to the Class M3 Notes, in reduction of their Class Principal
        Amount, until the Class Principal Amount of such Class has been reduced
        to zero;

          (e) to the Class M4 Notes, in reduction of their Class Principal
        Amount, until the Class Principal Amount of such Class has been reduced
        to zero;

          (f) to the Class M5 Notes, in reduction of their Class Principal
        Amount, until the Class Principal Amount of such Class has been reduced
        to zero;

          (g) to the Class M6 Notes, in reduction of their Class Principal
        Amount, until the Class Principal Amount of such Class has been reduced
        to zero;

          (h) to the Class B1 Notes, in reduction of their Class Principal
        Amount, until the Class Principal Amount of such Class has been reduced
        to zero;

          (i) to the Class B2 Notes, in reduction of their Class Principal
        Amount, until the Class Principal Amount of such Class has been reduced
        to zero; and

          (j) to the Class B3 Notes, in reduction of their Class Principal
        Amount, until the Class Principal Amount of such Class has been reduced
        to zero;


                                      S-44


       (2) on each Payment Date occurring (a) on or after the Stepdown Date and
    (b) for which a Trigger Event is not in effect, in the following order of
    priority:

          (a) to the Class A1, Class A2 and Class A3 Notes, sequentially, in
        that order, in reduction of their respective Class Principal Amounts,
        until the aggregate Class Principal Amount of the Senior Notes, after
        giving effect to payments on such Payment Date, equals the Senior
        Target Amount;

          (b) to the Class M1 Notes, in reduction of their Class Principal
        Amount, until the aggregate Class Principal Amount of the Senior Notes
        and the Class M1 Notes, after giving effect to payments on such Payment
        Date, equals the M1 Target Amount;

          (c) to the Class M2 Notes, in reduction of their Class Principal
        Amount, until the aggregate Class Principal Amount of the Senior Notes
        and the Class M1 and Class M2 Notes, after giving effect to payments on
        such Payment Date, equals the M2 Target Amount;

          (d) to the Class M3 Notes, in reduction of their Class Principal
        Amount, until the aggregate Class Principal Amount of the Senior Notes
        and the Class M1, Class M2 and Class M3 Notes, after giving effect to
        payments on such Payment Date, equals the M3 Target Amount;

          (e) to the Class M4 Notes, in reduction of their Class Principal
        Amount, until the aggregate Class Principal Amount of the Senior Notes
        and the Class M1, Class M2, Class M3 and Class M4 Notes, after giving
        effect to payments on such Payment Date, equals the M4 Target Amount;

          (f) to the Class M5 Notes, in reduction of their Class Principal
        Amount, until the aggregate Class Principal Amount of the Senior Notes
        and the Class M1, Class M2, Class M3, Class M4 and Class M5 Notes,
        after giving effect to payments on such Payment Date, equals the M5
        Target Amount;

          (g) to the Class M6 Notes, in reduction of their Class Principal
        Amount, until the aggregate Class Principal Amount of the Senior Notes
        and the Class M1, Class M2, Class M3, Class M4, Class M5 and Class M6
        Notes, after giving effect to payments on such Payment Date, equals the
        M6 Target Amount;

          (h) to the Class B1 Notes, in reduction of their Class Principal
        Amount, until the aggregate Class Principal Amount of the Senior Notes
        and the Class M1, Class M2, Class M3, Class M4, Class M5, Class M6 and
        Class B1 Notes, after giving effect to payments on such Payment Date,
        equals the B1 Target Amount;

          (i) to the Class B2 Notes, in reduction of their Class Principal
        Amount, until the aggregate Class Principal Amount of the Senior Notes
        and the Class M1, Class M2, Class M3, Class M4, Class M5, Class M6,
        Class B1 and Class B2 Notes, after giving effect to payments on such
        Payment Date, equals the B2 Target Amount; and

          (j) to the Class B3 Notes, in reduction of their Class Principal
        Amount, until the aggregate Class Principal Amount of the Senior Notes
        and the Class M1, Class M2, Class M3, Class M4, Class M5, Class M6,
        Class B1, Class B2 and Class B3 Notes, after giving effect to payments
        on such Payment Date, equals the B3 Target Amount;

       (3) on each Payment Date, in the following order of priority:

          (a) concurrently, pro rata, to the Senior Notes, any applicable Basis
        Risk Shortfall for each such Class and such Payment Date;

          (b) to the Class M1 Notes, any Basis Risk Shortfall for such Class
        and such Payment Date;

          (c) to the Class M2 Notes, any Basis Risk Shortfall for such Class
        and such Payment Date;

          (d) to the Class M3 Notes, any Basis Risk Shortfall for such Class
        and such Payment Date;


                                      S-45


          (e) to the Class M4 Notes, any Basis Risk Shortfall for such Class
        and such Payment Date;

          (f) to the Class M5 Notes, any Basis Risk Shortfall for such Class
        and such Payment Date;

          (g) to the Class M6 Notes, any Basis Risk Shortfall for such Class
        and such Payment Date;

          (h) to the Class B1 Notes, any Basis Risk Shortfall for such Class
        and such Payment Date;

          (i) to the Class B2 Notes, any Basis Risk Shortfall for such Class
        and such Payment Date; and

          (j) to the Class B3 Notes, any Basis Risk Shortfall for such Class
        and such Payment Date;

       (4) on each Payment Date, in the following order of priority:

          (a) to the Class M1 Notes, any Deferred Interest for such Class and
        such Payment Date;

          (b) to the Class M2 Notes, any Deferred Interest for such Class and
        such Payment Date;

          (c) to the Class M3 Notes, any Deferred Interest for such Class and
        such Payment Date;

          (d) to the Class M4 Notes, any Deferred Interest for such Class and
        such Payment Date;

          (e) to the Class M5 Notes, any Deferred Interest for such Class and
        such Payment Date;

          (f) to the Class M6 Notes, any Deferred Interest for such Class and
        such Payment Date;

          (g) to the Class B1 Notes, any Deferred Interest for such Class and
        such Payment Date;

          (h) to the Class B2 Notes, any Deferred Interest for such Class and
        such Payment Date; and

          (i) to the Class B3 Notes, any Deferred Interest for such Class and
    such Payment Date;

       (5) on each Payment Date, from any remaining Monthly Excess Cashflow,
    together with all amounts received under the Class N Cap Agreement and all
    Prepayment Premiums received during the related Prepayment Period, to the
    Class N Notes, sequentially, accrued interest as provided in the Transfer
    and Servicing Agreement for such Payment Date;

       (6) on each Payment Date, from any remaining Monthly Excess Cashflow,
    together with all remaining amounts received under the Class N Cap
    Agreement and all remaining Prepayment Premiums received during the
    related Prepayment Period, to the Class N Notes, sequentially, in
    reduction of their respective Class Principal Amounts, until the Class
    Principal Amount of each such Class has been reduced to zero;

       (7) on each Payment Date, to the Swap Counterparty, any unpaid Swap
    Termination Payment triggered by a Swap Counterparty Trigger Event owed to
    the Swap Counterparty pursuant to the Swap Agreement;

       (8) on each Payment Date, any amount payable by the Trust in connection
    with the purchase of a substitute Swap Agreement, Cap Agreement or Class N
    Cap Agreement, if any, as provided in the Transfer and Servicing
    Agreement; and


                                      S-46


       (9) on each Payment Date, to the Ownership Certificate, the amount
    distributable thereon under the Transfer and Servicing Agreement.


     DEFINITIONS RELATING TO MONTHLY EXCESS CASHFLOW PRIORITIES.

     o    The "Deferred Interest" for each Class of Offered Subordinate Notes
          for any Payment Date will be equal to the sum of (a) the aggregate
          amount of interest accrued at the applicable Interest Rate during the
          related Accrual Period on the Principal Deficiency Amount for that
          class, (b) any amounts due pursuant to clause (a) for such Class for
          prior Payment Dates that remain unpaid and (c) interest accrued during
          the Accrual Period related to such Payment Date on the amount in
          clause (b) at the Interest Rate applicable to such class.

     o    "Principal Deficiency Amount" means, with respect to the Class M1
          Notes, the M1 Principal Deficiency Amount; with respect to the Class
          M2 Notes, the M2 Principal Deficiency Amount; with respect to the
          Class M3 Notes, the M3 Principal Deficiency Amount; with respect to
          the Class M4 Notes, the M4 Principal Deficiency Amount; with respect
          to the Class M5 Notes, the M5 Principal Deficiency Amount; with
          respect to the Class M6 Notes, the M6 Principal Deficiency Amount;
          with respect to the Class B1 Notes, the B1 Principal Deficiency
          Amount; with respect to the Class B2 Notes, the B2 Principal
          Deficiency Amount; and with respect to the Class B3 Notes, the B3
          Principal Deficiency Amount.

     o    The "Total Principal Deficiency Amount" with respect to any Payment
          Date will be the excess, if any, of the aggregate Class Principal
          Amount of the Offered Notes after giving effect to payments on such
          Payment Date over the Pool Balance as of the last day of the related
          Collection Period.

     o    The "M1 Principal Deficiency Amount" with respect to any Payment Date
          will be the lesser of (a) the excess, if any, of (1) the Total
          Principal Deficiency Amount over (2) the sum of the M2 Principal
          Deficiency Amount, the M3 Principal Deficiency Amount, the M4
          Principal Deficiency Amount, the M5 Principal Deficiency Amount, the
          M6 Principal Deficiency Amount, the B1 Principal Deficiency Amount,
          the B2 Principal Deficiency Amount and the B3 Principal Deficiency
          Amount, in each case for that Payment Date and (b) the Class Principal
          Amount of the Class M1 Notes immediately prior to such Payment Date.

     o    The "M2 Principal Deficiency Amount" with respect to any Payment Date
          will be the lesser of (a) the excess, if any, of (1) the Total
          Principal Deficiency Amount over (2) the sum of the M3 Principal
          Deficiency Amount, the M4 Principal Deficiency Amount, the M5
          Principal Deficiency Amount, the M6 Principal Deficiency Amount, the
          B1 Principal Deficiency Amount, the B2 Principal Deficiency Amount and
          the B3 Principal Deficiency Amount, in each case for that Payment Date
          and (b) the Class Principal Amount of the Class M2 Notes immediately
          prior to such Payment Date.

     o    The "M3 Principal Deficiency Amount" with respect to any Payment Date
          will be the lesser of (a) the excess, if any, of (1) the Total
          Principal Deficiency Amount over (2) the sum of the M4 Principal
          Deficiency Amount, the M5 Principal Deficiency Amount, the M6
          Principal Deficiency Amount, the B1 Principal Deficiency Amount, the
          B2 Principal Deficiency Amount and the B3 Principal Deficiency Amount,
          in each case for that Payment Date and (b) the Class Principal Amount
          of the Class M3 Notes immediately prior to such Payment Date.

     o    The "M4 Principal Deficiency Amount" with respect to any Payment Date
          will be the lesser of (a) the excess, if any, of (1) the Total
          Principal Deficiency Amount over (2) the sum of the M5 Principal
          Deficiency Amount, the M6 Principal Deficiency Amount, the B1
          Principal Deficiency Amount, the B2 Principal Deficiency Amount and
          the B3 Principal Deficiency Amount, in each case for that Payment Date
          and (b) the Class Principal Amount of the Class M4 Notes immediately
          prior to such Payment Date.


                                      S-47


     o    The "M5 Principal Deficiency Amount" with respect to any Payment Date
          will be the lesser of (a) the excess, if any, of (1) the Total
          Principal Deficiency Amount over (2) the sum of the M6 Principal
          Deficiency Amount, the B1 Principal Deficiency Amount, the B2
          Principal Deficiency Amount and the B3 Principal Deficiency Amount, in
          each case for that Payment Date and (b) the Class Principal Amount of
          the Class M5 Notes immediately prior to such Payment Date.

     o    The "M6 Principal Deficiency Amount" with respect to any Payment Date
          will be the lesser of (a) the excess, if any, of (1) the Total
          Principal Deficiency Amount over (2) the sum of the B1 Principal
          Deficiency Amount, the B2 Principal Deficiency Amount and the B3
          Principal Deficiency Amount, in each case for that Payment Date and
          (b) the Class Principal Amount of the Class M6 Notes immediately prior
          to such Payment Date.

     o    The "B1 Principal Deficiency Amount" with respect to any Payment Date
          will be the lesser of (a) the excess, if any, of (1) the Total
          Principal Deficiency Amount over (2) the sum of the B2 Principal
          Deficiency Amount and the B3 Principal Deficiency Amount, in each case
          for that Payment Date and (b) the Class Principal Amount of the Class
          B1 Notes immediately prior to such Payment Date.

     o    The "B2 Principal Deficiency Amount" with respect to any Payment Date
          will be the lesser of (a) the excess, if any, of (1) the Total
          Principal Deficiency Amount over (2) the B3 Principal Deficiency
          Amount, in each case for that Payment Date and (b) the Class Principal
          Amount of the Class B2 Notes immediately prior to such Payment Date.

     o    The "B3 Principal Deficiency Amount" with respect to any Payment Date
          will be the lesser of (a) the Total Principal Deficiency Amount for
          that Payment Date and (b) the Class Principal Amount of the Class B3
          Notes immediately prior to such Payment Date.

MATURITY DATE

     The maturity date (the "Maturity Date") for the Offered Notes will be the
Payment Date in August 2035, which is the second Payment Date after the date of
the last Scheduled Payment of the latest maturing Mortgage Loan. As to each
Class of Notes, the actual final Payment Date may be earlier, and could be
substantially earlier, than such Class's Maturity Date.

OPTIONAL PURCHASE OF MORTGAGE LOANS

     On the later of (1) any Payment Date following the month in which the Pool
Balance is less than 10% of the Cut-off Date Balance and (2) the Payment Date
in September 2009 (the later of such Payment Dates, the "Initial Purchase
Date"), the Residual Holder (or the Servicer, if the Residual Holder does not
do so) will have the option (provided that the Class N Notes have been paid in
full) to purchase the Mortgage Loans, any REO Property and any other property
remaining in the Trust for a price equal to the sum of (a) 100% of the
aggregate outstanding principal balance of the Mortgage Loans plus accrued
interest thereon at the applicable Mortgage Rate plus any unreimbursed
Servicing Advances, (b) the fair market value of all other property being
purchased, (c) any costs and damages incurred by the Trust as a result of
violation of any applicable federal, state or local predatory or abusive
lending law in connection with the origination of any Mortgage Loan, (d) any
outstanding amounts due to the Master Servicer, the Administrator, the
Custodian, the Owner Trustee and the Indenture Trustee and (e) any Swap
Termination Payment payable to the Swap Counterparty due to the exercise of
such option (the "Purchase Price"). If such option is exercised, the Trust will
be terminated (such event, an "Optional Termination"). If the Residual Holder
or the Servicer fails to exercise such option on the Initial Purchase Date, the
applicable Interest Rate of each Class of Offered Notes will be increased as
described under "Summary of Terms--The Notes--Payments on the Notes--Interest
Payments."

     On any Payment Date, the Depositor will have the option to purchase, one
time only, 1.0% (and, in any case, not less than five Mortgage Loans) of the
Mortgage Loans, by Pool Balance as of such date. The Mortgage Loans so
purchased will be selected by the Depositor in its sole discretion and will be
purchased at a price not less than the aggregate Purchase Price.


                                      S-48


     In addition, as described under "The Sale Agreement and the Transfer and
Servicing Agreement--Optional Purchase of Distressed Mortgage Loans," the
Residual Holder will have the right to purchase any Mortgage Loan that becomes
90 or more days delinquent in payment.


THE ADMINISTRATOR AND THE CUSTODIAN

     Wells Fargo Bank, N.A. ("Wells Fargo") will be appointed Administrator
under the Administration Agreement and, as such, will be responsible for
preparing certain investor reports, including the monthly payment date
statement to Noteholders and the monthly distribution date statement to the
Residual Holder (together with the Noteholders, the "Securityholders"),
providing all customary tax reports to Securityholders related to their
investment, providing monthly calculations to the Indenture Trustee regarding
payments to Noteholders and to the Owner Trustee regarding payments to the
Residual Holder and acting as note registrar ("Note Registrar") and paying
agent ("Paying Agent"). The Administrator will be compensated by the Master
Servicer for its services. In addition, any investment income on funds in the
certificate distribution account (the "Certificate Distribution Account") and
the Note Payment Account established and maintained by the Administrator
pursuant to the Trust Agreement and the Indenture, respectively will be paid to
the Administrator. The Administrator will be entitled to reimbursement from the
Trust for certain expenses prior to payment of any amounts to Securityholders.
The office of the Administrator for purposes of transfers and surrender of the
Securities is located at Sixth Street and Marquette Avenue, Minneapolis,
Minnesota 55479, Attention: Aegis 2005-3, and for all other purposes is P.O.
Box 98, Columbia, Maryland 21046, Attention: Aegis 2005-3 (or for overnight
delivery at 9062 Old Annapolis Road, Columbia, Maryland 21045-1951, Attention:
Client Manager Aegis 2005-3), or any other address that the Administrator may
designate from time to time by notice to the Noteholders, the Depositor, the
Indenture Trustee and the Owner Trustee.

     The Administrator may resign at any time, in which event the Indenture
Trustee will be obligated to appoint a successor Administrator. The Indenture
Trustee may also remove the Administrator if the Administrator ceases to be
eligible to continue as such under the Transfer and Servicing Agreement or the
Administration Agreement or if the Administrator becomes incapable of acting,
bankrupt, insolvent or if a receiver takes charge of the Administrator or its
property. Upon such resignation or removal of the Administrator, the Indenture
Trustee will be entitled to appoint a successor Administrator. The
Administrator may also be removed at any time by the holders of Notes
evidencing ownership of not less than 51% of the Trust. Any resignation or
removal of the Administrator and appointment of a successor Administrator will
not become effective until acceptance of the appointment by the successor
Administrator. If at any time Wells Fargo resigns, or transfers or assigns its
rights and obligations, or is removed as Master Servicer, then at such time,
Wells Fargo will be terminated as Administrator. In such event, the obligations
of each such party shall be assumed by the Indenture Trustee or any successor
master servicer or Administrator appointed by the Indenture Trustee.

     Wells Fargo will also act as custodian (the "Custodian") of the Mortgage
Loan documents without additional compensation.

THE INDENTURE TRUSTEE

     Wachovia Bank, National Association, a national banking association, will
be the Indenture Trustee (the "Indenture Trustee") under the Indenture. The
Indenture Trustee will be paid a fixed annual fee (the "Indenture Trustee Fee")
out of income on funds held in the Collection Account, and will be entitled to
reimbursement from the Trust for expenses and certain other amounts prior to
payment of any amounts to Noteholders. The Indenture Trustee's "Corporate Trust
Office" is located at 401 S. Tryon Street, Charlotte, North Carolina
28288-1179, Attention: AEGIS 2005-3, or any other address that the Indenture
Trustee may designate from time to time by notice to the Noteholders, the Owner
Trustee, the Depositor, the Administrator, the Master Servicer and the
Servicer.


                                      S-49


                        FEES AND EXPENSES OF THE TRUST
     In consideration of their duties on behalf of the Trust, the Servicer, the
Master Servicer the Owner Trustee, the Indenture Trustee, the Administrator and
the Credit Risk Manager will receive from the assets of the Trust certain fees
as set forth in the following table:



<TABLE>

                      FREQUENCY                                                          HOW AND WHEN
FEE PAYABLE TO:      OF PAYMENT:                    AMOUNT OF FEE:                     FEE IS PAYABLE:
-----------------   -------------   ----------------------------------------------   -------------------

Servicer            monthly         For each Mortgage Loan, a monthly fee paid       Deducted by the
                                    to the Servicer out of interest collections      Servicer from the
                                    received from such Mortgage Loan calculated      Servicing Account
                                    on the outstanding principal balance of such     in respect of each
                                    Mortgage Loan at 0.50% per annum.                Mortgage Loan,
                                                                                     before payment of
                                                                                     any amounts to
                                                                                     Noteholders.

Master Servicer     monthly         All investment earnings on amounts on            Retained by the
                                    deposit in the Collection Account less any       Master Servicer.
                                    payment of the fees payable to the Indenture
                                    Trustee and the Owner Trustee.

Administrator       monthly         All investment earnings on amounts on            Retained by the
                                    deposit in the Certificate Distribution          Administrator.
                                    Account and the Note Payment Account.

Indenture           annually        A fixed annual fee of $3,500.                    Payable from
Trustee                                                                              investment
                                                                                     earnings on
                                                                                     amounts on
                                                                                     deposit in the
                                                                                     Collection
                                                                                     Account.

Owner Trustee       annually        A fixed annual fee of $4,000.                    Payable from
                                                                                     investment
                                                                                     earnings on
                                                                                     amounts on
                                                                                     deposit in the
                                                                                     Collection
                                                                                     Account.

Credit Risk         monthly         0.015% per annum on the Scheduled                Payable after
Manager                             Principal Balance of each Mortgage Loan.         payments of
                                                                                     interest have been
                                                                                     made to
                                                                                     Noteholders.
</TABLE>

     The Custodian will not receive any additional compensation with respect to
its duties on behalf of the Trust. None of the fees set forth in the table
above may be increased without amendment of the Transfer and Servicing
Agreement as described under "The Agreements--Amendment" in the prospectus.

     Expenses of the Servicer, the Master Servicer, the Administrator, the
Indenture Trustee and the Owner Trustee will be reimbursed before payments are
made on the Notes. Expenses of the Indenture Trustee will be reimbursed up to
$200,000 annually before payments of interest and principal are made on the
Notes; any additional unpaid expenses above $200,000 in any year will be paid
to the Indenture Trustee to the extent of any remaining Interest Remittance
Amount after all payments of Accrued Note Interest on the Offered Notes.


                                      S-50


                       DESCRIPTION OF THE MORTGAGE POOL

     Wherever reference is made herein to a percentage of some or all of the
Mortgage Loans, that percentage (unless otherwise specified) is determined on
the basis of the total Scheduled Principal Balance of such Mortgage Loans as of
June 1, 2005 (the "Cut-off Date," and such total, the "Cut-off Date Balance").


GENERAL

     On the Closing Date the Trust is expected to include approximately 6,953
conventional, adjustable and fixed rate, fully-amortizing and balloon, first
and second lien residential Mortgage Loans, substantially all of which have
original terms to maturity from the first due date of the Scheduled Payment of
not more than 30 years, and which have a total Scheduled Principal Balance
(after giving effect to Scheduled Payments due on the Cut-off Date) of
approximately $850,001,328.

     The underwriting guidelines generally applied by the Originators (as
defined herein) in originating the Mortgage Loans are described under
"Underwriting Standards" below. Because, in general, such underwriting
guidelines do not conform to Fannie Mae or Freddie Mac guidelines, the Mortgage
Loans are likely to experience higher rates of delinquency, foreclosure and
bankruptcy than if they had been underwritten to a more restrictive standard.
The Mortgage Loans will be acquired by the Depositor from the Seller and the
Depositor will, in turn, convey the Mortgage Loans to the Trust. See "The Sale
Agreement and the Transfer and Servicing Agreement--Sale of the of Mortgage
Loans."

     As of the Cut-off Date, approximately 2,079 (or 14.62%) of the Mortgage
Loans bear interest rates at fixed rates ("Fixed Rate Mortgage Loans") and
approximately 4,874 (or 85.38%) bear interest at rates that adjust at specified
intervals as described in more detail under "--Adjustable Rate Mortgage Loans"
below ("Adjustable Rate Mortgage Loans"). Interest on the Mortgage Loans
accrues on the basis of a 360-day year consisting of twelve 30-day months.

     As of the Cut-off Date, approximately 5,456 (or 93.84%) of the Mortgage
Loans are secured by first liens on the related Mortgaged Properties and
approximately 1,497 (or 6.16%) are secured by junior liens ("Junior Lien
Mortgage Loans").

     As of the Cut-off Date, approximately 852 (or 19.91%) of the Mortgage
Loans provide for monthly payments of interest, but not principal, for a period
of up to five years following origination, after which the monthly payments
will be increased to amounts sufficient to pay interest and to amortize the
principal balances over the remaining terms. If the monthly payment at the end
of the interest only period is substantially higher than the interest only
payment, that loan may be subject to an increased risk of default.

     Pursuant to its terms, each Mortgage Loan, other than a loan secured by a
condominium unit, is required to be covered by a standard hazard insurance
policy in an amount generally equal to the lower of the unpaid principal amount
thereof or the replacement value of the improvements on the real property
securing such Mortgaged Loan. Generally, a condominium association is
responsible for maintaining hazard insurance covering the entire building.

     As of the Cut-off Date, approximately 32.57% of the Mortgage Loans have
original Loan-to- Value Ratios in excess of 80%. The "Loan-to-Value Ratio" of a
Mortgage Loan at any time is the ratio, expressed as a percentage, of the
principal balance of such Mortgage Loan plus, in the case of a Junior Lien
Mortgage Loan, the principal balance of each mortgage loan senior thereto, in
each case as of the applicable date of determination, to (a) in the case of a
purchase, the lesser of the sale price of the real property securing the
related Mortgage Loan (a "Mortgaged Property") and its appraised value at the
time of sale or (b) in the case of a refinancing or modification, the appraised
value of the Mortgaged Property at the time of the refinancing or modification.

     As of the Cut-off Date, all of the Adjustable Rate Mortgage Loans and
approximately 96.72% of the Fixed Rate Mortgage Loans are fully amortizing.
Approximately 3.28% of the Fixed Rate Mortgage Loans will have original terms
to maturity that are shorter than their amortization


                                      S-51


schedules, leaving final payments ("Balloon Payments") due on their maturity
dates that are significantly larger than other scheduled payments (such loans,
"Balloon Loans"). The Balloon Loans generally have original terms to maturity
of 15 years. The ability of the borrower to repay a Balloon Loan at maturity
frequently will depend on the borrower's ability to refinance the loan. Any
loss on a Balloon Loan as a result of the borrower's inability to refinance the
loan will be borne by Noteholders, to the extent not covered by the applicable
credit enhancement. None of the Master Servicer, the Servicer, the Subservicer,
the Administrator or the Indenture Trustee will make any Delinquency Advances
with respect to delinquent Balloon Payments.

     As of the Cut-off Date, approximately 64.81% of the Mortgage Loans provide
for payment by the borrower of a prepayment premium (a "Prepayment Premium") in
connection with certain full or partial prepayments of principal. Generally,
each such Mortgage Loan provides for payment of a Prepayment Premium in
connection with certain voluntary, full or partial prepayments made within the
period of time specified in the related Mortgage Note, ranging from one to five
years from the date of origination (such period of time, the "Prepayment
Premium Period"). The amount of the applicable Prepayment Premium, to the
extent permitted under applicable state law, is as provided in the related
Mortgage Note; generally, this amount is equal to six months' interest on any
amounts prepaid in excess of 20% of the original principal balance or, in some
cases, the current principal balance of the related Mortgage Loan during any
12-month period during the applicable Prepayment Premium Period. Prepayment
Premiums will not be part of available funds applied to pay interest or
principal on the Offered Notes, but rather will be available to pay amounts due
on the Class N Notes. The Servicer may waive (or permit the Subservicer to
waive) a Prepayment Premium without the consent of the Master Servicer (and
without reimbursing the Trust from its own funds for any foregone Prepayment
Premium) only if the prepayment is not the result of a refinancing by the
Servicer (or Subservicer) or its affiliates and such waiver (1) relates to a
default or a reasonably foreseeable default and, in the reasonable judgment of
the Servicer, such waiver would maximize recovery of total proceeds from the
Mortgage Loan, taking into account the value of the Prepayment Premium and the
related Mortgage Loan or, (2) relates to a Prepayment Premium the collection of
which would, in the reasonable judgment of the Servicer, be in violation of law
or regulation. The Servicer will be obligated to remit to the Master Servicer
from its own funds the amount of any Prepayment Premium to the extent not
collected from a borrower, except with respect to a waiver of any such
Prepayment Premium as described above.

     The Seller will represent and warrant that no Mortgage Loan is a "high
cost" or "covered" loan under federal, state or local predatory lending laws.

     As of the Cut-off Date, approximately 0.06% of the Mortgage Loans were 30
or more but less than 60 days delinquent and none of the Mortgage Loans were 60
days or more delinquent.

     As of the Cut-off Date, no more than approximately 0.29% of the Mortgage
Loans are secured by Mortgaged Properties located in any one zip code area.


ADJUSTABLE RATE MORTGAGE LOANS

     As of the Cut-off Date, all of the Adjustable Rate Mortgage Loans provide
for semi-annual adjustment of the related Mortgage Rate based on the Six-Month
LIBOR Index (such Adjustable Rate Mortgage Loans, the "LIBOR Mortgage Loans")
as described under "--The Index" below. In the case of the LIBOR Mortgage
Loans, there will be corresponding adjustments to the monthly payment amount,
in each case on each adjustment date applicable thereto (each such date, an
"Adjustment Date"); provided that the first such adjustment for approximately
95.73% of the LIBOR Mortgage Loans will occur after an initial period of
approximately two years following origination; in the case of approximately
3.96% of the LIBOR Mortgage Loans, approximately three years following
origination; and in the case of approximately 0.32% of the LIBOR Mortgage
Loans, approximately five years following origination. On each Adjustment Date
for a LIBOR Mortgage Loan, the Mortgage Rate will be adjusted to equal the sum,
rounded generally to the next highest or nearest multiple of 1/8%, of the
Six-Month LIBOR Index and a fixed percentage amount (the "Gross Margin"),
provided that the Mortgage Rate on each such LIBOR Mortgage Loan will not
increase or


                                      S-52


decrease by more than a fixed percentage (ranging from 1.000% to 3.000%) as
specified in the related Mortgage Note (the "Periodic Cap") on any related
Adjustment Date and will not exceed a specified maximum Mortgage Rate over the
life of such Mortgage Loan (the "Maximum Rate") or be less than a specified
minimum Mortgage Rate over the life of such Mortgage Loan (the "Minimum Rate").
The Mortgage Rate generally will not increase or decrease on the first
Adjustment Date by more than a fixed percentage specified in the related
Mortgage Note (the "Initial Cap"); the Initial Caps are 1.000% to 3.000% for
all of the LIBOR Mortgage Loans. Effective with the first monthly payment due
on each LIBOR Mortgage Loan after each related Adjustment Date, the monthly
payment amount will be adjusted to an amount that will amortize fully the
outstanding principal balance of the related Mortgage Loan over its remaining
term, and pay interest at the Mortgage Rate as so adjusted. Due to the
application of the Initial Caps, Periodic Caps and Maximum Rates, the Mortgage
Rate on each such LIBOR Mortgage Loan, as adjusted on any related Adjustment
Date, may be less than the sum of the Six-Month LIBOR Index and the related
Gross Margin, rounded as described herein. See "--The Index" below.

     The Adjustable Rate Mortgage Loans generally do not permit the related
borrower to convert the adjustable Mortgage Rate to a fixed Mortgage Rate.


THE INDEX

     As indicated above, the index applicable to the determination of the
Mortgage Rates for substantially all the Adjustable Rate Mortgage Loans will be
the average of the interbank offered rates for six-month United States dollar
deposits in the London market, calculated as provided in the related Mortgage
Note (the "Six-Month LIBOR Index") and as most recently available either as of
(1) the first business day a specified period of time prior to such Adjustment
Date, (2) the first business day of the month preceding the month of such
Adjustment Date or (3) the last business day of the second month preceding the
month in which such Adjustment Date occurs, as specified in the related
Mortgage Note. In the event that the Six-Month LIBOR Index becomes unavailable
or otherwise unpublished, the Servicer will select a comparable alternative
index over which it has no direct control and which is readily verifiable.


CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS

     The Mortgage Loans are expected to have the approximate aggregate
characteristics as of the Cut-off Date as set forth in Annex C to this
prospectus supplement. Prior to the issuance of the Notes, Mortgage Loans may
be removed from the Mortgage Pool as a result of incomplete documentation or
otherwise, if the Depositor deems such removal necessary or appropriate.


                            ADDITIONAL INFORMATION

     The description in this prospectus supplement of the Mortgage Pool and the
Mortgaged Properties is based upon the Mortgage Pool as constituted at the
close of business on the Cut-off Date, as adjusted for Scheduled Payments due
on or before that date. A Current Report on Form 8-K will be filed, together
with the Trust Agreement, the Indenture, the Transfer and Servicing Agreement
and certain other transaction documents, with the Securities and Exchange
Commission within fifteen days after the Closing Date. In the event that
Mortgage Loans are removed from or added to the Trust, such removal or
addition, to the extent material, will be noted in the Current Report on Form
8-K.

     Pursuant to the Transfer and Servicing Agreement, the Administrator will,
based upon information received from the Master Servicer and the Servicer,
prepare monthly statements to Noteholders containing certain information
regarding the Notes and the Mortgage Pool. The Administrator may make available
each month, to any interested party, the monthly statement to Noteholders via
the Administrator's website. The Administrator's website will initially be
located at www.ctslink.com and assistance in using the website can be obtained
by calling the Administrator's customer service desk at (301) 815-6600. Parties
that are unable to use the above payment option are entitled to have a paper
copy mailed to them via first class by notifying the Administrator at Wells


                                      S-53


Fargo Bank, N.A., 9062 Old Annapolis Road, Columbia, Maryland 21045-1951,
Attention: Client Manager--Aegis 2005-3. The Administrator will have the right
to change the way such reports are distributed in order to make such payments
more convenient and/or more accessible, and the Administrator will provide
notification regarding any such changes.


                            AEGIS REIT CORPORATION

     Aegis REIT Corporation (referred to herein as "ARC" or the "Seller") was
organized as a Maryland corporation and is a direct subsidiary of Aegis
Mortgage Corporation ("Aegis"), a Delaware corporation. The Seller will
represent that it will file with its federal income tax return for its taxable
year ending December 31, 2004, an election to be a REIT (as defined herein),
that it has been organized in conformity with the requirements for REIT
qualification set forth in the Code (as defined herein), that it has operated
and will continue to operate in a manner that enables it to qualify as a REIT
and that it will not undertake any action that would cause the Trust to be
subject to federal income tax. The Seller acquired the Mortgage Loans from the
Originators (as defined below) and will convey the Mortgage Loans on the
Closing Date to the Depositor. See "The Sale Agreement and the Transfer and
Servicing Agreement" below.

     The Seller, the Depositor and Aegis maintain their principal offices at
3250 Briarpark, Suite 400, Houston, Texas 77042. Their telephone number is
(713) 787-0100.


                          AEGIS MORTGAGE CORPORATION

     Aegis is a privately held mortgage banking company that through its wholly
owned subsidiaries, Aegis Wholesale Corporation ("AWC"), Aegis Lending
Corporation ("ALC"), Aegis Funding Corporation ("AFC") and Aegis Correspondent
Corporation ("ACC"), originates and purchases first lien and second lien
residential mortgage loans. AWC primarily originates mortgage loans that are
commonly referred to as conforming "A" mortgage loans or prime mortgage loans.
ALC and AFC primarily originate and ACC primarily purchases mortgage loans that
are commonly referred to as non-conforming "B&C" mortgage loans or subprime
mortgage loans. ACC primarily purchases closed loans, and ALC and AFC originate
loans on a retail and wholesale basis, respectively. ALC, AFC and any banks,
savings and loans or other mortgage lending institutions from which ACC
purchased mortgage loans are sometimes referred to in this prospectus
supplement as the "Originators"). Aegis and its predecessors have been in the
mortgage banking business since March 1981. Aegis, AWC, ALC, AFC and ACC are
Delaware corporations. All are headquartered in Houston, Texas, except ALC,
which is headquartered in Baton Rouge, Louisiana. The Depositor is a wholly
owned subsidiary of Aegis.

     As of December 1, 2004, AFC, Aegis's non-conforming wholesale subsidiary,
operated nationwide through 6 wholesale centers, ALC, Aegis's non-conforming
retail subsidiary, operated through 90 retail sales offices and centers in 36
states, and ACC, Aegis's non-conforming correspondent subsidiary, operated
nationwide through 1 operational center. As of December 1, 2004, Aegis, AWC,
AFC, ALC and ACC, collectively, had over 3,100 employees.


                            UNDERWRITING STANDARDS

GENERAL STANDARDS FOR FIRST AND SECOND LIEN MORTGAGE LOANS

     The underwriting standards of Aegis and its subsidiaries (the "Aegis
Underwriting Standards") with respect to first and second lien mortgage loans
will generally conform to those published in the guide for Aegis's alternative
documentation programs for first and second lien mortgage loans (the "Guide").
The Aegis Underwriting Standards as set forth in the Guide are continuously
revised based on opportunities and prevailing conditions in the residential
mortgage market and the market for the Depositor's securities. Aegis and its
affiliates originated the Mortgage Loans in accordance with the Aegis
Underwriting Standards generally described below or, in the case of ACC,
purchased the Mortgage Loans from other originators whose underwriting
standards met or exceeded the Aegis Underwriting Standards and confirmed
compliance with the Aegis Underwriting Standards as described below.


                                      S-54


     The Aegis Underwriting Standards, as well as any other underwriting
standards that may be applicable to any first or second lien mortgage loans,
generally include a set of specific criteria pursuant to which the underwriting
evaluation is made. However, the application of those underwriting standards
does not imply that each specific criterion was satisfied individually. Rather,
a mortgage loan will be considered to be originated in accordance with a given
set of underwriting standards if, based on an overall qualitative evaluation,
the loan substantially complies with the underwriting standards. For example, a
mortgage loan may be considered to comply with a set of underwriting standards,
even if one or more specific criteria included in the underwriting standards
were not satisfied, if other factors compensated for the criteria that were not
satisfied or if the mortgage loan is considered to be in substantial compliance
with the underwriting standards.

     All of the Mortgage Loans had features that generally distinguish those
loans from the more restrictive underwriting requirements used as standards for
Fannie Mae and Freddie Mac. Aegis established loan programs by which it could
aggregate acceptable loans into groupings considered to have substantially
similar risk characteristics. A more detailed description of those loan
programs applicable to the Mortgage Loans is set forth below. The underwriting
of the Mortgage Loans generally consisted of analyzing the following as
standards applicable to the Mortgage Loans:

     o    the creditworthiness of a borrower based on both a credit score and
          mortgage history,

     o    the income sufficiency of a borrower's projected family income
          relative to the mortgage payment and to other fixed obligations,
          including in certain instances rental income from investment property,
          and

     o    the adequacy of the mortgaged property expressed in terms of loan-to-
          value ratio, to serve as the collateral for a mortgage loan.

     The underwriting criteria applicable to any loan program under which
mortgage loans may be originated and reviewed may provide that qualification
for the loan, or the availability of specific loan features, such as maximum
loan amount, maximum loan-to-value ratio, property type and use, and
documentation level, may depend on the borrower's credit score.

GUIDE STANDARDS

     The following is a brief description of the Aegis Underwriting Standards
set forth in the Guide. Initially, a prospective borrower is required to fill
out a detailed application providing pertinent credit information. As part of
the application, the borrower is required to provide a current balance sheet
describing assets and liabilities and a statement of income and expenses, as
well as an authorization for the lender to obtain for a credit report that
summarizes the borrower's credit history with merchants and lenders and any
record of bankruptcy. Salaried prospective borrowers generally are required to
submit pay stubs covering a consecutive 30-day period and their W-2 form for
the most recent year. In addition, the Aegis Underwriting Standards require
either a verbal or written verification of employment from the prospective
borrower's employer. If a prospective borrower is self-employed, the borrower
may be required to submit copies of signed tax returns or provide bank
statements.

     Some of the Mortgage Loans have been originated under "stated income" or
"limited documentation" programs that require less documentation and
verification than do traditional "full documentation" programs. Under a "stated
income" program, some borrowers with acceptable payment histories will not be
required to provide any information regarding income and no other investigation
regarding the borrower's income, except verification of employment, will be
undertaken. Under a "limited documentation" program, applicants usually are
required to submit verification of stable income for at least 12 months, such
as 12 consecutive months of complete personal checking account bank statements.
Generally, in order for a borrower to be eligible for a "stated income" or
"limited documentation" program, the loan-to-value ratio must meet applicable
guidelines, the borrower must have a good credit history and the borrower's
eligibility for this type of program may be determined by use of a
credit-scoring model.

     Generally, credit-scoring models provide a means for evaluating the
information about a prospective borrower that is available from a credit
reporting agency. Credit scores are obtained from


                                      S-55


credit reports provided by various credit reporting organizations, each of
which may employ differing computer models and methodologies. The credit score
is designed to assess a borrower's credit history at a single point in time,
using objective information currently on file for the borrower at a particular
credit reporting organization. Information utilized to create a credit score
may include, among other things, payment history, delinquencies on accounts,
levels of outstanding indebtedness, length of credit history, types of credit,
and bankruptcy experience. Credit scores range from approximately 350 to
approximately 840, with higher scores indicating an individual with a more
favorable credit history compared to an individual with a lower score. However,
a credit score purports only to be a measurement of the relative degree of risk
a borrower represents to a lender. A borrower with a higher credit score is
statistically expected to be less likely to default in payment than a borrower
with a lower credit score.

     In addition, it should be noted that credit scores were developed to
indicate a level of default probability over a two-year period, which does not
correspond to the life of a mortgage loan. Furthermore, credit scores were not
developed specifically for use in connection with mortgage loans, but for
consumer loans in general, and assess only the borrower's past credit history.
Therefore, a credit score does not take into consideration the differences
between mortgage loans and consumer loans generally, or the specific
characteristics of the related mortgage loan, such as the loan-to-value ratio,
the collateral for the mortgage loan, or the debt to income ratio. There can be
no assurance that the credit scores of the borrowers will be an accurate
predictor of the likelihood of repayment of the related mortgage loans or that
any borrower's credit score would not be lower if obtained as of the date of
this prospectus supplement.

     In determining the adequacy of the property as collateral, an appraisal is
generally made of each Property considered for financing. In limited
circumstances with respect to high credit score borrowers, an automated
valuation is obtained on the property and is combined with an exterior property
inspection report instead of an appraisal. In the case of an appraisal, the
appraiser is required to verify that the property is in good condition and that
construction, if new, has been completed. The appraisal is based on various
factors, including the market value of comparable homes and the cost of
replacing the improvements. Additionally, a risk analysis is ordered on each
appraisal from a third party vendor and all high risk appraisals are reviewed
by staff appraisers.

     Based on the data provided in the application, certain verifications and
the appraisal or other valuation of the mortgaged property, a determination is
made that the borrower's monthly income will be sufficient to enable the
borrower to meet its monthly obligations on the mortgage loan and other
expenses related to the property, including property taxes, utility costs,
standard hazard insurance and other fixed obligations other than housing
expenses. The Guidelines for mortgage loans generally specify that scheduled
payments on a mortgage loan during the first year of its term plus taxes and
insurance and all scheduled payments on obligations that extend beyond ten
months, including those mentioned above and other fixed obligations, equal no
more than specified percentages of the prospective borrower's gross income. The
amount of liquid assets available to the borrower after origination may also be
considered in the underwriting process.


LOAN PROGRAMS

     The Loan Programs determined by Aegis as applicable to the Mortgage Loans
are expressed in this prospectus supplement are: A+, A, A--, B, C+, C, 80/20
Combo 1st, and 80/20 Combo 2nd. The following is general description of the
Loan Programs:

     LOAN PROGRAM A+: The prospective borrower may have minor repayment
delinquencies related to installment or revolving debt. As to non-mortgage
credit, some prior defaults may have occurred, provided that open collections
and charge-offs in excess of $1,000 must be paid down to zero at closing unless
they are two years or older and do not affect the title or are medical related.
No 30-day, 60-day or 90-day late payments are acceptable within the last 12
months on an existing mortgage loan. The mortgaged property must be in average
to good condition. A maximum LTV ratio of 100% is permitted for a mortgage loan
on a single family owner-occupied property. A maximum LTV ratio of 85% is
permitted for a mortgage loan on a single family non-owner occupied property or
80% for a


                                      S-56


mortgage loan originated under a stated income documentation program. The
borrower must have a credit score of 500 or greater, based on the LTV. The
borrower's debt service-to-income ratio is 50% or less which, in the case of
adjustable rate mortgage loans, will be based on the initial interest rate on
the mortgage loan. The borrower's debt service-to-income ratio may be increased
to 55% if the borrower has an LTV ratio of 75% or less. No Chapter 7 or Chapter
13 bankruptcies were discharged in the past 24 months. No foreclosures on a
mortgaged property are allowed within the last 36 months.

     LOAN PROGRAM A: The prospective borrower may have minor repayment
delinquencies related to installment or revolving debt. As to non-mortgage
credit, some prior defaults may have occurred, provided that open collections
and charge-offs in excess of $1,500 must be paid down to zero at closing unless
they are two years or older and do not affect the title or are medical related.
At most one 30-day rolling late payment and no 60-day or 90-day late payments
are acceptable within the last 12 months on an existing mortgage loan. The
mortgaged property must be in average to good condition. A maximum LTV ratio of
95% is permitted for a mortgage loan on a single family owner- occupied
property or 90% for a mortgage loan originated under a stated income
documentation program. A maximum LTV ratio of 85% is permitted for a mortgage
loan on a single family non-owner occupied property or 80% for a mortgage loan
originated under a stated income documentation program. The borrower must have
a credit score of 500 or greater, based on the LTV. The borrower's debt
service-to-income ratio is 50% or less which, in the case of adjustable rate
mortgage loans, will be based on the initial interest rate on the mortgage
loan. The borrower's debt service-to-income ratio may be increased to 55% if
the borrower has a LTV ratio of 75% or less. No Chapter 7 or Chapter 13
bankruptcies were discharged in the past 24 months. No foreclosures on a
mortgaged property are allowed within the last 36 months.

     LOAN PROGRAM A-: The prospective borrower is required to have generally
repaid all previous or existing installment or revolving debt according to its
terms. As to non-mortgage credit, some prior defaults may have occurred,
provided that open collections and charge-offs in excess of $2,500 must be paid
down to zero at closing unless they are two years or older and do not affect
the title or are medical related. At most three 30-day rolling late payments
and no 60-day or 90-day late payments are acceptable within the last 12 months
on an existing mortgage loan. The mortgaged property must be in average to good
condition. A maximum LTV ratio of 90% is permitted for a mortgage loan on a
single family owner-occupied property or 80% for a mortgage loan originated
under a stated income documentation program. A maximum LTV ratio of 80% is
permitted for a mortgage loan on a single family non-owner occupied property or
70% for a mortgage loan originated under a stated income documentation program.
The borrower must have a credit score of 500 or greater, based on the LTV. The
borrower's debt service-to-income ratio is 50% or less which, in the case of
adjustable rate mortgage loans, will be based on the initial interest rate on
the mortgage loan. The borrower's debt service-to-income ratio may be increased
to 55% if the borrower has a LTV ratio of 75% or less. No Chapter 7
bankruptcies were discharged, and no Chapter 13 bankruptcies were filed, within
the last 24 months. No foreclosures on a mortgaged property are allowed within
the last 36 months.

     LOAN PROGRAM B: The prospective borrower may not have paid all previous or
existing installment or revolving debt according to its terms, and may have
some charge-offs. As to non-mortgage credit, some prior defaults may have
occurred, provided that open collections and charge-offs in excess of $2,500
must be paid down to zero at closing unless they are two years or older and do
not affect the title or are medical related. The borrower may have made a late
payment of 60 days within the last 12 months on an existing mortgage loan. The
mortgaged property must be in average to good condition. A maximum LTV ratio of
85% is permitted for a mortgage loan on a single family owner-occupied property
or 75% for a mortgage loan originated under a stated income documentation
program. A maximum LTV ratio of 75% is permitted for a mortgage loan on a
single family non-owner occupied property or 65% for a mortgage loan originated
under a stated income documentation program. The borrower must have a credit
score of 500 or greater, based on the LTV. The borrower's debt
service-to-income ratio is 50% or less which, in the case of adjustable rate
mortgage loans, will be based on the initial interest rate on the mortgage
loan. The borrower's debt service-to-income ratio may be increased to 55% if
the borrower has a LTV ratio of 75% or less. No


                                      S-57


Chapter 7 bankruptcies were discharged, and no Chapter 13 bankruptcies were
filed, within the last 18 months. No foreclosures on a mortgaged property are
allowed within the last 24 months.

     LOAN PROGRAM C+: The prospective borrower may have experienced significant
credit problems in the past. As to mortgage credit, the borrower may have had a
history of being generally 30 to 60 days delinquent. As to non-mortgage credit,
significant prior defaults may have occurred, provided that open collections
and charge-offs in excess of $5,000 must be paid down to zero at closing unless
they are two years or older and do not effect the title or are medical related.
The borrower may have made a late payment of 90 days within the last 12 months
on an existing mortgage loan. The mortgaged property must be in average to good
condition. A maximum LTV ratio of 80% is permitted for a mortgage loan on a
single family owner-occupied property or 65% for a mortgage loan originated
under a stated income documentation program. A maximum LTV ratio of 70% is
permitted for a mortgage loan on a single family non-owner occupied property or
55% for a mortgage loan originated under a stated income documentation program.
The borrower must have a credit score of 500 or greater, based on the LTV. The
borrower's debt service-to-income ratio is 55% or less which, in the case of
adjustable rate mortgage loans, will be based on the initial interest rate on
the mortgage loan. No Chapter 7 bankruptcies were discharged, and no Chapter 13
bankruptcies were filed, within the last 12 months. No foreclosures on a
mortgaged property are allowed within the last 12 months.

     LOAN PROGRAM C: The prospective borrower may have experienced substantial
credit problems in the past. As to mortgage credit, the borrower may have had a
history of being generally 30 to 60 days delinquent, and a maximum of two
90-day late payments or one 120-day late payment within the last 12 months is
acceptable on an existing mortgage loan. The prospective borrower's credit
history is poor and a notice of default may have been filed. As to non-mortgage
credit, significant prior defaults may have occurred, provided that open
collections and charge-offs in excess of $5,000 must be paid down to zero at
closing unless they are two years or older and do not affect the title or are
medical related. The mortgaged property must be in average to good condition. A
maximum LTV ratio of 70% is permitted for a mortgage loan on a single family
owner-occupied property and the stated income documentation program is not
allowed. A maximum LTV ratio of 60% is permitted for a mortgage loan on a
single family non-owner occupied property. The borrower must have a credit
score of 525 or greater, based on the LTV. The borrower's debt service-
to-income ratio is 55% or less which, in the case of adjustable rate mortgage
loans, will be based on the initial interest rate on the mortgage loan. Chapter
7 bankruptcies must be currently discharged and all Chapter 13 bankruptcies
must be paid or discharged at funding. No current NOD on a mortgaged property
is allowed.

     LOAN PROGRAM 80/20 COMBO 1ST: The prospective borrower may have minor
repayment delinquencies related to installment or revolving debt. As to
non-mortgage credit, some prior defaults may have occurred, provided that open
collections and charge-offs in excess of $1,000 must be paid down to zero at
closing unless they are two years or older and do not affect the title or are
medical related. At most one 30-day rolling late payment on full documentation
loans and no 30-day late payment on alternative and stated documentation loans
are acceptable within the last 12 months on an existing mortgage loan. No
60-day or 90-day late payments are acceptable. The credit score will be 580 or
greater on full documentation loans, 620 or greater on alternative
documentation loans and 640 or greater on stated documentation loans. The
mortgaged property must be in average to good condition. A maximum LTV ratio of
80% is permitted for a mortgage loan on a single family owner-occupied property
or 80% for a mortgage loan originated under a stated income documentation
program. Non-owner occupied properties are not allowed. The borrower's debt
service-to-income ratio is 50% or less which, in the case of adjustable rate
mortgage loans, will be based on the initial interest rate on the mortgage
loan. No Chapter 7 or Chapter 13 bankruptcies were discharged in the past 24
months. No foreclosures on a mortgaged property are allowed within the last 36
months.

     LOAN PROGRAM 80/20 COMBO 2ND: The prospective borrower may have minor
repayment delinquencies related to installment or revolving debt. As to
non-mortgage credit, some prior defaults may have occurred, provided that open
collections and charge-offs in excess of $1,000 must be paid down to zero at
closing unless they are two years or older and do not affect the title or are
medical related. At most one 30-day rolling late payment on full documentation
loans and no 30-day late payment on alternative and stated documentation loans
are acceptable within the last 12 months on


                                      S-58


an existing mortgage loan. No 60-day or 90-day late payments are acceptable.
The credit score will be 580 or greater on full documentation loans, 620 or
greater on alternative documentation loans and 640 or greater on stated
documentation loans. The mortgaged property must be in average to good
condition. A maximum CLTV ratio of 100% is permitted for a mortgage loan on a
single family owner-occupied property or 100% for a mortgage loan originated
under a stated income documentation program. Non-owner occupied properties are
not allowed. The borrower's debt service-to-income ratio is 50% or less which,
in the case of adjustable-rate mortgage loans, will be based on the initial
rate on the mortgage loan. No Chapter 7 or Chapter 13 bankruptcies were
discharged in the past 24 months. No foreclosures on a mortgaged property are
allowed within the last 36 months.

     For all credit grade categories, non-mortgage credit may include prior
defaults, and different levels of major adverse credit. Major adverse credit is
defined as collection accounts, charge-off accounts, judgments, liens,
delinquent property taxes, repossessions, garnishments and accounts currently
90 days or more delinquent. Any adverse account affecting title must also be
paid down to zero at closing except for tax liens which may remain open as long
as there is a payment plan and the payment is included in the debt service to
income ratio. Some adverse accounts may remain open after closing, provided the
borrower has adequate compensating factors.

EXCEPTIONS

     As described above, the indicated underwriting standards applicable to the
Mortgage Loans include the foregoing categories and characteristics as
guidelines only. On a case-by-case basis, it may be determined that an
applicant warrants a debt service-to-income ratio exception, a pricing
exception, a loan-to-value ratio exception, an exception from certain
requirements of a particular risk category, etc. An exception may be allowed if
the application reflects compensating factors, such as: low loan-to-value
ratio; stable ownership; low debt ratios; strong residual income; a maximum of
one 30-day late payment on all mortgage loans during the last 12 months; and
stable employment or ownership of current residence of four or more years.

     Based on the indicated underwriting standards applicable for mortgage
loans with risk features originated thereunder, those mortgage loans are likely
to experience greater rates of delinquency, foreclosure and loss, and may
experience substantially greater rates of delinquency, foreclosure and loss
than mortgage loans underwritten under more stringent underwriting standards.


                              THE MASTER SERVICER

     Wells Fargo (in its capacity as master servicer, the "Master Servicer") is
a national banking association with executive offices located at Sixth Street
and Marquette Avenue, Minneapolis, Minnesota 55479 and master servicing offices
located at 9062 Old Annapolis Road, Columbia, Maryland 21045. The Master
Servicer is engaged in the business of master servicing single-family
residential mortgage loans secured by properties located in all 50 states and
the District of Columbia.

     The Servicer or one or more subservicers will directly service the
Mortgage Loans under the supervision of the Master Servicer. The Master
Servicer, however, will not be ultimately responsible for the servicing of the
Mortgage Loans except to the extent described under "Servicing of the Mortgage
Loans" below.


                       THE SERVICER AND THE SUBSERVICER

GENERAL

     Ocwen Federal Bank FSB (together with any successor entity, "Ocwen" or the
"Servicer") will service the Mortgage Loans pursuant to the Transfer and
Servicing Agreement. The Servicer may perform any of its obligations under the
Transfer and Servicing Agreement through one or more subservicers, which may be
affiliates of the Servicer. Notwithstanding any subservicing arrangement, the
Servicer will remain liable for its servicing duties and obligations under the
Transfer and Servicing Agreement as if the Servicer alone were servicing the
Mortgage Loans. The Servicer will initially perform its obligations under the
Transfer and Servicing Agreement through Aegis Mortgage Corporation, as
subservicer.


                                      S-59


     The Seller, as owner of the servicing rights with respect to the Mortgage
Loans, will retain the right, in its sole discretion and at any time with 30
days' advance notice, without cause, to terminate the Servicer (including any
successor servicer) and replace the Servicer (or such successor servicer, as
the case may be) with a successor servicer acceptable to the Master Servicer
and the Rating Agencies (as evidenced by a letter from each Rating Agency to
the effect that such a termination and appointment will not result in a
downgrading of the rating of any of the Notes). Any successor servicer so
appointed will meet the requirements set forth in the Transfer and Servicing
Agreement. At such time as a successor servicer becomes the successor servicer,
such successor servicer will assume all of the Servicer's servicing obligations
as set forth in the Transfer and Servicing Agreement, provided, however, that
the successor servicer will not be liable for any actions or omissions of any
prior Servicer other than, in the case of a termination of the Servicer due to
a failure to make a required Delinquency Advance, such Delinquency Advance.

OCWEN FEDERAL BANK FSB

     Ocwen is a federally chartered savings bank with its home office in Fort
Lee, New Jersey, its servicing operations in Orlando, Florida and its corporate
offices in West Palm Beach, Florida. Ocwen is a wholly owned subsidiary of
Ocwen Financial Corporation, a public financial services holding company
("OCN") headquartered in West Palm Beach, Florida. OCN's primary businesses are
the servicing, special servicing and resolution of nonconforming, subperforming
and nonperforming residential and commercial mortgage loans for third parties,
as well as providing loan servicing technology and business-to-business
e-commerce solutions for the mortgage and real estate industries.

     On June 16, 2005, Ocwen sent correspondence to its mortgage loan servicing
customers providing notice that the servicing of their mortgage loans is being
transferred to a new entity, Ocwen Loan Servicing, LLC, effective on or about
July 1, 2005 (the "Effective Date"). This service transfer is the result of
Ocwen's voluntary dissolution, sale of its branch facility and deposits in Fort
Lee, New Jersey to another bank, and cessation of operations as a federal
savings bank, all subject to the completion of certain conditions of regulatory
approval. Upon Ocwen's dissolution and sale of the branch facility and
deposits, all of Ocwen's remaining assets and liabilities, including its
mortgage loan servicing business, will be transferred to and assumed by Ocwen
Loan Servicing, LLC, a wholly-owned subsidiary of OCN. Ocwen's management,
servicing portfolio and platform will not be changed as a result of the
foregoing transactions.

     Ocwen is rated as a "Strong" residential subprime servicer and residential
special servicer by Standard & Poor's and has an "RPS2" rating as a subprime
servicer and an "RSS2" rating as special servicer from Fitch. Ocwen is also
rated "SQ2-" ("Above Average") as a primary servicer of subprime loans and
"SQ2" ("Above Average") as a special servicer by Moody's Investors Service,
Inc. On April 23, 2004, Standard & Poor's placed its "Strong" residential
subprime servicer and residential special servicer ratings assigned to Ocwen on
"Credit Watch with negative implications." Ocwen expects the foregoing servicer
ratings to apply to Ocwen Loan Servicing, LLC as of the Effective Date.

     Ocwen has been named as a defendant in several potential class action
lawsuits challenging its mortgage servicing practices. To date, no such lawsuit
has been certified by any court as a class action. On April 13, 2004, these
lawsuits were consolidated in a single proceeding in the United States District
Court for the District of Illinois under caption styled: Ocwen Federal Bank FSB
Mortgage Servicing Litigation, MDL Docket No. 1604. Ocwen believes that its
servicing practices comply with legal requirements. Ocwen intends to defend
against such lawsuits. Ocwen is also subject to various other routine pending
litigation in the ordinary course of its business. While the outcome of
litigation is always uncertain, Ocwen's management is of the opinion that the
resolution of any of these claims and lawsuits will not have a material adverse
effect on the results of its operations or financial condition or its ability
to service the mortgage loans.

     Ocwen is an approved Freddie Mac and Fannie Mae seller/servicer. As of
March 31, 2005, Ocwen provided servicing for residential mortgage loans with an
aggregate unpaid principal balance of approximately $37.4 billion,
substantially all of which are being serviced for third parties.

     As of March 31, 2005, OCN had approximately $1.235 billion in assets,
approximately $902 million in liabilities and approximately $333 million in
equity. As of March 31, 2005, Ocwen's core


                                      S-60


capital ratio was approximately 24.53% and its total risk-based capital ratio
was approximately 32.72%, as measured by the Office of Thrift Supervision. For
the quarter ended March 31, 2005, OCN's net income was approximately $2.4
million, as compared to an approximate net income of $2.6 million reported for
the quarter ended December 31, 2004. OCN reported approximately $220.5 million
of cash and cash equivalents as of March 31, 2005.


     The following tables set forth, for the non-conforming credit mortgage
loan servicing portfolio serviced by Ocwen, certain information relating to the
delinquency, foreclosure, REO and loss experience with respect to such mortgage
loans (including loans in foreclosure in Ocwen's servicing portfolio (which
portfolio does not include mortgage loans that are subserviced by others)) at
the end of the indicated periods. The indicated periods of delinquency are
based on the number of days past due on a contractual basis. No mortgage loan
is considered delinquent for these purposes until it is one month past due on a
contractual basis.


                                     OCWEN
                        DELINQUENCIES AND FORECLOSURES


(DOLLARS IN THOUSANDS)


<TABLE>

                                                        AS OF
                                                  DECEMBER 31, 2002
                                  --------------------------------------------------
                                    BY NO.                  PERCENT BY   PERCENT BY
                                      OF       BY DOLLAR      NO. OF       DOLLAR
                                    LOANS       AMOUNT         LOANS       AMOUNT
                                  --------- -------------- ------------ ------------

Total Portfolio .................  229,335   $26,356,007       100.00%      100.00%
Period of Delinquency(1)
 30-59 days .....................    8,483   $   858,552         3.70%        3.26%
 60-89 days .....................    3,718   $   393,762         1.62%        1.49%
 90 days or more ................   19,823   $ 1,820,509         8.64%        6.91%
Total Delinquent Loans ..........   32,024   $ 3,072,823        13.96%       11.66%
Loans in Foreclosure(2) .........    8,323   $   849,266         3.63%        3.22%




                                                        AS OF
                                                  DECEMBER 31, 2003
                                  -------------------------------------------------
                                    BY NO.                  PERCENT BY   PERCENT BY
                                      OF       BY DOLLAR      NO. OF       DOLLAR
                                    LOANS       AMOUNT         LOANS       AMOUNT
                                  --------- -------------- ------------ -----------

Total Portfolio .................  256,891   $30,551,242       100.00%     100.00%
Period of Delinquency(1)
 30-59 days .....................   10,662   $ 1,117,125         4.15%       3.66%
 60-89 days .....................    4,595   $   488,900         1.79%       1.60%
 90 days or more ................   24,050   $ 2,341,837         9.36%       7.67%
Total Delinquent Loans ..........   39,307   $ 3,947,862        15.30%      12.92%
Loans in Foreclosure(2) .........    9,800   $ 1,057,710         3.81%       3.46%
</TABLE>


<TABLE>

                                                        AS OF
                                                  DECEMBER 31, 2004
                                  --------------------------------------------------
                                    BY NO.                  PERCENT BY   PERCENT BY
                                      OF       BY DOLLAR      NO. OF       DOLLAR
                                    LOANS       AMOUNT         LOANS       AMOUNT
                                  --------- -------------- ------------ ------------

Total Portfolio .................  237,985   $28,367,753       100.00%      100.00%
Period of Delinquency(1)
 30-59 days .....................   11,251   $ 1,127,427         4.73%        3.97%
 60-89 days .....................    5,066   $   515,826         2.13%        1.82%
 90 days or more ................   26,459   $ 2,545,313        11.12%        8.97%
Total Delinquent Loans ..........   42,776   $ 4,188,566        17.97%       14.77%
Loans in Foreclosure(2) .........    9,599   $   975,961         4.03%        3.44%




                                                        AS OF
                                                   MARCH 31, 2005
                                  -------------------------------------------------
                                    BY NO.                  PERCENT BY   PERCENT BY
                                      OF       BY DOLLAR      NO. OF       DOLLAR
                                    LOANS       AMOUNT         LOANS       AMOUNT
                                  --------- -------------- ------------ -----------

Total Portfolio .................  260,561   $32,119,431       100.00%     100.00%
Period of Delinquency(1)
 30-59 days .....................   10,491   $ 1,113,220         4.03%       3.47%
 60-89 days .....................    4,702   $   500,996         1.80%       1.56%
 90 days or more ................   26,927   $ 2,593,298        10.33%       8.07%
Total Delinquent Loans ..........   42,120   $ 4,207,514        16.17%      13.10%
Loans in Foreclosure(2) .........    9,066   $   933,590         3.48%       2.91%
</TABLE>

----------
(1)   Includes 19,691 loans totaling $1,827,274 for March 31, 2005, which were
delinquent at the time of transfer to Ocwen.


(2)   Loans in foreclosure are also included under the heading "Total
Delinquent Loans."

                                      S-61


                                     OCWEN
                               REAL ESTATE OWNED


(DOLLARS IN THOUSANDS)



<TABLE>

                                        AT                           AT
                                DECEMBER 31, 2002            DECEMBER 31, 2003
                           ---------------------------- ----------------------------
                              BY NO.                       BY NO.
                                OF         BY DOLLAR         OF         BY DOLLAR
                              LOANS         AMOUNT         LOANS         AMOUNT
                           ----------- ---------------- ----------- ----------------

Total Portfolio ..........   229,335      $26,356,007     256,891      $30,551,242
Foreclosed Loans(1) ......     3,484      $   285,598       4,849      $   437,510
Foreclosure Ratio(2) .....      1.52%            1.08%       1.89%            1.43%




                                        AT                           AT
                                DECEMBER 31, 2004              MARCH 31, 2005
                           ---------------------------- ----------------------------
                              BY NO.                       BY NO.
                                OF         BY DOLLAR         OF         BY DOLLAR
                              LOANS         AMOUNT         LOANS         AMOUNT
                           ----------- ---------------- ----------- ----------------

Total Portfolio ..........   237,985      $28,367,753     260,561      $32,119,431
Foreclosed Loans(1) ......     4,858      $   439,890       4,705      $   416,932
Foreclosure Ratio(2) .....      2.04%            1.55%       1.81%            1.30%
</TABLE>

----------
(1)   For the purpose of these tables, "Foreclosed Loans" means the principal
      balance of mortgage loans secured by mortgaged properties the title to
      which has been acquired by Ocwen.


(2)   The "Foreclosure Ratio" is equal to the aggregate principal balance or
      number of Foreclosed Loans divided by the aggregate principal balance, or
      number, as applicable, of mortgage loans in the Total Portfolio at the
      end of the indicated period.



                                     OCWEN
                          LOAN GAIN/(LOSS) EXPERIENCE


(DOLLARS IN THOUSANDS)



<TABLE>

                                            AS OF                 AS OF                 AS OF               AS OF
                                      DECEMBER 31, 2002     DECEMBER 31, 2003     DECEMBER 31, 2004     MARCH 31, 2005
                                     -------------------   -------------------   -------------------   ---------------

Total Portfolio(1) ...............       $26,356,007           $30,551,242           $28,367,753         $32,119,431
Net Gains/(Losses)(2)(3) .........       $ (275,036)           $ (249,516)           $ (348,145)         $ (359,659)
Net Gains/(Losses) as a
 Percentage of Total
 Portfolio .......................            (1.04)%               (0.82)%               (1.23)%             (1.12)%
</TABLE>

----------
(1)   "Total Portfolio" on the date stated above, is the principal balance of
      the mortgage loans outstanding on the last day of the period.


(2)   "Net Gains/(Losses)" are actual gains or losses incurred on liquidated
      properties and shortfall payoffs for the preceding one year period. Gains
      or losses on liquidated properties are calculated as net sales proceeds
      less unpaid principal at the time of payoff. Shortfall payoffs are
      calculated as the difference between the principal payoff amount and
      unpaid principal at the time of payoff.


(3)   Includes ($102,901) as of March 31, 2005, of losses attributable to
      loans, which were delinquent at the time of transfer to Ocwen.


                                      S-62


                        SERVICING OF THE MORTGAGE LOANS


GENERAL

     The Servicer will perform customary servicing functions with respect to
the Mortgage Loans, including, but not limited to, all collection, advancing
and loan level reporting obligations, maintenance of custodial and escrow
accounts, maintenance of insurance and enforcement of foreclosure proceedings
with respect to the Mortgage Loans and the Mortgaged Properties in accordance
with the provisions of the Transfer and Servicing Agreement. Among other
things, the Servicer is obligated under some circumstances to advance
delinquent payments of principal and interest with respect to the Mortgage
Loans and to pay the amount of Prepayment Interest Shortfalls on the Mortgage
Loans to the extent described below. In managing the liquidation of defaulted
Mortgage Loans, the Servicer will have sole discretion to take such action in
maximizing recoveries to Noteholders including, without limitation, selling
defaulted Mortgage Loans and REO Properties. See "The Agreements--Collection
Procedures" in the prospectus.

     The Seller will retain ownership of the servicing rights with respect to
the Mortgage Loans and generally may transfer the servicing to a successor
servicer at any time, subject to the conditions set forth in the Transfer and
Servicing Agreement.


THE SUBSERVICER

     On or prior to the Closing Date, the Servicer will enter into a
subservicing agreement (the "Subservicing Agreement") with Aegis Mortgage
Corporation, as subservicer (the "Subservicer"). Under the provisions of the
Subservicing Agreement, the Subservicer will be required to service the
Mortgage Loans pursuant to the servicing provisions of the Transfer and
Servicing Agreement. The Subservicer has a subprime mortgage servicer rating of
"Average" from S&P. The Subservicer's principal executive office is located at
3250 Briarpark, Suite 400, Houston, Texas 77042.

     References throughout this prospectus supplement to payments to be
received or made by the Servicer, expenses to be incurred by or reimbursed to
the Servicer, or obligations or responsibilities of the Servicer, generally
include the Subservicer acting on behalf of the Servicer unless the context
requires otherwise.


SERVICING ACCOUNT AND COLLECTION ACCOUNT

     The Servicer will establish and maintain a segregated Servicing Account
(the "Servicing Account") in the name of the Indenture Trustee into which the
Servicer will deposit payments on account of interest and principal for the
Mortgage Loans, less its Servicing Fee, as described under "The
Agreements--Servicing and Other Compensation and Payment of Expenses" in the
prospectus. On the 19th day of each month (or if such 19th day is not a
Business Day, the immediately preceding Business Day), the Servicer will remit
the amounts on deposit in the Servicing Account to the Master Servicer for
deposit into the collection account established by the Master Servicer pursuant
to the Transfer and Servicing Agreement (the "Collection Account"). The
Servicer and the Master Servicer are entitled to reimburse themselves from the
Servicing Account or Collection Account, as applicable, for any Advances made
and expenses incurred, as described below under "--Servicing Compensation and
Payment of Expenses" and "--Advances." The Servicing Account and the Collection
Account will consist solely of amounts relating to the Mortgage Loans, and
amounts on deposit therein will not be commingled with any other funds not
related to the Trust.


SERVICING COMPENSATION AND PAYMENT OF EXPENSES

     The Master Servicer will be entitled to retain any interest or other
income earned on funds held in the Collection Account, minus the Indenture
Trustee Fee and the Owner Trustee Fee.

     The Servicer will receive a monthly fee (the "Servicing Fee") calculated
as 0.50% annually on the outstanding principal balance of each Mortgage Loan
(the "Servicing Fee Rate"). Any successor to


                                      S-63


the Servicer will receive a fee in an amount equal to, but not greater than,
the Servicing Fee calculated at the Servicing Fee Rate. As additional servicing
compensation, the Servicer is entitled to retain all servicing-related fees,
including assumption fees, modification fees, ancillary servicing fees,
extension fees, non-sufficient fund fees and late payment charges (other than
Prepayment Premiums) to the extent collected from the borrower, together with
any interest or other income earned on funds held in the Servicing Account and
the escrow accounts.

     The Servicing Fees are subject to reduction as described below under
"--Prepayment Interest Shortfalls." The Master Servicer and the Servicer will
be entitled to reimbursement for certain expenses prior to payment of any
amounts to Noteholders. See "The Agreements--Servicing and Other Compensation
and Payment of Expenses" in the prospectus.


PREPAYMENT INTEREST SHORTFALLS

     When a borrower prepays a Mortgage Loan in full or in part between due
dates, the borrower pays interest on the amount prepaid only from the last due
date to the date of prepayment, with a resulting reduction in interest payable
for the month during which the prepayment is made. Any Prepayment Interest
Shortfall resulting from a prepayment in full or in part by a borrower during
the related Prepayment Period or Collection Period, as applicable, is generally
required to be paid by the Servicer, but only to the extent that such amount
does not exceed the total of its servicing compensation for the applicable
Payment Date.

     The Master Servicer is required to fund any Prepayment Interest Shortfall
required to be funded but not funded by the Servicer or a successor servicer,
but only to the extent that such amount does not exceed the total of its master
servicing compensation for the applicable Payment Date.


ADVANCES

     The Servicer will generally be obligated to make advances with respect to
delinquent payments of principal and interest on the Mortgage Loans (other than
Balloon Payments), adjusted to the related Mortgage Rate less the Servicing Fee
Rate (each, a "Delinquency Advance"), to the extent that such Delinquency
Advances, in its judgment, are reasonably recoverable from future payments and
collections, insurance payments or proceeds of liquidation of a Mortgage Loan.
The Master Servicer, as successor servicer, will be obligated to make any
required Delinquency Advance if the Servicer fails in its obligation to do so.
The Servicer and the Master Servicer, as applicable, will be entitled to
recover any Delinquency Advances made by it with respect to a Mortgage Loan out
of late payments thereon or out of related liquidation and insurance proceeds
or, if those amounts are insufficient, from collections on other Mortgage
Loans. Such reimbursements may result in Realized Losses.

     The purpose of making these Delinquency Advances is to maintain a regular
cashflow to the Noteholders, rather than to guarantee or insure against losses.
No party will be required to make any Delinquency Advances with respect to
reductions in the amount of the Scheduled Payments on Mortgage Loans made by a
bankruptcy court or a reduction of the applicable Mortgage Rate by application
of the Relief Act or similar state or local laws (a "Relief Act Reduction").

     In the course of performing its servicing obligations, the Servicer will
be required to pay all reasonable and customary "out-of-pocket" costs and
expenses, including costs and expenses of foreclosures (including reasonable
attorneys' fees and disbursements) incurred in the performance of its servicing
obligations, including, but not limited to, the cost of (1) the preservation,
restoration, inspection and protection of the Mortgaged Properties, (2) any
enforcement or judicial proceedings and (3) the management and liquidation of
Mortgaged Properties acquired in satisfaction of the related mortgage. Each
such expenditure will constitute a "Servicing Advance." Servicing Advances,
together with Delinquency Advances, are referred to herein as "Advances."

     The Servicer's right to reimbursement for Servicing Advances is limited to
late collections on the related Mortgage Loan, including liquidation proceeds,
released Mortgaged Property proceeds, insurance proceeds, condemnation proceeds
and such other amounts (excluding Prepayment Premiums) as may be collected by
the Servicer from the related borrower or otherwise relating to the


                                      S-64


Mortgage Loan in respect of which such unreimbursed amounts are owed, unless
such unreimbursed amounts are deemed to be nonrecoverable by the Servicer, in
which event reimbursement will be made to the Servicer from general funds in
the Servicing Account.


ADVANCE FACILITY

     The Subservicer will enter into an agreement (the "Advance Agency
Agreement") with an affiliate of Lehman Brothers Inc. (the "Advance Agent")
under which the Advance Agent will agree, subject to certain conditions, to
fund Advances which the Subservicer would otherwise be obligated to make under
the terms of the Subservicing Agreement and the Transfer and Servicing
Agreement. To the extent that the Advance Agent does not fund a required
Advance, the Subservicer will be obligated to do so.

     While the Advance Agency Agreement is in place, the Subservicer will be
required to remit all amounts available for reimbursement of Advances to the
Collection Account, without regard to whether any such amounts are owed to the
Subservicer. On each Payment Date the Administrator will remit such amount to
the Advance Agent, which will retain amounts owed to it for reimbursements of
Advances and pay to the Subservicer any amounts owed to it. The Subservicer
will be obligated to pay the Advance Agent a fee based on the amount of
Advances funded under the Advance Agency Agreement.

     Failure by the Subservicer to pay any amounts due to the Advance Agent
will be an event of default under the Subservicing Agreement.

     In addition, the Servicer may make other arrangements in the future to
fund Advances, which may involve a pledge of servicing rights or other
provisions.


COLLECTION OF TAXES, ASSESSMENTS AND SIMILAR ITEMS

     The Servicer will, to the extent required by the related loan documents,
maintain escrow accounts for the collection of hazard insurance premiums and
real estate taxes with respect to the Mortgage Loans, and will make Delinquency
Advances with respect to delinquencies in required escrow payments by the
related borrowers to the extent necessary to avoid the loss of a Mortgaged
Property due to a tax sale or the foreclosure thereof as a result of a tax
lien.


WAIVER OR MODIFICATION OF MORTGAGE LOAN TERMS

     As more specifically provided in the Transfer and Servicing Agreement, the
Servicer will make reasonable efforts (or will cause the Subservicer to make
reasonable efforts) to collect all payments called for under the terms and
provisions of the Mortgage Loans. Consistent with the foregoing, the Servicer
may in its discretion (1) waive any late payment charge or penalty interest and
(2) extend the due dates for payments due on a mortgage note for a period not
greater than 180 days; provided, however, that the Servicer cannot extend the
maturity of any such Mortgage Loan past the date on which the final payment is
due on the latest maturing Mortgage Loan as of the Cut-off Date. In the event
of any such modification that permits the deferral of interest or principal
payments on any Mortgage Loan, the Servicer must make a Delinquency Advance.


INSURANCE COVERAGE

     The Master Servicer and the Servicer are required to obtain and thereafter
maintain in effect a bond, corporate guaranty or similar form of insurance
coverage (which may provide blanket coverage), or any combination thereof,
insuring against loss occasioned by the errors and omissions of their
respective officers and employees.


EVIDENCE AS TO COMPLIANCE

     The Transfer and Servicing Agreement will provide that each year a firm of
independent accountants will furnish a statement to the Master Servicer to the
effect that such firm has examined certain documents and records of the
Servicer relating to the servicing of mortgage loans and that, on


                                      S-65


the basis of such examination, such firm is of the opinion that the servicing
has been conducted in accordance with the terms of the Transfer and Servicing
Agreement, except for (1) such exceptions as the firm believes to be immaterial
and (2) any other exceptions set forth in such statement. In addition, the
Transfer and Servicing Agreement will provide that each year the Master
Servicer will certify to the Depositor, the Indenture Trustee and the
Administrator that for the prior calendar year the Master Servicer has
performed and fulfilled its duties, responsibilities and obligations under the
Transfer and Servicing Agreement in all material respects throughout that year,
or, if there has been a default in the fulfillment of any such duties,
responsibilities or obligations, specifying each such default known to the
Master Servicer and the nature and status thereof, and the Master Servicer has
received from the Servicer an annual certificate of compliance and a copy of
the Servicer's annual audit report required under the Transfer and Servicing
Agreement, or, if any such certificate or report has not been received by the
Master Servicer, the Master Servicer is using its best reasonable efforts to
obtain such certificate or report.

CUSTODY OF THE MORTGAGE FILES

     The Servicer will generally not have responsibility for custody of the
Mortgage Loan documents described under "The Sale Agreement and the Transfer
and Servicing Agreement--Sale of the Mortgage Loans" below. These documents are
generally required to be delivered to the Custodian. The Custodian will hold
the related Mortgage Loan documents on behalf of the Indenture Trustee pursuant
to the Transfer and Servicing Agreement. The Mortgage Loan documents related to
a Mortgage Loan will be held separate from other mortgage loan files held by
the Custodian.

TERMINATION OF SERVICER

     Upon the occurrence of certain events as described under "The Sale
Agreement and the Transfer and Servicing Agreement--Events of Default; Servicer
Termination Events" in this prospectus supplement, the Servicer may be
terminated and a successor servicer appointed. In addition, the Seller retains
the right to terminate the Servicer without cause, as described under "The
Servicer and the Subservicer--General" above. Any successor servicer must be
qualified to service mortgage loans for Freddie Mac or Fannie Mae and must have
a net worth of not less than $25,000,000.

THE CREDIT RISK MANAGER

     The Murrayhill Company, a Colorado corporation (the "Credit Risk Manager")
will monitor and make recommendations to the Subservicer regarding certain
delinquent and defaulted Mortgage Loans, and will report to the Depositor on
the performance of such Mortgage Loans. The Credit Risk Manager will rely on
Mortgage Loan data that is provided to it by the Subservicer and/or the Master
Servicer in performing its advisory and monitoring functions. The Credit Risk
Manager will be entitled to receive a fee (the "Credit Risk Manager's Fee")
until the termination of the Trust or until its removal by the Depositor in
accordance with the terms of the Transfer and Servicing Agreement. This fee
will be paid by the Issuer and will be calculated as 0.015% annually (the
"Credit Risk Manager's Fee Rate") on the Scheduled Principal Balance of each
Mortgage Loan.

OPTIONAL PURCHASE OF DISTRESSED MORTGAGE LOANS

     Subject to certain limitations set forth in the Transfer and Servicing
Agreement, the Residual Holder will have the right, but not the obligation, to
purchase for their own account any Mortgage Loan which becomes more than 90
days delinquent or for which the Servicer has accepted a deed in lieu of
foreclosure (a "Distressed Mortgage Loan") for a purchase price equal to the
outstanding principal balance of such Mortgage Loan, plus accrued interest
thereon to the date of repurchase, plus any unreimbursed Advances or Servicing
Fees allocable to the Distressed Mortgage Loan. Any such repurchase will be
accomplished by remittance to the Master Servicer of the purchase price for the
Distressed Mortgage Loan for deposit into the Collection Account.

SPECIAL SERVICER FOR DISTRESSED MORTGAGE LOANS

     The Seller has the option to transfer the servicing of any Distressed
Mortgage Loan to a special servicer selected by Aegis and any special servicer
so selected will report directly to the Master Servicer. Any special servicing
fee paid to a special servicer will not exceed the Servicing Fee Rate.


                                      S-66


          THE SALE AGREEMENT AND THE TRANSFER AND SERVICING AGREEMENT

GENERAL

     On the Closing Date, pursuant to the sale agreement between the Seller and
the Depositor (the "Sale Agreement"), the Seller will sell the Mortgage Loans
to the Depositor. Pursuant to a transfer and servicing agreement to be dated as
of June 1, 2005 (the "Transfer and Servicing Agreement"), among the Issuer, the
Depositor, the Seller, the Master Servicer, the Administrator, the Custodian,
the Servicer, the Credit Risk Manager and the Indenture Trustee, the Depositor
will, in turn, sell the Mortgage Loans to the Trust. In addition to the
provisions of these agreements summarized elsewhere in this prospectus
supplement, there is set forth below a summary of certain other provisions of
such agreements. See also "The Agreements--The Trustee," "--Events of Default;
Rights upon Event of Default," "--Amendment" and "--Termination; Optional
Termination" in the prospectus.

ADMINISTRATION

     The Administrator or the Depositor will agree, to the extent provided in
the Transfer and Servicing Agreement and the Administration Agreement, to
provide certain notices and to perform certain other administrative obligations
required to be performed by the Issuer, the Indenture Trustee and the Owner
Trustee under the Transfer and Servicing Agreement, the Indenture and the Trust
Agreement. Neither the Administrator nor the Depositor will receive additional
compensation for their services under the Administration Agreement.

REPORTS TO SECURITYHOLDERS

     On each Payment Date, the Administrator will make available on the
Administrator's website at http://www.ctslink.com a payment statement
containing the following, based solely on information received from the
Servicer or the Master Servicer:

     o    the aggregate amount of payments to be made on such Payment Date to
          the holders of each Class of Notes allocable to principal on the
          Mortgage Loans, including Net Liquidation Proceeds and Insurance
          Proceeds, stating separately the amount attributable to scheduled
          principal payments and unscheduled payments;

     o    the aggregate amount of payments to be made on such Payment Date to
          the holders of each Class of Notes allocable to interest, and the
          calculation thereof;

     o    the amount, if any, of any distributions to the Residual Holder;

     o    the amount of all Prepayment Premiums received;

     o    the amount of Advances for the related Collection Period, the amount
          of unrecovered Advances outstanding and the aggregate amount of
          nonrecoverable Advances;

     o    the total Scheduled Principal Balance of the Mortgage Loans for such
          Payment Date;

     o    the Class Principal Amount of each Class of Notes, giving effect to
          payments on such Payment Date;

     o    the amount of any Realized Losses incurred or received with respect to
          the Mortgage Loans (x) in the applicable Prepayment Period and (y) in
          the aggregate since the Cut-off Date, and the aggregate Realized
          Losses during the preceding twelve month period expressed as a
          percentage of the total Scheduled Principal Balances of the Mortgage
          Loans;

     o    the amount of the Servicing Fee and Credit Risk Manager's Fee paid
          with respect to such Payment Date;

     o    the number and total Scheduled Principal Balance of Mortgage Loans (a)
          remaining outstanding, (b) delinquent 30 to 59 days on a contractual
          basis, (c) delinquent 60 to 89 days on a contractual basis, (d)
          delinquent 90 or more days on a contractual basis, (e) as to which
          foreclosure proceedings have been commenced, (f) in bankruptcy and (g)
          as to which the Mortgaged Properties have become REO Properties, in
          each case, as of the close of business on the last business day of the
          calendar month immediately preceding the month in which such Payment
          Date occurs;


                                      S-67


     o    the total Scheduled Principal Balance of any Mortgage Loans with
          respect to which the related Mortgaged Property became a REO Property
          as of the close of business on the last Business Day of the calendar
          month immediately preceding the month in which such Payment Date
          occurs;

     o    with respect to substitution of Mortgage Loans in the preceding
          calendar month, the Scheduled Principal Balance of each deleted
          Mortgage Loan, and of each substitute Mortgage Loan;

     o    the level of LIBOR and the Interest Rate applicable to such Payment
          Date with respect to each Class of Notes;

     o    the Interest Remittance Amount and the Principal Remittance Amount for
          such Payment Date;

     o    if applicable, the amount of any shortfall (i.e., the difference
          between the aggregate amounts of principal and interest which
          Noteholders would have received if there were sufficient available
          amounts in the Note Payment Account and the amounts actually paid);

     o    the aggregate outstanding Prepayment Interest Shortfalls and Basis
          Risk Shortfalls, if any, for each Class of Notes, after giving effect
          to payments on such Payment Date;

     o    the amount of any Overcollateralization Deficiency after giving effect
          to payments on such Payment Date;

     o    the amount of any payments made or received pursuant to the Swap
          Agreement with respect to such Payment Date;

     o    the amount of any payments received pursuant to the Cap Agreement or
          the Class N Cap Agreement;

     o    the level of LIBOR and the Interest Rate that will be applicable to
          the next Payment Date with respect to each Class of Notes; and

     o    any other information required pursuant to the Transfer and Servicing
          Agreement.


DELIVERY AND SUBSTITUTION OF MORTGAGE LOANS

     The Seller will be required to repurchase any Mortgage Loan for which the
required documentation is not delivered on the Closing Date or reasonably
promptly thereafter. Under the limited circumstances specified in the Transfer
and Servicing Agreement, the Seller may substitute substantially similar
mortgage loans for Mortgage Loans initially delivered. It is anticipated that
any permitted substitution will not materially change the characteristics of
the Mortgage Pool. See "The Trust--The Loans" and "--Substitution of Trust
Assets" in the prospectus.


VOTING RIGHTS

     Voting rights under the Transfer and Servicing Agreement will be allocated
as follows:

     o    98% to the Classes of Offered Notes in proportion to their respective
          outstanding note principal amounts; and

     o    2% to the Residual Holder.


TERMINATION OF THE TRUST

     The Trust will terminate upon the payment to the holders of all Classes of
Notes of all amounts required to be paid to the holders and upon the last to
occur of:

     o    the final payment or other liquidation of the last Mortgage Loan;

     o    the disposition of all property acquired in respect of any Mortgage
          Loan remaining in the trust; and


                                      S-68


     o    exercise by the Residual Holder of its right to purchase the Mortgage
          Loans and other property of the Trust as described under "Description
          of the Notes--Optional Purchase of Mortgage Loans."


SALE OF THE MORTGAGE LOANS

     In connection with the sale of the Mortgage Loans by the Depositor to the
Indenture Trustee on the Closing Date, the Depositor will be required to
deliver a loan file to the Custodian with respect to each Mortgage Loan
consisting of, as to each Mortgage Loan:

     o    the original mortgage note endorsed to the order of the Indenture
          Trustee or in blank, or a lost note affidavit in lieu thereof, with
          all prior and intervening endorsements;

     o    the original recorded mortgage or a certified copy thereof, or if the
          original mortgage has been submitted for recordation but has not been
          returned by the applicable public recording office, a certified copy
          thereof;

     o    for any Mortgage Loan not recorded with the MERS System (Registered
          Trademark) , the original assignment of the mortgage to the Indenture
          Trustee or in blank, in recordable form (except as described below);

     o    each original recorded intervening assignment of the mortgage as may
          be necessary to show a complete chain of title to the Indenture
          Trustee, or if any assignment has been submitted for recordation but
          has not been returned from the applicable public recording office or
          is otherwise not available, a certified copy thereof;

     o    the original title insurance policy, note of title insurance or
          written commitment, or a copy of such policy certified as true and
          correct by the insurer; and

     o    the original or certified copies of each assumption agreement,
          modification agreement, written assurance or substitution agreement,
          if any.

     Each transfer of the Mortgage Loans from the Seller to the Depositor and
from the Depositor to the Issuer will be intended to be a sale of the Mortgage
Loans and will be reflected as such in the Sale Agreement and the Transfer and
Servicing Agreement, respectively. However, in the event of insolvency of
either the Seller or the Depositor, a trustee in bankruptcy or a receiver or
creditor of the insolvent party could attempt to recharacterize the sale of the
Mortgage Loans by the insolvent party as a financing secured by a pledge of the
Mortgage Loans. In the event that a court were to recharacterize the sale of
the Mortgage Loans by either the Seller or the Depositor as a financing, each
of the Depositor, as transferee of the mortgage loans from the Seller, and the
Issuer will have a perfected security interest in the Mortgage Loans
transferred to it. Upon the pledge of the Trust Estate to the Indenture Trustee
pursuant to the Indenture, the Indenture Trustee will have a first priority
perfected security interest in the Mortgage Loans. The Transfer and Servicing
Agreement will require that the Mortgage Loan documents referred to in the
first three bullets in the paragraph above be delivered to the Custodian on
behalf of the Issuer and the Indenture Trustee. In addition, the Depositor will
file an initial financing statement to perfect the interest of the Indenture
Trustee in the Trust Estate. Under the terms of the Transfer and Servicing
Agreement, each of the Depositor and the Issuer will agree to prepare and file
or cause to be prepared and filed all filings necessary to maintain such
perfection.

     With respect to certain Mortgage Loans, it is expected that the mortgages
or assignments of mortgage will have been recorded in the name of an agent on
behalf of the holder of the related mortgage note. In that case, no mortgage
assignment in favor of the Indenture Trustee will be required to be prepared,
delivered or recorded. Instead, the Servicer will be required to take all
actions as are necessary to cause the Indenture Trustee to be shown as the
owner of the related mortgage loan on the records of the agent for purposes of
the system of recording transfers of beneficial ownership of mortgages
maintained by the agent. Assignments of mortgage will be recorded only to the
extent necessary to perfect the security interest of the Indenture Trustee in a
Mortgaged Property, as provided in the Transfer and Servicing Agreement.


                                      S-69


     The Custodian, on behalf of the Indenture Trustee, is required to review
each mortgage note and provide certification regarding receipt of such Mortgage
Loan notes on or before the Closing Date and the Custodian is required to
review the remainder of the Mortgage Loan file within a specified number of
days after the Closing Date and provide a final certification on the entire
loan file prior to the first anniversary of the Closing Date.

     On the Closing Date, the Depositor will also assign to the Indenture
Trustee all the Depositor's right, title and interest in the Sale Agreement
with respect to the representations and warranties made therein by the Seller
in respect of the Mortgage Loans and the remedies provided for breach of such
representations and warranties. Such representations and warranties will
include, among others, that:

     o    prior to the sale of the Mortgage Loans to the Depositor, the Seller
          will have good title to the Mortgage Loans, free of any liens;

     o    each Mortgage Loan was originated in compliance with applicable law;

     o    no Mortgage Loan is a "high cost" or "covered" loan under any federal,
          state or local predatory or abusive lending law;

     o    no proceeds from any Mortgage Loan were used to finance single-premium
          credit insurance policies;

     o    each Mortgaged Property is free of damage due to casualty; and

     o    no Prepayment Premium is payable on any Mortgage Loan for a period in
          excess of five years following origination.

     Upon discovery by the Administrator or any other party of a breach of any
representation or warranty that materially and adversely affects the interests
of the Noteholders, the discovering party will promptly notify the Seller. The
Seller will have 90 days from its discovery or its receipt of notice to cure
the breach or, if required, (1) to repurchase the affected Mortgage Loan at a
purchase price equal to the outstanding principal balance of such Mortgage
Loan, plus accrued interest thereon to the date of repurchase, plus any
unreimbursed Servicing Advances allocable to that Mortgage Loan, plus any costs
and damages incurred by the Trust as a result of violation of any applicable
federal, state or local predatory or abusive lending laws in connection with
the origination of the Mortgage Loan, or (2) subject to the conditions in the
Transfer and Servicing Agreement, to substitute a qualified substitute mortgage
loan. See "Loan Program--Representations by Sellers; Repurchases" in the
prospectus. Aegis will guarantee the Seller's obligations to repurchase or
substitute for defective Mortgage Loans.

EVENTS OF DEFAULT; SERVICER TERMINATION EVENTS

     If the Master Servicer is in material breach of its obligations under the
Transfer and Servicing Agreement, the Indenture Trustee may, and must if
directed to do so by either the Residual Holder or Noteholders having more than
50% of the voting rights applicable to each Class of Notes affected thereby,
terminate the Master Servicer. In the event of such a termination, the
Indenture Trustee must appoint a successor master servicer to assume the
obligations of the Master Servicer under the Transfer and Servicing Agreement.
If the Indenture Trustee is unable to appoint a successor master servicer, the
Indenture Trustee will be obligated to master service the Mortgage Loans. Any
successor master servicer will be entitled to compensation arrangements similar
to, but no greater than, those provided to the predecessor master servicer.

     If the Servicer is in material breach of its obligations under the
Transfer and Servicing Agreement, the Master Servicer may, and must if directed
to do so by either the Residual Holder or Noteholders having more than 50% of
the voting rights applicable to each Class of Notes affected thereby, terminate
the Servicer. In the event of such a termination, the Seller will appoint a
successor servicer acceptable to the Master Servicer and each Rating Agency to
assume the obligations of the Servicer under the Transfer and Servicing
Agreement, including the obligation to make Advances. If the Seller does not
appoint a successor servicer within 14 calendar days following notification to
the Servicer of termination, then the Master Servicer will succeed as servicer
or appoint a successor


                                      S-70


servicer. Any successor servicer will be entitled to compensation arrangements
similar to, but no greater than, those provided to the predecessor servicer.
See "The Agreements--Events of Default; Rights upon Event of Default" in the
prospectus.

     In addition, so long as Ocwen is Servicer, a "Servicer Termination Event"
will have occurred and the Servicer will be terminated and a successor servicer
appointed if certain delinquency or loss levels with respect to the Mortgage
Loans are reached, as provided in the Transfer and Servicing Agreement.

     The Seller retains the right to terminate the Servicer without cause, as
described under "The Servicer and the Subservicer--General" in this prospectus
supplement.


                     THE TRUST AGREEMENT AND THE INDENTURE


GENERAL

     As described under "Description of the Trust," the Trust Agreement will
provide for the formation of the Issuer. The Notes will be issued pursuant to
the Indenture. Notes in certificated form will be transferable and exchangeable
at the Corporate Trust Office of the Administrator, which will serve as Note
Registrar and Paying Agent. The Administrator will provide to a prospective or
actual Noteholder, without charge, on written request, an electronic copy
(without exhibits) of the Indenture, the Trust Agreement and the Transfer and
Servicing Agreement. Requests should be addressed to Wells Fargo Bank, N.A.,
P.O. Box 98, Columbia, Maryland 21046, Attention: Aegis 2005-3.

     The following summary describes certain terms of the Trust Agreement, the
Indenture and the Administration Agreement. The summary does not purport to be
complete and is subject to, and qualified in its entirety by reference to, all
the provisions of such agreements.


CERTAIN MATTERS UNDER THE AGREEMENTS

     Duties of the Owner Trustee. The Owner Trustee will be required to
discharge (or cause to be discharged) all of its responsibilities pursuant to
the terms of the Trust Agreement and any other document or agreement to which
the Issuer or the Owner Trustee is a party and will administer the Trust in the
interest of the Residual Holder, in accordance with the provisions of the Trust
Agreement. As described under "Description of the Trust" above and
"-Administration" below, the Administrator and the Depositor will perform on
behalf of the Owner Trustee and the Trust certain administrative functions
required under the Trust Agreement, the Indenture and the Transfer and
Servicing Agreement.

     Wilmington Trust Company, in its individual capacity, may be held liable
for its own willful misconduct, gross negligence or bad faith in performing its
duties as Owner Trustee; provided, however, that Wilmington Trust Company will
not be liable for any error of judgment made in good faith by an officer of the
Owner Trustee or with respect to any action taken or omitted to be taken by the
Owner Trustee in accordance with the instructions of the Residual Holder.
Wilmington Trust Company is not required to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of the Owner
Trustee's duties under the Trust Agreement or any other document or agreement
to which the Issuer or the Owner Trustee is a party, or in the exercise of any
of the Owner Trustee's rights or powers, if Wilmington Trust Company has
reasonable grounds for believing that repayment of those funds or adequate
indemnity against risk or liability is not reasonably assured or provided to
it.

     Expenses and Indemnities of the Owner Trustee. The Owner Trustee will be
entitled to reimbursement of all reasonable expenses incurred by it in
accordance with the Trust Agreement. Such reimbursement will be paid from
amounts allocable to interest and principal on the Mortgage Loans, prior to
payment of any amounts to Noteholders. The Owner Trustee will also be entitled
to indemnification from the Trust for any claim, loss, liability or expense
incurred by it in connection with the administration of the Trust and the
performance of its duties under the Trust Agreement or any other document or
agreement to which the Issuer or the Owner Trustee is a party, except to the


                                      S-71


extent that any such claim, loss, liability or expense arises out of or results
from Wilmington Trust Company's own willful misconduct, fraud or gross
negligence or results from any of the other circumstances that are specified in
the Trust Agreement. Any amounts payable in connection with such
indemnification will be paid from the Certificate Distribution Account prior to
payment of any amounts distributable to the Ownership Certificate under the
Transfer and Servicing Agreement.

     Resignation or Removal of Owner Trustee. The Owner Trustee may, upon 30
days' advance written notice to the Depositor, the Residual Holder and the
Indenture Trustee, resign at any time, in which event the Depositor will appoint
a successor Owner Trustee that satisfies the eligibility requirements provided
in the Trust Agreement. The Owner Trustee may also be removed at any time by the
Depositor if (a) the Owner Trustee ceases to be eligible to continue to act as
Owner Trustee under the Trust Agreement, (b) the Owner Trustee is legally unable
to act or is adjudged bankrupt or insolvent or (c) a receiver or other public
officer takes charge of the Owner Trustee or its property. If the Owner Trustee
is removed the Depositor will promptly appoint a successor Owner Trustee. If a
successor Owner Trustee does not take office within 30 days after the retiring
Owner Trustee resigns or is removed, the retiring Owner Trustee may petition any
court of competent jurisdiction for appointment of a successor Owner Trustee.

     Any resignation or removal of the Owner Trustee and appointment of a
successor Owner Trustee will not become effective until acceptance of the
appointment by the successor Owner Trustee, whereupon the Administrator will
provide notice of such resignation and appointment to the Residual Holder, the
Indenture Trustee, the Noteholders and the Rating Agencies.

     Any fees and expenses owed to the retiring Owner Trustee in connection with
such resignation or removal will be paid as described above under "-Expenses and
Indemnities of the Owner Trustee."

     Duties of the Indenture Trustee. If no event of default under the Indenture
(each, an "Indenture Default") has occurred, the Indenture Trustee will be
required to perform only those duties specifically required of it under the
Indenture and the Transfer and Servicing Agreement. As described under
"-Administration" below, the Administrator will perform on behalf of the
Indenture Trustee certain administrative functions required under the Indenture
and the Transfer and Servicing Agreement.

     Upon receipt of the various certificates, statements and opinions required
to be furnished to it, the Indenture Trustee will be required to examine them to
determine whether they are in the form required by the Indenture; however, the
Indenture Trustee will not be responsible for the accuracy or content of any
certificates, statements or opinions furnished to it by the Issuer, the
Depositor, the Administrator, the Master Servicer or any other party and, in the
absence of bad faith on its part, may conclusively rely on such certificates,
statements and opinions.

     The Indenture Trustee may be held liable for its own negligent action or
failure to act, or for its own willful misconduct; provided, however, that the
Indenture Trustee will not be personally liable with respect to any action
taken, suffered or omitted to be taken by it in good faith in accordance with
the direction of the Noteholders in an Indenture Default, and the Indenture
Trustee will not be deemed to have notice of any Indenture Default unless an
officer of the Indenture Trustee has actual knowledge of the Indenture Default
or written notice of an Indenture Default is received by the Indenture Trustee
at its Corporate Trust Office. See "--Events of Default under the Indenture"
below. The Indenture Trustee is not required to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of its duties
under the Indenture, or in the exercise of any of its rights or powers, if it
has reasonable grounds for believing that repayment of those funds or adequate
indemnity against risk or liability is not reasonably assured to it.

     Events of Default under the Indenture. An Indenture Default will generally
consist of: (i) a default for one month or more in the payment of any Accrued
Note Interest due on any Class of Notes then outstanding; (ii) a default in the
payment of the entire principal of any Note when the same becomes due and
payable under the Indenture or on the applicable Maturity Date; (iii) a default
in the observance or performance of any covenant or agreement of the Issuer made
in the Indenture and the continuation of any such default for a period of 30
days after notice thereof is given to the


                                      S-72


Owner Trustee as provided in the Indenture; (iv) any representation or warranty
made by the Issuer in the Indenture or in any certificate delivered pursuant
thereto or in connection therewith having been incorrect in a material respect
when made, and such breach not having been cured within 30 days after notice
thereof is given to the Owner Trustee as provided in the Indenture; (v) the
receipt of notice from the Residual Holder to the Indenture Trustee of such
holder's failure to qualify as a REIT or a qualified REIT subsidiary; or (vi)
certain events of bankruptcy, insolvency, receivership or liquidation of the
Issuer.

     If an Indenture Default occurs and is continuing, the Indenture Trustee or
holders of a majority by Class Principal Amount of the Priority Class or
Priority Classes of Notes then outstanding may declare the principal of the
Notes to be immediately due and payable. Such declaration may, under certain
circumstances, be rescinded by the holders of a majority by Class Principal
Amount of such Priority Class or Priority Classes of Notes. The "Priority Class"
is the Class or Classes of Notes then outstanding having the highest priority of
payment of interest.

     If the Notes are declared immediately due and payable following an
Indenture Default, the Indenture Trustee may, as directed, institute proceedings
to collect amounts due or foreclose on collateral pledged to secure the Notes,
exercise remedies as a secured party, sell the assets of the Trust Estate
pledged to secure the Notes, or elect to maintain possession of such assets and
continue to apply collections on such assets as if there had been no declaration
of acceleration. However, the Indenture Trustee is prohibited from selling the
assets of the Trust Estate following an Indenture Default, other than a default
in the payment of any principal of or a default for one month or more in the
payment of any interest on any Class of Notes, unless (i) the holders of all
outstanding Notes consent to such sale, (ii) the proceeds of the sale are
sufficient to pay in full the principal of and the accrued interest on such
outstanding Notes at the date of such sale or (iii) the Indenture Trustee
determines, based on information provided by the Administrator, that the
proceeds of the Trust Estate and the other property of the Trust would not be
sufficient on an ongoing basis to make all payments on the Notes as such
payments would have become due if such obligations had not been declared due and
payable, and the Indenture Trustee obtains the consent of the holders of 66 2/3%
of the aggregate outstanding amount of the Notes.

     If the collateral securing the Notes is sold following an Indenture
Default, proceeds of such sale, after deduction of the expenses of such sale,
will be applied in the order of priority provided in the Indenture.

     If an Indenture Default occurs and is continuing, the Indenture Trustee
will 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 the Notes, if the
Indenture Trustee reasonably believes it will not be adequately indemnified
against the costs, expenses and liabilities that might be incurred by it in
complying with such request. Subject to the provisions for indemnification and
certain limitations contained in the Indenture, the holders of a majority in
principal amount of the outstanding Notes will have the right to direct the
time, method and place of conducting any proceeding or any remedy available to
the Indenture Trustee, and the holders of a majority in principal amount of the
Notes then outstanding may, in certain cases, waive any default with respect
thereto, except a default in the payment of principal or interest or a default
in respect of a covenant or provision of the Indenture that cannot be modified
without the waiver or consent of all the holders of the outstanding Notes.

     Except as described above in the case of an Indenture Default, no
Noteholder will have the right to institute any proceeding with respect to the
Indenture, unless (i) such holder previously has given to the Indenture Trustee
written notice of a continuing Indenture Default, (ii) the holders of not less
than 25% in principal amount of the outstanding Notes have made written request
to the Indenture Trustee to institute such proceeding in its own name as the
Indenture Trustee, (iii) such holder or holders have offered the Indenture
Trustee reasonable indemnity, (iv) the Indenture Trustee has, for 60 days after
receipt of such notice, request and offer of indemnity, failed to institute such
proceeding and (v) no direction inconsistent with such written request has been
given to the Indenture Trustee during such 60-day period by the holders of a
majority in principal amount of such outstanding Notes.


                                      S-73


     In addition, the Indenture Trustee and the Noteholders, by accepting the
Notes, will covenant that they will not at any time institute against the Trust
any bankruptcy, reorganization or other proceeding under any federal or state
bankruptcy or similar law.

     None of the Indenture Trustee, the Master Servicer, the Administrator or
the Owner Trustee in their respective individual capacities, or the Residual
Holder, or any of their respective owners, beneficiaries, agents, officers,
directors, employees, affiliates, successors or assigns will be personally
liable for the payment of the principal of or interest on the Notes or for the
agreements of the Trust contained in the Indenture. See also "The
Agreements--Events of Default; Rights upon Event of Default--Indenture" in the
prospectus.

     Expenses and Indemnities of the Indenture Trustee. The Indenture Trustee
will be entitled to reimbursement of all reasonable expenses incurred by it and
any disbursements or advances made by it in accordance with the Indenture or the
Transfer and Servicing Agreement, except for expenses incurred or any
disbursements and advances made by it in the routine administration of its
duties under the Indenture and the Transfer and Servicing Agreement and except
for any expenses arising from its negligence, bad faith or willful misconduct.
The Indenture Trustee will also be entitled to indemnification from the Trust
for any claim, loss, liability or expense incurred by it in connection with the
administration of the Trust and the performance of its duties under the
Indenture, the Transfer and Servicing Agreement or any other document or
agreement to which the Indenture Trustee is a party.

     The Indenture Trustee will be entitled to reimbursement for its expenses
and indemnification amounts as described above from amounts allocable to
interest and principal on the Mortgage Loans, prior to payment of any amounts to
Noteholders, provided that such reimbursable amounts will not exceed $200,000 in
the aggregate per year from the Closing Date to the first anniversary of the
Closing Date and for each subsequent anniversary year thereafter. The Indenture
Trustee will be entitled to reimbursement for its expenses and indemnification
amounts in excess of $200,000 in each anniversary year from any Interest
Remittance Amount remaining after payment of any Net Swap Payment, Swap
Termination Payment, Accrued Note Interest and the Credit Risk Manager's Fee, as
described under "Description of the Notes--Payments of Interest--Interest
Payment Priorities."

     Resignation or Removal of Indenture Trustee. The Indenture Trustee may,
upon 90 days' advance written notice to the Depositor, the Issuer, each
Noteholder and each Rating Agency, resign at any time, in which event the Issuer
will appoint a successor Indenture Trustee that satisfies the eligibility
requirements provided in the Indenture. The Indenture Trustee may also be
removed at any time by the Issuer if (a) the Indenture Trustee ceases to be
eligible to continue to act as Indenture Trustee under the Indenture; (b) the
Indenture Trustee is adjudged bankrupt or insolvent; (c) a receiver or other
public officer takes charge of the Indenture Trustee or its property; or (d) the
Indenture Trustee otherwise becomes incapable of acting. If the Indenture
Trustee is removed the Issuer will promptly appoint a successor Indenture
Trustee. If a successor Indenture Trustee does not take office within 30 days
after the retiring Indenture Trustee resigns or is removed, the retiring
Indenture Trustee, the Issuer or the holders of more than 50% of the aggregate
Class Principal Amount of the outstanding Notes may petition any court of
competent jurisdiction for appointment of a successor Indenture Trustee.

     Any resignation or removal of the Indenture Trustee and appointment of a
successor Indenture Trustee will not become effective until acceptance of the
appointment by the successor Indenture Trustee, whereupon the successor
Indenture Trustee will mail notice of its succession to all Noteholders. The
predecessor Indenture Trustee will be required to transfer all property held by
it as Indenture Trustee to the successor Indenture Trustee.

     Any fees and expenses owed to the retiring Indenture Trustee in connection
with such resignation or removal will be paid as described above under "Expenses
and Indemnities of the Indenture Trustee."

     Redemption. The Notes are subject to redemption under the circumstances
described under "Description of the Notes--Optional Purchase of Mortgage Loans."


                                      S-74


     The Indenture will be discharged upon the delivery to the Administrator for
cancellation of all Notes or, with certain limitations, upon deposit with the
Administrator of funds sufficient for the payment in full of all the Notes. Upon
the payment in full of all outstanding Notes and the discharge of the Indenture,
the Owner Trustee will succeed to all the rights of the Indenture Trustee, the
Master Servicer and the Administrator, and the Residual Holder will succeed to
all the rights of the Noteholders pursuant to the Transfer and Servicing
Agreement.


ADMINISTRATION

     The Administrator or the Depositor will agree, to the extent provided in
the Transfer and Servicing Agreement and the Administration Agreement, to
provide certain notices and to perform certain other administrative obligations
required to be performed by the Issuer, the Indenture Trustee and the Owner
Trustee under the Transfer and Servicing Agreement, the Indenture and the Trust
Agreement. Neither the Administrator nor the Depositor will receive additional
compensation for their services under the Administration Agreement.


AMENDMENT

     Generally, the Trust Agreement, the Indenture and the Administration
Agreement are subject to amendment by the parties thereto under conditions
similar to those described under "The Agreements--Amendment" in the prospectus.
Any amendment of the provisions of the Indenture will take the form of a
supplemental indenture. In addition to the purposes described under "The
Agreements--Amendment" in the prospectus, the Trust and the Indenture Trustee
may enter into supplemental indentures, without obtaining the consent of the
Noteholders, for the purpose of correcting or amplifying the description of the
Trust Estate subject to the Indenture, evidencing the succession of a successor
to the Trust, adding to the covenants of the Trust or surrendering any power
conferred upon the Trust under the Indenture, or conveying or pledging any
property to the Indenture Trustee.



                  YIELD, PREPAYMENT AND WEIGHTED AVERAGE LIFE


GENERAL

     The yields to maturity (or to early termination) of the Offered Notes will
be affected by the rate of principal payments (including prepayments, which may
include amounts received by virtue of purchase, condemnation, insurance or
foreclosure) on the Mortgage Loans and the application of excess interest to
reduce the Class Principal Amounts of the Notes. Yields will also be affected by
the extent to which Mortgage Loans bearing higher Mortgage Rates prepay at a
more rapid rate than Mortgage Loans with lower Mortgage Rates, the amount and
timing of borrower delinquencies and defaults resulting in Realized Losses, the
purchase price paid by investors for the Offered Notes, and other factors.

     Principal prepayments may be influenced by a variety of economic,
geographic, demographic, social, tax, legal and other factors, including the
credit quality of the Mortgage Loans. In general, if prevailing interest rates
fall below the interest rates on the Mortgage Loans, the Mortgage Loans are
likely to be subject to higher rates of prepayments than if prevailing rates
remain at or above the interest rates on the Mortgage Loans. Conversely, if
prevailing interest rates rise above the interest rates on the Mortgage Loans,
the rate of prepayment would be expected to decrease. Other factors affecting
prepayment of the Mortgage Loans include such factors as changes in borrowers'
housing needs, job transfers, unemployment, borrowers' net equity in the
mortgaged properties, changes in the values of mortgaged properties, mortgage
market interest rates and servicing decisions, as well as refinancings resulting
from solicitations by mortgage lenders. The Mortgage Loans generally have
due-on-sale clauses.

     In addition, the rate of principal prepayments may also be influenced by
programs offered by mortgage loan originators, servicers and brokers (including
the Subservicer and its affiliates). In


                                      S-75


particular, the Subservicer and its affiliates may solicit borrowers using
general and targeted solicitations (which may be based on mortgage loan
characteristics including, but not limited to, interest rate, payment history
or geographic location) and solicitations to borrowers whom the Subservicer or
its affiliates believe may be considering refinancing their mortgage loans.

     The Adjustable Rate Mortgage Loans have Mortgage Rates that provide for a
fixed interest rate during an initial period of two, three or five years from
the date of the origination and thereafter provide for adjustments to the
Mortgage Rates on a semi-annual basis. When an Adjustable Rate Mortgage Loan
begins its adjustable rate period, increases and decreases in the Mortgage Rate
will be limited by the Initial Cap or Periodic Cap, the Maximum Rate and the
Minimum Rate, if any, and will be based on the Six-Month LIBOR Index in effect
on the applicable date prior to the related Adjustment Date plus the applicable
Gross Margin. The Six-Month LIBOR Index may not rise and fall consistently with
mortgage interest rates. As a result, the Mortgage Rates on the Adjustable Rate
Mortgage Loans at any time may not equal the prevailing mortgage interest rates
of similar adjustable rate mortgage loans, and accordingly the prepayment rate
may be lower or higher than would otherwise be anticipated. Some borrowers who
prefer the certainty provided by fixed rate mortgage loans may nevertheless
obtain adjustable rate mortgage loans at a time when they regard the mortgage
interest rates (and, therefore, the payments) on fixed rate mortgage loans as
unacceptably high. These borrowers may be induced to refinance adjustable rate
loans when the interest rates and monthly payments on comparable fixed rate
mortgage loans decline to levels which these borrowers regard as acceptable,
even though such mortgage interest rates and monthly payments may be
significantly higher than the current mortgage interest rates and monthly
payments on the borrowers' adjustable rate mortgage loans. The ability to
refinance a Mortgage Loan will depend on a number of factors prevailing at the
time refinancing is desired, including, without limitation, real estate values,
the borrower's financial situation, prevailing mortgage interest rates, the
borrower's equity in the related Mortgaged Property, tax laws and prevailing
general economic conditions.

     As of the Cut-off Date, approximately 64.81% of the Mortgage Loans, are
subject to Prepayment Premiums during the applicable Prepayment Premium Period,
as described under "Description of the Mortgage Pool--General" herein. These
Prepayment Premiums may have the effect of reducing the amount or the likelihood
of prepayment of the related Mortgage Loans during the applicable Prepayment
Premium Period.

     The rate of principal payments on the Mortgage Loans will also be affected
by the amortization schedules of the Mortgage Loans, the rate and timing of
prepayments thereon by the borrowers, liquidations of defaulted Mortgage Loans,
repurchases of Mortgage Loans due to certain breaches of representations and
warranties or defective documentation, and optional purchases of Mortgage Loans
as described herein. The timing of changes in the rate of prepayments,
liquidations and purchases of the Mortgage Loans may, and the timing of Realized
Losses will, significantly affect the yield to an investor, even if the average
rate of principal payments experienced over time is consistent with an
investor's expectation. Because the rate and timing of principal payments on the
Mortgage Loans will depend on future events and on a variety of factors (as
described more fully herein and in the prospectus under "Yield and Prepayment
Considerations"), no assurance can be given as to such rate or the timing of
principal payments on the Offered Notes. In general, the earlier a prepayment of
principal of the Mortgage Loans, the greater will be the effect on an investor's
yield. The effect on an investor's yield of principal payments occurring at a
rate higher (or lower) than the rate anticipated by the investor during the
period immediately following the issuance of the Notes may not be offset by a
subsequent like decrease (or increase) in the rate of principal payments.

     From time to time, areas of the United States may be affected by flooding,
severe storms, landslides, wildfires, earthquakes or other natural disasters.
Under the Sale Agreement, the Seller will represent and warrant that as of the
Closing Date each Mortgaged Property was free of material damage. In the event
of an uncured breach of this representation and warranty that materially and
adversely affects the interests of Noteholders (determined without regard to the
Note Insurance Policy), the Seller will be required to repurchase the affected
Mortgage Loan or substitute another mortgage loan therefor. If any damage caused
by flooding, storms, wildfires, landslides or earthquakes (or other cause)
occurs after the Closing Date, the Seller will not have any repurchase
obligation. In


                                      S-76


addition, the standard hazard policies covering the Mortgaged Properties
generally do not cover damage caused by earthquakes, flooding and landslides,
and earthquake, flood or landslide insurance may not have been obtained with
respect to such Mortgaged Properties. As a consequence, Realized Losses could
result. To the extent that the insurance proceeds received with respect to any
damaged Mortgaged Properties are not applied to the restoration thereof, the
proceeds will be used to prepay the related Mortgage Loans in whole or in part.
Any repurchases or repayments of the Mortgage Loans may reduce the weighted
average lives and will reduce the yields on the Offered Notes to the extent
they are purchased at a premium.

     Prepayments, liquidations and purchases of Mortgage Loans will result in
payments to holders of Offered Notes of principal amounts that would otherwise
be paid over the remaining terms of such Mortgage Loans. The rate of defaults on
the Mortgage Loans will also affect the rate and timing of principal payments on
the Mortgage Loans. In general, defaults on mortgage loans are expected to occur
with greater frequency in their early years, especially with respect to
adjustable rate mortgage loans, as increases in monthly payments may result in a
default rate higher than on level payment mortgage loans. Furthermore, the rate
of default on Mortgage Loans with high loan-to-value ratios may be higher than
for other Mortgage Loans.

     Certain characteristics of the Mortgage Loans that may influence the rate
of defaults or losses are described under "Risk Factors" and "Description of the
Mortgage Pool."

     The inclusion of interest only Mortgage Loans in the Trust will generally,
absent other considerations, result in longer weighted average lives of the
Offered Notes than would be the case if these Mortgage Loans provided for
monthly payments of principal throughout their terms. If an investor purchases
Notes at a discount, the yield may be reduced. In addition, a borrower may view
the interest only period as a disincentive to prepayment.

     The yields on the Offered Notes may be adversely affected by Net Prepayment
Interest Shortfalls on the Mortgage Loans. The yields on the Offered Notes will
be affected by the level of LIBOR from time to time, and by the Mortgage Rates
of the Mortgage Loans from time to time as described under "Risk
Factors-Mortgage Loan Interest Rates May Limit Interest Rates on the Notes."

     As described herein, excess interest will be applied, to the extent
available, as an additional payment of principal on the Offered Notes to
maintain limited overcollateralization. The amount of excess interest available
on any Payment Date will be influenced by, among other things:

     o    the amount of overcollateralization. This means the extent to which
          interest on the Mortgage Loans is accruing on a higher principal
          balance than the aggregate Class Principal Amounts of the Notes;

     o    the loss experience of the Mortgage Loans. For example, excess
          interest will be reduced as a result of Realized Losses on the
          Mortgage Loans;

     o    the value of LIBOR;

     o    the extent to which amounts are received by the Trust under the Swap
          Agreement and the Cap Agreement; and

     o    the extent to which the weighted average Net Mortgage Rates of the
          Mortgage Loans exceed the weighted average of the Interest Rates of
          the Offered Notes.

     No assurance can be given as to the amount or timing of excess interest
payable on the Notes.

     The yields to investors in the Offered Notes will be affected by the
exercise by the Residual Holder or the Servicer of their right to purchase the
Mortgage Loans, as described under "Description of the Notes--Optional Purchase
of Mortgage Loans" herein or their failure to exercise that right.

     If the purchaser of a Note offered at a discount from its initial
principal amount calculates its anticipated yield to maturity (or early
termination) based on an assumed rate of payment of principal that is faster
than that actually experienced on the related Mortgage Loans, the actual yield
may be lower than that so calculated. Conversely, if the purchaser of a Note
offered at a premium calculates


                                      S-77


its anticipated yield based on an assumed rate of payment of principal that is
slower than that actually experienced on the related Mortgage Loans, the actual
yield may be lower than that so calculated. For this purpose, prepayments of
principal include not only voluntary prepayments made by the borrower, but
repurchases of Mortgage Loans by the Seller due to breaches of representations
and warranties.

     The Interest Rates applicable to the Offered Notes will be affected by the
level of LIBOR from time to time, and by the Mortgage Rates of the Mortgage
Loans from time to time as described under "Risk Factors--Mortgage Loan Interest
Rates May Limit Interest Rates on the Notes."


OVERCOLLATERALIZATION

     The yields of the Offered Notes will be affected by the application of
Monthly Excess Cashflow as described herein and by the amount of
overcollateralization. The amount of Monthly Excess Cashflow will be affected by
the delinquency, default and prepayment experience of the Mortgage Loans. There
can be no assurance as to whether overcollateralization will be increased to or
maintained at the levels described herein.


SUBORDINATION OF THE OFFERED SUBORDINATE NOTES

     As described herein, Notes having a relatively higher priority of payment
will have a preferential right to receive payments of interest to the extent of
the Interest Remittance Amount and principal to the extent of the Principal
Payment Amount. As a result, the yields of the Offered Subordinate Notes will be
more sensitive, in varying degrees, to delinquencies and losses on the Mortgage
Loans than the yields of more senior Notes.


WEIGHTED AVERAGE LIFE

     Weighted average life refers to the average amount of time that will elapse
from the date of issuance of a security to the date of payment to the investor
of each dollar paid in net reduction of principal of such security (assuming no
losses). The weighted average lives of the Offered Notes will be influenced by,
among other things, the rate at which principal of the related Mortgage Loans is
paid, which may be in the form of scheduled amortization, prepayments or
liquidations and the amount of excess interest.

     Prepayments on mortgage loans are commonly measured relative to a constant
prepayment standard or model. The model used in this prospectus supplement for
the Mortgage Loans is a prepayment assumption (the "Prepayment Assumption") that
represents an assumed rate of prepayment each month relative to the then
outstanding principal balance of the Mortgage Loans for the life of the Mortgage
Loans. A 100% Prepayment Assumption for the Adjustable Rate Mortgage Loans
assumes a constant prepayment rate of 5% per annum of the outstanding principal
balance of such Mortgage Loans for the first month following the origination of
the Mortgage Loan and approximately an additional 2% in each month thereafter
for the next eleven months; a constant prepayment rate of 27% per annum of the
outstanding principal balance of such Mortgage Loans in the twelfth through the
twenty-third month; a constant prepayment rate of 60% per annum of the
outstanding principal balance of such Mortgage Loans in the twenty-fourth
through the twenty-seventh month; and in each month thereafter during the life
of such Mortgage Loans, a constant prepayment rate of 30%. A 100% Prepayment
Assumption for the Fixed Rate Mortgage Loans assumes a constant prepayment rate
of 4.60% per annum of the outstanding principal balance of such Mortgage Loans
for the first month following the origination of the Mortgage Loan and
approximately an additional 1.6727% in each month thereafter for the next eleven
months; and in each month thereafter during the life of such Mortgage Loans, a
constant prepayment rate of 23% per annum is assumed. As used in the tables
below, a 0% Prepayment Assumption assumes prepayment rates equal to 0% of the
Prepayment Assumption, i.e. no prepayments; a 50% Prepayment Assumption assumes
prepayment rates equal to 50% of the Prepayment Assumption, and so forth.

     The Prepayment Assumption does not purport to be either a historical
description of the prepayment experience of the Mortgage Loans or a prediction
of the anticipated rate of prepayment


                                      S-78


of any mortgage loans, including the Mortgage Loans to be owned by the Trust.
The percentages of the Prepayment Assumption in the tables below do not purport
to be historical correlations of relative prepayment experience of the Mortgage
Loans or predictions of the anticipated relative rate of prepayment of the
Mortgage Loans. Variations in the prepayment experience and the principal
balance of the Mortgage Loans that prepay may increase or decrease the
percentages of initial Class Principal Amounts (and weighted average lives)
shown in the following tables. Such variations may occur even if the average
prepayment experience of all such Mortgage Loans equals any of the specified
percentages of the Prepayment Assumption.

     The tables beginning on page S-83 were prepared based on the following
assumptions (collectively, the "Modeling Assumptions"): (1) the initial Class
Principal Amounts are as set forth in the table on page S-3; (2) each Scheduled
Payment of principal and interest is timely received on the first day of each
month commencing in July 2005; (3) principal prepayments are received in full on
the last day of each month commencing in June 2005 and there are no Net
Prepayment Interest Shortfalls; (4) there are no defaults or delinquencies on
the Mortgage Loans; (5) Payment Dates occur on the 25th day of each month
commencing in July 2005; (6) there are no purchases or substitutions of Mortgage
Loans (except in the case of an Optional Termination); (7) the Mortgage Rate of
each Adjustable Rate Mortgage Loan is adjusted on the next applicable Adjustment
Date and any subsequent adjustment date to equal the value of the Six-Month
LIBOR Index set forth below plus the related Gross Margin subject to initial and
periodic caps; (8) the value of Six-Month LIBOR is equal to 3.650% and remains
constant; and the value of LIBOR is equal to 3.314% and remains constant; (9)
there is no Optional Termination (except in the case of Weighted Average Life in
Years With Optional Termination); (10) the Notes are issued on June 28, 2005;
(11) no Swap Termination Payment occurs; (12) the aggregate fees deducted from
the Mortgage Rates are equal to 0.5100%; (13) the Credit Risk Manager's Fee Rate
is equal to 0.015% per annum; (14) the Mortgage Loans are aggregated into
assumed Mortgage Loans having the following characteristics; and (15) the
aggregate principal amount of the Class N Notes is equal to zero:


                                      S-79


                  ASSUMED CHARACTERISTICS OF THE MORTGAGE LOANS


<TABLE>

                                                                        REMAINING   ORIGINAL     ORIGINAL      NEXT RATE
                                                           GROSS         TERM TO     TERM TO   AMORTIZATION   ADJUSTMENT
                                       PRINCIPAL          MORTGAGE       MATURITY   MATURITY       TERM          DATE
        MORTGAGE LOAN TYPE            BALANCE ($)         RATE (%)       (MONTHS)   (MONTHS)     (MONTHS)      (MONTHS)
---------------------------------- ----------------- ----------------- ----------- ---------- -------------- ------------

Fixed ............................       380,265.30      7.3839549336      120         120         120             N/A
Fixed ............................       259,900.00      6.4430973451      120         120         120             N/A
Fixed ............................       572,775.70      9.0371211762      180         180         180             N/A
Fixed ............................       102,712.99      8.4279938935      179         180         180             N/A
Fixed ............................     3,556,026.75      8.0851135920      179         180         180             N/A
Fixed ............................       104,696.30      7.9900000000      179         180         180             N/A
Fixed ............................     2,981,544.47      7.5867134516      179         180         180             N/A
Fixed ............................       813,527.66      7.6149622888      240         240         240             N/A
Fixed ............................       210,196.74      7.0947468548      238         240         240             N/A
Fixed ............................       806,009.34      8.2765436163      239         240         240             N/A
Fixed ............................       785,198.73      7.2895730453      239         240         240             N/A
2/28 ARM (Interest Only) .........     9,367,712.63      7.5043410685      360         360         300             24
2/28 ARM .........................    34,670,506.64      8.1692230110      359         360         360             23
2/28 ARM (Interest Only) .........    99,137,641.33      7.0601128069      359         360         300             23
2/28 ARM .........................   320,590,228.25      8.0309532010      359         360         360             23
2/28 ARM (Interest Only) .........       126,400.00      7.3200000000      358         360         300             22
2/28 ARM .........................       876,850.06      7.5304926815      358         360         360             23
2/28 ARM .........................       311,347.83      7.0739845022      359         360         360             23
2/28 ARM (Interest Only) .........    47,336,840.15      7.3177380302      359         360         300             23
2/28 ARM .........................   182,269,091.58      8.2906778714      359         360         360             23
Fixed ............................     7,463,386.50      8.3139113135      358         358         358             N/A
Fixed ............................     1,956,030.70      7.2857370873      358         360         360             N/A
Fixed ............................       314,114.41      8.4482795627      360         360         360             N/A
Fixed (Interest Only) ............     2,109,650.00      7.1237756026      359         360         300             N/A
Fixed ............................    31,252,329.51      7.7228612708      358         359         359             N/A
Fixed ............................       113,803.84      6.8500000000      359         360         360             N/A
Fixed (Interest Only) ............     1,194,260.00      6.8380813223      359         360         300             N/A
Fixed ............................    15,452,112.18      7.5549889758      359         360         360             N/A
3/27 ARM (Interest Only) .........       184,600.00      6.0280000000      359         360         300             35
3/27 ARM .........................     1,396,638.49      6.8980277944      360         360         360             36
3/27 ARM (Interest Only) .........       424,800.00      7.3655367232      359         360         300             35
3/27 ARM .........................       349,358.21      7.2072322142      358         360         360             34
3/27 ARM .........................       963,917.13      8.5711615289      360         360         360             36
3/27 ARM (Interest Only) .........     3,168,085.12      7.0958005964      359         360         300             35
3/27 ARM .........................     7,344,559.75      7.3122437266      359         360         360             35




                                                                                                        RATE
                                                                                                     ADJUSTMENT   REMAINING
                                      MAXIMUM     MINIMUM      GROSS      INITIAL    PERIODIC RATE    FREQUENCY    IO TERM
        MORTGAGE LOAN TYPE           RATE (%)    RATE (%)   MARGIN (%)    CAP (%)       CAP (%)       (MONTHS)    (MONTHS)
---------------------------------- ------------ ---------- ------------ ----------- --------------- ------------ ----------

Fixed ............................         N/A        N/A         N/A          N/A           N/A           N/A      N/A
Fixed ............................         N/A        N/A         N/A          N/A           N/A           N/A      N/A
Fixed ............................         N/A        N/A         N/A          N/A           N/A           N/A      N/A
Fixed ............................         N/A        N/A         N/A          N/A           N/A           N/A      N/A
Fixed ............................         N/A        N/A         N/A          N/A           N/A           N/A      N/A
Fixed ............................         N/A        N/A         N/A          N/A           N/A           N/A      N/A
Fixed ............................         N/A        N/A         N/A          N/A           N/A           N/A      N/A
Fixed ............................         N/A        N/A         N/A          N/A           N/A           N/A      N/A
Fixed ............................         N/A        N/A         N/A          N/A           N/A           N/A      N/A
Fixed ............................         N/A        N/A         N/A          N/A           N/A           N/A      N/A
Fixed ............................         N/A        N/A         N/A          N/A           N/A           N/A      N/A
2/28 ARM (Interest Only) .........     13.5730     7.4110      6.2210       3.0000        1.0000         6.000       60
2/28 ARM .........................     14.1960     8.1690      6.9630       3.0000        1.0000         6.000      N/A
2/28 ARM (Interest Only) .........     13.1180     6.9850      5.9070       2.9980        1.0140         6.000      59
2/28 ARM .........................     14.0920     8.0190      6.8550       2.9930        1.0080         6.000      N/A
2/28 ARM (Interest Only) .........     14.3200     6.5900      7.0700       3.0000        1.0000         6.000       58
2/28 ARM .........................     14.0090     7.5300      6.1360       3.0000        1.0000         6.000      N/A
2/28 ARM .........................     13.7560     7.0740      6.8240       3.0000        1.0000         6.000      N/A
2/28 ARM (Interest Only) .........     13.3510     7.2600      6.1850       2.9860        1.0070         6.000       59
2/28 ARM .........................     14.3300     8.2870      7.0550       2.8730        1.0020         6.000      N/A
Fixed ............................         N/A        N/A         N/A          N/A           N/A           N/A      N/A
Fixed ............................         N/A        N/A         N/A          N/A           N/A           N/A      N/A
Fixed ............................         N/A        N/A         N/A          N/A           N/A           N/A      N/A
Fixed (Interest Only) ............         N/A        N/A         N/A          N/A           N/A           N/A       59
Fixed ............................         N/A        N/A         N/A          N/A           N/A           N/A      N/A
Fixed ............................         N/A        N/A         N/A          N/A           N/A           N/A      N/A
Fixed (Interest Only) ............         N/A        N/A         N/A          N/A           N/A           N/A       59
Fixed ............................         N/A        N/A         N/A          N/A           N/A           N/A      N/A
3/27 ARM (Interest Only) .........     12.0280     6.0280      4.7780       3.0000        1.0000         6.000       59
3/27 ARM .........................     12.8980     6.8980      5.6480       3.0000        1.0000         6.000      N/A
3/27 ARM (Interest Only) .........     13.6930     7.3660      6.4430       3.0000        1.0000         6.000       59
3/27 ARM .........................     13.8220     6.9930      6.0560       3.0000        1.0000         6.000      N/A
3/27 ARM .........................     14.5710     8.5710      7.3210       3.0000        1.0000         6.000      N/A
3/27 ARM (Interest Only) .........     13.0960     7.0960      5.9740       3.0000        1.0000         6.000       59
3/27 ARM .........................     13.3390     7.2840      6.1490       3.0000        1.0000         6.000      N/A
</TABLE>

                                      S-80


           ASSUMED CHARACTERISTICS OF THE MORTGAGE LOANS (CONTINUED)




<TABLE>

                                                                         REMAINING   ORIGINAL     ORIGINAL      NEXT RATE
                                                            GROSS         TERM TO     TERM TO   AMORTIZATION   ADJUSTMENT
                                        PRINCIPAL          MORTGAGE       MATURITY   MATURITY       TERM          DATE
         MORTGAGE LOAN TYPE            BALANCE ($)         RATE (%)       (MONTHS)   (MONTHS)     (MONTHS)      (MONTHS)
----------------------------------- ----------------- ----------------- ----------- ---------- -------------- ------------

3/27 ARM (Interest Only) ..........     5,570,808.14      6.7215503071       359        360        300                35
3/27 ARM ..........................     9,736,473.02      7.4188771700       359        360        360                35
5/25 ARM ..........................       157,044.97      6.0490000000       359        360        360                59
5/25 ARM ..........................     1,168,634.08      6.6683205264       359        360        360                59
5/25 ARM (Interest Only) ..........       273,600.00      7.3600000000       359        360        300                59
5/25 ARM ..........................       690,333.56      7.4099132669       360        360        360                60
Balloon -- Fixed (Interest Only) ..       210,000.00      8.3800000000       179        180        300               N/A
Balloon -- Fixed (Interest Only) ..       205,938.45      7.1710000000       179        180        300               N/A
Balloon -- Fixed ..................       296,000.00      6.9380000000       180        180        360               N/A
Balloon -- Fixed (Interest Only) ..       264,000.00      6.8750000000       179        180        300               N/A
Fixed .............................        27,865.18     10.2400000000       119        120        120               N/A
Fixed .............................        47,600.00     11.5386554622       120        120        120               N/A
Fixed .............................       230,474.00     11.6472975694       180        180        180               N/A
Fixed .............................       100,739.31     11.4337032386       180        180        180               N/A
Fixed .............................       543,319.30     11.3112755816       179        180        180               N/A
Fixed .............................       618,149.63     11.5439010917       179        180        180               N/A
Fixed .............................       512,470.50     12.2346474314       239        240        240               N/A
Fixed .............................       584,351.54     11.7142126158       239        240        240               N/A
Fixed .............................        44,600.00     12.5000000000       240        240        240               N/A
Fixed .............................     3,800,353.39     11.7457439978       239        240        240               N/A
Fixed .............................     5,456,660.09     11.4052717472       239        240        240               N/A
Fixed .............................     1,254,308.66     10.5108440720       359        360        360               N/A
Fixed .............................     4,031,657.74     10.5297162570       360        360        360               N/A
Fixed .............................     8,507,167.05     10.4842000340       360        360        360               N/A
Fixed .............................    23,614,974.72     10.4981667547       359        360        360               N/A
Balloon -- Fixed ..................        45,971.10     11.6000000000       178        180        360               N/A
Balloon -- Fixed ..................       436,265.35     10.6613755885       178        180        360               N/A
Balloon -- Fixed ..................     2,624,495.16     10.7596668127       179        180        360               N/A




                                                                                                         RATE
                                                                                                      ADJUSTMENT   REMAINING
                                       MAXIMUM     MINIMUM      GROSS      INITIAL    PERIODIC RATE    FREQUENCY    IO TERM
         MORTGAGE LOAN TYPE           RATE (%)    RATE (%)   MARGIN (%)    CAP (%)       CAP (%)       (MONTHS)    (MONTHS)
----------------------------------- ------------ ---------- ------------ ----------- --------------- ------------ ----------

3/27 ARM (Interest Only) ..........   12.8400      6.7220     5.9860       2.9280      1.0720          6.000            59
3/27 ARM ..........................   13.4460      7.4110     6.4650       2.9010      1.0340          6.000            N/A
5/25 ARM ..........................   12.0490      6.0490     4.7990       3.0000      1.0000          6.000            N/A
5/25 ARM ..........................   12.6680      6.6680     5.3800       3.0000      1.0000          6.000            N/A
5/25 ARM (Interest Only) ..........   13.3600      7.3600     6.1100       3.0000      1.0000          6.000            59
5/25 ARM ..........................   13.4100      7.4100     6.1600       3.0000      1.0000          6.000            N/A
Balloon -- Fixed (Interest Only) ..     N/A          N/A        N/A          N/A         N/A             N/A            59
Balloon -- Fixed (Interest Only) ..     N/A          N/A        N/A          N/A         N/A             N/A            59
Balloon -- Fixed ..................     N/A          N/A        N/A          N/A         N/A             N/A            N/A
Balloon -- Fixed (Interest Only) ..     N/A          N/A        N/A          N/A         N/A             N/A            59
Fixed .............................     N/A          N/A        N/A          N/A         N/A             N/A            N/A
Fixed .............................     N/A          N/A        N/A          N/A         N/A             N/A            N/A
Fixed .............................     N/A          N/A        N/A          N/A         N/A             N/A            N/A
Fixed .............................     N/A          N/A        N/A          N/A         N/A             N/A            N/A
Fixed .............................     N/A          N/A        N/A          N/A         N/A             N/A            N/A
Fixed .............................     N/A          N/A        N/A          N/A         N/A             N/A            N/A
Fixed .............................     N/A          N/A        N/A          N/A         N/A             N/A            N/A
Fixed .............................     N/A          N/A        N/A          N/A         N/A             N/A            N/A
Fixed .............................     N/A          N/A        N/A          N/A         N/A             N/A            N/A
Fixed .............................     N/A          N/A        N/A          N/A         N/A             N/A            N/A
Fixed .............................     N/A          N/A        N/A          N/A         N/A             N/A            N/A
Fixed .............................     N/A          N/A        N/A          N/A         N/A             N/A            N/A
Fixed .............................     N/A          N/A        N/A          N/A         N/A             N/A            N/A
Fixed .............................     N/A          N/A        N/A          N/A         N/A             N/A            N/A
Fixed .............................     N/A          N/A        N/A          N/A         N/A             N/A            N/A
Balloon -- Fixed ..................     N/A          N/A        N/A          N/A         N/A             N/A            N/A
Balloon -- Fixed ..................     N/A          N/A        N/A          N/A         N/A             N/A            N/A
Balloon -- Fixed ..................     N/A          N/A        N/A          N/A         N/A             N/A            N/A
</TABLE>


                                      S-81


     The actual characteristics and the performance of the Mortgage Loans will
differ from the assumptions used in constructing the tables set forth below,
which are hypothetical in nature and are provided only to give a general sense
of how the principal cashflows might behave under varying prepayment scenarios.
For example, it is not expected that the Mortgage Loans will prepay at a
constant rate until maturity, that all of the Mortgage Loans will prepay at the
same rate or that there will be no defaults or delinquencies on the Mortgage
Loans. Moreover, the diverse remaining terms to maturity of the Mortgage Loans
could produce slower or faster principal payments than indicated in the tables
at the various percentages of the Prepayment Assumption specified, even if the
weighted average remaining term to maturity are as assumed. Any difference
between such assumptions and the actual characteristics and performance of the
Mortgage Loans, or the actual prepayment or loss experience, will cause the
percentages of initial Class Principal Amounts outstanding over time and the
weighted average lives of the Offered Notes to differ (which difference could
be material) from the corresponding information in the tables for each
indicated percentage of the Prepayment Assumption.


     Subject to the foregoing discussion and assumptions, the following tables
indicate the weighted average lives of the Offered Notes and set forth the
percentages of the initial Class Principal Amounts of the Offered Notes that
would be outstanding after each of the Payment Dates shown at various
percentages of the Prepayment Assumption.


     The weighted average life of a Class of Offered Notes is determined by (1)
multiplying the net reduction, if any, of the applicable Class Principal Amount
by the number of years from the date of issuance of the Note to the related
Payment Date, (2) adding the results and (3) dividing the sum by the aggregate
of the net reductions of Class Principal Amount described in (1) above.


                                      S-82


   PERCENTAGE OF INITIAL CLASS PRINCIPAL AMOUNT OF THE CLASS A1 AND CLASS A2
  NOTES OUTSTANDING AT THE FOLLOWING PERCENTAGES OF THE PREPAYMENT ASSUMPTION




<TABLE>

                                                            CLASS A1 NOTES
                                        ------------------------------------------------------
                                            0%       50%      75%     100%     125%     150%
                                        --------- -------- -------- -------- -------- --------

Initial Percentage ....................     100      100      100      100      100      100
June 25, 2006 .........................      98       74       61       49       36       23
June 25, 2007 .........................      96       32        2        0        0        0
June 25, 2008 .........................      94        0        0        0        0        0
June 25, 2009 .........................      92        0        0        0        0        0
June 25, 2010 .........................      90        0        0        0        0        0
June 25, 2011 .........................      88        0        0        0        0        0
June 25, 2012 .........................      85        0        0        0        0        0
June 25, 2013 .........................      81        0        0        0        0        0
June 25, 2014 .........................      77        0        0        0        0        0
June 25, 2015 .........................      73        0        0        0        0        0
June 25, 2016 .........................      69        0        0        0        0        0
June 25, 2017 .........................      64        0        0        0        0        0
June 25, 2018 .........................      58        0        0        0        0        0
June 25, 2019 .........................      52        0        0        0        0        0
June 25, 2020 .........................      44        0        0        0        0        0
June 25, 2021 .........................      37        0        0        0        0        0
June 25, 2022 .........................      29        0        0        0        0        0
June 25, 2023 .........................      21        0        0        0        0        0
June 25, 2024 .........................      11        0        0        0        0        0
June 25, 2025 .........................       *        0        0        0        0        0
June 25, 2026 .........................       0        0        0        0        0        0
June 25, 2027 .........................       0        0        0        0        0        0
June 25, 2028 .........................       0        0        0        0        0        0
June 25, 2029 .........................       0        0        0        0        0        0
June 25, 2030 .........................       0        0        0        0        0        0
June 25, 2031 .........................       0        0        0        0        0        0
June 25, 2032 .........................       0        0        0        0        0        0
June 25, 2033 .........................       0        0        0        0        0        0
June 25, 2034 .........................       0        0        0        0        0        0
June 25, 2035 .........................       0        0        0        0        0        0
Weighted Average Life in Years:
 Without Optional Termination .........     13.1      1.6      1.2      1.0      0.9      0.8
 With Optional Termination ............     13.1      1.6      1.2      1.0      0.9      0.8




                                                            CLASS A2 NOTES
                                        ------------------------------------------------------
                                            0%       50%      75%     100%     125%     150%
                                        --------- -------- -------- -------- -------- --------

Initial Percentage ....................     100      100      100      100      100      100
June 25, 2006 .........................     100      100      100      100      100      100
June 25, 2007 .........................     100      100      100       75       48       20
June 25, 2008 .........................     100       95       57       25        0        0
June 25, 2009 .........................     100       70       43       25        0        0
June 25, 2010 .........................     100       55       31       14        0        0
June 25, 2011 .........................     100       44       21        6        0        0
June 25, 2012 .........................     100       35       14        1        0        0
June 25, 2013 .........................     100       28        8        0        0        0
June 25, 2014 .........................     100       22        3        0        0        0
June 25, 2015 .........................     100       16        0        0        0        0
June 25, 2016 .........................     100       12        0        0        0        0
June 25, 2017 .........................     100        8        0        0        0        0
June 25, 2018 .........................     100        4        0        0        0        0
June 25, 2019 .........................     100        1        0        0        0        0
June 25, 2020 .........................     100        0        0        0        0        0
June 25, 2021 .........................     100        0        0        0        0        0
June 25, 2022 .........................     100        0        0        0        0        0
June 25, 2023 .........................     100        0        0        0        0        0
June 25, 2024 .........................     100        0        0        0        0        0
June 25, 2025 .........................     100        0        0        0        0        0
June 25, 2026 .........................      90        0        0        0        0        0
June 25, 2027 .........................      78        0        0        0        0        0
June 25, 2028 .........................      65        0        0        0        0        0
June 25, 2029 .........................      56        0        0        0        0        0
June 25, 2030 .........................      47        0        0        0        0        0
June 25, 2031 .........................      37        0        0        0        0        0
June 25, 2032 .........................      26        0        0        0        0        0
June 25, 2033 .........................      14        0        0        0        0        0
June 25, 2034 .........................       1        0        0        0        0        0
June 25, 2035 .........................       0        0        0        0        0        0
Weighted Average Life in Years:
 Without Optional Termination .........     24.7      6.4      4.3      3.0      2.1      1.8
 With Optional Termination ............     24.7      6.4      4.3      3.0      2.1      1.8
</TABLE>

*     Indicates a value between 0.0% and 0.5%.

                                      S-83


   PERCENTAGE OF INITIAL CLASS PRINCIPAL AMOUNT OF THE CLASS A3 AND CLASS M1
  NOTES OUTSTANDING AT THE FOLLOWING PERCENTAGES OF THE PREPAYMENT ASSUMPTION




<TABLE>

                                                             CLASS A3 NOTES
                                        --------------------------------------------------------
                                            0%       50%       75%      100%     125%     150%
                                        --------- --------- --------- -------- -------- --------

Initial Percentage ....................     100       100       100      100      100      100
June 25, 2006 .........................     100       100       100      100      100      100
June 25, 2007 .........................     100       100       100      100      100      100
June 25, 2008 .........................     100       100       100      100       71        0
June 25, 2009 .........................     100       100       100      100       71        0
June 25, 2010 .........................     100       100       100      100       71        0
June 25, 2011 .........................     100       100       100      100       71        0
June 25, 2012 .........................     100       100       100      100       50        0
June 25, 2013 .........................     100       100       100       75       32        0
June 25, 2014 .........................     100       100       100       53       21        0
June 25, 2015 .........................     100       100        96       37       13        0
June 25, 2016 .........................     100       100        74       26        5        0
June 25, 2017 .........................     100       100        57       19        0        0
June 25, 2018 .........................     100       100        44       13        0        0
June 25, 2019 .........................     100       100        34        6        0        0
June 25, 2020 .........................     100        92        25        1        0        0
June 25, 2021 .........................     100        76        19        0        0        0
June 25, 2022 .........................     100        63        15        0        0        0
June 25, 2023 .........................     100        52         9        0        0        0
June 25, 2024 .........................     100        42         4        0        0        0
June 25, 2025 .........................     100        34         1        0        0        0
June 25, 2026 .........................     100        27         0        0        0        0
June 25, 2027 .........................     100        22         0        0        0        0
June 25, 2028 .........................     100        17         0        0        0        0
June 25, 2029 .........................     100        13         0        0        0        0
June 25, 2030 .........................     100         7         0        0        0        0
June 25, 2031 .........................     100         2         0        0        0        0
June 25, 2032 .........................     100         0         0        0        0        0
June 25, 2033 .........................     100         0         0        0        0        0
June 25, 2034 .........................     100         0         0        0        0        0
June 25, 2035 .........................       0         0         0        0        0        0
Weighted Average Life in Years:
 Without Optional Termination .........     29.5      19.0      13.3      9.8      6.7      2.3
 With Optional Termination ............     29.0      13.9       9.3      6.8      4.6      2.3




                                                            CLASS M1 NOTES
                                        -------------------------------------------------------
                                            0%       50%       75%     100%     125%     150%
                                        --------- --------- -------- -------- -------- --------

Initial Percentage ....................     100       100      100      100      100      100
June 25, 2006 .........................     100       100      100      100      100      100
June 25, 2007 .........................     100       100      100      100      100      100
June 25, 2008 .........................     100       100      100      100      100       97
June 25, 2009 .........................     100       100       75       57      100       97
June 25, 2010 .........................     100        90       59       36       81       84
June 25, 2011 .........................     100        77       46       26       21       49
June 25, 2012 .........................     100        65       35       18        9       29
June 25, 2013 .........................     100        55       27       13        6       14
June 25, 2014 .........................     100        46       21        9        4        3
June 25, 2015 .........................     100        39       16        6        *        0
June 25, 2016 .........................     100        33       13        5        0        0
June 25, 2017 .........................     100        27       10        3        0        0
June 25, 2018 .........................     100        23        8        0        0        0
June 25, 2019 .........................     100        19        6        0        0        0
June 25, 2020 .........................     100        16        4        0        0        0
June 25, 2021 .........................     100        13        3        0        0        0
June 25, 2022 .........................     100        11        1        0        0        0
June 25, 2023 .........................     100         9        0        0        0        0
June 25, 2024 .........................     100         7        0        0        0        0
June 25, 2025 .........................     100         6        0        0        0        0
June 25, 2026 .........................     100         5        0        0        0        0
June 25, 2027 .........................     100         4        0        0        0        0
June 25, 2028 .........................     100         3        0        0        0        0
June 25, 2029 .........................      92         0        0        0        0        0
June 25, 2030 .........................      80         0        0        0        0        0
June 25, 2031 .........................      67         0        0        0        0        0
June 25, 2032 .........................      52         0        0        0        0        0
June 25, 2033 .........................      36         0        0        0        0        0
June 25, 2034 .........................      18         0        0        0        0        0
June 25, 2035 .........................       0         0        0        0        0        0
Weighted Average Life in Years:
 Without Optional Termination .........     27.0      10.0      6.7      5.4      5.8      6.3
 With Optional Termination ............     26.9       9.2      6.1      4.9      5.2      4.2
</TABLE>

*     Indicates a value between 0.0% and 0.5%.

                                      S-84


   PERCENTAGE OF INITIAL CLASS PRINCIPAL AMOUNT OF THE CLASS M2 AND CLASS M3
  NOTES OUTSTANDING AT THE FOLLOWING PERCENTAGES OF THE PREPAYMENT ASSUMPTION




<TABLE>

                                                            CLASS M2 NOTES
                                        -------------------------------------------------------
                                            0%       50%       75%     100%     125%     150%
                                        --------- --------- -------- -------- -------- --------

Initial Percentage ....................     100       100      100      100      100      100
June 25, 2006 .........................     100       100      100      100      100      100
June 25, 2007 .........................     100       100      100      100      100      100
June 25, 2008 .........................     100       100      100      100      100      100
June 25, 2009 .........................     100       100       75       51      100       73
June 25, 2010 .........................     100        90       59       36       21       11
June 25, 2011 .........................     100        77       46       26       13        6
June 25, 2012 .........................     100        65       35       18        9        4
June 25, 2013 .........................     100        55       27       13        6        0
June 25, 2014 .........................     100        46       21        9        4        0
June 25, 2015 .........................     100        39       16        6        0        0
June 25, 2016 .........................     100        33       13        5        0        0
June 25, 2017 .........................     100        27       10        2        0        0
June 25, 2018 .........................     100        23        8        0        0        0
June 25, 2019 .........................     100        19        6        0        0        0
June 25, 2020 .........................     100        16        4        0        0        0
June 25, 2021 .........................     100        13        3        0        0        0
June 25, 2022 .........................     100        11        0        0        0        0
June 25, 2023 .........................     100         9        0        0        0        0
June 25, 2024 .........................     100         7        0        0        0        0
June 25, 2025 .........................     100         6        0        0        0        0
June 25, 2026 .........................     100         5        0        0        0        0
June 25, 2027 .........................     100         4        0        0        0        0
June 25, 2028 .........................     100         1        0        0        0        0
June 25, 2029 .........................      92         0        0        0        0        0
June 25, 2030 .........................      80         0        0        0        0        0
June 25, 2031 .........................      67         0        0        0        0        0
June 25, 2032 .........................      52         0        0        0        0        0
June 25, 2033 .........................      36         0        0        0        0        0
June 25, 2034 .........................      18         0        0        0        0        0
June 25, 2035 .........................       0         0        0        0        0        0
Weighted Average Life in Years:
 Without Optional Termination .........     27.0      10.0      6.7      5.2      5.0      4.5
 With Optional Termination ............     26.9       9.2      6.1      4.8      4.6      4.1




                                                            CLASS M3 NOTES
                                        -------------------------------------------------------
                                            0%       50%       75%     100%     125%     150%
                                        --------- --------- -------- -------- -------- --------

Initial Percentage ....................     100       100      100      100      100      100
June 25, 2006 .........................     100       100      100      100      100      100
June 25, 2007 .........................     100       100      100      100      100      100
June 25, 2008 .........................     100       100      100      100      100      100
June 25, 2009 .........................     100       100       75       51       59       18
June 25, 2010 .........................     100        90       59       36       21       11
June 25, 2011 .........................     100        77       46       26       13        6
June 25, 2012 .........................     100        65       35       18        9        1
June 25, 2013 .........................     100        55       27       13        6        0
June 25, 2014 .........................     100        46       21        9        1        0
June 25, 2015 .........................     100        39       16        6        0        0
June 25, 2016 .........................     100        33       13        5        0        0
June 25, 2017 .........................     100        27       10        0        0        0
June 25, 2018 .........................     100        23        8        0        0        0
June 25, 2019 .........................     100        19        6        0        0        0
June 25, 2020 .........................     100        16        4        0        0        0
June 25, 2021 .........................     100        13        0        0        0        0
June 25, 2022 .........................     100        11        0        0        0        0
June 25, 2023 .........................     100         9        0        0        0        0
June 25, 2024 .........................     100         7        0        0        0        0
June 25, 2025 .........................     100         6        0        0        0        0
June 25, 2026 .........................     100         5        0        0        0        0
June 25, 2027 .........................     100         2        0        0        0        0
June 25, 2028 .........................     100         0        0        0        0        0
June 25, 2029 .........................      92         0        0        0        0        0
June 25, 2030 .........................      80         0        0        0        0        0
June 25, 2031 .........................      67         0        0        0        0        0
June 25, 2032 .........................      52         0        0        0        0        0
June 25, 2033 .........................      36         0        0        0        0        0
June 25, 2034 .........................      18         0        0        0        0        0
June 25, 2035 .........................       0         0        0        0        0        0
Weighted Average Life in Years:
 Without Optional Termination .........     27.0      10.0      6.7      5.2      4.7      3.9
 With Optional Termination ............     26.9       9.2      6.1      4.7      4.3      3.7
</TABLE>


                                      S-85


   PERCENTAGE OF INITIAL CLASS PRINCIPAL AMOUNT OF THE CLASS M4 AND CLASS M5
  NOTES OUTSTANDING AT THE FOLLOWING PERCENTAGES OF THE PREPAYMENT ASSUMPTION




<TABLE>

                                                            CLASS M4 NOTES
                                        ------------------------------------------------------
                                            0%       50%      75%     100%     125%     150%
                                        --------- -------- -------- -------- -------- --------

Initial Percentage ....................     100      100      100      100      100      100
June 25, 2006 .........................     100      100      100      100      100      100
June 25, 2007 .........................     100      100      100      100      100      100
June 25, 2008 .........................     100      100      100      100      100      100
June 25, 2009 .........................     100      100       75       51       32       18
June 25, 2010 .........................     100       90       59       36       21       11
June 25, 2011 .........................     100       77       46       26       13        6
June 25, 2012 .........................     100       65       35       18        9        0
June 25, 2013 .........................     100       55       27       13        6        0
June 25, 2014 .........................     100       46       21        9        0        0
June 25, 2015 .........................     100       39       16        6        0        0
June 25, 2016 .........................     100       33       13        3        0        0
June 25, 2017 .........................     100       27       10        0        0        0
June 25, 2018 .........................     100       23        8        0        0        0
June 25, 2019 .........................     100       19        6        0        0        0
June 25, 2020 .........................     100       16        1        0        0        0
June 25, 2021 .........................     100       13        0        0        0        0
June 25, 2022 .........................     100       11        0        0        0        0
June 25, 2023 .........................     100        9        0        0        0        0
June 25, 2024 .........................     100        7        0        0        0        0
June 25, 2025 .........................     100        6        0        0        0        0
June 25, 2026 .........................     100        3        0        0        0        0
June 25, 2027 .........................     100        0        0        0        0        0
June 25, 2028 .........................     100        0        0        0        0        0
June 25, 2029 .........................      92        0        0        0        0        0
June 25, 2030 .........................      80        0        0        0        0        0
June 25, 2031 .........................      67        0        0        0        0        0
June 25, 2032 .........................      52        0        0        0        0        0
June 25, 2033 .........................      36        0        0        0        0        0
June 25, 2034 .........................      18        0        0        0        0        0
June 25, 2035 .........................       0        0        0        0        0        0
Weighted Average Life in Years:
 Without Optional Termination .........     27.0      9.9      6.7      5.1      4.5      3.7
With Optional Termination .............     26.9      9.2      6.1      4.7      4.2      3.5




                                                            CLASS M5 NOTES
                                        ------------------------------------------------------
                                            0%       50%      75%     100%     125%     150%
                                        --------- -------- -------- -------- -------- --------

Initial Percentage ....................     100      100      100      100      100      100
June 25, 2006 .........................     100      100      100      100      100      100
June 25, 2007 .........................     100      100      100      100      100      100
June 25, 2008 .........................     100      100      100      100      100       78
June 25, 2009 .........................     100      100       75       51       32       18
June 25, 2010 .........................     100       90       59       36       21       11
June 25, 2011 .........................     100       77       46       26       13        6
June 25, 2012 .........................     100       65       35       18        9        0
June 25, 2013 .........................     100       55       27       13        3        0
June 25, 2014 .........................     100       46       21        9        0        0
June 25, 2015 .........................     100       39       16        6        0        0
June 25, 2016 .........................     100       33       13        0        0        0
June 25, 2017 .........................     100       27       10        0        0        0
June 25, 2018 .........................     100       23        8        0        0        0
June 25, 2019 .........................     100       19        4        0        0        0
June 25, 2020 .........................     100       16        0        0        0        0
June 25, 2021 .........................     100       13        0        0        0        0
June 25, 2022 .........................     100       11        0        0        0        0
June 25, 2023 .........................     100        9        0        0        0        0
June 25, 2024 .........................     100        7        0        0        0        0
June 25, 2025 .........................     100        5        0        0        0        0
June 25, 2026 .........................     100        0        0        0        0        0
June 25, 2027 .........................     100        0        0        0        0        0
June 25, 2028 .........................     100        0        0        0        0        0
June 25, 2029 .........................      92        0        0        0        0        0
June 25, 2030 .........................      80        0        0        0        0        0
June 25, 2031 .........................      67        0        0        0        0        0
June 25, 2032 .........................      52        0        0        0        0        0
June 25, 2033 .........................      36        0        0        0        0        0
June 25, 2034 .........................      18        0        0        0        0        0
June 25, 2035 .........................       0        0        0        0        0        0
Weighted Average Life in Years:
 Without Optional Termination .........     27.0      9.9      6.6      5.0      4.4      3.5
With Optional Termination .............     26.9      9.2      6.1      4.6      4.1      3.3
</TABLE>



                                      S-86


   PERCENTAGE OF INITIAL CLASS PRINCIPAL AMOUNT OF THE CLASS M6 AND CLASS B1
  NOTES OUTSTANDING AT THE FOLLOWING PERCENTAGES OF THE PREPAYMENT ASSUMPTION




<TABLE>

                                                            CLASS M6 NOTES
                                        ------------------------------------------------------
                                            0%       50%      75%     100%     125%     150%
                                        --------- -------- -------- -------- -------- --------

Initial Percentage ....................     100      100      100      100      100      100
June 25, 2006 .........................     100      100      100      100      100      100
June 25, 2007 .........................     100      100      100      100      100      100
June 25, 2008 .........................     100      100      100      100      100       32
June 25, 2009 .........................     100      100       75       51       32       18
June 25, 2010 .........................     100       90       59       36       21       11
June 25, 2011 .........................     100       77       46       26       13        *
June 25, 2012 .........................     100       65       35       18        9        0
June 25, 2013 .........................     100       55       27       13        0        0
June 25, 2014 .........................     100       46       21        9        0        0
June 25, 2015 .........................     100       39       16        2        0        0
June 25, 2016 .........................     100       33       13        0        0        0
June 25, 2017 .........................     100       27       10        0        0        0
June 25, 2018 .........................     100       23        7        0        0        0
June 25, 2019 .........................     100       19        0        0        0        0
June 25, 2020 .........................     100       16        0        0        0        0
June 25, 2021 .........................     100       13        0        0        0        0
June 25, 2022 .........................     100       11        0        0        0        0
June 25, 2023 .........................     100        9        0        0        0        0
June 25, 2024 .........................     100        5        0        0        0        0
June 25, 2025 .........................     100        0        0        0        0        0
June 25, 2026 .........................     100        0        0        0        0        0
June 25, 2027 .........................     100        0        0        0        0        0
June 25, 2028 .........................     100        0        0        0        0        0
June 25, 2029 .........................      92        0        0        0        0        0
June 25, 2030 .........................      80        0        0        0        0        0
June 25, 2031 .........................      67        0        0        0        0        0
June 25, 2032 .........................      52        0        0        0        0        0
June 25, 2033 .........................      36        0        0        0        0        0
June 25, 2034 .........................      18        0        0        0        0        0
June 25, 2035 .........................       0        0        0        0        0        0
Weighted Average Life in Years:
 Without Optional Termination .........     27.0      9.8      6.6      5.0      4.2      3.4
With Optional Termination .............     26.9      9.2      6.1      4.6      4.0      3.2




                                                            CLASS B1 NOTES
                                        ------------------------------------------------------
                                            0%       50%      75%     100%     125%     150%
                                        --------- -------- -------- -------- -------- --------

Initial Percentage ....................     100      100      100      100      100      100
June 25, 2006 .........................     100      100      100      100      100      100
June 25, 2007 .........................     100      100      100      100      100      100
June 25, 2008 .........................     100      100      100      100      100       32
June 25, 2009 .........................     100      100       75       51       32       18
June 25, 2010 .........................     100       90       59       36       21       11
June 25, 2011 .........................     100       77       46       26       13        0
June 25, 2012 .........................     100       65       35       18        3        0
June 25, 2013 .........................     100       55       27       13        0        0
June 25, 2014 .........................     100       46       21        5        0        0
June 25, 2015 .........................     100       39       16        0        0        0
June 25, 2016 .........................     100       33       13        0        0        0
June 25, 2017 .........................     100       27        8        0        0        0
June 25, 2018 .........................     100       23        0        0        0        0
June 25, 2019 .........................     100       19        0        0        0        0
June 25, 2020 .........................     100       16        0        0        0        0
June 25, 2021 .........................     100       13        0        0        0        0
June 25, 2022 .........................     100       11        0        0        0        0
June 25, 2023 .........................     100        4        0        0        0        0
June 25, 2024 .........................     100        0        0        0        0        0
June 25, 2025 .........................     100        0        0        0        0        0
June 25, 2026 .........................     100        0        0        0        0        0
June 25, 2027 .........................     100        0        0        0        0        0
June 25, 2028 .........................     100        0        0        0        0        0
June 25, 2029 .........................      92        0        0        0        0        0
June 25, 2030 .........................      80        0        0        0        0        0
June 25, 2031 .........................      67        0        0        0        0        0
June 25, 2032 .........................      52        0        0        0        0        0
June 25, 2033 .........................      36        0        0        0        0        0
June 25, 2034 .........................      18        0        0        0        0        0
June 25, 2035 .........................       0        0        0        0        0        0
Weighted Average Life in Years:
 Without Optional Termination .........     27.0      9.7      6.5      4.9      4.1      3.3
With Optional Termination .............     26.9      9.2      6.1      4.6      3.9      3.1
</TABLE>

----------
*     Indicates a value between 0.0% and 0.5%

                                      S-87


   PERCENTAGE OF INITIAL CLASS PRINCIPAL AMOUNT OF THE CLASS B2 AND CLASS B3
  NOTES OUTSTANDING AT THE FOLLOWING PERCENTAGES OF THE PREPAYMENT ASSUMPTION




<TABLE>

                                                            CLASS B2 NOTES
                                        ------------------------------------------------------
                                            0%       50%      75%     100%     125%     150%
                                        --------- -------- -------- -------- -------- --------

Initial Percentage ....................     100      100      100      100      100      100
June 25, 2006 .........................     100      100      100      100      100      100
June 25, 2007 .........................     100      100      100      100      100      100
June 25, 2008 .........................     100      100      100      100      100       32
June 25, 2009 .........................     100      100       75       51       32       18
June 25, 2010 .........................     100       90       59       36       21        *
June 25, 2011 .........................     100       77       46       26       10        0
June 25, 2012 .........................     100       65       35       18        0        0
June 25, 2013 .........................     100       55       27        9        0        0
June 25, 2014 .........................     100       46       21        0        0        0
June 25, 2015 .........................     100       39       16        0        0        0
June 25, 2016 .........................     100       33        8        0        0        0
June 25, 2017 .........................     100       27        0        0        0        0
June 25, 2018 .........................     100       23        0        0        0        0
June 25, 2019 .........................     100       19        0        0        0        0
June 25, 2020 .........................     100       16        0        0        0        0
June 25, 2021 .........................     100       10        0        0        0        0
June 25, 2022 .........................     100        1        0        0        0        0
June 25, 2023 .........................     100        0        0        0        0        0
June 25, 2024 .........................     100        0        0        0        0        0
June 25, 2025 .........................     100        0        0        0        0        0
June 25, 2026 .........................     100        0        0        0        0        0
June 25, 2027 .........................     100        0        0        0        0        0
June 25, 2028 .........................     100        0        0        0        0        0
June 25, 2029 .........................      92        0        0        0        0        0
June 25, 2030 .........................      80        0        0        0        0        0
June 25, 2031 .........................      67        0        0        0        0        0
June 25, 2032 .........................      52        0        0        0        0        0
June 25, 2033 .........................      36        0        0        0        0        0
June 25, 2034 .........................      18        0        0        0        0        0
June 25, 2035 .........................       0        0        0        0        0        0
Weighted Average Life in Years:
 Without Optional Termination .........     27.0      9.6      6.4      4.8      4.0      3.2
With Optional Termination .............     26.9      9.2      6.1      4.6      3.9      3.1




                                                            CLASS B3 NOTES
                                        ------------------------------------------------------
                                            0%       50%      75%     100%     125%     150%
                                        --------- -------- -------- -------- -------- --------

Initial Percentage ....................     100      100      100      100      100      100
June 25, 2006 .........................     100      100      100      100      100      100
June 25, 2007 .........................     100      100      100      100      100      100
June 25, 2008 .........................     100      100      100      100      100       32
June 25, 2009 .........................     100      100       75       51       32       12
June 25, 2010 .........................     100       90       59       36       20        0
June 25, 2011 .........................     100       77       46       26        0        0
June 25, 2012 .........................     100       65       35       11        0        0
June 25, 2013 .........................     100       55       27        0        0        0
June 25, 2014 .........................     100       46       21        0        0        0
June 25, 2015 .........................     100       39        6        0        0        0
June 25, 2016 .........................     100       33        0        0        0        0
June 25, 2017 .........................     100       27        0        0        0        0
June 25, 2018 .........................     100       23        0        0        0        0
June 25, 2019 .........................     100       15        0        0        0        0
June 25, 2020 .........................     100        4        0        0        0        0
June 25, 2021 .........................     100        0        0        0        0        0
June 25, 2022 .........................     100        0        0        0        0        0
June 25, 2023 .........................     100        0        0        0        0        0
June 25, 2024 .........................     100        0        0        0        0        0
June 25, 2025 .........................     100        0        0        0        0        0
June 25, 2026 .........................     100        0        0        0        0        0
June 25, 2027 .........................     100        0        0        0        0        0
June 25, 2028 .........................     100        0        0        0        0        0
June 25, 2029 .........................      92        0        0        0        0        0
June 25, 2030 .........................      80        0        0        0        0        0
June 25, 2031 .........................      67        0        0        0        0        0
June 25, 2032 .........................      52        0        0        0        0        0
June 25, 2033 .........................      36        0        0        0        0        0
June 25, 2034 .........................      11        0        0        0        0        0
June 25, 2035 .........................       0        0        0        0        0        0
Weighted Average Life in Years:
 Without Optional Termination .........     26.9      9.3      6.2      4.6      3.8      3.0
With Optional Termination .............     26.9      9.2      6.1      4.6      3.8      3.0
</TABLE>

----------
*     Indicates a value between 0.0% and 0.5%

                                      S-88


                  MATERIAL FEDERAL INCOME TAX CONSIDERATIONS

TAX CLASSIFICATION OF THE TRUST AND OF THE NOTES

     In the opinion of McKee Nelson LLP, assuming compliance with the
Agreements, for U.S. federal income tax purposes, the Notes will be classified
as debt instruments. In addition, the Owner Trustee, on behalf of the Trust,
will agree, and beneficial owners of the Notes will agree by their purchase of
Notes, to treat the Notes as debt instruments for U.S. federal income tax
purposes.

     In the opinion of McKee Nelson LLP, assuming compliance with the
Agreements, for U.S. federal income tax purposes, the Trust will not be
classified as an association taxable as a corporation or as a publicly traded
partnership; the Trust will, however, be classified as a taxable mortgage pool
("TMP"). Although the Trust will be classified as a TMP, the Trust will not be
subject to federal income tax as long as an entity that qualifies as a "real
estate investment trust" (a "REIT") under the Internal Revenue Code of 1986, as
amended (the "Code") holds, directly or indirectly, through one or more wholly
owned qualified REIT subsidiaries a 100% ownership interest in the Ownership
Certificate.

     The Seller will hold through Aegis Equity Holding Corporation, its wholly
owned qualified REIT subsidiary, a 100% ownership interest in the Ownership
Certificate. The Seller represents it will file with its federal income tax
return for its taxable year ending December 31, 2004, an election to be a REIT,
that it has been organized in conformity with the requirements for REIT
qualification set forth in the Code, that it has operated and will continue to
operate in a manner that enables it to qualify as a REIT and that it will not
undertake any action that would cause the Trust to be subject to federal income
tax. In rendering its opinion, McKee Nelson LLP has not independently verified
the Seller's qualification as a REIT, but instead has relied solely upon the
representation made by the Seller concerning its REIT status. If the Seller
were to fail to qualify as a REIT while it or its subsidiary owns the Ownership
Certificate, the Trust could become subject to federal income tax as a
corporation and would not be allowed to file a consolidated federal income tax
return with any other corporation. A tax imposed upon the Trust could reduce
cashflow that would otherwise be available to make payments on the Notes. Any
such failure of the holder of the Ownership Certificate to qualify as a REIT or
a qualified REIT subsidiary would constitute an Indenture Default.


TAX CONSEQUENCES TO HOLDERS OF THE NOTES

     INTEREST INCOME ON THE NOTES. The notes may be treated as having been
issued with OID. The beneficial owner of a note must include any OID with
respect to such note in income as it accrues on a constant yield method,
regardless of whether the beneficial owner receives any cash currently
attributable to such OID. See "Material Federal Tax Considerations--Taxation of
Securities Treated as Debt Instruments--Election to Treat All Interest as OID"
in the prospectus. The prepayment assumption that will be used in determining
the accrual of any OID, market discount or bond premium, if any, will be a rate
equal to 100% of the Prepayment Assumption with respect to the Mortgage Loans.
See "Yield, Prepayment and Weighted Average Life" above. No representation,
however, is made as to the rate at which principal payments or recoveries on
the mortgage loans actually will occur.

     POSSIBLE ALTERNATIVE TREATMENTS OF THE NOTES. If, contrary to the opinion
of McKee Nelson, LLP, the IRS successfully asserted that a class of notes did
not represent debt instruments for U.S. federal income tax purposes, those
notes might be treated as equity interests in the trust. If, as a result, a
REIT did not hold, directly, or indirectly through a qualified REIT subsidiary,
100% of the equity in the trust, the trust could be subject to corporate income
tax. Moreover, if a class of notes represented equity in the trust, payments of
interest on that class of notes to a foreign person generally would be subject
to U.S. tax and withholding requirements.


STATE AND LOCAL INCOME TAX CONSIDERATIONS

     In addition to the federal income tax consequences described under
"Material Federal Income Tax Considerations" above, prospective investors
should consider the state and local income tax consequences of the acquisition,
ownership and disposition of the offered securities. State and local


                                      S-89


income tax law may differ substantially from the corresponding federal tax law,
and this discussion does not purport to describe any aspect of the income tax
laws of any state or municipality. Therefore, prospective investors should
consult their own tax advisors with respect to the various tax consequences of
investments in the offered securities.

                        LEGAL INVESTMENT CONSIDERATIONS

     The Offered Notes will not constitute "mortgage related securities" for
purposes of the Secondary Mortgage Market Enhancement Act of 1984, as amended.

     Institutions whose investment activities are subject to review by certain
regulatory authorities may be or may become subject to restrictions, which may
be retroactively imposed by such regulatory authorities, on the investment by
such institutions in certain mortgage related securities. In addition, several
states have adopted or may adopt regulations that prohibit certain
state-chartered institutions from purchasing or holding similar types of
securities.

     Accordingly, investors should consult their own legal advisors to
determine whether and to what extent the Offered Notes may be purchased by such
investors. See "Legal Investment" in the prospectus.


                             ERISA CONSIDERATIONS

GENERAL

     Section 406 of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") prohibits, and Section 4975 of the Code imposes adverse tax
consequences on, certain transactions between those pension, profit-sharing or
other employee benefit plans or other retirement plans or arrangements,
including a so-called "Keogh" plan, an educational savings account or an
individual retirement account, to which they are applicable or any entity
deemed to hold the assets of the foregoing ("Plans") and 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 and other penalties and liabilities under ERISA and the
Code for such persons.

     Certain transactions involving the assets of a trust might be deemed to
constitute prohibited transactions under Section 406 of ERISA and the Section
4975 of the Code with respect to a Plan that purchases securities issued by
that trust if assets of the trust were deemed to be assets of the Plan. Under a
regulation issued by the United States Department of Labor (the "Plan Assets
Regulation"), the assets of a trust would be treated as plan assets of the Plan
for the purposes of ERISA and the Section 4975 Code only if the Plan acquired
an "equity interest" in the trust and none of the exceptions contained in the
Plan Assets Regulation was applicable. An equity interest is defined under the
Plan Assets Regulation as an interest other than an instrument which is treated
as indebtedness under applicable local law and which has no substantial equity
features.

PURCHASES OF THE OFFERED NOTES

     Although there is little guidance on the subject, the Offered Notes should
be treated as indebtedness without substantial equity features for purposes of
the Plan Asset Regulations. This determination is based in part upon the
traditional debt features of the Offered Notes, including the reasonable
expectation of purchasers of the Offered Notes that they will be repaid when
due, as well as the absence of conversion rights, warrants and other typical
equity features. Based upon the foregoing and other considerations, and subject
to the limitations and qualifications described under "ERISA Considerations" in
the prospectus and the considerations described below, the Offered Notes may be
purchased by a Plan.

     Without regard to whether the Offered Notes are considered an "equity
interest" in the Trust under the Plan Asset Regulations, the acquisition or
holding of Offered Notes by or on behalf of a Plan could be considered to give
rise to a prohibited transaction if the Underwriters, the Trust, the


                                      S-90


Owner Trustee or the Indenture Trustee, or any of their respective affiliates
is or becomes a party in interest or a disqualified person with respect to such
Plan. In that case, certain exemptions ("prohibited transaction exemptions" or
"PTCEs") from the prohibited transaction rules could be applicable, depending
on the type of Plan involved and the circumstances of the plan fiduciary's
decision to acquire such Note. Included among these exemptions are: PTCE 84-14
(relating to transactions effected by a "qualified professional asset
manager"); PTCE 90-1 (relating to transactions involving insurance company
pooled separate accounts); PTCE 91-38 (relating to transactions involving bank
collective investment funds); PTCE 95-60 (relating to transactions involving
insurance company general accounts); and PTCE 96-23 (relating to transactions
effected by an "in-house asset manager") ("Investor-Based Exemptions"). Even if
the conditions specified in one or more of these exemptions are met, the scope
of the relief provided by these exemptions might or might not cover all acts
that might be construed as prohibited transactions. There can be no assurance
that any of these exemptions, or any other exemption, will be available with
respect to any particular transaction involving such Notes.

     Employee benefit plans that are governmental plans (as defined in Section
3(32) of ERISA) and certain church plans (as defined in Section 3(33) of ERISA)
are not subject to ERISA requirements but may be subject to state or local laws
substantially similar to ERISA or the Code ("Similar Law") (together with
Plans, "Benefit Plans").

     The Offered Notes should not be purchased with the assets of a Benefit
Plan if the Seller, the Depositor, the Indenture Trustee, the Owner Trustee,
the Administrator, the Underwriters or any of their affiliates is a fiduciary
or gives investment advice with respect to such Benefit Plan or is an employer
maintaining or contributing to such Benefit Plan, unless such purchase and
holding of the Offered Notes would be covered by an applicable prohibited
transaction exemption, and will not cause a non-exempt violation of any Similar
Law.

     Prospective Benefit Plan investors in Offered Notes should consult with
their legal advisors concerning the impact of ERISA and the Code and any
Similar Law, the availability of other exemptions from the prohibited
transaction rules that may apply to them, and the potential consequences in
their specific circumstances, prior to making an investment in the Offered
Notes. Each Benefit Plan fiduciary should also determine whether under the
general fiduciary standards of investment prudence and diversification, an
investment in the Offered Notes is appropriate for the Benefit Plan, taking
into account the overall investment policy of the Plan and the composition of
the Benefit Plan's investment portfolio.

     Each purchaser and transferee of an Offered Note will be deemed to
represent and warrant to the Issuer that (i) it is not acquiring such Note for,
or with the assets of, a Benefit Plan or (ii) its acquisition and holding of
such Note will not result in a non-exempt prohibited transaction under Section
406 of ERISA or Section 4975 of the Code which is not covered under an
Investor-Based Exemption or some other applicable exemption, and will not cause
a non-exempt violation of any Similar Law.


                                USE OF PROCEEDS

     The net proceeds from the sale of the Offered Notes will be applied by the
Depositor toward the purchase of the Mortgage Loans from the Seller and the
repayment of the related financing.


                                      S-91


                                 UNDERWRITING

     Subject to the terms and conditions set forth in the underwriting
agreement relating to the Offered Notes (the "Underwriting Agreement"), the
Depositor has agreed to sell to the underwriters named below (the
"Underwriters"), and the Underwriters have agreed, severally and not jointly,
to purchase from the Depositor, the initial principal amounts of Offered Notes
set forth below.



<TABLE>

                          LEHMAN        BEAR, STEARNS       CREDIT SUISSE           UBS
       CLASS          BROTHERS INC.       & CO. INC.      FIRST BOSTON LLC     SECURITIES LLC
------------------   ---------------   ---------------   ------------------   ---------------

Class A1 .........    $196,446,727       $28,063,818         $28,063,818        $49,183,636
Class A2 .........    $249,493,222       $35,641,889         $35,641,889        $         0
Class A3 .........    $ 26,619,698       $ 3,802,814         $ 3,802,814        $ 6,664,675
Class M1 .........    $ 22,134,256       $ 3,162,037         $ 3,162,037        $ 5,541,671
Class M2 .........    $ 19,644,152       $ 2,806,307         $ 2,806,307        $ 4,918,233
Class M3 .........    $ 12,450,519       $ 1,778,646         $ 1,778,646        $ 3,117,190
Class M4 .........    $ 11,343,806       $ 1,620,544         $ 1,620,544        $ 2,840,107
Class M5 .........    $ 10,237,093       $ 1,462,442         $ 1,462,442        $ 2,563,023
Class M6 .........    $ 10,237,093       $ 1,462,442         $ 1,462,442        $ 2,563,023
Class B1 .........    $  8,853,702       $ 1,264,815         $ 1,264,815        $ 2,216,668
Class B2 .........    $  7,470,311       $ 1,067,187         $ 1,067,187        $ 1,870,314
Class B3 .........    $  6,086,920       $   869,560         $   869,560        $ 1,523,960
</TABLE>

     The payment of the Offered Notes will be made by the Underwriters from
time to time in negotiated transactions or otherwise at varying prices to be
determined at the time of sale. The Underwriters may effect such transactions
by selling the Notes to or through dealers, and such dealers may receive from
the Underwriters, for whom they act as agent, compensation in the form of
underwriting discounts, concessions or commissions. The Underwriters and any
dealers that participate with the Underwriters in the payment of the Notes may
be deemed to be an underwriter, and any discounts, commissions or concessions
received by them, and any profit on the resale of the Notes purchased by them,
may be deemed to be underwriting discounts and commissions under the Securities
Act of 1933, as amended (the "Securities Act").


     The Underwriting Agreement provides that Aegis and the Depositor will
indemnify the Underwriters against certain civil liabilities, including
liabilities under the Securities Act, or contribute to payments the
Underwriters may be required to make in respect thereof.


     There can be no assurance that a secondary market for the Offered Notes
will develop or, if it does develop, that it will continue or provide
Noteholders with sufficient liquidity of investment.


     Expenses incurred by the Depositor in connection with this offering are
expected to be approximately $1,000,000.


     From time to time the Underwriters or their affiliates may perform
investment banking and advisory services for, and may provide general financing
and banking services to, affiliates of the Depositor. Certain of the
Underwriters, or affiliates of certain of the Underwriters, have provided
financing for certain of the Mortgage Loans. A portion of the proceeds of the
sale of the Offered Notes will be used to repay this financing.


     As described under "Servicing of the Mortgage Loans--Advance Facility," an
affiliate of Lehman Brothers Inc. will provide financing for Advances which
Aegis is obligated to make as Subservicer.

                                 LEGAL MATTERS

     Certain legal matters with respect to the Notes will be passed upon for
the Depositor by McKee Nelson LLP, Washington, D.C., and for the Underwriters
by Thacher Proffitt & Wood LLP, New York, New York.


                                      S-92


                                    RATINGS

     It is a condition to the issuance of the Offered Notes that they receive
the applicable ratings from Dominion Bond Rating Service, Inc. ("DBRS"), Fitch
Ratings ("Fitch"), Moody's Investors Service, Inc. ("Moody's") and Standard &
Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc. ("S&P")
(collectively, the "Rating Agencies") as described under "Summary of
Terms--Ratings of the Notes."


     The ratings of "AAA" and "Aaa" are the highest ratings that the applicable
Rating Agency assigns to securities. A securities rating is not a
recommendation to buy, sell or hold securities and may be subject to revision
or withdrawal at any time by the assigning Rating Agency. A securities rating
addresses the likelihood of receipt by holders of Offered Notes of payments in
the amount of scheduled payments on the Mortgage Loans. The rating takes into
consideration the characteristics of the Mortgage Loans and the structural and
legal aspects associated with the Offered Notes. The ratings on the Offered
Notes do not represent any assessment of the likelihood or rate of principal
prepayments. The ratings do not address the possibility that holders of Offered
Notes might suffer a lower than anticipated yield due to prepayments.


     The ratings do not address the likelihood that any Basis Risk Shortfall
will be repaid to Noteholders from Monthly Excess Cashflow.


     The ratings assigned to the Offered Notes should be evaluated
independently from similar ratings on other types of securities.


     The Depositor has not requested a rating of the Offered Notes 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 Notes or,
if it does, what rating would be assigned by such other rating agency. The
rating assigned by such other rating agency to the Offered Notes could be lower
than the respective ratings assigned by the Rating Agencies.


                                      S-93


                            INDEX OF PRINCIPAL TERMS


<TABLE>

DEFINED TERMS                                  PAGE
-------------------------------------------   -----

Above Average .............................    S-60
ACC .......................................    S-54
Accrual Period ............................    S-31
Accrued Note Interest .....................    S-31
Additional Termination Events .............    S-34
Adjustable Rate Mortgage Loans ............    S-51
Adjustment Date ...........................    S-52
Administration Agreement ..................    S-29
Administrator .............................    S-28
Advance Agency Agreement ..................    S-65
Advance Agent .............................    S-65
Advances ..................................    S-64
Aegis .....................................    S-54
Aegis Underwriting Standards ..............    S-54
AFC .......................................    S-54
Affected Party ............................    S-35
ALC .......................................    S-54
ARC .......................................    S-54
Available Funds Cap .......................    S-31
AWC .......................................    S-54
B1 Principal Deficiency Amount ............    S-48
B1 Principal Payment Amount ...............    S-41
B1 Target Amount ..........................    S-42
B2 Principal Deficiency Amount ............    S-48
B2 Principal Payment Amount ...............    S-41
B2 Target Amount ..........................    S-43
B3 Principal Deficiency Amount ............    S-48
B3 Principal Payment Amount ...............    S-41
B3 Target Amount ..........................    S-43
Balloon Loans .............................    S-52
Balloon Payments ..........................    S-52
Basis Risk Shortfall ......................    S-33
BBA .......................................    S-36
Beneficial Owner ..........................    S-30
Benefit Plans .............................    S-91
Book-Entry Notes ..........................    S-30
Business Day ..............................    S-30
Cap Agreement .............................    S-35
Cap Counterparty ..........................    S-35
Certificate Distribution Account ..........    S-49
Class .....................................    S-29
Class A Notes .............................    S-29
Class N Cap Agreement .....................    S-35
Class N Notes .............................    S-29
Class Principal Amount ....................    S-31
Clearstream Luxembourg ....................    S-30
Closing Date ..............................    S-28
Code ......................................    S-89
</TABLE>

<TABLE>

DEFINED TERMS                                  PAGE
-------------------------------------------   -----

Collection Account ........................    S-63
Collection Period .........................    S-37
Compensating Interest .....................    S-36
Corporate Trust Office ....................    S-49
Credit Risk Manager .......................    S-66
Credit Risk Manager's Fee .................    S-66
Credit Risk Manager's Fee Rate ............    S-66
CSFBi .....................................    S-33
Cumulative Loss Trigger Event .............    S-40
Custodian .................................    S-49
Cut-off Date ..............................    S-51
Cut-off Date Balance ......................    S-51
DBRS ......................................    S-93
Defaulting Party ..........................    S-34
Deferred Interest .........................    S-47
Definitive Note ...........................    S-30
Delinquency Advance .......................    S-64
Delinquency Event .........................    S-40
Delinquency Rate ..........................    S-40
Depositor .................................    S-28
Designated Telerate Page ..................    S-36
Determination Date ........................    S-37
Distressed Mortgage Loan ..................    S-66
Downgrade Provisions ......................    S-35
DTC .......................................    S-30
DTC Participants ..........................    S-30
Early Termination Date ....................    S-34
Effective Date ............................    S-60
ERISA .....................................    S-90
Euroclear .................................    S-30
European Depositaries .....................    S-30
Events of Default .........................    S-34
Financial Intermediary ....................    S-31
Fitch .....................................    S-93
Fixed Rate Mortgage Loans .................    S-51
Gross Margin ..............................    S-52
Guide .....................................    S-54
Indenture .................................    S-28
Indenture Default .........................    S-72
Indenture Trustee .........................    S-49
Indenture Trustee Fee .....................    S-49
Initial Cap ...............................    S-53
Initial Purchase Date .....................    S-48
Insurance Proceeds ........................    S-37
Interest Rate .............................    S-31
Interest Remittance Amount ................    S-32
Interest Settlement Rate ..................    S-36
Investor-Based Exemptions .................    S-91
</TABLE>

                                      S-94





<TABLE>

DEFINED TERMS                                   PAGE
--------------------------------------------   -----

ISDA Master Agreement ......................    S-33
Issuer .....................................    S-28
Junior Lien Mortgage Loans .................    S-51
LIBOR ......................................    S-36
LIBOR Business Day .........................    S-36
LIBOR Determination Date ...................    S-36
LIBOR Mortgage Loans .......................    S-52
Liquidated Mortgage Loan ...................    S-43
Loan-to-Value Ratio ........................    S-51
M1 Principal Deficiency Amount .............    S-47
M1 Principal Payment Amount ................    S-40
M1 Target Amount ...........................    S-42
M2 Principal Deficiency Amount .............    S-47
M2 Principal Payment Amount ................    S-40
M2 Target Amount ...........................    S-42
M3 Principal Deficiency Amount .............    S-47
M3 Principal Payment Amount ................    S-41
M3 Target Amount ...........................    S-42
M4 Principal Deficiency Amount .............    S-47
M4 Principal Payment Amount ................    S-41
M4 Target Amount ...........................    S-42
M5 Principal Deficiency Amount .............    S-48
M5 Principal Payment Amount ................    S-41
M5 Target Amount ...........................    S-42
M6 Principal Deficiency Amount .............    S-48
M6 Principal Payment Amount ................    S-41
M6 Target Amount ...........................    S-42
Master Servicer ............................    S-59
Maturity Date ..............................    S-48
Maximum Rate ...............................    S-53
Minimum Rate ...............................    S-53
Modeling Assumptions .......................    S-79
Monthly Excess Cashflow ....................    S-44
Monthly Excess Interest ....................    S-32
Moody's ....................................    S-93
Mortgage Loans .............................    S-29
Mortgage Pool ..............................    S-29
Mortgage Rate ..............................    S-31
Mortgaged Property .........................    S-51
Net Liquidation Proceeds ...................    S-37
Net Mortgage Rate ..........................    S-31
Net Prepayment Interest Shortfalls .........    S-36
Net Swap Payment ...........................    S-33
Note Payment Account .......................    S-29
Note Registrar .............................    S-49
Noteholder .................................    S-30
Notes ......................................    S-28
OCN ........................................    S-60
Ocwen ......................................    S-59
Offered Notes ..............................    S-29


</TABLE>
<TABLE>

DEFINED TERMS                                   PAGE
--------------------------------------------   -----

Offered Subordinate Notes ..................    S-29
Optional Termination .......................    S-48
Originators ................................    S-54
Overcollateralization Amount ...............    S-41
Overcollateralization Deficiency ...........    S-41
Overcollateralization Release
   Amount ..................................    S-42
Owner Trustee ..............................    S-28
Owner Trustee Fee ..........................    S-29
Ownership Certificate ......................    S-29
Payahead ...................................    S-32
Paying Agent ...............................    S-49
Payment Date ...............................    S-30
Periodic Cap ...............................    S-53
Plan Assets Regulation .....................    S-90
Plans ......................................    S-90
Pool Balance ...............................    S-31
Prepayment Assumption ......................    S-78
Prepayment Interest Shortfall ..............    S-35
Prepayment Period ..........................    S-37
Prepayment Premium .........................    S-52
Prepayment Premium Period ..................    S-52
Principal Deficiency Amount ................    S-47
Principal Payment Amount ...................    S-36
Principal Remittance Amount ................    S-36
Priority Class .............................    S-73
PTCEs ......................................    S-91
Purchase Price .............................    S-48
Rating Agencies ............................    S-93
Realized Loss ..............................    S-43
Record Date ................................    S-30
REIT .......................................    S-89
Relevant Depositary ........................    S-30
Relief Act .................................    S-31
Relief Act Reduction .......................    S-64
Residual Holder ............................    S-29
Rolling Three Month Delinquency
   Rate ....................................    S-40
Sale Agreement .............................    S-67
Scheduled Notional Amount ..................    S-33
Scheduled Payment ..........................    S-37
Scheduled Principal Balance ................    S-37
Securities .................................    S-29
Securities Act .............................    S-92
Securityholders ............................    S-49
Seller .....................................    S-54
Senior Enhancement Percentage ..............    S-42
Senior Notes ...............................    S-29
Senior Principal Payment Amount ............    S-40
Senior Target Amount .......................    S-42
</TABLE>

                                      S-95



<TABLE>

DEFINED TERMS                                  PAGE
-------------------------------------------   -----

Servicer ..................................    S-59
Servicer Termination Event ................    S-71
Servicing Account .........................    S-63
Servicing Advance .........................    S-64
Servicing Fee .............................    S-63
Servicing Fee Rate ........................    S-63
Similar Law ...............................    S-91
Six-Month LIBOR Index .....................    S-53
Stepdown Date .............................    S-40
Subordinate Notes .........................    S-29
Subservicer ...............................    S-63
Subservicing Agreement ....................    S-63
Substitution Amount .......................    S-32
Swap Agreement ............................    S-33
Swap Counterparty .........................    S-33
Swap Counterparty Trigger Event ...........    S-34
Swap Default ..............................    S-34
Swap Early Termination ....................    S-34


</TABLE>
<TABLE>

DEFINED TERMS                                  PAGE
-------------------------------------------   -----

Swap Termination Payment ..................    S-34
S&P .......................................    S-93
Target Amount .............................    S-39
Targeted Overcollateralization
   Amount .................................    S-42
Termination Event .........................    S-34
TMP .......................................    S-89
Total Principal Deficiency Amount .........    S-47
Transfer and Servicing Agreement ..........    S-67
Trigger Event .............................    S-39
Trust .....................................    S-28
Trust Agreement ...........................    S-28
Trust Estate ..............................    S-28
Underwriters ..............................    S-92
Underwriting Agreement ....................    S-92
Wells Fargo ...............................    S-49
</TABLE>


                                      S-96


                                    ANNEX A
                   SWAP AGREEMENT SCHEDULED NOTIONAL AMOUNTS




<TABLE>

PAYMENT DATE OCCURRING IN    SCHEDULED NOTIONAL AMOUNT($)
--------------------------- -----------------------------

  July 2005 ...............          825,775,000
  August 2005 .............          793,250,136
  September 2005 ..........          761,816,429
  October 2005 ............          731,417,782
  November 2005 ...........          702,002,202
  December 2005 ...........          673,521,737
  January 2006 ............          645,932,402
  February 2006 ...........          619,194,089
  March 2006 ..............          593,270,467
  April 2006 ..............          568,128,868
  May 2006 ................          543,740,154
  June 2006 ...............          520,085,145
  July 2006 ...............          497,416,189
  August 2006 .............          475,693,182
  September 2006 ..........          454,876,570
  October 2006 ............          434,928,457
  November 2006 ...........          415,812,535
  December 2006 ...........          397,494,017
  January 2007 ............          379,939,571
  February 2007 ...........          363,117,264
  March 2007 ..............          346,996,498
  April 2007 ..............          331,547,956
  May 2007 ................          316,743,551
  June 2007 ...............          275,456,690
  July 2007 ...............          244,448,839
  August 2007 .............          221,670,255
  September 2007 ..........          205,315,798
  October 2007 ............          192,014,200
  November 2007 ...........          178,883,148
  December 2007 ...........          165,847,994
  January 2008 ............          154,305,184
  February 2008 ...........          144,603,231
  March 2008 ..............          136,391,466
  April 2008 ..............          128,578,076
  May 2008 ................          120,305,834
  June 2008 ...............          111,468,945
  July 2008 ...............          103,337,382
  August 2008 .............           95,724,492
  September 2008 ..........           88,527,450
  October 2008 ............           81,716,886
  November 2008 ...........           75,623,029
  December 2008 ...........           70,226,424
  January 2009 ............           65,456,918
  February 2009 ...........           61,035,371
  March 2009 ..............           56,876,229
  April 2009 ..............           52,955,187
  May 2009 ................           49,209,757
</TABLE>

                                     S-A-1



<TABLE>

PAYMENT DATE OCCURRING IN                SCHEDULED NOTIONAL AMOUNT($)
--------------------------------------- -----------------------------

  June 2009 ...........................          45,626,627
  July 2009 ...........................          42,195,613
  August 2009 .........................          38,804,610
  September 2009 ......................          35,447,866
  October 2009 and thereafter .........                   0
</TABLE>


                                     S-A-2


                                    ANNEX B
                    CAP AGREEMENT SCHEDULED NOTIONAL AMOUNTS




<TABLE>

                              SCHEDULED NOTIONAL AMOUNT($)
PAYMENT DATE OCCURRING IN    (ROUNDED TO THE NEAREST DOLLAR)
--------------------------- --------------------------------

  July 2005 ...............           825,775,000
  August 2005 .............           793,250,136
  September 2005 ..........           761,816,429
  October 2005 ............           731,417,782
  November 2005 ...........           702,002,202
  December 2005 ...........           673,521,737
  January 2006 ............           645,932,402
  February 2006 ...........           619,194,089
  March 2006 ..............           593,270,467
  April 2006 ..............           568,128,868
  May 2006 ................           543,740,154
  June 2006 ...............           520,085,145
  July 2006 ...............           497,416,189
  August 2006 .............           475,693,182
  September 2006 ..........           454,876,570
  October 2006 ............           434,928,457
  November 2006 ...........           415,812,535
  December 2006 ...........           397,494,017
  January 2007 ............           379,939,571
  February 2007 ...........           363,117,264
  March 2007 ..............           346,996,498
  April 2007 ..............           331,547,956
  May 2007 ................           316,743,551
  June 2007 ...............           275,456,690
  July 2007 ...............           244,448,839
  August 2007 .............           221,670,255
  September 2007 ..........           205,315,798
  October 2007 ............           192,014,200
  November 2007 ...........           178,883,148
  December 2007 ...........           165,847,994
  January 2008 ............           154,305,184
  February 2008 ...........           144,603,231
  March 2008 ..............           136,391,466
  April 2008 ..............           128,578,076
  May 2008 ................           120,305,834
  June 2008 ...............           111,468,945
  July 2008 ...............           103,337,382
  August 2008 .............            95,724,492
  September 2008 ..........            88,527,450
  October 2008 ............            81,716,886
  November 2008 ...........            75,623,029
  December 2008 ...........            70,226,424
  January 2009 ............            65,456,918
  February 2009 ...........            61,035,371
  March 2009 ..............            56,876,229
  April 2009 ..............            52,955,187
</TABLE>

                                     S-B-1



<TABLE>

                                          SCHEDULED NOTIONAL AMOUNT($)
PAYMENT DATE OCCURRING IN                (ROUNDED TO THE NEAREST DOLLAR)
--------------------------------------- --------------------------------

  May 2009 ............................            49,209,757
  June 2009 ...........................            45,626,627
  July 2009 ...........................            42,195,613
  August 2009 .........................            38,804,610
  September 2009 ......................            35,447,866
  October 2009 and thereafter .........                     0
</TABLE>


                                     S-B-2


                                    ANNEX C
                 CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS

     The Mortgage Loans are expected to have the following approximate
aggregate characteristics as of the Cut-off Date. Prior to the issuance of the
Notes, Mortgage Loans may be removed from the Trust as a result of incomplete
documentation or otherwise, if the Depositor deems such removal necessary or
appropriate.


     The following tables set forth, as of the Cut-off Date, the number, total
Scheduled Principal Balance, percentage, weighted average credit score,
weighted average loan-to-value ratios and weighted average coupon of the
Mortgage Loans having the stated characteristics shown in the tables in each
range (the sum of the amounts of the total Scheduled Principal Balances and the
percentages in the following tables may not equal the totals due to rounding).




<TABLE>

                                                                      PERCENTAGE OF
                                                                      MORTGAGE LOANS
                                    NUMBER OF         TOTAL              BY TOTAL         WEIGHTED     WEIGHTED    WEIGHTED
        RANGE OF SCHEDULED           MORTGAGE       SCHEDULED           SCHEDULED          AVERAGE      AVERAGE     AVERAGE
      PRINCIPAL BALANCES ($)          LOANS     PRINCIPAL BALANCE   PRINCIPAL BALANCE   CREDIT SCORE      LTV       COUPON
---------------------------------- ----------- ------------------- ------------------- -------------- ---------- ------------

      0.01 to  50,000.00 .........    1,563     $ 48,826,573.71            5.74%      614            92.23%         10.382%
 50,000.01 to 100,000.00 .........    2,039      150,944,007.80           17.76       602            80.83           8.612
100,000.01 to 150,000.00 .........    1,375      169,543,247.02           19.95       607            78.69           8.039
150,000.01 to 200,000.00 .........      802      139,394,675.91           16.40       612            77.61           7.815
200,000.01 to 250,000.00 .........      519      115,194,320.24           13.55       617            77.86           7.605
250,000.01 to 300,000.00 .........      277       75,798,052.41            8.92       613            78.29           7.584
300,000.01 to 350,000.00 .........      166       53,843,980.71            6.33       622            79.60           7.527
350,000.01 to 400,000.00 .........       80       29,880,536.59            3.52       625            79.92           7.308
400,000.01 to 450,000.00 .........       49       20,882,952.67            2.46       620            79.23           7.338
450,000.01 to 500,000.00 .........       45       21,526,208.80            2.53       623            77.67           7.383
500,000.01 to 550,000.00 .........       15        7,999,055.63            0.94       588            75.72           7.950
550,000.01 to 600,000.00 .........        5        2,884,237.21            0.34       618            82.05           7.648
600,000.01 to 650,000.00 .........        5        3,105,992.31            0.37       586            72.46           7.081
Greater than 650,000.00 ..........       13       10,177,487.69            1.20       612            73.64           7.999
                                      -----     ---------------          ------       ---            ------         ------
 Total: ..........................    6,953     $850,001,328.70          100.00%      611            79.51%          8.041%
                                      =====     ===============          ======       ===            ======         ======
</TABLE>

     The average Cut-off Date Scheduled Principal Balance is approximately
$122,249.58.

                                     S-C-1


                        MORTGAGE RATES--MORTGAGE LOANS*




<TABLE>

                                                              PERCENTAGE OF
                                                              MORTGAGE LOANS
                            NUMBER OF         TOTAL              BY TOTAL         WEIGHTED     WEIGHTED    WEIGHTED
         RANGE OF            MORTGAGE       SCHEDULED           SCHEDULED          AVERAGE      AVERAGE    AVERAGE
    MORTGAGE RATES (%)        LOANS     PRINCIPAL BALANCE   PRINCIPAL BALANCE   CREDIT SCORE      LTV       COUPON
-------------------------- ----------- ------------------- ------------------- -------------- ---------- -----------

 5.001 to  5.500 .........       15     $  2,635,675.78            0.31%      665               74.73%      5.386%
 5.501 to  6.000 .........      131       25,318,482.91            2.98       669               74.27       5.852
 6.001 to  6.500 .........      368       73,076,785.98            8.60       656               76.13       6.295
 6.501 to  7.000 .........      742      136,430,899.69           16.05       636               76.59       6.803
 7.001 to  7.500 .........      748      119,874,464.85           14.10       628               77.52       7.278
 7.501 to  8.000 .........      936      136,782,144.83           16.09       611               78.31       7.787
 8.001 to  8.500 .........      597       79,543,692.84            9.36       593               79.57       8.276
 8.501 to  9.000 .........      606       74,793,976.04            8.80       579               79.42       8.774
 9.001 to  9.500 .........      425       50,884,785.53            5.99       572               81.87       9.257
 9.501 to 10.000 .........      576       53,695,307.01            6.32       573               82.21       9.815
10.001 to 10.500 .........      776       51,936,915.84            6.11       586               87.46      10.319
10.501 to 11.000 .........      715       33,210,048.30            3.91       586               89.74      10.741
11.001 to 11.500 .........       86        3,403,038.20            0.40       614               92.39      11.306
11.501 to 12.000 .........       61        2,514,945.16            0.30       592               91.00      11.808
12.001 to 12.500 .........      169        5,809,299.57            0.68       632               98.11      12.476
12.501 to 13.000 .........        2           90,866.17            0.01       531               75.37      12.589
                                ---     ---------------          ------       ---               -----      ------
 Total: ..................    6,953     $850,001,328.70          100.00%      611               79.51%      8.041%
                              =====     ===============          ======       ===               =====      ======
</TABLE>

----------
*    Reflects the current Mortgage Rates for the Mortgage Loans.


                           LOAN TYPE--MORTGAGE LOANS




<TABLE>

                                                                         PERCENTAGE OF
                                                                         MORTGAGE LOANS
                                       NUMBER OF         TOTAL              BY TOTAL         WEIGHTED     WEIGHTED    WEIGHTED
                                        MORTGAGE       SCHEDULED           SCHEDULED          AVERAGE      AVERAGE    AVERAGE
              LOAN TYPE                  LOANS     PRINCIPAL BALANCE   PRINCIPAL BALANCE   CREDIT SCORE      LTV       COUPON
------------------------------------- ----------- ------------------- ------------------- -------------- ---------- -----------

2/28 ARM (LIBOR) ....................    3,903     $538,877,269.02          63.40%      596            78.34%         8.122%
3/27 ARM (LIBOR) ....................      124       19,703,137.81           2.32       634            76.88          7.388
5/25 ARM (LIBOR) ....................       15        2,016,012.61           0.24       686            67.91          6.874
Balloon .............................       79        3,402,742.93           0.40       648            97.47         10.426
Fixed Rate ..........................    1,980      116,778,179.13          13.74       635            84.94          9.020
2/28 ARM (LIBOR) -- Interest
 Only ...............................      789      155,818,556.08          18.33       639            79.83          7.168
3/27 ARM (LIBOR) -- Interest
 Only ...............................       42        9,026,721.12           1.06       652            79.48          6.851
5/25 ARM (LIBOR) -- Interest
 Only ...............................        1          273,600.00           0.03       652            80.00          7.360
Balloon -- Interest Only ............        3          680,000.00           0.08       678            79.67          7.429
Fixed Rate -- Interest Only .........       17        3,425,110.00           0.40       655            69.31          7.001
                                         -----     ---------------         ------       ---            ------        ------
 Total: .............................    6,953     $850,001,328.70         100.00%      611            79.51%         8.041%
                                         =====     ===============         ======       ===            ======        ======
</TABLE>

                                     S-C-2


                    ORIGINAL TERMS TO MATURITY-MORTGAGE LOANS




<TABLE>

                                                                       PERCENTAGE OF
                                                                       MORTGAGE LOANS
                                     NUMBER OF         TOTAL              BY TOTAL         WEIGHTED     WEIGHTED    WEIGHTED
              RANGE OF                MORTGAGE       SCHEDULED           SCHEDULED          AVERAGE      AVERAGE    AVERAGE
        MATURITIES (MONTHS)            LOANS     PRINCIPAL BALANCE   PRINCIPAL BALANCE   CREDIT SCORE      LTV       COUPON
----------------------------------- ----------- ------------------- ------------------- -------------- ---------- -----------

Less than or equal to 180 .........      213     $ 13,531,906.67            1.59%      644            80.69%         8.898%
181 to 240 ........................      342       12,914,486.69            1.52       635            94.18         10.805
241 to 360 ........................    6,398      823,554,935.34           96.89       610            79.26          7.984
                                       -----     ---------------          ------       ---            ------        ------
 Total: ...........................    6,953     $850,001,328.70          100.00%      611            79.51%         8.041%
                                       =====     ===============          ======       ===            ======        ======
</TABLE>

   The weighted average original term to maturity is approximately 355 months.



                   REMAINING TERMS TO MATURITY-MORTGAGE LOANS




<TABLE>

                                                                       PERCENTAGE OF
                                                                       MORTGAGE LOANS
                                     NUMBER OF         TOTAL              BY TOTAL         WEIGHTED     WEIGHTED    WEIGHTED
              RANGE OF                MORTGAGE       SCHEDULED           SCHEDULED          AVERAGE      AVERAGE    AVERAGE
        MATURITIES (MONTHS)            LOANS     PRINCIPAL BALANCE   PRINCIPAL BALANCE   CREDIT SCORE      LTV       COUPON
----------------------------------- ----------- ------------------- ------------------- -------------- ---------- -----------

Less than or equal to 180 .........      213     $ 13,531,906.67            1.59%      644            80.69%         8.898%
181 to 240 ........................      342       12,914,486.69            1.52       635            94.18         10.805
241 to 360 ........................    6,398      823,554,935.34           96.89       610            79.26          7.984
                                       -----     ---------------          ------       ---            ------        ------
 Total: ...........................    6,953     $850,001,328.70          100.00%      611            79.51%         8.041%
                                       =====     ===============          ======       ===            ======        ======
</TABLE>

   The weighted average remaining term to maturity is approximately 355
                months.


                  ORIGINAL LOAN-TO-VALUE RATIOS-MORTGAGE LOANS*




<TABLE>

                                                              PERCENTAGE OF
                                                              MORTGAGE LOANS
                            NUMBER OF         TOTAL              BY TOTAL         WEIGHTED     WEIGHTED    WEIGHTED
         RANGE OF            MORTGAGE       SCHEDULED           SCHEDULED          AVERAGE      AVERAGE    AVERAGE
 LOAN-TO-VALUE RATIOS (%)     LOANS     PRINCIPAL BALANCE   PRINCIPAL BALANCE   CREDIT SCORE      LTV       COUPON
-------------------------- ----------- ------------------- ------------------- -------------- ---------- -----------

10.01 to  20.00 ..........       13     $    698,915.50            0.08%      604               16.13%      8.579%
20.01 to  30.00 ..........       36        3,808,230.56            0.45       592               26.84       8.103
30.01 to  40.00 ..........       53        5,985,620.75            0.70       622               36.06       7.714
40.01 to  50.00 ..........       99       12,808,342.54            1.51       608               46.20       7.771
50.01 to  60.00 ..........      224       33,322,905.84            3.92       594               55.92       7.682
60.01 to  70.00 ..........      554       89,788,310.11           10.56       577               66.49       7.961
70.01 to  80.00 ..........    2,916      426,761,739.42           50.21       618               78.80       7.497
80.01 to  90.00 ..........    1,228      176,551,018.16           20.77       602               87.26       8.505
90.01 to 100.00 ..........    1,830      100,276,245.82           11.80       635               97.71       9.780
                              -----     ---------------          ------       ---               -----       -----
 Total: ..................    6,953     $850,001,328.70          100.00%      611               79.51%      8.041%
                              =====     ===============          ======       ===               =====       =====
</TABLE>

----------
*    Reflects loans-to-value ratios for first lien Mortgage Loans and combined
     loan-to-value rations for junior lien Mortgage Loans.


                                     S-C-3


                     GEOGRAPHIC DISTRIBUTION-MORTGAGE LOANS




<TABLE>

                                                                  PERCENTAGE OF
                                                                  MORTGAGE LOANS
                                NUMBER OF         TOTAL              BY TOTAL         WEIGHTED     WEIGHTED    WEIGHTED
                                 MORTGAGE       SCHEDULED           SCHEDULED          AVERAGE      AVERAGE    AVERAGE
         JURISDICTION             LOANS     PRINCIPAL BALANCE   PRINCIPAL BALANCE   CREDIT SCORE      LTV       COUPON
------------------------------ ----------- ------------------- ------------------- -------------- ---------- -----------

Alabama ......................       89     $  7,066,032.37            0.83%      606            83.13%         8.449%
Arizona ......................      224       30,352,251.97            3.57       613            80.82          8.058
Arkansas .....................       27        1,934,505.96            0.23       618            84.09          9.131
California ...................      435       98,401,177.78           11.58       621            75.31          7.412
Colorado .....................      206       22,174,771.99            2.61       626            82.74          7.517
Connecticut ..................      142       20,260,396.65            2.38       619            74.91          8.333
District of Columbia .........        2          189,953.61            0.02       697            83.77          7.881
Delaware .....................       40        5,749,404.25            0.68       595            79.60          8.373
Florida ......................      626       78,008,001.20            9.18       616            81.25          8.009
Georgia ......................      189       19,920,156.08            2.34       616            83.71          8.030
Idaho ........................        3          245,479.11            0.03       621            92.61          8.518
Illinois .....................      344       42,943,576.71            5.05       616            80.94          7.745
Indiana ......................      151       10,198,719.44            1.20       595            82.92          8.367
Iowa .........................       49        3,140,868.47            0.37       590            82.70          8.996
Kansas .......................       44        3,759,920.55            0.44       625            85.27          8.557
Kentucky .....................       82        5,164,877.69            0.61       594            83.06          8.540
Louisiana ....................      146       10,795,341.68            1.27       608            83.54          8.078
Maine ........................      141       16,384,069.28            1.93       615            77.02          8.283
Maryland .....................      159       28,582,737.71            3.36       607            76.81          7.847
Massachusetts ................      251       51,017,589.11            6.00       616            75.22          7.870
Michigan .....................      336       30,988,802.33            3.65       614            81.54          8.168
Minnesota ....................       88       11,071,220.16            1.30       610            81.86          8.501
Mississippi ..................       57        4,061,988.59            0.48       595            85.28          8.062
Missouri .....................      187       13,260,579.23            1.56       586            83.39          8.666
Nebraska .....................       43        3,601,831.09            0.42       600            85.03          9.235
Nevada .......................      239       42,820,546.99            5.04       623            78.23          7.663
New Hampshire ................      113       17,010,580.98            2.00       619            78.33          8.074
New Jersey ...................       97       17,284,060.81            2.03       583            74.81          8.675
New Mexico ...................       17        1,522,005.53            0.18       604            84.56          8.746
New York .....................      206       33,174,223.41            3.90       601            75.01          8.278
North Carolina ...............      220       19,606,826.33            2.31       600            82.32          8.522
Ohio .........................      529       40,388,773.96            4.75       598            83.22          8.521
Oklahoma .....................       27        1,644,435.61            0.19       590            82.89          9.030
Oregon .......................       16        2,032,039.44            0.24       632            82.46          8.119
Pennsylvania .................      109       10,796,911.02            1.27       595            81.81          8.414
Rhode Island .................      138       23,869,814.56            2.81       613            77.93          8.082
South Carolina ...............       99        7,632,730.49            0.90       596            83.32          8.945
South Dakota .................        1          104,453.77            0.01       575            95.00         10.000
Tennessee ....................      100        9,362,874.35            1.10       602            84.57          8.502
Texas ........................      508       39,323,773.39            4.63       611            82.11          7.997
Utah .........................       49        5,870,806.65            0.69       615            84.00          7.599
Vermont ......................       42        5,203,501.91            0.61       613            76.00          8.948
Virginia .....................      182       28,547,149.60            3.36       603            78.42          7.949
Washington ...................      110       15,512,010.69            1.82       622            81.08          7.730
West Virginia ................        6        1,026,214.06            0.12       656            86.22          7.822
Wisconsin ....................       84        7,993,342.14            0.94       589            80.52          9.177
                                    ---     ---------------          ------       ---            ------        ------
 Total: ......................    6,953     $850,001,328.70          100.00%      611            79.51%         8.041%
                                  =====     ===============          ======       ===            ======        ======
</TABLE>

                                     S-C-4


                          PROPERTY TYPE-MORTGAGE LOANS


<TABLE>

                                                                      PERCENTAGE OF
                                                                      MORTGAGE LOANS
                                    NUMBER OF         TOTAL              BY TOTAL         WEIGHTED     WEIGHTED    WEIGHTED
                                     MORTGAGE       SCHEDULED           SCHEDULED          AVERAGE      AVERAGE    AVERAGE
           PROPERTY TYPE              LOANS     PRINCIPAL BALANCE   PRINCIPAL BALANCE   CREDIT SCORE      LTV       COUPON
---------------------------------- ----------- ------------------- ------------------- -------------- ---------- -----------

Single Family Detached ...........    5,490     $641,747,358.02          75.50%      609               79.59%      8.100%
Planned Unit Development .........      768      111,739,447.97          13.15       619               81.07       7.798
Two- to Four-Family ..............      309       51,713,344.17           6.08       612               74.84       7.904
Condominium ......................      338       39,783,601.24           4.68       628               80.13       7.953
Townhouse ........................       38        3,675,674.65           0.43       605               76.27       7.910
Rowhouse .........................       10        1,341,902.65           0.16       631               82.95       8.459
                                      -----     ---------------         ------       ---               -----       -----
 Total: ..........................    6,953     $850,001,328.70         100.00%      611               79.51%      8.041%
                                      =====     ===============         ======       ===               =====       =====
</TABLE>

                           LOAN PURPOSE-MORTGAGE LOANS




<TABLE>

                                                                 PERCENTAGE OF
                                                                 MORTGAGE LOANS
                               NUMBER OF         TOTAL              BY TOTAL         WEIGHTED     WEIGHTED    WEIGHTED
                                MORTGAGE       SCHEDULED           SCHEDULED          AVERAGE      AVERAGE    AVERAGE
         LOAN PURPOSE            LOANS     PRINCIPAL BALANCE   PRINCIPAL BALANCE   CREDIT SCORE      LTV       COUPON
----------------------------- ----------- ------------------- ------------------- -------------- ---------- -----------

Cash-Out Refinance ..........    3,371       $516,633,476.70          60.78%      601               76.47%      8.037%
Purchase ....................    3,363        322,590,802.33          37.95       628               83.98       7.982
Rate/Term Refinance .........      219         10,777,049.67           1.27       617               91.76      10.019
                                 -----       ---------------         ------       ---               -----      ------
 Total: .....................    6,953       $850,001,328.70         100.00%      611               79.51%      8.041%
                                 =====       ===============         ======       ===               =====      ======
</TABLE>

                         OCCUPANCY STATUS-MORTGAGE LOANS




<TABLE>

                                                                PERCENTAGE OF
                                                                MORTGAGE LOANS
                              NUMBER OF         TOTAL              BY TOTAL         WEIGHTED     WEIGHTED    WEIGHTED
                               MORTGAGE       SCHEDULED           SCHEDULED          AVERAGE      AVERAGE    AVERAGE
      OCCUPANCY STATUS          LOANS     PRINCIPAL BALANCE   PRINCIPAL BALANCE   CREDIT SCORE      LTV       COUPON
---------------------------- ----------- ------------------- ------------------- -------------- ---------- -----------

Owner Occupied .............    6,674       $816,490,217.97          96.06%      610               79.67%      8.038%
Non-owner Occupied .........      229         26,222,992.64           3.09       635               74.55       8.104
Vacation ...................       50          7,288,118.09           0.86       631               80.17       8.205
                                -----       ---------------         ------       ---               -----       -----
 Total: ....................    6,953       $850,001,328.70         100.00%      611               79.51%      8.041%
                                =====       ===============         ======       ===               =====       =====
</TABLE>


                                     S-C-5


                      LOAN DOCUMENTATION--MORTGAGE LOANS




<TABLE>

                                                                       PERCENTAGE OF
                                                                       MORTGAGE LOANS
                                     NUMBER OF         TOTAL              BY TOTAL         WEIGHTED     WEIGHTED    WEIGHTED
                                      MORTGAGE       SCHEDULED           SCHEDULED          AVERAGE      AVERAGE    AVERAGE
         LOAN DOCUMENTATION            LOANS     PRINCIPAL BALANCE   PRINCIPAL BALANCE   CREDIT SCORE      LTV       COUPON
----------------------------------- ----------- ------------------- ------------------- -------------- ---------- -----------

Full Documentation ................    4,960       $540,138,540.42          63.55%      604               79.99%      8.003%
Stated Documentation ..............    1,851        287,368,117.49          33.81       627               78.43       8.084
Alternative Documentation .........      142         22,494,670.79           2.65       603               81.75       8.415
                                       -----       ---------------         ------       ---               -----       -----
 Total: ...........................    6,953       $850,001,328.70         100.00%      611               79.51%      8.041%
                                       =====       ===============         ======       ===               =====       =====
</TABLE>

                    PREPAYMENT PREMIUM YEARS--MORTGAGE LOANS




<TABLE>

                                                                PERCENTAGE OF
                                                                MORTGAGE LOANS
                              NUMBER OF         TOTAL              BY TOTAL         WEIGHTED     WEIGHTED    WEIGHTED
                               MORTGAGE       SCHEDULED           SCHEDULED          AVERAGE      AVERAGE    AVERAGE
 PREPAYMENT PREMIUM (YEARS)     LOANS     PRINCIPAL BALANCE   PRINCIPAL BALANCE   CREDIT SCORE      LTV       COUPON
---------------------------- ----------- ------------------- ------------------- -------------- ---------- -----------

None .......................    2,657     $299,117,286.31          35.19%      610               79.84%      8.273%
1.000 ......................      333       57,098,101.65           6.72       615               77.58       8.139
2.000 ......................    3,138      426,892,709.97          50.22       607               79.51       7.830
2.500 ......................        8        1,322,631.54           0.16       596               74.65       8.674
3.000 ......................      813       65,040,751.26           7.65       639               79.89       8.267
5.000 ......................        4          529,847.97           0.06       559               76.67       7.207
                                -----     ---------------         ------       ---               -----       -----
 Total: ....................    6,953     $850,001,328.70         100.00%      611               79.51%      8.041%
                                =====     ===============         ======       ===               =====       =====
</TABLE>

                           RATE TYPE--MORTGAGE LOANS




<TABLE>

                                                        PERCENTAGE OF
                                                        MORTGAGE LOANS
                      NUMBER OF         TOTAL              BY TOTAL         WEIGHTED     WEIGHTED    WEIGHTED
                       MORTGAGE       SCHEDULED           SCHEDULED          AVERAGE      AVERAGE    AVERAGE
      RATE TYPE         LOANS     PRINCIPAL BALANCE   PRINCIPAL BALANCE   CREDIT SCORE      LTV       COUPON
-------------------- ----------- ------------------- ------------------- -------------- ---------- -----------

Fixed .............. 2,079        $124,286,032.06          14.62%      636               84.82%      8.994%
Adjustable ......... 4,874         725,715,296.64          85.38       607               78.60       7.878
                     -----        ---------------         ------       ---               -----       -----
 Total: ............ 6,953        $850,001,328.70         100.00%      611               79.51%      8.041%
                     =====        ===============         ======       ===               =====       =====
</TABLE>


                                     S-C-6


      GROSS MARGINS OF THE MORTGAGE LOANS--ADJUSTABLE RATE MORTGAGE LOANS




<TABLE>

                                                                      PERCENTAGE OF
                                                                      MORTGAGE LOANS
                                    NUMBER OF         TOTAL              BY TOTAL         WEIGHTED     WEIGHTED    WEIGHTED
          RANGE OF GROSS             MORTGAGE       SCHEDULED           SCHEDULED          AVERAGE      AVERAGE    AVERAGE
         MARGIN RATES (%)             LOANS     PRINCIPAL BALANCE   PRINCIPAL BALANCE   CREDIT SCORE      LTV       COUPON
---------------------------------- ----------- ------------------- ------------------- -------------- ---------- -----------

Less than or equal to 3.000 ......        4     $    541,475.68            0.07%      660               80.37%      7.419%
3.001 to 3.500 ...................        1          152,000.00            0.02       613               57.36       7.000
3.501 to 4.000 ...................        3          383,900.00            0.05       675               48.97       5.174
4.001 to 4.500 ...................       33        6,585,950.66            0.91       672               74.32       5.766
4.501 to 5.000 ...................      189       38,079,541.81            5.25       668               76.41       6.152
5.001 to 5.500 ...................      379       75,933,112.71           10.46       640               77.05       6.532
5.501 to 6.000 ...................      639      111,097,347.07           15.31       627               77.64       6.987
6.001 to 6.500 ...................      758      118,144,774.26           16.28       624               77.81       7.391
6.501 to 7.000 ...................      782      116,279,539.24           16.02       606               79.18       7.849
7.001 to 7.500 ...................      595       81,945,522.38           11.29       588               78.85       8.368
7.501 to 8.000 ...................      491       60,304,466.11            8.31       571               81.47       8.946
8.001 to 8.500 ...................      353       42,511,308.19            5.86       568               80.59       9.440
8.501 to 9.000 ...................      374       42,800,874.17            5.90       553               79.21       9.964
9.001 to 9.500 ...................      223       26,238,845.14            3.62       553               81.44      10.482
9.501 to10.000 ...................       41        4,156,562.09            0.57       558               80.69      10.880
Greater than 10.000 ..............        9          560,077.13            0.08       547               62.20      11.788
                                        ---     ---------------          ------       ---               -----      ------
 Total: ..........................    4,874     $725,715,296.64          100.00%      607               78.60%      7.878%
                                      =====     ===============          ======       ===               =====      ======
</TABLE>

The weighted average Gross Margin for Adjustable Rate Mortgage Loans is
                             approximately 6.697%.

                                     S-C-7


      MAXIMUM RATES OF THE MORTGAGE LOANS--ADJUSTABLE RATE MORTGAGE LOANS




<TABLE>

                                                              PERCENTAGE OF
                                                              MORTGAGE LOANS
                            NUMBER OF         TOTAL              BY TOTAL         WEIGHTED     WEIGHTED    WEIGHTED
         RANGE OF            MORTGAGE       SCHEDULED           SCHEDULED          AVERAGE      AVERAGE    AVERAGE
     MAXIMUM RATES (%)        LOANS     PRINCIPAL BALANCE   PRINCIPAL BALANCE   CREDIT SCORE      LTV       COUPON
-------------------------- ----------- ------------------- ------------------- -------------- ---------- -----------

 9.001 to  9.500 .........        1     $    510,800.00            0.07%            637           61.54%      6.490%
 9.501 to 10.000 .........        1          135,200.00            0.02             639           80.00       6.590
10.001 to 10.500 .........        1           76,000.00            0.01             602           80.00       7.440
11.001 to 11.500 .........        9        1,612,325.60            0.22             656           72.26       5.335
11.501 to 12.000 .........      101       19,857,296.60            2.74             662           76.53       5.883
12.001 to 12.500 .........      299       61,705,701.35            8.50             655           76.12       6.275
12.501 to 13.000 .........      594      110,668,581.42           15.25             633           76.87       6.786
13.001 to 13.500 .........      643      105,057,308.85           14.48             626           78.07       7.233
13.501 to 14.000 .........      864      131,673,123.42           18.14             612           78.59       7.695
14.001 to 14.500 .........      570       78,294,485.77           10.79             594           79.75       8.179
14.501 to 15.000 .........      553       70,786,142.06            9.75             580           80.13       8.693
15.001 to 15.500 .........      406       50,537,249.21            6.96             571           81.78       9.204
15.501 to 16.000 .........      388       45,699,032.28            6.30             558           79.11       9.714
16.001 to 16.500 .........      294       31,398,335.02            4.33             552           80.25      10.238
16.501 to 17.000 .........      135       16,599,850.85            2.29             552           80.85      10.646
17.001 to 17.500 .........        8          683,670.32            0.09             553           79.54      11.174
17.501 to 18.000 .........        4          273,714.95            0.04             555           53.65      11.780
18.001 to 18.500 .........        3          146,478.94            0.02             570           70.20      12.339
                                ---     ---------------          ------             ---           -----      ------
 Total: ..................    4,874     $725,715,296.64          100.00%            607           78.60%      7.878%
                              =====     ===============          ======             ===           =====      ======
</TABLE>

The weighted average Maximum Rate for Adjustable Rate Mortgage Loans is
                            approximately 13.930%.

                                     S-C-8


      MINIMUM RATES OF THE MORTGAGE LOANS--ADJUSTABLE RATE MORTGAGE LOANS




<TABLE>

                                                                      PERCENTAGE OF
                                                                      MORTGAGE LOANS
                                    NUMBER OF         TOTAL              BY TOTAL         WEIGHTED     WEIGHTED    WEIGHTED
             RANGE OF                MORTGAGE       SCHEDULED           SCHEDULED          AVERAGE      AVERAGE    AVERAGE
         MINIMUM RATES (%)            LOANS     PRINCIPAL BALANCE   PRINCIPAL BALANCE   CREDIT SCORE      LTV       COUPON
---------------------------------- ----------- ------------------- ------------------- -------------- ---------- -----------

Less than or equal to 5.500 ......       19     $  3,774,425.84            0.52%            653         76.09%      5.905%
 5.501 to  6.000 .................      115       21,675,620.10            2.99             662         76.65       5.881
 6.001 to  6.500 .................      330       66,239,632.33            9.13             654         76.27       6.295
 6.501 to  7.000 .................      666      123,149,799.46           16.97             633         77.10       6.832
 7.001 to  7.500 .................      664      108,041,732.65           14.89             624         78.04       7.281
 7.501 to  8.000 .................      820      123,133,772.56           16.97             609         78.73       7.791
 8.001 to  8.500 .................      536       72,573,200.22           10.00             591         79.81       8.275
 8.501 to  9.000 .................      531       68,199,569.04            9.40             577         79.79       8.777
 9.001 to  9.500 .................      389       48,162,689.41            6.64             571         81.83       9.245
 9.501 to 10.000 .................      371       42,844,577.61            5.90             557         79.43       9.788
10.001 to 10.500 .................      289       30,948,261.28            4.26             552         80.24      10.249
10.501 to 11.000 .................      129       15,868,151.93            2.19             552         80.75      10.681
11.001 to 11.500 .................        8          683,670.32            0.09             553         79.54      11.174
11.501 to 12.000 .................        4          273,714.95            0.04             555         53.65      11.780
12.001 to 12.500 .................        3          146,478.94            0.02             570         70.20      12.339
                                        ---     ---------------          ------             ---         -----      ------
 Total: ..........................    4,874     $725,715,296.64          100.00%            607         78.60%      7.878%
                                      =====     ===============          ======             ===         =====      ======
</TABLE>

The weighted average Minimum Rate for Adjustable Rate Mortgage Loans is
                             approximately 7.867%.

                                     S-C-9


               NEXT RATE ADJUSTMENT DATE OF THE MORTGAGE LOANS--
                         ADJUSTABLE RATE MORTGAGE LOANS




<TABLE>

                                                                PERCENTAGE OF
                                                                MORTGAGE LOANS
                              NUMBER OF         TOTAL              BY TOTAL         WEIGHTED     WEIGHTED    WEIGHTED
                               MORTGAGE       SCHEDULED           SCHEDULED          AVERAGE      AVERAGE    AVERAGE
  NEXT RATE ADJUSTMENT DATE     LOANS     PRINCIPAL BALANCE   PRINCIPAL BALANCE   CREDIT SCORE      LTV       COUPON
---------------------------- ----------- ------------------- ------------------- -------------- ---------- -----------

July 2006 ..................        1     $    218,146.83            0.03%      570               67.69%      7.500%
February 2007 ..............        2          192,999.50            0.03       583               83.26       9.322
March 2007 .................       43        6,504,382.42            0.90       595               75.92       7.665
April 2007 .................      283       43,888,652.12            6.05       612               78.63       7.535
May 2007 ...................    2,290      340,512,174.55           46.92       608               78.83       7.877
June 2007 ..................    2,022      296,500,169.68           40.86       603               78.61       7.996
July 2007 ..................       51        6,879,300.00            0.95       576               76.38       8.285
February 2008 ..............        1           67,752.09            0.01       695               80.00       6.500
March 2008 .................        2          468,010.23            0.06       626               83.77       7.189
April 2008 .................       16        2,366,523.15            0.33       649               78.66       6.908
May 2008 ...................       94       16,912,273.46            2.33       634               76.83       7.212
June 2008 ..................       53        8,915,300.00            1.23       647               78.74       7.323
May 2010 ...................       11        1,535,112.61            0.21       685               65.62       6.676
June 2010 ..................        5          754,500.00            0.10       676               76.96       7.454
                                -----     ---------------          ------       ---               -----       -----
 Total: ....................    4,874     $725,715,296.64          100.00%      607               78.60%      7.878%
                                =====     ===============          ======       ===               =====       =====
</TABLE>

       INITIAL CAPS OF THE MORTGAGE LOANS--ADJUSTABLE RATE MORTGAGE LOANS




<TABLE>

                                                     PERCENTAGE OF
                                                     MORTGAGE LOANS
                   NUMBER OF         TOTAL              BY TOTAL         WEIGHTED     WEIGHTED    WEIGHTED
                    MORTGAGE       SCHEDULED           SCHEDULED          AVERAGE      AVERAGE    AVERAGE
 INITIAL CAP (%)     LOANS     PRINCIPAL BALANCE   PRINCIPAL BALANCE   CREDIT SCORE      LTV       COUPON
----------------- ----------- ------------------- ------------------- -------------- ---------- -----------

1.000............       95     $ 12,302,611.78            1.70%            611               78.30%      8.367%
1.500............        4          973,728.88            0.13             562               79.20       7.166
2.000............        7        1,309,451.52            0.18             612               83.42       7.353
3.000............    4,768      711,129,504.46           97.99             607               78.60       7.871
                     -----     ---------------          ------             ---               -----       -----
 Total: .........    4,874     $725,715,296.64          100.00%            607               78.60%      7.878%
                     =====     ===============          ======             ===               =====       =====
</TABLE>

      PERIODIC CAPS OF THE MORTGAGE LOANS--ADJUSTABLE RATE MORTGAGE LOANS




<TABLE>

                                                      PERCENTAGE OF
                                                      MORTGAGE LOANS
                    NUMBER OF         TOTAL              BY TOTAL         WEIGHTED     WEIGHTED    WEIGHTED
                     MORTGAGE       SCHEDULED           SCHEDULED          AVERAGE      AVERAGE    AVERAGE
 PERIODIC CAP (%)     LOANS     PRINCIPAL BALANCE   PRINCIPAL BALANCE   CREDIT SCORE      LTV       COUPON
------------------ ----------- ------------------- ------------------- -------------- ---------- -----------

1.000.............    4,840     $  718,687,451.52          99.03%      607               78.59%      7.883%
1.500.............       21          4,163,643.20           0.57       612               78.95       7.510
2.000.............       11          2,410,357.09           0.33       608               81.15       6.969
3.000.............        2            453,844.83           0.06       543               75.99       7.441
                      -----     -----------------         ------       ---               -----       -----
 Total: ..........    4,874     $  725,715,296.64         100.00%      607               78.60%      7.878%
                      =====     =================         ======       ===               =====       =====
</TABLE>

                                     S-C-10


                      CREDIT SCORES OF THE MORTGAGE LOANS




<TABLE>

                                                             PERCENTAGE OF
                                                             MORTGAGE LOANS
                           NUMBER OF         TOTAL              BY TOTAL         WEIGHTED     WEIGHTED    WEIGHTED
                            MORTGAGE       SCHEDULED           SCHEDULED          AVERAGE      AVERAGE    AVERAGE
      CREDIT SCORES          LOANS     PRINCIPAL BALANCE   PRINCIPAL BALANCE   CREDIT SCORE      LTV       COUPON
------------------------- ----------- ------------------- ------------------- -------------- ---------- -----------

500 to 520 ..............      433     $  64,309,122.15            7.57%      510               71.64%      9.043%
521 to 540 ..............      397        49,878,145.23            5.87       530               73.91       8.983
541 to 560 ..............      477        61,998,882.65            7.29       551               78.10       8.735
561 to 580 ..............      509        66,817,972.07            7.86       571               77.06       8.490
581 to 600 ..............    1,356       134,338,374.29           15.80       591               81.95       8.215
601 to 620 ..............    1,077       120,166,322.31           14.14       610               81.48       7.932
621 to 640 ..............      759        92,310,391.70           10.86       630               80.78       7.685
641 to 660 ..............      765        94,360,149.22           11.10       650               81.43       7.601
661 to 680 ..............      469        61,301,346.43            7.21       670               81.00       7.488
681 to 700 ..............      280        41,616,646.96            4.90       690               79.88       7.245
701 to 720 ..............      186        25,785,429.06            3.03       710               80.83       7.367
721 to 740 ..............      107        16,139,744.16            1.90       731               80.40       7.130
741 to 760 ..............       78        12,009,559.91            1.41       749               81.01       6.937
761 to 780 ..............       35         5,335,250.97            0.63       769               79.79       7.272
Greater than 781 ........       25         3,633,991.59            0.43       796               79.75       7.021
                             -----     ----------------          ------       ---               -----       -----
 Total: .................    6,953     $ 850,001,328.70          100.00%      611               79.51%      8.041%
                             =====     ================          ======       ===               =====       =====
</TABLE>

   The weighted average of the credit scores of the Mortgage Loans is
                     approximately 611.


                      LOAN PROGRAMS OF THE MORTGAGE LOANS




<TABLE>

                                                                 PERCENTAGE OF
                                                                 MORTGAGE LOANS
                               NUMBER OF         TOTAL              BY TOTAL         WEIGHTED     WEIGHTED    WEIGHTED
                                MORTGAGE       SCHEDULED           SCHEDULED          AVERAGE      AVERAGE    AVERAGE
        LOAN PROGRAMS            LOANS     PRINCIPAL BALANCE   PRINCIPAL BALANCE   CREDIT SCORE      LTV       COUPON
----------------------------- ----------- ------------------- ------------------- -------------- ---------- -----------

A+ ..........................    2,732     $  398,416,733.05          46.87%            612          79.19%      7.855%
A ...........................      497         79,369,315.41           9.34             576          76.70       8.377
A- ..........................      196         29,191,638.47           3.43             576          75.96       8.705
B ...........................      230         36,103,256.86           4.25             571          73.30       8.805
C+ ..........................      214         29,536,348.32           3.47             553          67.82       9.187
C ...........................       63          9,743,522.15           1.15             560          65.16       9.090
80/20 Combo-First Lien ......    1,524        215,317,684.66          25.33             638          79.99       7.178
80/20 Combo-Second Lien .....    1,497         52,322,829.78           6.16             638          99.83      10.761
                                 -----     -----------------         ------             ---          -----      ------
 Total: .....................    6,953     $  850,001,328.70         100.00%            611          79.51%      8.041%
                                 =====     =================         ======             ===          =====      ======
</TABLE>


                                     S-C-11


                     [THIS PAGE INTENTIONALLY LEFT BLANK.]

PROSPECTUS


                                 [LOGO OMITTED]
                                     AEGIS
                              MORTGAGECORPORATION


                   AEGIS ASSET BACKED SECURITIES CORPORATION
                                   DEPOSITOR


                      MORTGAGE AND ASSET BACKED SECURITIES
                              (ISSUABLE IN SERIES)

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

THE TRUSTS:

     Each trust will be established to hold assets in its trust fund transferred
to it by Aegis Asset Backed Securities Corporation. The assets in each trust
fund will be specified in the prospectus supplement for the particular trust and
will generally consist of the following types of residential mortgage loans,
together with certain other assets as described in the accompanying prospectus
supplement:

     o    first and/or subordinate lien mortgage loans secured by one- to
          four-family residential properties,

     o    private mortgage-backed securities backed by first and/or subordinate
          lien mortgage loans secured by one- to four-family residential
          properties or

     o    closed-end and/or revolving home equity loans, secured in whole or in
          part by first and/or subordinate liens on one- to four-family
          residential properties.


THE SECURITIES:

     The securities of a series will consist of certificates which evidence
beneficial ownership of a trust established by the depositor and/or notes
secured by the assets of a trust or trust fund. The securities will be offered
for sale pursuant to a prospectus supplement. The securities will be grouped
into one or more series, each having its own distinct designation. Each series
of securities will be issued in one or more classes and each class will
evidence the right to receive a specified portion of future payments on the
assets in the trust fund that the series relates to. A prospectus supplement
for a series will specify all the terms of the series and each of the classes
in the series.


OFFERS OF SECURITIES:

     The securities may be offered to the public through several different
methods, including offerings through underwriters.

     YOU SHOULD CAREFULLY CONSIDER THE RISK FACTORS BEGINNING ON PAGE 4 OF THIS
PROSPECTUS.

     THE SEC AND STATE SECURITIES REGULATORS HAVE NOT APPROVED OR DISAPPROVED
OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.


                                 June 10, 2005


         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 the
depositor's principal executive offices is Investor Relations Department, Aegis
Asset Backed Securities Corporation, 3250 Briarpark, Suite 400, Houston, Texas
77042 and the telephone number is (713) 787-0100. For other means of acquiring
additional information about us or a series of securities, see "Incorporation of
Certain Documents by Reference" beginning on page 22.


                                       2


                               TABLE OF CONTENTS





<TABLE>

                                                      PAGE
                                                   ----------

Risk Factors ...................................         4
The Trust Fund .................................        15
   General .....................................        15
   The Loans ...................................        16
   Private Mortgage-Backed Securities ..........        19
   Substitution of Trust Fund Assets ...........        21
Available Information ..........................        21
Incorporation of Certain Documents by
     Reference .................................        21
Reports to Securityholders .....................        22
Use of Proceeds ................................        22
The Depositor ..................................        22
Loan Program ...................................        22
   Underwriting Standards ......................        22
   Qualifications of Unaffiliated Sellers ......        26
   Representations by Sellers; Repurchases......        26
Description of the Securities ..................        28
   General .....................................        28
   Distributions on Securities .................        29
   Securities Subject to Purchase ..............        31
   Advances ....................................        31
   Reports to Securityholders ..................        32
   Categories of Classes of Securities .........        33
   Indices Applicable to Floating Rate and
        Inverse Floating Rate Classes ..........        35
   Book-entry Registration of Securities .......        39
Credit Enhancement .............................        43
   General .....................................        43
   Subordination ...............................        43
   Letter of Credit ............................        44
   Insurance Policies, Surety Bonds and
        Guaranties .............................        45
   Over-collateralization ......................        45
   Reserve Accounts ............................        45
   Pool Insurance Policies .....................        47
   Special Hazard Insurance Policies ...........        48
   Bankruptcy Bonds ............................        49
   Cross Support ...............................        49
   Financial Instruments .......................        49
Yield and Prepayment Considerations ............        50
The Agreements .................................        52
   Assignment of the Trust Fund Assets .........        52
   Payments on Loans; Deposits to Security
        Account ................................        54
   Pre-Funding Account .........................        56
   Subservicing by Sellers .....................        57
   Collection Procedures .......................        57
   Hazard Insurance ............................        57
   Realization upon Defaulted Loans ............        59


</TABLE>
<TABLE>

                                                      PAGE
                                                   ----------

   Servicing and Other Compensation and
        Payment of Expenses ....................        59
   Evidence as to Compliance ...................        60
   Certain Matters Regarding the Servicers
        and the Depositor ......................        60
   Events of Default; Rights upon Event of
        Default ................................        61
   Amendment ...................................        63
   Termination; Optional Termination ...........        64
   The Trustee .................................        65
   The Master Servicer .........................        65
Legal Aspects of the Loans .....................        65
   General .....................................        65
   Foreclosure .................................        67
   Environmental Risks .........................        69
   Rights of Redemption ........................        70
   Anti-deficiency Legislation and Other
        Limitations on Lenders .................        70
   Due-on-sale Clauses .........................        71
   Enforceability of Prepayment and Late
        Payment Fees ...........................        72
   Applicability of Usury Laws .................        72
   Servicemembers Civil Relief Act .............        72
   Junior Mortgages and Rights of Senior
        Mortgagees .............................        72
   Consumer Protection Laws ....................        73
   Home Ownership and Equity Protection
        Act of 1994 ............................        74
Material Federal Income Tax
   Considerations ..............................        74
   Types of Securities .........................        75
   Taxation of Securities Treated as Debt
        Instruments ............................        77
   REMIC Residual Certificates .................        82
   Grantor Trusts Certificates .................        89
   Partner Certificates ........................        91
   Special Tax Attributes ......................        93
   Backup Withholding ..........................        95
   Reportable Transactions .....................        95
State and Local Tax Considerations .............        95
ERISA Considerations ...........................        95
   General .....................................        95
Legal Investment ...............................       101
Method of Distribution .........................       102
Legal Matters ..................................       103
Financial Information ..........................       103
Ratings ........................................       103
ANNEX I Global Clearance, Settlement
   and Tax Documentation Procedures ............       105
Index of Defined Terms .........................       109
</TABLE>


                                       3


                                  RISK FACTORS

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


LIMITED SOURCE OF PAYMENTS -
 NO RECOURSE TO SELLERS,
 DEPOSITOR OR SERVICER.........  The applicable prospectus supplement may
                                 provide that securities will be payable from
                                 other trust funds in addition to their
                                 associated trust fund, but if it does not, they
                                 will be payable solely from their associated
                                 trust fund. If the trust fund does not have
                                 sufficient assets to distribute the full amount
                                 due to you as a securityholder, your yield will
                                 be impaired, and perhaps even the return of
                                 your principal may be impaired, without your
                                 having recourse to anyone else.

                                 Furthermore, at the times specified in the
                                 applicable prospectus supplement, some assets
                                 of the trust fund may be released and paid out
                                 to other people, such as the depositor, a
                                 servicer, a credit enhancement provider, or
                                 any other person entitled to payments from the
                                 trust fund. Those assets will no longer be
                                 available to make payments to you. Those
                                 payments are generally made after other
                                 specified payments that may be set forth in
                                 the applicable prospectus supplement have been
                                 made.

                                 You will not have any recourse against the
                                 depositor or any servicer if you do not
                                 receive a required distribution on the
                                 securities. Nor will you have recourse against
                                 the assets of the trust fund of any other
                                 series of securities.

                                 The securities will not represent an interest
                                 in the depositor, any servicer, any seller to
                                 the depositor, or anyone else except the trust
                                 fund. The only obligation of the depositor to
                                 a trust fund comes from certain
                                 representations and warranties made by it
                                 about assets transferred to the trust fund. If
                                 these representations and warranties turn out
                                 to be untrue, the depositor may be required to
                                 repurchase some of the transferred assets.
                                 Aegis Asset Backed Securities Corporation,
                                 which is the depositor, does not have
                                 significant assets and is unlikely to have
                                 significant assets in the future. Therefore,
                                 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 funds obtained from enforcing a
                                 corresponding obligation from the seller or
                                 originator of the loan.

                                 The only obligations of the master servicer to
                                 a trust fund (other than its master servicing
                                 obligations) come from certain representations
                                 and warranties made by it in connection with
                                 its loan servicing activities.

                                 The only obligations to a trust fund of a
                                 seller of loans to the depositor comes from
                                 certain representations and warranties made by
                                 it in connection with its sale of the


                                       4


                                 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 or substitute
                                 for some of the loans. However, the seller may
                                 not have the financial ability to make the
                                 required repurchase or substitution.


CREDIT ENHANCEMENT MAY NOT
 BE SUFFICIENT TO PROTECT YOU
 FROM LOSSES..................   Credit enhancement is intended to reduce the
                                 effect of loan losses. But credit enhancements
                                 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, the trustee may be permitted to
                                 reduce, substitute for, or even eliminate all
                                 or a portion of a credit enhancement so long
                                 as the rating agencies that have rated the
                                 securities at the request of the depositor
                                 indicate that the reduction would not cause
                                 them to change adversely their rating of the
                                 securities. Consequently, securityholders may
                                 suffer losses even though a credit enhancement
                                 exists and its provider does not default.


JUNIOR STATUS OF LIENS SECURING
 SOME HOME EQUITY LOANS COULD
 ADVERSELY AFFECT YOU.........   A portion of the mortgages and deeds of trust
                                 may include junior liens subordinate to the
                                 rights of the mortgagee under the related
                                 senior mortgage(s) or deed(s) of trust.
                                 Accordingly, the proceeds from any liquidation,
                                 insurance or condemnation will be available to
                                 satisfy the outstanding balance of the junior
                                 lien only to the extent that the claims of the
                                 related senior mortgagees have been satisfied
                                 in full, including any related foreclosure
                                 costs. In addition, if a junior mortgagee
                                 forecloses on the property securing a junior
                                 mortgage, it forecloses subject to any senior
                                 mortgage and must take one of the following
                                 steps to protect its interest in the property:

                                 o  pay the senior mortgage in full at or prior
                                    to the foreclosure sale; or

                                 o  assume the payments on the senior mortgage
                                    in the event the mortgagor is in default
                                    under the senior mortgage.

                                 The trust fund may effectively be prevented
                                 from foreclosing on the related property since
                                 it will have no


                                       5


                                 funds to satisfy any senior mortgages or make
                                 payments due to any senior mortgagees.

                                 Some states have imposed legal limits on the
                                 remedies of a secured lender in the event that
                                 the proceeds of any sale under a deed of trust
                                 or other foreclosure proceedings are
                                 insufficient to pay amounts owed to that
                                 secured lender. In some states, including
                                 California, if a lender simultaneously
                                 originates a loan secured by a senior lien on
                                 a particular property and a loan secured by a
                                 junior lien on the same property, that lender
                                 as the holder of the junior lien may be
                                 precluded from obtaining a deficiency judgment
                                 with respect to the excess of:

                                 o  the aggregate amount owed under both the
                                    senior and junior loans over

                                 o  the proceeds of any sale under a deed of
                                    trust or other foreclosure proceedings.

                                 See "Legal Aspects of the Loans --
                                 Anti-Deficiency Legislation and Other
                                 Limitations on Lenders."


DECLINES IN PROPERTY VALUES
 MAY ADVERSELY AFFECT YOU.....   The value of the properties underlying the
                                 loans held in the trust fund may decline over
                                 time. Among the factors that could adversely
                                 affect the value of the properties are:

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

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

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

                                 In the case of home equity loans, declining
                                 property values could diminish or extinguish
                                 the value of a junior mortgage before reducing
                                 the value of a senior mortgage on the same
                                 property.

                                 If property values decline, the actual rates
                                 of delinquencies, foreclosures, and losses on
                                 all underlying loans could be higher than
                                 those currently experienced in the mortgage
                                 lending industry in general. These losses, to
                                 the extent not otherwise covered by a credit
                                 enhancement, will be borne by the holder of
                                 one or more classes of securities.


DELAYS IN LIQUIDATION MAY
 ADVERSELY AFFECT YOU.........   Even if the properties underlying the loans
                                 held in the trust fund provide adequate
                                 security for the loans, substantial delays
                                 could occur before defaulted loans are
                                 liquidated and their proceeds are forwarded to
                                 investors. Property foreclosure actions are
                                 regulated by state statutes and rules and are
                                 subject to many of the delays and expenses of
                                 other lawsuits if defenses or counterclaims are


                                       6


                                 made, sometimes requiring several years to
                                 complete. Furthermore, in some states if the
                                 proceeds of the foreclosure are insufficient
                                 to repay the loan, the borrower is not liable
                                 for the deficit. Thus, if a borrower defaults,
                                 these restrictions may impede the trust'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 legal fees
                                 and costs, real estate taxes, and property
                                 maintenance and preservation expenses.


DISPROPORTIONATE EFFECT OF
 LIQUIDATION EXPENSES MAY
 ADVERSELY AFFECT YOU.........   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 smaller as a
                                 percentage of the outstanding principal balance
                                 of the small loan than it is for the defaulted
                                 loan having a large remaining principal
                                 balance.


CONSUMER PROTECTION LAWS MAY
 ADVERSELY AFFECT YOU.........   Because the mortgage loans are originated
                                 nationwide, the originator of the loans in the
                                 trust fund must also comply with the laws and
                                 regulations, as well as judicial and
                                 administrative decisions, of all relevant state
                                 and local jurisdictions. State laws generally
                                 regulate interest rates and other charges,
                                 require specific disclosures, and require
                                 licensing of mortgage 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 mortgage loans. The volume of new
                                 or modified laws and regulations has increased
                                 in recent years, and, in addition, individual
                                 cities and counties have begun to enact laws
                                 that restrict loan origination activities, and
                                 in some cases loan servicing activities, in
                                 those cities and counties. The laws and
                                 regulations of each of these jurisdictions are
                                 different, complex and, in some cases, may be
                                 in direct conflict with each other.

                                 The loans held in the trust fund may also be
                                 subject to certain federal laws, including:

                                 o  the Federal Truth in Lending Act and its
                                    regulations, which require disclosures to
                                    the borrowers regarding the terms of any
                                    mortgage loan;

                                 o  the Equal Credit Opportunity Act and its
                                    regulations, which prohibit discrimination
                                    in the extension of credit


                                       7


                                    on the basis of age, race, color, sex,
                                    religion, marital status, national origin,
                                    receipt of public assistance, or the
                                    exercise of any right under the Consumer
                                    Credit Protection Act; and

                                 o  the Fair Credit Reporting Act, which
                                    regulates the use and reporting of
                                    information related to the borrower's credit
                                    experience.

                                 Home Equity Loan Consumer Protection Act. The
                                 Home Equity Loan Consumer Protection Act of
                                 1988, which requires additional application
                                 disclosures, limits changes that may be made
                                 to the loan documents without the borrower's
                                 consent and restricts a lender's ability to
                                 declare a default or to suspend or reduce a
                                 borrower's credit limit to certain enumerated
                                 events.

                                 The Riegle Act. Certain mortgage loans may be
                                 subject to the Riegle Community Development
                                 and Regulatory Improvement Act of 1994, known
                                 as the Riegle Act, which incorporates the Home
                                 Ownership and Equity Protection Act of 1994.
                                 These provisions impose additional disclosure
                                 and other requirements on creditors with
                                 respect to non-purchase money mortgage loans
                                 with high interest rates or high up-front fees
                                 and charges. The provisions of the Riegle Act
                                 apply on a mandatory basis to all mortgage
                                 loans originated on or after October 1, 1995.
                                 These provisions can impose specific statutory
                                 liabilities upon creditors who fail to comply
                                 with their provisions and may affect the
                                 enforceability of the related loans. In
                                 addition, any assignee of the creditor,
                                 including the trust fund, would generally be
                                 subject to all claims and defenses that the
                                 consumer could assert against the creditor,
                                 including the right to rescind the mortgage
                                 loan.

                                 Failure by the originator or servicer to
                                 comply with these federal, state and local
                                 laws can in some circumstances give rise to
                                 legal defenses to loan enforceability;
                                 potential refunds to borrowers; loss of state
                                 licenses or other approved servicer status;
                                 class action lawsuits; administrative
                                 enforcement actions that may delay or
                                 otherwise materially and adversely affect the
                                 servicer's ability to collect or enforce
                                 mortgage loans; and claims against the trust
                                 fund. Losses on loans from the application of
                                 those laws that are not otherwise covered by a
                                 credit enhancement will be borne by the
                                 holders of one or more classes of securities.


LOSSES ON BALLOON PAYMENT
 MORTGAGES ARE BORNE BY YOU...   Some of the mortgage loans held in the trust
                                 fund may not be fully amortizing over their
                                 terms to maturity and, thus, will require
                                 substantial principal payments (that is,
                                 balloon payments) at their stated maturity.
                                 Loans with balloon payments involve a greater
                                 degree of risk than fully amortizing loans
                                 because typically the borrower must be able to
                                 refinance the loan or sell the property to make
                                 the


                                       8


                                 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 certificates.

MODIFICATION OF MORTGAGE LOANS
 MAY DELAY OR REDUCE CERTIFICATE
 PAYMENTS.....................   With respect to a mortgage loan on which a
                                 material default has occurred or a payment
                                 default is imminent, the servicer may enter
                                 into a forbearance or modification agreement
                                 with the borrower. The terms of any forbearance
                                 or modification agreement may affect the amount
                                 and timing of payment on the mortgage loan and,
                                 consequently, the amount and timing of payment
                                 on one or more classes of the related series of
                                 certificates. For example, a modification
                                 agreement that results in a lower mortgage
                                 interest rate would lower the pass through rate
                                 of any related class of certificates that
                                 accrues interest at a rate based on the
                                 weighted average net rate of the mortgage
                                 loans.

YOUR RISK OF LOSS MAY BE HIGHER
 THAN YOU EXPECT IF YOUR
 SECURITIES ARE BACKED BY LOANS
 THAT WERE UNDERWRITTEN TO
 STANDARDS WHICH DO NOT CONFORM
 TO THE STANDARDS OF FREDDIE
 MAC OR FANNIE MAE.............. Substantially all of the loans in the trust
                                 fund will have been originated under standards
                                 that were less stringent than the standards
                                 generally acceptable to Freddie Mac and Fannie
                                 Mae with regard to the borrower's credit
                                 standing and repayment ability. The related
                                 borrowers may have payment histories and
                                 debt-to-income ratios which would not satisfy
                                 Freddie Mac and Fannie Mae underwriting
                                 guidelines and may have a record of major
                                 derogatory credit items such as outstanding
                                 judgments or prior bankruptcies. In addition,
                                 on a case by case basis, the related seller may
                                 determine that, based upon compensating
                                 factors, a prospective borrower not strictly
                                 qualifying under its applicable underwriting
                                 risk category guidelines warrants an
                                 underwriting exception. These exceptions would
                                 represent a further departure from the Freddie
                                 Mac and Fannie Mae standards.

                                 As a result of the application of less
                                 stringent underwriting standards, certain
                                 mortgage loans in a mortgage pool may
                                 experience rates of delinquency, foreclosure
                                 and bankruptcy that are higher, and that may
                                 be substantially higher, than those
                                 experienced by mortgage loans underwritten in
                                 a more traditional manner. Furthermore,
                                 changes in the values of the related mortgaged
                                 properties


                                       9


                                 may have a greater effect on the delinquency,
                                 foreclosure, bankruptcy and loss experience of
                                 these mortgage loans than on mortgage loans
                                 originated in a more traditional manner. No
                                 assurance can be given that the values of the
                                 related mortgaged properties have remained or
                                 will remain at the levels in effect on the
                                 dates of origination of the related mortgage
                                 loans.


YOUR RISK OF LOSS MAY BE HIGHER
 THAN YOU EXPECT IF YOUR
 SECURITIES ARE BACKED BY
 PARTIALLY UNSECURED HOME
 EQUITY LOANS..................  The trust fund may also include home equity
                                 loans that were originated with loan-to-value
                                 ratios or combined loan-to-value ratios in
                                 excess of the value of the related mortgaged
                                 property. Under these circumstances, the trust
                                 fund could be treated as a general unsecured
                                 creditor as to any unsecured portion of any
                                 related loan. In the event of a default under a
                                 loan that is unsecured in part, the trust fund
                                 will have recourse only against the borrower's
                                 assets generally for the unsecured portion of
                                 the loan, along with all other general
                                 unsecured creditors of the borrower.

THE PREPAYMENT RATE ON HOME
 EQUITY LOANS IS UNCERTAIN....   Generally, if prevailing interest rates fall
                                 below the coupon rates on the loans, the loans
                                 are likely to be subject to higher prepayment
                                 rates than if prevailing rates remain at or
                                 above the coupon rates on the loans.
                                 Conversely, if prevailing interest rates rise
                                 above the coupon rate on the home equity loans,
                                 the rate of prepayments may decrease. The
                                 average life of your securities and, if
                                 purchased at other than par, the yields
                                 realized by you will be sensitive to levels of
                                 payment (including prepayments) on the loans.

                                 In general, if you purchase a security at a
                                 premium to the outstanding principal amount of
                                 the security, the yield on your security may
                                 be adversely affected by a higher than
                                 anticipated level of prepayments of the loans.
                                 Conversely, if you purchase a security at a
                                 discount to the outstanding principal balance
                                 of the security, the yield on your security
                                 may be adversely affected by a lower than
                                 anticipated level of prepayments.

YOU MAY BE UNABLE TO REINVEST
 DISTRIBUTIONS IN COMPARABLE
 INVESTMENTS..................   Asset-backed securities usually produce more
                                 returns of principal to investors when market
                                 interest rates fall below the interest rates on
                                 the loans and produce less returns on principal
                                 when market interest rates rise above the
                                 interest rates on the loans. If borrowers
                                 refinance their loans as a result of lower
                                 interest rates, you will receive an
                                 unanticipated payment of principal. As a
                                 result, you are likely to receive more money to
                                 reinvest at a time when other investments
                                 generally are producing a lower yield than that
                                 on the securities, and you are likely to
                                 receive


                                       10


                                 less money to reinvest when other investments
                                 generally are producing a higher yield than
                                 that on the securities. You will bear the risk
                                 that the timing and amount of distributions on
                                 your securities will prevent you from
                                 obtaining your desired yield.


YOU COULD BE ADVERSELY AFFECTED
 BY VIOLATIONS OF ENVIRONMENTAL
 LAWS.........................   Federal, state and local laws and regulations
                                 impose a wide range of requirements on
                                 activities that may affect the environment,
                                 health and safety. In some circumstances, these
                                 laws and regulations impose obligations on
                                 owners or operators of residential properties
                                 such as those that secure the loans held in the
                                 trust fund. Failure to comply with these laws
                                 and regulations can result in fines and
                                 penalties that could be assessed against the
                                 trust as owner of the related property.

                                 In some states, a lien on the property due to
                                 contamination has priority over the lien of an
                                 existing mortgage.


RATINGS OF THE SECURITIES DO NOT
 ASSURE THEIR PAYMENT; RATINGS
 MAY BE LOWERED OR WITHDRAWN
 AT ANY TIME..................   Any class of securities issued under this
                                 prospectus and the accompanying prospectus
                                 supplement may be rated by one or more
                                 nationally recognized rating agencies. A rating
                                 is based on the adequacy of the value of the
                                 trust assets and any credit enhancement for
                                 that class, and reflects the rating agency's
                                 assessment of how likely it is that holders of
                                 the class of securities will receive the
                                 payments to which they are entitled. A rating
                                 does not constitute an assessment of how likely
                                 it is that principal prepayments on the
                                 underlying loans will be made, the degree to
                                 which the rate of prepayments might differ from
                                 that originally anticipated, or the likelihood
                                 that the securities will be redeemed early. A
                                 rating is not a recommendation to purchase,
                                 hold, or sell securities because it does not
                                 address the market price of the securities or
                                 the suitability of the securities for any
                                 particular investor.

                                 A rating may not remain in effect for any
                                 predetermined period of time and the rating
                                 agency could lower or withdraw the rating
                                 entirely in the future. For example, the
                                 rating agency could lower or withdraw its
                                 rating due to:

                                 o  a decrease in the adequacy of the value of
                                    the trust assets or any related credit
                                    enhancement;

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

                                 o  a change in the rating of the credit
                                    enhancement provider's long-term debt.


                                       11


                                 The amount, type, and nature of credit
                                 enhancement established for a class of
                                 securities will be determined on the basis of
                                 criteria established by each rating agency
                                 rating classes of the securities. These
                                 criteria are sometimes based upon an actuarial
                                 analysis of the behavior of similar loans in a
                                 larger group. That analysis is often the basis
                                 upon which each rating agency determines the
                                 amount of credit enhancement required for a
                                 class. The historical data supporting any
                                 actuarial analysis may not accurately reflect
                                 future experience, and the data derived from a
                                 large pool of similar loans may not accurately
                                 predict the delinquency, foreclosure, or loss
                                 experience of any particular pool of mortgage
                                 loans. Mortgaged properties may not retain
                                 their values. If residential real estate
                                 markets experience an overall decline in
                                 property values such that the outstanding
                                 principal balances of the loans held in a
                                 particular trust fund and any secondary
                                 financing on the related mortgaged properties
                                 become equal to or greater than the value of
                                 the mortgaged properties (or in the case that
                                 the differential is increased where the loan
                                 to value was greater than 100%), the rates of
                                 delinquencies, foreclosures, and losses could
                                 be higher than those now generally experienced
                                 in the mortgage lending industry. In addition,
                                 adverse economic conditions may affect timely
                                 payment by mortgagors on their loans whether
                                 or not the conditions affect real property
                                 values and, accordingly, the rates of
                                 delinquencies, foreclosures, and losses in any
                                 trust fund. Losses from this that are not
                                 otherwise covered by a credit enhancement will
                                 be borne, by the holders of one or more
                                 classes of securities.

YOU MAY HAVE DIFFICULTY
 RESELLING YOUR SECURITIES
 DUE TO A LACK OF A SECONDARY
 MARKET, FLUCTUATING MARKET
 VALUES OR PERIODS OF
 ILLIQUIDITY..................   No market for any of the securities will
                                 exist before they are issued. We cannot assure
                                 you that a secondary market 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 return or
                                 yield to maturity. The market values of the
                                 securities are likely to fluctuate; these
                                 fluctuations may be significant and could
                                 result in significant losses to you. The
                                 secondary markets for mortgage and 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. Illiquidity can also have
                                 an adverse effect on the price of securities
                                 that have been structured to support other
                                 classes of certificates or that have been
                                 structured to meet the investment requirements
                                 of limited categories of investors. For
                                 example, a particular


                                       12


                                 investor may require a security with a
                                 specified maturity date, a call protection
                                 feature, or a specific type of amortization
                                 feature. The unique nature of the security may
                                 inhibit its marketability to other investors.

BOOK-ENTRY REGISTRATION
 LIMITED LIQUIDITY............   Securities issued in book-entry form may have
                                 only limited liquidity in the resale market,
                                 since investors may be unwilling to purchase
                                 securities for which they cannot obtain
                                 physical instruments.

LIMIT ON ABILITY TO TRANSFER
 OR PLEDGE....................   Transactions in book-entry securities can be
                                 effected only through The Depository Trust
                                 Company, its participating organizations, its
                                 indirect participants and some 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.

BANKRUPTCY OR INSOLVENCY MAY
 AFFECT THE TIMING AND AMOUNT
 OF DISTRIBUTIONS ON
 THE SECURITIES................  The seller and the depositor intend that the
                                 transfers of assets to the depositor and, in
                                 turn, to the related trust constitute sales
                                 under applicable law rather than pledges to
                                 secure indebtedness for insolvency purposes. If
                                 the seller becomes bankrupt, its bankruptcy
                                 trustee or one of its creditors may attempt to
                                 recharacterize the sale of the loans as a
                                 borrowing by the seller, secured by a pledge of
                                 the loans. Presenting this position to a
                                 bankruptcy court could prevent timely payments
                                 on the securities and even reduce the payments
                                 on the securities. Similarly, if the
                                 characterizations of the transfers as sales are
                                 correct, then if the depositor were to become
                                 bankrupt, the loans would not be part of the
                                 depositor's bankruptcy estate and would not be
                                 available to the depositor's creditors. On the
                                 other hand, if the depositor becomes bankrupt,
                                 its bankruptcy trustee or one of its creditors
                                 may attempt to recharacterize the sale of the
                                 loans as a borrowing by the depositor, secured
                                 by a pledge of the loans. Presenting this
                                 position to a bankruptcy court could prevent
                                 timely payments on the securities and even
                                 reduce the payments on the securities.

                                 If the master servicer becomes bankrupt, the
                                 bankruptcy trustee may have the power to
                                 prevent the appointment of a successor master
                                 servicer. The period during which cash
                                 collections may be commingled with the master
                                 servicer's


                                       13


                                 own funds before each distribution date for
                                 securities will be specified in the applicable
                                 prospectus supplement. If the master servicer
                                 becomes bankrupt and cash collections have
                                 been commingled with the master servicer's own
                                 funds for at least ten days, the trust fund
                                 will likely not have a perfected interest in
                                 those collections. In this case the trust
                                 might be an unsecured creditor of the master
                                 servicer as to the commingled funds and could
                                 recover only its share as a general creditor,
                                 which might be nothing. Collections commingled
                                 less than ten days but still in an account of
                                 the master servicer might also be included in
                                 the bankruptcy estate of the master servicer
                                 even though the trust may have a perfected
                                 security interest in them. Their inclusion in
                                 the bankruptcy estate of the master servicer
                                 may result in delays in payment and failure to
                                 pay amounts due on the securities.

                                 Federal and state statutory provisions
                                 affording protection or relief to distressed
                                 borrowers may affect the ability of the
                                 secured mortgage lender to realize upon its
                                 security in other situations as well. For
                                 example, in a proceeding under the federal
                                 Bankruptcy Code, a lender may not foreclose on
                                 a mortgaged property without the permission of
                                 the bankruptcy court. And in some 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.


THE PRINCIPAL AMOUNT OF
 SECURITIES MAY EXCEED THE
 MARKET VALUE OF THE TRUST
 FUND ASSETS..................   The market value of the assets relating to a
                                 series of securities at any time may be less
                                 than the principal amount of the securities of
                                 that series then outstanding, plus accrued
                                 interest. After an event of default and a sale
                                 of the assets relating to a series of
                                 securities, the trustee, the master servicer,
                                 the credit enhancer, if any, and any other
                                 service provider specified in the related
                                 prospectus supplement generally will be
                                 entitled to receive the proceeds of that sale
                                 to the extent of unpaid fees and other amounts
                                 owing to them under the related transaction
                                 document prior to distributions to
                                 securityholders. Upon any such sale, the
                                 proceeds may be insufficient to pay in full the
                                 principal of and interest on the securities of
                                 the related series.

     Some 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
Defined Terms" beginning on page 113.



                                       14


                                THE TRUST FUND


GENERAL

     The securities of each series will represent interests in the assets of the
related trust fund, and the notes of each series will be secured by the pledge
of the assets of the related trust fund. The trust fund for each series will be
held by the trustee for the benefit of the related securityholders. Each trust
fund will consist of the trust fund assets (the "Trust Fund Assets") consisting
of a pool comprised of loans as specified in the related prospectus supplement,
together with payments relating to those loans as specified in the related
prospectus supplement.(1) The pool will be created on the first day of the month
of the issuance of the related series of securities or another date as may be
specified in the related prospectus supplement. The securities will be entitled
to payment from the assets of the related trust fund or funds or other assets
pledged for the benefit of the securityholders, as specified in the related
prospectus supplement and will not be entitled to payments in respect of the
assets of any other trust fund established by the depositor.

     The Trust Fund Assets will be acquired by the depositor, either directly
or through affiliates, from originators or sellers which may be affiliates of
the depositor (the "Sellers"), and conveyed without recourse by the depositor
to the related trust fund. Loans acquired by the depositor will have been
originated in accordance with the underwriting criteria specified below under
"Loan Program -- Underwriting Standards" and in the related prospectus
supplement. In addition to loans acquired on the closing date, the trust fund
may acquire loans during a subsequent funding period specified in the related
Agreement. See "The Agreements -- Assignment of Trust Fund Assets -- Conveyance
of Subsequent Loans."

     The depositor will cause the Trust Fund Assets to be assigned to the
trustee named in the related prospectus supplement for the benefit of the
holders of the securities of the related series. The servicer(s) named in the
related prospectus supplement will service the Trust Fund Assets, either
directly or through other servicing institutions called subservicers, pursuant
to a pooling and servicing agreement (each, a "Pooling and Servicing
Agreement") among parties including the depositor, a master servicer (if
applicable), the servicer(s) and the trustee with respect to a series
consisting of certificates, or either a transfer and servicing agreement or a
sale and servicing agreement (each, a "Transfer and Servicing Agreement" or a
"Sale and Servicing Agreement," as applicable) among parties including the
trustee, the seller, the issuer, the depositor, a master servicer (if
applicable) and the servicer(s) with respect to a series consisting of
certificates and notes, and will receive a fee for those services. See "Loan
Program" and "The Agreements." With respect to loans serviced by a servicer
through a subservicer, the servicer will remain liable for its servicing
obligations under the related Agreement as if such servicer alone were
servicing the loans.

     As used in this prospectus, "Agreement" means, with respect to a series
consisting of certificates, the Pooling and Servicing Agreement, and with
respect to a series consisting of certificates and notes, the Trust Agreement,
the Indenture and the Transfer and Servicing Agreement or the Sale and
Servicing Agreement, as the context requires.

     If so specified in the related prospectus supplement, a trust fund
relating to a series of securities may be a business trust formed under the
laws of the state specified in the related prospectus supplement pursuant to a
trust agreement (each, a "Trust Agreement") between the depositor and the
trustee of the trust fund.

----------
1  Whenever the terms "pool," "certificates," "notes" and "securities" are used
   in this prospectus, those terms will be considered to apply, unless the
   context indicates otherwise, to one specific pool and the securities of one
   series including the certificates representing undivided interests in,
   and/or notes secured by the assets of, a single trust fund consisting
   primarily of the loans in that pool. Similarly, the term "Pass-Through
   Rate" will refer to the pass- through rate borne by the certificates and
   the term "interest rate" will refer to the interest rate borne by the notes
   of one specific series, as applicable, and the term "trust fund" will refer
   to one specific trust fund.


                                       15


     With respect to each trust fund, prior to the initial offering of the
related series of securities, the trust fund will have no assets or
liabilities. No trust fund is expected to engage in any activities other than
acquiring, managing and holding of the related Trust Fund Assets and other
assets contemplated in this prospectus and in the related prospectus supplement
and the proceeds thereof, issuing securities and making payments and
distributions thereon and certain related activities. No trust fund is expected
to have any source of capital other than its assets and any related credit
enhancement.

     Unless otherwise stated in the applicable prospectus supplement, the only
obligations of the depositor with respect to a series of securities will be to
obtain certain representations and warranties from the sellers and to assign to
the trustee for that series of securities the depositor's rights with respect to
those representations and warranties. See "The Agreements - Assignment of the
Trust Fund Assets." The obligations of a master servicer or servicer with
respect to the loans will consist principally of its contractual servicing
obligations under the related Agreement (including its obligation to enforce the
obligations of the subservicers or sellers, or both, as more fully described in
this prospectus under "Loan Program - Representations by Sellers; Repurchases"
and "The Agreements - Subservicing By Sellers" and "- Assignment of the Trust
Fund Assets") and its obligation, if any, to make certain cash advances in the
event of delinquencies in payments on or with respect to the loans in the
amounts described in this prospectus under "Description of the Securities -
Advances." The obligations of a master servicer to make advances may be subject
to limitations, to the extent provided in this prospectus and in the related
prospectus supplement.

     The following is a brief description of the assets expected to be included
in the trust funds. If specific information respecting the Trust Fund Assets is
not known at the time the related series of securities initially is offered,
more general information of the nature described below will be provided in the
related prospectus supplement, and specific information will be set forth in a
report on Form 8-K to be filed with the Securities and Exchange Commission
after the initial issuance of the securities (the "Detailed Description"). A
schedule of the loans relating to the series will be attached to the Agreement
delivered to the trustee upon delivery of the securities. No more than 5% of
the loans relative to the pool principal balance as of the related cut-off date
will deviate from the loan characteristics described in the related prospectus
supplement.


THE LOANS

     General. Loans will consist of single family mortgage loans or home equity
loans. For purposes hereof, "home equity loans" includes closed-end loans and
revolving credit line loans. If so specified, the loans may include cooperative
apartment loans ("cooperative loans") secured by security interests in shares
issued by private, non-profit, cooperative housing corporations
("cooperatives") and in the related proprietary leases or occupancy agreements
granting exclusive rights to occupy specific dwelling units in the
cooperatives' buildings. Substantially all of the loans will have been
underwritten to standards that are less stringent than the standards generally
acceptable to Freddie Mac and Fannie Mae with regard to the borrower's credit
standing and repayment ability because the standards focus more on the value of
the mortgaged property.

     The applicable prospectus supplement may specify the day on which monthly
payments on the loans in a pool will be due, but if it does not, all of the
mortgage loans in a pool will have monthly payments due on the first day of
each month. The payment terms of the loans to be included in a trust fund will
be described in the related prospectus supplement and may include any of the
following features or combination thereof or other features described in the
related prospectus supplement:

     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


                                       16


          may be specified in the related prospectus supplement. Loans may
          provide for the payment of interest at a rate lower than the specified
          interest rate borne by the loan (the "Loan Rate") for a period of time
          or for the life of the loan, and the amount of any difference may be
          contributed from funds supplied by the seller of the Property or
          another source.

     o    Principal may be payable on a level debt service basis to fully
          amortize the loan over its term, may be calculated on the basis of an
          assumed amortization schedule that is significantly longer than the
          original term to maturity or on an interest rate that is different
          from the Loan Rate or may not be amortized during all or a portion of
          the original term. Payment of all or a substantial portion of the
          principal may be due on maturity, called balloon payments. Principal
          may include interest that has been deferred and added to the principal
          balance of the loan.

     o    Monthly payments of principal and interest may be fixed for the life
          of the loan, may increase over a specified period of time or may
          change from period to period. The terms of a loan may include limits
          on periodic increases or decreases in the amount of monthly payments
          and may include maximum or minimum amounts of monthly payments.

     o    The loans generally may be prepaid at any time. Prepayments of
          principal may be subject to a prepayment fee, which may be fixed for
          the life of the loan or may decline over time, and may be prohibited
          for the life of the loan or for certain periods, which are called
          lockout periods. Some loans may permit prepayments after expiration of
          the applicable lockout period and may require the payment of a
          prepayment fee in connection with any subsequent prepayment. Other
          loans may permit prepayments without payment of a fee unless the
          prepayment occurs during specified time periods. The loans may include
          "due-on-sale" clauses that permit the mortgagee to demand payment of
          the entire loan in connection with the sale or certain transfers of
          the related Property. Other loans may be assumable by persons meeting
          the then applicable underwriting standards of the seller.

     A trust fund may contain buydown loans that include provisions whereby a
third party partially subsidizes the monthly payments of the obligors on the
loans during the early years of the loans, the difference to be made up from a
buydown fund contributed by the third party at the time of origination of the
loan. A buydown fund will be in an amount equal either to the discounted value
or full aggregate amount of future payment subsidies. Thereafter, buydown funds
are applied to the applicable loan upon receipt by the master servicer of the
mortgagor's portion of the monthly payment on the loan. The master servicer
administers the buydown fund to ensure that the monthly allocation from the
buydown fund combined with the monthly payment received from the mortgagor
equals the scheduled monthly payment on the applicable loan. The underlying
assumption of buydown plans is that the income of the mortgagor will increase
during the buydown period as a result of normal increases in compensation and
inflation, so that the mortgagor will be able to meet the full mortgage
payments at the end of the buydown period. To the extent that this assumption
as to increased income is not fulfilled, the possibility of defaults on buydown
loans is increased. The related prospectus supplement will contain information
with respect to any buydown loan concerning limitations on the interest rate
paid by the mortgagor initially, on annual increases in the interest rate and
on the length of the buydown period.

     The loans will be secured by mortgages or deeds of trust or other similar
security instruments creating a lien on a mortgaged property. In the case of
mortgage loans and if specified in the related prospectus supplement, the
mortgage loans may be secured by security instruments creating a lien on
borrowers' leasehold interests in real property, if the depositor determines
the mortgage loans are commonly acceptable to institutional mortgage investors.
A mortgage loan secured by a leasehold interest in real property is secured not
by a fee simple interest in the mortgaged property but rather by a leasehold
interest under which the mortgagor has the right, for a specified term, to use
the related real estate and the residential dwelling or dwellings located on
the real estate. Generally, a mortgage loan will be secured by a leasehold
interest only if the use of leasehold estates as security for mortgage loans is
customary in the area, the lease is not subject to any prior lien that could
result in termination of the lease, and the term of the lease ends at least
five years beyond the maturity date


                                       17


of the Mortgage Loan. In the case of home equity loans, the liens generally
will be subordinated to one or more senior liens on the related mortgaged
properties as described in the related prospectus supplement. If so specified
in the related prospectus supplement, the home equity loans may include loans
(primarily for home improvement or debt consolidation purposes) that are in
amounts in excess of the value of the related mortgaged properties at the time
of origination. The mortgaged properties and the home improvements are
collectively referred to in this prospectus as the "Properties." The Properties
may be located in any one of the fifty states, the District of Columbia, Guam,
Puerto Rico or any other territory of the United States.

     Loans with certain Loan-to-Value Ratios and/or certain principal balances
may be covered wholly or partially by primary mortgage guaranty insurance
policies (each, a "Primary Mortgage Insurance Policy"). The existence, extent
and duration of coverage under a Primary Mortgage Insurance Policy will be
described in the applicable prospectus supplement.

     The aggregate principal balance of loans secured by Properties that are
owner-occupied will be disclosed in the related prospectus supplement. The
applicable prospectus supplement may provide for the basis for representations
relating to Single Family Properties, but if it does not, the sole basis for a
representation that a given percentage of the loans is secured by Single Family
Properties that are owner-occupied will be either (i) the making of a
representation by the borrower at origination of the loan either that the
underlying Property will be used by the borrower for a period of at least six
months every year or that the borrower intends to use the Property as a primary
residence or (ii) a finding that the address of the underlying Property is the
borrower's mailing address.

     Single Family Loans. The mortgaged properties relating to single family
loans will consist of detached or semi-detached one- to four-family dwelling
units, townhouses, rowhouses, individual condominium units, individual units in
planned unit developments, manufactured housing that is permanently affixed and
treated as real property under local law, and certain other dwelling units
("Single Family Properties"). Single Family Properties may include vacation and
second homes, investment properties and leasehold interests. In the case of
leasehold interests, the applicable prospectus supplement may provide for the
leasehold term, but if it does not, the term of the leasehold will exceed the
scheduled maturity of the loan by at least five years.

     Home Equity Loans. The mortgaged properties relating to home equity loans
will consist of Single Family Properties. As more fully described in the
related prospectus supplement, interest on each revolving credit line loan,
excluding introductory rates offered from time to time during promotional
periods, is computed and payable monthly on the average daily outstanding
principal balance of the loan. Principal amounts on a revolving credit line
loan may be drawn down (up to a maximum amount as set forth in the related
prospectus supplement) or repaid under each revolving credit line loan from
time to time, but may be subject to a minimum periodic payment. Except to the
extent provided in the related prospectus supplement, the trust fund will not
include any amounts borrowed under a revolving credit line loan after the
cut-off date. The full amount of a closed-end loan is advanced at the inception
of the loan and generally is repayable in equal (or substantially equal)
installments of an amount to fully amortize the loan at its stated maturity.
Except to the extent provided in the related prospectus supplement, the
original terms to stated maturity of closed-end loans will not exceed 360
months. Under some circumstances, under either a revolving credit line loan or
a closed-end loan, a borrower may choose an interest only payment option and is
obligated to pay only the amount of interest which accrues on the loan during
the billing cycle. An interest only payment option may be available for a
specified period before the borrower must begin paying at least the minimum
monthly payment of a specified percentage of the average outstanding balance of
the loan.

     Additional Information. Each prospectus supplement will contain
information, as of the date of the prospectus supplement and to the extent then
specifically known to the depositor, with respect to the loans contained in the
related pool, including:

     o    the aggregate outstanding principal balance and the average
          outstanding principal balance of the loans as of the first day of the
          month of issuance of the related series of certificates or another
          date specified in the related prospectus supplement called a cut-off
          date;


                                       18


     o    the type of property securing the loans (e.g., single-family
          residences, individual units in condominium apartment buildings or in
          buildings owned by cooperatives, other real property or home
          improvements);

     o    the original terms to maturity of the loans;

     o    the Loan-to-Value Ratios or Combined Loan-to-Value Ratios, as
          applicable, of the loans;

     o    the Loan Rates or annual percentage rates ("APR") or range of Loan
          Rates or APR's borne by the loans;

     o    the maximum and minimum per annum Loan Rates; and

     o    the geographical distribution of the loans.

     If specific information respecting the loans is not known to the depositor
at the time the related securities are initially offered, more general
information of the nature described above will be provided in the Detailed
Description.

     The "Loan-to-Value Ratio" of a loan at any given time is the fraction,
expressed as a percentage, the numerator of which is the original principal
balance of the related loan and the denominator of which is the Collateral
Value of the related Property. The "Combined Loan-to-Value Ratio" of a loan at
any given time is the ratio, expressed as a percentage, of (i) the sum of (a)
the original principal balance of the loan (or, in the case of a revolving
credit line loan, the maximum amount thereof available) and (b) the outstanding
principal balance at the date of origination of the loan of any senior mortgage
loan(s) or, in the case of any open-ended senior mortgage loan, the maximum
available line of credit with respect to the mortgage loan, regardless of any
lesser amount actually outstanding at the date of origination of the loan, to
(ii) the Collateral Value of the related Property. The "Collateral Value" of
the Property, other than for loans the proceeds of which were used to refinance
an existing mortgage loan (each, a "Refinance Loan"), is the lesser of (a) the
appraised value determined in an appraisal obtained by the originator at
origination of the loan and (b) the sales price for the Property. In the case
of Refinance Loans, the "Collateral Value" of the related Property is generally
the appraised value thereof determined in an appraisal obtained at the time of
refinancing.

     No assurance can be given that values of the Properties have remained or
will remain at their levels on the dates of origination of the related loans.
If the residential real estate market should experience an overall decline in
property values such that the outstanding principal balances of the loans, and
any secondary financing on the Properties, in a particular pool become equal to
or greater than the value of the Properties, the actual rates of delinquencies,
foreclosures and losses could be higher than those now generally experienced in
the mortgage lending industry. In addition, adverse economic conditions and
other factors (which may or may not affect real property values) may affect the
timely payment by borrowers of scheduled payments of principal and interest on
the loans and, accordingly, the actual rates of delinquencies, foreclosures and
losses with respect to any pool. To the extent that the losses are not covered
by subordination provisions or alternative arrangements, the losses will be
borne, at least in part, by the holders of the securities of the related
series.

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 some mortgage loans. Private mortgage-backed securities will
have been issued pursuant to a pooling and servicing agreement, an indenture or
similar agreement. 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.


                                       19


     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
establishing trusts and acquiring and selling housing loans to the trusts and
selling beneficial interests in the trusts. If so specified in the related
prospectus supplement, the issuer of 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 its representations and
warranties with respect to the assets conveyed by it to the related trust fund.
The issuer of private mortgage-backed securities will not have guaranteed any
of the assets conveyed to the related trust fund or any of the private
mortgage-backed securities issued under the pooling and servicing agreement or
similar agreement. Additionally, although the mortgage loans underlying the
private mortgage-backed securities may be guaranteed by an agency or
instrumentality of the United States, the private mortgage-backed securities
themselves will not be so guaranteed.

     Distributions of principal and interest will be made on the private
mortgage-backed securities on the dates specified in the related prospectus
supplement. The private mortgage-backed securities may be entitled to receive
nominal or no principal distributions or nominal or no interest distributions.
Principal and interest distributions will be made on the private
mortgage-backed securities by the private trustee or the private servicer. The
issuer of private mortgage-backed securities or the private servicer may have
the right to repurchase assets underlying the private mortgage-backed
securities after a specific 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 single family property 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.

     The prospectus supplement for a series for which the trust fund includes
private mortgage-backed securities will specify the aggregate approximate
principal amount and type of the private mortgage-backed securities to be
included in the trust fund and specific 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 minimum and maximum stated maturities of the underlying mortgage
          loans at origination;

     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, the servicer and the trustee of the private
          mortgage-backed securities;

     o    certain characteristics of credit support, if any, such as reserve
          funds, insurance policies, surety bonds, letters of credit or
          guaranties relating to the mortgage loans underlying the 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; and

     o    the terms on which mortgage loans may be substituted for those
          originally underlying the private mortgage-backed securities.

     Private mortgage-backed securities included in the trust fund for a series
of securities that were issued by an issuer of private mortgage-backed
securities that is not affiliated with the depositor must


                                       20


be acquired from one or more entities unaffiliated with the depositor in one or
more bona fide secondary market transactions and they must 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. Private
mortgaged-backed securities included in the trust fund for a series of
securities that were issued by the depositor or an affiliate of the depositor
must be registered under the Securities Act concurrently with the offering of
the securities under the related prospectus supplement.


SUBSTITUTION OF TRUST FUND ASSETS

     Substitution of Trust Fund Assets will be permitted in the event of
breaches of representations and warranties with respect to any original Trust
Fund Asset or in the event the documentation with respect to any Trust Fund
Asset is determined by the trustee to be incomplete. The period during which
substitution will be permitted generally will be indicated in the related
prospectus supplement.


                             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 certificates 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 450
Fifth Street, N.W., Washington, D.C. 20549, and at its Regional Offices located
as follows: Chicago Regional Office, 500 West Madison Street, Chicago, Illinois
60661; and Northeast Regional Office, 233 Broadway, New York, New York 10279.
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, 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.

     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

     All documents filed under the name of Aegis Asset Backed Securities
Corporation and/or the name of the trust referred to in the accompanying
prospectus supplement after the date of this prospectus and before the end of
the related offering with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d)
of the Securities Exchange Act of 1934, as amended, 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. Neither the depositor nor the
master servicer intends to file with the Securities and Exchange Commission
periodic reports with respect to the trust fund following completion of the
reporting period required by Rule 15d-1 or Regulation 15D under the Securities
Exchange Act of 1934.

     The trustee on behalf of any trust fund will provide without charge to
each person to whom this prospectus is delivered, on the person's written or
oral 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


                                       21


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). Requests should be directed to the
corporate trust office of the trustee specified in the accompanying prospectus
supplement.


                          REPORTS TO SECURITYHOLDERS

     Periodic and annual reports concerning the trust fund will be forwarded to
securityholders. However, these reports will neither be examined nor reported
on by an independent public accountant. See "Description of the Securities --
Reports to Securityholders."


                                USE OF PROCEEDS

     The net proceeds to be received from the sale of the securities will be
applied by the depositor to acquire the related Trust Fund Assets and for other
general corporate purposes consistent with the limitations set forth in its
charter documents. See "The Depositor." The depositor expects to sell
securities in series from time to time, but the timing and amount of offerings
of securities will depend on a number of factors, including the volume of Trust
Fund Assets acquired by the depositor, prevailing interest rates, availability
of funds and general market conditions.


                                 THE DEPOSITOR

     Aegis Asset Backed Securities Corporation, a Delaware corporation, the
depositor, was incorporated on June 3, 2002, for the limited purpose of
acquiring, owning and transferring mortgage collateral and selling interests in
mortgage collateral or bonds secured by mortgage collateral. The depositor is a
wholly owned limited purpose finance subsidiary of Aegis Mortgage Corporation,
a Delaware corporation ("Aegis"). The depositor maintains its principal office
at 3250 Briarpark, Suite 400, Houston, Texas 77042. Its telephone number is
(713) 787-0100.

     Neither the depositor nor any of the depositor's affiliates will insure or
guarantee distributions on the securities of any series.


                                 LOAN PROGRAM

     The loans will have been purchased by the depositor, either directly or
through affiliates, from sellers, that may include unaffiliated parties. The
applicable prospectus supplement may provide for the underwriting criteria used
in originating the loans, but if it does not, the loans so acquired by the
depositor will have been originated in accordance with the underwriting
criteria specified below under "Underwriting Standards."


UNDERWRITING STANDARDS

     General Standards for First Lien Mortgage Loans. Aegis's underwriting
standards with respect to first lien mortgage loans will generally conform to
those published in the guide for Aegis's alternative documentation programs for
first lien mortgage loans (the "Guide"). The underwriting standards as set
forth in the Guide are continuously revised based on opportunities and
prevailing conditions in the residential mortgage market and the market for the
depositor's securities. If an affiliate of the depositor originates the loan
directly, the underwriting standards described below will apply to the
affiliate's origination process. If a non-affiliated loan broker or
correspondent originates the loan, the underwriting standards described below
will apply collectively to the originator's and Aegis's origination processes.
If groups of loans are acquired by Aegis or an affiliate of Aegis in bulk, the
mortgage loans may be reunderwritten by Aegis or by a designated third party on
Aegis's behalf. See "-- Qualifications of Unaffiliated Sellers." In such bulk
acquisitions, Aegis may perform only sample quality assurance reviews to
determine whether the mortgage loans in any mortgage pool were underwritten in
accordance with applicable standards.

     Aegis's underwriting standards, as well as any other underwriting
standards that may be applicable to any first lien mortgage loans, generally
include a set of specific criteria pursuant to which


                                       22


the underwriting evaluation is made. However, the application of those
underwriting standards does not imply that each specific criterion was
satisfied individually. Rather, a mortgage loan will be considered to be
originated in accordance with a given set of underwriting standards if, based
on an overall qualitative evaluation, the loan substantially complies with the
underwriting standards. For example, a mortgage loan may be considered to
comply with a set of underwriting standards, even if one or more specific
criteria included in the underwriting standards were not satisfied, if other
factors compensated for the criteria that were not satisfied or if the mortgage
loan is considered to be in substantial compliance with the underwriting
standards.

     The level of review by Aegis, if any, of any mortgage loan acquired in
bulk for conformity with the applicable underwriting standards will vary
depending on any one of a number of factors, including:

     o    factors relating to the experience and status of the seller;

     o    characteristics of the specific mortgage loan, including the principal
          balance, the loan-to-value ratio, the loan type or loan program; and

     o    the applicable credit score of the related mortgagor used in
          connection with the origination of the mortgage loan, as determined
          based on a credit scoring model acceptable to Aegis.

     Generally, credit scoring models provide a means for evaluating the
information about a prospective borrower that is available from a credit
reporting agency. The underwriting criteria applicable to any program under
which the mortgage loans may be originated and reviewed may provide that
qualification for the loan, or the availability of specific loan features, such
as maximum loan amount, maximum loan-to-value ratio, property type and use, and
documentation level, may depend on the borrower's credit score.

     Aegis's underwriting standards for first lien mortgage loans are generally
intended to provide an underwriter with information to evaluate the borrower's
repayment ability and the adequacy of the Property as collateral. Due to the
variety of underwriting standards and review procedures that may be applicable
to the mortgage loans included in any mortgage pool, the related prospectus
supplement generally will not distinguish among the various underwriting
standards applicable to the mortgage loans nor describe any review for
compliance with applicable underwriting standards performed by Aegis. Moreover,
there can be no assurance that every mortgage loan was originated in conformity
with the applicable underwriting standards in all material respects, or that
the quality or performance of mortgage loans underwritten pursuant to varying
standards as described above will be equivalent under all circumstances.

     Guide Standards. The following is a brief description of the underwriting
standards set forth in the Guide. Initially, a prospective borrower is required
to fill out a detailed application providing pertinent credit information. As
part of the application, the borrower is required to provide a current balance
sheet describing assets and liabilities and a statement of income and expenses,
as well as an authorization for the lender to obtain for a credit report which
summarizes the borrower's credit history with merchants and lenders and any
record of bankruptcy. Salaried prospective borrowers generally are required to
submit pay stubs covering a consecutive 30-day period and their W-2 form for
the most recent year. In addition, Aegis generally requires a verbal
verification of employment from the prospective borrower's employer. If a
prospective borrower is self-employed, the borrower may be required to submit
copies of signed tax returns or provide bank statements.

     In determining the adequacy of the Property as collateral, an appraisal is
made of each Property considered for financing. The appraiser is required to
verify that the Property is in good condition and that construction, if new,
has been completed. The appraisal is based on various factors, including the
market value of comparable homes and the cost of replacing the improvements.

     Information with respect to the credit scores for the mortgage loans
underlying a series of certificates may be supplied in the related prospectus
supplement. Credit scores are obtained by many mortgage lenders in connection
with mortgage loan applications to help assess a borrower's credit-worthiness.
In addition, credit scores may be obtained by Aegis after the origination of a


                                       23


mortgage loan if the seller does not provide a credit score to Aegis. Credit
scores are obtained from credit reports provided by various credit reporting
organizations, each of which may employ differing computer models and
methodologies.

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

     Once all applicable employment, credit and Property information is
received, a determination is made as to whether the prospective borrower has
sufficient monthly income available to meet their monthly obligations on the
proposed mortgage loan and other expenses related to the home, including
property taxes and hazard insurance, and their other financial obligations and
monthly living expenses. Aegis will generally underwrite adjustable rate
mortgage loans, buy-down mortgage loans, graduated payment mortgage loans and
certain other mortgage loans on the basis of the borrower's ability to make
monthly payments as determined by reference to the mortgage rates in effect at
origination or the reduced initial monthly payments, as the case may be, and on
the basis of an assumption that the borrowers will likely be able to pay the
higher monthly payments that may result from later increases in the mortgage
rates or from later increases in the monthly payments, as the case may be, at
the time of the increase, even though the borrowers may not be able to make the
higher payments at the time of origination. The mortgage rate in effect from
the origination date of an adjustable rate mortgage loan or certain other types
of loans to the first adjustment date generally will be lower, and may be
significantly lower, than the sum of the then applicable index and note margin.
Similarly, the amount of the monthly payment on buy-down mortgage loans and
graduated payment mortgage loans will increase periodically. If the borrowers'
incomes do not increase in an amount commensurate with the increases in monthly
payments, the likelihood of default will increase. In addition, in the case of
either adjustable rate mortgage loans or graduated payment mortgage loans that
are subject to negative amortization, due to the addition of deferred interest
to the principal balances of the mortgage loans are more likely to equal or
exceed the value of the underlying mortgaged properties, thereby increasing the
likelihood of defaults and losses. With respect to balloon loans, payment of
the balloon amount will generally depend on the borrower's ability to obtain
refinancing or to sell the Property before the maturity of the balloon loan,
and there can be no assurance that the borrower will be able to refinance or
sell the Property before the balloon loan matures.

     If so specified in the related prospectus supplement, a mortgage pool may
include mortgage loans that have been underwritten pursuant to a streamlined
documentation refinancing program, as set forth in the Guide. These programs
permit certain mortgage loans to be refinanced with only limited verification
or updating of the underwriting information that was obtained at the time that
the original mortgage loan was originated. For example, a new appraisal of the
Property may not be required if the refinanced mortgage loan was originated up
to approximately 24 months before the refinancing. In addition, the mortgagor's
income may not be verified, although continued employment is required to


                                       24


be verified. In certain circumstances, the mortgagor may be permitted to borrow
up to 107% of the outstanding principal amount of the original mortgage loan.
Each mortgage loan underwritten pursuant to this program will be treated as
having been underwritten pursuant to the same underwriting documentation
program as the mortgage loan that it refinanced, including for purposes of the
disclosure in the related prospectus supplement.

     The underwriting standards set forth in the Guide will be varied in
appropriate cases, including limited or reduced documentation programs. Certain
limited documentation programs, for example, do not require income, employment
or asset verifications. Generally, in order to be eligible for a limited
documentation program, the loan-to-value ratio must meet applicable guidelines,
the borrower must have a good credit history and the borrower's eligibility for
this type of program may be determined by use of a credit scoring model.

     In its evaluation of mortgage loans which have more than twelve months of
payment experience, Aegis generally places greater weight on payment history
and may take into account market and other economic trends while placing less
weight on underwriting factors generally applied to newly originated mortgage
loans. Mortgage loans seasoned for over twelve months may be underwritten for
purchase by Aegis based on the borrower's credit score and payment history,
with no current income verification, and under an alternative property
valuation method.

     The mortgaged properties may be located in states where, in general, a
lender providing credit on a single-family property may not seek a deficiency
judgment against the mortgagor but rather must look solely to the Property for
repayment in the event of foreclosure. See "Certain Legal Aspects of the
Mortgage Loans -- Anti-Deficiency Legislation and Other Limitations on
Lenders." Aegis's underwriting standards applicable to all states, including
anti-deficiency states, require that the value of the Property being financed,
as indicated by the appraisal, currently supports and is anticipated to support
in the future the outstanding loan balance, although there can be no assurance
that the value of the Property will continue to support the loan balance in the
future.

     General Standards for Home Equity Loans. The applicable prospectus
supplement may provide for the seller's representations and warranties relating
to the home equity loans, but if it does not, each seller will represent and
warrant that all home equity loans originated and/or sold by it to the
depositor or one of its affiliates will have been underwritten in accordance
with standards consistent with those utilized by home equity lenders generally
during the period of origination for similar types of loans.

     Underwriting standards are applied by or on behalf of a lender to evaluate
the borrower's credit standing and repayment ability, and the value and
adequacy of the related Property as collateral. In general, a prospective
borrower applying for a home equity loan is required to fill out a detailed
application designed to provide to the underwriting officer pertinent credit
information, including the principal balance and payment history with respect
to any senior mortgage, if any. The applicable prospectus supplement may
specify whether that credit information will be verified by the seller, but if
it does not, the credit information supplied by the borrower will be verified
by the related seller. As part of the description of the borrower's financial
condition, the borrower generally is required to provide a current list of
assets and liabilities and a statement of income and expenses, as well as an
authorization to apply for a credit report which summarizes the borrower's
credit history with local merchants and lenders and any record of bankruptcy.
In most cases, an employment verification is obtained from an independent
source (typically the borrower's employer) which verification reports, among
other things, the length of employment with that organization and the
borrower's current salary. If a prospective borrower is self-employed, the
borrower may be required to submit copies of signed tax returns. The borrower
may also be required to authorize verification of deposits at financial
institutions where the borrower has demand or savings accounts.

     In determining the adequacy of the Property to be used as collateral, an
appraisal will generally be made of each Property considered for financing. The
appraiser is generally required to inspect the Property, issue a report on its
condition and, if applicable, verify construction, if new, has been completed.
The appraisal is generally based on the market value of comparable homes, the
estimated rental income (if considered applicable by the appraiser) and the
cost of replacing the home. The


                                       25


value of the Property being financed, as indicated by the appraisal, must be
such that it currently supports, and is anticipated to support in the future,
the outstanding loan balance.

     The maximum loan amount will vary depending upon a borrower's credit grade
and loan program but will not generally exceed $150,000. Variations in maximum
loan amount limits will be permitted based on compensating factors.
Compensating factors may generally include, to the extent specified in the
related prospectus supplement, low loan-to-value ratio, low debt-to-income
ratio, stable employment, favorable credit history and the nature of the
underlying first mortgage loan, if applicable.

     Each seller's underwriting standards will generally permit home equity
with loan-to-value ratios at origination of up to 125% depending on the loan
program, type and use of the Property, creditworthiness of the borrower and
debt-to-income ratio. If so specified in the related prospectus supplement, a
seller's underwriting criteria may permit home equity loans with loan-to-value
ratios at origination in excess of 125%, such as for debt consolidation or home
improvement purposes.

     After obtaining all applicable employment, credit and Property
information, the related seller will use a debt-to-income ratio to assist in
determining whether the prospective borrower has sufficient monthly income
available to support the payments of principal and interest on the mortgage
loan in addition to other monthly credit obligations. The "debt-to-income
ratio" is the ratio of the borrower's total monthly payments to the borrower's
gross monthly income. The maximum monthly debt-to-income ratio will vary
depending upon a borrower's credit grade and loan program but will not
generally exceed 55%. Variations in the monthly debt-to-income ratio limit will
be permitted based on compensating factors to the extent specified in the
related prospectus supplement.

     In the case of a home equity loan secured by a leasehold interest in
Property, the title to which is held by a third party lessor, the applicable
prospectus supplement may provide for the related representations and
warranties of the seller, but if it does not, the related seller will represent
and warrant, among other things, that the remaining term of the lease and any
sublease is at least five years longer than the remaining term on the home
equity loan.

     Certain of the types of home equity loans that may be included in a trust
fund are recently developed and may involve additional uncertainties not
present in traditional types of loans. For example, certain of the loans may
provide for escalating or variable payments by the borrower. These types of
home equity loans are underwritten on the basis of a judgment that the
borrowers have the ability to make the monthly payments required initially. In
some instances, a borrower's income may not be sufficient to permit continued
loan payments as those payments increase. These types of loans may also be
underwritten primarily upon the basis of loan-to-value ratios or other
favorable credit factors.

QUALIFICATIONS OF UNAFFILIATED SELLERS

     Each seller that is not an affiliate of the depositor will be required to
satisfy the following qualifications. Each such seller must be an institution
experienced in originating and servicing loans of the type contained in the
related pool in accordance with accepted practices and prudent guidelines, and
must maintain satisfactory facilities to originate and service those loans.
Each such seller must be a mortgagee approved by the FHA or an institution the
deposit accounts of which are insured by the Federal Deposit Insurance
Corporation ("FDIC").

REPRESENTATIONS BY SELLERS; REPURCHASES

     Each seller will have made representations and warranties in respect of
the loans sold by that seller and evidenced by all, or a part, of a series of
securities. These representations and warranties may include, among other
things:

     o    that title insurance (or in the case of Properties located in areas
          where title insurance policies are generally not available, an
          attorney's certificate of title) and any required hazard insurance
          policy were effective at origination of each loan, other than
          cooperative loans and certain home equity loans, and that each policy
          (or certificate of title as applicable) remained in effect on the date
          of purchase of the loan from the seller by or on behalf of the
          depositor;


                                       26


     o    that the seller had good title to each loan and the loan was subject
          to no offsets, defenses, counterclaims or rights of rescission except
          to the extent that any buydown agreement may forgive certain
          indebtedness of a borrower;

     o    that each loan constituted a valid lien on, or a perfected security
          interest with respect to, the Property (subject only to permissible
          liens disclosed, if applicable, title insurance exceptions, if
          applicable, and certain other exceptions described in the Agreement)
          and that the Property was free from damage and was in acceptable
          condition;

     o    that there were no delinquent tax or assessment liens against the
          Property;

     o    that no required payment on a loan was delinquent more than the number
          of days specified in the related prospectus supplement; and

     o    that each loan was made in compliance with, and is enforceable under,
          all applicable local, state and federal laws and regulations in all
          material respects.

     In addition, if any required payment on a mortgage loan was more than 31
days delinquent at any time during the twelve months before the cut-off date,
the related prospectus supplement shall so indicate.

     If so specified in the related prospectus supplement, the representations
and warranties of a seller in respect of a loan will be made not as of the
cut-off date but as of the date on which the seller sold the loan to the
depositor or one of its affiliates. Under those circumstances, a substantial
period of time may have elapsed between the sale date and the date of initial
issuance of the series of securities evidencing an interest in the loan. Since
the representations and warranties of a seller do not address events that may
occur following the sale of a loan by the seller, its repurchase obligation
described below will not arise if the relevant event that would otherwise have
given rise to such an obligation with respect to a loan occurs after the date
of sale of the 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, certain
representations, including the condition of the related Property, 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 loan in the trust fund for any series of
securities if anything has come to the depositor's attention that would cause
it to believe that the representations and warranties of a seller will not be
accurate and complete in all material respects in respect of the loan as of the
date of initial issuance of the related series of securities.

     The trustee will promptly notify the relevant seller of any breach of any
representation or warranty made by it in respect of a loan which materially and
adversely affects the interests of the securityholders in the loan. If the
seller cannot cure the breach within 90 days following notice from the trustee
the applicable prospectus supplement may provide for the seller's obligations
under those circumstances, but if it does not, then the seller will be
obligated either

     o    to repurchase the loan from the trust fund at a price (the "Purchase
          Price") equal to 100% of the unpaid principal balance thereof as of
          the date of the repurchase plus accrued interest thereon to the first
          day of the month following the month of repurchase at the Loan Rate or

     o    substitute for the loan a replacement loan that satisfies the criteria
          specified in the related prospectus supplement.

     The trustee will be required under the applicable Agreement to enforce
this obligation for the benefit of the holders of the securities, following the
practices it would employ in its good faith business judgment were it the owner
of the loan. This repurchase or substitution obligation will constitute the
sole remedy available to holders of securities or the trustee for a breach of
representation by a seller.

     Neither the depositor nor the servicer will be obligated to purchase or
substitute a loan if a seller defaults on its obligation to do so, and no
assurance can be given that sellers will carry out their respective repurchase
or substitution obligations with respect to loans.


                                       27


                         DESCRIPTION OF THE SECURITIES

     Each series of certificates will be issued pursuant to a Pooling and
Servicing Agreement or a Trust Agreement among parties including the depositor,
a master servicer (if applicable), the servicer(s) and the trustee. A form of
such agreements has been filed as an exhibit to the Registration Statement of
which this prospectus forms a part. Each series of notes will be issued
pursuant to an indenture (the "Indenture") among parties including the related
trust and the entity named in the related prospectus supplement as trustee with
respect to the series, and the related loans will be serviced pursuant to the
terms of a Transfer & Servicing Agreement or a Sale and Servicing Agreement. A
form of such agreements 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. Each Agreement, dated as of the related
cut-off date, will be among parties including the depositor, a master servicer
(if applicable), the servicer(s) and the trustee for the benefit of the holders
of the securities of the series. The provisions of each Agreement will vary
depending upon the nature of the securities to be issued thereunder and the
nature of the related trust fund. The following are descriptions of the
material provisions which may appear in each Agreement. The depositor will
provide a copy of the Agreement (without exhibits) relating to any series
without charge upon written request of a holder of record of a security of the
series addressed to Aegis Asset Backed Securities Corporation, 3250 Briarpark,
Suite 400, Houston, Texas 77042, Attention: Investor Relations.


GENERAL

     The securities of each series will be issued in book-entry or fully
registered form, in the authorized denominations specified in the related
prospectus supplement, will, in the case of certificates, evidence specified
beneficial ownership interests in, and in the case of notes, be secured by, the
assets of the related trust fund created pursuant to each Agreement and will
not be entitled to payments in respect of the assets included in any other
trust fund established by the depositor. The applicable prospectus supplement
may provide for guarantees or insurance obtained from a governmental entity or
other person, but if it does not, the Trust Fund Assets will not be guaranteed
or insured by any governmental entity or other person. Each trust fund will
consist of, to the extent provided in the related Agreement:

     o    the Trust Fund Assets, as from time to time are subject to the related
          Agreement (exclusive of any amounts specified in the related
          prospectus supplement ("Retained Interest")), including all payments
          of interest and principal received with respect to the loans after the
          cut-off date (to the extent not applied in computing the principal
          balance of the loans as of the cut-off date (the "Cut-off Date
          Principal Balance"));

     o    the assets required to be deposited in the related Security Account
          from time to time; and

     o    property which secured a loan and which is acquired on behalf of the
          securityholders by foreclosure or deed in lieu of foreclosure and any
          insurance policies or other forms of credit enhancement required to be
          maintained pursuant to the related Agreement.

     If so specified in the related prospectus supplement, a trust fund may
also include one or more of the following: reinvestment income on payments
received on the Trust Fund Assets, a reserve fund, a mortgage pool insurance
policy, a special hazard insurance policy, a bankruptcy bond, one or more
letters of credit, a surety bond, guaranties or similar instruments.

     Each series of securities will be issued in one or more classes. Each
class of certificates of a series evidence beneficial ownership of future
interest and/or principal payments on, and each class of notes of a series will
be secured by, the related Trust Fund Assets. A series of securities may
include one or more classes that are senior in right to payment to one or more
other classes of securities of the series. Certain series or classes of
securities may be covered by insurance policies, surety bonds or other forms of
credit enhancement, in each case as described under "Credit Enhancement" in
this prospectus and in the related prospectus supplement. One or more classes
of securities of a series may be entitled to receive distributions of
principal, interest or any combination thereof. Distributions on one or more
classes of a series of securities may be made prior to one or more other
classes, after the


                                       28


occurrence of specified events, in accordance with a schedule or formula or on
the basis of collections from designated portions of the related Trust Fund
Assets, in each case as specified in the related prospectus supplement. The
timing and amounts of distributions may vary among classes or over time as
specified in the related prospectus supplement.

     Distributions of principal and interest (or, where applicable, of
principal only or interest only) on the related securities will be made by the
trustee on each distribution date (i.e., monthly, quarterly, semi-annually or
at such other intervals and on the dates as are specified in the related
prospectus supplement) amounts determined as described in the related
prospectus supplement. Distributions will be made to the persons in whose names
the securities are registered at the close of business on the dates specified
in the related prospectus supplement (each, a "Record Date"). Distributions
will be made in the manner specified in the related prospectus supplement to
the persons entitled thereto at the address appearing in the register
maintained for holders of securities (the "Security Register"); provided,
however, that the final distribution in retirement of the securities will be
made only upon presentation and surrender of the securities at the office or
agency of the trustee or other person specified in the notice to
securityholders of the final distribution.

     The securities will be freely transferable and exchangeable at the
Corporate Trust Office of the trustee as set forth in the related prospectus
supplement. No service charge will be made for any registration of exchange or
transfer of securities of any series, but the trustee may require payment of a
sum sufficient to cover any related tax or other governmental charge.

     The purchase, holding or disposition of the securities employee benefit
plan or other retirement arrangement (including individual retirement accounts
and annuities, Keogh plans and collective investment funds in which the plans,
accounts or arrangements are invested) subject to provisions of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") or the Internal
Revenue Code of 1986, as amended (the "Code"), may result in prohibited
transactions, within the meaning of ERISA and the Code. The applicable
prospectus supplement will provide for the conditions for transferring a class
of securities to an employee benefits plan or other retirement arrangement. See
"ERISA Considerations."

     As to each series, an election may be made to treat the related trust fund
or designated portions thereof 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 trustee and may only be made if certain conditions are
satisfied. As to any series for which a REMIC election will be made, the terms
and provisions applicable to the making of the REMIC election 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 with respect to which
a REMIC election is to be made, the trustee or a holder of the related residual
certificate will be obligated to take all actions required in order to comply
with applicable laws and regulations and will be obligated to pay any
prohibited transaction taxes. The trustee, unless otherwise provided in the
related prospectus supplement, will be entitled to reimbursement for these
payments from the assets of the trust fund or from any holder of the related
residual certificate.

DISTRIBUTIONS ON SECURITIES

     General. In general, the method of determining the amount of distributions
on a particular series of securities will depend on the type of credit support,
if any, that is used with respect to the series. See "Credit Enhancement." Set
forth below are descriptions of various methods that may be used to determine
the amount of distributions on the securities of a particular series. The
prospectus supplement for each series of securities will describe the method to
be used in determining the amount of distributions on the securities of the
series.

     Distributions allocable to principal and interest on the securities will
be made by the trustee out of, and only to the extent of, funds in the related
Security Account, including any funds transferred


                                       29


from any reserve fund. As between securities of different classes and as
between distributions of principal (and, if applicable, between distributions
of Principal Prepayments, as defined below, and scheduled payments of
principal) and interest, distributions made on any distribution date will be
applied as specified in the related prospectus supplement.


     Available Funds. All distributions on the securities of each series on
each distribution date will be made from the Available Funds described below,
in accordance with the terms described in the related prospectus supplement and
specified in the Agreement. "Available Funds" for each distribution date will
generally equal the amount on deposit in the related Security Account on the
distribution date (net of related fees and expenses payable by the related
trust fund) 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 principal
balance of the securities (or, in the case of securities entitled only to
distributions allocable to interest, the aggregate notional amount) of each
class of securities (the "Class Security Balance") entitled to interest from
the date, at the Pass-Through Rate or interest rate, as applicable (which in
either case may be a fixed rate or rate adjustable as specified in the
prospectus supplement), and for the periods specified in the prospectus
supplement. To the extent funds are available therefor, interest accrued during
each specified period on each class of securities entitled to interest (other
than a class of securities that provides for interest that accrues, but is not
currently payable) will be distributable on the distribution dates specified in
the related prospectus supplement until the aggregate Class Security Balance of
the securities of the class has been distributed in full or, in the case of
securities entitled only to distributions allocable to interest, until the
aggregate notional amount of the securities is reduced to zero or for the
period of time designated in the related prospectus supplement. The original
Class Security Balance of each security will equal the aggregate distributions
allocable to principal to which the security is entitled. Distributions
allocable to interest on each security that is not entitled to distributions
allocable to principal will be calculated based on the notional amount of the
security. The notional amount of a security will not evidence an interest in or
entitlement to distributions allocable to principal but will be used solely for
convenience in expressing the calculation of interest and for certain other
purposes.


     Interest payable on the securities of a series on a distribution date will
include all interest accrued during the period specified in the related
prospectus supplement. In the event interest accrues over a period ending two
or more days prior to a distribution date, the effective yield to
securityholders will be reduced from the yield that would otherwise be
obtainable if interest payable on the security were to accrue through the day
immediately preceding the distribution date, and the effective yield (at par)
to securityholders will be less than the indicated coupon rate.


     With respect to any class of accrual securities, if specified in the
related prospectus supplement, any interest that has accrued but is not paid on
a given distribution date will be added to the aggregate Class Security Balance
of the class of securities on that distribution date. Distributions of interest
on any class of accrual securities will commence only after the occurrence of
the events specified in the prospectus supplement. Prior to that time, the
beneficial ownership interest in the trust fund or the principal balance, as
applicable, of the class of accrual securities, as reflected in the aggregate
Class Security Balance of the class of accrual securities, will increase on
each distribution date by the amount of interest that accrued on the class of
accrual securities during the preceding interest accrual period but that was
not required to be distributed to that class on the distribution date. The
class of accrual securities will thereafter accrue interest on its outstanding
Class Security Balance as so adjusted.


     Distributions of Principal. The related prospectus supplement will specify
the method by which the amount of principal to be distributed on the securities
on each distribution date will be calculated and the manner in which the amount
will be allocated among the classes of securities entitled to distributions of
principal. The aggregate Class Security Balance of any class of securities
entitled to distributions of principal generally will be the aggregate original
Class Security Balance of the class of securities specified in the prospectus
supplement, reduced by all distributions paid to such class of holders of the
securities as allocable to principal and,


                                       30


     o    in the case of accrual securities, in general, increased by all
          interest accrued but not then distributable on the accrual securities;
          and

     o    in the case of adjustable rate securities, subject to the effect of
          negative amortization, if applicable.

     If so provided in the related prospectus supplement, one or more classes
of securities will be entitled to receive all or a disproportionate percentage
of the payments of principal including payments of principal which are received
from borrowers in advance of their scheduled due dates and are not accompanied
by amounts representing scheduled interest due after the month of the payments
("Principal Prepayments") in the percentages and under the circumstances or for
the periods specified in the prospectus supplement. The allocation of
disproportional amounts of principal to a class or classes of securities will
have the effect of accelerating the amortization of those securities while
increasing the interests evidenced by one or more other classes of securities
in the trust fund. Increasing the interests of the other classes of securities
relative to that of certain securities is intended to preserve the availability
of the subordination provided by the other securities. See "Credit Enhancement
- Subordination."

     Unscheduled Distributions. If specified in the related prospectus
supplement, the securities will be subject to distributions of principal before
the next scheduled distribution date under the circumstances and in the manner
described below and in the prospectus supplement. If applicable, the trustee
will be required to make unscheduled distributions on the day and in the amount
specified in the related prospectus supplement if, due to substantial payments
of principal (including Principal Prepayments) on the Trust Fund Assets, the
trustee determines that the funds available or anticipated to be available from
the Security Account and, if applicable, any reserve fund, may be insufficient
to make required distributions on the securities on that distribution date. The
applicable prospectus supplement may provide for limits on the amount of an
unscheduled distribution, but if it does not, the amount of any unscheduled
distribution that is allocable to principal will not exceed the amount that
would otherwise have been required to be distributed as principal on the
securities on the next distribution date. The applicable prospectus supplement
may specify whether the unscheduled distribution will include interest, but if
it does not, the unscheduled distributions will include interest at the
applicable Pass-Through Rate (if any) or interest rate (if any) on the amount
of the unscheduled distribution allocable to principal for the period and to
the date specified in the prospectus supplement.


SECURITIES SUBJECT TO PURCHASE

     The prospectus supplement may provide that one or more classes of
securities of a series may be (i) purchased, in whole or in part, at the option
of the depositor, the servicer, the holder of another class of securities of
the same series or another designated entity, at specified times and purchase
prices, and under particular circumstances, or (ii) subject to redemption, in
whole or in part, at the request of the holders of that class, or may be
subject to mandatory purchase by the depositor, the servicer or another
designated entity. The material terms and conditions of any such optional
purchase, redemption or mandatory purchase will be described in the prospectus
supplement.


ADVANCES

     To the extent provided in the related prospectus supplement, the
servicer(s) will be required to advance on or before each distribution date
(from its own funds, funds advanced by subservicers or funds held in the
Security Account for future distributions to the holders of securities of the
related series), an amount equal to the aggregate of payments of interest
and/or principal that were delinquent on the related Determination Date (as
that term is defined in the related prospectus supplement) and were not
advanced by any subservicer, subject to the servicer's determination that those
advances may be recoverable out of late payments by borrowers, Liquidation
Proceeds, Insurance Proceeds or otherwise. In the case of cooperative loans,
the servicer(s) also may be required to advance any unpaid maintenance fees and
other charges under the related proprietary leases as specified in the related
prospectus supplement.


                                       31


     In making advances, the servicer(s) will endeavor to maintain a regular
flow of scheduled interest and principal payments to holders of the securities,
rather than to guarantee or insure against losses. If advances are made by the
servicer from cash being held for future distribution to securityholders, the
servicer will replace those funds on or before any future distribution date to
the extent that funds in the applicable Security Account on the future
distribution date would be less than the amount required to be available for
distributions to securityholders on that distribution date. Any servicer funds
advanced will be reimbursable to the servicer out of recoveries on the specific
loans with respect to which those advances were made (e.g., late payments made
by the related borrower, any related Insurance Proceeds, Liquidation Proceeds
or proceeds of any loan purchased by the depositor, a subservicer or a seller
pursuant to the related Agreement). Advances by the servicer (and any advances
by a subservicer) also will be reimbursable to the servicer (or subservicer)
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 above. To the
extent provided in the related prospectus supplement, the servicer also will be
obligated to make advances, to the extent recoverable out of Insurance
Proceeds, Liquidation Proceeds or otherwise, in respect of certain taxes and
insurance premiums not paid by borrowers on a timely basis. Funds so advanced
are reimbursable to the servicer to the extent permitted by the related
Agreement. The obligations of the servicer to make advances may be supported by
a cash advance reserve fund, a surety bond or other arrangement of the type
described in this prospectus under "Credit Enhancement," in each case as
described in the related prospectus supplement.

     In the event the servicer or a subservicer 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 master servicer will
be obligated to make the advance in its capacity as successor servicer. If the
master servicer makes an advance, it will be entitled to be reimbursed for the
advance to the same extent and degree as the servicer or a subservicer is
entitled to be reimbursed for advances. See "Description of the Securities --
Distributions on Securities."

REPORTS TO SECURITYHOLDERS

     Prior to or concurrently with each distribution on a distribution date the
trustee will furnish to each securityholder of record of the related series a
statement setting forth, to the extent applicable to the related series of
securities, among other things:

     o    the amount of the distribution allocable to principal, separately
          identifying the aggregate amount of any Principal Prepayments and if
          so specified in the related prospectus supplement, any applicable
          prepayment penalties included in the distribution;

     o    the amount of the distribution allocable to interest;

     o    the amount of any advance;

     o    the aggregate amount (a) otherwise allocable to the Subordinated
          Securityholders on the distribution date, and (b) withdrawn from the
          reserve fund, if any, that is included in the amounts distributed to
          the Senior Securityholders;

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

     o    the related amount of the servicing compensation retained or withdrawn
          from the Security Account by the master servicer, and the amount of
          additional servicing compensation received by the master servicer
          attributable to penalties, fees, excess Liquidation Proceeds and other
          similar charges and items;

     o    the number and aggregate principal balances of loans (A) delinquent
          (exclusive of loans in foreclosure) 1 to 30 days, 31 to 60 days, 61 to
          90 days and 91 or more days and (B) in foreclosure and delinquent 1 to
          30 days, 31 to 60 days, 61 to 90 days and 91 or more days, as of the
          close of business on the last day of the calendar month preceding the
          distribution date;

     o    the book value of any real estate acquired through foreclosure or
          grant of a deed in lieu of foreclosure;


                                       32


     o    if applicable, the amount remaining in any reserve fund at the close
          of business on the distribution date;

     o    if applicable, the amount of the Pre-Funding Amount deployed by the
          trustee to purchase Subsequent Loans during the preceding collection
          period;

     o    the Pass-Through Rate or interest rate, as applicable, as of the day
          prior to the immediately preceding distribution date;

     o    any amounts remaining under letters of credit, pool policies or other
          forms of credit enhancement; and

     o    the servicing fee payable to the and any subservicer, if applicable.

     Where applicable, any amount set forth above may be expressed as a dollar
amount per $1,000 security of the relevant class having the percentage interest
specified in the related prospectus supplement. The report to securityholders
for any series of securities may include additional or other information of a
similar nature to that specified above.

     In addition, within a reasonable period of time after the end of each
calendar year, the master servicer or the trustee will mail to each
securityholder of record at any time during that calendar year a report as to
(a) the aggregate of amounts reported pursuant to the first two items above for
that calendar year or, in the event the person was a securityholder of record
during a portion of that calendar year, for the applicable portion of that
calendar year and (b) such other customary information as may be deemed
necessary or desirable for securityholders to prepare their tax returns.


CATEGORIES OF CLASSES OF SECURITIES


     The securities of any series may be comprised of one or more classes.
These classes, in general, fall into different categories. The following chart
identifies and generally defines certain of the more typical categories. The
prospectus supplement for a series of securities may identify the classes that
comprise the series by reference to the following categories.



<TABLE>

CATEGORIES OF CLASSES                  DEFINITION
------------------------------------   -----------------------------------------------------------

PRINCIPAL TYPES

Accretion Directed .................   A class that receives principal payments from the
                                       accreted interest from specified Accrual classes. An
                                       accretion directed class also may receive principal
                                       payments from principal paid on the underlying Trust
                                       Fund Assets for the related series.

Component Securities ...............   A class consisting of "components." The components of
                                       a class of component securities may have different
                                       principal and/or interest payment characteristics but
                                       together constitute a single class. Each component of a
                                       class of component securities may be identified as falling
                                       into one or more of the categories in this chart.

Notional Amount Securities .........   A class having no principal balance and bearing interest
                                       on the related notional amount. The notional amount is
                                       used for purposes of the determination of interest
                                       distributions.
</TABLE>

                                       33



<TABLE>

CATEGORIES OF CLASSES                        DEFINITION
------------------------------------------   -----------------------------------------------------------

Planned Principal Class or PACs ..........   A class that is designed to receive principal payments
                                             using a predetermined principal balance schedule
                                             derived by assuming two constant prepayment rates for
                                             the underlying Trust Fund Assets. These two rates are
                                             the endpoints for the "structuring range" for the
                                             planned principal class. The planned principal classes in
                                             any series of certificates may be subdivided into
                                             different categories (e.g., primary planned principal
                                             classes, secondary planned principal classes and so forth)
                                             having different effective structuring ranges and
                                             different principal payment priorities. The structuring
                                             range for the secondary planned principal class of a
                                             series of certificates will be narrower than that for the
                                             primary planned principal class of the series.

Scheduled Principal Class ................   A class that is designed to receive principal payments
                                             using a predetermined principal balance schedule but is
                                             not designated as a Planned Principal Class or Targeted
                                             Principal class. In many cases, the schedule is derived by
                                             assuming two constant prepayment rates for the
                                             underlying Trust Fund Assets. These two rates are the
                                             endpoints for the "structuring range" for the scheduled
                                             principal class.

Sequential Pay ...........................   Classes that receive principal payments in a prescribed
                                             sequence, that do not have predetermined principal
                                             balance schedules and that under all circumstances
                                             receive payments of principal continuously from the first
                                             distribution date on which they receive principal until
                                             they are retired. A single class that receives principal
                                             payments before or after all other classes in the same
                                             series of securities may be identified as a sequential pay
                                             class.

Strip ....................................   A class that receives a constant proportion, or "strip,"
                                             of the principal payments on the underlying Trust Fund
                                             Assets.

Support Class (also sometimes referred
 to as "companion classes") ..............   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 and/or Scheduled Principal Classes.

Targeted Principal Class or TACs .........   A class that is designed to receive principal payments
                                             using a predetermined principal balance schedule
                                             derived by assuming a single constant prepayment rate
                                             for the underlying Trust Fund Assets.

INTEREST TYPES

Fixed Rate ...............................   A class with an interest rate that is fixed throughout the
                                             life of the class.

Floating Rate ............................   A class with an interest rate that resets periodically
                                             based upon a designated index and that varies directly
                                             with changes in the index.
</TABLE>

                                       34



<TABLE>

CATEGORIES OF CLASSES             DEFINITION
-------------------------------   ------------------------------------------------------------

Inverse Floating Rate .........   A class with an interest rate that resets periodically
                                  based upon a designated index and that varies inversely
                                  with changes in the index.

Variable Rate .................   A class with an interest rate that resets periodically and
                                  is calculated by reference to the rate or rates of interest
                                  applicable to specified assets or instruments (e.g., the
                                  Loan Rates borne by the underlying loans).

Interest Only .................   A class that receives some or all of the interest
                                  payments made on the underlying Trust Fund Assets
                                  and little or no principal. Interest Only classes have
                                  either a nominal principal balance or a notional amount.
                                  A nominal principal balance represents actual principal
                                  that will be paid on the class. It is referred to as
                                  nominal since it is extremely small compared to other
                                  classes. A notional amount is the amount used as a
                                  reference to calculate the amount of interest due on an
                                  Interest Only class that is not entitled to any
                                  distributions in respect of principal.

Principal Only ................   A class that does not bear interest and is entitled to
                                  receive only distributions in respect of principal.

Partial Accrual ...............   A class that accretes a portion of the amount of accrued
                                  interest thereon, which amount will be added to the
                                  principal balance of that class on each applicable
                                  distribution date, with the remainder of the accrued
                                  interest to be distributed currently as interest on that
                                  class. This accretion may continue until a specified event
                                  has occurred or until the Partial Accrual class is retired.

Accrual .......................   A class that accretes the amount of accrued interest
                                  otherwise distributable on that class, which amount will
                                  be added as principal to the principal balance of that
                                  class on each applicable distribution date. The accretion
                                  may continue until some specified event has occurred or
                                  until the Accrual class is retired.
</TABLE>

INDICES APPLICABLE TO FLOATING RATE AND INVERSE FLOATING RATE CLASSES


     LIBOR

     The applicable prospectus supplement may specify some other basis for
determining LIBOR, but if it does not, on the LIBOR determination date (as
defined in the related prospectus supplement) for each class of certificates of
a series for which the applicable interest rate is determined by reference to
an index denominated as LIBOR, the person designated in the related pooling and
servicing agreement or similar agreement as the calculation agent will
determine LIBOR in accordance with one of the two methods described below
(which method will be specified in the related prospectus supplement):


     LIBO Method

     If using this method to calculate LIBOR, the calculation agent will
determine LIBOR by reference to the quotations, as set forth on the Reuters
Screen LIBO Page, 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


                                       35


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 Screen LIBO Page, the calculation agent will
request each of the reference banks to provide the offered quotations at the
time.

     Under this method LIBOR will be established by the calculation agent 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 shall be a leading bank engaged in transactions in
Eurodollar deposits in the international Eurocurrency market; shall not
control, be controlled by, or be under common control with the calculation
agent; and shall have an established place of business in London. If a
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
Telerate page 3750 as of 11:00 a.m. London time on each LIBOR determination
date. Interest Settlement Rates currently are based on rates quoted by eight
British Bankers' Association designated banks as being, in the view of the
banks, the offered rate at which deposits are being quoted to prime banks in
the London interbank market. The Interest Settlement Rates are calculated by
eliminating the two highest rates and the two lowest rates, averaging the four
remaining rates, carrying the result (expressed as a percentage) out to six
decimal places, and rounding to five decimal places.

     If on any LIBOR determination date, the calculation agent is unable to
calculate LIBOR in accordance with the method set forth in the immediately
preceding paragraph, LIBOR for the next interest accrual period shall be
calculated in accordance with the LIBOR method described under "LIBO Method."


                                       36


     The establishment of LIBOR on each LIBOR determination date by the
calculation agent and its calculation of the rate of interest for the
applicable classes for the related interest accrual period shall (in the
absence of manifest error) be final and binding.

     COFI

     The Eleventh District Cost of Funds Index is designed to represent the
monthly weighted average cost of funds for savings institutions in Arizona,
California and Nevada that are member institutions of the Eleventh Federal Home
Loan Bank District (the "Eleventh District"). The Eleventh District Cost of
Funds Index for a particular month reflects the interest costs paid on all
types of funds held by Eleventh District member institutions and is calculated
by dividing the cost of funds by the average of the total amount of those funds
outstanding at the end of that month and of the prior month and annualizing and
adjusting the result to reflect the actual number of days in the particular
month. If necessary, before these calculations are made, the component figures
are adjusted by the Federal Home Loan Bank of San Francisco ("FHLBSF") to
neutralize the effect of events such as member institutions leaving the
Eleventh District or acquiring institutions outside the Eleventh District. The
Eleventh District Cost of Funds Index is weighted to reflect the relative
amount of each type of funds held at the end of the relevant month. The major
components of funds of Eleventh District member institutions are: savings
deposits, time deposits, FHLBSF advances, repurchase agreements and all other
borrowings. Because the component funds represent a variety of maturities whose
costs may react in different ways to changing conditions, the Eleventh District
Cost of Funds Index does not necessarily reflect current market rates.

     A number of factors affect the performance of the Eleventh District Cost
of Funds Index, which may cause it to move in a manner different from indices
tied to specific interest rates, such as United States Treasury bills or LIBOR.
Because the liabilities upon which the Eleventh District Cost of Funds Index is
based were issued at various times under various market conditions and with
various maturities, the Eleventh District Cost of Funds Index may not
necessarily reflect the prevailing market interest rates on new liabilities of
similar maturities. Moreover, as stated above, the Eleventh District Cost of
Funds Index is designed to represent the average cost of funds for Eleventh
District savings institutions for the month prior to the month in which it its
due to be published. Additionally, the Eleventh District Cost of Funds Index
may not necessarily move in the same direction as market interest rates at all
times, since as longer term deposits or borrowings mature and are renewed at
prevailing market interest rates, the Eleventh District Cost of Funds Index is
influenced by the differential between the prior and the new rates on those
deposits or borrowings. In addition, movements of the Eleventh District Cost of
Funds Index, as 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 as to which
the applicable interest rate is determined by reference to an index denominated
as COFI (each, a class of "COFI securities") for the Interest Accrual Period
commencing in the second following month will be based on the Eleventh District
Cost of Funds Index for the second preceding month. If publication is delayed
beyond the tenth day, the interest rate will be based on the Eleventh District
Cost of Funds Index for the third preceding month.

     The applicable prospectus supplement may specify some other basis for
determining COFI, but if it does not, then if on the tenth day of the month in
which any interest accrual period commences for


                                       37


a class of COFI certificates the most recently published Eleventh District Cost
of Funds Index relates to a month before the third preceding month, the index
for the current interest accrual period and for each succeeding interest
accrual period will, except as described in the next to last sentence of this
paragraph, be based on the National Monthly Median Cost of Funds Ratio to
SAIF-Insured Institutions (the "National Cost of Funds Index") published by the
Office of Thrift Supervision (the "OTS") for the third preceding month (or the
fourth preceding month if the National Cost of Funds Index for the third
preceding month has not been published on the tenth day of an interest accrual
period). Information on the National Cost of Funds Index may be obtained by
writing the OTS at 1700 G Street, N.W., Washington, D.C. 20552 or calling (202)
906-6677, and the current National Cost of Funds Index may be obtained by
calling (202) 906-6988. If on the tenth day of the month in which an interest
accrual period commences the most recently published National Cost of Funds
Index relates to a month before the fourth preceding month, the applicable
index for the interest accrual period and each succeeding interest accrual
period will be based on LIBOR, as determined by the calculation agent in
accordance with the Agreement relating to the series of certificates. A change
of index from the Eleventh District Cost of Funds Index to an alternative index
will result in a change in the index level and could increase its volatility,
particularly if LIBOR is the alternative index.

     The establishment of COFI by the calculation agent and its calculation of
the rates of interest for the applicable classes for the related interest
accrual period shall (in the absence of manifest error) be final and binding.


     Treasury Index

     The applicable prospectus supplement may specify some other basis for
determining and defining the Treasury index, but if it does not, on the
Treasury index determination date for each class of securities of a series for
which the applicable interest rate is determined by reference to an index
denominated as a Treasury index, the calculation agent will ascertain the
Treasury index for Treasury securities of the maturity and for the period (or,
if applicable, date) specified in the related prospectus supplement. The
Treasury index for any period means the average of the yield for each business
day during the specified period (and for any date means the yield for the
date), expressed as a per annum percentage rate, on U.S. Treasury securities
adjusted to the "constant maturity" specified in the prospectus supplement or
if no "constant maturity" is so specified, U.S. Treasury securities trading on
the secondary market having the maturity specified in the prospectus
supplement, in each case as published by the Federal Reserve Board in its
Statistical Release No. H.15 (519). Statistical Release No. H.15 (519) is
published on Monday or Tuesday of each week and may be obtained by writing or
calling the Publications Department at the Board of Governors of the Federal
Reserve System, 21st and C Streets, Washington, D.C. 20551 (202) 452-3244. If
the calculation agent has not yet received Statistical Release No. H.15 (519)
for a week, then it will use the Statistical Release from the preceding week.

     Yields on U.S. Treasury securities at "constant maturity" are derived from
the U.S. Treasury's daily yield curve. This curve, which relates the yield on a
security to its time to maturity, is based on the closing market bid yields on
actively traded Treasury securities in the over-the-counter market. These
market yields are calculated from composites of quotations reported by five
leading U.S. Government securities dealers to the Federal Reserve Bank of New
York. This method provides a yield for a given maturity even if no security
with that exact maturity is outstanding. In the event that the Treasury Index
is no longer published, a new index based upon comparable data and methodology
will be designated in accordance with the Agreement relating to the particular
series of securities. The Calculation Agent's determination of the Treasury
Index, and its calculation of the rates of interest for the applicable classes
for the related Interest Accrual Period shall (in the absence of manifest
error) be final and binding.


     Prime Rate

     The applicable prospectus supplement may specify the party responsible for
determining the Prime Rate, but if it does not, on the Prime Rate determination
date (as that term is defined in the


                                       38


related prospectus supplement) for each class of securities of a series as to
which the applicable interest rate is determined by reference to an index
denominated as the Prime Rate, the calculation agent will ascertain the Prime
Rate for the related interest accrual period. The applicable prospectus
supplement may provide for the means of determining the Prime Rate, but if it
does not, the Prime Rate for an interest accrual period will be the "Prime
Rate" as published in the "Money Rates" section of The Wall Street Journal (or
if not so published, the "Prime Rate" as published in a newspaper of general
circulation selected by the calculation agent in its sole discretion) on the
related Prime Rate Determination Date. If a prime rate range is given, then the
average of the range will be used. In the event that the Prime Rate is no
longer published, a new index based upon comparable data and methodology will
be designated in accordance with the Agreement relating to the particular
series of securities. The calculation agent's determination of the Prime Rate
and its calculation of the rates of interest for the related interest accrual
period shall (in the absence of manifest error) be final and binding.


BOOK-ENTRY REGISTRATION OF SECURITIES

     As described in the related prospectus supplement, if not issued in fully
registered form, each class of securities will be registered as book-entry
securities. Persons acquiring beneficial ownership interests in the securities
("Security Owners") will hold their securities through the Depository Trust
Company ("DTC") in the United States, or Clearstream Luxembourg or Euroclear
(in Europe) if they are participants of those systems, or indirectly through
organizations which are participants in those systems (each such participating
organization, a "DTC Participant," "Clearstream Luxembourg Participant" or
"Euroclear Participant," as applicable). The book-entry securities will be
issued in one or more certificates which equal the aggregate principal balance
of the securities and will initially be registered in the name of Cede & Co.,
the nominee of DTC. Clearstream Luxembourg and Euroclear will hold omnibus
positions on behalf of their participants through customers' securities
accounts in Clearstream Luxembourg's and Euroclear's names on the books of
their respective depositories which in turn will hold those positions in
customers' securities accounts in the depositories' names on the books of DTC.
Citibank, N.A., will act as depositary for Clearstream Luxembourg and JPMorgan
Chase Bank, National Association will act as depositary for Euroclear (in those
capacities, individually the "Relevant Depositary" and collectively the
"European Depositories"). Except as described below, no person acquiring a
book-entry security (each, a "beneficial owner") will be entitled to receive a
physical certificate representing the security (a "Definitive Security").
Unless and until Definitive Securities are issued, it is anticipated that the
only "securityholders" of the securities will be Cede & Co., as nominee of DTC.
Security Owners are only permitted to exercise their rights indirectly through
the participating organizations that use the services of DTC, including
securities brokers and dealers, banks and trust companies and clearing
corporations and certain other organizations and DTC.

     A Security Owner's ownership of a book-entry security will be recorded on
the records of the brokerage firm, bank, thrift institution or other financial
intermediary (each, a "Financial Intermediary") that maintains the beneficial
owner's account for that purpose. In turn, the Financial Intermediary's
ownership of the book-entry security will be recorded on the records of DTC (or
of a participating firm that acts as agent for the Financial Intermediary,
whose interest will in turn be recorded on the records of DTC, if the
beneficial owner's Financial Intermediary is not a DTC Participant, and on the
records of Clearstream Luxembourg or Euroclear, as appropriate).

     Security Owners will receive all distributions of principal of, and
interest on, the securities from the applicable trustee through DTC and DTC
Participants. While the securities are outstanding (except under the
circumstances described below), under the rules, regulations and procedures
creating and affecting DTC and its operations (the "Rules"), DTC must make
book-entry transfers among participants on whose behalf it acts with respect to
the securities and is required to receive and transmit distributions of
principal of, and interest on, the securities. Participants and organizations
that have indirect access to the DTC system, such as banks, brokers, dealers,
trust companies and other indirect participants that clear through or maintain
a custodial relationship with a participant, with whom Security Owners have
accounts for securities are similarly required to make book-entry


                                       39


transfers and receive and transmit those distributions on behalf of their
respective Security Owners. Accordingly, although Security Owners will not
possess physical certificates, the Rules provide a mechanism by which Security
Owners will receive distributions and will be able to transfer their interest.

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

     Because of time zone differences, credits of securities received in
Clearstream Luxembourg or Euroclear as a result of a transaction with a
participant will be made during subsequent securities settlement processing and
dated the business day following the DTC settlement date. Those credits or any
transactions in those securities will be reported to the relevant Euroclear or
Clearstream Luxembourg Participants on the business day following the DTC
settlement date. Cash received in Clearstream Luxembourg or Euroclear as a
result of sales of securities by or through a Clearstream Luxembourg
Participant or Euroclear participant to a DTC participant will be received with
value on the DTC settlement date but will be available in the relevant
Clearstream Luxembourg or Euroclear cash account only as of the business day
following settlement in DTC. For information with respect to tax documentation
procedures relating to the Notes, see "Material Federal Income Tax
Considerations -- Tax Treatment of Foreign Investors" and " -- Tax Consequences
to Holders of the Notes -- Backup Withholding" in this prospectus and "Global
Clearance, Settlement And Tax Documentation Procedures -- Certain U.S. Federal
Income Tax Documentation Requirements" in Annex I attached to this 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, these
cross-market transactions will require delivery of instructions to the relevant
European international clearing system by the counterparty in that system in
accordance with its rules and procedures and within its established deadlines
(European time). The relevant European international clearing system will, if
the transaction meets its settlement requirements, deliver instructions to the
Relevant Depositary to take action to effect final settlement on its behalf by
delivering or receiving securities in DTC, and making or receiving payment in
accordance with normal procedures for same day funds settlement applicable to
DTC. Clearstream Luxembourg Participants and Euroclear Participants may not
deliver instructions directly to the European Depositories.

     DTC, which is a New York-chartered limited purpose trust company, performs
services for its participants, some of which (or their representatives) own
DTC. In accordance with its normal procedures, DTC is expected to record the
positions held by each DTC Participant in the book-entry securities, whether
held for its own account or as a nominee for another person. In general,
beneficial ownership of book-entry securities will be subject to the rules,
regulations and procedures governing DTC and DTC Participants as in effect from
time to time.

     Clearstream Banking, societe anonyme, 67 Bd Grande-Duchesse Charlotte,
L-2967 Luxembourg ("Clearstream Luxembourg"), was incorporated in 1970 as
"Cedel S.A," a company with limited liability under Luxembourg law (a "societe
anonyme"). Cedel S.A. subsequently changed its name to


                                       40


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

     Further to the merger, the Board of Directors of New Cedel International
decided to re-name the companies in the group to give them a cohesive brand
name. The new brand name that was chosen is "Clearstream." With effect from
January 14, 2000 New Cedel International has been renamed "Clearstream
International, societe anonyme." On January 18, 2000, Cedelbank was renamed
"Clearstream Banking, societe anonyme," and Cedel Global Services was renamed
"Clearstream Services, societe anonyme."

     On 17 January 2000 Deutsche Borse Clearing AG 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 Participants through electronic book-entry changes in accounts of
Clearstream Luxembourg Participants, thereby eliminating the need for physical
movement of securities. Transactions may be settled in Clearstream Luxembourg
in any of 36 currencies, including United States dollars. Clearstream
Luxembourg provides to its participants, 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, which supervises Luxembourg banks.
Clearstream Luxembourg's participants are world-wide financial institutions
including underwriters, securities brokers and dealers, banks, trust companies
and clearing corporations. Clearstream Luxembourg's U.S. participants 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 Morgan Guaranty Trust Company of New York as the operator of the
Euroclear System ("MGT/EOC") in Brussels to facilitate settlement of trades
between Clearstream Luxembourg and MGT/EOC.

     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 movement of securities and any risk from lack
of simultaneous transfers of securities and cash. Transactions may be settled
in any of 32 currencies, including United States dollars. Euroclear includes
various other services, including securities lending and borrowing and deals
with domestic securities markets in several countries generally similar to the
arrangements for cross-market transfers with DTC described above. Euroclear is
operated by MGT/EOC under contract with Euroclear Clearance Systems S.C., a
Belgian cooperative corporation. All operations are conducted by MGT/EOC, and
all Euroclear securities clearance accounts and Euroclear cash accounts are
accounts with the Euroclear Operator, not Euroclear Clearance Systems, S.C.
Euroclear Clearance Systems S.C. 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.


                                       41


     MGT/EOC is the Belgian branch of a New York banking corporation which is a
member bank of the Federal Reserve System. As such, it is regulated and
examined by the Board of Governors of the Federal Reserve System and the New
York State Banking Department, as well as the Belgian Banking Commission.


     Securities clearance accounts and cash accounts with MGT/EOC 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.
MGT/EOC 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, since those payments
will be forwarded by the trustee to Cede & Co., as nominee of DTC.
Distributions with respect to securities held through Clearstream Luxembourg or
Euroclear will be credited to the cash accounts of Clearstream Luxembourg
Participants or Euroclear Participants in accordance with the relevant system's
rules and procedures, to the extent received by the Relevant Depositary. Those
distributions will be subject to tax reporting in accordance with relevant
United States tax laws and regulations. See "Material Federal Income Tax
Considerations -- Taxation of Securities Treated as Debt Instruments -- Foreign
Persons" and -- Backup Withholding" in this prospectus and "Global Clearance,
Settlement And Tax Documentation Procedures -- Certain U.S. Federal Income Tax
Documentation Requirements" in Annex I attached to this prospectus. Because DTC
can only act on behalf of Financial Intermediaries, the ability of a Security
Owner to pledge book-entry securities to persons or entities that do not
participate in the depository system may be limited due to the lack of physical
certificates for the book-entry securities. In addition, issuance of the
book-entry securities in book-entry form may reduce the liquidity of those
securities in the secondary market since certain potential investors may be
unwilling to purchase securities for which they cannot obtain physical
certificates.

     Monthly and annual reports on the Trust will be provided to Cede & Co., as
nominee of DTC, and may be made available by Cede & Co. to Security Owners upon
request, in accordance with the Rules, and to the Financial Intermediaries to
whose DTC accounts the book-entry securities of those Security Owners are
credited.

     DTC has advised the depositor and the trustee that, unless and until
Definitive Securities are issued, DTC will take any action permitted to be
taken by the holders of the book-entry securities under the applicable
Agreement only at the direction of one or more Financial Intermediaries to
whose DTC accounts the book-entry securities are credited, to the extent that
the actions are taken on behalf of Financial Intermediaries whose holdings
include the book-entry securities. Clearstream Luxembourg or MGT/EOC, as the
case may be, will take any other action permitted to be taken by a
securityholder under the Agreement on behalf of a Clearstream Luxembourg
Participant or Euroclear Participant only in accordance with its relevant rules
and procedures and subject to the ability of the Relevant Depositary to effect
the actions on its behalf through DTC. DTC may take actions, at the direction
of the related participants, with respect to some securities which 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 Security Owners 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 the depositor or the trustee is unable to
          locate a qualified successor; or


                                       42


     o    after the occurrence of an event of default under the applicable
          Agreement, 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 availability of Definitive Securities, the applicable trustee
will be required to notify all Security Owners of the occurrence of the event
resulting in their availability and the availability through DTC of Definitive
Securities. Upon surrender by DTC of the global certificate or certificates
representing the book-entry securities and instructions for re-registration,
the applicable trustee will issue Definitive Securities, and thereafter the
applicable trustee will recognize the holders of Definitive Securities as
securityholders under the applicable Agreement.

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

     The foregoing information with respect to DTC, Clearstream Luxembourg and
Euroclear has been provided for informational purposes only and is not a
representation, warranty or contract modification of any kind by DTC,
Clearstream Luxembourg or Euroclear.

     None of the master servicer, the depositor or the trustee will have any
responsibility for any aspect of the records relating to or payments made on
account of beneficial ownership interests of the book-entry securities held by
Cede & Co., as nominee of DTC, or for maintaining, supervising or reviewing any
records relating to the beneficial ownership interests.

                               CREDIT ENHANCEMENT

GENERAL

     Credit enhancement may be provided with respect to one or more classes of
a series of securities or with respect to the related Trust Fund Assets. Credit
enhancement may be in the form of a limited financial guaranty policy issued by
an entity named in the related prospectus supplement, the subordination of one
or more classes of the securities of the series, the establishment of one or
more reserve funds, the use of a cross-collateralization feature, use of a
mortgage pool insurance policy, bankruptcy bond, special hazard insurance
policy, surety bond, letter of credit, guaranteed investment contract,
overcollateralization, or another method of credit enhancement contemplated in
this prospectus or described in the related prospectus supplement, or any
combination of the foregoing. See "The Agreements -- Realization upon Defaulted
Loans -- Insurance Policies, Surety Bonds and Guaranties" for a description of
guaranteed investment contracts. The applicable prospectus supplement may
provide for credit enhancement which covers all the classes of securities, or
only certain classes and such credit enhancement may not provide protection
against all risks of loss and will not guarantee repayment of the entire
principal balance of the securities and interest thereon. If losses occur which
exceed the amount covered by credit enhancement or which are not covered by the
credit enhancement, securityholders will bear their allocable share of any
deficiencies.

SUBORDINATION

     If so specified in the related prospectus supplement, protection afforded
to holders of one or more classes of securities of a series by means of the
subordination feature may be accomplished by the preferential right of holders
("Senior Securityholders") of one or more other classes of the series (the
"Senior Securities") to distributions in respect of scheduled principal,
Principal Prepayments, interest or any combination thereof that otherwise would
have been payable to holders ("Subordinated Securityholders") of subordinated
securities (the "Subordinated Securities") under the circumstances and to the
extent specified in the related prospectus supplement. Protection may also be


                                       43


afforded to the holders of Senior Securities of a series by: (i) reducing the
ownership interest (if applicable) of the related Subordinated Securities; (ii)
a combination of the immediately preceding sentence and clause (i) above; or
(iii) as otherwise described in the related prospectus supplement. If so
specified in the related prospectus supplement, delays in receipt of scheduled
payments on the loans and losses on defaulted loans may be borne first by the
various classes of 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 prospectus supplement. The aggregate
distributions in respect of delinquent payments on the loans over the lives of
the securities or at any time, the aggregate losses in respect of defaulted
loans which must be borne by the 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. In the event that delinquent payments on the
loans or aggregate losses in respect of the loans were to exceed an amount
specified in the related prospectus supplement, holders of Senior Securities
would experience losses or delays in payments on the securities.

     In addition to or in lieu of the foregoing, if so specified in the related
prospectus supplement, all or any portion of distributions otherwise payable to
holders of Subordinated Securities on any distribution date may instead be
deposited into one or more reserve funds established with the trustee or
distributed to holders of Senior Securities. Those deposits may be made on each
distribution date, for specified periods or until the balance in the reserve
fund has reached a specified amount and, following payments from the reserve
fund to holders of Senior Securities or otherwise, thereafter to the extent
necessary to restore the balance in the reserve fund to required levels, in
each case as specified in the related prospectus supplement. Amounts on deposit
in the reserve fund may be released to the holders of certain classes of
securities at the times and under the circumstances specified in the 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-collateralization
mechanism or otherwise.

     As between classes of Senior Securities and as between classes of
Subordinated Securities, distributions may be allocated among those classes (i)
in the order of their scheduled final distribution dates, (ii) in accordance
with a schedule or formula, (iii) in relation to the occurrence of events, or
(iv) otherwise, in each case as specified in the related prospectus supplement.
As between classes of Subordinated Securities, payments to holders of Senior
Securities on account of delinquencies or losses and payments to any reserve
fund will be allocated as specified in the related prospectus supplement.

LETTER OF CREDIT

     The letter of credit, if any, with respect to a series of securities will
be issued by the bank or financial institution specified in the related
prospectus supplement (the "L/C Bank"). Under the letter of credit, the L/C
Bank will be obligated to honor drawings thereunder in an aggregate fixed
dollar amount, net of unreimbursed payments thereunder, equal to the percentage
specified in the related prospectus supplement of the aggregate principal
balance of the loans on the related cut-off date or of one or more Classes of
securities (the "L/C Percentage"). If so specified in the related prospectus
supplement, the letter of credit may permit drawings in the event of losses not
covered by insurance policies or other credit support, such as losses arising
from damage not covered by standard hazard insurance policies, losses resulting
from the bankruptcy of a borrower and the application of certain provisions of
the federal Bankruptcy Code, or losses resulting from denial of insurance
coverage due to misrepresentations in connection with the origination of a
loan. The amount available under the letter of credit will, in all cases, be
reduced to the extent of the unreimbursed payments thereunder. The obligations
of the L/C Bank under the letter of credit for each series of securities will
expire at the earlier of the date specified in the related prospectus
supplement or the termination of the trust fund. See "The Agreements --
Termination: Optional Termination."


                                       44


INSURANCE POLICIES, SURETY BONDS AND GUARANTIES

     If so provided in the prospectus supplement for a series of securities,
deficiencies in amounts otherwise payable on the securities or certain classes
thereof will be covered by insurance policies and/or surety bonds provided by
one or more insurance companies or sureties. Those instruments may cover, with
respect to one or more classes of securities of the related series, timely
distributions of interest and/or full distributions of principal on the basis
of a schedule of principal distributions set forth in or determined in the
manner specified in the related prospectus supplement. In addition, if
specified in the related prospectus supplement, a trust fund may also include
bankruptcy bonds, special hazard insurance policies, other insurance or
guaranties (including guaranteed investment contracts) for the purpose of (i)
maintaining timely payments or providing additional protection against losses
on the assets included in the trust fund, (ii) paying administrative expenses
or (iii) establishing a minimum reinvestment rate on the payments made in
respect of those assets or a principal payment rate on those assets. These
arrangements may include agreements under which securityholders are entitled to
receive amounts deposited in various accounts held by the trustee upon the
terms specified in the prospectus supplement.

OVER-COLLATERALIZATION

     If so provided in the prospectus supplement for a series of securities, a
portion of the interest payment on each loan may be applied as an additional
distribution in respect of principal to reduce the principal balance of a
certain class or classes of securities and, thus, accelerate the rate of
payment of principal on that class or those classes of securities. Reducing the
principal balance of the securities without a corresponding reduction in the
principal balance of the underlying Trust Fund Assets will result in
over-collateralization.

RESERVE ACCOUNTS

     If specified in the related prospectus supplement, credit support with
respect to a series of securities will be provided by the establishment and
maintenance with the trustee for the series of securities, in trust, of one or
more reserve funds for the series. The related prospectus supplement will
specify whether or not any reserve funds will be included in the trust fund for
a series.

     The reserve fund for a series will be funded (i) by the deposit of cash,
United States Treasury securities, instruments evidencing ownership of
principal or interest payments thereon, letters of credit, demand notes,
certificates of deposit or a combination thereof in the aggregate amount
specified in the related prospectus supplement, (ii) by the deposit from time
to time of certain amounts, as specified in the related prospectus supplement
to which the Subordinated Securityholders, if any, would otherwise be entitled
or (iii) in such other manner as may be specified in the related prospectus
supplement.

     Any amounts on deposit in the reserve fund and the proceeds of any other
instrument upon maturity will be held in cash or will be invested in "Permitted
Investments" which may include:

   (i)        obligations of the United States or any agency thereof, provided
              those obligations are backed by the full faith and credit of the
              United States;

   (ii)       general obligations of or obligations guaranteed by any state of
              the United States or the District of Columbia receiving the
              highest long-term debt rating of each Rating Agency rating the
              related series of securities, or such lower rating as will not
              result in the downgrading or withdrawal of the ratings then
              assigned to the securities by each Rating Agency;

   (iii)      commercial or finance company paper which is then receiving the
              highest commercial or finance company paper rating of each Rating
              Agency, or such lower rating as will not result in the
              downgrading or withdrawal of the ratings then assigned to the
              securities by each Rating Agency;


                                       45


   (iv)       certificates of deposit, demand or time deposits, or bankers'
              acceptances issued by any depository institution or trust company
              incorporated under the laws of the United States or of any state
              thereof and subject to supervision and examination by federal
              and/or state banking authorities, provided that the commercial
              paper and/or long term unsecured debt obligations of the
              depository institution or trust company (or in the case of the
              principal depository institution in a holding company system, the
              commercial paper or long-term unsecured debt obligations of such
              holding company, but only if Moody's Investors Service, Inc.
              ("Moody's") is not a Rating Agency) are then rated one of the two
              highest long-term and the highest short-term ratings of each
              Rating Agency for the securities, or such lower ratings as will
              not result in the downgrading or withdrawal of the rating then
              assigned to the securities by any Rating Agency;

   (v)        demand or time deposits or certificates of deposit issued by any
              bank or trust company or savings institution to the extent that
              the deposits are fully insured by the FDIC;

   (vi)       guaranteed reinvestment agreements issued by any bank, insurance
              company or other corporation containing, at the time of the
              issuance of the agreements, terms and conditions that will not
              result in the downgrading or withdrawal of the rating then
              assigned to the securities by any Rating Agency;

   (vii)      repurchase obligations with respect to any security described in
              clauses (i) and (ii) above, in either case entered into with a
              depository institution or trust company (acting as principal)
              described in clause (iv) above;

   (viii)     securities (other than stripped bonds, stripped coupons or
              instruments sold at a purchase price in excess of 115% of the
              face amount thereof) bearing interest or sold at a discount
              issued by any corporation incorporated under the laws of the
              United States or any state thereof which, at the time of the
              investment, have one of the two highest ratings of each Rating
              Agency (except if the Rating Agency is Moody's, such rating shall
              be the highest commercial paper rating of Moody's for any such
              securities), or such lower rating as will not result in the
              downgrading or withdrawal of the rating then assigned to the
              securities by any Rating Agency, as evidenced by a signed writing
              delivered by each Rating Agency;

   (ix)       short term investment funds sponsored by any trust company or
              national banking association incorporated under the laws of the
              United States or any state thereof which on the date of
              acquisition has been rated by each Rating Agency in their
              respective highest applicable rating category or such lower
              rating as will not result in the downgrading or withdrawal of the
              ratings then assigned to the securities by each Rating Agency;

   (x)        securities issued or guaranteed by GNMA, Fannie Mae or Freddie
              Mac; and

   (xi)       other investments having a specified stated maturity and bearing
              interest or sold at a discount acceptable to each Rating Agency
              that will not result in the downgrading or withdrawal of the
              rating then assigned to the securities by any Rating Agency, as
              evidenced by a signed writing delivered by each Rating Agency;
              provided that no instrument shall be a Permitted Investment if
              the instrument evidences the right to receive interest only
              payments with respect to the obligations underlying the
              instrument; and provided, further, that no investment specified
              in clause (ix) or clause (x) above shall be a Permitted
              Investment for any pre-funding account or any related Capitalized
              Interest Account.

     If a letter of credit is deposited with the trustee, that letter of credit
will be irrevocable and will name the trustee, in its capacity as trustee for
the holders of the securities, as beneficiary and will be issued by an entity
acceptable to each Rating Agency that rates the securities of the related
series. Additional information with respect to the instruments deposited in the
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 holders
of securities of the related series for the purposes, in the manner and at the
times specified in the related prospectus supplement.


                                       46


POOL INSURANCE POLICIES

     If specified in the related prospectus supplement, a separate pool
insurance policy ("Pool Insurance Policy") will be obtained for the pool and
issued by the insurer (the "Pool Insurer") named in the prospectus supplement.
Each Pool Insurance Policy will, subject to the limitations described below,
cover loss by reason of default in payment on loans in the pool in an amount
equal to a percentage specified in the prospectus supplement of the aggregate
principal balance of the loans on the cut-off date which are not covered as to
their entire outstanding principal balances by Primary Mortgage Insurance
Policies. As more fully described below, the master servicer will present
claims thereunder to the Pool Insurer on behalf of itself, the trustee and the
holders of the securities of the related series. The Pool Insurance Policies,
however, are not blanket policies against loss, since claims thereunder may
only be made respecting particular defaulted loans and only upon satisfaction
of certain conditions precedent described below. The applicable prospectus
supplement may provide for the extent of coverage provided by the related Pool
Insurance Policy, but if it does not, the Pool Insurance Policies will not
cover losses due to a failure to pay or denial of a claim under a Primary
Mortgage Insurance Policy.

     The applicable prospectus supplement may provide for the conditions for
the presentation of claims under a Pool Insurance Policy, but if it does not,
the Pool Insurance Policy will provide that no claims may be validly presented
unless (i) any required Primary Mortgage Insurance Policy is in effect for the
defaulted loan and a claim thereunder has been submitted and settled; (ii)
hazard insurance on the related Property has been kept in force and real estate
taxes and other protection and preservation expenses have been paid; (iii) if
there has been physical loss or damage to the Property, it has been restored to
its physical condition (reasonable wear and tear excepted) at the time of
issuance of the policy; and (iv) the insured has acquired good and merchantable
title to the Property free and clear of liens except certain permitted
encumbrances. Upon satisfaction of these conditions, the Pool Insurer will have
the option either (a) to purchase the Property securing the defaulted loan at a
price equal to the principal balance thereof plus accrued and unpaid interest
at the Loan Rate to the date of purchase and certain expenses incurred by the
master servicer on behalf of the trustee and securityholders, or (b) to pay the
amount by which the sum of the principal balance of the defaulted loan plus
accrued and unpaid interest at the Loan Rate to the date of payment of the
claim and the aforementioned expenses exceeds the proceeds received from an
approved sale of the Property, in either case net of certain amounts paid or
assumed to have been paid under the related Primary Mortgage Insurance Policy.
If any Property securing a defaulted loan is damaged and proceeds, if any, from
the related hazard insurance policy or the applicable special hazard insurance
policy are insufficient to restore the damaged Property to a condition
sufficient to permit recovery under the Pool Insurance Policy, the master
servicer will not be required to expend its own funds to restore the damaged
Property unless it determines that (i) the restoration will increase the
proceeds to securityholders on liquidation of the loan after reimbursement of
the master servicer for its expenses and (ii) the expenses will be recoverable
by it through proceeds of the sale of the Property or proceeds of the related
Pool Insurance Policy or any related Primary Mortgage Insurance Policy.

     The applicable prospectus supplement may provide for a Pool Insurance
Policy covering losses resulting from defaults. Primary Mortgage Insurance
Policies generally do not insure against loss sustained by reason of a default
arising from, among other things,

     o    fraud or negligence in the origination or servicing of a loan,
          including misrepresentation by the borrower, the originator or persons
          involved in the origination thereof, or

     o    failure to construct a Property in accordance with plans and
          specifications.

     A failure of coverage attributable to one of the foregoing events might
result in a breach of the related seller's representations described above and
might give rise to an obligation on the part of the related seller to
repurchase the defaulted loan if the breach cannot be cured by the related
seller. No Pool Insurance Policy will cover (and many Primary Mortgage
Insurance Policies do not cover) a claim in respect of a defaulted loan
occurring when the servicer of the loan, at the time of default or thereafter,
was not approved by the applicable insurer.


                                       47


     The applicable prospectus supplement may provide for a Pool Insurance
Policy featuring a fixed amount of coverage over the life of the policy, but if
it does not, the original amount of coverage under each Pool Insurance Policy
will be reduced over the life of the related securities by the aggregate dollar
amount of claims paid less the aggregate of the net amounts realized by the
Pool Insurer upon disposition of all foreclosed properties. The applicable
prospectus supplement may provide for the exclusion of specified expenses from
the coverage of the Pool Insurance Policy, but if it does not, the amount of
claims paid will include certain expenses incurred by the master servicer as
well as accrued interest on delinquent loans to the date of payment of the
claim. Accordingly, if aggregate net claims paid under any Pool Insurance
Policy reach the original policy limit, coverage under that Pool Insurance
Policy will be exhausted and any further losses will be borne by the related
securityholders.


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 and other losses
that may be 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 master 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, each special hazard policy will insure against
damage to mortgaged properties caused by special hazard losses in an amount
equal to the lesser of:

     o    the cost of repair to or replacement of the damaged Property, or

     o    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 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. In addition,
any amount paid to repair or replace the Property will further reduce special
hazard coverage by that amount.

     No special hazard policy will insure against damage that is covered by a
hazard insurance policy or flood insurance policy, if any, maintained by the
mortgagor or the servicer.

     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 certificateholders, but
will affect the relative amounts of coverage remaining under the related
special hazard insurance policy and mortgage pool insurance policy.


                                       48


     To the extent specified in the prospectus supplement, the master servicer
may deposit cash, an irrevocable letter of credit, or any other instrument
acceptable to each 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 canceled or reduced by the
master servicer if the cancellation or reduction would not adversely affect the
then current rating or ratings of the related securities. See "Legal Aspects of
the Mortgage Loans -- Anti-deficiency Legislation and Other Limitations on
Lenders."

     To the extent specified in the prospectus supplement, the master servicer
may deposit cash, an irrevocable letter of credit or any other instrument
acceptable to each nationally recognized rating agency rating the certificates
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 certificates may be reduced so long as
the reduction will not result in a downgrading of the rating of the
certificates by a rating agency rating certificates at the request of the
depositor.


CROSS SUPPORT

     If specified in the related prospectus supplement, the beneficial
ownership of separate groups of assets included in a trust fund may be
evidenced by separate classes of the related series of securities. 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 trust fund. The related
prospectus supplement for a series that includes a cross support feature will
describe the manner and conditions for applying the cross support feature.

     If specified in the related prospectus supplement, the coverage provided
by one or more forms of credit support may apply concurrently to two or more
related trust funds. If applicable, the related prospectus supplement will
identify the trust funds 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 trust funds.


FINANCIAL INSTRUMENTS

     If specified in the related prospectus supplement, the trust fund may
include one or more swap arrangements or other financial instruments that are
intended to meet the following goals:

     o    to convert the payments on some or all of the mortgage loans, private
          securities or agency securities from fixed to floating payments, or
          from floating to fixed, or from floating based on a particular index
          to floating based on another index;

     o    to provide payments in the event that any index rises above or falls
          below specified levels; or

     o    to provide protection against interest rate changes, certain type of
          losses, including reduced market value, or other payment shortfalls to
          one or more classes of the related series.


                                       49


     If a trust fund includes financial instruments of this type, the
instruments may be structured to be exempt from the registration requirements
of the Securities Act.


                      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 Trust Fund Assets included in the related trust fund.
The original terms to maturity of the loans in a given pool will vary depending
upon the type of loans included the pool. Each prospectus supplement will
contain information with respect to the type and maturities of the loans in the
related pool. The related prospectus supplement will specify the circumstances,
if any, under which the related loans will be subject to prepayment penalties.
The prepayment experience on the loans in a pool will affect the weighted
average life of the related series of securities.

     The rate of prepayment on the loans cannot be predicted. Generally, home
equity loans are not viewed by borrowers as permanent financing. Accordingly,
home equity loans may experience a higher rate of prepayment than traditional
first mortgage loans. On the other hand, because home equity loans such as the
revolving credit line loans generally are not fully amortizing, the absence of
voluntary borrower prepayments could cause rates of principal payments lower
than, or similar to, those of traditional fully-amortizing first mortgage
loans. The prepayment experience of the related trust fund may be affected by a
wide variety of factors, including general economic conditions, prevailing
interest rate levels, the availability of alternative financing, homeowner
mobility and the frequency and amount of any future draws on any revolving
credit line loans. Other factors that might be expected to affect the
prepayment rate of a pool of junior lien home equity loans include the amounts
of, and interest rates on, the underlying senior mortgage loans, and the use of
first mortgage loans as long-term financing for home purchase and subordinate
mortgage loans as shorter-term financing for a variety of purposes, including
home improvement, education expenses and purchases of consumer durables such as
automobiles. Accordingly, these loans may experience a higher rate of
prepayment than traditional fixed-rate mortgage loans. In addition, any future
limitations on the right of borrowers to deduct interest payments on home
equity loans for federal income tax purposes may further increase the rate of
prepayments of the loans. The enforcement of a "due-on-sale" provision (as
described below) will have the same effect as a prepayment of the related loan.
See "Legal Aspects of the Loans -- Due-on-Sale Clauses." 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.

     Collections on revolving credit line loans may vary because, among other
things, borrowers may (i) make payments during any month as low as the minimum
monthly payment for that month or, during the interest-only period for certain
revolving credit line loans and, in more limited circumstances, closed-end
loans, with respect to which an interest-only payment option has been selected,
the interest and the fees and charges for that month or (ii) make payments as
high as the entire outstanding principal balance plus accrued interest and the
fees and charges thereon. It is possible that borrowers may fail to make the
required periodic payments. In addition, collections on the loans may vary due
to seasonal purchasing and the payment habits of borrowers.

     Generally, all conventional loans will contain due-on-sale provisions
permitting the mortgagee to accelerate the maturity of the loan upon sale or
certain transfers by the borrower of the related Property. The master servicer
generally will enforce any due-on-sale or due-on-encumbrance clause, to the
extent it has knowledge of the conveyance or further encumbrance or the
proposed conveyance or proposed further encumbrance of the Property and
reasonably believes that it is entitled to do so under applicable law;
provided, however, that the master servicer will not take any enforcement
action that would impair or threaten to impair any recovery under any related
insurance policy. See "The Agreements -- Collection Procedures" and "Legal
Aspects of the Loans" for a description of certain provisions of each Agreement
and certain legal developments that may affect the prepayment experience on the
loans.


                                       50


     The rate of prepayments with respect to conventional mortgage loans has
fluctuated significantly in recent years. In general, if prevailing rates fall
significantly below the Loan Rates borne by the loans, the loans are more
likely to be subject to higher prepayment rates than if prevailing interest
rates remain at or above the Loan Rates. Conversely, if prevailing interest
rates rise appreciably above the Loan Rates borne by the loans, the loans are
more likely to experience a lower prepayment rate than if prevailing rates
remain at or below the Loan Rates. However, there can be no assurance that this
will be the case.

     When a full prepayment is made on a loan, the borrower is charged interest
on the principal amount of the loan so prepaid only for the number of days in
the month actually elapsed up to the date of the prepayment, rather than for a
full month. The effect of prepayments in full will be to reduce the amount of
interest passed through or paid in the following month to holders of securities
because interest on the principal amount of any loan so prepaid will generally
be paid only to the date of prepayment. Partial prepayments in a given month
may be applied to the outstanding principal balances of the loans so prepaid on
the first day of the month of receipt or in the month following receipt. In the
latter case, partial prepayments will not reduce the amount of interest passed
through or paid in the month of receipt. The applicable prospectus supplement
may specify when prepayments are passed through to securityholders, but if it
does not, neither full nor partial prepayments will be passed through or paid
until the month following receipt.

     Even assuming that the Properties provide adequate security for the loans,
substantial delays could be encountered in connection with the liquidation of
defaulted loans and corresponding delays in the receipt of related proceeds by
securityholders could occur. An action to foreclose on a Property securing a
loan is regulated by state statutes and rules and is subject to many of the
delays and expenses of other lawsuits if defenses or counterclaims are
interposed, sometimes requiring several years to complete. Furthermore, in some
states an action to obtain a deficiency judgment is not permitted following a
nonjudicial sale of a Property. In the event of a default by a borrower, these
restrictions among other things, may impede the ability of the master servicer
to foreclose on or sell the Property or to obtain liquidation proceeds
sufficient to repay all amounts due on the related loan. In addition, the
master servicer will be entitled to deduct from related liquidation proceeds
all expenses reasonably incurred in attempting to recover amounts due on
defaulted loans and not yet repaid, including payments to senior lienholders,
legal fees and costs of legal action, real estate taxes and maintenance and
preservation expenses.

     Liquidation expenses with respect to defaulted mortgage loans generally do
not vary directly with the outstanding principal balance of the loan at the
time of default. Therefore, assuming that a servicer took the same steps in
realizing upon a defaulted mortgage loan having a small remaining principal
balance as it would in the case of a defaulted mortgage loan having a large
remaining principal balance, the amount realized after expenses of liquidation
would be smaller as a percentage of the remaining principal balance of the
small mortgage loan than would be the case with the other defaulted mortgage
loan having a large remaining principal balance.

     Applicable state laws generally regulate interest rates and other charges,
require certain disclosures, and require licensing of certain originators and
servicers of loans. In addition, most have other laws, public policy and
general principles of equity relating to the protection of consumers, unfair
and deceptive practices and practices which may apply to the origination,
servicing and collection of the loans. Depending on the provisions of the
applicable law and the specific facts and circumstances involved, violations of
these laws, policies and principles may limit the ability of the servicer to
collect all or part of the principal of or interest on the loans, may entitle
the borrower to a refund of amounts previously paid and, in addition, could
subject the servicer to damages and administrative sanctions.

     If the rate at which interest is passed through or paid to the holders of
securities of a series is calculated on a loan-by-loan basis, disproportionate
principal prepayments among loans with different Loan Rates will affect the
yield on 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


                                       51


and purchase price, because while interest will generally accrue on each loan
from the first day of the month, the distribution of the interest will not be
made earlier than the month following the month of accrual.

     Under certain circumstances, 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 a trust fund upon the occurrence of a specific
trigger event, such as the reduction of the principal amount of the loans to a
specified percentage of the original balance of the loans, thereby effecting
earlier retirement of the related series of securities. See "The Agreements --
Termination; Optional Termination."

     The relative contribution of the various factors affecting prepayment may
vary from time to time. There can be no assurance as to the rate of payment of
principal of the Trust Fund Assets at any time or over the lives of the
securities.

     The prospectus supplement relating to a series of securities will discuss
in greater detail the effect of the rate and timing of principal payments
(including prepayments), delinquencies and losses on the yield, weighted
average lives and maturities of the securities.


                                THE AGREEMENTS

     Set forth below is a description of the material provisions of each
Agreement which are not described elsewhere in this prospectus. Where
particular provisions or terms used in the Agreements are referred to, the
provisions or terms are as specified in the Agreements.

ASSIGNMENT OF THE TRUST FUND ASSETS

     Assignment of the Loans. At the time of issuance of the securities of a
series, the depositor will cause the loans comprising the related trust fund to
be assigned to the trustee, without recourse, together with all principal and
interest received by or on behalf of the depositor on or with respect to the
loans after the cut-off date, other than principal and interest due on or
before the cut-off date and other than any Retained Interest specified in the
related prospectus supplement. The trustee will, concurrently with the
assignment, deliver the securities to the depositor in exchange for the loans.
Each loan will be identified in a schedule appearing as an exhibit to the
related Agreement. This schedule will include information as to the outstanding
principal balance of each loan after application of payments due on or before
the cut-off date, as well as information regarding the Loan Rate or APR, the
maturity of the loan, the Loan-to-Value Ratios or Combined Loan-to-Value
Ratios, as applicable, at origination and certain other information.

     In addition, the depositor will also deliver or cause to be delivered to
the trustee (or to the custodian) for each single family loan or home equity
loan; in general:

     o    the mortgage note or contract endorsed without recourse in blank or to
          the order of the trustee, except that the depositor may deliver or
          cause to be delivered a lost note affidavit in lieu of any original
          mortgage note that has been lost;

     o    the mortgage, deed of trust or similar instrument (a "Mortgage") with
          evidence of recording indicated thereon, except for any Mortgage not
          returned from the public recording office, in which case the depositor
          will deliver or cause to be delivered a copy of the Mortgage together
          with a certificate that the original of the Mortgage was delivered to
          the recording office, and except that such Mortgages may be registered
          electronically through Mortgage Electronic Registration Systems, Inc.
          ("MERS"), and for mortgage loans registered through the MERS system,
          MERS will serve as mortgagee of record solely as a nominee in an
          administrative capacity on behalf of the trustee and will not have any
          interest in any of the mortgage loans); and

     o    an assignment of the Mortgage in blank, which assignment (except in
          the case of a Mortgage registered with MERS) will be in recordable
          form in the case of a Mortgage assignment, and any other security
          documents, including those relating to any senior liens on the
          Property, as may be specified in the related prospectus supplement or
          the related Agreement.


                                       52


     Unless otherwise stated in the applicable prospectus supplement, the
depositor will (except in the case of a Mortgage registered with MERS) promptly
cause the assignments of the related loans to be recorded in the appropriate
public office for real property records, except in those states designated by
the Rating Agencies where recording is not required to protect the trustee's
interest in those loans against the claim of any subsequent transferee or any
successor to or creditor of the depositor or the originator of the related
loans.

     With respect to any loans that are cooperative loans, the depositor will
cause to be delivered to the trustee (or to the custodian) for each cooperative
loan:

     o    the related original cooperative note endorsed without recourse in
          blank or to the order of the trustee or, to the extent the related
          Agreement 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 the relevant stock certificate,
          together with the related blank stock powers; and

     o    any other document specified in the related prospectus supplement.

     The depositor will cause to be filed in the appropriate office an
assignment and a financing statement evidencing the trustee's security interest
in each cooperative loan.

     The trustee (or the custodian) will review the loan documents within the
time period specified in the related prospectus supplement after receipt
thereof, and the trustee will hold the loan documents in trust for the benefit
of the related securityholders. Generally, if the document is found to be
missing or defective in any material respect, the trustee (or the custodian)
will notify the depositor, and the depositor will notify the related seller. If
the seller cannot cure the omission or defect within the time period specified
in the related prospectus supplement after receipt of notice, the seller will
be obligated to either purchase the related loan from the trust fund at the
Purchase Price or if so specified in the related prospectus supplement, remove
the loan from the trust fund and substitute in its place one or more other
loans that meets certain requirements set forth in the related prospectus
supplement. There can be no assurance that a seller will fulfill this purchase
or substitution obligation. Although the trustee may be obligated to enforce
the obligation to the extent described above under "Loan Program --
Representations by Sellers; Repurchases," neither the trustee nor the depositor
will be obligated to purchase or replace a loan if the seller defaults on its
obligation, unless the breach also constitutes a breach of the representations
or warranties of the depositor. The applicable prospectus supplement may
provide other remedies, but if it does not, this obligation to cure, purchase
or substitute constitutes the sole remedy available to the securityholders or
the trustee for omission of, or a material defect in, a constituent document.

     The trustee 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 loans as agent of the trustee.

     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 Trust Fund -- 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
or similar 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.

     Conveyance of Subsequent Loans. With respect to a series of securities for
which a Pre-Funding Arrangement is provided, in connection with any conveyance
of Subsequent loans to the trust fund


                                       53


after the issuance of the related securities, the related Agreement will
require the seller and the depositor to satisfy the conditions specified in the
applicable prospectus supplement, which may include, among others:

     o    each Subsequent loan purchased after the applicable closing date must
          satisfy the representations and warranties contained in the subsequent
          transfer agreement to be entered into by the depositor, the seller and
          the trustee and in the related Agreement;

     o    the seller will not select the Subsequent loans in a manner that it
          believes is adverse to the interests of the securityholders;

     o    as of the related cut-off date, all of the loans in the loan pool at
          that time, including the Subsequent loans purchased after the closing
          date, will satisfy the criteria set forth in the related Agreement;

     o    the Subsequent loans will have been approved by any third party
          provider of credit enhancement, if applicable; and

     o    before the purchase of each Subsequent loan the trustee will perform
          an initial review of certain related loan file documentation for the
          loan and issue an initial certification for which the required
          documentation in the loan file has been received with respect to each
          Subsequent loan.

     The Subsequent loans, on an aggregate basis, will have characteristics
similar to the characteristics of the initial pool of loans as described in the
related prospectus supplement. Each acquisition of any Subsequent loans will be
subject to the review of the aggregate statistical characteristics of the
related loan pool for compliance with the applicable statistical criteria set
forth in the related Agreement, which will be conducted by any third party
provider of credit enhancement, if applicable, the rating agencies and the
seller's accountants.

     Notwithstanding the foregoing provisions, with respect to a trust fund for
which a REMIC election is to be made, no purchase or substitution of a loan
will be made if the purchase or substitution would result in a prohibited
transaction tax under the Code.

PAYMENTS ON LOANS; DEPOSITS TO SECURITY ACCOUNT

     The master servicer will establish and maintain or cause to be established
and maintained with respect to the related trust fund a separate account or
accounts for the collection of payments on the related Trust Fund Assets in the
trust fund (the "Security Account"). The applicable prospectus supplement may
provide for other requirements for the Security Account, but if it does not,
the Security Account must be either (i) maintained with a depository
institution the debt obligations of which (or in the case of a depository
institution that is the principal subsidiary of a holding company, the
obligations of which) are rated in one of the two highest rating categories by
the Rating Agency or Rating Agencies that rated one or more classes of the
related series of securities, (ii) an account or accounts the deposits in which
are fully insured by either the Bank Insurance Fund (the "BIF") of the FDIC or
the Savings Association Insurance Fund (as successor to the Federal Savings and
Loan Insurance Corporation ("SAIF")), and the uninsured deposits in which are
otherwise secured such that, as evidenced by an opinion of counsel, the
securityholders have a claim with respect to the funds in the security account
or a perfected first priority security interest against any collateral securing
those funds that is superior to the claims of any other depositors or general
creditors of the depository institution with which the Security Account is
maintained, or (iii) an account or accounts otherwise acceptable to each Rating
Agency. The collateral eligible to secure amounts in the Security Account is
limited to Permitted Investments. A Security Account may be maintained as an
interest bearing account or the funds held in a Security Account may be
invested pending each succeeding distribution date in Permitted Investments. To
the extent provided in the related prospectus supplement, the trustee will be
entitled to receive any interest or other income earned on funds in the
Security Account as additional compensation and will be obligated to deposit in
the Security Account the amount of any loss immediately as realized. The
Security Account may be maintained with the trustee or with a depository
institution that is an affiliate of the trustee, provided it meets the
standards set forth above.


                                       54


     The master servicer will deposit or cause to be deposited in the Security
Account for each trust fund, to the extent applicable and unless otherwise
specified in the Agreement, the following payments and collections received or
advances made by or on behalf of it subsequent to the cut-off date (other than
payments due on or before the cut-off date and exclusive of any amounts
representing Retained Interest):

     o    all payments on account of principal, including Principal Prepayments
          and, if specified in the related prospectus supplement, any applicable
          prepayment penalties, on the loans;

     o    all payments on account of interest on the loans, net of applicable
          servicing compensation;

     o    all proceeds (net of unreimbursed payments of property taxes,
          insurance premiums and similar items ("Insured Expenses") incurred,
          and unreimbursed advances made, by the master servicer, if any) of the
          hazard insurance policies and any Primary Mortgage Insurance Policies,
          to the extent those proceeds are not applied to the restoration of the
          Property or released to the Mortgagor in accordance with the
          servicer's normal servicing procedures (collectively, "Insurance
          Proceeds") and all other cash amounts (net of unreimbursed expenses
          incurred in connection with liquidation or foreclosure ("Liquidation
          Expenses") and unreimbursed advances made, by the servicer, if any)
          received and retained in connection with the liquidation of defaulted
          loans, by foreclosure or otherwise ("Liquidation Proceeds"), 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 loan or Property in respect thereof purchased by
          the servicer, the depositor or any seller as described under "Loan
          Program - Representations by Sellers; Repurchases" or "- Assignment of
          Trust Fund Assets" above and all proceeds of any loan repurchased as
          described under "- Termination; Optional Termination" below;

     o    all payments required to be deposited in the Security Account with
          respect to any deductible clause in any blanket insurance policy
          described under "- Hazard Insurance" below;

     o    any amount required to be deposited by the 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 Agreement.

     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 or as otherwise specified
in the Agreement:

     o    to pay to the servicer the servicing fees described in the related
          prospectus supplement, the master 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, this right of reimbursement
          with respect to any loan being limited to amounts received that
          represent late recoveries of payments of principal and/or interest on
          the loan (or Insurance Proceeds or Liquidation Proceeds with respect
          thereto) with respect to which the advance was made;

     o    to reimburse the servicer for any advances previously made which the
          master servicer has determined to be nonrecoverable;

     o    to reimburse the servicer from Insurance Proceeds for expenses
          incurred by the servicer and covered by the related insurance
          policies;

     o    to reimburse the servicer for unpaid servicing fees and unreimbursed
          out-of-pocket costs and expenses incurred by the servicer in the
          performance of its servicing obligations, this right of reimbursement
          being limited to amounts received representing late recoveries of the
          payments for which the advances were made;


                                       55


     o    to pay to the servicer, with respect to each loan or Property acquired
          in respect thereof that has been purchased by the servicer pursuant to
          the Agreement, all amounts received thereon and not taken into account
          in determining the principal balance of the repurchased loan;

     o    to reimburse the servicer or the depositor for expenses incurred and
          reimbursable pursuant to the Agreement;

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

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

     In addition, the Agreement will generally provide that, on or prior to the
business day immediately preceding each distribution date, the master servicer
shall withdraw from the Security Account the amount of Available Funds, to the
extent on deposit, for deposit in an account maintained by the trustee for the
related series of securities.


PRE-FUNDING ACCOUNT

     If so provided in the related prospectus supplement, the trustee will
establish and maintain an account (the "Pre-Funding Account"), in the name of
the related trustee on behalf of the related securityholders, into which the
depositor will deposit cash in an amount specified in the prospectus supplement
(the "Pre-Funded Amount") on the related Closing Date. The Pre-Funding Account
will be with the trustee for the related series of securities and is designed
solely to hold funds to be applied by the trustee during the period from the
closing date to a date not more than a year after the closing date (the
"Funding Period") to pay to the depositor the purchase price for loans
purchased during the Funding Period (the "Subsequent Loans"). Monies on deposit
in the Pre-Funding Account will not be available to cover losses on or in
respect of the related loans. The Pre-Funded Amount will not exceed 50% of the
initial aggregate principal amount of the certificates and notes of the related
series. 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. See "Credit Enhancement -- Reserve Accounts" for a
description of the types of investments which may constitute "Permitted
Investments." Earnings on investment of funds in the Pre-Funding Account will
be deposited into the related Security Account or such other trust account as
is specified in the related prospectus supplement and losses will be charged
against the funds on deposit in the Pre-Funding Account. Any amounts remaining
in the Pre-Funding Account at the end of the Funding Period will be distributed
to the related securityholders in the manner and priority specified in the
related prospectus supplement, as a prepayment of principal of the related
securities. Prior to or concurrently with each distribution on a distribution
date within the Funding Period, the trustee will furnish to each securityholder
of record of the related series of securities a statement setting forth the
amounts of the Pre-Funding Amount deployed by the trustee to purchase
Subsequent Loans during the preceding collection period. The depositor will
file or cause such statement to be filed with the SEC as an exhibit to a
Current Report on Form 8-K within 15 days after the related distribution date.
See "Description of the Securities -- Reports to Securityholders." The
underwriting standards for the Subsequent Loans will not materially differ from
the underwriting standards for the mortgage loans initially included in the
trust fund.

     In addition, if so provided in the related prospectus supplement, on the
related Closing Date the depositor will deposit in an account (the "Capitalized
Interest Account") cash in such amount as is necessary to cover shortfalls in
interest on the related series of securities that may arise as a result of the
Pre-Funding feature as described above. The Capitalized Interest Account shall
be maintained with the trustee for the related series of securities and is
designed solely to cover the above-mentioned interest shortfalls. Monies on
deposit in the Capitalized Interest Account will not be available to cover
losses on or in respect of the related loans. To the extent that the entire
amount on deposit in the Capitalized Interest Account has not been applied to
cover shortfalls in interest on the related series of securities by the end of
the Funding Period, any amounts remaining in the Capitalized Interest Account
will be paid to the depositor.


                                       56


SUBSERVICING BY SELLERS

     Each seller of a loan or any other servicing entity may act as the
subservicer for the loan pursuant to a subservicing agreement, which will not
contain any terms inconsistent with the related Agreement. While each
subservicing agreement will be a contract solely between the servicer and the
subservicer, the Agreement pursuant to which a series of securities is issued
will provide that, if for any reason the master servicer for the series of
securities is no longer the servicer of the related loans, the trustee or any
successor servicer must recognize the subservicer's rights and obligations
under the subservicing agreement. Notwithstanding any subservicing arrangement,
unless otherwise provided in the related prospectus supplement, the servicer
will remain liable for its servicing duties and obligations under the Sale and
Servicing Agreement as if the servicer alone were servicing the loans.

COLLECTION PROCEDURES

     The servicer, directly or through one or more subservicers, will make
reasonable efforts to collect all payments called for under the loans and will,
consistent with each Agreement and any Pool Insurance Policy, Primary Mortgage
Insurance Policy, bankruptcy bond or alternative arrangements, follow those
collection procedures as are customary with respect to loans that are
comparable to the loans. Consistent with the above, the servicer may, in its
discretion, waive any assumption fee, late payment or other charge in
connection with a loan and to the extent not inconsistent with the coverage of
the loan by a Pool Insurance Policy, Primary Mortgage Insurance Policy,
bankruptcy bond or alternative arrangements, if applicable, arrange with a
borrower a schedule for the liquidation of delinquencies running for no more
than 125 days after the applicable due date for each payment.

     Unless otherwise provided in the Agreement, in any case in which Property
securing a loan has been, or is about to be, conveyed by the mortgagor or
obligor, 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 loan under any due-on-sale clause applicable thereto, but
only if the exercise of those rights is permitted by applicable law and will
not impair or threaten to impair any recovery under any 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,
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 the person becomes liable for repayment
of the loan and, to the extent permitted by applicable law, the mortgagor
remains liable thereon. Any fee collected by or on behalf of the servicer for
entering into an assumption agreement will be retained by or on behalf of the
servicer as additional servicing compensation. See "Legal Aspects of the Loans
- Due-on-Sale Clauses." In connection with the assumption of any loan, the
terms of the related loan may not be changed.

     With respect to cooperative loans, any prospective purchaser will
generally have to obtain the approval of the board of directors of the relevant
cooperative before purchasing the shares and acquiring rights under the related
proprietary lease or occupancy agreement. See "Legal Aspects of the Loans."
This approval is usually based on the purchaser's income and net worth and
numerous other factors. Although the cooperative's approval is unlikely to be
unreasonably withheld or delayed, the necessity of acquiring the approval could
limit the number of potential purchasers for those shares and otherwise limit
the trust fund's ability to sell and realize the value of those shares.

HAZARD INSURANCE

     In general, the servicer will require the mortgagor or obligor on each
loan to maintain a hazard insurance policy providing for no less than the
coverage of the standard form of fire insurance policy with extended coverage
customary for the type of Property in the state in which the Property is
located. This coverage will be in an amount that is at least equal to:

     o    the lesser of the maximum insurable value of the improvements securing
          the loan; or

     o    the greater of the outstanding principal balance of the loan and an
          amount such that the proceeds of the policy shall be sufficient to
          prevent the mortgagor and/or the mortgagee from becoming a co-insurer.


                                       57


     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 or obligor in accordance with the servicer's normal servicing
procedures) will be deposited in the related Security Account. In the event
that the servicer maintains a blanket policy insuring against hazard losses on
all the loans comprising part of a trust fund, it will conclusively be deemed
to have satisfied its obligation relating to the maintenance of hazard
insurance. This 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 which would have been deposited in the Security
Account but for that clause.

     In general, the standard form of fire and extended coverage policy covers
physical damage to or destruction of the improvements securing a loan by fire,
lightning, explosion, smoke, windstorm and hail, riot, strike and civil
commotion, subject to the conditions and exclusions particularized in each
policy. Although the policies relating to the loans may have been underwritten
by different insurers under different state laws in accordance with different
applicable forms and therefore may not contain identical terms and conditions,
the basic terms thereof are dictated by respective state laws, and most of
those policies typically do not cover any physical damage resulting from the
following: war, revolution, governmental actions, floods and other
water-related causes, earth movement (including earthquakes, landslides and mud
flows), nuclear reactions, wet or dry rot, vermin, rodents, insects or domestic
animals, theft and, in certain cases, vandalism and hurricanes. The foregoing
list is merely indicative of certain kinds of uninsured risks and is not
intended to be all inclusive. If the Property securing a loan is located in a
federally designated special flood area at the time of origination, the
servicer will require the mortgagor or obligor to obtain and maintain flood
insurance.

     The hazard insurance policies covering properties securing the loans
typically contain a clause which in effect requires the insured at all time to
carry insurance of a specified percentage of a specified percentage (generally
80% to 90%) of the full replacement value of the insured Property in order to
recover the full amount of any partial loss. If the insured's coverage falls
below this specified percentage, then the insurer's liability in the event of
partial loss will not exceed the larger of:

     o    the actual cash value (generally defined as replacement cost at the
          time and place of loss, less physical depreciation) of the
          improvements damaged or destroyed; or

     o    such proportion of the loss as the amount of insurance carried bears
          to the specified percentage of the full replacement cost of the
          improvements.

     Because the amount of hazard insurance the servicer may cause to be
maintained on the improvements securing the loans declines as the principal
balances owing thereon decrease, and since improved real estate generally has
appreciated in value over time in the past, the effect of this requirement in
the event of partial loss may be that hazard insurance proceeds will be
insufficient to restore fully the damaged Property. If specified in the related
prospectus supplement, a special hazard insurance policy will be obtained to
insure against certain of the uninsured risks described above. See "Credit
Enhancement."

     The 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 hazard 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 related cooperative loan to the extent not covered
by other credit support.

     If the Property securing a defaulted loan is damaged and proceeds, if any,
from the related hazard insurance policy are insufficient to restore the
damaged Property, the servicer is not required to expend its own funds to
restore the damaged Property unless it determines (i) that restoration will
increase the proceeds to securityholders on liquidation of the loan after
reimbursement of the servicer for its expenses and (ii) that the related
expenses will be recoverable by it from related Insurance Proceeds or
Liquidation Proceeds.


                                       58


     If recovery on a defaulted loan under any related Insurance Policy is not
available or if the defaulted loan is not covered by an Insurance Policy, the
servicer will be obligated to follow or cause to be followed those normal
practices and procedures as it deems necessary or advisable to realize upon the
defaulted loan. If the proceeds of any liquidation of the Property securing the
defaulted loan are less than the principal balance of the related loan plus
interest accrued thereon that is payable to securityholders, the trust fund
will realize a loss in the amount of the difference plus the aggregate of
expenses incurred by the servicer in connection with the liquidation
proceedings and which are reimbursable under the Agreement. In the unlikely
event that any liquidation proceedings result in a total recovery which is,
after reimbursement to the servicer of its expenses, in excess of the principal
balance of the 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 loan and amounts representing the balance of the excess,
exclusive of any amount required by law to be forwarded to the related
borrower, as additional servicing compensation.

     If the servicer or its designee recovers Insurance Proceeds which, when
added to any related Liquidation Proceeds and after deduction of certain
expenses reimbursable to the servicer, exceed the principal balance of the 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 loan. In the
event that the servicer has expended its own funds to restore the damaged
Property and those 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 those
expenses incurred by it, in which event the trust fund 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 such payment or recovery will
result in a recovery to the trust fund which exceeds the principal balance of
the defaulted loan together with accrued interest thereon. See "Credit
Enhancement."

     The proceeds from any liquidation of a loan will generally 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
loan; second, to reimburse the servicer for any unreimbursed advances with
respect to the loan; third, to accrued and unpaid interest (to the extent no
advance has been made for that amount) on the loan; and fourth, as a recovery
of principal of the loan.


REALIZATION UPON DEFAULTED LOANS

     Primary Mortgage Insurance Policies. If so specified in the related
prospectus supplement, the servicer will maintain or cause to be maintained, as
the case may be, in full force and effect, a Primary Mortgage Insurance Policy
with regard to each loan for which this type of coverage is required. Primary
Mortgage Insurance Policies reimburse certain losses sustained by reason of
defaults in payments by borrowers. 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.


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, unless
otherwise described in the applicable prospectus supplement, be equal to the
percentage per annum described in the related prospectus supplement (which may
vary under certain circumstances) of the outstanding principal balance of each
loan, and this compensation will be retained by it from collections of interest
on the loan in the related trust fund (the "Servicing Fee"). As compensation
for its servicing duties, a subservicer will be entitled to a


                                       59


monthly subservicing fee as described in the related prospectus supplement. In
addition, generally, the servicer or subservicer will retain all prepayment
charges, assumption fees and late payment charges, to the extent collected from
borrowers, and any benefit that may accrue as a result of the investment of
funds in the applicable Security Account.

     The servicer will pay or cause to be paid certain ongoing expenses
associated with each trust fund and incurred by it in connection with its
responsibilities under the related Agreement, including, without limitation,
payment of any fee or other amount payable in respect of any credit enhancement
arrangements, payment of the fees and disbursements of the trustee, any
custodian appointed by the trustee, the certificate registrar and any paying
agent, and payment of expenses incurred in enforcing the obligations of
subservicers and sellers. The servicer will be entitled to reimbursement of
expenses incurred in enforcing the obligations of subservicers and sellers
under certain limited circumstances. In addition, 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, and in
connection with the restoration of mortgaged properties, the right of
reimbursement being before the rights of certificateholders to receive any
related liquidation proceeds, including insurance proceeds.


EVIDENCE AS TO COMPLIANCE

     Each Agreement will provide, generally, that on or before a specified date
in each year, a firm of independent public accountants will furnish a statement
to the trustee to the effect that, on the basis of the examination by that firm
conducted substantially in compliance with the Uniform Single Attestation
Program for Mortgage Bankers or the Audit Program for Mortgages serviced for
FHLMC, the servicing by or on behalf of the servicer of mortgage loans or
private asset backed securities, or under pooling and servicing agreements or
similar agreements substantially similar to each other (including the related
Agreement) was conducted in compliance with those agreements except for any
significant exceptions or errors in records that, in the opinion of the firm,
the Audit Program for Mortgages serviced for FHLMC, or the Uniform Single
Attestation Program for Mortgage Bankers, it is required to report. In
rendering its statement the firm may rely, as to matters relating to the direct
servicing of loans by subservicers, upon comparable statements for examinations
conducted substantially in compliance with the Uniform Single Attestation
Program for Mortgage Bankers or the Audit Program for Mortgages serviced for
FHLMC (rendered within one year of the statement) of firms of independent
public accountants with respect to the related subservicer.

     Each Agreement will also 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 Agreement throughout the preceding year.

     Copies of the annual accountants' statement and the statement of officers
of the servicer 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.


CERTAIN MATTERS REGARDING THE SERVICERS AND THE DEPOSITOR

     The servicer(s) will be identified in the related Prospectus Supplement.
The entity(ies) acting as servicer under a Pooling and Servicing Agreement,
Transfer and Servicing Agreement or Sale and Servicing Agreement, as
applicable, may be an affiliate(s) of the depositor and may have normal
business relationships with the depositor or the depositor's affiliates. If
there is no master servicer named in the related Prospectus Supplement, certain
references in this prospectus to the master servicer may relate to obligations
that will be required to be performed by the servicer.

     The Agreements will generally provide that the servicer may not resign
from its obligations and duties under the Agreement except upon a determination
that its duties thereunder are no longer permissible under applicable law. The
servicer may, however, be removed from its obligations and duties as set forth
in the Agreement. No resignation by the servicer will become effective until
the trustee or a successor servicer has assumed the servicer's obligations and
duties under the Agreement.


                                       60


     Each Agreement will, in general, 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 trust fund
or securityholders for any action taken or for refraining from the taking of
any action in good faith pursuant to the Agreement, or for errors in judgment;
provided, however, that neither the servicer, the depositor nor any director,
officer, employee or agent of the servicer or the depositor will be protected
against any liability which would otherwise be imposed by reason of willful
misfeasance, bad faith or gross negligence in the performance of duties
thereunder or by reason of reckless disregard of obligations and duties
thereunder. Each Agreement will, in general, 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 trust fund and
will be held harmless against any loss, liability or expense incurred in
connection with any legal action relating to the Agreement or the securities,
other than any loss, liability or expense related to any specific loan or loans
(except for any loss, liability or expense otherwise reimbursable pursuant to
the Agreement) and any loss, liability or expense incurred by reason of willful
misfeasance, bad faith or gross negligence in the performance of duties
thereunder or by reason of reckless disregard of obligations and duties
thereunder. In addition, each Agreement will provide that neither the servicer
nor the depositor will be under any obligation to appear in, prosecute or
defend any legal action which is not incidental to its respective
responsibilities under the Agreement and which in its opinion may involve it in
any expense or liability. The servicer or the depositor may, however, in its
discretion undertake any action which it may deem necessary or desirable with
respect to the Agreement and the rights and duties of the parties thereto and
the interests of the securityholders thereunder. In this event, the legal
expenses and costs of the action and any liability resulting therefrom will be
expenses, costs and liabilities of the trust fund and the servicer or the
depositor, as the case may be, will be entitled to be reimbursed therefor out
of funds otherwise distributable to securityholders.

     In general, any person into which the 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:

     o    that person is qualified to sell mortgage loans to, and service
          mortgage loans on behalf of, Fannie Mae or Freddie Mac; and

     o    the related merger, consolidation or succession does not adversely
          affect the then current rating or ratings of the class or classes of
          securities of the related series that have been rated.

EVENTS OF DEFAULT; RIGHTS UPON EVENT OF DEFAULT

     Pooling and Servicing Agreement; Transfer and Servicing Agreement; Sale
and Servicing Agreement. The applicable Agreement may provide for other events
of default under any Pooling and Servicing Agreement, Transfer and Servicing
Agreement or Sale and Servicing Agreement, but if it does not, the "Events of
Default" will generally consist of:

     o    any failure by the Servicer to deposit in the Security Account or
          remit to the Trustee any payment required to be made under the terms
          of the Agreement, which failure shall continue unremedied for one day
          after the date upon which written notice of such failure shall have
          been given to the Servicer by the Trustee or the Depositor or to the
          Master Servicer and the Trustee by the Holders of Certificates having
          not less than 51% of the Voting Rights evidenced by the Certificates;
          or

     o    any failure by the Servicer to observe or perform in any material
          respect any other of the covenants or agreements on the part of the
          Servicer contained in the Agreement, which failure materially affects
          the rights of Certificateholders, which failure continues unremedied
          for a period of 60 days after the date on which written notice of such
          failure shall have been given to the Servicer by the Trustee, the
          Master Servicer, or the Depositor, or to the Servicer and the Trustee
          by the Holders of Certificates evidencing not less than 51% of the
          Voting Rights evidenced by the Certificates; provided, however, that
          the 60-day cure period shall not apply to the initial delivery of the
          Mortgage File for Delay Delivery Mortgage Loans nor the failure to
          substitute or repurchase in lieu thereof; or


                                       61


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

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

     o    the Servicer shall admit in writing its inability to pay its debts
          generally as they become due, file a petition to take advantage of, or
          commence a voluntary case under, any applicable insolvency or
          reorganization statute, make an assignment for the benefit of its
          creditors, or voluntarily suspend payment of its obligations.

     The applicable Agreement will provide for steps required to be taken if an
Event of Default remains unremedied. Generally, so long as an Event of Default
under an Agreement remains unremedied, the depositor, the trustee or all of the
holders of the class of certificates designated in the prospectus supplement
may, and at the direction of holders of securities of any class evidencing not
less than 25% of the aggregate percentage interests constituting the class and
under such other circumstances as may be specified in the Agreement, the
trustee shall terminate all of the rights and obligations of the servicer under
the Agreement relating to the trust fund and in and to the related Trust Fund
Assets, whereupon the trustee will succeed to all of the responsibilities,
duties and liabilities of the 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. In the
event that the trustee is unwilling or unable so to act, it may appoint, or
petition a court of competent jurisdiction for the appointment of, a mortgage
loan servicing institution with a net worth of at least $10,000,000 to act as
successor to the servicer under the Agreement. Pending that appointment, the
trustee is obligated to act in that capacity. 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 the holder's status as a securityholder,
will have any right under any Agreement to institute any proceeding with
respect to the Agreement, unless the holder previously has given to the trustee
written notice of default and unless the holders of securities of any class of
the series evidencing not less than 25% of the aggregate percentage interests
constituting the class have made written request upon the trustee to institute
the proceeding in its own name as trustee thereunder and have offered to the
trustee reasonable indemnity, and the trustee for 60 days has neglected or
refused to institute the proceeding.

     Indenture. The applicable Agreement may provide for other Events of
Default, but if it does not, the Events of Default under each Indenture will
generally consist of:

     o    a default in the payment of any principal of or interest on any note
          of the series which continues unremedied for five days after the
          giving of written notice of the default is given as specified in the
          related prospectus supplement;

     o    failure to perform in any material respect any other covenant of the
          depositor or the trust fund in the Indenture which continues for a
          period of thirty (30) days after notice thereof is given in accordance
          with the procedures described in the related prospectus supplement;

     o    certain events of bankruptcy, insolvency, receivership or liquidation
          of the depositor or the trust fund; or

     o    any other Event of Default provided with respect to notes of that
          series including but not limited to certain defaults on the part of
          the issuer, if any, of a credit enhancement instrument supporting the
          notes.


                                       62


     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 the series
may declare the principal amount (or, if the notes of the series affected
thereby, or such other class of notes specified in the applicable prospectus
supplement, have an interest rate of 0%, that portion of the principal amount
as may be specified in the terms of the series, as provided in the related
prospectus supplement) of all the notes of the series to be due and payable
immediately. This declaration may, under certain circumstances, be rescinded
and annulled by the holders of more than 50% of the percentage interests of the
notes of the series.

     If, following an Event of Default with respect to any series of notes, the
notes of the series have been declared to be due and payable, the trustee may,
in its discretion, notwithstanding the acceleration, elect to maintain
possession of the collateral securing the notes of the series and to continue
to apply distributions on the collateral as if there had been no declaration of
acceleration if the collateral continues to provide sufficient funds for the
payment of principal of and interest on the notes of the series as they would
have become due if there had not been a declaration of acceleration. In
addition, unless otherwise provided in the Agreement, the trustee may not sell
or otherwise liquidate the collateral securing the notes of a series following
an Event of Default, unless:

     o    the holders of 100% of the percentage interests of the notes of the
          series consent to the sale;

     o    the proceeds of the sale or liquidation are sufficient to pay in full
          the principal of and accrued interest, due and unpaid, on the
          outstanding notes of the series at the date of the sale; or

     o    the trustee determines that the collateral would not be sufficient on
          an ongoing basis to make all payments on the notes as the payments
          would have become due if the notes had not been declared due and
          payable, and the trustee obtains the consent of the holders of more
          than 50% of the percentage interests of the notes of the series.

     In the event the principal of the notes of a series is declared due and
payable, as described above, the holders of any notes issued at a discount from
par may be entitled to receive no more than an amount equal to the unpaid
principal amount thereof less the amount of the discount which is unamortized.

     Subject to the provisions of the Indenture relating to the duties of the
trustee, in case an Event of Default shall occur and be continuing with respect
to a series of notes, the trustee shall be under no obligation to exercise any
of the rights or powers under the Indenture at the request or direction of any
of the holders of notes of the series, unless the holders offered to the
trustee security or indemnity satisfactory to it against the costs, expenses
and liabilities which might be incurred by it in complying with the request or
direction. Subject to the provisions for indemnification and certain
limitations contained in the Indenture, the holders of a majority of the then
aggregate outstanding amount of the notes of the series shall have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the trustee or exercising any trust or power conferred on the
trustee with respect to the notes of the series, and the holders of a majority
of the then aggregate outstanding amount of the notes of the series may, in
certain cases, waive any default with respect thereto, except a default in the
payment of principal or interest or a default in respect of a covenant or
provision of the Indenture that cannot be modified without the waiver or
consent of all the holders of the outstanding notes of the series affected
thereby.

AMENDMENT

     The applicable Agreement may specify other amendment provisions, but if it
does not, each Agreement may be amended by the depositor and the trustee,
without the consent of any of the securityholders, generally:

     (a)  to cure any ambiguity;

     (b)  to correct any defective provision in the Agreement or to supplement
          any provision in the Agreement that may be inconsistent with any other
          provision in it;

     (c)  to make any other revisions with respect to matters or questions
          arising under the Agreement which are not inconsistent with the
          provisions in it;


                                       63


     (d)  to add to the duties of any party thereto; or

     (e)  to modify, alter, amend, add to or rescind any of the terms or
          provisions contained in the Agreement,

provided that the action taken pursuant to clause (e) will not adversely affect
in any material respect the interests of any securityholder. An amendment will
be deemed not to adversely affect in any material respect the interests of the
securityholders if the person requesting the amendment obtains (a) an opinion
of counsel to such effect, or (b) 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, to the extent provided in the related Agreement, an Agreement
may be amended without the consent of any of the securityholders, to change the
manner in which the Security Account is maintained, provided that any change
does not adversely affect the then current rating on the class or classes of
securities of the series that have been rated. Moreover, 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 trust fund as a
REMIC or to avoid or minimize the risk of imposition of any tax on the REMIC,
if a REMIC election is made with respect to the trust fund, or to comply with
any other requirements of the Code, if the trustee has received an opinion of
counsel to the effect that the action is necessary or helpful to maintain the
qualification, avoid or minimize that risk or comply with those requirements,
as applicable.

     The applicable Agreement may specify other amendment provisions, but if it
does not, each Agreement may also be amended by the depositor and the trustee
with consent of holders of securities of the series evidencing not less than
66% of the aggregate percentage interests of each class affected thereby or of
all classes, if all classes are so affected for the purpose of adding any
provisions to or changing in an manner or eliminating any of the provisions of
the Agreement or of modifying in any manner the rights of the holders of the
related securities; provided, however, that no amendment may:

     o    reduce in any manner the amount of or delay the timing of, payments
          received on loans which are required to be distributed on any security
          without the consent of the holder of the security, or

     o    reduce the aforesaid percentage of securities of any class the holders
          of which are required to consent to any such amendment,

in each case 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 a trust fund, the trustee will
not be entitled to consent to an amendment to the related Agreement without
having first received an opinion of counsel to the effect that the amendment
will not cause the trust fund to fail to qualify as a REMIC.

TERMINATION; OPTIONAL TERMINATION

     Pooling and Servicing Agreement; Transfer and Servicing Agreement; Trust
Agreement. The applicable prospectus supplement may provide for the timing by
which the Agreement terminates, but if it does not, the obligations created by
each Pooling and Servicing Agreement, Transfer and Servicing Agreement or Trust
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
trustee and required to be paid to them pursuant to the Agreement following the
later of:

     (i)  the final payment of or other liquidation of the last of the Trust
          Fund Assets subject thereto or the disposition of all Property
          acquired upon foreclosure of any Trust Fund Assets remaining in the
          trust fund; and

     (ii) the purchase by the 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 "Federal Income Tax
          Consequences" below), or other person specified in the related
          prospectus supplement from the related trust fund of all of the
          remaining Trust Fund Assets and all Property acquired in respect of
          the Trust Fund Assets.


                                       64


     Any purchase of Trust Fund Assets and Property acquired in respect of
Trust Fund Assets for 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 specified in
the related prospectus supplement. The exercise of this right will effect early
retirement of the securities of that series, but the right of the servicer, or
the other party or, if applicable, the holder of the REMIC residual interest,
to so purchase is subject to the principal balance of the related Trust Fund
Assets being less than the percentage specified in the related prospectus
supplement of the aggregate principal balance of the Trust Fund Assets at the
cut-off date for the series. The foregoing is subject to the provision that if
a REMIC election is made with respect to a trust fund, any repurchase pursuant
to clause (ii) above will be made only in connection with a "qualified
liquidation" of the REMIC within the meaning of Section 860F(g)(4) of the Code.


     Indenture. The Indenture will be discharged with respect to a series of
notes (except with respect to certain continuing rights specified in the
Indenture) upon the delivery to the trustee for cancellation of all the notes
of the series or, with certain limitations, upon deposit with the trustee of
funds sufficient for the payment in full of all of the notes of the series.

     In addition to the discharge with certain limitations, the Indenture will
provide that, if so specified with respect to the notes of any series, the
related trust fund will be discharged from any and all obligations in respect
of the notes of the series (except for certain obligations relating to
temporary notes and exchange of notes, to register the transfer of or exchange
notes of the series, to replace stolen, lost or mutilated notes of the series,
to maintain paying agencies and to hold monies for payment in trust) upon the
deposit with the trustee, in trust, of money and/or direct obligations of or
obligations guaranteed by the United States of America which through the
payment of interest and principal in respect thereof in accordance with their
terms will provide money in an amount sufficient to pay the principal of and
each installment of interest on the notes of the series on the last scheduled
distribution date for the notes and any installment of interest on the notes in
accordance with the terms of the Indenture and the notes of the series. In the
event of any defeasance and discharge of notes of a series, holders of notes of
the series would be able to look only to this money and/or direct obligations
for payment of principal and interest, if any, on their notes until maturity.

THE TRUSTEE

     The trustee under each Agreement will be named in the related Prospectus
Supplement. The commercial bank or trust company serving as trustee may have
normal banking relationships with the depositor, the master servicer, the
servicer(s) and any of their respective affiliates. If there is no master
servicer named in the related Prospectus Supplement, certain references in this
prospectus to the master servicer may relate to obligations that will be
required to be performed by the trustee.

THE MASTER SERVICER

     The master servicer under each Agreement will be named in the related
Prospectus Supplement. The entity acting as master servicer under each
Agreement may be an affiliate of the depositor, the trustee, the servicer and
any of their respective affiliates. If the related Prospectus Supplement does
not name a master servicer, references in this prospectus to master servicer
may relate to obligations that will be required to be performed by the servicer
or the trustee.


                          LEGAL ASPECTS OF THE LOANS

     The following discussion contains summaries, which are general in nature,
of certain legal matters relating to the loans. Because the legal aspects are
governed primarily by applicable state law (which laws may differ
substantially), the descriptions do not, except as expressly provided below,
reflect the laws of any particular state, nor encompass the laws of all states
in which the security for the loans is situated. The descriptions are qualified
in their entirety by reference to the applicable federal laws and the
appropriate laws of the states in which loans may be originated.

GENERAL

     Mortgages. The loans for a series may be secured by deeds of trust,
mortgages, security deeds or deeds to secure debt, depending upon the
prevailing practice in the state in which the Property subject


                                       65


to the loan is located. Deeds of trust are used almost exclusively in
California and other jurisdictions instead of mortgages. A mortgage creates a
lien upon the Property encumbered by the mortgage, which lien is generally not
prior to the lien for real estate taxes and assessments. Priority between
mortgages depends on their terms and generally on the order of recording with a
state or county office. There are two parties to a mortgage, the mortgagor, who
is the borrower and owner of the 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 loans may be cooperative loans. The
cooperative owns all the Property that comprises the project, including the
land, separate dwelling units and all common areas. The cooperative is directly
responsible for project management and, in most cases, payment of real estate
taxes and hazard and liability insurance. If there is a blanket mortgage on the
cooperative and/or underlying land, as is generally the case, the cooperative,
as project mortgagor, is also responsible for meeting these mortgage
obligations. A blanket mortgage is ordinarily incurred by the cooperative in
connection with the construction or purchase of the cooperative's apartment
building. The interest of the occupant under proprietary leases or occupancy
agreements to which that cooperative is a party are generally subordinate to
the interest of the holder of the blanket mortgage in that building. If the
cooperative is unable to meet the payment obligations arising under its blanket
mortgage, the mortgagee holding the blanket mortgage could foreclose on that
mortgage and terminate all subordinate proprietary leases and occupancy
agreements. In addition, the blanket mortgage on a cooperative may provide
financing in the form of a mortgage that does not fully amortize with a
significant portion of principal being due in one lump sum at final maturity.
The inability of the cooperative to refinance this mortgage and its consequent
inability to make the final payment could lead to foreclosure by the mortgagee
providing the financing. A foreclosure in either event by the holder of the
blanket mortgage could eliminate or significantly diminish the value of any
collateral held by the lender who financed the purchase by an individual
tenant-stockholder of cooperative shares or, in the case of a trust fund
including cooperative loans, the collateral securing the cooperative loans.


     The cooperative is owned by tenant-stockholders who, through ownership of
stock, shares or membership certificates in the corporation, receive
proprietary leases or occupancy agreements which confer exclusive rights to
occupy specific units. Generally, a tenant-stockholder of a cooperative must
make a monthly payment to the cooperative representing the tenant-stockholder's
pro rata share of the cooperative's payments for its blanket mortgage, real
property taxes, maintenance expenses and other capital or ordinary expenses. An
ownership interest in a cooperative and accompanying rights is financed through
a cooperative share loan evidenced by a promissory note and secured by a
security interest in the occupancy agreement or proprietary lease and in the
related cooperative shares. The lender takes possession of the share
certificate and a counterpart of the proprietary lease or occupancy agreement,
and a financing statement covering the proprietary lease or occupancy agreement
and the cooperative shares is filed in the appropriate state and local offices
to perfect the lender's interest in its collateral. Subject to the limitations
discussed below, upon default of the tenant-stockholder, the lender may sue for
judgment on the promissory note, dispose of the collateral at a public or
private


                                       66


sale or otherwise proceed against the collateral or tenant-stockholder as an
individual as provided in the security agreement covering the assignment of the
proprietary lease or occupancy agreement and the pledge of cooperative shares.

FORECLOSURE

     Deed of Trust. Foreclosure of a deed of trust is generally accomplished by
a non-judicial sale under a specific provision in the deed of trust which
authorizes the trustee to sell the Property at public auction upon any default
by the borrower under the terms of the note or deed of trust. In certain
states, the foreclosure also may be accomplished by judicial action in the
manner provided for foreclosure of mortgages. In addition to any notice
requirements contained in a deed of trust, in some states (including
California), the trustee must record a notice of default and send a copy to the
borrower-trustor, to any person who has recorded a request for a copy of any
notice of default and notice of sale, to any successor in interest to the
borrower-trustor, to the beneficiary of any junior deed of trust and to certain
other persons. In some states (including California), the borrower-trustor has
the right to reinstate the loan at any time following default until shortly
before the trustee's sale. In general, the borrower, or any other person having
a junior encumbrance on the real estate, may, during a statutorily prescribed
reinstatement period, cure a monetary default by paying the entire amount in
arrears plus other designated costs and expenses incurred in enforcing the
obligation. Generally, state law controls the amount of foreclosure expenses
and costs, including attorney's fees, which may be recovered by a lender. After
the reinstatement period has expired without the default having been cured, the
borrower or junior lienholder no longer has the right to reinstate the loan and
must pay the loan in full to prevent the scheduled foreclosure sale. If the
deed of trust is not reinstated within any applicable cure period, a notice of
sale must be posted in a public place and, in most states (including
California), published for a specific period of time in one or more newspapers.
In addition, some state laws require that a copy of the notice of sale be
posted on the Property and sent to all parties having an interest of record in
the Property. In California, the entire process from recording a notice of
default to a non-judicial sale usually takes four to five months.

     Mortgages. Foreclosure of a mortgage is generally accomplished by judicial
action. The action is initiated by the service of legal pleadings upon all
parties having an interest in the Property. Delays in completion of the
foreclosure may occasionally result from difficulties in locating necessary
parties. Judicial foreclosure proceedings are often not contested by any of the
parties. When the mortgagee's right to foreclosure is contested, the legal
proceedings necessary to resolve the issue can be time consuming. After the
completion of a judicial foreclosure proceeding, the court generally issues a
judgment of foreclosure and appoints a referee or other court officer to
conduct the sale of the Property. In some states, mortgages may also be
foreclosed by advertisement, pursuant to a power of sale provided in the
mortgage.

     Although foreclosure sales are typically public sales, frequently no third
party purchaser bids in excess of the lender's lien because of the difficulty
of determining the exact status of title to the Property, the possible
deterioration of the Property during the foreclosure proceedings and a
requirement that the purchaser pay for the Property in cash or by cashier's
check. Thus the foreclosing lender often purchases the Property from the
trustee or referee for an amount equal to the principal amount outstanding
under the loan, accrued and unpaid interest and the expenses of foreclosure in
which event the mortgagor's debt will be extinguished or the lender may
purchase for a lesser amount in order to preserve its right against a borrower
to seek a deficiency judgment in states where the judgment is available.
Thereafter, subject to the right of the borrower in some states to remain in
possession during the redemption period, the lender will assume the burden of
ownership, including obtaining hazard insurance and making the repairs at its
own expense as are necessary to render the Property suitable for sale. The
lender will commonly obtain the services of a real estate broker and pay the
broker's commission in connection with the sale of the Property. Depending upon
market conditions, the ultimate proceeds of the sale of the Property may not
equal the lender's investment in the Property. Any loss may be reduced by the
receipt of any mortgage guaranty insurance proceeds.

     Courts have imposed general equitable principles upon foreclosure, which
are generally designed to mitigate the legal consequences to the borrower of
the borrower's defaults under the loan


                                       67


documents. Some courts have been faced with the issue of whether federal or
state constitutional provisions reflecting due process concerns for fair notice
require that borrowers under deeds of trust receive notice longer than that
prescribed by statute. For the most part, these cases have upheld the notice
provisions as being reasonable or have found that the sale by a trustee under a
deed of trust does not involve sufficient state action to afford constitutional
protection to the borrower.

     When the beneficiary under a junior mortgage or deed of trust cures the
default and reinstates or redeems by paying the full amount of the senior
mortgage or deed of trust, the amount paid by the beneficiary so to cure or
redeem becomes a part of the indebtedness secured by the junior mortgage or
deed of trust. See "Junior Mortgages; Rights of Senior Mortgagees" below.

     Cooperative Loans. The cooperative shares owned by the tenant-stockholder
and pledged to the lender are, in almost all cases, subject to restrictions on
transfer as set forth in the cooperative's certificate of incorporation and
bylaws, as well as the proprietary lease or occupancy agreement, and may be
cancelled by the cooperative for failure by the tenant-stockholder to pay rent
or other obligations or charges owed by the tenant-stockholder, including
mechanics' liens against the cooperative apartment building incurred by the
tenant-stockholder. The proprietary lease or occupancy agreement generally
permits the cooperative to terminate the lease or agreement in the event an
obligor fails to make payments or defaults in the performance of covenants
required thereunder. Typically, the lender and the cooperative enter into a
recognition agreement which establishes the rights and obligations of both
parties in the event of a default by the tenant-stockholder on its obligations
under the proprietary lease or occupancy agreement. A default by the
tenant-stockholder under the proprietary lease or occupancy agreement will
usually constitute a default under the security agreement between the lender
and the tenant-stockholder.

     The recognition agreement generally provides that, in the event that the
tenant-stockholder has defaulted under the proprietary lease or occupancy
agreement, the cooperative will take no action to terminate the lease or
agreement until the lender has been provided with an opportunity to cure the
default. The recognition agreement typically provides that if the proprietary
lease or occupancy agreement is terminated, the cooperative will recognize the
lender's lien against proceeds form the sale of the cooperative apartment,
subject, however, to the cooperative's right to sums due under the proprietary
lease or occupancy agreement. The total amount owed to the cooperative by the
tenant-stockholder, which the lender generally cannot restrict and does not
monitor, could reduce the value of the collateral below the outstanding
principal balance of the cooperative loan and accrued and unpaid interest
thereon.

     Recognition agreements also provide that in the event of a foreclosure on
a cooperative loan, the lender must obtain the approval or consent of the
cooperative as required by the proprietary lease before transferring the
cooperative shares or assigning the proprietary lease. Generally, the lender is
not limited in any rights it may have to dispossess the tenant-stockholders.

     In some states, foreclosure on the cooperative shares is accomplished by a
sale in accordance with the provisions of Article 9 of the Uniform Commercial
Code (the "UCC") and the security agreement relating to those shares. Article 9
of the UCC requires that a sale be conducted in a "commercially reasonable"
manner. Whether a foreclosure sale has been conducted in a "commercially
reasonable" manner will depend on the facts in each case. In determining
commercial reasonableness, a court will look to the notice given the debtor and
the method, manner, time, place and terms of the foreclosure. Generally, a sale
conducted according to the usual practice of banks selling similar collateral
will be considered reasonably conducted.

     Article 9 of the UCC provides that the proceeds of the sale will be
applied first to pay the costs and expenses of the sale and then to satisfy the
indebtedness secured by the lender's security interest. The recognition
agreement, however, generally provides that the lender's right to reimbursement
is subject to the right of the cooperative to receive sums due under the
proprietary lease or occupancy agreement. If there are proceeds remaining, the
lender must account to the tenant-stockholder for the surplus. Conversely, if a
portion of the indebtedness remains unpaid, the tenant-stockholder is generally
responsible for the deficiency. See "Anti-Deficiency Legislation and Other
Limitations on Lenders" below.


                                       68


     In the case of foreclosure on a building which was converted from a rental
building to a building owned by a cooperative under a non-eviction plan, some
states require that a purchaser at a foreclosure sale take the Property subject
to rent control and rent stabilization laws which apply to certain tenants who
elected to remain in the building but who did not purchase shares in the
cooperative when the building was so converted.

ENVIRONMENTAL RISKS

     Property pledged as security to a lender may be subject to unforeseen
environmental risks. Under the laws of certain states, contamination of a
Property may give rise to a lien on the Property to assure the payment of the
costs of clean-up. In several states this type of lien has priority over the
lien of an existing mortgage against the Property. In addition, under the
federal Comprehensive Environmental Response, Compensation and Liability Act of
1980 ("CERCLA"), the EPA may impose a lien on Property where EPA has incurred
clean-up costs. However, a CERCLA lien is subordinate to pre-existing,
perfected security interests.

     Under the laws of some states, and under CERCLA, it is conceivable that a
secured lender may be held liable as an "owner" or "operator" for the costs of
addressing releases or threatened releases of hazardous substances at a
Property, even though the environmental damage or threat was caused by a prior
or current owner or operator. CERCLA imposes liability for those costs on any
and all "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 exclusion") but without "participating in the management" of
the Property. Thus, if a lender's activities begin to 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 holds the facility or Property as an investment (including leasing
the facility or Property to third party), or fails to market the Property in a
timely fashion.

     Whether actions taken by a lender would constitute participation in the
management of a Property, or the business of a borrower, so as to render the
secured creditor exemption unavailable to a lender has been a matter of
judicial interpretation of the statutory language, and court decisions have
been inconsistent. 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 the borrower's business to deny the
protection of the secured creditor exemption to the lender.

     This ambiguity appears to have been resolved by the enactment of the Asset
Conservation, Lender Liability and Deposit Insurance Protection Act of 1996,
which was signed into law by President Clinton on September 30, 1996. This
legislation provides that in order to be deemed to have participated in the
management of a Property, a lender must actually participate in the operational
affairs of the Property or the borrower. The legislation also provides that
participation in the management of the Property does not include "merely having
the capacity to influence, or unexercised right to control" operations. Rather,
a lender will lose the protection of the secured creditor exemption only if it
exercises decision-making control over the borrower's environmental compliance
and hazardous substance handling and disposal practices, or assumes day-to-day
management of all operational functions of the Property.

     If a lender is or becomes liable, it can bring an action for contribution
against any other "responsible parties," including a previous owner or
operator, who created the environmental hazard, but those persons or entities
may be bankrupt or otherwise judgment proof. The costs associated with
environmental cleanup may be substantial. It is conceivable that the costs
arising from the circumstances set forth above would result in a loss to
certificateholders.

     CERCLA does not apply to petroleum products, and the secured creditor
exclusion does not govern liability for cleanup costs under federal laws other
than CERCLA, in particular Subtitle I of the federal Resource Conservation and
Recovery Act ("RCRA"), which regulates underground


                                       69


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. 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.

     In general, at the time the loans were originated no environmental
assessment, or a very limited environmental assessment, of the Properties was
conducted.


RIGHTS OF REDEMPTION

     In some states, after sale pursuant to a deed of trust or foreclosure of a
mortgage, the borrower and foreclosed junior lienors are given a statutory
period in which to redeem the Property from the foreclosure sale. In certain
other states (including California), this right of redemption applies only to
sales following judicial foreclosure, and not to sales pursuant to a
non-judicial power of sale. In most states where the right of redemption is
available, statutory redemption may occur upon payment of the foreclosure
purchase price, accrued interest and taxes. In other states, redemption may be
authorized if the former borrower pays only a portion of the sums due. The
effect of a statutory right of redemption is to diminish the ability of the
lender to sell the foreclosed Property. The exercise of a right of redemption
would defeat the title of any purchaser from the lender subsequent to
foreclosure or sale under a deed of trust. Consequently, the practical effect
of the redemption right is to force the lender to retain the Property and pay
the expenses of ownership until the redemption period has run. In some states,
there is no right to redeem Property after a trustee's sale under a deed of
trust.


ANTI-DEFICIENCY LEGISLATION AND OTHER LIMITATIONS ON LENDERS

     Certain states have imposed statutory and judicial restrictions that limit
the remedies of a beneficiary under a deed of trust or a mortgagee under a
mortgage. In some states, including California, statutes and case law limit the
right of the beneficiary or mortgagee to obtain a deficiency judgment against
borrowers financing the purchase of their residence or following sale under a
deed of trust or certain other foreclosure proceedings. A deficiency judgment
is a personal judgment against the borrower equal in most cases to the
difference between the amount due to the lender and the fair market value of
the Property at the time of the foreclosure sale. In certain states, including
California, if a lender simultaneously originates a loan secured by a senior
lien on a particular Property and a loan secured by a junior lien on the same
Property, the lender, as the holder of the junior lien, may be precluded from
obtaining a deficiency judgment with respect to the excess of the aggregate
amount owed under both loans over the proceeds of any sale under a deed of
trust or other foreclosure proceedings. As a result of these prohibitions, it
is anticipated that in most instances the master servicer will utilize the
non-judicial foreclosure remedy and will not seek deficiency judgments against
defaulting borrowers.

     Some state statutes require the beneficiary or mortgagee to exhaust the
security afforded under a deed of trust or mortgage by foreclosure in an
attempt to satisfy the full debt before bringing a personal action against the
borrower. In certain other states, the lender has the option of bringing a
personal action against the borrower on the debt without first exhausting the
security; however, in some of these states, the lender, following judgment on
the personal action, may be deemed to have elected a remedy and may be
precluded from exercising remedies with respect to the security. Consequently,
the practical effect of the election requirement, when applicable, is that
lenders will usually proceed first against the security rather than bringing a
personal action against the borrower. In some states, exceptions to the
anti-deficiency statutes are provided for in certain instances where the value
of the lender's security has been impaired by acts or omissions of the
borrower, for example, in the event of waste of the Property. Finally, other
statutory provisions limit any deficiency judgment


                                       70


against the former borrower following a foreclosure sale to the excess of the
outstanding debt over the fair market value of the Property at the time of the
public sale. The purpose of these statutes is generally to prevent a
beneficiary or a mortgagee from obtaining a large deficiency judgment against
the former borrower as a result of low or no bids at the foreclosure sale.

     Generally, Article 9 of the UCC governs foreclosure on cooperative shares
and the related proprietary lease or occupancy agreement. Some courts have
interpreted section 9-504 of the UCC to prohibit a deficiency award unless the
creditor establishes that the sale of the collateral (which, in the case of a
cooperative loan, would be the shares of the cooperative and the related
proprietary lease or occupancy agreement) was conducted in a commercially
reasonable manner.

     In addition to anti-deficiency and related legislation, numerous other
federal and state statutory provisions, including the federal bankruptcy laws,
and state laws affording relief to debtors, may interfere with or affect the
ability of the secured mortgage lender to realize upon its security. For
example, in a proceeding under the federal Bankruptcy Code, a lender may not
foreclose on a Property without the permission of the bankruptcy court. The
rehabilitation plan proposed by the debtor may provide, if the Property is not
the debtor's principal residence and the court determines that the value of the
Property is less than the principal balance of the mortgage loan, for the
reduction of the secured indebtedness to the value of the Property as of the
date of the commencement of the bankruptcy, rendering the lender a general
unsecured creditor for the difference, and also may reduce the monthly payments
due under the mortgage loan, change the rate of interest and alter the mortgage
loan repayment schedule. The effect of these types of proceedings under the
federal Bankruptcy Code, including but not limited to any automatic stay, could
result in delays in receiving payments on the loans underlying a series of
securities and possible reductions in the aggregate amount of the payments.

     The federal tax laws provide priority to certain tax liens over the lien
of a mortgage or secured party.

DUE-ON-SALE CLAUSES

     Generally, each conventional loan will contain a due-on-sale clause which
will generally provide that if the mortgagor or obligor sells, transfers or
conveys the Property, the loan or contract may be accelerated by the mortgagee
or secured party. Court decisions and legislative actions have placed
substantial restriction on the right of lenders to enforce due-on-sale clauses
in many states. However, the Garn-St Germain Depository Institutions Act of
1982 (the "Garn-St Germain Act"), subject to certain exceptions, preempts state
constitutional, statutory and case law prohibiting the enforcement of
due-on-sale clauses. As a result, due-on-sale clauses have become generally
enforceable except in those states whose legislatures exercised their authority
to regulate the enforceability of those clauses with respect to mortgage loans
that were (i) originated or assumed during the "window period" under the
Garn-St Germain Act which ended in all cases not later than October 15, 1982,
and (ii) originated by lenders other than national banks, federal savings
institutions and federal credit unions. FHLMC has taken the position in its
published mortgage servicing standards that, out of a total of eleven "window
period states," five states (Arizona, Michigan, Minnesota, New Mexico and Utah)
have enacted statutes extending, on various terms and for varying periods, the
prohibition on enforcement of due-on-sale clauses with respect to certain
categories of window period loans. Also, the Garn-St Germain Act does
"encourage" lenders to permit assumption of loans at the original rate of
interest or at some other rate less than the average of the original rate and
the market rate.

     As to loans secured by an owner-occupied residence, the Garn-St Germain
Act sets forth nine specific instances in which a mortgagee covered by the Act
may not exercise its rights under a due-on-sale clause, notwithstanding the
fact that a transfer of the Property may have occurred. The inability to
enforce a due-on-sale clause may result in transfer of the related Property to
an uncreditworthy person, which could increase the likelihood of default or may
result in a mortgage bearing an interest rate below the current market rate
being assumed by a new home buyer, which may affect the average life of the
loans and the number of loans which may extend to maturity.


                                       71


     In addition, under federal bankruptcy law, due-on-sale clauses may not be
enforceable in bankruptcy proceedings and may, under certain circumstances, be
eliminated in any modified mortgage resulting from the bankruptcy proceeding.


ENFORCEABILITY OF PREPAYMENT AND LATE PAYMENT FEES

     Forms of notes, mortgages and deeds of trust used by lenders may contain
provisions obligating the borrower to pay a late charge if payments are not
timely made, and in some circumstances may provide for prepayment fees or
penalties if the obligation is paid prior to maturity. In certain states, there
are or may be specific limitations upon the late charges which a lender may
collect from a borrower for delinquent payments. Certain states also limit the
amounts that a lender may collect from a borrower as an additional charge if
the loan is prepaid. Under certain state laws, prepayment charges may not be
imposed after a certain period of time following the origination of mortgage
loans with respect to prepayments on loans secured by liens encumbering
owner-occupied residential properties. Since many of the Properties will be
owner-occupied, it is anticipated that prepayment charges may not be imposed
with respect to many of the loans. The absence of a prepayment penalty,
particularly with respect to fixed rate loans having higher Loan Rates, may
increase the likelihood of refinancing or other early retirement of the those
loans or contracts. Late charges and prepayment penalties are typically
retained by servicers as additional servicing compensation.

APPLICABILITY OF USURY LAWS

     Title V of the Depository Institutions Deregulation and Monetary Control
Act of 1980, enacted in March 1980 ("Title V") provides that state usury
limitations shall not apply to certain types of residential first mortgage
loans originated by certain lenders after March 31, 1980. The Office of Thrift
Supervision, as successor to the Federal Home Loan Bank Board, is authorized to
issue rules and regulations and to publish interpretations governing
implementation of Title V. The statute authorized the states to reimpose
interest rate limits by adopting, before April 1, 1983, a law or constitutional
provision which expressly rejects an application of the federal law. Fifteen
states adopted these laws prior to the April 1, 1983 deadline. In addition,
even where Title V is not so rejected, any state is authorized by the law to
adopt a provision limiting discount points or other charges on mortgage loans
covered by Title V. Certain states have taken action to reimpose interest rate
limits and/or to limit discount points or other charges.


SERVICEMEMBERS CIVIL RELIEF ACT

     Generally, under the terms of the Servicemembers Civil Relief Act (the
"Relief Act"), a borrower who enters military service after the origination of
the borrower's loan (including a borrower who is a draftee or who is a member
of the National Guard or is in a reserve status at the time of the origination
of the loan and is later called to active duty) is entitled to have interest
rates reduced and capped at 6% per annum (and all interest in excess of 6% per
annum forgiven), on obligations (including mortgage loans and manufactured home
loans) incurred prior to the commencement of military service for the duration
of active duty status, unless a court orders otherwise upon application of the
lender. It is possible that the interest rate limitation could have an effect,
for an indeterminate period of time, on the ability of the master servicer to
collect full amounts of interest on certain of the loans. Unless otherwise
provided in the related prospectus supplement, any shortfall in interest
collections resulting from the application of the Relief Act could result in
losses to securityholders. The Relief Act also imposes limitations which would
impair the ability of the master servicer to foreclose on an affected loan
during the borrower's period of active duty status. Moreover, the Relief Act
permits the extension of a loan's maturity and the re-adjustment of its payment
schedule beyond the completion of military service. Thus, in the event that a
loan that is subject to the Relief Act goes into default, there may be delays
and losses occasioned by the inability to realize upon the Property in a timely
fashion.


JUNIOR MORTGAGES AND RIGHTS OF SENIOR MORTGAGEES

     To the extent that the loans comprising the trust fund for a series are
secured by mortgages which are junior to other mortgages held by other lenders
or institutional investors, the rights of the trust


                                       72


fund (and therefore the securityholders), as mortgagee under the junior
mortgage, are subordinate to those of any mortgagee under any senior mortgage.
The senior mortgagee has the right to receive hazard insurance and condemnation
proceeds and to cause the Property securing the loan to be sold upon default of
the mortgagor, thereby extinguishing the junior mortgagee's lien unless the
junior mortgagee asserts its subordinate interest in the Property in
foreclosure litigation and, possibly, satisfies the defaulted senior mortgage.
A junior mortgagee may satisfy a defaulted senior loan in full and, in some
states, may cure a default and bring the senior loan current, in either event
adding the amounts expended to the balance due on the junior loan. In most
states, absent a provision in the mortgage or deed of trust, no notice of
default is required to be given to a junior mortgagee.

     The standard form of the mortgage used by most institutional lenders
confers on the mortgagee the right both to receive all proceeds collected under
any hazard insurance policy and all awards made in connection with condemnation
proceedings, and to apply these proceeds and awards to any indebtedness secured
by the mortgage, in the order determined by the mortgagee. Thus, in the event
improvements on the Property are damaged or destroyed by fire or other
casualty, or in the event the Property is taken by condemnation, the mortgagee
or beneficiary under senior mortgages will have the prior right to collect any
insurance proceeds payable under a hazard insurance policy and any award of
damages in connection with the condemnation and to apply the same to the
indebtedness secured by the senior mortgages. Proceeds in excess of the amount
of senior mortgage indebtedness, in most cases, may be applied to the
indebtedness of a junior mortgage.

     Another provision sometimes found in the form of the mortgage or deed of
trust used by institutional lenders obligates the mortgagor to pay before
delinquency all taxes and assessments on the Property and, when due, all
encumbrances, charges and liens on the Property which appear prior to the
mortgage or deed of trust, to provide and maintain fire insurance on the
Property, to maintain and repair the Property and not to commit or permit any
waste thereof, and to appear in and defend any action or proceeding purporting
to affect the Property or the rights of the mortgagee under the mortgage. Upon
a failure of the mortgagor to perform any of these obligations, the mortgagee
is given the right under certain mortgages to perform the obligation itself, at
its election, with the mortgagor agreeing to reimburse the mortgagee for any
sums expended by the mortgagee on behalf of the mortgagor. All sums so expended
by the mortgagee become part of the indebtedness secured by the mortgage.

     The form of credit line trust deed or mortgage generally used by most
institutional lenders which make revolving credit line loans typically contains
a "future advance" clause, which provides, in essence, that additional amounts
advanced to or on behalf of the borrower by the beneficiary or lender are to be
secured by the deed of trust or mortgage. Any amounts so advanced after the
cut-off date with respect to any Mortgage will not be included in the trust
fund. The priority of the lien securing any advance made under the clause may
depend in most states on whether the deed of trust or mortgage is called and
recorded as a credit line deed of trust or mortgage. If the beneficiary or
lender advances additional amounts, the advance is entitled to receive the same
priority as amounts initially advanced under the trust deed or mortgage,
notwithstanding the fact that there may be junior trust deeds or mortgages and
other liens which intervene between the date of recording of the trust deed or
mortgage and the date of the future advance, and notwithstanding that the
beneficiary or lender had actual knowledge of the intervening junior trust
deeds or mortgages and other liens at the time of the advance. In most states,
the trust deed or mortgage lien securing mortgage loans of the type which
includes home equity credit lines applies retroactively to the date of the
original recording of the trust deed or mortgage, provided that the total
amount of advances under the home equity credit line does not exceed the
maximum specified principal amount of the recorded trust deed or mortgage,
except as to advances made after receipt by the lender of a written notice of
lien from a judgment lien creditor of the trustor.

CONSUMER PROTECTION LAWS

     Numerous federal and state consumer protection laws impose substantive
requirements upon mortgage lenders in connection with the origination,
servicing and enforcement of loans secured by Single Family Properties. These
laws include the federal Truth-in-Lending Act and Regulation Z


                                       73


promulgated thereunder, Real Estate Settlement Procedures Act and Regulation B
promulgated thereunder, Equal Credit Opportunity Act, Fair Credit Billing Act,
Fair Credit Reporting Act and related statutes and regulations. In particular,
Regulation Z, requires certain disclosures to the borrowers regarding the terms
of the loans; the Equal Credit Opportunity Act and Regulation B promulgated
thereunder prohibit discrimination on the basis of age, race, color, sex,
religion, marital status, national origin, receipt of public assistance or the
exercise of any right under the Consumer Credit Protection Act, in the
extension of credit; the Fair Credit Reporting Act regulates the use and
reporting of information related to the borrower's credit experience. Certain
provisions of these laws impose specific statutory liabilities upon lenders who
fail to comply therewith. In addition, violations of these laws may limit the
ability of the sellers to collect all or part of the principal of or interest
on the loans and could subject the sellers and in some cases their assignees to
damages and administrative enforcement.

HOME OWNERSHIP AND EQUITY PROTECTION ACT OF 1994

     Some loans and contracts, known as "High Cost Loans," may be subject to
special rules, disclosure requirements and other provisions that were added to
the federal Truth-in-Lending Act by the Home Ownership and Equity Protection
Act of 1994, or "Homeownership Act," if such trust assets were originated on or
after October 1, 1995, are not loans made to finance the purchase of the
mortgaged property and have interest rates or origination costs in excess of
certain prescribed levels. The Homeownership Act requires certain additional
disclosures, specifies the timing of those disclosures and limits or prohibits
inclusion of certain provisions in mortgages subject to the Homeownership Act.
Purchasers or assignees of any High Cost Loan, including any trust fund, could
be liable under federal law for all claims and subject to all defenses that the
borrower could assert against the originator of the High Cost Loan, under the
federal Truth-in-Lending Act or any other law, unless the purchaser or assignee
did not know and could not with reasonable diligence have determined that the
loan was subject to the provisions of the Homeownership Act. Remedies available
to the borrower include monetary penalties, as well as rescission rights if
appropriate disclosures were not given as required or if the particular
mortgage includes provisions prohibited by law. The maximum damages that may be
recovered under these provisions from an assignee, including the trust fund, is
the remaining amount of indebtedness plus the total amount paid by the borrower
in connection with the home loan.

     In addition to the Homeownership Act, a number of legislative proposals
have been introduced at both the federal and state level that are designed to
discourage predatory lending practices. Some states have enacted, or may enact,
laws or regulations that prohibit inclusion of some provisions in home loans
that have interest rates or origination costs in excess of consummation of the
home loans. In some cases, state law may impose requirements and restrictions
greater than those in the Homeownership Act. An originators' failure to comply
with these laws could subject the trust fund, and other assignees of the home
loans, to monetary penalties and could result in the borrowers rescinding the
home loans against either the trust fund or subsequent holders of the home
loans.

     Lawsuits have been brought in various states making claims against
assignees of High Cost Loans for violations of state law allegedly committed by
the originator. Named defendants in these cases include numerous participants
within the secondary mortgage market, including some securitization trusts.


                  MATERIAL FEDERAL INCOME TAX CONSIDERATIONS

     The following is a general discussion of certain anticipated material
federal income tax considerations of the purchase, ownership and disposition of
the securities. This discussion has been prepared with the advice of McKee
Nelson LLP, as special counsel to the depositor. This discussion is based on
authorities that are subject to change or differing interpretations. Any such
change or differing interpretation could be applied retroactively. No rulings
have been or will be sought from the Internal Revenue Service (the "IRS") with
respect to any of the matters discussed below, and no assurance can be given
that the views of the IRS with respect to those matters will not differ from
that described below.


                                       74


     This discussion is directed solely to Security Owners that purchase
securities at issuance and hold them as "capital assets" within the meaning of
Section 1221 of the Code. The discussion does not purport to cover all federal
income tax consequences applicable to particular investors, some of which may
be subject to special rules. Investors subject to such special rules include
dealers in securities, certain traders in securities, financial institutions,
tax-exempt organizations, insurance companies, persons who hold securities as
part of a hedging transaction or as a position in a straddle or conversion
transaction, persons whose functional currency is not the U.S. dollar, or
persons who elect to treat gain recognized on the disposition of a security as
investment income under Section 163(d)(4)(B)(iii) of the Code.

     In addition, this discussion does not address the state, local or other
tax consequences of the purchase, ownership, and disposition of securities. We
recommend that you consult your own tax advisor in determining the state, local
and other tax consequences of the purchase, ownership, and disposition of
securities. Moreover, this discussion may be supplemented by a discussion in
the applicable prospectus supplement.

     In this discussion, when we use the term:

     o    "Security Owner," we mean any person holding a beneficial ownership
          interest in securities;

     o    "Code," we mean the Internal Revenue Code of 1986, as amended;

     o    "IRS," we mean the Internal Revenue Service;

     o    "AFR," we mean the applicable federal rate, which is an average of
          current yields for U.S. Treasury securities with specified ranges of
          maturities and which is computed and published monthly by the IRS for
          use in various tax calculations;

     o    "Foreign Person," we mean any person other than a U.S. Person; and

     o    "U.S. Person," we mean (i) a citizen or resident of the United States;
          (ii) a corporation (or entity treated as a corporation for tax
          purposes) created or organized in the United States or under the laws
          of the United States or of any state thereof, including, for this
          purpose, the District of Columbia; (iii) a partnership (or entity
          treated as a partnership for tax purposes) organized in the United
          States or under the laws of the United States or of any state thereof,
          including, for this purpose, the District of Columbia (unless provided
          otherwise by future Treasury regulations); (iv) an estate whose income
          is includible in gross income for United States income tax purposes
          regardless of its source; or (v) 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 U.S. Persons have authority to control
          all substantial decisions of the trust. Notwithstanding the preceding
          clause, to the extent provided in Treasury regulations, certain trusts
          that were in existence on August 20, 1996, that were treated as U.S.
          Persons prior to such date, and that elect to continue to be treated
          as U.S. Persons, also are U.S. Persons.

TYPES OF SECURITIES

     This discussion addresses the following four types of securities:

     o    REMIC certificates;

     o    notes issued by a trust, including a trust for which a REIT election
          has been made; and

     o    trust certificates issued by trusts for which a REMIC election is not
          made.

     The prospectus supplement for each series of securities will indicate the
tax characterization of each security issued pursuant to that supplement. Set
forth below is a general description of each type of tax characterization, with
references to more detailed discussions regarding particular securities. The
discussions under "-- Special Tax Attributes" and "-- Backup Withholding" below
address all types of securities.

     REMIC Certificates Generally. With respect to each series of REMIC
certificates, McKee Nelson LLP ("Company Counsel") will deliver its opinion
that, assuming compliance with all provisions of


                                       75


the related trust agreement, the related trust will comprise one or more
"REMICs" within the meaning of Section 860D of the Code and the classes of
interests offered will be considered to be "regular interests" or "residual
interests" in a REMIC within the meaning set out in Section 860G(a) of the
Code. The prospectus supplement for REMIC certificates will identify the
regular interests and residual interest in the REMIC.

     A REMIC may issue one or more classes of regular interests and must issue
one and only one class of residual interest. We refer to a REMIC certificate
representing a regular interest in a REMIC as a "REMIC regular certificate."
REMIC regular certificates generally will be treated for federal income tax
purposes as debt instruments issued by the REMIC. The tax treatment of
securities treated as debt instruments, including REMIC regular certificates,
is discussed under "-- Taxation of Securities Treated as Debt Instruments"
below. You should be aware, however, that although you normally would take
interest income on a debt instrument into account under your regular method of
accounting, you must include interest accrued on a REMIC regular certificate in
income under the accrual method of accounting regardless of the method of
accounting you otherwise use for tax purposes.

     We refer to a REMIC certificate representing a residual interest in a
REMIC as a "REMIC residual certificate" and the owner of a beneficial interest
in a REMIC residual certificate as a "Residual Owner." The tax treatment of
REMIC residual certificates is discussed under "-- REMIC Residual Certificates"
below.

     A REMIC is subject to tax at a rate of 100 percent on the net income the
REMIC derives from prohibited transactions. In general, a "prohibited
transaction" means the disposition of a qualified mortgage other than pursuant
to certain specified exceptions, the receipt of income from a source other than
a qualified mortgage 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 qualified mortgages for temporary investment pending
distribution on the REMIC certificates. The Code also imposes a 100 percent tax
on the value of any contribution of assets to the REMIC after the closing date
other than pursuant to specified exceptions, and subjects "net income from
foreclosure property" to tax at the highest corporate rate. We do not
anticipate that any REMIC in which we will offer certificates will engage in
any such transactions or receive any such income.

     If an entity elects to be treated as a REMIC but fails to comply with one
or more of the ongoing requirements of the Code for REMIC status during any
taxable year, the entity will not qualify as a REMIC for such year and
thereafter. In this event, the entity may be subject to taxation as a separate
corporation, and the certificates issued by the entity may not be accorded the
status described under "-- Special Tax Attributes" below. In the case of an
inadvertent termination of REMIC status, the Treasury Department has authority
to issue regulations providing relief; however, sanctions, such as the
imposition of a corporate tax on all or a portion of the entity's income for
the period during which the requirements for REMIC status are not satisfied,
may accompany any such relief.

     To the extent provided in the applicable prospectus supplement, a
certificate may represent not only the ownership of a REMIC regular interest
but also an interest in a notional principal contract. This can occur, for
instance, if the applicable trust agreement provides that the rate of interest
payable by the REMIC on the regular interest is subject to a cap based on the
weighted average of the net interest rates payable on the qualified mortgages
held by the REMIC. In these instances, the trust agreement may provide for a
reserve fund that will be held as part of the trust fund but not as an asset of
any REMIC created pursuant to the trust agreement (an "outside reserve fund").
The outside reserve fund would typically be funded from monthly excess
cashflow. If the interest payments on a regular interest were limited due to
the above-described cap, payments of any interest shortfall due to application
of that cap would be made to the regular interest holder to the extent of funds
on deposit in the outside reserve fund. For federal income tax purposes,
payments from the outside reserve fund will be treated as payments under a
notional principal contract written by the owner of the outside reserve fund in
favor of the regular interest holders.

     Issuance of Notes Generally. For each issuance of notes by a trust (which
does not make a REMIC election), Company Counsel will deliver its opinion that,
assuming compliance with the trust


                                       76


agreement and the indenture, the notes will constitute debt instruments for
federal income tax purposes. No regulations, published rulings, or judicial
decisions may exist that discuss the characterization for federal income tax
purposes of securities with terms substantially the same as the notes. The
depositor and the trustee will agree, and the beneficial owners of notes will
agree by their purchase of the notes, to treat the notes as debt for all tax
purposes. The tax treatment of securities treated as debt instruments is
discussed under "- Taxation of Securities Treated as Debt Instruments" below.
If, contrary to the opinion of Company Counsel, the IRS successfully asserted
that the notes were not debt instruments for federal income tax purposes, the
notes might be treated as equity interests in the trust, and the timing and
amount of income allocable to beneficial owners of those notes might be
different than as described under "- Taxation of Securities Treated as Debt
Instruments."

     With respect to certain trusts that issue notes, an election may be made
to treat the trust as a "real estate investment trust" within the meaning of
Section 856(a) of the Code (a "REIT"). In general, a REIT receives certain tax
benefits, provided the REIT complies with requirements relating to its assets,
its income and its operations, all as further provided in the Code. The
classification of the trust issuing notes as a REIT generally will not have any
tax consequences for a beneficial owner of a note.

     Classification of Trust Certificates Generally. With respect to each
series of trust certificates for which no REMIC election is made, Company
Counsel will deliver its opinion (unless otherwise limited by the related
prospectus supplement) that, assuming compliance with the trust agreement,
either: (1) the trust will be classified as a trust under applicable Treasury
regulations and will not be taxable as a corporation and that each beneficial
owner of a certificate will be an owner of the trust under the provisions of
subpart E, part I, of subchapter J of the Code (we refer to such a trust herein
as a "Grantor Trust" and to the certificates issued by the trust as "Grantor
Trust Certificates"); or (2) the trust will be classified as a partnership for
federal income tax purposes that is not taxable as a corporation under the
taxable mortgage pool rules of Section 7701(i) of the Code or the publicly
traded partnership rules of Section 7704 of the Code and that each beneficial
owner of a certificate issued by the trust will be a partner in that
partnership (we refer to such certificates as "Partner Certificates"). The
depositor and the trustee will agree, and the beneficial owners of Grantor
Trust Certificates or Partner Certificates will agree by their purchase of such
securities, to treat the trust and the related securities consistent with the
manner provided in the related supplement for all tax purposes. The proper
characterization of the arrangement involving Grantor Trust Certificates or
Partner Certificates may not be clear, because there may be no authority on
closely comparable transactions. For a discussion of the tax treatment of
Grantor Trust Certificates, see "- Grantor Trust Certificates" below, and for
a discussion of the tax treatment of Partner Certificates, see "Partner
Certificates" below.


TAXATION OF SECURITIES TREATED AS DEBT INSTRUMENTS

     When we refer to "Debt Securities" in the discussion that follows, we mean
(i) REMIC regular certificates and (ii) notes issued by a trust that does not
make a REMIC election. This discussion is based in part on the regulations
applicable to original issue discount (the "OID Regulations") and in part on
the provisions of the Tax Reform Act of 1986 (the "1986 Act"). Prospective
investors should be aware, however, that the OID Regulations do not adequately
address certain issues relevant to prepayable securities, such as the Debt
Securities. To the extent that those issues are not addressed in the OID
Regulations, the trustee intends to apply the methodology described in the
Conference Committee Report to the 1986 Act. No assurance can be provided that
the IRS will not take a different position as to those matters not currently
addressed by the OID Regulations. Moreover, the OID Regulations include an
anti-abuse rule allowing the IRS to apply or depart from the OID Regulations
where necessary or appropriate to ensure a reasonable tax result because of the
applicable statutory provisions. A tax result will not be considered
unreasonable under the anti-abuse rule in the absence of a substantial effect
on the present value of a taxpayer's tax liability. Prospective investors are
advised to consult their own tax advisors as to the discussion therein and the
appropriate method for reporting interest and original issue discount ("OID")
with respect to Debt Securities.


                                       77


     Interest Income and OID. Debt Securities may be treated as having been
issued with OID. A debt instrument is issued with OID to the extent its stated
redemption price at maturity exceeds its issue price by more than a de minimis
amount. Although not clear, the de minimis amount for a class of Debt
Securities would appear to equal the product of (1) 0.25 percent, (2) the
stated redemption price at maturity of the class and (3) the weighted average
maturity of the class, computed by taking into account the prepayment
assumption discussed below. A beneficial owner of a Debt Security generally
must report de minimis OID with respect to that Debt Security pro rata as
principal payments are received, and that income will be capital gain if the
Debt Security is held as a capital asset.

     For OID purposes, the issue price of a Debt Security generally is the
first price at which a substantial amount of that class is sold to the public
(excluding bond houses, brokers and underwriters). Although unclear under the
OID Regulations, it is anticipated that the trustee will treat the issue price
of a Debt Security as to which there is no substantial sale as of the issue
date, or that is retained by the depositor, as the fair market value of the
class as of the issue date. The issue price of a Debt Security also includes
any amount paid by an beneficial owner of that Debt Security for accrued
interest that relates to a period before the issue date of the Debt Security,
unless the Security Owner elects on its federal income tax return to exclude
that amount from the issue price and to recover it on the first distribution
date.

     The stated redemption price at maturity of a debt instrument includes all
payments, other than interest unconditionally payable at fixed intervals of one
year or less at either a fixed rate or a variable rate ("Qualified Stated
Interest"). Interest is unconditionally payable only if either (1) reasonable
legal remedies exist to compel the timely payment of interest or (2) the terms
or conditions under which the debt instrument is issued make the late payment
or nonpayment of interest a remote likelihood. Because a portion of the
interest payable on the Debt Securities may be deferred, it is possible that
some or all of such interest may not be treated as unconditionally payable.
Nevertheless, for tax information reporting purposes, unless disclosed
otherwise in the applicable prospectus supplement, the trustee or other person
responsible for tax information reporting will treat all stated interest on
each class of Debt Securities as Qualified Stated Interest, provided that class
is not an interest-only class, a class the interest on which is not payable
currently in all accrual periods (an "accrual class"), or a class the interest
on which is substantially disproportionate to its principal amount (a
"super-premium class").

     To the extent stated interest payable on a class of Debt Securities, other
than a class of REMIC regular certificates, is Qualified Stated Interest, such
interest will be taxable as ordinary income to a Security Owner in accordance
with such Security Owner's method of tax accounting. If, however, all or a
portion of the stated interest payable on the class of Debt Securities is not
Qualified Stated Interest, then the stated interest, or portion thereof, would
be included in the Debt Security's stated redemption price at maturity.
Qualified Stated Interest payable on a REMIC regular certificate must be
included in the income of the Security Owner under an accrual method of
accounting, regardless of the method otherwise used by the Security Owner.

     If a Debt Security is issued with OID, a Security Owner will be required
to include in income, as ordinary income, the daily portion of such OID
attributable to each day it holds such Debt Security. This requirement
generally will result in the accrual of income before the receipt of cash
attributable to that income.

     The daily portion of such OID will be determined on a constant yield to
maturity basis in accordance with Section 1272(a)(6) of the Code (the "PAC
Method"). Under the PAC Method, the amount of OID allocable to any accrual
period for a class of Debt Securities will equal (1) the sum of (i) the
adjusted issue price of that class of Debt Securities at the end of the accrual
period and (ii) any payments made on that class of Debt Securities during the
accrual period of amounts included in the stated redemption price at maturity
of that class of Debt Securities, minus (2) the adjusted issue price of that
class of Debt Securities at the beginning of the accrual period. The OID so
determined is allocated ratably among the days in the accrual period to
determine the daily portion for each such day. The trustee will treat the
monthly period (or shorter period from the date of original issue) ending on
the day before each Distribution Date as the accrual period.


                                       78


     The adjusted issue price of a class of Debt Securities at the beginning of
its first accrual period will be its issue price. The adjusted issue price at
the end of any accrual period (and, therefore, at the beginning of the
subsequent accrual period) is determined by discounting the remaining payments
due on that class of Debt Securities at their yield to maturity. The remaining
payments due are determined based on the prepayment assumption made in pricing
the Debt Securities, but are adjusted to take into account the effect of
payments actually made on the trust's assets.

     For this purpose, the yield to maturity of a class of Debt Securities is
determined by projecting payments due on that class of Debt Securities based on
a prepayment assumption made with respect to the trust's assets. The yield to
maturity of a class of Debt Securities is the discount rate that, when applied
to the stream of payments projected to be made on that class of Debt Securities
as of its issue date, produces a present value equal to the issue price of that
class of Debt Securities. The Code requires that the prepayment assumption be
determined in the manner prescribed in Treasury Department regulations. To
date, no such regulations have been issued. The legislative history of this
Code provision indicates that the regulations will provide that the assumed
prepayment rate must be the rate used by the parties in pricing the particular
transaction. The prospectus supplement related to each series will describe the
prepayment assumption to be used for tax reporting purposes. No representation,
however, is made as to the rate at which principal payments or recoveries on
the trust's assets actually will occur.

     Under the PAC Method, accruals of OID will increase or decrease (but never
below zero) to reflect the fact that payments on the trust's assets are
occurring at a rate that is faster or slower than that assumed under the
prepayment assumption. If the OID accruing on a class of Debt Securities is
negative for any period, a beneficial owner of a Debt Security of that class
will be entitled to offset such negative accruals only against future positive
OID accruals on that Debt Security.

     Variable Rate Securities. Debt Securities may provide for interest based
on a variable rate. The amount of OID for a Debt Security bearing a variable
rate of interest will accrue in the manner described under "-- Interest Income
and OID" above, with the yield to maturity and future payments on that Debt
Security generally to be determined by assuming that interest will be payable
for the life of the Debt Security based on the initial rate (or, if different,
the value of the applicable variable rate as of the pricing date) for that Debt
Security. It is anticipated that the trustee will treat interest payable at a
variable rate as Qualified Stated Interest, other than variable interest on an
interest-only class, super-premium class or accrual class. OID reportable for
any period will be adjusted based on subsequent changes in the applicable
interest rate index.

     Acquisition Premium. If a Security Owner purchases a Debt Security for a
price that is greater that its adjusted issue price but less than its stated
redemption price at maturity, the Security Owner will have acquired the Debt
Security at an "acquisition premium" as that term is defined in Section
1272(a)(7) of the Code. The Security Owner must reduce future accruals of OID
on the Debt Security by the amount of the acquisition premium. Specifically, a
Security Owner must reduce each future accrual of OID on the Debt Security by
an amount equal to the product of the OID accrual and a fixed fraction, the
numerator of which is the amount of the acquisition premium and the denominator
of which is the OID remaining to be accrued on the Debt Security at the time
the Security Owner purchased the Debt Security. Security Owners should be aware
that this fixed fraction methodology will not always produce the appropriate
recovery of acquisition premium in situations where stated interest on a Debt
Security is included in the Debt Security's stated redemption price at maturity
because the total amount of OID remaining to be accrued on such a Debt Security
at the time of purchase is not fixed.

     Market Discount. If a purchaser acquires a Debt Security at a discount
from its outstanding principal amount (or, if the Debt Security is issued with
OID, its adjusted issue price), the purchaser will acquire the Debt Security
with market discount (a "market discount bond"). If the market discount is less
than a statutorily defined de minimis amount (presumably equal to the product
of (i) 0.25 percent, (ii) the stated redemption price at maturity of the Debt
Security and (iii) the remaining weighted average maturity of the Debt
Security), the market discount will be considered to be zero. It appears that
de minimis market discount would be reported in a manner similar to de minimis
OID. See "- Interest Income and OID" above.


                                       79


     Treasury regulations interpreting the market discount rules have not yet
been issued; therefore, we recommend that prospective investors consult their
own tax advisors regarding the application of those rules and the advisability
of making any of the elections described below.

     Unless the beneficial owner of a market discount bond elects under Section
1278(b) of the Code to include market discount in income as it accrues, any
principal payment (whether a scheduled payment or a prepayment) or any gain on
disposition of the market discount bond will be treated as ordinary income to
the extent that it does not exceed the accrued market discount at the time of
such payment. If the beneficial owner makes the election under Section 1278(b)
of the Code, the election will apply to all market discount bonds acquired by
the beneficial owner at the beginning of the first taxable year to which the
election applies and all market discount bonds thereafter acquired by it. The
election may be revoked only with the consent of the IRS.

     The Code grants the Treasury Department authority to issue regulations
providing for the computation of accrued market discount on debt instruments,
such as the Debt Securities, the principal of which is payable in more than one
installment, but no regulations have been issued. The relevant legislative
history provides that, until such regulations are issued, the beneficial owner
of a market discount bond may elect to accrue market discount either on the
basis of a constant interest rate or according to a pro rata method described
in the legislative history. Under that method, the amount of market discount
that accrues in any accrual period in the case of a Debt Security issued with
OID equals the product of (i) the market discount that remains to be accrued as
of the beginning of the accrual period and (ii) a fraction, the numerator of
which is the OID accrued during the accrual period and the denominator of which
is the sum of the OID accrued during the accrual period and the amount of OID
remaining to be accrued as of the end of the accrual period. In the case of a
Debt Security that was issued without OID, the amount of market discount that
accrues in any accrual period will equal the product of (i) the market discount
that remains to be accrued as of the beginning of the accrual period and (ii) a
fraction, the numerator of which is the amount of stated interest accrued
during the accrual period and the denominator of which is the total amount of
stated interest remaining to be accrued at the beginning of the accrual period.
For purposes of determining the amount of OID or interest remaining to be
accrued with respect to a class of Debt Securities, the prepayment assumption
applicable to calculating the accrual of OID on such Debt Securities applies.

     If a beneficial owner of a Debt Security incurred or continues
indebtedness to purchase or hold Debt Securities with market discount, the
beneficial owner may be required to defer a portion of its interest deductions
for the taxable year attributable to any such indebtedness. Any such deferred
interest expense would not exceed the market discount that accrues during such
taxable year and is, in general, allowed as a deduction not later than the year
in which such market discount is includible in income. If such beneficial owner
elects to include market discount in income currently as it accrues under
Section 1278(b) of the Code, the interest deferral rule will not apply.

     Amortizable Bond Premium. A purchaser of a Debt Security that purchases
the Debt Security for an amount (net of accrued interest) greater than its
stated redemption price at maturity will have premium with respect to that Debt
Security in the amount of the excess. Such a purchaser need not include in
income any remaining OID with respect to that Debt Security and may elect to
amortize the premium under Section 171 of the Code. If a Security Owner makes
this election, the amount of any interest payment that must be included in the
Security Owner's income for each period will be reduced by a portion of the
premium allocable to the period based on a constant yield method. In addition,
the relevant legislative history states that premium should be amortized in the
same manner as market discount. The election under Section 171 of the Code also
will apply to all debt instruments (the interest on which is not excludable
from gross income) held by the Security Owner at the beginning of the first
taxable year to which the election applies and to all such taxable debt
instruments thereafter acquired by it. The election may be revoked only with
the consent of the IRS.

     Non-Pro Rata Securities. A Debt Security may provide for certain amounts
of principal to be distributed upon the request of a Security Owner or by
random lot (a "non-pro rata security"). In the case of a non-pro rata security,
it is anticipated that the trustee will determine the yield to maturity based
upon the anticipated payment characteristics of the class as a whole under the
prepayment


                                       80


assumption. In general, the OID accruing on each non-pro rata security in an
accrual period would be its allocable share of the OID for the entire class, as
determined in accordance with the discussion of OID above. However, in the case
of a distribution in retirement of the entire unpaid principal balance of any
non-pro rata security (or portion of the unpaid principal balance), (a) the
remaining unaccrued OID allocable to the security (or to that portion) will
accrue at the time of the distribution, and (b) the accrual of OID allocable to
each remaining security of that class will be adjusted by reducing the present
value of the remaining payments on that class and the adjusted issue price of
that class to the extent attributable to the portion of the unpaid principal
balance thereof that was distributed. The depositor believes that the foregoing
treatment is consistent with the "pro rata prepayment" rules of the OID
Regulations, but with the rate of accrual of OID determined based on the
prepayment assumption for the class as a whole. Prospective investors are
advised to consult their tax advisors as to this treatment.

     Election to Treat All Interest as OID. The OID Regulations permit a
beneficial owner of a Debt Security to elect to accrue all interest, discount
(including de minimis OID and de minimis market discount), and premium in
income as interest, based on a constant yield method (a "constant yield
election"). It is unclear whether, for this purpose, the initial prepayment
assumption would continue to apply or if a new prepayment assumption as of the
date of the Security Owner's acquisition would apply. If such an election were
to be made and the Debt Securities were acquired at a premium, such a Security
Owner would be deemed to have made an election to amortize bond premium under
Section 171 of the Code, which is described above. Similarly, if the Security
Owner had acquired the Debt Securities with market discount, the Security Owner
would be considered to have made the election in Section 1278(b) of the Code,
which is described above. A constant yield election may be revoked only with
the consent of the IRS.

     Treatment of Losses. Security Owners that own REMIC regular certificates,
or in the case of Debt Securities for which a REMIC election is not made,
Security Owners that use the accrual method of accounting, will be required to
report income with respect to such Debt Securities on the accrual method
without giving effect to delays and reductions in distributions attributable to
defaults or delinquencies on any of the trust's assets, except possibly, in the
case of income that constitutes Qualified Stated Interest, to the extent that
it can be established that such amounts are uncollectible. In addition,
potential investors are cautioned that while they may generally cease to accrue
interest income if it reasonably appears that the interest will be
uncollectible, the IRS may take the position that OID must continue to be
accrued in spite of its uncollectibility until the Debt Security is disposed of
in a taxable transaction or becomes worthless in accordance with the rules of
Section 166 of the Code. As a result, the amount of income required to be
reported by a Security Owner in any period could exceed the amount of cash
distributed to such Security Owner in that period.

     Although not entirely clear, it appears that: (a) a Security Owner who
holds a Debt Security in the course of a trade or business or a Security Owner
that is a corporation generally should be allowed to deduct as an ordinary loss
any loss sustained on account of the Debt Security's partial or complete
worthlessness and (b) a noncorporate Security Owner who does not hold the Debt
Security in the course of a trade or business generally should be allowed to
deduct as a short-term capital loss any loss sustained on account of the Debt
Security's complete worthlessness. Security Owners should consult their own tax
advisors regarding the appropriate timing, character and amount of any loss
sustained with respect to a Debt Security, particularly subordinated Debt
Securities.

     Sale or Other Disposition. If a beneficial owner of a Debt Security sells,
exchanges or otherwise disposes of the Debt Security, or the Debt Security is
redeemed, the beneficial owner will recognize gain or loss in an amount equal
to the difference between the amount realized by the beneficial owner upon the
sale, exchange, redemption or other disposition and the beneficial owner's
adjusted tax basis in the Debt Security. The adjusted tax basis of a Debt
Security to a particular beneficial owner generally will equal the beneficial
owner's cost for the Debt Security, increased by any market discount and OID
previously included by such beneficial owner in income with respect to the Debt
Security and decreased by the amount of bond premium, if any, previously
amortized and by the amount of payments that are part of the Debt Security's
stated redemption price at maturity previously received by such beneficial
owner. Any such gain or loss will be capital gain or loss if the


                                       81


Debt Security 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.

     Gain from the sale of a REMIC regular certificate that might otherwise be
treated as capital gain will be treated as ordinary income to the extent that
such gain does not exceed the excess of (1) the amount that would have been
includible in the Security Owner's income had the income accrued at a rate
equal to 110 percent of the AFR as of the date of purchase, over (2) the amount
actually includible in such Security Owner's income.

     Foreign Persons. Interest (including OID) paid to or accrued by a
beneficial owner of a Debt Security who is a Foreign Person generally will be
considered "portfolio interest" and generally will not be subject to United
States federal income tax or withholding tax, provided the interest is not
effectively connected with the conduct of a trade or business within the United
States by the Foreign Person and the Foreign Person (i) is not actually or
constructively a 10 percent shareholder of the issuer of the Debt Securities or
a controlled foreign corporation with respect to which the issuer of the Debt
Securities is a related person (all within the meaning of the Code) and (ii)
provides the trustee or other person who is otherwise required to withhold U.S.
tax with respect to the Debt Securities (the "withholding agent") with an
appropriate statement on Form W-8 BEN (Certificate of Foreign Status of
Beneficial Owner for United States Tax Withholding). If a Debt Security 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 provided by the Foreign Person that owns
the Debt Security. If the information shown on Form W-8BEN changes, a new Form
W-8BEN must be filed. If the foregoing requirements are not met, then interest
(including OID) on the Debt Securities 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.

     Under Treasury regulations relating to withholding obligations, a payment
to a foreign partnership is treated, with some exceptions, as a payment
directly to the partners, so that the partners are required to provide any
required certifications. We recommend that Foreign Persons that intend to hold
a Debt Security through a partnership or other pass-through entity consult
their own tax advisors regarding the application of those Treasury regulations
to an investment in a Debt Security.

     Any capital gain realized on the sale, redemption, retirement or other
taxable disposition of a Debt Security by a Foreign Person will be exempt from
United States federal income and withholding tax, provided that (i) such gain
is not effectively connected with the conduct of a trade or business in the
United States by the Foreign Person and (ii) in the case of a Foreign Person
who is an individual, the Foreign Person is not present in the United States
for 183 days or more in the taxable year.

     Information Reporting. Payments of interest (including OID, if any) on a
Debt Security held by a U.S. Person other than a corporation or other exempt
holder are required to be reported to the IRS. Moreover, each trust is required
to make available to Security Owners that hold beneficial interests in Debt
Securities issued by that trust information concerning the amount of OID and
Qualified Stated Interest accrued for each accrual period for which the Debt
Securities are outstanding, the adjusted issue price of the Debt Securities as
of the end of each accrual period, and information to enable a Security Owner
to compute accruals of market discount or bond premium using the pro rata
method described under "-- Market Discount" above.

     Payments of interest (including OID, if any) on a Debt Security held by a
Foreign Person (other than payments of interest that is effectively connected
with the Foreign Person's conduct of a United States trade or business) are
required to be reported annually on IRS Form 1042-S, which the withholding
agent must file with the IRS and furnish to the recipient of the income.

REMIC RESIDUAL CERTIFICATES

     If you are a Residual Owner, you will be required to report the daily
portion of the taxable income or, subject to the limitation described under "--
Basis Rules and Distributions" below, the net


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loss of the REMIC for each day during a calendar quarter that you are a
Residual Owner. The requirement that Residual Owners report their pro rata
share of taxable income or net loss of the REMIC will continue until there are
no certificates of any class of the related series outstanding. For this
purpose, the daily portion will be determined by allocating to each day in the
calendar quarter a ratable portion of the taxable income or net loss of the
REMIC for the quarter. The daily portions then will be allocated among the
Residual Owners in accordance with their percentage of ownership on each day.
Any amount included in the gross income of, or allowed as a loss to, any
Residual Owner will be treated as ordinary income or loss.


     Taxable Income or Net Loss of the REMIC. Generally, a REMIC determines its
taxable income or net loss for a given calendar quarter in the same manner as
would an individual having the calendar year as his taxable year and using the
accrual method of accounting. There are, however, certain modifications. First,
a deduction is allowed for accruals of interest and OID on the REMIC regular
certificates issued by the REMIC. Second, market discount will be included in
income as it accrues, based on a constant yield to maturity method. Third, no
item of income, gain, loss or deduction allocable to a prohibited transaction
is taken into account. Fourth, the REMIC generally may deduct only items that
would be allowed in calculating the taxable income of a partnership under
Section 703(a) of the Code. Fifth, the limitation on miscellaneous itemized
deductions imposed on individuals by Section 67 of the Code does not apply at
the REMIC level to investment expenses such as trustee fees or servicing fees.
See, however, "- Pass Through of Certain Expenses" below. If the deductions
allowed to the REMIC exceed its gross income for a calendar quarter, such
excess will be the net loss for the REMIC for that calendar quarter. For
purposes of determining the income or loss of a REMIC, the regulations
applicable to REMICs provide that a REMIC has a tax basis in its assets equal
to the total of the issue prices of all regular and residual interests in the
REMIC.


     Pass Through of Certain Expenses. A Residual Owner who is an individual,
estate, or trust will be required to include in income a share of the expenses
of the related REMIC and may deduct those expenses subject to the limitations
of Sections 67 and 68 of the Code. See "- Grantor Trust Certificates - Trust
Expenses" below for a discussion of the limitations of Sections 67 and 68 of
the Code. Those expenses may include the servicing fees and all administrative
and other expenses relating to the REMIC. In addition, those expenses are not
deductible for purposes of computing the alternative minimum tax, and may cause
those investors to be subject to significant additional tax liability. Similar
rules apply to individuals, estates and trusts holding a REMIC residual
certificate through certain pass-through entities.

     Excess Inclusions. Excess inclusions with respect to a REMIC residual
certificate are subject to special tax rules. For any Residual Owner, the
excess inclusion for any calendar quarter will generally equal the excess of
the sum of the daily portions of the REMIC's taxable income allocated to the
Residual Owner over the amount of income that the Residual Owner would have
accrued if the REMIC residual certificate were a debt instrument having a yield
to maturity equal to 120 percent of the long-term AFR in effect at the time of
issuance of the REMIC residual certificate. If the issue price of a REMIC
residual certificate is zero, which would be the case if the REMIC residual
certificate had no economic value at issuance, then all of the daily portions
of income allocated to the Residual Owner will be excess inclusions. The issue
price of a REMIC residual certificate issued for cash generally will equal the
price paid by the first buyer, and if the REMIC residual certificate is issued
for property, the issue price will be its fair market value at issuance.

     For Residual Owners, an excess inclusion may not be offset by deductions,
losses, or loss carryovers. Thus, a Residual Owner that has losses in excess of
income for a taxable year would, nevertheless, be required to pay tax on excess
inclusions. For Residual Owners that are subject to tax on unrelated business
taxable income (as defined in Section 511 of the Code), an excess inclusion is
treated as unrelated business taxable income. For Residual Owners that are
nonresident alien individuals or foreign corporations generally subject to
United States withholding tax, even if interest paid to such Residual Owners is
generally eligible for exemptions from such tax, an excess inclusion will be
subject to such tax and no tax treaty rate reduction or exemption may be
claimed with respect thereto.


                                       83


     Alternative minimum taxable income for a Residual Owner is determined
without regard to the special rule that taxable income may not be less than the
sum of the Residual Owner's excess inclusions for the year. Alternative minimum
taxable income cannot, however, be less than the sum of a Residual Owner's
excess inclusions for the year. Also, the amount of any alternative minimum tax
net operating loss deduction must be computed without regard to any excess
inclusions.

     Finally, if a REIT or a regulated investment company owns a REMIC residual
certificate, a portion (allocated under Treasury regulations yet to be issued)
of dividends paid by the REIT or regulated investment company could not be
offset by net operating losses of its shareholders, would constitute unrelated
business taxable income for tax-exempt shareholders, and would be ineligible
for reduction of withholding to certain persons who are not U.S. Persons.

     Taxable Income May Exceed Distributions. In light of the tax consequences
to a Residual Owner, the taxable income from a REMIC residual certificate may
exceed cash distributions with respect thereto in any taxable year. The taxable
income recognized by a Residual Owner in any taxable year will be affected by,
among other factors, the relationship between the timing of recognition of
interest, OID or market discount income or amortization of premium for the
mortgage loans, on the one hand, and the timing of deductions for interest
(including OID) or income from amortization of issue premium on the regular
interests, on the other hand. If an interest in the mortgage loans is acquired
by the REMIC at a discount, and one or more of these mortgage loans is prepaid,
the proceeds of the prepayment may be used in whole or in part to make
distributions in reduction of principal on the regular interests, and (2) the
discount on the mortgage loans that is includible in income may exceed the
deduction allowed upon those distributions on those regular interests on
account of any unaccrued OID relating to those regular interests. When there is
more than one class of regular interests that distribute principal
sequentially, this mismatching of income and deductions is particularly likely
to occur in the early years following issuance of the regular interests when
distributions in reduction of principal are being made in respect of earlier
classes of regular interests to the extent that those classes are not issued
with substantial discount or are issued at a premium. If taxable income
attributable to that mismatching is realized, in general, losses would be
allowed in later years as distributions on the later maturing classes of
regular interests are made.

     Taxable income also may be greater in earlier years that in later years as
a result of the fact that interest expense deductions, expressed as a percentage
of the outstanding principal amount of that series of regular interests, may
increase over time as distributions in reduction of principal are made on the
lower yielding classes of regular interests, whereas, to the extent the REMIC
consists of fixed rate mortgage loans, interest income for any particular
mortgage loan will remain constant over time as a percentage of the outstanding
principal amount of that loan. Consequently, Residual Owners must have
sufficient other sources of cash to pay any federal, state, or local income
taxes due as a result of that mismatching or unrelated deductions against which
to offset that income, subject to the discussion of excess inclusions under "--
Excess Inclusions" above. The timing of mismatching of income and deductions
described in this paragraph, if present for a series of REMIC certificates, may
have a significant adverse effect upon a Residual Owner's after-tax rate of
return.

     Basis Rules and Distributions. A Residual Owner's adjusted basis in a REMIC
residual certificate will equal the amount paid for the REMIC residual
certificate, increased by the sum of the daily portions of REMIC income taken
into account by the Residual Owner, and decreased by the sum of (i) the daily
portions of REMIC net loss taken into account by the Residual Owner and (ii)
distributions made by the REMIC to the Residual Owner.

     A distribution by a REMIC to a Residual Owner will not be includible in
gross income by the Residual Owner if the distribution does not exceed the
Residual Owner's adjusted basis in the REMIC residual certificate immediately
before the distribution. The distribution will reduce the Residual Owner's
adjusted basis of such interest, but not below zero. To the extent a
distribution exceeds the Residual Owner's adjusted basis in the REMIC residual
certificate, the excess will be treated as gain from the sale of the REMIC
residual certificate. See "-- Sales of REMIC Residual Certificates" below.


                                       84


     A Residual Owner is not allowed to take into account any net loss for any
calendar quarter to the extent such net loss exceeds such Residual Owner's
adjusted basis in its REMIC residual certificate as of the close of such
calendar quarter, determined without regard to such net loss. Any loss
disallowed by reason of this limitation may be carried forward indefinitely to
future calendar quarters and, subject to the same limitation, may be used by
that Residual Owner to offset income from the REMIC residual certificate.

     The effect of these basis and distribution rules is that a Residual Owner
may not amortize its basis in a REMIC residual certificate but may only recover
its basis through distributions, through the deduction of any net losses of the
REMIC, or upon the sale of its REMIC residual certificate. See "- Sales of REMIC
Residual Certificates."

     Sales of REMIC Residual Certificates. If a Residual Owner sells a REMIC
residual certificate, the Residual Owner will recognize gain or loss equal to
the difference between the amount realized on the sale and its adjusted basis
in the REMIC certificate. If a Residual Owner sells a REMIC residual
certificate at a loss, the loss will not be recognized if, within six months
before or after the sale of the REMIC residual certificate, the Residual Owner
purchases another residual interest in any REMIC or any interest in a taxable
mortgage pool (as defined in Section 7701(i) of the Code) comparable to a
residual interest in a REMIC. Such disallowed loss will be allowed upon the
sale of the other residual interest (or comparable interest) if the rule
referred to in the preceding sentence does not apply to that sale.

     Inducement Fees. The IRS has issued final regulations addressing the tax
treatment of payments made by a transferor of a non-economic REMIC residual
interest to induce the transferee to acquire that residual interest
("inducement fees"). The regulations (i) require the transferee to recognize an
inducement fee as income over the expected remaining life of the REMIC in a
manner that reasonably reflects the after-tax costs and benefits of holding
that residual interest and (ii) specify that inducement fees constitute income
from sources within the United States. Prospective purchasers of the REMIC
residual certificates should consult their own tax advisors regarding the tax
consequences of receiving any inducement fee.

     Disqualified Organizations. If a Residual Owner were to transfer a REMIC
residual certificate to a disqualified organization, the Residual Owner would
be subject to a tax in an amount equal to the maximum corporate tax rate
applied to the present value (using a discount rate equal to the applicable
AFR) of the total anticipated excess inclusions with respect to such residual
interest for the periods after the transfer. For this purpose, disqualified
organizations include the United States, any state or political subdivision of
a state, any foreign government or international organization or any agency or
instrumentality of any of the foregoing; any tax-exempt entity (other than a
Section 521 cooperative) which is not subject to the tax on unrelated business
income; and any rural electrical or telephone cooperative. However, a
transferor of a REMIC residual certificate would in no event be liable for the
tax for a transfer if the transferee furnished to the transferor an affidavit
stating that the transferee is not a disqualified organization and, as of the
time of the transfer, the transferor does not have actual knowledge that the
affidavit is false.

     The anticipated excess inclusions must be determined as of the date that
the REMIC residual certificate is transferred and must be based on events that
have occurred up to the time of such transfer, the prepayment assumption (see "-
Taxation of Securities Treated as Debt Instruments -- Interest Income and OID,"
for a discussion of the prepayment assumption), and any required or permitted
clean up calls or required liquidation provided for in the trust agreement. The
tax generally is imposed on the transferor of the REMIC residual certificate,
except that it is imposed on an agent for a disqualified organization if the
transfer occurs through such agent. The trust agreement for each series of REMIC
certificates will require, as a prerequisite to any transfer of a REMIC residual
certificate, the delivery to the trustee of an affidavit of the transferee to
the effect that it is not a disqualified organization and will contain other
provisions designed to render any attempted transfer of a REMIC residual
certificate to a disqualified organization void.

     In addition, if a pass through entity includes in income excess inclusions
with respect to a REMIC residual certificate, and a disqualified organization is
the record holder of an interest in such entity at


                                       85


any time during any taxable year of such entity, then a tax will be imposed on
the entity equal to the product of (1) the amount of excess inclusions on the
REMIC residual certificate for such taxable year that are allocable to the
interest in the pass through entity held by such disqualified organization and
(2) the highest marginal federal income tax rate imposed on corporations. A
pass through entity will not be subject to this tax for any period with respect
to an interest in such entity, however, if the record holder of such interest
furnishes to such entity (1) such holder's social security number and a
statement under penalties of perjury that such social security number is that
of the record holder or (2) a statement under penalties of perjury that such
record holder is not a disqualified organization. For these purposes, a "pass
through entity" means any regulated investment company, REIT, trust,
partnership or certain other entities described in Section 860E(e)(6) of the
Code. In addition, a person holding an interest in a pass through entity as a
nominee for another person shall, with respect to such interest, be treated as
a pass through entity. Moreover, in the case of any "electing large
partnership," within the meaning of Section 775 of the Code, all record holders
are considered to be disqualified organizations so that the partnership itself
will be subject to tax on the excess inclusions and such excess inclusions will
be excluded in determining partnership income. Finally, an exception to this
tax, otherwise available to a pass through entity that is furnished certain
affidavits by record holders of interests in the entity and that does not know
those affidavits are false, is not available to an electing large partnership.

     Noneconomic REMIC Residual Certificates. A transfer of a "noneconomic"
REMIC residual certificate will be disregarded for all federal income tax
purposes if a significant purpose of the transfer was to enable the transferor
to impede the assessment or collection of tax. If such transfer is disregarded,
the purported transferor will continue to be treated as the Residual Owner and
will, therefore, be liable for any taxes due with respect to the daily portions
of income allocable to such noneconomic REMIC residual certificate.

     A REMIC residual certificate is noneconomic for this purpose unless, at the
time of its transfer, (1) the present value of the expected future distributions
on the REMIC residual certificate at least equals the product of the present
value of the anticipated excess inclusions and the highest tax rate applicable
to corporations for the year of the transfer and (2) the transferor reasonably
expects that the transferee will receive distributions with respect to the REMIC
residual certificate at or after the time the taxes accrue on the anticipated
excess inclusions in an amount sufficient to satisfy the accrued taxes. The
present value computations are based on a discount rate equal to the applicable
AFR and a prepayment assumption used in computing income on the mortgage loans
held by the trust. See "- Taxation of Securities Treated as Debt Instruments -
Interest Income and OID," for a discussion concerning prepayment assumptions.

     All transfers of REMIC residual certificates will be subject to certain
restrictions under the terms of the related trust agreement that are intended to
reduce the possibility of any such transfer being disregarded. Such restrictions
will require each party to a transfer to provide an affidavit that no purpose of
such transfer is to impede the assessment or collection of tax, including
certain representations as to the financial condition of the prospective
transferee.

     Prior to purchasing a REMIC residual certificate, prospective purchasers
should consider the possibility that a purported transfer of such REMIC residual
certificate by such a purchaser to another purchaser at some future date may be
disregarded in accordance with the above-described rules, which would result in
the retention of tax liability by such purchaser. The applicable prospectus
supplement will disclose whether offered REMIC residual certificates may be
considered noneconomic residual interests; provided, however, that any
disclosure that a REMIC residual certificate will or will not be considered
noneconomic will be based upon certain assumptions, and the depositor will make
no representation that a REMIC residual certificate will not be considered
noneconomic for purposes of the above-described rules or that a Residual Owner
will receive distributions calculated pursuant to such assumptions.

     Treasury regulations contain a safe harbor under which a transfer of a
noneconomic residual is presumed to be a valid transfer that will be respected
for federal income tax purposes. To qualify under the safe harbor:


                                       86


     (i)  the transferor must perform a reasonable investigation of the
          financial status of the transferee and determine that the transferee
          has historically paid its debts as they come due and find no
          significant evidence to indicate that the transferee will not continue
          to pay its debts as they come due;

     (ii) the transferor must obtain a representation from the transferee to the
          effect that the transferee understands that as the holder of the
          residual interest the transferee will recognize taxable income in
          excess of cash flow and that the transferee intends to pay taxes on
          the income as those taxes become due;

     (iii) the transferee must represent that it will not cause income from the
          residual interest to be attributable to a foreign permanent
          establishment or fixed base (within the meaning of an applicable
          income tax treaty) of the transferee or another U.S. taxpayer; and

     (iv) either (i) the present value (computed based upon a statutory discount
          rate) of the anticipated tax liabilities associated with holding the
          residual interest must be no greater than the present value of the sum
          of any consideration given to the transferee to acquire the interest,
          the anticipated distributions on the interest and the anticipated tax
          savings associated with holding the interest, or (ii) the transferee
          must be a domestic taxable C corporation that meets certain asset
          tests and that agrees that any subsequent transfer of the interest
          will satisfy the same safe harbor provision and be to a domestic
          taxable C corporation.


     Eligibility for the safe harbor requires, among other things, that the
facts and circumstances known to the transferor at the time of transfer not
indicate to a reasonable person that the taxes with respect to the interest
will not be paid, with an unreasonably low cost for the transfer specifically
mentioned as negating eligibility. The final regulations contain additional
detail regarding their application, and you should consult your own tax advisor
regarding the application of the safe harbor to a transfer of a REMIC residual
certificate before acquiring one.

     Restrictions on Transfers of Residual Certificates to Foreign Persons.
Transfers to a Foreign Person of REMIC residual certificates that have tax
avoidance potential are disregarded for all federal income tax purposes. If such
a transfer is disregarded, the purported transferor of the REMIC residual
certificate to the Foreign Person continues to remain liable for any taxes due
with respect to the income on such REMIC residual certificate. A transfer of a
REMIC residual certificate has tax avoidance potential unless, at the time of
the transfer, the transferor reasonably expects (1) that the REMIC will
distribute to the transferee of the REMIC residual certificate amounts that will
equal at least 30 percent of each excess inclusion and (2) that such amounts
will be distributed at or after the time at which the excess inclusion accrues
and not later than the close of the calendar year following the calendar year of
accrual. This rule does not apply to transfers if the income from the REMIC
residual certificate is taxed in the hands of the transferee as income
effectively connected with the conduct of a U.S. trade or business. Moreover, if
a Foreign Person transfers a REMIC residual certificate to a U.S. Person (or to
a Foreign Person in whose hands income from the REMIC residual certificate would
be effectively connected income) and the transfer has the effect of allowing the
transferor to avoid tax on accrued excess inclusions, that transfer is
disregarded for all federal income tax purposes and the purported Foreign Person
transferor continues to be treated as the owner of the REMIC residual
certificate. The trust agreement for each series will preclude the transfer of a
REMIC residual certificate to a Foreign Person, other than a Foreign Person in
whose hands the income from the REMIC residual certificate would be effectively
connected with a U.S. trade or business.

     Foreign Persons. The Conference Committee Report to the 1986 Act indicates
that amounts paid to Residual Owners who are Foreign Persons generally should be
treated as interest for purposes of the 30 percent (or lower treaty rate) United
States withholding tax. Treasury regulations provide that amounts distributed to
Residual Owners may qualify as "portfolio interest," subject to the conditions
described in "- Taxation of Securities Treated as Debt Instruments - Foreign
Persons" above, but only to the extent that (i) the mortgage loans were issued
after July 18, 1984, and (ii) the trust fund to which the REMIC residual
certificate relates consists of obligations issued in "registered form" within
the meaning of Section 163 (f)(1) of the Code. Generally, mortgage loans will
not be, but


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regular interests in another REMIC will be, considered obligations issued in
registered form. Furthermore, Residual Owners will not be entitled to any
exemption from the 30 percent withholding tax (or lower treaty rate) to the
extent of that portion of REMIC taxable income that constitutes an "excess
inclusion." See "- Excess Inclusions" above. If the amounts paid to Residual
Owners who are Foreign Persons are effectively connected with the conduct of a
trade or business within the United States by those Foreign Persons, the 30
percent (or lower treaty rate) withholding will not apply. Instead, the amounts
paid to those Foreign Persons will be subject to United States federal income
tax at regular rates. If the 30 percent (or lower treaty rate) withholding is
applicable, those amounts generally will be taken into account for purposes of
withholding only when paid or otherwise distributed (or when the REMIC residual
certificate is disposed of ) under rules similar to withholding upon disposition
of Debt Securities that have OID. See "- Restrictions on Transfers of Residual
Certificates to Foreign Investors" above concerning the disregard of certain
transfers having "tax avoidance potential." Potential investors who are Foreign
Persons should consult their own tax advisors regarding the specific tax
consequences to them of owning REMIC residual certificates.

     Administrative Provisions. The REMIC will be required to maintain its
books on a calendar year basis and to file federal income tax returns for
federal income tax purposes in a manner similar to a partnership. The form for
the income tax return is Form 1066, U.S. Real Estate Mortgage Investment
Conduit Income Tax Return. The trustee will be required to sign the REMIC's
returns. Treasury regulations provide that, except where there is a single
Residual Owner for an entire taxable year, the REMIC will be subject to the
procedural and administrative rules of the Code applicable to partnerships,
including the determination by the IRS of any adjustments to, among other
things, items of REMIC income, gain, loss deduction, or credit in a unified
administrative proceeding. The master servicer will be obligated to act as "tax
matters person," as defined in applicable Treasury regulations, for the REMIC
as agent of the Residual Owners holding the largest percentage interest in the
REMIC's residual interest. If the Code or applicable Treasury regulations do
not permit the master servicer to act as tax matters person in its capacity as
agent of the Residual Owner, the Residual Owner or any other person specified
pursuant to Treasury regulations will be required to act as tax matters person.
The tax mattes person generally has responsibility for overseeing and providing
notice to the other Residual Owner of certain administrative and judicial
proceedings regarding the REMIC's tax affairs, although other holders of the
REMIC residual certificates of the same series would be able to participate in
those proceedings in appropriate circumstances.

     Treasury regulations provide that a Residual Owner is not required to
treat items on its return consistently with their treatment on the REMIC's
return if the holder owns 100 percent of the REMIC residual certificates for
the entire calendar year. Otherwise, each Residual Owner is required to treat
items on its returns for the entire calendar year. Otherwise, each Residual
Owner is required to treat items on its returns consistently with their
treatment on the REMIC's return, unless the holder either files a statement
identifying the inconsistency or establishes that the inconsistency resulted
from incorrect information received from the REMIC. The IRS may access 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 REMIC residual certificate as a nominee for another person may be
required to furnish the related REMIC, in a manner to be provided in Treasury
regulations, with the name and address of that person and other specified
information.

     The IRS Form 1066 has an accompanying Schedule Q, Quarterly Notice to
Residual Interest Holders of REMIC taxable Income or Net Loss Allocation.
Treasury regulations require that a Schedule Q be furnished by the REMIC Pool
to each Residual Owner by the end of the month following the close of each
calendar quarter (41 days after the end of a quarter under proposed Treasury
regulations) in which the REMIC is in existence. Treasury regulations require
that, in addition to the foregoing requirements, information must be furnished
quarterly to Residual Owners and filed annually with the IRS concerning Section
67 of the Code expenses (see "-- Pass Through of Certain Expenses" above)
allocable to those holders. Furthermore, under those regulations, information
must be furnished quarterly to Residual Owners and filed annually with the IRS


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concerning the percentage of the REMIC's assets meeting the qualified asset
tests described under "- Special Tax Attributes - REMIC Certificates" below.

     Mark-to-Market Rules. Section 475 of the Code generally requires that
securities dealers include securities in inventory at their fair market value,
recognizing gain or loss as if the securities were sold at the end of each tax
year. The Treasury regulations provide that a REMIC residual certificate is not
treated as a security for purposes of the mark-to-market rules and thus may not
be marked to market.


GRANTOR TRUSTS CERTIFICATES

     For purposes of this discussion, we refer to two types of certificates
issued by a Grantor Trust: "Standard Certificates" and "Stripped Certificates."
Each certificate issued by a Grantor Trust that is not a Stripped Certificate
is a Standard Certificate.

     Classification of Stripped Certificates. There generally are three
situations in which a Grantor Trust Certificate will be classified as a
Stripped Certificate. First, if the trust holds assets that pay principal and
interest but issues interest-only or principal-only certificates, all the
certificates of that trust likely will be Stripped Certificates. Second, if the
seller, depositor, or some other person retains the right to receive a portion
of the interest payments on assets held in the trust, all the certificates
issued by the trust could be Stripped Certificates. Finally, if a portion of a
servicing or guarantee fee were recharacterized under rules established by the
IRS as ownership interests in stripped coupons, all the certificates of the
trust could be Stripped Certificates.

     Taxation of Stripped Certificates. Stripped Certificates will be treated
under rules contained in Section 1286 of the Code (the "Stripped Bond Rules").
Pursuant to the Stripped Bond Rules, the separation of ownership of some or all
of the interest payments on a debt instrument from ownership of 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.
A beneficial owner of a Stripped Certificate will be treated as owning
"stripped bonds" to the extent of its share of principal payments and "stripped
coupons" to the extent of its share of interest payments.

     Generally, if a taxpayer acquires an interest in "stripped coupons" or
"stripped bonds," the taxpayer will be treated as having purchased a newly
issued debt instrument on the date of purchase for an issue price equal to the
purchase price paid. As a result, a beneficial owner of a Stripped Certificate
would be taxed as holding a newly issued debt instrument. The tax consequences
of holding a debt instrument are discussed generally under "-- Taxation of
Securities Treated as Debt Instruments" above.

     Although a Stripped Certificate may represent a beneficial ownership
interest in stripped coupons from all or several of the assets held in the
trust, for information reporting purposes, the trustee will aggregate all such
interests and treat each class of Stripped Certificates as a single issue of
debt instruments. Moreover, the trustee will apply the PAC Method to compute
accruals of any OID on the Stripped Certificates, as described herein under "--
Taxation of Securities Treated as Debt Instruments -- Interest Income and OID,"
and will comply with any tax information reporting obligations with respect to
Stripped Certificates in the manner described under "-- Taxation of Securities
Treated as Debt Instruments -- Information Reporting." Whether aggregation of
stripped coupons from several assets acquired in a single purchase is
appropriate, and whether the PAC Method should apply to compute OID accruals on
Stripped Certificates are not free from doubt. We recommend, therefore, that a
prospective investor in Stripped Certificates consult their tax advisor
concerning the application of these rules to Stripped Certificates.

     For this purpose, the tax information will include the amount of OID
accrued on Stripped Certificates. However, the amount required to be reported
by the trustee may not be equal to the proper amount of OID required to be
reported as taxable income by a Security Owner, other than an original Security
Owner who purchased at the issue price. In particular, in the case of Stripped
Securities, the reporting will be based upon a representative initial offering
price of each class of Stripped Securities, except as set forth in the
prospectus supplement. It is not clear for this purpose whether the assumed
prepayment rate that is to be used in the case of an owner other than a
Security


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Owner that acquires its Stripped Certificate at original issue should be the
prepayment assumption or a new rate based on the circumstances at the date of
subsequent purchase.

     A beneficial owner of a Stripped Certificate, particularly any Stripped
Certificate that is subordinate to another class, may deduct losses incurred
for the Stripped Certificate as described under "-- Taxation of Standard
Certificates" below. In addition, if the mortgage loans prepay at a rate either
faster or slower than that under the prepayment assumption, a Security Owner's
recognition of OID either will be accelerated or decelerated and the amount of
that OID either will be increased or decreased depending on the relative
interests in principal and interest on each mortgage loan represented by that
Security Owner's Stripped Certificate. While the matter is not free from doubt,
the beneficial owner of a Stripped Certificate should be entitled to recognize
a loss (which may be a capital loss) in the year that it becomes certain
(assuming no further prepayments) that the Security Owner will not recover a
portion of its adjusted basis in the Stripped Certificate, such loss being
equal to that portion of unrecoverable basis.

     In addition, each beneficial owner of a Stripped Certificate will be
required to include in income its share of the expenses of the trust, including
the servicing fees with respect to any assets held by the trust. Although not
free from doubt, for purposes of reporting to Security Owners of Stripped
Certificates, the trust expenses will be allocated to the classes of Stripped
Certificates in proportion to the distributions to those classes for the related
period. The beneficial owner of a Stripped Certificate generally will be
entitled to a deduction in respect of the trust expenses, as described under "-
Trust Expenses" below, subject to the limitation described therein.

     Purchase of More Than One Class of Stripped Certificates. When an investor
purchases more than one class of Stripped Certificates, it is currently unclear
whether for federal income tax purposes those classes of Stripped Certificates
should be treated separately or aggregated for purposes of the rules described
above.

     Taxation of Standard Certificates. For federal income tax purposes, a
Standard Certificate will represent an undivided beneficial ownership interest
in the assets of the Grantor Trust. As a result, each Security Owner holding an
interest in a Standard Certificate must include in income its proportionate
share of the entire income from the assets represented by its Standard
Certificate. Thus, for example, in the case of a Standard Certificate
representing ownership of mortgage loans, a beneficial owner of the certificate
would be required to include in income interest at the coupon rate on the
mortgage loans, OID (if any), and market discount (if any), and any prepayment
fees, assumption fees, and late payment charges received by the servicer, in
accordance with the beneficial owner's method of accounting. In addition,
beneficial owners of Standard Certificates, particularly any class of a series
that is subordinate to other classes, may incur losses of interest or principal
with respect to the trust's assets. Those losses would be deductible generally
only as described under "- Taxation of Securities Treated as Debt Instruments -
Treatment of Losses" above.

     For information reporting purposes, although not free from doubt, the
trustee will report information concerning income accruals and principal
payments on the assets of the trust in the aggregate.

     Trust Expenses. Each Security Owner that holds an interest in a Grantor
Trust Certificate must include in income its share of the trust's expenses, as
described above. Each Security Owner may deduct its share of those expenses at
the same time, to the same extent, and in the same manner as such items would
have been reported and deducted had it held directly interests in the trust's
assets and paid directly its share of the servicing and related fees and
expenses. Investors who are individuals, estates or trusts who own Grantor Trust
Certificates, either directly or indirectly through certain pass-through
entities, will be subject to limitations for certain itemized deductions
described in Section 67 of the Code, including deductions for the servicing fees
and all administrative and other expenses of the trust. In general, such an
investor can deduct those expenses only to the extent that those expenses, in
total, exceed 2 percent of the investor's adjusted gross income. In addition,
Section 68 of the Code provides that itemized deductions otherwise allowable for
a taxable year will be reduced by the lesser of (i) 3 percent of the excess, if
any, of adjusted gross income over $100,000 ($50,000 in the case of a married
individual filing a separate return) (in each case, as adjusted for


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post-1991 inflation), and (ii) 80 percent of the amount of itemized deductions
otherwise allowable for that year. This reduction is currently scheduled to be
phased-out over a five year period beginning 2006. As a result of the
limitations set forth in Sections 67 and 68 of the Code, those investors
holding Grantor Trust Certificates, directly or indirectly through a
pass-through entity, may have total taxable income in excess of the total
amount of cash received on the Grantor Trust Certificates. In addition, those
investors cannot deduct the expenses of the trust for purposes of computing the
alternative minimum tax, and thus those investors may be subject to significant
additional tax liability.

     Sales of Grantor Trust Certificates. If a Grantor Trust Certificate is
sold, gain or loss will be recognized by the Security Owner in an amount equal
to the difference between the amount realized on the sale and the Security
Owner's adjusted tax basis in the Grantor Trust Certificate. Such tax basis
will equal the Security Owner's cost for the Grantor Trust Certificate,
increased by any OID or market discount previously included in income and
decreased by any premium previously taken into account and by the amount of
payments, other than payments of Qualified Stated Interest, previously received
with respect to such Grantor Trust Certificate. The portion of any such gain
attributable to accrued market discount not previously included in income will
be ordinary income. See "-- Taxation of Securities Treated as Debt Instruments
-- Sale or Other Disposition." Any remaining gain or any loss will be capital
gain or loss. Capital losses generally may be used only to offset capital
gains.

     Trust Reporting. Each registered holder of a Grantor Trust Certificate
will be furnished with each distribution a statement setting forth the
allocation of such distribution to principal and interest. In addition, within
a reasonable time after the end of each calendar year each registered holder of
a Grantor Trust Certificate at any time during such year will be furnished with
information regarding the amount of servicing compensation and other trust
expenses to enable beneficial owners of Grantor Trust Certificates to prepare
their tax returns. The trustee also will file any required tax information with
the IRS, to the extent and in the manner required by the Code.

     Foreign Persons. The tax and withholding rules that apply to Foreign
Persons who acquire an interest in Grantor Trust Certificates generally are the
same as those that apply to a Foreign Person who acquires an interest in Debt
Securities. See the discussion of the tax and withholding rules under "--
Taxation of Securities Treated as Debt Instruments -- Foreign Persons."


PARTNER CERTIFICATES

     If a trust is classified as a partnership for federal income tax purposes,
the trust will not be subject to an entity level federal income tax. Instead,
pursuant to the terms of the trust agreement, the trustee will compute taxable
income for each taxable year for the trust and will allocate the income so
computed among the Security Owners owning Partner Certificates. Each such
Security Owner must take into account in computing its taxable income for
federal income tax purposes its allocable share of the trust's income for the
taxable year of the trust that ends with or within the Security Owner's taxable
year. The trust will adopt the calendar year as its taxable year unless
otherwise specified in the applicable prospectus supplement.

     Security Owner's Distributive Share. The trust will compute taxable income
for each taxable year in the same manner as would an individual, except that
certain deductions specified in Section 703(a)(2) of the Code are not allowed.
The trustee will allocate that taxable income among the Partner Certificates.
The method of allocation will be described in the applicable prospectus
supplement.

     A share of expenses of the partnership (including fees of the master
servicer but not interest expense) allocable to a beneficial owner who is an
individual, estate or trust would constitute miscellaneous itemized deductions
subject to the limitations described under "-- Grantor Trust Certificates --
Trust Expenses" above. Accordingly, those deductions might be disallowed to the
individual in whole or in part and might result in that holder being taxed on
an amount of income that exceeds the amount of cash actually distributed to
that holder over the life of the partnership.

     Distributions. A distribution of cash to a Security Owner owning a Partner
Certificate will not be taxable to the Security Owner to the extent that the
amount distributed does not exceed the


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Security Owner's adjusted basis in the Partner Certificate. If the amount of
cash distributed exceeds a Security Owner's basis in a Partner Certificate, the
excess will be treated as though it were gain from the sale of the Partner
Certificate. If, upon receipt of a cash distribution in liquidation of a
Security Owner's interest in the trust, the Security Owner's adjusted basis
exceeds the amount distributed, the excess will be treated as though it were a
loss from the sale of the Partner Certificate.

     A Security Owner's adjusted basis in a Partner Certificate at any time
will equal the purchase price paid by the Security Owner for the Partner
Certificate, increased by allocations of income made to the Security Owner by
the trust, and decreased by distributions previously made by the trust on the
Partner Certificate and any losses allocated by the trust to the Security Owner
with respect to the Partner Certificate.

     If a trust distributes its assets in-kind to a Security Owner in
liquidation of the trust, neither the trust nor the Security Owner will
recognize gain or loss on the distribution. The Security Owner would be
required to allocate its adjusted basis in its Partner Certificate among the
assets it received in the liquidating distribution.

     Sale or Exchange of a Partner Certificate. If a Security Owner sells a
Partner Certificate, the Security Owner will recognize gain or loss equal to
the difference between the amount realized on the sale and the Security Owner's
adjusted basis in the Partner Certificate at the time of sale. Generally,
except to the extent provided otherwise in the applicable prospectus
supplement, any gain or loss will be capital gain or loss.

     Section 708 Terminations. Under Section 708 of the Code, the trust will be
deemed to have terminated for federal income tax purpose if 50 percent of the
capital and profits interests in the trust are sold or exchanged within a
12-month period. If a termination were to occur, it would result in the deemed
contribution by the trust of its assets to a newly formed trust in exchange for
interests in such newly formed trust, which the terminated trust would be
deemed to distribute to the Security Owners. The series of deemed transactions
would not result in recognition of gain or loss to the trust or to the Security
Owners. If the Partner Certificates are Book Entry Certificates, the trust most
likely will not be able to comply with the termination provisions of Section
708 of the Code due to lack of information concerning the transfer of interests
in the trust.

     Section 754 Election. If a Security Owner were to sell its Partner
Certificate at a profit (loss), the purchaser would have a higher (lower)
adjusted basis in the Certificate than did the seller. The trust's adjusted
basis in its assets would not be adjusted to reflect this difference unless the
trust made an election under Section 754 of the Code. To avoid the
administrative complexities that would be involved if such an election were to
be made, a trust that is classified as a partnership will not make an election
under Section 754 of the Code unless otherwise provided in the applicable
prospectus supplement. As a result, a beneficial owner of a Partner Certificate
might be allocated a greater or lesser amount of partnership income than would
be appropriate based on its own purchase price for its Partner Certificate.

     The American Jobs Creation Act of 2004 added a provision to the Code that
would require a partnership with a "substantial built-in loss" immediately
after a transfer of a partner's interest in such partnership to make the types
of basis adjustments that would be required if an election under Section 754 of
the Code were in effect. This new provision does not apply to a "securitization
partnership." The applicable prospectus supplement will address whether any
partnership in which a Partner Certificate represents an interest will
constitute a securitization partnership for this purpose.

     Foreign Persons. Unless otherwise provided in the applicable prospectus
supplement, income allocated and distributions made by the trust to a Security
Owner who is a Foreign Person will be subject to United States federal income
tax and withholding tax, if the income attributable to a security is not
effectively connected with the conduct of a trade or business within the United
States by the Foreign Person.

     Any capital gain realized on the sale, redemption, retirement or other
taxable disposition of a beneficial interest in a Partner Certificate by a
Foreign Person will be exempt from United States federal income and withholding
tax, provided that (i) such gain is not effectively connected with the


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conduct of a trade or business in the United States by the Foreign Person and
(ii) in the case of an individual, the individual is not present in the United
States for 183 days or more in the taxable year.

     Information Reporting. Each trust classified as a partnership will file a
partnership tax return on IRS Form 1065 with the IRS for each taxable year of
the trust. The trust will report each Security Owner's allocable share of the
trust's items of income and expense to the Security Owner and to the IRS on
Schedules K-1. The trust will provide the Schedules K-1 to nominees that fail
to provide the trust with the information statement described below and the
nominees then will be required to forward that information to the beneficial
owners of the Partner Certificates. Generally, a Security Owner must file tax
returns that are consistent with the information reported on the Schedule K-1
or be subject to penalties, unless the Security Owner notifies the IRS of the
inconsistencies.

     Under Section 6031 of the Code, any person that holds a Partner
Certificate as a nominee at any time during a calendar year is required to
furnish to the trust a statement containing certain information concerning the
nominee and the beneficial owner of the Partner Certificates. In addition,
brokers and financial institutions that hold Partner Certificates through a
nominee are required to furnish directly to the trust information as to the
beneficial ownership of the Partner Certificates. The information referred to
above for any calendar year is to be provided to the trust by January 31 of the
following year. Brokers and nominees who fail to provide the information may be
subject to penalties. However, a clearing agency registered under Section 17A
of the Securities Exchange Act of 1934 is not required to furnish that
information statement to the trust.

     Administrative Matters. Unless another designation is made, the depositor
will be designated as the tax matters partner in the trust agreement and, as
the tax matters partner, will be responsible for representing the beneficial
owners of Partner Certificates 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 until three years after the date on which the
partnership information return is filed. Any adverse determination following an
audit of the return of the partnership by the appropriate taxing authorities
could result in an adjustment of the returns of the beneficial owners of
Partner Certificates, and, under certain circumstances, a beneficial owner may
be precluded from separately litigating a proposed adjustment to the items of
the partnership. An adjustment also could result in an audit of a beneficial
owner's returns and adjustments of items not related to the income and losses
of the partnership.


SPECIAL TAX ATTRIBUTES

     In certain cases, securities are afforded special tax attributes under
particular sections of the Code, as discussed below.

     REMIC Certificates. REMIC certificates held by a domestic building and
loan association will constitute "regular or residual interests in a REMIC"
within the meaning of Section 7701(a)(19)(C)(xi) of the Code in proportion to
the assets of the REMIC that are described in Section 7701(a)(19)(C)(i) through
(x). If, however, at least 95 percent of the assets of the REMIC are described
in Section 7701(a)(19)(C)(i) through (x), the entire REMIC certificates in that
REMIC will so qualify.

     In addition, REMIC certificates held by a REIT will constitute "real
estate assets" within the meaning of Section 856(c)(5)(B) of the Code. If at
any time during a calendar year less than 95 percent of the assets of a REMIC
consist of "real estate assets," then the portion of the REMIC certificates
that are real estate assets under Section 856(c)(5)(B) during the calendar year
will be limited to the portion of the assets of the REMIC that are real estate
assets. Similarly, income on the REMIC certificates will be treated as
"interest on obligations secured by mortgages on real property" within the
meaning of Section 856(c)(3)(B) of the Code, subject to the same limitation as
set forth in the preceding sentence.

     REMIC regular certificates also will be "qualified mortgages" within the
meaning of Section 860G(a)(3) of the Code with respect to other REMICs,
provided they are transferred to the other REMIC within the periods required by
the Code.


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     The determination as to the percentage of the REMIC's assets that
constitute assets described in the foregoing sections of the Code will be made
for each calendar quarter based on the average adjusted basis of each category
of the assets held by the REMIC during that calendar quarter. The REMIC will
report those determinations in the manner and at the times required by
applicable Treasury regulations. The Small Business Job Protection Act of 1996
(the "SBJPA of 1996") repealed the reserve method for bad debts of domestic
building and loan associations and mutual savings banks, and thus has
eliminated the asset category of "qualifying real property loans" in former
Section 593(d) of the Code for taxable years beginning after December 31, 1995.
The requirements in the SBJPA of 1996 that these institutions must "recapture"
a portion of their existing bad debt reserves is suspended if a certain portion
of their assets are maintained in "residential loans" under Section
7701(a)(19)(C)(v) of the Code, but only if those loans were made to acquire,
construct or improve the related real property and not for the purpose of
refinancing. However, no effort will be made to identify the portion of the
mortgage loans of any series meeting this requirement, and no representation is
made in this regard.

     The assets of the REMIC will include, in addition to mortgage loans,
payments on mortgage loans held pending distribution on the REMIC certificates
and property acquired by foreclosure held pending sale, and may include amounts
in reserve accounts. It is unclear whether property acquired by foreclosure
held pending sale and amounts in reserve accounts would be considered to be
part of the mortgage loans, or whether those assets (to the extent not invested
in assets described in the foregoing sections) otherwise would receive the same
treatment as the mortgage loans for purposes of all of the foregoing sections.
Under the regulations applicable to REITs, however, mortgage loan payments held
by a REMIC pending distribution are real estate assets for purposes of Section
856(c)(5)(B) of the Code. Furthermore, foreclosure property generally will
qualify as real estate assets under Section 856(c)(5)(B) of the Code.

     For some series of REMIC certificates, two or more separate elections may
be made to treat designated portions of the related trust fund as REMICs
("Tiered REMICs") for federal income tax purposes. Solely for purposes of
determining whether the REMIC certificates will be "real estate assets" within
the meaning of Section 856(c)(5)(B) of the Code and "loans secured by an
interest in real property" under Section 7701(a)(19)(C) of the Code, and
whether the income on those Securities is interest described in Section
856(c)(3)(B) of the Code, the Tiered REMICs will be treated as one REMIC.

     As described above, certain REMIC regular certificates will evidence
ownership of a REMIC regular interest and a notional principal contract, as
further described in the accompanying supplement. See "Types of Securities --
REMIC Certificates Generally" above. Any such notional principal contract (and
any income therefrom) will not be afforded any of the special tax attributes
described in this section.

     Non-REMIC Debt Securities. Debt Securities that are not REMIC regular
certificates and that are owned by domestic building and loan associations and
other thrift institutions will not be considered "loans secured by an interest
in real property" or "qualifying real property loans." Moreover, such Debt
Securities owned by a REIT will not be treated as "real estate assets" nor will
interest on the Debt Securities be considered "interest on obligations secured
by mortgages on real property." In addition, such Debt Securities will not be
"qualified mortgages" for REMICs.

     Grantor Trust Certificates. Standard Certificates held by a domestic
building and loan association will constitute "loans secured by interests in
real property" within the meaning of Section 7701(a)(19)(C)(v) of the Code;
Standard Certificates held by a REIT will constitute "real estate assets"
within the meaning of Section 856(c)(5)(B) of the Code; amounts includible in
gross income with respect to Standard Certificates held by a REIT will be
considered "interest on obligations secured by mortgages on real property"
within the meaning of Section 856(c)(3)(B) of the Code; and Standard
Certificates transferred to a REMIC within the prescribed time periods will
qualify as "qualified mortgage" within the meaning of Section 860G(a)(3) of the
Code; provided in each case that the related assets of the trust (or income
therefrom, as applicable) would so qualify.


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     Although there appears to be no policy reason not to accord to Stripped
Certificates the treatment described above for Standard Certificates, there is
no authority addressing such characterization for instruments similar to
Stripped Certificates. We recommend that prospective investors in Stripped
Certificates consult their own tax advisers regarding the characterization of
Stripped Certificates, and the income therefrom, if the characterization of the
Stripped Certificates under the above-referenced rules is relevant.

     Partner Certificates. For federal income tax purposes, Partner
Certificates held by a domestic building and loan association will not
constitute "loans secured by an interest in real property" within the meaning
of Code Section 7701(a)(19)(C)(v), but, for purposes of the provisions
applicable to REITs, a REIT holding a Partnership Certificate will be deemed to
hold its proportionate share of each of the assets of the partnership and will
be deemed to be entitled to the income of the partnership attributable to such
share, based in each case on the capital accounts.

BACKUP WITHHOLDING

     Distributions on securities, as well as payment of proceeds from the sale
of securities, may be subject to the backup withholding tax under Section 3406
of the Code if recipients fail to furnish certain information, including their
taxpayer identification numbers, or otherwise fail to establish an exemption
from such tax. Any amounts deducted and withheld from a recipient would be
allowed as a credit against such recipient's federal income tax. Furthermore,
certain penalties may be imposed by the IRS on a recipient that is required to
supply information but that does not do so in the manner required.

REPORTABLE TRANSACTIONS

     Pursuant to recently enacted legislation, a penalty in the amount of
$10,000 in the case of a natural person and $50,000 in any other case is
imposed on any taxpayer that fails to file timely an information return with
the IRS with respect to a "reportable transaction" (as defined in Section 6011
of the Code). The rules defining "reportable transactions" are complex. In
general, they include transactions that result in certain losses that exceed
threshold amounts and transactions that result in certain differences between
the taxpayer's tax treatment of an item and book treatment of that same item.
Prospective investors are advised to consult their own tax advisers regarding
any possible disclosure obligations in light of their particular circumstances.

                      STATE AND LOCAL TAX CONSIDERATIONS

     In addition to the federal income tax consequences described above,
potential investors should consider the state and local income tax consequences
of the acquisition, ownership and disposition of 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.

     For example, a REMIC or Non-REMIC trust may be characterized as a
corporation, a partnership, or some other entity for purposes of state income
tax law. Such characterization could result in entity level income or franchise
taxation of the trust. We recommend that potential investors consult their own
tax advisors with respect to the various state and local tax consequences of an
investment in securities.


                             ERISA CONSIDERATIONS


GENERAL

     The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
and the Code impose certain requirements in connection with the investment of
plan assets on employee benefit plans and on certain other retirement plans and
arrangements, including individual retirement accounts and annuities, Keogh
plans and collective investment funds and separate accounts in which


                                       95


these plans, accounts or arrangements are invested, that are subject to Title I
of ERISA or to Section 4975 of the Code ("Plans") and on persons who are
fiduciaries for those Plans. Some employee benefit plans, such as governmental
plans (as defined in ERISA Section 3(32)) and, if no election has been made
under Section 410(d) of the Code, church plans (as defined in Section 3(33) of
ERISA), are not subject to ERISA requirements. Therefore, assets of these plans
may be invested in securities without regard to the ERISA considerations
described below, subject to the provisions of other applicable federal, state
and local law. Any of these plans that is qualified and exempt from taxation
under Sections 401(a) and 501(a) of the Code, however, is subject to the
prohibited transaction rules set forth in Section 503 of the Code.

     ERISA generally imposes on Plan fiduciaries certain general fiduciary
requirements, including those of investment prudence and diversification and
the requirement that a Plan's investments be made in accordance with the
documents governing the Plan. In addition, ERISA and the Code prohibit a broad
range of transactions involving assets of a Plan and persons ("Parties in
Interest") who have certain specified relationships to the Plan unless a
statutory, regulatory or administrative exemption is available. Certain Parties
in Interest that participate in a prohibited transaction may be subject to an
excise tax imposed pursuant to Section 4975 of the Code, unless a statutory,
regulatory or administrative exemption is available. These prohibited
transactions generally are set forth in Sections 406 and 407 of ERISA and
Section 4975 of the Code.

     A Plan's investment in securities may cause the assets included in a
related trust fund to be deemed Plan assets. Section 2510.3-101 of the
regulations of the United States Department of Labor ("DOL") provides that when
a Plan acquires an equity interest in an entity, the Plan's assets include both
the equity interest and an undivided interest in each of the underlying assets
of the entity, unless certain exceptions not applicable here apply, or unless
the equity participation in the entity by "benefit plan investors" (i.e.,
Plans, employee benefit plans not subject to ERISA, and entities whose
underlying assets include plan assets by reason of a Plan's investment in the
entity) is not "significant," both as defined therein. For this purpose, in
general, equity participation by benefit plan investors will be "significant"
on any date if 25% or more of the value of any class of equity interests in the
entity is held by benefit plan investors. To the extent the securities are
treated as equity interests for purposes of DOL regulations Section 2510.3-101,
equity participation in a trust fund will be significant on any date if
immediately after the most recent acquisition of any security, 25% or more of
any class of securities is held by benefit plan investors.

     Any person who has discretionary authority or control respecting the
management or disposition of assets of a Plan, and any person who provides
investment advice for those assets for a fee, is a fiduciary of the Plan. If
the assets included in a trust fund constitute plan assets of an investing
Plan, then any party exercising management or discretionary control regarding
those assets, such as the servicer or master servicer, may be deemed to be a
"fiduciary" of the Plan and thus subject to the fiduciary responsibility
provisions and prohibited transaction provisions of ERISA and the Code with
respect to the investing Plan. In addition, if the assets included in a trust
fund constitute plan assets, the purchase of securities by a Party in Interest
of the Plan, as well as the operation of the trust fund, may constitute or
involve a prohibited transaction under ERISA and the Code.

     The DOL has issued individual exemptions to various underwriters as
indicated in the related prospectus supplement (the "Exemption") that generally
exempt from the application of the prohibited transaction provisions of
Sections 406(a) and 407(a) of ERISA, and the excise taxes imposed on those
prohibited transactions pursuant to Section 4975(a) and (b) of the Code,
certain transactions relating to the servicing and operation of mortgage pools
and the purchase, sale and holding of securities underwritten by an
underwriter, as defined below, that (1) represent a beneficial ownership
interest in the assets of an issuer which is a trust and entitle the holder to
pass-through payments of principal, interest and/or other payments made with
respect to the assets of the trust fund or (2) are denominated as a debt
instrument and represent an interest in the issuer, provided that certain
conditions set forth in the Exemption are satisfied.

     For purposes of this Section "ERISA Considerations," the term
"underwriter" will include (a) the underwriter specified in the related
prospectus supplement, (b) any person directly or indirectly,


                                       96


through one or more intermediaries, controlling, controlled by or under common
control with that underwriter, and (c) any member of the underwriting syndicate
or selling group of which a person described in (a) or (b) is a manager or
co-manager for a class of securities.

     Among the general conditions that must be satisfied for a transaction
involving the purchase, sale and holding of securities to be eligible for
exemptive relief under the Exemption are:

     o    The acquisition of securities by a Plan must be 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    If the investment pool contains only fully secured mortgage loans or
          obligations, the Exemption will apply to securities evidencing rights
          and interests that are subordinated to the rights and interests
          evidenced by the other securities of the issuer;

     o    One-to-four family residential and home equity loans may have
          loan-to-value ratios in excess of 100% (but not in excess of 125%),
          provided the securities are not subordinated and are rated in one of
          the two highest generic rating categories by a Rating Agency;

     o    The securities at the time of acquisition by the Plan must be rated in
          one of the three highest generic rating categories (four, in a
          "Designated Transaction") by Standard & Poor's Rating Services, a
          division of The McGraw-Hill Companies, Inc. ("S&P"), Moody's Investors
          Service, Inc. ("Moody's") or Fitch, Inc. ("Fitch") (each, a "Rating
          Agency");

     o    The trustee may not be an affiliate of any other member of the
          Restricted Group, as defined below other than the underwriter;

     o    The sum of all payments made to and retained by the underwriter(s)
          must represent not more than reasonable compensation for underwriting
          the securities; the sum of all payments made to and retained by the
          depositor pursuant to the assignment of the assets to the issuer must
          represent not more than the fair market value of those obligations;
          and the sum of all payments made to and retained by the master
          servicer and any other servicer must represent not more than
          reasonable compensation for that person's services under the related
          agreement and reimbursement of that person's reasonable expenses in
          connection therewith;

     o    The Plan investing in the securities must be an accredited investor as
          defined in Rule 501(a)(1) of Regulation D of the Commission under the
          Securities Act;

     o    Where the issuer is an owner trust, the documents establishing the
          issuer and governing the transaction must contain provisions intended
          to protect the assets of the issuer from creditors of the seller; and

     o    Assets of the type included as assets of the trust fund have been
          included in other investment pools; and securities evidencing
          interests in those other pools have been both: (i) rated in one of the
          three (or in the case of a Designated Transaction, four) highest
          generic rating categories by a Rating Agency and (ii) purchased by
          investors other than Plans for at least one year prior to a Plan's
          acquisition of the securities in reliance upon the Exemption.

     Moreover, the Exemption provides relief from certain self-dealing/conflict
of interest prohibited transactions that may arise under Sections 406(b)(1) and
406(b)(2) of ERISA (as well as from the excise taxes imposed by Sections
4975(a) and 4975(b) of the Code, by reason of Section 4975(c)(1)(E) of the
Code) when a fiduciary causes a Plan to invest in an issuer that holds
obligations on which the fiduciary (or its affiliate) is an obligor only if,
among other requirements: (1) the fiduciary (or its affiliate) is an obligor
with respect to no more than five percent of the fair market value of the
obligations contained in the trust fund; (2) the Plan's investment in each
class of securities does not exceed twenty-five percent of all of the
securities of that class outstanding at the time of the acquisition and (3)
immediately after the acquisition, no more than twenty-five percent of the
assets of any Plan for which the fiduciary serves as a fiduciary are invested
in securities representing an interest in one or more trusts containing assets
sold or serviced by the same entity; (4) in the case of an acquisition of
securities in connection with their initial issuance, at least 50% of each
class of securities


                                       97


in which Plans have invested and at least 50% of the aggregate interest in the
issuer is acquired by persons independent of the Restricted Group; and (5) the
Plan is not an Excluded Plan. An "Excluded Plan" is one that is sponsored by a
member of the Restricted Group, which consists of the trustee, each
underwriter, any insurer of the issuer, the sponsor, each servicer, any obligor
with respect to obligations included in the issuer constituting more than 5
percent of the aggregate unamortized principal balance of the assets of the
issuer on the date of the initial issuance of securities, each counterparty in
any eligible swap transactions and any affiliate of any such persons.

     A fiduciary of a Plan contemplating purchasing a security must make its
own determination that the general conditions set forth above will be satisfied
for that security.

     The rating of a security may change. If the rating of a security declines
below the lowest permitted rating, the security will no longer be eligible for
relief under the Exemption, (although a Plan that had purchased the security
when the security had a permitted rating would not be required by the Exemption
to dispose of it). Consequently, a security may not be purchased by or sold to
a Plan in such circumstances other than to an insurance company general account
pursuant to Prohibited Transaction Class Exemption ("PTCE") 95-60.

     If the general conditions of the Exemption are satisfied, the Exemption
may provide an exemption from the restrictions imposed by Sections 406(a) and
407(a) of ERISA (as well as the excise taxes imposed by Sections 4975(a) and
(b) of the Code by reason of Sections 4975(c) (1)(A) through (D) of the Code)
in connection with the direct or indirect sale, exchange, transfer, holding or
the direct or indirect acquisition or disposition in the secondary market of
securities by Plans. However, no exemption is provided from the restrictions of
Sections 406(a)(1)(E), 406(a)(2) and 407 of ERISA for the acquisition or
holding of a security on behalf of an Excluded Plan by any person who has
discretionary authority or renders investment advice with respect to the assets
of that Excluded Plan.

     Further, if certain specific conditions of the Exemption are satisfied,
the Exemption may provide an exemption from the restrictions imposed by
Sections 406(a), 406(b) and 407(a) of ERISA, and the taxes imposed by Sections
4975(a) and (b) of the Code by reason of Section 4975(c) of the Code for
transactions in connection with the servicing, management and operation of the
trust fund. The depositor expects that the specific conditions of the Exemption
required for this purpose will be satisfied for the securities so that the
Exemption would provide an exemption from the restrictions imposed by Sections
406(a), 406(b) and 407(a) of ERISA (as well as the excise taxes imposed by
Sections 4975(a) and (b) of the Code by reason of Section 4975(c) of the Code)
for transactions in connection with the servicing, management and operation of
the mortgage pools, provided that the general conditions of the Exemption are
satisfied.

     The Exemption also may provide an exemption from the restrictions imposed
by Sections 406(a) and 407(a) of ERISA, and the taxes imposed by Section
4975(a) and (b) of the Code by reason of Sections 4975(c)(1)(A) through (D) of
the Code if those restrictions are deemed to otherwise apply merely because a
person is deemed to be a "party in interest" (within the meaning of Section
3(14) of ERISA) or a "disqualified person" (within the meaning of Section
4975(e)(2) of the Code) with respect to an investing Plan by virtue of
providing services to the Plan (or by virtue of having certain specified
relationships to that person) solely as a result of the Plan's ownership of
securities.

     The Exemption extends exemptive relief to certain mortgage-backed and
asset-backed securities transactions that use pre-funding accounts and that
otherwise meet the requirements of the exemption relating to pre-funding
accounts. Generally, obligations in an investment pool supporting payments to
securityholders, and having a value equal to no more than 25% of the total
initial principal balance of the related securities, may be transferred to the
trust fund within the pre-funding period, which must end no later than the
later of three months or 90 days after the closing date, instead of being
required to be either identified or transferred on or before the closing date.

     The Exemption permits interest-rate swaps and yield supplement agreements
to be assets of a trust fund if certain conditions are satisfied. An
interest-rate swap (or if purchased by or on behalf of the trust) an
interest-rate cap contract (collectively, a "Swap" or "Swap Agreement") is a
permitted


                                       98


trust fund asset if it: (a) is an "eligible Swap;" (b) is with an "eligible
counterparty;" (c) is purchased by a "qualified plan investor;" (d) meets
certain additional specific conditions which depend on whether the Swap is a
"ratings dependent Swap" or a "non-ratings dependent Swap" and (e) permits the
trust to make termination payments to the Swap counterparty (other than
currently scheduled payments) solely from excess spread or amounts otherwise
payable to the servicer, depositor or seller.


     An "eligible Swap" is one which: (a) is denominated in U.S. dollars; (b)
pursuant to which the trust pays or receives, on or immediately prior to the
respective payment or distribution date for the class of securities to which
the Swap relates, a fixed rate of interest or a floating rate of interest based
on a publicly available index (e.g., LIBOR or the U.S. Federal Reserve's Cost
of Funds Index (COFI)), with the trust receiving such payments on at least a
quarterly basis and obligated to make separate payments no more frequently than
the counterparty, with all simultaneous payments being netted ("Allowable
Interest Rate"); (c) has a notional amount that does not exceed either: (i) the
principal balance of the class of securities to which the Swap relates, or (ii)
the portion of the principal balance of such class represented by obligations
("Allowable Notional Amount"); (d) is not leveraged (i.e., payments are based
on the applicable notional amount, the day count fractions, the fixed or
floating rates permitted above, and the difference between the products
thereof, calculated on a one-to-one ratio and not on a multiplier of such
difference) ("Leveraged"); (e) has a final termination date that is either the
earlier of the date on which the issuer terminates or the related class of
securities are fully repaid and (f) does not incorporate any provision which
could cause a unilateral alteration in the interest rate requirements described
above or the prohibition against leveraging.


     An "eligible counterparty" means a bank or other financial institution
which has a rating at the date of issuance of the securities, which is in one
of the three highest long-term credit rating categories or one of the two
highest short-term credit rating categories, utilized by at least one of the
Rating Agencies rating the securities; provided that, if a counterparty is
relying on its short-term rating to establish eligibility hereunder, such
counterparty must either have a long-term rating in one of the three highest
long-term rating categories or not have a long-term rating from the applicable
Rating Agency.


     A "qualified plan investor" is a Plan where the decision to buy such class
of securities is made on behalf of the Plan by an independent fiduciary
qualified to understand the Swap transaction and the effect the Swap would have
on the rating of the securities and such fiduciary is either (a) a "qualified
professional asset manager" ("QPAM") under PTCE 84-14, (b) an "in-house asset
manager" under PTCE 96-23 or (c) has total assets (both Plan and non-Plan)
under management of at least $100 million at the time the securities are
acquired by the Plan.


     In "ratings dependent Swaps" (where the rating of a class of securities is
dependent on the terms and conditions of the Swap), the Swap Agreement must
provide that if the credit rating of the counterparty is withdrawn or reduced
by any Rating Agency below a level specified by the Rating Agency, the servicer
must, within the period specified under the Pooling and Servicing Agreement or
similar agreement: (a) obtain a replacement Swap Agreement with an eligible
counterparty which is acceptable to the Rating Agency and the terms of which
are substantially the same as the current Swap Agreement (at which time the
earlier Swap Agreement must terminate); or (b) cause the Swap counterparty to
establish any collateralization or other arrangement satisfactory to the Rating
Agency such that the then current rating by the Rating Agency of the particular
class of securities will not be withdrawn or reduced (and the terms of the Swap
Agreement must specifically obligate the counterparty to perform these duties
for any class of securities with a term of more than one year). In the event
that the servicer fails to meet these obligations, holders of the securities
that are employee benefit plans or other retirement arrangements must be
notified in the immediately following periodic report which is provided to the
holders of the securities but in no event later than the end of the second
month beginning after the date of such failure. Sixty days after the receipt of
such report, the exemptive relief provided under the Exemption will
prospectively cease to be applicable to any class of securities held by an
employee benefit plan or other retirement arrangement which involves such
ratings dependent Swap.


                                       99


     "Non-ratings dependent Swaps" (those where the rating of the securities
does not depend on the terms and conditions of the Swap) are subject to the
following conditions. If the credit rating of the counterparty is withdrawn or
reduced below the lowest level permitted above, the servicer will, within a
specified period after such rating withdrawal or reduction: (a) obtain a
replacement Swap Agreement with an eligible counterparty, the terms of which
are substantially the same as the current Swap Agreement (at which time the
earlier Swap Agreement must terminate); (b) cause the counterparty to post
collateral with the trust in an amount equal to all payments owed by the
counterparty if the Swap transaction were terminated; or (c) terminate the Swap
Agreement in accordance with its terms.

     An "eligible yield supplement agreement" is any yield supplement agreement
or similar arrangement (or if purchased by or on behalf of the trust) an
interest rate cap contract to supplement the interest rates otherwise payable
on obligations held by the trust fund ("EYS Agreement"). If the EYS Agreement
has a notional principal amount and/or is written on an International Swaps and
Derivatives Association, Inc. (ISDA) form, the EYS Agreement may only be held
as an asset of the trust fund if it meets the following conditions: (a) it is
denominated in U.S. dollars; (b) it pays an Allowable Interest Rate; (c) it is
not Leveraged; (d) it does not allow any of these three preceding requirements
to be unilaterally altered without the consent of the trustee; (e) it is
entered into between the trust and an eligible counterparty and (f) it has an
Allowable Notional Amount.

     To the extent the securities are notes treated as equity interests for
purposes of DOL regulations Section 2510.3-101, a Plan's investment in those
securities ("Non-Equity Securities") would not cause the assets included in a
related trust fund to be deemed Plan assets. However, without regard to whether
or not the Non-Equity Securities are treated as equity, the acquisition or
holding of Non-Equity Securities by or on behalf of a Plan could still give
rise to a prohibited transaction if the trust or any of its affiliates is or
becomes a party in interest or disqualified person with respect to such Plan,
or in the event that a Non-Equity Security is purchased in the secondary market
and such purchase constitutes a sale or exchange between a Plan and a party in
interest or disqualified person with respect to such Plan. Also, any holder of
securities, because of its activities or the activities of its respective
affiliates, may be deemed to be a Party in Interest with respect to certain
Plans, including but not limited to Plans sponsored by that holder. In either
case, the acquisition or holding of Non-Equity Securities by or on behalf of
that Plan could be considered to give rise to an indirect prohibited
transaction within the meaning of ERISA and the Code, unless it is subject to
one or more statutory, regulatory or administrative exemptions such as PTCE
84-14, which exempts certain transactions effected on behalf of a Plan by a
"qualified professional asset manager," PTCE 90-1, which exempts certain
transactions involving insurance company pooled separate accounts, PTCE 91-38,
which exempts certain transactions involving bank collective investment funds,
PTCE 95-60, which exempts certain transactions involving insurance company
general accounts, or PTCE 96-23, which exempts certain transactions effected on
behalf of a Plan by certain "in-house" asset managers. It should be noted,
however, that even if the conditions specified in one or more of these
exemptions are met, the scope of relief provided by these exemptions may not
necessarily cover all acts that might be construed as prohibited transactions.

     The depositor, the master servicer, the servicer, the trustee, or
underwriter may be the sponsor of or investment advisor with respect to one or
more Plans. Because these parties may receive certain benefits in connection
with the sale of Non-Equity Securities, the purchase of Non-Equity Securities
using Plan assets over which any of these parties 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, Non-Equity
Securities may not purchased using the assets of any Plan if any of the
depositor, the master servicer, the servicer, the trustee, or underwriter has
investment authority for those assets, or is an employer maintaining or
contributing to the Plan unless a prohibited transaction exemption is
applicable to this type of transaction.

     Any Plan fiduciary that proposes to cause a Plan to purchase securities
should consult with its counsel with respect to the potential applicability of
ERISA and the Code to that investment, the availability of the exemptive relief
provided in the Exemption and the potential applicability of any other
prohibited transaction exemption in connection therewith. In particular, a Plan
fiduciary that


                                      100


proposes to cause a Plan to purchase securities representing a beneficial
ownership interest in a pool of single-family residential first mortgage loans
should consider the applicability of PTCE 83-1, which provides exemptive relief
for certain transactions involving mortgage pool investment trusts. The
prospectus supplement for a series of securities may contain additional
information regarding the application of the Exemption, PTCE 83-1 or any other
exemption, with respect to the securities offered thereby. In addition, any
Plan fiduciary that proposes to cause a Plan to purchase certain types of
securities should consider the federal income tax consequences of that
investment.

     Any Plan fiduciary considering whether to purchase a security on behalf of
a Plan should consult with its counsel regarding the application of the DOL
regulations Section 2510.3-101 and the fiduciary responsibility and prohibited
transaction provisions of ERISA and the Code to that investment.

     The sale of securities to a Plan is in no respect a representation by the
depositor or the underwriter that the investment meets all relevant legal
requirements for investments by Plans generally or any particular Plan, or that
the investment is appropriate for Plans generally or any particular Plan.

                                LEGAL INVESTMENT

     The prospectus supplement for each series of securities will specify
which, if any, of the classes of securities offered thereby constitute
"mortgage related securities" for purposes of the Secondary Mortgage Market
Enhancement Act of 1984 ("SMMEA"). Classes of securities that qualify as
"mortgage related securities" will be legal investments for persons, trusts,
corporations, partnerships, associations, business trusts, and business
entities (including depository institutions, life insurance companies and
pension funds) created pursuant to or existing under the laws of the United
States or of any state (including the District of Columbia and Puerto Rico)
whose authorized investments are subject to state regulations to the same
extent as, under applicable law, obligations issued by or guaranteed as to
principal and interest by the United States or any of those entities. Under
SMMEA, if a state enacted legislation prior to October 4, 1991 specifically
limiting the legal investment authority of any of those entities with respect
to "mortgage related securities," securities will constitute legal investments
for entities subject to the legislation only to the extent provided in the
legislation. Approximately twenty-one states adopted this legislation prior to
the October 4, 1991 deadline. SMMEA provides, however, that in no event will
the enactment of any such legislation affect the validity of any contractual
commitment to purchase, hold or invest in securities, or require the sale or
other disposition of securities, so long as the contractual commitment was made
or the securities were acquired prior to the enactment of the legislation.

     SMMEA also amended the legal investment authority of federally-chartered
depository institutions as follows: federal savings and loan associations and
federal savings banks may invest in, sell or otherwise deal in securities
without limitations as to the percentage of their assets represented thereby,
federal credit unions may invest in mortgage related securities, and national
banks may purchase securities for their own account without regard to the
limitations generally applicable to investment securities set forth in 12 U.S.C.
24 (Seventh), subject in each case to such regulations as the applicable federal
authority may prescribe. In this connection, federal credit unions should review
the National Credit Union Administration ("NCUA") Letter to Credit Unions No.
96, as modified by Letter to Credit Unions No. 108, which includes guidelines to
assist federal credit unions in making investment decisions for mortgage related
securities and the NCUA's regulation "Investment and Deposit Activities" (12
C.F.R. Part 703), which sets forth certain restrictions on investment by federal
credit unions in mortgage related securities (in each case whether or not the
class of securities under consideration for purchase constituted a "mortgage
related security"). The NCUA issued final regulations effective December 2, 1991
that restrict and in some instances prohibit the investment by Federal Credit
Unions in certain types of mortgage related securities.

     All depository institutions considering an investment in the securities
(whether or not the class of securities under consideration for purchase
constitutes a "mortgage related security") should review the Federal Financial
Institutions Examination Council's Supervisory Policy Statement on the
Securities Activities (to the extent adopted by their respective regulators)
(the "Policy Statement")


                                      101


setting forth, in relevant part, certain securities trading and sales practices
deemed unsuitable for an institution's investment portfolio, and guidelines for
(and restrictions on) investing in mortgage derivative products, including
"mortgage related securities," which are "high-risk mortgage securities" as
defined in the Policy Statement. According to the Policy Statement, such
"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, it is the responsibility of each
depository institution to determine, prior to purchase (and at stated intervals
thereafter), whether a particular mortgage derivative product is a "high-risk
mortgage security," and whether the purchase (or retention) of 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, but not limited
to "prudent investor" provisions, percentage-of-assets limits and provisions
which may restrict or prohibit investment in securities which are not "interest
bearing" or "income paying," or in securities which are issued in book-entry
form.

     There may be other restrictions on the ability of certain investors,
including depository institutions, either to purchase securities or to purchase
securities representing more than a specified percentage of the investor's
assets. Investors should 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 or relating to a separate trust fund) through any of the
following methods:

     o    by negotiated firm commitment underwriting and public reoffering by
          underwriters;

     o    by agency placements through one or more placement agents primarily
          with institutional investors and dealers; and

     o    by placement directly by the depositor with institutional investors.

     A prospectus supplement will be prepared for each series which will
describe the method of offering being used for that series and will set forth
the identity of any underwriters thereof and either the price at which that
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.

     It is anticipated that the underwriting agreement pertaining to the sale
of offered securities of any series will provide that the obligations of the
underwriters will be subject to conditions precedent, that the underwriters
will be obligated to purchase all the securities if any are purchased, other
than in connection with an underwriting on a best efforts basis, and that, in
limited circumstances, the depositor will indemnify the several underwriters
and the underwriters will indemnify the depositor against certain civil
liabilities, including liabilities under the Securities Act or will contribute
to payments required to be made in respect thereof.

     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 those underwriters or agents may be required to
make in respect thereof.


                                      102


     If a series is offered other than through underwriters, the prospectus
supplement relating thereto will contain information regarding the nature of
the offering and any agreements to be entered into between the depositor and
purchasers of securities of the series.


                                 LEGAL MATTERS

     The validity of the securities of each series, including certain federal
income tax consequences with respect thereto, will be passed upon for the
depositor by McKee Nelson LLP, 1919 M Street, N.W., Washington, D.C. 20036.


                             FINANCIAL INFORMATION

     A new trust fund will be formed with respect to each series of securities
and no trust fund will engage in any business activities or have any assets or
obligations prior to the issuance of the related series of securities.
Accordingly, no financial statements with respect to any trust fund will be
included in this prospectus or in the related prospectus supplement.


                                    RATINGS

     It is a condition to the issuance of the securities of each series offered
hereby and by the prospectus supplement that they shall have been rated in one
of the four highest rating categories by the nationally recognized statistical
rating agency or agencies (each, a "Rating Agency") specified in the related
prospectus supplement.

     A rating is based on, among other things, the adequacy of the value of the
Trust Fund Assets and any credit enhancement with respect to a class of
securities and will reflect the Rating Agency's assessment solely of the
likelihood that holders of that class of securities will receive payments to
which the holders are entitled under the related Agreement. A rating will not
constitute an assessment of the likelihood that principal prepayments on the
related loans will be made, the degree to which the rate of those prepayments
might differ from that originally anticipated or the likelihood of early
optional termination of the series of securities. A rating should not be deemed
a recommendation to purchase, hold or sell securities, inasmuch as it does not
address market price or suitability for a particular investor. Each security
rating should be evaluated independently of any other security rating. A rating
will not address the possibility that prepayment at higher or lower rates than
anticipated by an investor may cause the investor to experience a lower than
anticipated yield or that an investor purchasing a security at a significant
premium might fail to recoup its initial investment under certain prepayment
scenarios.

     There is also no assurance that any rating will remain in effect for any
given period of time or that it may not be lowered or withdrawn entirely by the
Rating Agency in the future if in its judgment circumstances in the future so
warrant. In addition to being lowered or withdrawn due to any erosion in the
adequacy of the value of the Trust Fund Assets or any credit enhancement with
respect to a series, a rating might also be lowered or withdrawn among other
reasons, because of an adverse change in the financial or other condition of a
credit enhancement provider or a change in the rating of the credit enhancement
provider's long term debt.

     The amount, type and nature of credit enhancement, if any, established
with respect to a series of securities will be determined on the basis of
criteria established by each Rating Agency rating classes of such series. These
criteria are sometimes based upon an actuarial analysis of the behavior of
mortgage loans in a larger group. This analysis is often the basis upon which
each Rating Agency determines the amount of credit enhancement required with
respect to each class of securities. There can be no assurance that the
historical data supporting any such actuarial analysis will accurately reflect
future experience nor any assurance that the data derived from a large pool of
mortgage loans accurately predicts the delinquency, foreclosure or loss
experience of any particular pool of loans. No assurance can be given that
values of any Properties have remained or will remain at their levels on the
respective dates of origination of the related loans. If the residential real
estate markets should experience an overall decline in property values such
that the outstanding principal balances of the


                                      103


loans in a particular trust fund and any secondary financing on the related
Properties become equal to or greater than the value of the Properties, the
rates of delinquencies, foreclosures and losses could be higher than those now
generally experienced in the mortgage lending industry. In additional, adverse
economic conditions (which may or may not affect real property values) may
affect the timely payment by mortgagors of scheduled payments of principal and
interest on the loans and, accordingly, the rates of delinquencies,
foreclosures and losses with respect to any trust fund. To the extent that
those losses are not covered by credit enhancement, they will be borne, at
least in part, by the holders of one or more classes of the securities of the
related series.



                                      104


                                    ANNEX I

                      GLOBAL CLEARANCE, SETTLEMENT AND TAX
                           DOCUMENTATION PROCEDURES

     Except in certain limited circumstances, the globally offered mortgage loan
asset backed securities (the "Global Securities") will be available only in
book-entry form. Investors in the Global Securities may hold such Global
Securities through any of DTC, Clearstream Luxembourg or Euroclear. The Global
Securities will be tradable as home market instruments in both the European and
U.S. domestic markets. Initial settlement and all secondary trades will settle
in same-day funds.

     Secondary market trading between investors holding Global Securities
through Clearstream Luxembourg and Euroclear will be conducted in the ordinary
way in accordance with their normal rules and operating procedures and in
accordance with conventional eurobond practice (i.e., seven calendar day
settlement).

     Secondary market trading between investors holding Global Securities
through DTC will be conducted according to the rules and procedures applicable
to U.S. corporate debt obligations and prior mortgage loan asset backed
securities issues.

     Secondary cross-market trading between Clearstream Luxembourg or Euroclear
and DTC Participants holding Global Securities will be effected on a
delivery-against-payment basis through the respective depositaries of
Clearstream Luxembourg and Euroclear (in such capacity) and as DTC Participants.

     A holder that is not a United States person (as described below) of Global
Securities will be subject to U.S. withholding taxes unless such holder meets
certain requirements and delivers appropriate U.S. tax documents to the
securities clearing organizations or their participants.

INITIAL SETTLEMENT

     All Global Securities will be held in book-entry form by DTC in the name of
Cede & Co. as nominee of DTC. Investors' interests in the Global Securities will
be represented through financial institutions acting on their behalf as direct
and indirect Participants in DTC. As a result, Clearstream Luxembourg and
Euroclear will hold positions on behalf of their participants through their
respective Relevant Depositaries, which in turn will hold such positions in
accounts as DTC Participants.

     Investors electing to hold their Global Securities through DTC will follow
the settlement practices applicable to prior mortgage loan asset backed
securities issues. Investors' securities custody accounts will be credited with
their holdings against payment in same-day funds on the settlement date.

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

SECONDARY MARKET TRADING

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

     TRADING BETWEEN DTC PARTICIPANTS. Secondary market trading between DTC
Participants will be settled using the procedures applicable to prior mortgage
loan asset backed securities issues in same-day funds.

     TRADING BETWEEN CLEARSTREAM LUXEMBOURG AND/OR EUROCLEAR PARTICIPANTS.
Secondary market trading between Clearstream Luxembourg Participants or
Euroclear Participants will be settled using the procedures applicable to
conventional eurobonds in same-day funds.

     TRADING BETWEEN DTC SELLER AND CLEARSTREAM LUXEMBOURG OR EUROCLEAR
PURCHASER. When Global Securities are to be transferred from the account of a
DTC Participant to the account of a


                                      105


Clearstream Luxembourg Participant or a Euroclear Participant, the purchaser
will send instructions to Clearstream Luxembourg or Euroclear through a
Clearstream Luxembourg Participant or Euroclear Participant at least one
business day prior to settlement. Clearstream Luxembourg or Euroclear will
instruct the respective Relevant Depositary, as the case may be, to receive the
Global Securities against payment. Payment will include interest accrued on the
Global Securities from and including the last coupon payment date to and
excluding the settlement date, on the basis of either the actual number of days
in such accrual period and a year assumed to consist of 360 days or a 360-day
year of twelve 30-day months as applicable to the related class of Global
Securities. 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 Relevant Depositary of the DTC
Participant's account against delivery of the Global Securities. After
settlement has been completed, the Global Securities will be credited to the
respective clearing system, and by the clearing system, in accordance with its
usual procedures, to the Clearstream Luxembourg Participant's or Euroclear
Participant's account. The securities credit will appear the next day (European
time) and the cash debt will be back-valued to, and the interest on the Global
Securities will accrue from, the value date (which would be the preceding day
when settlement occurred in New York). If settlement is not completed on the
intended value date (i.e., the trade fails), the Clearstream Luxembourg or
Euroclear cash debt will be valued instead as of the actual settlement date.

     Clearstream Luxembourg Participants and Euroclear Participants will need to
make available to the respective clearing systems the funds necessary to process
same-day funds settlement. The most direct means of doing so is to preposition
funds for settlement, either from cash on hand or existing lines of credit, as
they would for any settlement occurring within Clearstream Luxembourg or
Euroclear. Under this approach, they may take on credit exposure to Clearstream
Luxembourg or Euroclear until the Global Securities are credited to their
accounts one day later.

     As an alternative, if Clearstream Luxembourg or Euroclear has extended a
line of credit to them, Clearstream Luxembourg Participants or Euroclear
Participants can elect not to preposition funds and allow that credit line to be
drawn upon the finance settlement. Under this procedure, Clearstream Luxembourg
Participants or Euroclear Participants purchasing Global Securities would incur
overdraft charges for one day, assuming they cleared the overdraft when the
Global Securities were credited to their accounts. However, interest on the
Global Securities would accrue from the value date. Therefore, in many cases the
investment income on the Global Securities earned during that one-day period may
substantially reduce or offset the amount of such overdraft charges, although
this result will depend on each Clearstream Luxembourg Participant's or
Euroclear Participant's particular cost of funds.

     Since the settlement is taking place during New York business hours, DTC
Participants can employ their usual procedures for sending Global Securities to
the respective European Depositary for the benefit of Clearstream Luxembourg
Participants or Euroclear Participants. The sale proceeds will be available to
the DTC seller on the settlement date. Thus, to the DTC Participants a
cross-market transaction will settle no differently than a trade between two DTC
Participants.

     TRADING BETWEEN CLEARSTREAM LUXEMBOURG OR EUROCLEAR SELLER AND DTC
PURCHASER. Due to time zone differences in their favor, Clearstream Luxembourg
Participants and Euroclear Participants may employ their customary procedures
for transactions in which Global Securities are to be transferred by the
respective clearing system, through the respective Relevant Depositary, to a DTC
Participant. The seller will send instructions to Clearstream Luxembourg or
Euroclear through a Clearstream Luxembourg Participant or Euroclear Participant
at least one business day prior to settlement. In these cases Clearstream
Luxembourg or Euroclear will instruct the respective Relevant Depositary, as
appropriate, to deliver the Global Securities to the DTC Participant's account
against payment. Payment will include interest accrued on the Global Securities
from and including the last coupon payment to and excluding the settlement date
on the basis of either the actual number of days in such accrual period and a
year assumed to consist of 360 days or a 360-day year of twelve 30-day months as
applicable to the related class of Global Securities. 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


                                      106


payment will then be reflected in the account of the Clearstream Luxembourg
Participant or Euroclear Participant the following day, and receipt of the cash
proceeds in the Clearstream Luxembourg Participant's or Euroclear Participant's
account would be back-valued to the value date (which would be the preceding
day, when settlement occurred in New York). Should the Clearstream Luxembourg
Participant or Euroclear Participant have a line of credit with its respective
clearing system and elect to be in debt in anticipation of receipt of the sale
proceeds in its account, the back-valuation will extinguish any overdraft
incurred over that one day period. If settlement is not completed on the
intended value date (i.e., the trade fails), receipt of the cash proceeds in the
Clearstream Luxembourg Participant's or Euroclear Participant's account would
instead be valued as of the actual settlement date.

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

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

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

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

CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS

     A holder that is not a United States person within the meaning of Section
7701(a)(30) of the Code holding a book-entry security through Clearstream
Luxembourg, Euroclear or DTC may be subject to U.S. withholding tax at a rate of
30% unless such holder provides certain documentation to the trustee or to the
U.S. entity required to withhold tax (the "U.S. Withholding Agent") establishing
an exemption from withholding. A holder that is not a United States person may
be subject to 30% withholding unless:

     I. the trustee or the U.S. Withholding Agent receives a statement--

      (a) from the holder on IRS Form W-8BEN (or any successor form) that--

          (i) is signed by the securityholder under penalties of perjury,

          (ii) certifies that such owner is not a United States person, and

          (iii) provides the name and address of the securityholder, or

      (b) from a securities clearing organization, a bank or other financial
       institution that holds customers' securities in the ordinary course of
       its trade or business that-

          (i) is signed under penalties of perjury by an authorized
           representative of the financial institution,

          (ii) states that the financial institution has received an IRS Form
           W-8BEN (or any successor form) from the securityholder or that
           another financial institution acting on behalf of the securityholder
           has received such IRS Form W-8BEN (or any successor form),

          (iii) provides the name and address of the securityholder, and

          (iv) attaches the IRS Form W-8BEN (or any successor form) provided by
           the securityholder;


                                      107


     II. the holder claims an exemption or reduced rate based on a treaty and
provides a properly executed IRS Form W-8BEN (or any successor form) to the
trustee or the U.S. Withholding Agent;

     III. the holder claims an exemption stating that the income is effectively
connected to a U.S. trade or business and provides a properly executed IRS Form
W-8ECI (or any successor form) to the trustee or the U.S. Withholding Agent; or

     IV. the holder is a nonwithholding partnership and provides a properly
executed IRS Form W-8IMY (or any successor form) with all necessary attachments
to the trustee or the U.S. Withholding Agent. Certain pass-through entities
that have entered into agreements with the Internal Revenue Service (for
example qualified intermediaries) may be subject to different documentation
requirements; it is recommended that such holders consult with their tax
advisors when purchasing the Global Securities.

     A holder holding book-entry securities through Clearstream Luxembourg or
Euroclear provides the forms and statements referred to above by submitting
them to the person through which he holds an interest in the book-entry
securities, which is the clearing agency, in the case of persons holding
directly on the books of the clearing agency. Under certain circumstances a
Form W-8BEN, if furnished with a taxpayer identification number (a "TIN"), will
remain in effect until the status of the beneficial owner changes, or a change
in circumstances makes any information on the form incorrect. A Form W-8BEN, if
furnished without a TIN, and a Form W-8ECI will remain in effect for a period
starting on the date the form is signed and ending on the last day of the third
succeeding calendar year, unless a change in circumstances makes any
information on the form incorrect.

     In addition, all holders holding book-entry securities through Clearstream
Luxembourg, Euroclear or DTC may be subject to backup withholding at a rate of
up to 31% unless the holder:

     I. provides a properly executed IRS Form W-8BEN, Form W-8ECI or Form
W-8IMY (or any successor forms) if that person is not a United States person;

     II. provides a properly executed IRS Form W-9 (or any substitute form) if
that person is a United States person; or

     III. is a corporation, within the meaning of Section 7701(a) of the Code,
or otherwise establishes that it is a recipient exempt from United States
backup withholding.

     This summary does not deal with all aspects of federal income tax
withholding or backup withholding that may be relevant to investors that are
not United States persons within the meaning of Section 7701(a)(30) of the
Code. Such investors are advised to consult their own tax advisors for specific
tax advice concerning their holding and disposing of the book-entry securities.

     The term "United States person" means (1) a citizen or resident of the
United States, (2) a corporation or partnership organized in or under the laws
of the United States or any state or the District of Columbia (other than a
partnership that is not treated as a United States person under any applicable
Treasury regulations), (3) an estate the income of which is includible in gross
income for United States tax purposes, regardless of its source, (4) a trust if
a court within the United States is able to exercise primary supervision over
the administration of the trust and one or more United States persons have
authority to control all substantial decisions of the trust, and (5)to the
extent provided in regulations, certain trusts in existence on August 20, 1996,
that are treated as United States persons prior to such date and that elect to
continue to be treated as United States persons.


                                      108


                             INDEX OF DEFINED TERMS


<TABLE>

DEFINED TERM                               PAGE
---------------------------------------   -----

1986 Act ..............................     77
accrual class .........................     78
Aegis .................................     22
Agreement .............................     15
Allowable Interest Rate ...............     99
Allowable Notional Amount .............     99
APR ...................................     19
Available Funds .......................     30
beneficial owner ......................     39
benefit plan investors ................     96
BIF ...................................     54
Capitalized Interest Account ..........     56
CERCLA ................................     69
Class Security Balance ................     30
Clearstream Luxembourg ................     40
Clearstream Luxembourg Participant.....     39
Code ..................................     29
COFI securities .......................     37
Collateral Value ......................     19
Combined Loan-to-Value Ratio ..........     19
Company Counsel .......................     75
constant yield election ...............     81
cooperative loans .....................     16
cooperatives ..........................     16
Cut-off Date Principal Balance ........     28
Debt Securities .......................     77
debt-to-income ratio ..................     26
Definitive Security ...................     39
Designated Transaction ................     97
Detailed Description ..................     16
DOL ...................................     96
DTC ...................................     39
DTC Participant .......................     39
Eleventh District .....................     37
ERISA .................................     29
Euroclear Participant .................     39
European Depositories .................     39
Events of Default .....................     61
Exemption .............................     96
EYS Agreement .........................    100
FDIC ..................................     26
FHLBSF ................................     37
fiduciary .............................     96
Financial Intermediary ................     39
Fitch .................................     97
Funding Period ........................     56
Garn-St Germain Act ...................     71
Global Securities .....................    105
</TABLE>

<TABLE>

DEFINED TERM                               PAGE
---------------------------------------   -----

Grantor Trust .........................     77
Grantor Trust Certificates ............     77
Guide .................................     22
High Cost Loans .......................     74
home equity loans .....................     16
Homeownership Act .....................     74
Indenture .............................     28
inducement fees .......................     85
Insurance Proceeds ....................     55
Insured Expenses ......................     55
IRS ...................................     74
L/C Bank ..............................     44
L/C Percentage ........................     44
Leveraged .............................     99
Liquidation Expenses ..................     55
Liquidation Proceeds ..................     55
Loan Rate .............................     17
Loan-to-Value Ratio ...................     19
market discount bond ..................     79
MERS ..................................     52
MGT/EOC ...............................     41
Moody's ...............................     46
Mortgage ..............................     52
National Cost of Funds Index ..........     38
NCUA ..................................    101
Non-Equity Securities .................    100
non-pro rata security .................     80
OID ...................................     77
OID Regulations .......................     77
OTS ...................................     38
outside reserve fund ..................     76
PAC Method ............................     78
Parties in Interest ...................     96
Partner Certificates ..................     77
Pass-Through Rate .....................     15
Permitted Investments .................     45
Plans .................................     96
Policy Statement ......................    101
Pool Insurance Policy .................     47
Pool Insurer ..........................     47
Pooling and Servicing Agreement .......     15
Pre-Funded Amount .....................     56
Pre-Funding Account ...................     56
Primary Mortgage Insurance Policy .....     18
Prime Rate ............................     39
Principal Prepayments .................     31
pro rata prepayment ...................     81
Properties ............................     18
</TABLE>

                                      109



<TABLE>

DEFINED TERM                                  PAGE
------------------------------------------   -----

PTCE .....................................     98
Purchase Price ...........................     27
QPAM .....................................     99
Qualified Stated Interest ................     78
Rating Agency ............................     97
RCRA .....................................     69
Record Date ..............................     29
Refinance Loan ...........................     19
regular interests ........................     29
REIT .....................................     77
Relevant Depositary ......................     39
Relief Act ...............................     72
REMIC ....................................     29
residual interests .......................     29
Retained Interest ........................     28
Rules ....................................     39
SAIF .....................................     54
Sale and Servicing Agreement .............     15
SBJPA of 1996 ............................     94
secured creditor exclusion ...............     69
Securities Act ...........................
Security Account .........................     54
Security Owners ..........................     39
Security Register ........................     29
Sellers ..................................     15
Senior Securities ........................     43
</TABLE>

<TABLE>

DEFINED TERM                                  PAGE
------------------------------------------   -----

Senior Securityholders ...................     43
Servicing Fee ............................     59
significant ..............................     96
Single Family Properties .................     18
SMMEA ....................................    101
Stripped Bond Rules ......................     89
Subordinated Securities ..................     43
Subordinated Securityholders .............     43
Subsequent Loans .........................     56
super-premium class ......................     78
Swap .....................................     98
Swap Agreement ...........................     98
S&P ......................................     97
Terms and Conditions .....................     42
Tiered REMICs ............................     94
TIN ......................................    108
Title V ..................................     72
Transfer and Servicing Agreement .........     15
Trust Agreement ..........................     15
Trust Fund Assets ........................     15
UCC ......................................     68
underwriter ..............................     96
United States person .....................    108
U.S. Withholding Agent ...................    107
withholding agent ........................     82
</TABLE>


                                      110

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