Filed Pursuant to Rule 424B5
                                               Registration File No.: 333-125593

PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED JULY 27, 2005)


                                  $524,223,100
                                 (APPROXIMATE)


                  MORGAN STANLEY MORTGAGE LOAN TRUST 2005-11AR
                                    (ISSUER)

              MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2005-11AR

                         MORGAN STANLEY CAPITAL I INC.
                                  (DEPOSITOR)

                      MORGAN STANLEY MORTGAGE CAPITAL INC.
                                    (SELLER)

                     WELLS FARGO BANK, NATIONAL ASSOCIATION
                               (MASTER SERVICER)

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

MORGAN STANLEY MORTGAGE LOAN TRUST 2005-11AR IS ISSUING NINETEEN CLASSES OF
CERTIFICATES, BUT IS OFFERING ONLY FOURTEEN OF THESE CLASSES OF CERTIFICATES
THROUGH THIS PROSPECTUS SUPPLEMENT.

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

YOU SHOULD READ THE SECTION ENTITLED "RISK FACTORS" STARTING ON PAGE S-8 OF THIS
PROSPECTUS SUPPLEMENT AND PAGE 10 OF THE ACCOMPANYING PROSPECTUS AND CONSIDER
THESE FACTORS BEFORE MAKING A DECISION TO INVEST IN THE CERTIFICATES.

THE CERTIFICATES REPRESENT INTERESTS IN THE TRUST FUND ONLY AND ARE NOT
INTERESTS IN OR OBLIGATIONS OF ANY OTHER PERSON.

NEITHER THE CERTIFICATES NOR THE UNDERLYING MORTGAGE LOANS WILL BE INSURED OR
GUARANTEED BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY.

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


THE TRUST FUND--

o    THE TRUST FUND WILL CONSIST PRIMARILY OF ONE LOAN GROUP OF FIXED-RATE,
     ADJUSTABLE-RATE AND HYBRID ADJUSTABLE-RATE MORTGAGE LOANS, SECURED BY
     FIRST-LIEN MORTGAGES ON RESIDENTIAL REAL PROPERTIES WITH ORIGINAL TERMS TO
     MATURITY OF UP TO 30 YEARS.

THE CERTIFICATES--

o    THE CERTIFICATES WILL REPRESENT BENEFICIAL INTERESTS IN THE ASSETS OF THE
     TRUST FUND, AS DESCRIBED IN THIS PROSPECTUS SUPPLEMENT.

CREDIT ENHANCEMENT--

o    SUBORDINATION AS DESCRIBED IN THIS PROSPECTUS SUPPLEMENT UNDER "DESCRIPTION
     OF THE CERTIFICATES--ALLOCATION OF LOSSES" AND "CREDIT ENHANCEMENT--
     SUBORDINATION."

     THE SECURITIES AND EXCHANGE COMMISSION AND STATE SECURITIES REGULATORS
HAVE NOT APPROVED OR DISAPPROVED OF THE OFFERED CERTIFICATES OR DETERMINED IF
THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS IS TRUTHFUL OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

     MORGAN STANLEY CAPITAL I INC. WILL NOT LIST THE OFFERED CERTIFICATES ON
ANY SECURITIES EXCHANGES OR ON ANY AUTOMATED QUOTATION SYSTEM OF ANY SECURITIES
ASSOCIATION.

     THE CERTIFICATES OFFERED BY THIS PROSPECTUS SUPPLEMENT WILL BE PURCHASED
BY MORGAN STANLEY & CO. INCORPORATED AND OFFERED FROM TIME TO TIME TO THE
PUBLIC IN NEGOTIATED TRANSACTIONS OR OTHERWISE AT VARYING PRICES TO BE
DETERMINED AT THE TIME OF SALE. PROCEEDS TO THE DEPOSITOR FROM THE SALE OF THE
OFFERED CERTIFICATES ARE ANTICIPATED TO BE APPROXIMATELY 99.97% OF THE
PRINCIPAL BALANCE OF THESE CLASSES OF CERTIFICATES (EXCLUDING ACCRUED INTEREST)
BEFORE THE DEDUCTION OF EXPENSES PAYABLE BY THE DEPOSITOR, ESTIMATED TO BE
APPROXIMATELY $550,000. THE OFFERED CERTIFICATES, OTHER THAN THE CLASS A-R
CERTIFICATES, WILL BE AVAILABLE FOR DELIVERY TO INVESTORS IN BOOK-ENTRY FORM
THROUGH THE FACILITIES OF THE DEPOSITORY TRUST COMPANY, CLEARSTREAM, LUXEMBOURG
AND THE EUROCLEAR SYSTEM ON OR ABOUT DECEMBER 29, 2005.

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

                                 MORGAN STANLEY


DECEMBER 22, 2005

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

          We provide information to you about the certificates in two separate
documents that provide more detail in progression: (1) the accompanying
prospectus, which provides general information, some of which may not apply to
your series of certificates, and (2) this prospectus supplement, which describes
the specific terms of your series of certificates. IF THE ACCOMPANYING
PROSPECTUS CONTEMPLATES MULTIPLE OPTIONS, YOU SHOULD RELY ON THE INFORMATION IN
THIS PROSPECTUS SUPPLEMENT AS TO THE APPLICABLE OPTION.

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

          We are not offering the Mortgage Pass-Through Certificates, Series
2005-11AR in any state where the offer is not permitted.

          For 90 days following the date of this prospectus supplement, all
dealers selling certificates will deliver a prospectus supplement and
prospectus. This requirement is in addition to the dealers' obligation to
deliver a prospectus when acting as underwriters of the certificates with
respect to their unsold allotments or subscriptions.

          We cannot sell the certificates to you unless you have received both
this prospectus supplement and the accompanying prospectus.

          We include cross-references in this prospectus supplement and the
accompanying prospectus to captions in these materials where you can find
further information concerning a particular topic. The table of contents in this
prospectus supplement and the table of contents in the accompanying prospectus
provide the pages on which these captions are located.

          Some of the terms used in this prospectus supplement are capitalized.
These capitalized terms have specified definitions, which can be located using
the "Index of Certain Definitions" at the end of this prospectus supplement.

          Morgan Stanley Capital I Inc.'s principal offices are located at 1585
Broadway, New York, New York 10036, and its phone number is (212) 761-4000.

                             EUROPEAN ECONOMIC AREA

          In relation to each Member State of the European Economic Area which
has implemented the Prospectus Directive (each, a "RELEVANT MEMBER STATE"), the
underwriter has represented and agreed that with effect from and including the
date on which the Prospectus Directive is implemented in that Relevant Member
State (the "RELEVANT IMPLEMENTATION DATE") it has not made and will not make an
offer of certificates to the public in that Relevant Member State prior to the
publication of a prospectus in relation to the certificates which has been
approved by the competent authority in that Relevant Member State or, where
appropriate, approved in another Relevant Member State and notified to the
competent authority in that Relevant Member State, all in accordance with the
Prospectus Directive, except that it may, with effect from and including the
Relevant Implementation Date, make an offer of certificates to the public in
that Relevant Member State at any time:

         (a) to legal entities which are authorized or regulated to operate in
the financial markets or, if not so authorized or regulated, whose corporate
purpose is solely to invest in securities;

         (b) to any legal entity which has two or more of (1) an average of at
least 250 employees during the last financial year; (2) a total balance sheet of
more than (euro)43,000,000 and (3) an annual net turnover of more than
(euro)50,000,000, as shown in its last annual or consolidated accounts; or


                                       ii



          (c) in any other circumstances which do not require the publication by
the issuer of a prospectus pursuant to Article 3 of the Prospectus Directive.

          For the purposes of this provision, the expression an "offer of
certificates to the public" in relation to any certificates in any Relevant
Member State means the communication in any form and by any means of sufficient
information on the terms of the offer and the certificates to be offered so as
to enable an investor to decide to purchase or subscribe the certificates, as
the same may be varied in that Member State by any measure implementing the
Prospectus Directive in that Member State and the expression "PROSPECTUS
DIRECTIVE" means Directive 2003/71/EC and includes any relevant implementing
measure in each Relevant Member State.


                                      iii



                        THE SERIES 2005-11AR CERTIFICATES



                                                                                INITIAL RATING
                                                                                   OF THE
                                                                                 CERTIFICATES
                                 INITIAL         PASS-                               (2)
                                PRINCIPAL       THROUGH                         --------------
          CLASS                BALANCE(1)        RATE         PRINCIPAL TYPES    S&P   MOODY'S
---------------------------   ------------   -------------   ----------------   ----   -------

OFFERED CERTIFICATES
Class A-1..................   $376,659,000   Floating Rate   Senior,             AAA     Aaa
                                                (3), (4)     Pass-Through
Class A-2..................   $100,000,000   Floating Rate   Senior,             AAA     Aaa
                                                (3), (5)     Pass-Through,
                                                             Super Senior
Class A-3..................   $ 11,115,000   Floating Rate   Senior,             AAA     Aaa
                                                (3), (6)     Pass-Through,
                                                             Support
Class X....................   Notional (7)   Variable (3),   Senior, Notional    AAA     Aaa
                                                (8), (9)     Amount,
                                                             Interest-Only
Class M-1..................   $ 11,256,000   Floating Rate   Subordinate         AA+     Aa1
                                               (3), (11)
Class M-2..................   $  8,576,000   Floating Rate   Subordinate         AA      Aa2
                                               (3), (12)
Class M-3..................   $  2,948,000   Floating Rate   Subordinate         AA-     Aa3
                                               (3), (13)
Class M-4..................   $  3,485,000   Floating Rate   Subordinate         A+      A1
                                               (3), (14)
Class M-5..................   $  2,680,000   Floating Rate   Subordinate          A      A2
                                               (3), (15)
Class M-6..................   $  2,144,000   Floating Rate   Subordinate         A-      A3
                                               (3), (16)
Class B-1..................   $  2,144,000   Variable (10)   Subordinate        BBB+    Baa1
Class B-2..................   $  1,608,000   Variable (10)   Subordinate         BBB    Baa2
Class B-3..................   $  1,608,000   Variable (10)   Subordinate        BBB-    Baa2

Class A-R..................   $        100   Variable (10)   Senior, Residual    AAA    Aaa

NON-OFFERED CERTIFICATES
Class B-4..................   $  3,484,000   Variable (10)   Subordinate         BB      Ba2
Class B-5..................   $  5,092,000   Variable (10)   Subordinate          B      --
Class B-6..................   $  3,216,752   Variable (10)   Subordinate         --      --
Class P....................   $        100      N/A (17)     N/A                 --      --
Class C....................   $        100      N/A (18)     N/A                 --      --


----------
(1)  Approximate, subject to adjustment as described in this prospectus
     supplement.

(2)  A description of the ratings of the offered certificates is set forth under
     the heading "Ratings" in this prospectus supplement. The ratings of the
     Class A-1, Class A-2, Class A-3, Class M-1, Class M-2, Class M-3, Class
     M-4, Class M-5 and Class M-6 Certificates do not address the likelihood
     that any Net WAC Shortfall, as described in this prospectus supplement,
     will be paid to certificateholders.

(3)  The pass-through rates for these classes of certificates will be subject to
     the weighted average adjusted net mortgage rate of the mortgage loans ("Net
     WAC") as described in this prospectus supplement under "Description of the
     Certificates."

(4)  The pass-through rate for the Class A-1 Certificates for the interest
     accrual period related to any distribution date will be a per annum rate
     equal to one-month LIBOR + 0.28%, subject to a maximum pass-through rate of
     11.50% per annum. The pass-through rate for the Class A-1 Certificates for
     the first distribution date will be a per annum rate of approximately
     4.650%.

(5)  The pass-through rate for the Class A-2 Certificates for the interest
     accrual period related to any distribution date will be a per annum rate
     equal to one-month LIBOR + 0.27%, subject to a maximum pass-through rate of
     11.50% per annum. The pass-through rate for the Class A-2 Certificates for
     the first distribution date will be a per annum rate of approximately
     4.640%.

(6)  The pass-through rate for the Class A-3 Certificates for the interest
     accrual period related to any distribution date will be a per annum rate
     equal to one-month LIBOR + 0.35%, subject to a maximum pass-through rate of
     11.50% per annum. The pass-through rate for the Class A-3 Certificates for
     the first distribution date will be a per annum rate of approximately
     4.720%.

(7)  Interest will accrue on the Notional Amount of the Class X Certificates,
     initially equal to approximately $518,863,000, calculated as described in
     "Description of the Certificates--Glossary" in this prospectus supplement.
     The Class X Certificates will not receive any distributions of principal.

(8)  The pass-through rate for the Class X Certificates for the interest accrual
     period related to any distribution date will be a per annum rate equal to
     the excess, if any, of (i) Net WAC for the interest accrual period related
     to that distribution date over (ii) the weighted average of the
     pass-through rates for the Class A-1, Class A-2, Class A-3, Class M-1,
     Class M-2, Class M-3, Class M-4, Class M-5 and Class M-6 Certificates for
     that distribution date and subject to other limitations described herein.


                                       iv



(9)  On each distribution date a portion of the interest otherwise distributable
     on the Class X Certificates may, in lieu of being distributed to such class
     of certificates, instead be deposited into the carryover shortfall reserve
     fund and will be used to pay certain carryover amounts in respect of the
     Class A-1, Class A-2, Class A-3, Class M-1, Class M-2, Class M-3, Class
     M-4, Class M-5 and Class M-6 Certificates as described in this prospectus
     supplement under "Description of the Certificates--Interest" and "--The
     Reserve Fund and the Corridor Contracts."

(10) The pass-through rate for the Class A-R, Class B-1, Class B-2, Class B-3,
     Class B-4, Class B-5 and Class B-6 Certificates for any distribution date
     will be a per annum rate equal to Net WAC. The pass-through rate for the
     Class A-R, Class B-1, Class B-2, Class B-3, Class B-4, Class B-5 and Class
     B-6 Certificates for the first distribution date will be a per annum rate
     of approximately 6.093%.

(11) The pass-through rate for the Class M-1 Certificates for the interest
     accrual period related to any distribution date will be a per annum rate
     equal to one-month LIBOR + 0.47%, subject to a maximum pass-through rate of
     11.50% per annum. The pass-through rate for the Class M-1 Certificates for
     the first distribution date will be a per annum rate of approximately
     4.840%.

(12) The pass-through rate for the Class M-2 Certificates for the interest
     accrual period related to any distribution date will be a per annum rate
     equal to one-month LIBOR + 0.50%, subject to a maximum pass-through rate of
     11.50% per annum. The pass-through rate for the Class M-2 Certificates for
     the first distribution date will be a per annum rate of approximately
     4.870%.

(13) The pass-through rate for the Class M-3 Certificates for the interest
     accrual period related to any distribution date will be a per annum rate
     equal to one-month LIBOR + 0.52%, subject to a maximum pass-through rate of
     11.50% per annum. The pass-through rate for the Class M-3 Certificates for
     the first distribution date will be a per annum rate of approximately
     4.890%.

(14) The pass-through rate for the Class M-4 Certificates for the interest
     accrual period related to any distribution date will be a per annum rate
     equal to one-month LIBOR + 0.65%, subject to a maximum pass-through rate of
     11.50% per annum. The pass-through rate for the Class M-4 Certificates for
     the first distribution date will be a per annum rate of approximately
     5.020%.

(15) The pass-through rate for the Class M-5 Certificates for the interest
     accrual period related to any distribution date will be a per annum rate
     equal to one-month LIBOR + 0.70%, subject to a maximum pass-through rate of
     11.50% per annum. The pass-through rate for the Class M-5 Certificates for
     the first distribution date will be a per annum rate of approximately
     5.070%.

(16) The pass-through rate for the Class M-6 Certificates for the interest
     accrual period related to any distribution date will be a per annum rate
     equal to one-month LIBOR + 0.75%, subject to a maximum pass-through rate of
     11.50% per annum. The pass-through rate for the Class M-6 Certificates for
     the first distribution date will be a per annum rate of approximately
     5.120%.

(17) The Class P Certificates will receive all payments in respect of prepayment
     penalties on the mortgage loan and are not entitled to receive any
     distributions of interest.

(18) The Class C Certificates will be entitled to receive the excess proceeds,
     if any, of an auction of the mortgage loans and are not entitled to receive
     any distributions of interest.


                                       v



                                TABLE OF CONTENTS

                              PROSPECTUS SUPPLEMENT

SUMMARY .................................................................    S-1
RISK FACTORS ............................................................    S-8
   Certificates May Not Be Appropriate for Individual Investors .........    S-8
   Credit Enhancement May Not Be Adequate ...............................    S-8
   There Are Risks Involving Unpredictability of Prepayments and the
      Effect of Prepayments on Yields ...................................   S-10
   Your Yield Will Be Affected By The Interest-Only Feature Of Some Of
      The Mortgage Loans ................................................   S-11
   Your Yield May Be Affected By Changes In Interest Rates ..............   S-11
   Your Yield Will Be Affected By How Mortgage Loan Interest Rate
      Adjustments Are Limited ...........................................   S-11
   The Pass-Through Rates and Interest Distributions on the Certificates
      are Subject to Special Risks ......................................   S-11
   The Corridor Contracts are Subject to Counterparty Risk ..............   S-12
   High Balance Mortgage Loans Pose Special Risks .......................   S-12
   Inadequacy of Value of Properties Could Affect Severity of Losses ....   S-13
   Bankruptcy of Borrowers May Adversely Affect Distributions on
      Certificates ......................................................   S-13
   There Are Risks in Holding Subordinated Certificates .................   S-13
   Geographic Concentration Could Increase Losses on The Mortgage
      Loans .............................................................   S-14
   Hurricane Katrina And Its Aftermath May Pose Special Risks ...........   S-14
   Recourse on Defective Mortgage Loans is Limited ......................   S-14
   Rapid Prepayments on the Mortgage Loans Will Reduce the Yield on the
      Class X Certificates ..............................................   S-14
   Bankruptcy or Insolvency May Affect the Timing and Amount of
      Distributions on the Certificates .................................   S-15
   You Could be Adversely Affected by Violations of Consumer Protection
      Laws ..............................................................   S-15
   Failure of Servicers and Master Servicer to Perform May Adversely
      Affect Distributions on Certificates ..............................   S-16
   Your Yield May be Affected if There is a Transfer of Servicing of
      Certain Mortgage Loans ............................................   S-16
   Limited Liquidity May Adversely Affect Market Value of Certificates ..   S-16
   Rights of Beneficial Owners May Be Limited by Book-Entry System ......   S-16
   Military Action and Terrorist Attacks ................................   S-17
   Risks Related to the Class A-R Certificates ..........................   S-17
FORWARD-LOOKING STATEMENTS ..............................................   S-18
DESCRIPTION OF THE MORTGAGE LOANS .......................................   S-19
   General ..............................................................   S-19
   Tabular Characteristics of the Mortgage Loans ........................   S-23
   Assignment of the Mortgage Loans .....................................   S-30
   Loan Purchasing Guidelines and Underwriting Standards ................   S-31
   Loan Purchasing Guidelines - Morgan Stanley Mortgage Capital Inc. ....   S-31
THE SERVICERS ...........................................................   S-32
   General ..............................................................   S-32
   GMAC Mortgage Corporation ............................................   S-33
SERVICING OF THE MORTGAGE LOANS .........................................   S-35
   General ..............................................................   S-35
   Servicing and Collection Procedures ..................................   S-35
   Servicing Compensation and Payment of Expenses; Master Servicing
      Compensation ......................................................   S-36
   Adjustment to Servicing Fees in Connection with Certain Prepaid
      Mortgage Loans ....................................................   S-37
   Advances .............................................................   S-37
   Evidence as to Compliance ............................................   S-38
   Master Servicer Default; Servicer Default ............................   S-38
   Resignation of the Master Servicer or a Servicer; Assignment and
      Merger ............................................................   S-39
   Seller's Retention of Servicing Rights ...............................   S-39
DESCRIPTION OF THE CERTIFICATES .........................................   S-39
   General ..............................................................   S-39
   Senior Certificates ..................................................   S-39
   Subordinated Certificates ............................................   S-40
   Class P Certificates .................................................   S-40
   Class C Certificates .................................................   S-41
   Designations .........................................................   S-41
   Notional Amount Certificates .........................................   S-42
   Forms and Denominations of Offered Certificates; Distributions to
      Certificates ......................................................   S-42
   Book-Entry Certificates ..............................................   S-43
   Physical Certificates ................................................   S-45
   Calculation of One-Month LIBOR .......................................   S-46
   Payments on Mortgage Loans; Accounts .................................   S-46


                                       vi



   Priority of Distributions Among Certificates .........................   S-47
   Interest .............................................................   S-48
   The Reserve Fund and the Corridor Contracts ..........................   S-49
   Description of the Corridor Contract Counterparty ....................   S-51
   Principal ............................................................   S-51
   Glossary .............................................................   S-52
   Allocation of Losses .................................................   S-55
   Subsequent Recoveries ................................................   S-56
   Reports to Certificateholders ........................................   S-57
   Last Scheduled Distribution Date .....................................   S-58
   Structuring Assumptions ..............................................   S-59
   Auction and Optional Termination of the Certificates .................   S-64
   The Trustee and the Securities Administrator .........................   S-65
   Voting Rights ........................................................   S-65
YIELD, PREPAYMENT AND WEIGHTED AVERAGE LIFE .............................   S-65
   General ..............................................................   S-65
   Prepayment Considerations and Risks ..................................   S-66
   Sensitivity of the Class X Certificates ..............................   S-68
   Sensitivity of the Class X Certificates to Prepayments (Pre-Tax Yield
      to Maturity) ......................................................   S-68
   Additional Information ...............................................   S-69
   Weighted Average Lives of the Offered Certificates ...................   S-69
   Decrement Tables .....................................................   S-70
   The Subordinated Certificates ........................................   S-72
CREDIT ENHANCEMENT ......................................................   S-72
   Subordination ........................................................   S-72
   Excess Losses ........................................................   S-73
USE OF PROCEEDS .........................................................   S-74
MATERIAL FEDERAL INCOME TAX CONSEQUENCES ................................   S-74
   General ..............................................................   S-74
   Taxation of Regular Certificates .....................................   S-75
   The Class A-R Certificates ...........................................   S-77
   Other Taxes ..........................................................   S-77
ERISA MATTERS ...........................................................   S-78
METHOD OF DISTRIBUTION ..................................................   S-80
LEGAL MATTERS ...........................................................   S-81
RATINGS .................................................................   S-81
INDEX OF CERTAIN DEFINITIONS ............................................   S-82
ANNEX I GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES....    I-1
ANNEX II CORRIDOR CONTRACT SCHEDULES FOR THE LIBOR CERTIFICATES .........   II-1


                                      vii



                                TABLE OF CONTENTS

                                   PROSPECTUS

SUMMARY OF PROSPECTUS ...................................................      5
RISK FACTORS ............................................................     10
DESCRIPTION OF THE TRUST FUNDS ..........................................     27
   Assets ...............................................................     27
   Mortgage Loans .......................................................     27
   Mortgage-Backed Securities ...........................................     29
   Government Securities ................................................     30
   Accounts .............................................................     31
   Credit Support .......................................................     31
   Cash Flow Agreements .................................................     31
USE OF PROCEEDS .........................................................     32
YIELD CONSIDERATIONS ....................................................     32
   General ..............................................................     32
   Pass-Through Rate ....................................................     32
   Timing of Payment of Interest ........................................     32
   Payments of Principal; Prepayments ...................................     33
   Prepayments, Maturity and Weighted Average Life ......................     34
   Other Factors Affecting Weighted Average Life ........................     35
THE DEPOSITOR ...........................................................     36
DESCRIPTION OF THE CERTIFICATES .........................................     37
   General ..............................................................     37
   Categories of Classes of Certificates ................................     37
   Indices Applicable to Floating Rate and Inverse Floating Rate
      Classes ...........................................................     40
   LIBOR ................................................................     40
   COFI .................................................................     40
   Treasury Index .......................................................     42
   Prime Rate ...........................................................     42
   Distributions ........................................................     43
   Available Distribution Amount ........................................     43
   Distributions of Interest on the Certificates ........................     43
   Distributions of Principal of the Certificates .......................     44
   Components ...........................................................     45
   Distributions on the Certificates of Prepayment Premiums .............     45
   Allocation of Losses and Shortfalls ..................................     45
   Advances in Respect of Delinquencies .................................     45
   Reports to Certificateholders ........................................     46
   Termination ..........................................................     48
   Book-Entry Registration and Definitive Certificates ..................     48
DESCRIPTION OF THE AGREEMENTS ...........................................     37
   Assignment of Assets; Repurchases ....................................     53
   Representations and Warranties; Repurchases ..........................     55
   Certificate Account and Other Collection Accounts ....................     56
   Collection and Other Servicing Procedures ............................     59
   Subservicers .........................................................     60
   Realization Upon Defaulted Mortgage Loans ............................     60
   Hazard Insurance Polices .............................................     62
   Fidelity Bonds and Errors and Omissions Insurance ....................     63
   Due-on-Sale Provisions ...............................................     64
   Retained Interest; Servicing Compensation and Payment of Expenses ....     64
   Evidence as to Compliance ............................................     64
   Matters Regarding a Master Servicer and the Depositor ................     65
   Events of Default ....................................................     66
   Rights Upon Event of Default .........................................     66
   Amendment ............................................................     67
   The Trustee ..........................................................     68
   Duties of the Trustee ................................................     68
   Matters Regarding the Trustee ........................................     68
   Resignation and Removal of the Trustee ...............................     69
DESCRIPTION OF CREDIT SUPPORT ...........................................     69
   General ..............................................................     69
   Subordinate Certificates .............................................     70
   Cross-Support Provisions .............................................     70
   Insurance or Guarantees for the Mortgage Loans .......................     70
   Letter of Credit .....................................................     70
   Insurance Policies and Surety Bonds ..................................     71
   Reserve Funds ........................................................     71
   Credit Support for Mortgage-Backed Securities ........................     71
LEGAL ASPECTS OF MORTGAGE LOANS .........................................     72
   General ..............................................................     72
   Types of Mortgage Instruments ........................................     72
   Interest in Real Property ............................................     73
   Cooperative Loans ....................................................     73
   Foreclosure ..........................................................     74
   Junior Mortgages .....................................................     78
   Anti-Deficiency Legislation and Other Limitations on Lenders .........     78
   Environmental Legislation ............................................     79
   Due-on-Sale Clauses ..................................................     79
   Prepayment Charges ...................................................     80
   Subordinate Financing ................................................     80
   Applicability of Usury Laws ..........................................     80
   Alternative Mortgage Instruments .....................................     81
   Servicemembers' Civil Relief Act .....................................     82
   Forfeiture for Drug, RICO and Money Laundering Violations ............     82
FEDERAL INCOME TAX CONSEQUENCES .........................................     83
   General ..............................................................     83
   Grantor Trust Funds ..................................................     83
   a. Single Class of Grantor Trust Certificates ........................     83


                                      viii



   b. Multiple Classes of Grantor Trust Certificates ....................     87
   c. Sale or Exchange of a Grantor Trust Certificate ...................     90
   d. Non-U.S. Persons ..................................................     91
   e. Information Reporting and Backup Withholding ......................     91
   REMICS ...............................................................     92
   a. Taxation of Owners of REMIC Regular Certificates ..................     93
   b. Taxation of Owners of REMIC Residual Certificates .................    102
   Prohibited Transactions and Other Taxes ..............................    107
   Liquidation and Termination ..........................................    107
   Administrative Matters ...............................................    108
   Tax-Exempt Investors .................................................    108
   Residual Certificate Payments - Non-U.S. Persons .....................    108
   Tax Related Restrictions on Transfers of REMIC Residual
      Certificates ......................................................    109
   Reportable Transactions ..............................................    111
STATE TAX CONSIDERATIONS ................................................    111
ERISA CONSIDERATIONS ....................................................    112
   General ..............................................................    112
   Prohibited Transactions ..............................................    112
   Review by Plan Fiduciaries ...........................................    115
LEGAL INVESTMENT ........................................................    116
PLAN OF DISTRIBUTION ....................................................    117
LEGAL MATTERS ...........................................................    119
FINANCIAL INFORMATION ...................................................    119
RATING ..................................................................    119
INCORPORATION OF INFORMATION BY REFERENCE ...............................    119
GLOSSARY OF TERMS .......................................................    121


                                       ix



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

                                     SUMMARY

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

RELEVANT PARTIES

   Issuer.....................   Morgan Stanley Mortgage Loan Trust 2005-11AR.
                                 The trust will be established under a pooling
                                 and servicing agreement, dated as of the
                                 cut-off date, among Morgan Stanley Capital I
                                 Inc., as depositor, Morgan Stanley Mortgage
                                 Capital Inc., as seller, Wells Fargo Bank,
                                 National Association, as master servicer and
                                 securities administrator, and Deutsche Bank
                                 National Trust Company, as trustee.

   Depositor..................   Morgan Stanley Capital I Inc., a Delaware
                                 corporation. The depositor's address is 1585
                                 Broadway, New York, New York 10036, telephone
                                 number (212) 761-4000. See "The Depositor" in
                                 the accompanying prospectus.

   Seller.....................   Morgan Stanley Mortgage Capital Inc., a New
                                 York corporation. The seller is an affiliate of
                                 the depositor and of Morgan Stanley & Co.
                                 Incorporated, the underwriter. The seller's
                                 address is 1221 Avenue of the Americas, New
                                 York, New York 10020. See "Description of the
                                 Mortgage Loans--Assignment of the Mortgage
                                 Loans" in this prospectus supplement.

   Master Servicer,
   Securities Administrator
   and Auction Administrator..   Wells Fargo Bank, National Association, a
                                 national banking association will act as master
                                 servicer, securities administrator, and, in its
                                 capacity as securities administrator, as
                                 auction administrator, under the pooling and
                                 servicing agreement. Wells Fargo's offices are
                                 located at Sixth Street and Marquette Avenue,
                                 Minneapolis, Minnesota 55479 for certificate
                                 transfer purposes, and for all other purposes
                                 at 9062 Old Annapolis Road, Columbia, Maryland,
                                 21045. See "Servicing of the Mortgage
                                 Loans--General" and "Description of the
                                 Certificates--The Trustee and the Securities
                                 Administrator" in this prospectus supplement.

   Originatorsand Servicers...   The Seller previously acquired the mortgage
                                 loans from various correspondent lenders, other
                                 mortgage loan sellers who originated less than
                                 10% of the mortgage loans and from the
                                 following originators: First National Bank of
                                 Nevada and Wachovia Mortgage Corporation. On
                                 the closing date, the Seller will sell all of
                                 its interest in the mortgage loans (other than
                                 certain servicing rights) to the depositor.

                                 Morgan Stanley Credit Corp., GMAC Mortgage
                                 Corporation, HSBC Mortgage Corporation
                                 (USA), Wachovia Mortgage Corporation and
                                 Wells Fargo Bank, National Association will
                                 initially act as the direct servicers of the
                                 mortgage loans.

                                 We refer you to "The Servicers" and
                                 "Servicing of the Mortgage Loans" in this
                                 prospectus supplement for more information.

   Trustee....................   Deutsche Bank National Trust Company.

   Corridor Contract
      Counterparty.............  Morgan Stanley Capital Services Inc.

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


                                       S-1



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

RELEVANT DATES

   Cut-off Date...............   December 1, 2005.

   Closing Date...............   On or about December 29, 2005.

   Distribution Date..........   The 25th day of each month or, if that day is
                                 not a business day, the next business day,
                                 beginning January 25, 2006.

   Interest Accrual Period       For each class of interest bearing certificates
                                 (other than the Class A-R, Class X, Class B-1,
                                 Class B-2, Class B-3, Class B-4, Class B-5 and
                                 Class B-6 Certificates) and any distribution
                                 date will be the one-month period commencing on
                                 the 25th day of the month prior to the month in
                                 which that distribution date occurs and ending
                                 on the 24th day of the month in which that
                                 distribution date occurs. For each other class
                                 of certificates and any distribution date, the
                                 calendar month immediately prior to the month
                                 in which the relevant distribution date occurs.
                                 Interest is required to be calculated on the
                                 basis of a 360-day year consisting of twelve
                                 30-day months.

   Record Date................   For each class of interest bearing certificates
                                 (other than the Class A-R, Class X, Class B-1,
                                 Class B-2, Class B-3, Class B-4, Class B-5 and
                                 Class B-6) and any distribution date, the
                                 business day immediately preceding that
                                 distribution date, or if a class of
                                 certificates (other than the Class A-R, Class
                                 X, Class B-4, Class B-5 and Class B-6
                                 Certificates) is no longer book-entry
                                 certificates, the last business day of the
                                 calendar month preceding the month of that
                                 distribution date. For each other class of
                                 certificates and any distribution date, the
                                 last business day of the calendar month
                                 immediately prior to the month in which that
                                 distribution date occurs.

OFFERED CERTIFICATES..........   We are offering the classes of certificates in
                                 the approximate original principal balance or
                                 notional amount, as applicable, set forth on
                                 page iv of this prospectus supplement, subject
                                 to a permitted variance of plus or minus 5%.

                                 The certificates will consist of a total of
                                 nineteen classes. The Class B-4, Class B-5,
                                 Class B-6, Class P and Class C Certificates are
                                 not being offered through this prospectus
                                 supplement and the accompanying prospectus.

   Interest Distributions.....   The offered certificates will bear interest at
                                 the per annum rates set forth or described on
                                 pages iv and v of this prospectus supplement.

                                 The actual amount of interest you receive on
                                 your certificates on each distribution date
                                 will depend on:

                                 o    the amount of interest accrued on your
                                      certificates;

                                 o    the total amount of funds available for
                                      distribution to your certificates;

                                 o    the amount of any interest accrued at the
                                      related pass-through rate not paid on your
                                      certificates on earlier distribution
                                      dates; and

                                 o    in the case of the Class X Certificates,
                                      the distributions of interest that such
                                      classes are entitled to receive on any
                                      distribution date may be used to pay
                                      certain interest carryover amounts to
                                      certain other classes of offered
                                      certificates.

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

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


                                       S-2



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

   Principal Distributions....   On each distribution date, one or more classes
                                 of the offered certificates will be entitled to
                                 distributions of principal. The Class X
                                 Certificates are notional amount certificates
                                 and are not entitled to distributions of
                                 principal. See "Description of the
                                 Certificates--Principal" in this prospectus
                                 supplement for a detailed discussion of the
                                 amount and timing of principal distributions.

THE MORTGAGE LOANS............   The trust will be comprised primarily of a
                                 single group of fixed-rate, adjustable-rate and
                                 hybrid adjustable-rate mortgage loans, all of
                                 which are secured by first priority mortgages
                                 or deeds of trust on residential one- to four-
                                 family properties and that have original terms
                                 to maturity of up to approximately 30 years.

                                 The mortgage loans to be deposited into the
                                 trust on the closing date are expected to have
                                 the following approximate characteristics based
                                 on the stated principal balances of the
                                 mortgage loans as of December 1, 2005:



                                 Number of Mortgage Loans:.................................................1,801
                                 Aggregate Scheduled Principal Balance:.............................$536,015,852
                                 Range of Principal Balances:...............................$1,509 to $1,994,546
                                 Average Scheduled Principal Balance:...................................$297,621
                                 Range of Current Mortgage Rates:...............................3.880% to 9.000%
                                 Aggregate Original Principal Balance:..............................$538,130,892
                                 Weighted Average Current Mortgage Rate:..................................6.383%
                                 Weighted Average Maximum Mortgage Rate
                                    (of adjustable rate mortgage loans): ................................12.194%
                                 Weighted Average Gross Margin
                                    (of adjustable rate mortgage loans):....... ..........................3.056%
                                 Weighted Average Months to Roll
                                    (of adjustable rate mortgage loans):...............................41 months
                                 Weighted Average Original Term to Maturity:..........................360 months
                                 Weighted Average Remaining Scheduled
                                    Term to Maturity:..................................................357 months
                                 Weighted Average Original Loan-to-Value Ratio:...........................73.51%
                                 Weighted Average Original Effective Loan-to-Value Ratio:.................73.46%
                                 Owner-Occupied:..........................................................70.61%
                                 Weighted Average Credit Score (where available):............................712
                                 Geographic Concentration of Mortgaged Properties
                                    Securing Mortgage Loans in Excess of 5% of the
                                    Aggregate Scheduled Principal Balance:                California......33.29%
                                                                                          Florida.........13.03%
                                                                                          Arizona..........5.32%


                                 See "Description of the Mortgage Loans" in this
                                 prospectus supplement.

SERVICING OF THE
   MORTGAGE LOANS.............   The master servicer will supervise the
                                 performance of each servicer under the related
                                 underlying servicing agreement to the extent
                                 required by the pooling and servicing
                                 agreement.

                                 Under the underlying servicing agreements, each
                                 servicer is generally obligated to make monthly
                                 advances of cash (to the extent such advances
                                 are deemed recoverable), which will be included
                                 with mortgage principal and interest
                                 collections, in an amount equal to any
                                 delinquent monthly payments due on the related
                                 mortgage loans serviced by that servicer on the
                                 immediately preceding determination date. The
                                 master servicer will be obligated to make any
                                 required advance if a servicer fails in its
                                 obligation to do so, to the extent described in
                                 this prospectus supplement and required by the
                                 pooling and servicing agreement. The master
                                 servicer and the servicers will be entitled to
                                 reimburse themselves for any such advances from
                                 future payments and collections (including
                                 insurance or liquidation proceeds) with respect
                                 to the related mortgage loans. However, if the
                                 master servicer or the servicers make advances
                                 which are determined to be nonrecoverable from
                                 future payments and collections on the related
                                 mortgage loan, such parties will be entitled to
                                 reimbursement for such advances prior to any
                                 distributions to certificateholders.

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


                                       S-3



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

                                 The servicers will also make interest payments
                                 to compensate in part for any shortfall in
                                 interest payments on the certificates which
                                 results from a mortgagor prepaying a related
                                 mortgage loan. If a servicer fails to make
                                 required payments in respect of such
                                 shortfalls, the master servicer will be
                                 obligated to reduce a portion of its master
                                 servicer compensation to the extent necessary
                                 to fund any such shortfalls.

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

RETENTION OF CERTAIN SERVICING
   RIGHTS.....................   The seller, as the original owner of the
                                 mortgage loans to be sold to the trust fund
                                 will retain certain rights relating to the
                                 servicing of certain of the mortgage loans,
                                 including the right to terminate certain of the
                                 servicers at any time, without cause, as
                                 further specified in the pooling and servicing
                                 agreement. The seller may, at its option, sell
                                 those servicing rights in the future.

                                 See "Servicing of the Mortgage Loans--Seller's
                                 Retention of Servicing Rights" in this
                                 prospectus supplement.

CREDIT ENHANCEMENT............   The issuance of senior certificates and
                                 subordinated certificates by the trust fund is
                                 designed to increase the likelihood that senior
                                 certificateholders will receive regular
                                 payments of interest and principal.

   Subordination..............   The senior certificates will have a payment
                                 priority over the subordinated certificates.
                                 Within the classes of subordinated
                                 certificates, the Class M Certificates will
                                 have payment priority over the Class B
                                 Certificates. The payment priority within the
                                 Class M and Class B Certificates is numerical
                                 order, with the class of certificates with the
                                 lowest numerical designation having the highest
                                 priority of payment.

                                 Subordination is designed to provide the
                                 holders of certificates with a higher payment
                                 priority with protection against most losses
                                 realized when the remaining unpaid principal
                                 balance on a mortgage loan exceeds the amount
                                 of proceeds recovered upon the liquidation of
                                 that mortgage loan. In general, this loss
                                 protection is accomplished by allocating the
                                 realized losses on the mortgage loans among the
                                 classes of subordinated certificates, beginning
                                 with the class of subordinated certificates
                                 with the lowest payment priority, before
                                 realized losses on the mortgage loans are
                                 allocated to the senior certificates. However,
                                 some losses such as special hazard losses,
                                 bankruptcy losses, and fraud losses on the
                                 mortgage loans in excess of the amounts set
                                 forth in this prospectus supplement are, in
                                 general, allocated pro rata to each class of
                                 certificates (other than the notional amount
                                 certificates) instead of first being allocated
                                 to the classes of subordinated certificates.

                                 Notwithstanding the foregoing, certain realized
                                 losses on the mortgage loans will be allocated
                                 to the classes of senior certificates in the
                                 manner, order and priority described in
                                 "Description of the Certificates--Allocation of
                                 Losses" in this prospectus supplement.

                                 The pooling and servicing agreement does not
                                 permit the allocation of realized losses to the
                                 Class P or Class C Certificates.

                                 See "Description of the
                                 Certificates--Allocation of Realized Losses" in
                                 this prospectus supplement.

   Shifting of Interests......   Except under the circumstances described in
                                 "Description of the Certificates--Principal" in
                                 this prospectus supplement, the senior
                                 certificates will receive

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


                                       S-4



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

                                 100% of principal prepayments received on the
                                 mortgage loans until the seventh anniversary of
                                 the first distribution date, although the
                                 subordinated certificates will generally be
                                 entitled to receive their pro rata portion of
                                 scheduled principal payments on the mortgage
                                 loans on each distribution date. During the
                                 next four years, except under the circumstances
                                 described in this prospectus supplement, the
                                 senior certificates will generally receive a
                                 disproportionately large, but decreasing, share
                                 of the principal prepayments on the mortgage
                                 loans. This shifting interest feature will
                                 result in a quicker return of principal to the
                                 senior certificates and increases the
                                 likelihood that holders of the senior
                                 certificates will be paid the full amount of
                                 principal to which they are entitled.

                                 We refer you to "Credit Enhancement" in this
                                 prospectus supplement for more information.

THE CORRIDOR CONTRACT
   AGREEMENTS.................   The holders of (i) the Class A-1 Certificates,
                                 (ii) the Class A-2 Certificates, (iii) the
                                 Class A-3 Certificates, (iv) in the aggregate,
                                 the Class M-1, Class M-2 and Class M-3
                                 Certificates and (v) in the aggregate, the
                                 Class M-4, Class M-5 and Class M-6 Certificates
                                 will each have the benefit of their own
                                 separate corridor contract provided by Morgan
                                 Stanley Capital Services Inc., as corridor
                                 contract counterparty. All obligations of the
                                 trust under the corridor contracts will be paid
                                 on or prior to the closing date.

                                 The separate corridor contract relating to each
                                 of (i) the Class A-1 Certificates, (ii) the
                                 Class A-2 Certificates, (iii) the Class A-3
                                 Certificates, (iv) the Class M-1, Class M-2 and
                                 Class M-3 Certificates and (v) the Class M-4,
                                 Class M-5 and Class M-6 Certificates will have
                                 the respective initial notional balance set
                                 forth below. In connection with each
                                 distribution date, commencing with the
                                 distribution date in February 2006 to and
                                 including the respective distribution dates set
                                 forth below, on the business day prior to each
                                 of these distribution dates, the corridor
                                 contract counterparty will be obligated under
                                 the corridor contracts to pay to the securities
                                 administrator, on behalf of the trustee, for
                                 the benefit of the holders of each of these
                                 classes of certificates an amount equal to the
                                 product of (a) the excess, if any, of the
                                 lesser of (i) the then current one-month LIBOR
                                 rate and (ii) the specified cap ceiling rate
                                 for such class or classes of certificates for
                                 that distribution date, over the specified cap
                                 strike rate for such class or classes of
                                 certificates for that distribution date, in
                                 each case calculated on a "30/360" basis, (b)
                                 the specified notional balance for such class
                                 or classes of certificates and (c) 100. The
                                 corridor contract counterparty's respective
                                 obligations under each of the corridor
                                 contracts will terminate immediately following
                                 the distribution date set forth below for such
                                 classes of certificates.



                                                                                 Corridor Contract Final
                                      Class or Classes        Initial Notional    Scheduled Distribution
                                       of Certificates             Balance                 Date
                                 --------------------------   ----------------   -----------------------

                                 Class A-1.................    $3,687,951.76          September 2014
                                 Class A-2.................    $  979,122.16          September 2014
                                 Class A-3.................    $  108,829.43          September 2014
                                 Class M-1, Class M-2 and
                                    Class M-3..............    $  227,746.45          September 2014
                                 Class M-4, Class M-5 and
                                    Class M-6..............    $   83,070.47          September 2014


                                 The specified cap ceiling rates, cap strike
                                 rates and notional balances for each corridor
                                 contract are set forth in Annex II to this
                                 prospectus supplement. Amounts, if any, payable
                                 under any corridor contract with respect to any

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


                                       S-5



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

                                 distribution date will be used to cover
                                 shortfalls in payments of interest on the class
                                 or classes of certificates to which the
                                 corridor contract relates as described in this
                                 prospectus supplement under "Description of the
                                 Certificates--The Reserve Fund and the Corridor
                                 Contracts."

THE RESERVE FUND..............   On each distribution date, certain amounts
                                 otherwise distributable to the Class X
                                 Certificates as interest will be deposited into
                                 the reserve fund and distributed to pay
                                 interest carryforward amounts remaining unpaid
                                 after application of payments under the related
                                 corridor contract, first, concurrently, to the
                                 Class A-1, Class A-2 and Class A-3
                                 Certificates, pro rata based upon the extent of
                                 their respective interest carryforward amounts
                                 for that distribution date, and then
                                 sequentially, to the Class M-1, Class M-2,
                                 Class M-3, Class M-4, Class M-5 and Class M-6
                                 Certificates, in that order, to the extent of
                                 any unpaid interest carryforward amounts for
                                 that distribution date. The Class X
                                 Certificates will not be reimbursed for any
                                 shortfalls resulting from the payment rules
                                 described in this paragraph.

                                 See "Description of the Certificates--The
                                 Reserve Fund and the Corridor Contracts" in
                                 this prospectus supplement.

REGISTRATION AND DENOMINATIONS
   OF THE CERTIFICATES........   The offered certificates, other than the Class
                                 A-R Certificates, initially will be issued in
                                 book-entry form. The offered certificates will
                                 be issued in the minimum denominations set
                                 forth in "Description of the Certificates--
                                 Forms and Denominations of Offered
                                 Certificates; Distributions to Certificates" in
                                 this prospectus supplement. The Class A-R
                                 Certificates are expected to be issued in fully
                                 registered, certificated form. No person
                                 acquiring an interest in the book-entry
                                 certificates will be entitled to receive a
                                 definitive certificate representing that
                                 person's interest in the trust fund, except
                                 under limited circumstances as described in
                                 this prospectus supplement. Beneficial owners
                                 may elect to hold their interests through The
                                 Depository Trust Company. Transfers within DTC
                                 will be in accordance with the usual rules and
                                 operating procedures of DTC. See "Description
                                 of the Certificates-- Forms and Denominations
                                 of Offered Certificates; Distributions to
                                 Certificates" in this prospectus supplement.

OPTIONAL TERMINATION OR
   AUCTION....................   On any distribution date on or after the
                                 distribution date in the month in which the
                                 aggregate stated principal balance of the
                                 mortgage loans declines to 10% or less of the
                                 aggregate stated principal balance of the
                                 mortgage loans as of the cut-off date, the
                                 auction administrator shall solicit bids for
                                 the purchase of the mortgage loans in
                                 accordance with the procedures set forth under
                                 "Description of the Certificates-- Auction and
                                 Optional Termination of the Certificates" in
                                 this prospectus supplement, and, to the extent
                                 the auction is successful, thereby effect the
                                 early retirement of the certificates. In the
                                 event that the auction is unsuccessful, then,
                                 beginning on the subsequent distribution date,
                                 the master servicer shall have the right, at
                                 its option, to purchase all of the mortgage
                                 loans and any related REO properties owned by
                                 the trust and thereby effect the early
                                 retirement of the certificates. The master
                                 servicer may assign its optional termination
                                 right to a third party.

LAST SCHEDULED DISTRIBUTION
   DATE.......................   The distribution date in January 2036, which is
                                 the distribution date in the month following
                                 the scheduled maturity date for the latest
                                 maturing mortgage loan in the trust fund. The
                                 actual final distribution date of any class of
                                 certificates may be earlier or later, and could
                                 be substantially earlier, than such class' last
                                 scheduled distribution date.

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


                                       S-6



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

TAX STATUS....................   For federal income tax purposes, the Trust Fund
                                 (exclusive of certain additional collateral,
                                 the corridor contracts and the assets held in
                                 the reserve fund) will comprise one or more
                                 REMICs: one or more underlying REMICs and the
                                 master REMIC. Each underlying REMIC (if any)
                                 will hold the mortgage loans (or uncertificated
                                 regular interests) and will issue several
                                 classes of uncertificated regular interests and
                                 a single uncertificated residual interest. The
                                 master REMIC will hold as assets regular
                                 interests issued by one or more underlying
                                 REMICs (or if there are no underlying REMICs,
                                 the mortgage loans) and will issue the several
                                 classes of certificates, which, other than the
                                 Class A-R Certificates, will represent the
                                 regular interests in the master REMIC. In
                                 addition, the certificates (other than the
                                 Class A-R, Class X, Class C, Class B-1, Class
                                 B-2, Class B-3, Class B-4, Class B-5 and Class
                                 B-6 Certificates) will represent a beneficial
                                 interest in the right to receive payments of
                                 Net WAC Shortfalls and the Class X Certificates
                                 will represent the obligation to make payments
                                 of Net WAC Shortfalls. The Class A-R
                                 Certificates will represent ownership of both
                                 the residual interest in the master REMIC and
                                 the residual interests in any underlying
                                 REMICs.

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

ERISA CONSIDERATIONS..........   If you are a fiduciary of any employee benefit
                                 plan or other retirement arrangement subject to
                                 the Employee Retirement Income Security Act of
                                 1974, as amended, or Section 4975 of the
                                 Internal Revenue Code of 1986, as amended, you
                                 should consult with counsel as to whether you
                                 can buy or hold an offered certificate. Subject
                                 to a number of conditions, it is expected that
                                 offered certificates (other than the Class A-R
                                 Certificates) will be eligible for purchase by
                                 such investors. See "ERISA Matters" in this
                                 prospectus supplement.

LEGAL INVESTMENT..............   The offered certificates (other than the Class
                                 M-4, Class M-5, Class M-6, Class B-1, Class B-2
                                 and Class B-3 Certificates) will constitute
                                 "mortgage-related securities" for purposes of
                                 the Secondary Mortgage Market Enhancement Act
                                 of 1984, as amended, so long as they are rated
                                 in one of the two highest rating categories by
                                 at least one nationally recognized statistical
                                 rating agency.

                                 The Class M-4, Class M-5, Class M-6, Class B-1,
                                 Class B-2 and Class B-3 Certificates will not
                                 constitute "mortgage-related securities." See
                                 "Legal Investment" in the accompanying
                                 prospectus.

CERTIFICATE RATINGS...........   On the closing date, the offered certificates
                                 must have ratings not lower than those set
                                 forth on page iv of this prospectus supplement
                                 by Standard & Poor's Ratings Services, a
                                 division of The McGraw-Hill Companies, Inc. and
                                 by Moody's Investors Service, Inc.

                                 A security rating is not a recommendation to
                                 buy, sell or hold securities and the assigning
                                 rating organization may revise or withdraw a
                                 rating at any time. The ratings do not address
                                 the possibility that holders of the offered
                                 certificates may suffer a lower than
                                 anticipated yield.

                                 See "Ratings" in this prospectus supplement for
                                 a discussion of the primary factors on which
                                 the ratings are based.

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


                                       S-7



                                  RISK FACTORS

          Before making an investment decision, you should carefully consider
the following risks which we believe describe the principal factors that make an
investment in the certificates speculative or risky. In particular, payments on
your certificates will depend on payments received on, and other recoveries with
respect to, the mortgage loans. Therefore, you should carefully consider the
risk factors relating to the mortgage loans.

          The certificates are complex securities. You should possess, either
alone or together with an investment advisor, the expertise necessary to
evaluate the information contained in this prospectus supplement and the
accompanying prospectus in the context of your financial situation and tolerance
for risk.

          You should carefully consider, among other things, the factors
described below and under "Yield, Prepayment and Weighted Average Life" in this
prospectus supplement and "Risk Factors" in the accompanying prospectus before
purchasing the certificates.

CERTIFICATES MAY NOT BE APPROPRIATE FOR INDIVIDUAL INVESTORS

          The offered certificates are not suitable investments for all
investors. In particular, you should not purchase any class of offered
certificates unless you understand the prepayment, credit, liquidity and market
risks associated with that class because:

          o    The amounts you receive on your certificates will depend on the
               amount of the payments borrowers make on the mortgage loans.
               Because we cannot predict the rate at which borrowers will repay
               their loans, you may receive distributions on your certificates
               in amounts that are larger or smaller than you expect. In
               addition, the life of your certificates may be longer or shorter
               than anticipated. Because of this, we cannot guarantee that you
               will receive distributions at any specific future date or in any
               specific amount.

          o    The yield to maturity on your certificates will depend primarily
               on the purchase price of your certificates and the rate of
               principal payments and realized losses on the mortgage loans.

          o    Rapid prepayment rates on the mortgage loans are likely to
               coincide with periods of low prevailing interest rates. During
               these periods, the yield at which you may be able to reinvest
               amounts received as payments on your certificates may be lower
               than the yield on your certificates. Conversely, slow prepayment
               rates on the mortgage loans are likely to coincide with periods
               of high interest rates. During these periods, the amount of
               payments available to you for reinvestment at high rates may be
               relatively low.

          o    The adjustable-rate mortgage loans have fixed interest rates for
               up to 5 years from the date of origination and then adjust based
               upon a specified index monthly, semi-annually or annually,
               depending on the terms of the related mortgage note. These
               mortgage loans may have higher prepayments as they approach their
               first adjustment dates because the related mortgagors may want to
               avoid periodic changes to their monthly payments.

          o    If the mortgage loans with relatively higher mortgage rates
               prepay, Net WAC will be reduced and this could affect the yield
               on the offered certificates.

CREDIT ENHANCEMENT MAY NOT BE ADEQUATE

          A decline in real estate values or in economic conditions generally
could increase the rates of delinquencies, foreclosures and losses on the
mortgage loans to a level that is significantly higher than those experienced
currently. This in turn will reduce the yield on your certificates, particularly
if the credit enhancement described in this prospectus supplement is not enough
to protect your certificates from these losses.


                                       S-8



          The certificates are not insured by any financial guaranty insurance
policy. The subordination, loss allocation and shifting interest features
described in this prospectus supplement are intended to enhance the likelihood
that holders of more senior classes of certificates 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.

          The amount of any realized losses, other than excess losses,
experienced on a mortgage loan will be applied to reduce the principal balance
of the class of subordinated certificates with the highest numerical class
designation, until the principal balance of that class has been reduced to zero.
If subordination is insufficient to absorb losses on the mortgage loans, then
holders of more senior classes will incur realized losses and may never receive
all of their principal payments. You should consider the following:

o    if you buy a Class B-3 Certificate and losses on the mortgage loans exceed
     the total principal balance of the Class B-4, Class B-5 and Class B-6
     Certificates, the principal balance of your certificate will be reduced
     proportionately with the principal balance of the other Class B-3
     Certificates by the amount of that excess;

o    if you buy a Class B-2 Certificate and losses on the mortgage loans exceed
     the total principal balance of the Class B-3, Class B-4, Class B-5 and
     Class B-6 Certificates, the principal balance of your certificate will be
     reduced proportionately with the principal balance of the other Class B-2
     Certificates by the amount of that excess;

o    if you buy a Class B-1 Certificate and losses on the mortgage loans exceed
     the total principal balance of the Class B-2, Class B-3, Class B-4, Class
     B-5 and Class B-6 Certificates, the principal balance of your certificate
     will be reduced proportionately with the principal balance of the other
     Class B-1 Certificates by the amount of that excess;

o    if you buy a Class M-6 Certificate and losses on the mortgage loans exceed
     the total principal balance of the Class B-1, Class B-2, Class B-3, Class
     B-4, Class B-5 and Class B-6 Certificates, the principal balance of your
     certificate will be reduced proportionately with the principal balance of
     the other Class M-6 Certificates by the amount of that excess;

o    if you buy a Class M-5 Certificate and losses on the mortgage loans exceed
     the total principal balance of the Class M-6, Class B-1, Class B-2, Class
     B-3, Class B-4, Class B-5 and Class B-6 Certificates, the principal balance
     of your certificate will be reduced proportionately with the principal
     balance of the other Class M-5 Certificates by the amount of that excess;

o    if you buy a Class M-4 Certificate and losses on the mortgage loans exceed
     the total principal balance of the Class M-5, Class M-6, Class B-1, Class
     B-2, Class B-3, Class B-4, Class B-5 and Class B-6 Certificates, the
     principal balance of your certificate will be reduced proportionately with
     the principal balance of the other Class M-4 Certificates by the amount of
     that excess;

o    if you buy a Class M-3 Certificate and losses on the mortgage loans exceed
     the total principal balance of the Class M-4, Class M-5, Class M-6, Class
     B-1, Class B-2, Class B-3, Class B-4, Class B-5 and Class B-6 Certificates,
     the principal balance of your certificate will be reduced proportionately
     with the principal balance of the other Class M-3 Certificates by the
     amount of that excess;

o    if you buy a Class M-2 Certificate and losses on the mortgage loans exceed
     the total principal balance of the Class M-3, Class M-4, Class M-5, Class
     M-6, Class B-1, Class B-2, Class B-3, Class B-4, Class B-5 and Class B-6
     Certificates, the principal balance of your certificate will be reduced
     proportionately with the principal balance of the other Class M-2
     Certificates by the amount of that excess;

o    if you buy a Class M-1 Certificate and losses on the mortgage loans exceed
     the total principal balance of the Class M-2, Class M-3, Class M-4, Class
     M-5, Class M-6, Class B-1, Class B-2, Class B-3, Class B-4, Class B-5 and
     Class B-6 Certificates, the principal balance of your certificate will be
     reduced proportionately with the principal balance of the other Class M-1
     Certificates by the amount of that excess; and


                                       S-9



o    after the aggregate class principal balance of the subordinated
     certificates has been reduced to zero, realized losses on the mortgage
     loans will reduce the class principal balances of the senior certificates,
     in the manner, order and priority described in "Description of the
     Certificates--Priority of Distributions Among Certificates" and
     "--Allocation of Losses" in this prospectus supplement.

          Furthermore, the subordinated certificates will provide only limited
protection against some categories of losses on the mortgage loans such as
bankruptcy losses, fraud losses and special hazard losses in excess of the
amounts specified in this prospectus supplement. Any losses on the mortgage
loans in excess of those amounts will be allocated pro rata among each class of
senior certificates (other than the notional amount certificates) and each class
of subordinated certificates, even if the principal balance of each class of
subordinated certificates has not been reduced to zero.

THERE ARE RISKS INVOLVING UNPREDICTABILITY OF PREPAYMENTS AND THE EFFECT OF
PREPAYMENTS ON YIELDS

          The rate of principal distributions and yield to maturity on the
certificates will be directly related to the rate of principal payments on the
mortgage loans. For example, the rate of principal payments on the mortgage
loans will be affected by the following:

o    the amortization schedules of the mortgage loans; and

o    the rate of principal prepayments, including partial prepayments and full
     prepayments resulting from:

               o    refinancing by borrowers;

               o    liquidations of defaulted loans by a servicer; and

               o    repurchases of mortgage loans by an originator or the seller
                    as a result of defective documentation or breaches of
                    representations and warranties.

          The yield to maturity of the certificates will also be affected by the
exercise of the optional termination of the trust by the master servicer.

          With the exception of approximately 48.11% of the mortgage loans by
aggregate stated principal balance of the mortgage loans as of the cut-off date,
all of the mortgage loans may be prepaid in whole or in part at any time without
payment of a prepayment penalty. The rate of principal payments on mortgage
loans is influenced by a wide variety of economic, geographic, social and other
factors, including general economic conditions, the level of prevailing interest
rates, the availability of alternative financing and homeowner maturity. For
example, if interest rates for similar loans fall below the interest rates on
the mortgage loans, the rate of prepayment would generally be expected to
increase. Conversely, if interest rates on similar loans rise above the interest
rates on the mortgage loans, the rate of prepayment would generally be expected
to decrease. We cannot predict the rate at which borrowers will repay their
mortgage loans. Please consider the following:

          o    if you are purchasing any offered certificate (other than a
               notional amount certificate) at a discount, your yield may be
               lower than expected if principal payments on the mortgage loans
               occur at a slower rate than you expected;

          o    if you are purchasing a notional amount certificate or an offered
               certificate at a premium, your yield may be lower than expected
               if principal payments on the related mortgage loans occur at a
               faster rate than you expected;

          o    prospective purchasers of the notional amount certificates should
               carefully consider the risk that a rapid rate of principal
               payments and realized losses on the mortgage loans could result
               in the failure of such purchasers to recover their initial
               investments;


                                      S-10



          o    if the rate of default and the amount of losses on the mortgage
               loans are higher than you expect, then your yield may be lower
               than you expect;

          o    the earlier a payment of principal occurs, the greater the impact
               on your yield. For example, if you purchase any offered
               certificate at a premium, although the average rate of principal
               payments is consistent with your expectations, if the rate of
               principal payments occurs initially at a rate higher than
               expected, which would adversely impact your yield, a subsequent
               reduction in the rate of principal payments will not offset any
               adverse yield effect; and

          o    the priorities governing payments of scheduled and unscheduled
               principal on the mortgage loans will have the effect of
               accelerating the rate of principal payments to holders of the
               classes of senior certificates relative to the classes of
               subordinated certificates.

          Prepayment penalties on the mortgage loans will be distributed to the
Class P Certificates and will not be available to the holders of other classes
of certificates. See "Yield, Prepayment and Weighted Average Life" and
"Description of the Certificates--Principal" in this prospectus supplement for a
description of the factors that may influence the rate and timing of prepayments
on the mortgage loans.

YOUR YIELD WILL BE AFFECTED BY THE INTEREST-ONLY FEATURE OF SOME OF THE MORTGAGE
LOANS

          Approximately 76.01% of the mortgage loans require monthly payments of
only accrued interest for a substantial period of time after origination. During
the interest-only period, less principal will be available for distribution to
the holders of the certificates than otherwise would be the case. In addition,
these loans may have a higher risk of default after the interest-only period due
to the larger outstanding balance and the increased monthly payment necessary to
amortize fully the mortgage loan. In addition, during the interest-only period,
these mortgage loans may be less likely to prepay since the perceived benefits
from refinancing may be less than if the mortgage loans were fully amortizing.
As the interest-only period approaches its end, however, these mortgage loans
may be more likely to be refinanced in order to avoid higher monthly payments
necessary to amortize fully the mortgage loans.

YOUR YIELD MAY BE AFFECTED BY CHANGES IN INTEREST RATES

          Except for approximately 33.51% of the mortgage loans that have fixed
mortgage rates, after their respective initial fixed-rate periods, if any, the
mortgage rate on each mortgage loan adjusts based upon one-month LIBOR,
six-month LIBOR, one-year LIBOR or one-year CMT, depending on the terms of the
related mortgage note. No prediction can be made as to future levels of any of
these indices or as to the timing of any changes therein, each of which will
directly affect the yields of the certificates. See "Description of the
Certificates--Interest" in this prospectus supplement.

YOUR YIELD WILL BE AFFECTED BY HOW MORTGAGE LOAN INTEREST RATE ADJUSTMENTS ARE
LIMITED

          The offered certificates will accrue interest at a pass-through rate
based on the weighted average of the interest rates on the mortgage loans, net
of certain expenses of the trust fund. Substantially all of the mortgage loans
with adjustable mortgage rates have periodic and maximum limitations on
adjustments to the interest rate on the mortgage loans. Consequently, the
operation of these interest rate caps may limit increases in one or more
pass-through rates for extended periods in a rising interest rate environment.

THE PASS-THROUGH RATES AND INTEREST DISTRIBUTIONS ON THE CERTIFICATES ARE
SUBJECT TO SPECIAL RISKS

          The pass-through rates on the offered certificates are subject to a
cap ("NET WAC ") equal to the weighted average of the mortgage rates of the
mortgage loans, net of certain expenses of the trust fund. Therefore, the
prepayment of the mortgage loans with higher mortgage rates may result in a
lower pass-through rate on the offered certificates.


                                      S-11



          In addition, the pass-through rates on the certificates (other than
the Class A-R, Class X, Class B-1, Class B-2, Class B-3, Class B-4, Class B-5
and Class B-6 Certificates) for any distribution date will be equal to the value
of one-month LIBOR plus the related margin, but subject to both Net WAC and a
maximum per annum rate of 11.50%. The pass-through rates of the Class X
Certificates are also sensitive to the value of one-month LIBOR. Your yield on
such certificates will be sensitive to:

          (1)  the level of one-month LIBOR;

          (2)  the imposition of Net WAC; and

          (3)  the maximum per annum rate of 11.50%.

          To the extent that amounts payable under the corridor contracts are
insufficient to cover Net WAC Shortfalls on the offered certificates, interest
distributions on the Class X Certificates may be used, subject to the priorities
described in this prospectus supplement. However, there can be no assurance that
the amounts otherwise distributable as interest on the Class X Certificates will
be sufficient to cover these shortfalls, particularly because in a situation
where the pass-through rate on a class of offered certificates is limited by Net
WAC, the pass-through rate on the Class X Certificates may be zero.

          To the extent that Net WAC limits the amount of interest paid on the
certificates (other than the Class A-R, Class X, Class B-1, Class B-2, Class
B-3, Class B-4, Class B-5 and Class B-6 Certificates), the difference between
the weighted average net mortgage rate of the mortgage loans and the
pass-through rates of those classes of certificates, calculated without giving
effect to such limitation, will create a shortfall that will carry forward with
interest thereon, as described herein. However, on each distribution date, any
such resulting shortfall will only be paid first, from any amounts distributable
on the related corridor contract on that distribution date and second, to the
extent that the Class X Certificates receive a distribution of interest on that
distribution date, from the portion of that interest distribution amount
deposited into the reserve fund. Accordingly, if the amounts described in the
preceding sentence are not sufficient to cover these shortfalls on a
distribution date, they may remain unpaid.

          Although holders of each class of certificates (other than the Class
A-R, Class X, Class B-1, Class B-2, Class B-3, Class B-4, Class B-5 and Class
B-6 Certificates) will be entitled to receive any related Net WAC Shortfall from
and to the limited extent of funds available for such payments in the reserve
fund, there is no assurance that those funds will be available or sufficient to
pay such Net WAC Shortfall. Such Net WAC Shortfalls will also be covered first
by amounts on deposit in the reserve fund from amounts payable under the
corridor contract related to each such class, to the extent that, for any
distribution date, one-month LIBOR exceeds the applicable cap strike with
respect to such class of offered certificates and such distribution date.

          See "Description of the Certificates--Interest" and "--The Reserve
Fund and the Corridor Contracts" and "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.

THE CORRIDOR CONTRACTS ARE SUBJECT TO COUNTERPARTY RISK

          The assets of the trust include the corridor contracts that will
require the corridor contract counterparty to make certain payments for the
benefit of the holders of the related Classes of LIBOR Certificates. To the
extent that payments on the offered certificates depend in part on payments to
be received by the securities administrator, on behalf of the trustee, under the
corridor contracts, the ability of the securities administrator to make such
payments on such classes of offered certificates will be subject to the credit
risk of the corridor contract counterparty.

HIGH BALANCE MORTGAGE LOANS POSE SPECIAL RISKS

          Approximately 34.75% of the mortgage loans had principal balances
greater than $500,000. You should consider the risk that the loss and
delinquency experience on these high balance mortgage loans may have a
disproportionate effect on the pool of mortgage loans as a whole.


                                      S-12



INADEQUACY OF VALUE OF PROPERTIES COULD AFFECT SEVERITY OF LOSSES

          Assuming that the related mortgaged properties provide adequate
security for the mortgage loans, substantial delays in recoveries may occur from
the foreclosure or liquidation of defaulted loans. We cannot assure you that the
values of the properties have remained or will remain at the levels in effect on
the dates of origination of the related loans. Further, liquidation expenses,
including legal fees, real estate taxes, and maintenance and preservation
expenses will reduce the proceeds payable on the mortgage loans and thereby
reduce the security for the mortgage loans. As a result, the risk that you will
suffer losses could increase. If any of the properties fail to provide adequate
security for the related loan, you may experience a loss. See "Legal Aspects of
the Mortgage Loans--Foreclosure" in the accompanying prospectus.

BANKRUPTCY OF BORROWERS MAY ADVERSELY AFFECT DISTRIBUTIONS ON CERTIFICATES

          The application of federal and state laws, including bankruptcy and
debtor relief laws, may interfere with or adversely affect the ability to
realize on the properties, enforce deficiency judgments or pursue collection
litigation with respect to defaulted loans. As a consequence, borrowers who have
defaulted on their loans and sought, or are considering seeking, relief under
bankruptcy or debtor relief laws will have substantially less incentive to repay
their loans. As a result, these loans will likely experience more severe losses,
which may be total losses and could therefore increase the risk that you will
suffer losses. See "--Credit Enhancement May Not Be Adequate" above.

THERE ARE RISKS IN HOLDING SUBORDINATED CERTIFICATES

          The protections afforded the senior certificates create risks for the
subordinated certificates. Prior to any purchase of any subordinated
certificates, consider the following factors that may adversely impact your
yield:

          o    Because the subordinated certificates receive interest and
               principal distributions after the senior certificates receive
               those distributions, there is a greater likelihood that the
               subordinated certificates will not receive the distributions to
               which they are entitled on any distribution date.

          o    If the servicer of a mortgage loan determines not to advance a
               delinquent payment on that mortgage loan because the servicer
               determines the amount is not recoverable from a borrower, there
               may be a shortfall in distributions on the certificates which
               will impact the subordinated certificates.

          o    Losses resulting from the liquidation of defaulted loans will be
               allocated first to the subordinated certificates. A loss
               allocation results in a reduction in a certificate balance,
               potentially to zero, without a corresponding distribution of cash
               to the holder. A lower certificate balance will result in less
               interest accruing on the certificate.

          o    The earlier in the transaction that a loss on a mortgage loan
               occurs, the greater the impact on your yield on the subordinated
               certificates.

          The pooling and servicing agreement does not permit the allocation of
realized losses on the mortgage loans to the Class P or Class C Certificates.
See "Description of the Certificates" and "Yield, Prepayment and Weighted
Average Life" in this prospectus supplement.

          Except under the circumstances described in this prospectus
supplement, the subordinated certificates are not entitled to a full
proportionate share of principal prepayments on the mortgage loans until the
beginning of the twelfth year after the closing date. In addition, if certain
losses on the mortgage loans exceed stated levels, a portion of the principal
distribution payable to classes of the subordinated certificates with lower
priorities of payment will be paid to the classes of subordinated certificates
with higher priorities of payment. Accordingly, the weighted average lives of
the subordinated certificates will be longer than would be the case if
distributions of principal were allocated among all of the classes of
certificates at the same time. As a result of the longer weighted average lives
of


                                      S-13



the subordinated certificates, the holders of these classes of certificates have
a greater risk of suffering a loss on their investments.

GEOGRAPHIC CONCENTRATION COULD INCREASE LOSSES ON THE MORTGAGE LOANS

          The yield to maturity on your certificates may be affected by the
geographic concentration of the mortgaged properties securing the mortgage
loans. Any concentration of the mortgaged properties securing the mortgage loans
in particular geographic regions might magnify the effect on the pool of
mortgage loans of adverse economic conditions or of special hazards in these
areas, such as earthquakes or tornadoes, and might increase the rate of
delinquencies, defaults and losses on the mortgage loans. Consequently, the
geographic concentration could result in shortfalls in distributions due on your
certificates more than would be the case if the mortgaged properties were more
geographically diversified.

          Approximately 33.29% of the mortgage loans by aggregate stated
principal balance of the mortgage loans as of the cut-off date, are secured by
properties located in California. Property in California may be more susceptible
than homes located in other parts of the country to some types of uninsurable
hazards, such as earthquakes, floods, mudslides and other natural disasters.

          See "Description of the Mortgage Loans" in this prospectus supplement.

HURRICANE KATRINA AND ITS AFTERMATH MAY POSE SPECIAL RISKS

          At the end of August 2005, Hurricane Katrina and related windstorms,
floods and tornadoes caused extensive and catastrophic physical damage to
coastal and inland areas located in the Gulf Coast region of the United States
(parts of Louisiana, Mississippi, Alabama and Florida) and may have adversely
affected mortgaged properties located in certain other parts of the United
States. The seller or the related originator, as applicable, will represent and
warrant as of the closing date that no mortgaged property has been damaged so as
to materially affect the value of the mortgaged property. In the event of a
breach of that representation and warranty, the seller or the related
originator, as applicable, will be obligated to repurchase or substitute for the
related mortgage loan. Any damage to a mortgaged property that secures a
mortgage loan in the trust fund occurring after the closing date as a result of
any other hurricane, windstorm, flood, tornado or casualty will not cause a
breach of this representation and warranty. Any repurchase would have the effect
of increasing the rate of principal payment on the certificates.

          The full economic impact of Hurricane Katrina and its aftermath is
uncertain. Initial economic effects appear to include nationwide decreases in
petroleum availability with a corresponding increase in price, decreases in
chemical production and availability and regional interruptions in travel and
transportation, tourism and economic activity generally. It is not possible to
determine how long these effects may last or whether other effects will
subsequently arise or become apparent in connection with Hurricane Katrina and
its aftermath. No assurance can be given as to the effect of any of these events
on consumer confidence and the performance of the mortgage loans. Any adverse
impact resulting from any of these events would be borne by the holders of the
certificates.

RECOURSE ON DEFECTIVE MORTGAGE LOANS IS LIMITED

          The seller or an originator may be required to purchase mortgage loans
from the trust fund in the event certain breaches of representations and
warranties made by it have not been cured. These purchases will have the same
effect on the holders of the offered certificates as a prepayment of the
mortgage loans. If the seller or the originator that made the breached
representation or warranty fails to repurchase that mortgage loan, it will
remain in the trust fund.

RAPID PREPAYMENTS ON THE MORTGAGE LOANS WILL REDUCE THE YIELD ON THE CLASS X
CERTIFICATES

          The Class X Certificates receive distributions only of interest.
Distributions to the holders of the Class X Certificates are based on the
notional amount for such class, calculated as described in this prospectus
supplement under "Description of the Certificates--Notional Amount
Certificates". You should fully consider the risks associated with an investment
in the Class X Certificates. If you invest in the Class X Certificates and the
mortgage


                                      S-14



loans prepay faster than expected or if the trust fund is terminated earlier
than expected, you may not fully recover your initial investment.

          We refer you to "Yield, Prepayment and Weighted Average
Life--Sensitivity of the Class X Certificates" in this prospectus supplement for
more detail.

BANKRUPTCY OR INSOLVENCY MAY AFFECT THE TIMING AND AMOUNT OF DISTRIBUTIONS ON
THE CERTIFICATES

          The seller and the depositor will treat the transfer of the mortgage
loans in the trust fund by the seller to the depositor as a sale for accounting
purposes. The depositor and the trust fund will treat the transfer of the
mortgage loans from the depositor to the trust fund as a sale for accounting
purposes. If these characterizations are correct, then if the seller were to
become bankrupt, the mortgage loans would not be part of the seller's bankruptcy
estate and would not be available to the seller's creditors. If the seller
becomes bankrupt, its bankruptcy trustee or one of the seller's creditors may
attempt to recharacterize the sale of the mortgage loans as a borrowing by the
seller, secured by a pledge of the mortgage loans. Presenting this position to a
bankruptcy court could prevent timely payments on the certificates and even
reduce the payments on the certificates. Similarly, if the characterizations of
the transfers as sales are correct, then if the depositor were to become
bankrupt, the mortgage 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 the
depositor's creditors may attempt to recharacterize the sale of the mortgage
loans as a borrowing by the depositor, secured by a pledge of the mortgage
loans. Presenting this position to a bankruptcy court could prevent timely
payments on the certificates and even reduce the payments on the certificates.

          If the master servicer becomes bankrupt, the bankruptcy trustee may
have the power to prevent the appointment of a successor to the master servicer.
If the master servicer becomes bankrupt and cash collections have been
commingled with the master servicer's own funds, the trust fund may not have a
perfected interest in those collections. In this case the trust fund might be an
unsecured creditor of the master servicer as to the commingled funds and could
recover only its share as a general creditor, which might be nothing.
Collections that are not commingled but still in an account of the master
servicer might also be included in the bankruptcy estate of the master servicer
even though the trust fund 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 certificates.

          Federal and state statutory provisions affording protection or relief
to distressed borrowers may affect the ability of the secured mortgage lender to
realize upon its security in other situations as well. For example, in a
proceeding under the federal Bankruptcy Code, a lender may not foreclose on a
mortgaged property without the permission of the bankruptcy court. And in
certain instances a bankruptcy court may allow a borrower to reduce the monthly
payments, change the rate of interest, 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 mortgage loans
and even to reduce the aggregate amount of payments on the mortgage loans.

YOU COULD BE ADVERSELY AFFECTED BY VIOLATIONS OF CONSUMER PROTECTION LAWS

          Applicable state laws generally regulate interest rates and other
charges and require certain disclosures. In addition, state and federal consumer
protection laws, unfair and deceptive practices acts and debt collection
practices acts may apply to the origination or collection of the mortgage loans.
Depending on the provisions of the applicable law, violations of these laws may
limit the ability of the servicers to collect all or part of the principal of or
interest on the mortgage loans, may entitle the borrower to a refund of related
amounts previously paid and, in addition, could subject the master servicer (in
its capacity as successor servicer) or the related servicer to damages and
administrative enforcement.

          The Federal Home Ownership and Equity Protection Act of 1994, commonly
known as HOEPA, prohibits inclusion of some 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 consummation
of such mortgage loans. Some states, as in the case of Georgia, with respect to
Georgia's Fair Lending Act of 2002, have enacted, or may


                                      S-15



enact, similar laws or regulations, which in some case impose restrictions and
requirements greater than those in HOEPA. 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 such mortgage loans against the trust. 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 originators and the seller have warranted that the mortgage loans do
not include any mortgage loan in violation of HOEPA or similar state laws.
However, if the trust fund should include loans subject to HOEPA or in material
violation of similar state laws, it will have repurchase remedies against the
related originator or the seller, as applicable. See "Legal Aspects of the
Mortgage Loans" in the accompanying prospectus.

FAILURE OF SERVICERS AND MASTER SERVICER TO PERFORM MAY ADVERSELY AFFECT
DISTRIBUTIONS ON CERTIFICATES

          The amount and timing of distributions on the certificates generally
will be dependent on servicers performing their respective servicing obligations
and on the master servicer performing its master servicing obligations in an
adequate and timely manner. See "Servicing of the Mortgage Loans--Servicing and
Collection Procedures" in this prospectus supplement. If a servicer or the
master servicer fails to perform its respective servicing or master servicing
obligations, this failure may result in the termination of that servicer or
master servicer. That termination, with its corresponding transfer of daily
collection activities, will likely increase the rates of delinquencies, defaults
and losses on the mortgage loans. As a result, shortfalls in the distributions
due on your certificates could occur.

YOUR YIELD MAY BE AFFECTED IF THERE IS A TRANSFER OF SERVICING OF CERTAIN
MORTGAGE LOANS

          The seller retained the right, subject to certain conditions, to
terminate certain of the servicers as servicers with respect to the related
mortgage loans and cause the transfer of the servicing of those mortgage loans
to be transferred to third parties. All transfers of servicing involve the risk
of disruption in collections due to data input errors, misapplied or misdirected
payments, system incompatibilities and other reasons. As a result, if the
servicing of these mortgage loans is transferred, the rates of delinquencies,
defaults and losses are likely to increase, at least for a period of time. There
can be no assurance as to the extent or duration of any disruptions associated
with the transfer of any servicing or as to what affect on the yield on your
certificates will be. In addition, even though a servicing transfer cannot occur
unless certain conditions set forth in the pooling and servicing agreement are
met, there can be no guarantee that a servicing transfer will not have an
adverse impact on the rates of delinquency, default and losses on the related
mortgage loans.

LIMITED LIQUIDITY MAY ADVERSELY AFFECT MARKET VALUE OF CERTIFICATES

          A secondary market for the offered certificates may not develop or, if
it does develop, it may not provide you with liquidity of investment or continue
while your certificates are outstanding. Lack of liquidity could result in a
substantial decrease in the market value of your certificates. See "Risk
Factors--Lack of a Secondary Market May Make it Difficult for You to Resell Your
Certificates" in the accompanying prospectus.

          The secondary market for mortgage-backed securities has experienced
periods of illiquidity and can be expected to do so in the future. Illiquidity
means that there may not be any purchasers for your class of certificates.
Although any class of certificates may experience illiquidity, it is more likely
that classes of certificates that are more sensitive to prepayment, credit or
interest rate risk will experience illiquidity.

RIGHTS OF BENEFICIAL OWNERS MAY BE LIMITED BY BOOK-ENTRY SYSTEM

          Unless you are the purchaser of a Class A-R Certificate, your
ownership of the offered certificates will be registered electronically with
DTC. The lack of physical certificates could:

          o    result in payment delays on your certificates because the trustee
               will be sending distributions on the certificates to DTC instead
               of directly to you;


                                      S-16



          o    make it difficult for you to pledge your certificates if physical
               certificates are required by the party demanding the pledge; and

          o    hinder your ability to resell your certificates because some
               investors may be unwilling to buy certificates that are not in
               physical form. See "Description of the Certificates--Book-Entry
               Certificates" in this prospectus supplement and "Description of
               the Certificates--Book-Entry Registration and Definitive
               Certificates" in the accompanying prospectus.

MILITARY ACTION AND TERRORIST ATTACKS

          The effects that military action by U.S. forces in Iraq and
Afghanistan or other regions and 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 have and may continue to defer, reduce or forgive
payments and delay foreclosure proceedings in respect of loans to borrowers
affected in some way by recent and possible future events. In addition,
activation of a substantial number of 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 (formerly known as the Soldiers' and Sailors' Civil Relief Act of 1940), or
similar state laws, and neither the master servicer nor the servicers will be
required to advance for any interest shortfall caused by any such reduction.
Shortfalls in interest may result from the application of the Servicemembers'
Civil Relief Act or similar state laws. Interest payable to senior and
subordinated certificateholders will be reduced on a pro rata basis by any
reductions in the amount of interest collectible as a result of application of
the Servicemembers' Civil Relief Act or similar state laws. See "Legal Aspects
of the Mortgage Loans--Servicemembers' Civil Relief Act" in the accompanying
prospectus.

RISKS RELATED TO THE CLASS A-R CERTIFICATES

          The holders of the Class A-R Certificates must include the taxable
income or loss of each REMIC created by the trust in determining its federal
taxable income. It is not anticipated that the residual certificateholders will
receive distributions from the trust. As such, prospective investors are
cautioned that the residual certificateholders' REMIC taxable income and the tax
liability associated therewith may be substantial during certain periods, in
which event the holders of those certificates must have sufficient sources of
funds to pay such tax liability. Furthermore, it is anticipated that all or a
substantial portion of the taxable income of the REMICs includible by the
holders of the residual certificates will be treated as "excess inclusion"
income. As such, the holder will (i) be unable to use net operating losses to
offset such income, (ii) treat such income as "unrelated business taxable
income" (if applicable), and (iii) if such holder is a foreign person, be
subject to 30% withholding tax to certain non-U.S. investors, with no exemption
or treaty reduction.

          Under the provisions of the Internal Revenue Code relating to REMICs,
it is likely that the residual certificates will be considered to be a
"non-economic residual interest." As such, a transfer of those certificates
would be disregarded if it had a significant purpose to impede the assessment or
collection of tax. Accordingly, the transferee affidavit used for transfers of
the residual certificates will require each transferee to affirm that it (i)
historically has paid its debts as they have come due and intends to do so in
the future, (ii) understands that it may incur tax liabilities with respect to
the residual certificate in excess of cash flows generated by it, (iii) intends
to pay taxes associated with holding such residual certificates as such taxes
become due, (iv) will not cause the income from the residual certificates to be
attributable to a foreign permanent establishment or fixed base, within the
meaning of an applicable income tax treaty, of the transferee or any other
person and (v) will not transfer the residual certificates to any person or
entity that does not provide a similar affidavit. Each transferor must certify
in writing to the trustee that, as of the date of transfer, it had no knowledge
or reason to know that the affirmations made by the transferee pursuant to the
preceding sentence were false. Under the regulations, any transfer of the Class
A-R Certificate will be disregarded for federal tax purposes if a significant
purpose of the transfer was to enable the seller to impede the assessment or
collection of tax. A significant purpose to impede the assessment or collection
of tax exists if the seller, at the time of the transfer, either knew or should
have known that the transferee would be unwilling or unable to pay taxes due on
its share of the taxable income of each REMIC created by the


                                      S-17



trust fund. Notwithstanding the above, a transfer will be respected if (a) the
transferor has performed reasonable investigations of the transferee and has no
knowledge or no reason to know that a transferee intended to impede the
assessment or collection of taxes, (b) the transfer is not made to a foreign
permanent establishment or fixed base of a U.S. taxpayer (an "Offshore
Location"), (c) the transferee represents that it will not cause income from the
Class A-R Certificate to be attributable to an Offshore Location and (d) one of
the two tests set forth in Treasury regulations issued on July 19, 2002 is
satisfied. See "Material Federal Income Tax Consequences--The Class A-R
Certificates" and "ERISA Matters" in this prospectus supplement and "Federal
Income Tax Consequences--REMICs-Taxation of Owners of REMIC Residual
Certificates," and "Federal Income Tax Consequences--Tax-Related Restrictions on
Transfers of REMIC Residual Certificates" in the accompanying prospectus.

          An individual, trust or estate that holds a Class A-R Certificate
(whether the residual certificate is held directly or indirectly through certain
pass-through entities) also would have additional gross income with respect to,
but may be subject to limitations or disallowance of deductions for servicing
fees on the mortgage loans and other administrative expenses properly allocable
to such residual certificate in computing such holder's regular tax liability,
and may not be able to deduct such fees or expenses at all in computing such
holder's alternative minimum tax liability. As a result, the Class A-R
Certificates generally are not suitable investments for individuals or for
partnerships, estates or S corporations with individuals as partners,
beneficiaries or shareholders. The pooling and servicing agreement will require
that any such gross income and such fees and expenses will be allocable to
holders of the Class A-R Certificates in proportion to their respective
ownership interests. See "Federal Income Tax Consequences--REMICS-Taxation of
Owners of REMIC Residual Certificates" in the accompanying prospectus.
Furthermore, the federal income tax consequences of any consideration paid to a
transferee on a transfer of a Class A-R Certificate are unclear. Any transferee
of a Class A-R Certificate receiving such consideration is urged to consult its
tax advisors.

          Due to the special tax treatment of residual interests, the effective
after-tax return of the Class A-R Certificates may be significantly lower than
would be the case if the Class A-R Certificates were taxed as debt instruments
and could be negative.

                           FORWARD-LOOKING STATEMENTS

          In this prospectus supplement and the accompanying prospectus, we use
certain forward-looking statements. These forward-looking statements are found
in the material, including each of the tables set forth under "Yield, Prepayment
and Weighted Average Life" in this prospectus supplement. Forward-looking
statements are also found elsewhere in this prospectus supplement and the
accompanying prospectus and include words like "expects," "intends,"
"anticipates," "estimates" and other similar words. These statements are
intended to convey our projections or expectations as of the date of this
prospectus supplement. These statements are inherently subject to a variety of
risks and uncertainties. Actual results could differ materially from those we
anticipate due to changes in, among other things:

          (1)  economic conditions and industry competition;

          (2)  political and/or social conditions; and

          (3)  the law and government regulatory initiatives.

          We will not update or revise any forward-looking statement to reflect
changes in our expectations or changes in the conditions or circumstances on
which these statements were originally based.


                                      S-18



                        DESCRIPTION OF THE MORTGAGE LOANS

GENERAL

          On the Closing Date, Morgan Stanley Mortgage Loan Trust 2005-11AR (the
"TRUST FUND") will own approximately 1,801 mortgage loans (the "MORTGAGE LOANS"
or the "MORTGAGE POOL") with an aggregate unpaid principal balance of
approximately $536,015,852 (the "AGGREGATE CUT-OFF DATE POOL PRINCIPAL BALANCE")
as of December 1, 2005 (the "CUT-OFF DATE"), after deducting payments due on or
before the Cut-off Date. The Mortgage Loans are secured by first liens on fee
simple interests in one- to four-family residential properties (each, a
"MORTGAGED PROPERTY"). All of the Mortgage Loans have original terms to maturity
of up to approximately 30 years. As of the Cut-off Date, approximately 488 of
the Mortgage Loans, representing approximately 33.51% of the Aggregate Cut-off
Date Pool Principal Balance are Mortgage Loans with Mortgage Rates (defined
below) that are fixed (the "FIXED-RATE MORTGAGE LOANS"), and approximately 1,313
of the Mortgage Loans, representing approximately 66.49% of the Aggregate
Cut-off Date Pool Principal Balance are Mortgage Loans with Mortgage Rates that
adjust (the "ADJUSTABLE-RATE MORTGAGE LOANS"), as described further below.

          The "TRUST FUND" will include, in addition to the Mortgage Pool, (i)
the amounts held from time to time in one or more accounts maintained in the
name of the Trustee pursuant to the Pooling and Servicing Agreement, (ii) the
amounts held from time to time in the Custodial Accounts and the Distribution
Account maintained in the name of the Trustee pursuant to the Pooling and
Servicing Agreement, (iii) any property which initially secured a Mortgage Loan
and which is acquired by foreclosure or deed in lieu of foreclosure, (iv) the
pledge agreements or guaranty agreements, as applicable, in respect of the
Additional Collateral Mortgage Loans, as described below, (v) all insurance
policies related to the Mortgage Loans and any insurance proceeds, (vi) all of
the right, title and interest of the Depositor to the mortgage loan purchase
agreement, the underlying mortgage loan purchase agreements and the underlying
servicing agreements as described under "Assignment of the Mortgage Loans" below
and (vii) the Corridor Contracts and the amounts on deposit in the Reserve Fund.
The rights in respect of the Additional Collateral, the Corridor Contracts and
amounts on deposit in the Reserve Fund (in each case, as defined below) will not
be part of any REMIC.

          Whenever reference is made herein to a percentage of some or all of
the Mortgage Loans, such percentage is determined on the basis of the Stated
Principal Balance (as defined below at "Description of the
Certificates--Interest") of the Mortgage Loans as of the Cut-off Date.

          The following table sets forth, by Aggregate Cut-off Date Pool
Principal Balance, the Mortgage Loans originated by each of Morgan Stanley
Mortgage Capital Inc. ("MSMC"), First National Bank of Nevada ("FNBN"), Wachovia
Mortgage Corporation ("WACHOVIA ") and other originators:

                                        PERCENT
                                     ORIGINATED IN
ORIGINATOR                           MORTGAGE POOL
----------------------------------   -------------
MSMC
(the "MSMC MORTGAGE LOANS").......       66.24%
FNBN
(the "FNBN MORTGAGE LOANS").......       10.21%
Wachovia
(the "WACHOVIA MORTGAGE LOANS")...       10.19%
Other
(the "OTHER MORTGAGE LOANS")......       13.36%


                                      S-19



          Each of MSMC, FNBN and Wachovia and the various other mortgage loan
sellers who originated Mortgage Loans that account for less than 10% of the
Mortgage Loans, by Aggregate Cut-off Date Pool Principal Balance, is referred to
herein as an "ORIGINATOR".

          Additional Collateral Mortgage Loans. Certain of the Mortgage Loans
with loan-to-value ratios in excess of 80% are "ADDITIONAL COLLATERAL MORTGAGE
LOANS," which, in addition to being secured by real property, are secured by a
security interest in a limited amount of additional collateral owned by the
borrower or are supported by a third-party guarantee (together the "ADDITIONAL
COLLATERAL"). In connection with the liquidation of an Additional Collateral
Mortgage Loan, the related Servicer will attempt to realize for the benefit of
the trust fund on the security interest in the Additional Collateral of a
defaulted Additional Collateral Mortgage Loan that is in liquidation. Such
Additional Collateral may no longer be required when the principal balance of
such Additional Collateral Mortgage Loan is reduced to a predetermined amount
set forth in the related pledge agreement or guaranty agreement, as applicable,
or when the loan-to-value ratio for such Additional Collateral Mortgage Loan is
reduced to the related Servicer's applicable loan-to-value ratio limit for such
Mortgage Loan by virtue of an increase in the appraised value of the mortgaged
property as determined by that servicer.

          On or prior to the Closing Date, the Depositor will have assigned to
the Trust Fund its rights under a limited purpose surety bond issued to the
related Originator by AMBAC Assurance Corporation (the "LIMITED PURPOSE SURETY
BOND"), which is intended to guarantee the receipt by the Trust Fund of certain
shortfalls in the net proceeds realized from the liquidation of any required
Additional Collateral (such amount not to exceed 30% of the original principal
amount of the related Additional Collateral Mortgage Loan) to the extent that
any such shortfall results in a loss of principal as an Additional Collateral
Mortgage Loan that becomes a Liquidated Mortgage Loan, as more particularly
described in, and as limited by, the terms and provisions of the Limited Purpose
Surety Bond.

          Certain general information with respect to the Mortgage Loans as of
the Cut-off Date is set forth below. Prior to the Closing Date, Mortgage Loans
may be removed from the Trust Fund and other mortgage loans may be substituted
therefor. The Depositor believes that the information set forth herein with
respect to the Mortgage Loans as presently constituted is representative of the
characteristics of the Mortgage Loans as they will be constituted at the Closing
Date, although the numerical data and certain other characteristics of the
Mortgage Loans described herein may vary within a range of plus or minus 5%.

          None of the Mortgage Loans will be guaranteed by any governmental
agency. Pursuant to assignment, assumption and recognition agreements (the
"ASSIGNMENT AGREEMENTS"), each among the Depositor, the Seller or the Servicer,
as applicable, the related Originator and the Trustee, on behalf of the Trust,
the Seller or the Servicer, as applicable, and the Depositor will assign to the
Trustee their respective interests in the underlying mortgage loan purchase
agreements (each, an "UNDERLYING MORTGAGE LOAN PURCHASE AGREEMENT") and/or the
underlying servicing agreements (each, an "UNDERLYING SERVICING AGREEMENT") with
respect to the Mortgage Loans originally entered into between the Seller and the
Originators. With respect to the MSMC Mortgage Loans, the Seller will assign its
interests in those Mortgage Loans, other than any retained servicing rights, to
the Depositor and the Trustee under a mortgage loan purchase agreement (the
"MORTGAGE LOAN PURCHASE AGREEMENT").

          The Mortgage Loans other than the MSMC Mortgage Loans have been
acquired by the Seller from the Originators in the ordinary course of its
business. The Seller purchased the MSMC Mortgage Loans directly from
correspondent lenders on its behalf. See "--Loan Purchasing Guidelines and
Underwriting Standards" below. GMAC Mortgage Corporation ("GMAC"), Morgan
Stanley Credit Corp., HSBC Mortgage Corporation (USA), Wachovia Mortgage
Corporation and Wells Fargo Bank, National Association will service the Mortgage
Loans pursuant to existing underlying servicing agreements with the Seller,
which agreements, as they relate to the Mortgage Loans, have been assigned to
the Trustee. Wells Fargo Bank, National Association, as master servicer ("WELLS
FARGO" or, in such capacity, the "MASTER SERVICER") will master service the
Mortgage Loans.

          All of the Mortgage Loans provide for payments due on the first day of
each month (the "DUE DATE"). Due to the provisions for monthly advances by the
applicable Servicer, scheduled payments made by the borrowers either earlier or
later than the scheduled Due Dates thereof will not affect the amortization
schedule or the relative


                                      S-20



application of such payments to principal and interest. Approximately 23.99% of
the Mortgage Loans (by Aggregate Cut-off Date Pool Principal Balance), will
provide for the amortization of the amount financed over a series of
substantially equal monthly payments. Approximately 76.01% of the Mortgage Loans
(by Aggregate Cut-off Date Pool Principal Balance), will provide that the
related mortgagors pay only interest on the principal balances of these Mortgage
Loans for up to 120 months after their origination, but require the entire
principal balances of these Mortgage Loans to be fully amortized over the
related remaining term of the Mortgage Loans (the "INTEREST ONLY LOANS"). Except
for approximately 48.11% of the Mortgage Loans (by Aggregate Cut-off Date Pool
Principal Balance), the mortgagors may prepay their Mortgage Loans at any time
without penalty. Any prepayment penalties received on these Mortgage Loans will
be distributed to the Class P Certificates and will not be available for
distribution to the Offered Certificates.

          Except for approximately 488 of the Mortgage Loans which are
Fixed-Rate Mortgage Loans, representing approximately 33.51% of the Aggregate
Cut-off Date Pool Principal Balance, the mortgage rate (the "MORTGAGE RATE") of
each of the Mortgage Loans will be fixed for a certain period of time after the
origination of that Mortgage Loan. Thereafter, each mortgage note for the
Adjustable-Rate Mortgage Loans will provide for adjustments to the Mortgage Rate
thereon at the end of the initial fixed-rate period and, monthly, semi-annually
or annually thereafter, depending on the terms of the related mortgage note
(each such date, an "ADJUSTMENT DATE"), to equal the sum of, rounded to the
nearest 0.125% of (1):

          o    if such Mortgage Rate adjusts based upon the One-Month LIBOR
               Index, the average of the London interbank offered rates for
               one-month U.S. dollar deposits in the London market, generally as
               set forth in either The Wall Street Journal or some other source
               generally accepted in the residential mortgage loan origination
               business and specified in the related mortgage note, or, if such
               rate ceases to be published in The Wall Street Journal or becomes
               unavailable for any reason, then based upon a new index selected
               by the master servicer, based on comparable information, in each
               case, as most recently announced as of either 45 days prior to,
               or the first business day of the month immediately preceding the
               month of, such Adjustment Date (the "ONE-MONTH LIBOR INDEX"); or

          o    if such Mortgage Rate adjusts based upon the Six-Month LIBOR
               Index, the average of the London interbank offered rates for
               six-month U.S. dollar deposits in the London market, generally as
               set forth in either The Wall Street Journal or some other source
               generally accepted in the residential mortgage loan origination
               business and specified in the related mortgage note, or, if such
               rate ceases to be published in The Wall Street Journal or becomes
               unavailable for any reason, then based upon a new index selected
               by the master servicer, based on comparable information, in each
               case, as most recently announced as of either 45 days prior to,
               or the first business day of the month immediately preceding the
               month of, such Adjustment Date (the "SIX-MONTH LIBOR INDEX"); or

          o    if such Mortgage Rate adjusts based upon the One-Year LIBOR
               Index, the average of the London interbank offered rates for
               one-year U.S. dollar deposits in the London market, generally as
               set forth in either The Wall Street Journal or some other source
               generally accepted in the residential mortgage loan origination
               business and specified in the related mortgage note, or, if such
               rate ceases to be published in The Wall Street Journal or becomes
               unavailable for any reason, then based upon a new index selected
               by the master servicer, based on comparable information, in each
               case, as most recently announced as of either 45 days prior to,
               or the first business day of the month immediately preceding the
               month of, such Adjustment Date (the "ONE-YEAR LIBOR INDEX"); or

          o    if such Mortgage Rate adjusts based upon the One-Year CMT Index,
               the weekly average yield on United States Treasury securities
               adjusted to a constant maturity of one year as published by the
               Federal Reserve Board in Statistical Release H.15(519) and most
               recently available as of the day specified in the related
               Mortgage Note (the "ONE-YEAR CMT INDEX", and each of the
               One-Month LIBOR Index, Six-Month LIBOR Index, the One-Year LIBOR
               Index and the One-Year CMT Index, a "MORTGAGE INDEX"),


                                      S-21



and (2) a fixed percentage amount specified in the related mortgage note (the
"GROSS MARGIN"); provided, however, that the Mortgage Rate for substantially all
of the Adjustable-Rate Mortgage Loans will not increase or decrease by more than
a certain amount specified in the mortgage note (each limit on adjustments in
the Mortgage Rate is referred to as a "SUBSEQUENT PERIODIC RATE CAP"), with the
exception of the initial Adjustment Date for which the Mortgage Rate on the
Adjustable-Rate Mortgage Loans will not increase or decrease by more the certain
amount specified in the related mortgage note (each limit on initial adjustments
in the Mortgage Rate is referred to as a "INITIAL PERIODIC RATE CAP").
Adjustments to the Mortgage Rate for each Adjustable-Rate Mortgage Loan are
subject to a lifetime maximum interest rate (the "MAXIMUM MORTGAGE RATE"). Each
Adjustable-Rate Mortgage Loan specifies a lifetime minimum interest rate (the
"MINIMUM MORTGAGE RATE"), which in some cases is equal to the Gross Margin for
that Mortgage Loan.

          Approximately 0.05% and 33.46% of the Mortgage Loans are fixed rate
loans that have original terms to maturity of up to approximately 20 years and
30 years, respectively. Approximately 0.57% of the Mortgage Loans have Mortgage
Rates that adjust monthly beginning at the origination of such Mortgage Loans.
Approximately 5.93% of the Mortgage Loans have Mortgage Rates that adjust
semi-annually beginning at the origination of such Mortgage Loans. Approximately
8.97% of the Mortgage Loans, by Aggregate Cut-off Date Pool Principal Balance,
are 2/6 Month Mortgage Loans. Approximately 17.34% of the Mortgage Loans, by
aggregate Cut-off Date Pool Principal Balance, are 3/1 Mortgage Loans or 3/6
Month Mortgage Loans. Approximately 33.68% of the Mortgage Loans, by Aggregate
Cut-off Date Pool Principal Balance, are 5/1 Mortgage Loans or 5/6 Month
Mortgage Loans. A "3/1 MORTGAGE LOAN" and a "5/1 MORTGAGE LOAN," has a mortgage
rate that is fixed for approximately 36 and 60 months, respectively, after
origination thereof before the Mortgage Rate for that Mortgage Loan becomes
subject to annual adjustment based on a Mortgage Index described in the
preceding paragraph. A "2/6 MONTH MORTGAGE LOAN," a "3/6 MONTH MORTGAGE LOAN"
and a "5/6 MONTH MORTGAGE LOAN" has a mortgage rate that is fixed for
approximately 24, 36 and 60 months, respectively, after origination thereof
before the Mortgage Rate for that Mortgage Loan becomes subject to semi-annual
adjustment based on a Mortgage Index described in the preceding paragraph.

          The earliest first payment date, earliest stated maturity date and
latest stated maturity date of any Mortgage Loan are January 2002, October 2025
and December 2035, respectively.

          As of the Cut-off Date, none of the Mortgage Loans was more than 30
days delinquent.

          No Mortgage Loan had a Loan-to-Value Ratio at origination of more than
100.00%. Except for the Additional Collateral Mortgage Loans and approximately
0.17% of Mortgage Loans by Aggregate Cut-off Date Pool Principal Balance, each
mortgage loan with a Loan-to-Value Ratio at origination of greater than 80% will
be covered by a primary mortgage guaranty insurance policy issued by a mortgage
insurance company acceptable to Fannie Mae or Freddie Mac. The policy provides
coverage in an amount equal to a specified percentage times the sum of the
remaining principal balance of the related mortgage loan, the accrued interest
thereon and the related foreclosure expenses. With respect to 8 Mortgage Loans
(the "LPMI MORTGAGE LOANS") constituting approximately 0.29% of the Aggregate
Cut-off Date Pool Principal Balance, the lender (rather than the borrower)
acquired the primary mortgage guaranty insurance and charged the related
borrower an interest premium. Except for the LPMI Mortgage Loans, no primary
mortgage guaranty insurance policy will be required with respect to any Mortgage
Loan if maintaining the policy is prohibited by applicable law or after the date
on which the related Loan-to-Value Ratio is 80% or less or, based on a new
appraisal, the principal balance of the mortgage loan represents 80% or less of
the new appraised value. The primary mortgage guaranty insurance policy will be
maintained for the life of the LPMI Mortgage Loans, unless otherwise prohibited
by law.

          The "LOAN-TO-VALUE RATIO" of a Mortgage Loan at any given time is a
fraction, expressed as a percentage, the numerator of which is the principal
balance of the related Mortgage Loan at the date of determination and the
denominator of which is (a) in the case of a purchase, the lesser of the selling
price of the Mortgaged Property and its appraised value determined in an
appraisal obtained by the originator at origination of such Mortgage Loan, or
(b) in the case of a refinance, the appraised value of the Mortgaged Property at
the time of such refinance. The "EFFECTIVE LOAN-TO-VALUE RATIO" of a Mortgage
Loan at any given time is a fraction, expressed as a percentage, the numerator
of which is the original principal amount of the related Mortgage Loan, less the
amount secured by the Additional Collateral required at the time of origination,
if any, and the denominator of which is the appraised value


                                      S-22



of the related Mortgaged Property at such time or, in the case of a Mortgage
Loan financing the acquisition of the Mortgaged Property, the sales price of the
Mortgaged Property, if such sales price is less than such appraised value. No
assurance can be given that the value of any Mortgaged Property has remained or
will remain at the level that existed on the appraisal or sales date. If
residential real estate values generally or in a particular geographic area
decline, the Loan-to-Value Ratios might not be a reliable indicator of the rates
of delinquencies, foreclosures and losses that could occur with respect to such
Mortgage Loans.

          As set forth in the "Credit Scores" tables below, credit scores have
been supplied with respect to the mortgagors. Credit scores are obtained by many
mortgage lenders in connection with mortgage loan applications to help assess a
borrower's credit-worthiness. Credit scores are generated by models developed by
a third party which analyzed data on consumers in order to establish patterns
which are believed to be indicative of the borrower's probability of default.
The credit score is based on a borrower's historical credit data, including,
among other things, payment history, delinquencies on accounts, levels of
outstanding indebtedness, length of credit history, types of credit, and
bankruptcy experience. Credit scores range from approximately 250 to
approximately 900, with higher scores indicating an individual with a more
favorable credit history compared to an individual with a lower score. However,
a credit score purports only to be a measurement of the relative degree of risk
a borrower represents to a lender, i.e., that a borrower with a higher score is
statistically expected to be less likely to default in payment than a borrower
with a lower score. In addition, it should be noted that credit 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. Therefore, a credit score does not
take into consideration the effect of mortgage loan characteristics (which may
differ from consumer loan characteristics) on the probability of repayment by
the borrower. There can be no assurance that a credit score will be an accurate
predictor of the likely risk or quality of the related mortgage loan.

TABULAR CHARACTERISTICS OF THE MORTGAGE LOANS

          The following information sets forth in tabular format certain
information, as of the Cut-off Date, as to the Mortgage Loans. Other than with
respect to rates of interest, percentages (approximate) are stated by Stated
Principal Balance of the Mortgage Loans as of the Cut-off Date and, due to
rounding, may not total 100%. In addition, the Weighted Average Credit Score in
the following tables is derived using the Mortgage Loans where a Credit Score is
available.


                                      S-23



                           TABULAR CHARACTERISTICS OF
                                THE MORTGAGE POOL

                            CURRENT MORTGAGE RATES(1)



                                                               PERCENT OF                           WEIGHTED
                                  NUMBER       AGGREGATE       AGGREGATE                             AVERAGE
                                    OF         PRINCIPAL       PRINCIPAL     WEIGHTED    WEIGHTED   ORIGINAL
RANGE OF CURRENT                 MORTGAGE       BALANCE         BALANCE       AVERAGE     AVERAGE    SUBJECT
MORTGAGE RATES (%)                 LOANS      OUTSTANDING     OUTSTANDING   COUPON (%)     FICO      LTV (%)
------------------------------   --------   ---------------   -----------   ----------   --------   --------

3.501 - 4.000.................         2    $    694,000.00       0.13%        3.933        698       65.91
4.001 - 4.500.................        18       5,668,830.00       1.06         4.385        733       78.83
4.501 - 5.000.................        61      22,903,878.96       4.27         4.824        726       69.67
5.001 - 5.500.................       101      35,782,590.46       6.68         5.378        727       68.27
5.501 - 6.000.................       363     144,072,393.49      26.88         5.790        727       68.72
6.001 - 6.500.................       387     126,525,892.78      23.60         6.340        711       74.51
6.501 - 7.000.................       370     108,464,272.43      20.24         6.806        698       76.12
7.001 - 7.500.................       174      35,966,842.11       6.71         7.315        697       79.08
7.501 - 8.000.................       158      28,310,903.86       5.28         7.801        698       79.17
8.001 - 8.500.................       138      22,647,280.24       4.23         8.332        692       79.74
8.501 - 9.000.................        29       4,978,968.00       0.93         8.722        684       79.70
                                   -----    ---------------     ------         -----        ---       -----
   TOTAL/WEIGHTED AVERAGE.....     1,801    $536,015,852.33     100.00%        6.383        712       73.51
                                   =====    ===============     ======         =====        ===       =====


----------
(1)  As of the Cut-off Date, the weighted average mortgage rate of the Mortgage
     Loans is expected to be approximately 6.383% per annum.

                   CURRENT MORTGAGE LOAN PRINCIPAL BALANCES(1)



                                                               PERCENT OF                           WEIGHTED
                                  NUMBER       AGGREGATE       AGGREGATE                             AVERAGE
RANGE OF CURRENT                    OF         PRINCIPAL       PRINCIPAL     WEIGHTED    WEIGHTED   ORIGINAL
MORTGAGE LOAN                    MORTGAGE       BALANCE         BALANCE       AVERAGE     AVERAGE    SUBJECT
PRINCIPAL BALANCES ($)             LOANS      OUTSTANDING     OUTSTANDING   COUPON (%)     FICO      LTV (%)
------------------------------   --------   ---------------   -----------   ----------   --------   --------

0.01 - 100,000.00.............       188    $ 13,771,234.64       2.57%        7.342        701       76.48
100,000.01 - 200,000.00.......       607      90,804,322.69      16.94         6.826        699       77.34
200,000.01 - 300,000.00.......       332      81,177,533.87      15.14         6.514        706       76.68
300,000.01 - 400,000.00.......       181      62,952,579.87      11.74         6.339        702       73.74
400,000.01 - 500,000.00.......       222     101,063,575.31      18.85         6.190        722       73.56
500,000.01 - 600,000.00.......       128      70,673,230.55      13.18         6.171        718       73.12
600,000.01 - 700,000.00.......        73      47,662,791.84       8.89         6.120        727       70.93
700,000.01 - 800,000.00.......        21      15,823,554.56       2.95         6.133        705       70.12
800,000.01 - 900,000.00.......        14      11,975,700.00       2.23         6.288        699       65.99
900,000.01 - 1,000,000.00.....        20      19,453,090.95       3.63         6.014        720       67.55
1,000,000.01 - 1,500,000.00...        14      18,663,691.57       3.48         6.251        722       62.07
1,500,000.01 and above........         1       1,994,546.48       0.37         6.500        797       53.33
                                   -----    ---------------     ------         -----        ---       -----
   TOTAL/WEIGHTED AVERAGE.....     1,801    $536,015,852.33     100.00%        6.383        712       73.51
                                   =====    ===============     ======         =====        ===       =====


----------
(1)  As of the Cut-off Date, the average current Mortgage Loan principal balance
     of the Mortgage Loans in the Mortgage Loans is approximately $297,621.24.


                                      S-24



                              DOCUMENTATION PROGRAM



                                                               PERCENT OF                           WEIGHTED
                                  NUMBER       AGGREGATE       AGGREGATE                             AVERAGE
                                    OF         PRINCIPAL       PRINCIPAL     WEIGHTED    WEIGHTED   ORIGINAL
                                 MORTGAGE       BALANCE         BALANCE       AVERAGE     AVERAGE    SUBJECT
DOCUMENTATION LEVEL                LOANS      OUTSTANDING     OUTSTANDING   COUPON (%)     FICO      LTV (%)
------------------------------   --------   ---------------   -----------   ----------   --------   --------

Limited.......................       871    $284,638,300.96      53.10%        6.382        714       74.58
Full/Alternative..............       393      91,125,212.58      17.00         6.062        713       73.85
No Ratio......................       213      68,769,260.16      12.83         6.622        706       73.81
No Documentation..............       207      60,792,553.58      11.34         6.357        712       66.07
Stated Documentation..........       106      27,929,714.70       5.21         7.034        696       76.73
Lite..........................        11       2,760,810.35       0.52         5.068        742       76.84
                                   -----    ---------------     ------         -----        ---       -----
   TOTAL/WEIGHTED AVERAGE.....     1,801    $536,015,852.33     100.00%        6.383        712       73.51
                                   =====    ===============     ======         =====        ===       =====


                       ORIGINAL LOAN-TO-VALUE RATIOS(1)(2)



                                                               PERCENT OF                           WEIGHTED
                                  NUMBER       AGGREGATE       AGGREGATE                             AVERAGE
                                    OF         PRINCIPAL       PRINCIPAL     WEIGHTED    WEIGHTED   ORIGINAL
RANGE OF ORIGINAL                MORTGAGE       BALANCE         BALANCE       AVERAGE     AVERAGE    SUBJECT
LOAN-TO-VALUE RATIOS (%)           LOANS      OUTSTANDING     OUTSTANDING   COUPON (%)     FICO      LTV (%)
------------------------------   --------   ---------------   -----------   ----------   --------   --------

30.00 and below...............        12    $  3,961,111.19       0.74%        5.451        730       25.67
30.01 - 35.00.................         7       1,844,043.98       0.34         5.594        733       31.46
35.01 - 40.00.................        11       4,473,944.66       0.83         5.790        740       37.40
40.01 - 45.00.................        18       5,539,686.02       1.03         5.722        752       42.54
45.01 - 50.00.................        32      13,128,712.93       2.45         5.975        719       47.86
50.01 - 55.00.................        31      14,254,137.16       2.66         5.857        729       52.91
55.01 - 60.00.................        41      16,134,930.89       3.01         5.924        722       58.44
60.01 - 65.00.................       112      56,597,874.42      10.56         5.988        715       63.76
65.01 - 70.00.................       127      44,229,659.54       8.25         6.238        715       68.84
70.01 - 75.00.................       128      54,840,054.63      10.23         6.199        709       73.98
75.01 - 80.00.................     1,204     302,113,950.15      56.36         6.606        709       79.76
80.01 - 85.00.................        11       3,315,808.38       0.62         6.374        712       83.20
85.01 - 90.00.................        40       9,299,371.93       1.73         6.942        707       89.76
90.01 - 95.00.................        22       5,165,274.14       0.96         6.108        675       94.43
95.01 - 100.00................         5       1,117,292.31       0.21         5.696        735      100.00
                                   -----    ---------------     ------         -----        ---      ------
   TOTAL/WEIGHTED AVERAGE.....     1,801    $536,015,852.33     100.00%        6.383        712       73.51
                                   =====    ===============     ======         =====        ===      ======


----------
(1)  The weighted average original Loan-to-Value Ratio of the Mortgage Loans by
     Aggregate Cut-off Date Loan Balance is approximately 73.51%.

(2)  Does not take into account any secondary financing on the Mortgage Loans in
     the Mortgage Pool that may exist at the time of origination or any
     Additional Collateral.

                  ORIGINAL EFFECTIVE LOAN-TO-VALUE RATIOS(1)(2)



                                                               PERCENT OF                           WEIGHTED
                                  NUMBER       AGGREGATE       AGGREGATE                             AVERAGE
RANGE OF ORIGINAL                   OF         PRINCIPAL       PRINCIPAL     WEIGHTED    WEIGHTED   ORIGINAL
EFFECTIVE LOAN-TO-               MORTGAGE       BALANCE         BALANCE       AVERAGE     AVERAGE    SUBJECT
VALUE RATIOS (%)                   LOANS      OUTSTANDING     OUTSTANDING   COUPON (%)     FICO      LTV (%)
------------------------------   --------   ---------------   -----------   ----------   --------   --------

10.01 - 20.00.................         3    $    331,804.08       0.06%        6.053        659       17.81
20.01 - 30.00.................         9       3,629,307.11       0.68         5.396        737       26.39
30.01 - 40.00.................        18       6,317,988.64       1.18         5.733        738       35.67
40.01 - 50.00.................        50      18,668,398.95       3.48         5.900        728       46.28
50.01 - 60.00.................        73      30,521,068.05       5.69         5.889        725       55.95
60.01 - 70.00.................       242     101,624,726.27      18.96         6.091        715       66.24
70.01 - 80.00.................     1,331     356,822,004.78      66.57         6.544        709       78.87
80.01 - 90.00.................        50      12,510,280.31       2.33         6.804        708       88.06
90.01 - 100.00................        25       5,590,274.14       1.04         6.148        677       94.86
                                   -----    ---------------     ------         -----        ---       -----
   TOTAL/WEIGHTED AVERAGE.....     1,801    $536,015,852.33     100.00%        6.383        712       73.51
                                   =====    ===============     ======         =====        ===       =====


----------
(1)  The weighted average original Effective Loan-to-Value Ratio of the Mortgage
     Loans by Aggregate Cut-off Date Loan Balance is approximately 73.46%.

(2)  Does not take into account any secondary financing on the Mortgage Loans in
     the Mortgage Pool that may exist at the time of origination.

                                CREDIT SCORES(1)



                                                               PERCENT OF                           WEIGHTED
                                  NUMBER       AGGREGATE       AGGREGATE                             AVERAGE
                                    OF         PRINCIPAL       PRINCIPAL     WEIGHTED    WEIGHTED   ORIGINAL
RANGE OF CREDIT                  MORTGAGE       BALANCE         BALANCE       AVERAGE     AVERAGE    SUBJECT
SCORES                             LOANS      OUTSTANDING     OUTSTANDING   COUPON (%)     FICO      LTV (%)
------------------------------   --------   ---------------   -----------   ----------   --------   --------

Not Available.................         2    $    383,664.23       0.07%        5.514        N/A       75.04
576 - 600.....................         7       1,241,978.99       0.23         7.225        595       68.48
601 - 625.....................        44       8,971,935.57       1.67         6.619        620       75.14
626 - 650.....................       185      43,797,836.11       8.17         6.798        639       75.50
651 - 675.....................       288      72,575,726.85      13.54         6.636        664       75.33
676 - 700.....................       335     101,778,003.20      18.99         6.447        688       74.84
701 - 725.....................       312      99,234,750.31      18.51         6.380        713       72.83
726 - 750.....................       265      83,414,650.93      15.56         6.252        738       73.35
751 - 775.....................       207      73,043,855.37      13.63         6.211        764       72.80
776 - 800.....................       127      42,252,095.27       7.88         5.989        787       69.26
801 - 825.....................        29       9,321,355.50       1.74         5.785        805       68.11
                                   -----    ---------------     ------         -----        ---       -----
   TOTAL/WEIGHTED AVERAGE ....     1,801    $536,015,852.33     100.00%        6.383        712       73.51
                                   =====    ===============     ======         =====        ===       =====


----------
(1)  As of the Cut-off Date, the weighted average Credit Score of the Mortgagors
     related to the Mortgage Loans (where available) is approximately 712.


                                      S-25



                  STATE DISTRIBUTION OF MORTGAGED PROPERTIES(1)



                                                       PERCENT OF                           WEIGHTED
                          NUMBER       AGGREGATE       AGGREGATE                            AVERAGE
                            OF         PRINCIPAL       PRINCIPAL     WEIGHTED    WEIGHTED   ORIGINAL
                         MORTGAGE       BALANCE         BALANCE      AVERAGE     AVERAGE    SUBJECT
STATE                     LOANS       OUTSTANDING     OUTSTANDING   COUPON (%)     FICO      LTV (%)
----------------------   --------   ---------------   -----------   ----------   --------   --------

California ...........       387    $178,423,424.13      33.29%        5.988       725        69.55
Florida ..............       267      69,853,212.00      13.03         6.612       703        75.21
Arizona ..............       128      28,541,060.87       5.32         6.916       711        76.95
New York .............        59      25,637,275.18       4.78         6.581       704        75.09
Virginia .............        66      24,036,636.04       4.48         6.077       707        76.93
Nevada ...............        75      22,213,058.91       4.14         7.002       695        75.84
Illinois .............        59      14,796,162.95       2.76         6.610       692        74.72
Texas ................       111      14,585,694.35       2.72         7.168       694        78.24
Colorado .............        57      14,580,587.35       2.72         6.819       707        77.46
Washington ...........        49      14,366,773.01       2.68         6.167       713        76.77
Other ................       543     128,981,967.54      24.06         6.457       709        74.48
                           -----    ---------------     ------         -----       ---        -----
   TOTAL/WEIGHTED
      AVERAGE ........     1,801    $536,015,852.33     100.00%        6.383       712        73.51
                           =====    ===============     ======         =====       ===        =====


----------
(1)  The Other row in the preceding table includes 34 other states and the
     District of Columbia. No more than approximately 0.51% of the Mortgage
     Loans will be secured by mortgaged properties located in any one postal zip
     code area.

                            PURPOSE OF MORTGAGE LOANS



                                                       PERCENT OF                           WEIGHTED
                          NUMBER       AGGREGATE       AGGREGATE                            AVERAGE
                            OF         PRINCIPAL       PRINCIPAL     WEIGHTED    WEIGHTED   ORIGINAL
                         MORTGAGE       BALANCE         BALANCE      AVERAGE     AVERAGE    SUBJECT
LOAN PURPOSE              LOANS       OUTSTANDING     OUTSTANDING   COUPON (%)     FICO      LTV (%)
----------------------   --------   ---------------   -----------   ----------   --------   --------

Purchase .............     1,176    $306,872,277.11      57.25%        6.582       713        77.47
Refinance - Cashout ..       463     169,693,969.12      31.66         6.155       709        67.98
Refinance - Rate
   Term ..............       162      59,449,606.10      11.09         6.002       712        68.88
                           -----    ---------------     ------         -----       ---        -----
   TOTAL/WEIGHTED
      AVERAGE ........     1,801    $536,015,852.33     100.00%        6.383       712        73.51
                           =====    ===============     ======         =====       ===        =====


                          TYPES OF MORTGAGED PROPERTIES



                                                       PERCENT OF                           WEIGHTED
                          NUMBER       AGGREGATE       AGGREGATE                            AVERAGE
                            OF         PRINCIPAL       PRINCIPAL     WEIGHTED    WEIGHTED   ORIGINAL
                         MORTGAGE       BALANCE         BALANCE      AVERAGE     AVERAGE    SUBJECT
PROPERTY TYPE             LOANS       OUTSTANDING     OUTSTANDING   COUPON (%)     FICO      LTV (%)
----------------------   --------   ---------------   -----------   ----------   --------   --------

Single Family
   Residence .........     1,046    $313,915,441.59      58.56%        6.263       713        72.58
Planned Unit
   Development .......       402     126,474,401.39      23.60         6.506       707        74.84
2-4 Family ...........       176      52,184,624.84       9.74         6.774       711        73.09
Condominium ..........       158      40,698,969.12       7.59         6.381       723        77.07
Townhouse ............        17       2,037,279.73       0.38         7.033       671        74.08
Cooperative ..........         2         705,135.66       0.13         6.669       646        76.37
                           -----    ---------------     ------         -----       ---        -----
   TOTAL/WEIGHTED
      AVERAGE ........     1,801    $536,015,852.33     100.00%        6.383       712        73.51
                           =====    ===============     ======         =====       ===        =====


                               OCCUPANCY TYPES(1)



                                                       PERCENT OF                           WEIGHTED
                          NUMBER       AGGREGATE       AGGREGATE                            AVERAGE
                            OF         PRINCIPAL       PRINCIPAL     WEIGHTED    WEIGHTED   ORIGINAL
                         MORTGAGE       BALANCE         BALANCE      AVERAGE     AVERAGE    SUBJECT
OCCUPANCY TYPES           LOANS       OUTSTANDING     OUTSTANDING   COUPON (%)     FICO      LTV (%)
----------------------   --------   ---------------   -----------   ----------   --------   --------

Primary ..............     1,041    $378,506,036.78      70.61%        6.136       711        72.99
Investment ...........       659     124,986,904.59      23.32         7.112       713        74.83
Second Home ..........       101      32,522,910.96       6.07         6.452       724        74.51
                           -----    ---------------     ------         -----       ---        -----
   TOTAL/WEIGHTED
      AVERAGE ........     1,801    $536,015,852.33     100.00%        6.383       712        73.51
                           =====    ===============     ======         =====       ===        =====


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


                                      S-26



                         REMAINING TERMS TO MATURITY(1)



                                                                  PERCENT OF                           WEIGHTED
                                                  AGGREGATE       AGGREGATE                             AVERAGE
RANGE OF REMAINING                 NUMBER OF      PRINCIPAL       PRINCIPAL     WEIGHTED    WEIGHTED   ORIGINAL
TERMS TO MATURITY                   MORTGAGE       BALANCE         BALANCE       AVERAGE     AVERAGE    SUBJECT
(MONTHS)                             LOANS       OUTSTANDING     OUTSTANDING   COUPON (%)     FICO      LTV (%)
--------------------------------   ---------   ---------------   -----------   ----------   --------   --------

211 - 240.......................         2     $    249,713.70       0.05%        6.027        685       58.16
301 - 330.......................        17        6,717,643.94       1.25         5.039        714       63.77
331 - 360.......................     1,782      529,048,494.69      98.70         6.400        712       73.64
                                     -----     ---------------     ------         -----        ---       -----
   TOTAL/WEIGHTED
      AVERAGE...................     1,801     $536,015,852.33     100.00%        6.383        712       73.51
                                     =====     ===============     ======         =====        ===       =====


(1)  As of the Cut-off Date, the weighted average remaining term to maturity of
     the Mortgage Loans is approximately 357 months.

                                  PRODUCT TYPE



                                                                  PERCENT OF                           WEIGHTED
                                                  AGGREGATE       AGGREGATE                             AVERAGE
                                   NUMBER OF      PRINCIPAL       PRINCIPAL     WEIGHTED    WEIGHTED   ORIGINAL
                                    MORTGAGE       BALANCE         BALANCE       AVERAGE     AVERAGE    SUBJECT
PRODUCT TYPE                         LOANS       OUTSTANDING     OUTSTANDING   COUPON (%)     FICO      LTV (%)
--------------------------------   ---------   ---------------   -----------   ----------   --------   --------

1 Month Arms - IO 10 Years .....         7     $  3,071,250.00       0.57%        6.186        734       69.60
2 Year Arms ....................        79       12,270,880.91       2.29         7.625        693       79.04
2 Year Arms - IO 10 Years.......        30        5,911,192.41       1.10         6.975        692       78.99
2 Year Arms - IO 5 Years .......       148       29,888,475.03       5.58         7.364        705       78.87
3 Year Arms ....................        75       17,240,560.13       3.22         6.023        714       68.15
3 Year Arms - IO 10 Years ......        93       37,752,153.26       7.04         6.383        726       76.87
3 Year Arms - IO 3 Years .......        33       10,008,226.29       1.87         5.681        731       77.95
3 Year Arms - IO 5 Years .......       156       27,946,132.56       5.21         7.146        705       78.84
5 Year Arms ....................        90       24,014,027.83       4.48         6.259        715       72.46
5 Year Arms - IO 10 Years ......       333       96,306,376.20      17.97         6.585        704       74.44
5 Year Arms - IO 5 Years .......       180       60,232,690.05      11.24         6.123        703       75.48
6 Month Arms ...................         1          399,361.47       0.07         6.125        711       65.00
6 Month Arms - IO 1 Years.......         1          532,300.00       0.10         5.750        692       78.86
6 Month Arms - IO 10 Yearssss...        87       30,836,369.35       5.75         5.217        718       76.76
Fixed 20 .......................         2          249,713.70       0.05         6.027        685       58.16
Fixed 30 .......................       222       74,435,019.40      13.89         6.101        724       65.14
Fixed 30 - IO 10 Years .........       261      104,176,773.74      19.44         6.391        713       72.29
Fixed 30 - IO 5 Years ..........         3          744,350.00       0.14         6.449        700       68.63
                                     -----     ---------------     ------         -----        ---       -----
   TOTAL/WEIGHTED
      AVERAGE ..................     1,801     $536,015,852.33     100.00%        6.383        712       73.51
                                     =====     ===============     ======         =====        ===       =====



                                      S-27



              MORTGAGE INDEX OF THE ADJUSTABLE RATE MORTGAGE LOANS



                                                                PERCENT OF                           WEIGHTED
                                                AGGREGATE       AGGREGATE                            AVERAGE
                                 NUMBER OF      PRINCIPAL       PRINCIPAL     WEIGHTED    WEIGHTED   ORIGINAL
                                 MORTGAGE        BALANCE         BALANCE       AVERAGE     AVERAGE    SUBJECT
MORTGAGE INDEX                     LOANS       OUTSTANDING     OUTSTANDING   COUPON (%)     FICO      LTV (%)
------------------------------   ---------   ---------------   -----------   ----------   --------   --------

One Year CMT..................        24     $  9,981,046.99       2.80%        5.087        728       61.10
One-Month LIBOR...............         7        3,071,250.00       0.86         6.186        734       69.60
Six-Month LIBOR...............     1,074      242,788,366.04      68.12         6.623        702       77.08
One-Year LIBOR................       208      100,569,332.46      28.22         6.135        723       73.79
                                   -----     ---------------     ------         -----        ---       -----
   TOTAL/WEIGHTED AVERAGE.....     1,313     $356,409,995.49     100.00%        6.439        709       75.64
                                   =====     ===============     ======         =====        ===       =====


             GROSS MARGINS OF THE ADJUSTABLE RATE MORTGAGE LOANS(1)



                                                                PERCENT OF                           WEIGHTED
                                                AGGREGATE       AGGREGATE                            AVERAGE
                                 NUMBER OF      PRINCIPAL       PRINCIPAL     WEIGHTED    WEIGHTED   ORIGINAL
                                  MORTGAGE       BALANCE         BALANCE       AVERAGE     AVERAGE    SUBJECT
GROSS MARGINS (%)                   LOANS      OUTSTANDING     OUTSTANDING   COUPON (%)     FICO      LTV (%)
------------------------------   ---------   ---------------   -----------   ----------   --------   --------

1.501 - 2.000.................        33     $ 10,063,147.38       2.82%        4.915        709       75.46
2.001 - 2.500.................       451      176,764,360.77      49.60         6.184        714       74.50
2.501 - 3.000.................       304       66,536,549.15      18.67         6.335        704       75.01
3.001 - 3.500.................        36       15,864,464.98       4.45         5.984        714       72.88
3.501 - 4.000.................         4          722,974.34       0.20         6.356        703       82.30
4.501 - 5.000.................       483       86,046,498.87      24.14         7.305        703       78.93
6.001 - 6.500.................         2          412,000.00       0.12         6.698        645       80.00
                                   -----     ---------------     ------         -----        ---       -----
   TOTAL/WEIGHTED AVERAGE.....     1,313     $356,409,995.49     100.00%        6.439        709       75.64
                                   =====     ===============     ======         =====        ===       =====


----------
(1)  As of the Cut-off Date, the weighted average Gross Margin of the Adjustable
     Rate Mortgage Loans is approximately 3.056%.

         INITIAL PERIODIC CAPS OF THE ADJUSTABLE RATE MORTGAGE LOANS (1)



                                                                PERCENT OF                           WEIGHTED
                                                AGGREGATE       AGGREGATE                             AVERAGE
                                 NUMBER OF      PRINCIPAL       PRINCIPAL     WEIGHTED    WEIGHTED   ORIGINAL
                                  MORTGAGE       BALANCE         BALANCE       AVERAGE    AVERAGE     SUBJECT
INITIAL PERIODIC CAPS (%)          LOANS       OUTSTANDING     OUTSTANDING   COUPON (%)     FICO      LTV (%)
------------------------------   ---------   ---------------   -----------   ----------   --------   --------

0.501 - 1.000.................        90     $ 33,047,572.15       9.27%        5.296        718       76.40
1.501 - 2.000.................        53       20,439,059.07       5.73         5.693        731       67.33
2.501 - 3.000.................        10        2,001,521.29       0.56         6.225        698       75.82
3.501 - 4.000.................         1          110,000.00       0.03         6.625        685      100.00
4.501 - 5.000.................       218       80,150,214.72      22.49         6.268        712       73.98
5.501 - 6.000.................       941      220,661,628.26      61.91         6.743        705       76.88
                                   -----     ---------------     ------         -----        ---       -----
   TOTAL/WEIGHTED AVERAGE.....     1,313     $356,409,995.49     100.00%        6.439        709       75.64
                                   =====     ===============     ======         =====        ===       =====


----------
(1)  As of the Cut-off Date, the weighted average Initial Periodic Cap of the
     Adjustable Rate Mortgage Loans is approximately 5.065%.

        SUBSEQUENT PERIODIC CAPS OF THE ADJUSTABLE RATE MORTGAGE LOANS(1)



                                                                PERCENT OF                           WEIGHTED
                                                AGGREGATE       AGGREGATE                            AVERAGE
                                 NUMBER OF      PRINCIPAL       PRINCIPAL     WEIGHTED    WEIGHTED   ORIGINAL
                                  MORTGAGE       BALANCE         BALANCE       AVERAGE     AVERAGE    SUBJECT
SUBSEQUENT PERIODIC CAPS (%)       LOANS       OUTSTANDING     OUTSTANDING   COUPON (%)     FICO      LTV (%)
------------------------------   ---------   ---------------   -----------   ----------   --------   --------

N/A...........................         1     $    300,000.00        0.08%       6.750        802       80.00
0.501 - 1.000.................       329       92,651,275.65       26.00        6.011        703       76.68
1.501 - 2.000.................       982      263,323,711.17       73.88        6.589        711       75.26
5.501 - 6.000.................         1          135,008.67        0.04        7.625        688       80.00
                                   -----     ---------------     ------         -----        ---       -----
   TOTAL/WEIGHTED AVERAGE.....     1,313     $356,409,995.49     100.00%        6.439        709       75.64
                                   =====     ===============     ======         =====        ===       =====


----------
(1)  As of the Cut-off Date, the non-zero weighted average Subsequent Periodic
     Cap of the Adjustable Rate Mortgage Loans is approximately 1.741%.


                                      S-28



        MAXIMUM MORTGAGE RATES OF THE ADJUSTABLE RATE MORTGAGE LOANS (1)



                                                               PERCENT OF                           WEIGHTED
                                  NUMBER       AGGREGATE       AGGREGATE                             AVERAGE
                                    OF         PRINCIPAL       PRINCIPAL     WEIGHTED    WEIGHTED   ORIGINAL
RANGE OF MAXIMUM                 MORTGAGE       BALANCE         BALANCE       AVERAGE     AVERAGE   SUBJECT
MORTGAGE RATES (%)                 LOANS      OUTSTANDING     OUTSTANDING   COUPON (%)     FICO      LTV (%)
------------------------------   --------   ---------------   -----------   ----------   --------   --------

9.001 - 10.000................         3    $  1,113,435.74       0.31%        4.335       725       71.00
10.001 - 11.000...............       154      59,952,794.91      16.82         5.324       733       71.71
11.001 - 12.000...............       331     112,243,869.55      31.49         6.078       709       74.49
12.001 - 13.000...............       404     111,835,972.46      31.38         6.547       702       76.61
13.001 - 14.000...............       264      46,955,985.19      13.17         7.570       704       79.22
14.001 - 15.000...............       156      23,657,937.64       6.64         8.371       696       79.60
15.001 - 16.000...............         1         650,000.00       0.18         4.625       739       74.12
                                   -----    ---------------     ------         -----       ---       -----
   TOTAL/WEIGHTED AVERAGE.....     1,313    $356,409,995.49     100.00%        6.439       709       75.64
                                   =====    ===============     =======        =====       ===       =====


---------
(1)  As of the Cut-off Date, the weighted average maximum mortgage rate of the
     Adjustable Rate Mortgage Loans is expected to be approximately 12.194% per
     annum.

              MONTHS TO NEXT RATE ADJUSTMENT OF THE ADJUSTABLE RATE
                               MORTGAGE LOANS (1)



                                                               PERCENT OF                           WEIGHTED
                                  NUMBER       AGGREGATE       AGGREGATE                            AVERAGE
RANGE OF MONTHS                     OF         PRINCIPAL       PRINCIPAL     WEIGHTED    WEIGHTED   ORIGINAL
TO NEXT RATE                     MORTGAGE       BALANCE         BALANCE      AVERAGE     AVERAGE    SUBJECT
ADJUSTMENT                         LOANS      OUTSTANDING     OUTSTANDING   COUPON (%)     FICO      LTV (%)
------------------------------   --------   ---------------   -----------   ----------   --------   --------

0 - 5.........................       105    $ 39,131,832.60      10.98%        5.270        719      74.67
6 - 11........................         4       1,420,124.22       0.40         5.594        715      65.26
12 - 17.......................         6       1,591,711.47       0.45         5.839        696      67.17
18 - 23.......................       256      47,886,907.14      13.44         7.363        701      78.97
24 - 29.......................        13       2,706,976.94       0.76         5.321        731      74.33
30 - 35.......................       326      83,119,349.04      23.32         6.631        717      76.98
42 - 47.......................         1         295,201.32       0.08         4.875        618      61.86
48 - 53.......................        23       4,220,893.96       1.18         6.153        670      79.13
54 - 59.......................       579     176,036,998.80      49.39         6.396        706      74.44
                                   -----    --------------      ------         -----        ---      -----
   TOTAL/WEIGHTED AVERAGE.....     1,313    $356,409,995.49     100.00%        6.439        709      75.64
                                   =====    ===============     ======         =====        ===      =====


---------
(1)  As of the Cut-off Date, the weighted average number of months to the next
     rate adjustment of the Adjustable Rate Mortgage Loans is approximately 41
     months.


                                      S-29



ASSIGNMENT OF THE MORTGAGE LOANS

          Under the Assignment Agreements and the Mortgage Loan Purchase
Agreement, Morgan Stanley Mortgage Capital Inc. (the "SELLER") will sell the
Mortgage Loans to the Depositor and the Depositor will sell the Mortgage Loans
to the Trust Fund. Pursuant to the Assignment Agreements, the Seller will
transfer its rights and obligations under the underlying mortgage loan purchase
agreements with respect to certain representations, warranties and covenants
made by the Originators relating to, among other things, certain characteristics
of the Mortgage Loans. Pursuant to the Pooling and Servicing Agreement and the
Mortgage Loan Purchase Agreement, the Seller will make certain representations,
warranties and covenants relating to certain characteristics of certain Mortgage
Loans. Subject to the limitations described below, the Originator or the Seller
will be obligated as described herein to purchase or substitute a similar
mortgage loan for any related Mortgage Loan as to which there exists deficient
documentation or as to which there has been an uncured breach of any such
representation or warranty relating to the characteristics of the Mortgage Loan
that materially and adversely affects the value of such Mortgage Loan or the
interests of the Certificateholders in such Mortgage Loan (a "DEFECTIVE MORTGAGE
LOAN"). See "Description of the Agreements--Assignment of Assets; Repurchases"
and "--Representations anD Warranties; Repurchases" in the accompanying
prospectus.

          Pursuant to a pooling and servicing agreement (the "POOLING AND
SERVICING AGREEMENT"), dated as of the Cut-off Date, among Morgan Stanley
Capital I Inc., as depositor (the "DEPOSITOR"), Wells Fargo Bank, National
Association ("WELLS FARGO"), as master servicer (in such capacity, the "MASTER
SERVICER") and as securities administrator (in such capacity, the "SECURITIES
ADMINISTRATOR"), Morgan Stanley Mortgage Capital Inc., as seller, and Deutsche
Bank National Trust Company, as trustee (the "TRUSTEE") of the trust, on the
Closing Date the Depositor will sell, transfer, assign, set over and otherwise
convey without recourse to the Trustee, in its capacity as trustee, all of its
rights to the Mortgage Loans and its rights and obligations under the Assignment
Agreements (including the right to enforce the Originators' purchase
obligations) and under the mortgage loan purchase agreement. The obligations of
the Originators and the Seller with respect to the Certificates are limited to
their respective obligations to purchase or substitute for Defective Mortgage
Loans.

          In connection with such transfer and assignment of the Mortgage Loans,
the Depositor will deliver or cause to be delivered to the Trustee or its
custodian, among other things, the original promissory note or a lost note
affidavit and a copy of the promissory note (the "MORTGAGE NOTE") (and any
modification or amendment thereto) endorsed in blank without recourse, the
original instrument creating a first lien on the related Mortgaged Property (the
"MORTGAGE") with evidence of recording indicated thereon, an assignment in
recordable form of the Mortgage, all recorded intervening assignments of the
Mortgage and any modifications to such Mortgage Note and Mortgage (except for
any such document other than Mortgage Notes not available on the Closing Date,
which will be delivered to the Trustee as soon as the same is available to the
Depositor) (collectively, the "MORTGAGE FILE"). Assignments of the Mortgage
Loans to the Trustee (or its nominee) will be recorded in the appropriate public
office for real property records, except in states where, in the opinion of
counsel, such recording is not required to protect the Trustee's interest in the
Mortgage Loans against the claim of any subsequent transferee or any successor
to or creditor of the Depositor.

          The Trustee or its custodian will review each Mortgage File within the
time period specified in the Pooling and Servicing Agreement or promptly after
the Trustee's receipt of any document permitted to be delivered after the
Closing Date. The Trustee will hold such Mortgage Files in trust for the benefit
of the Certificateholders. If at the end of such specified period, any document
in a Mortgage File is found to be missing or not in compliance with the review
requirements set forth in the Pooling and Servicing Agreement and the related
Originator or the Seller, as applicable, does not cure such omission or
noncompliance within the time period required under the applicable underlying
mortgage loan purchase agreement or the Mortgage Loan Purchase Agreement, as
applicable, and such omission or noncompliance is deemed to have a material and
adverse affect on the value of that Mortgage Loan, then the applicable
Originator, pursuant to such underlying mortgage loan purchase agreement, as
modified by the related Assignment Agreement, or the Seller pursuant to the
Pooling and Servicing Agreement or the Mortgage Loan Purchase Agreement, is
obligated to purchase the related Defective Mortgage Loan from the Trust Fund at
a price equal to the sum of (a) 100% of the Stated Principal Balance thereof and
(b) unpaid accrued interest thereon from the Due Date to which interest was last
paid by the mortgagor to the Due Date immediately preceding the repurchase.
Rather than purchase the Defective Mortgage Loan as provided above, the
applicable Originator or the


                                      S-30



Seller may remove such Mortgage Loan (a "DELETED MORTGAGE LOAN") from the
Mortgage Pool and substitute in its place one or more mortgage loans of like
kind (such loan a "REPLACEMENT MORTGAGE LOAN"); provided, however, that such
substitution is permitted only within two years after the Closing Date and may
not be made unless an opinion of counsel is provided to the effect that such
substitution would not disqualify any REMIC or result in a prohibited
transaction tax under the Code.

          Any Replacement Mortgage Loan generally will, on the date of
substitution, among other characteristics set forth in the related underlying
servicing agreement, (i) have an outstanding principal balance, after deduction
of all scheduled payments due in the month of substitution, not in excess of the
Stated Principal Balance of the Deleted Mortgage Loan (the amount of any
shortfall to be deposited in the Distribution Account in the month of
substitution (a "SUBSTITUTION ADJUSTMENT AMOUNT")), (ii) if such Replacement
Mortgage Loan is a Fixed-Rate Mortgage Loan, have a Mortgage Rate not less than
(and not more than two percentage points greater than) the maximum mortgage rate
of the Deleted Mortgage Loan, (iii) if such Replacement Mortgage Loan is an
Adjustable-Rate Mortgage Loan, have a maximum Mortgage Rate not less than (and
not more than two percentage points greater than) the maximum mortgage rate of
the Deleted Mortgage Loan, (iv) have a Loan-to-Value Ratio equal to or less than
that of the Deleted Mortgage Loan, (v) have a remaining term to maturity not
greater than (and not more than one year less than) that of the Deleted Mortgage
Loan, (vi) is otherwise acceptable to the Seller, (vii) if such Replacement
Mortgage Loan is an Adjustable-Rate Mortgage Loan, have the same adjustment date
as that of the Deleted Mortgage Loan, (viii) if such Replacement Mortgage Loan
is an Adjustable-Rate Mortgage Loan, have a minimum Mortgage Rate not less than
that of the Deleted Mortgage Loan, (ix) if such Replacement Mortgage Loan is an
Adjustable-Rate Mortgage Loan, have the same Index as that of the Deleted
Mortgage Loan and (x) comply with all of the representations and warranties set
forth in the related underlying servicing agreement, as modified by the related
Assignment Agreement. This cure, repurchase or substitution obligation
constitutes the sole remedy available to the Certificateholders or the Trustee
for omission of, or a material defect in, a Mortgage File.

LOAN PURCHASING GUIDELINES AND UNDERWRITING STANDARDS

          General. Each of the Originators, and in certain circumstances the
Seller, will represent and warrant that each of the Mortgage Loans originated
and/or sold by it was underwritten in accordance with standards consistent with
those utilized by mortgage lenders generally during the period of origination.
The Seller will represent and warrant that each of the Mortgage Loans sold by it
conformed to the requirements of its seller guide.

          The following information has been provided by the Seller and neither
the Depositor nor the underwriter makes any representations or warranties as to
the accuracy or completeness of such information.

LOAN PURCHASING GUIDELINES - MORGAN STANLEY MORTGAGE CAPITAL INC.

          The standards applicable to the purchase of mortgage loans by Morgan
Stanley Mortgage Capital Inc. typically differ from, and are, with respect to a
substantial number of mortgage loans, generally less stringent than, the
underwriting standards established by Fannie Mae or Freddie Mac primarily with
respect to original principal balances, loan-to-value ratios, borrower income,
required documentation, interest rates, borrower occupancy of the mortgaged
property and/or property types. To the extent the programs reflect underwriting
standards different from those of Fannie Mae and Freddie Mac, the performance of
the mortgage loans thereunder may reflect higher delinquency rates and/or credit
losses. In addition, certain exceptions to the loan purchasing guidelines
described herein are made in the event that compensating factors are
demonstrated by a prospective borrower.

          Generally, each mortgagor will have been required to complete an
application designed to provide to the original lender pertinent credit
information concerning the mortgagor. As part of the description of the
mortgagor's financial condition, the mortgagor will have furnished information
with respect to its assets, liabilities, income (except as described below),
credit history, employment history and personal information, and furnished an
authorization to apply for a credit report which summarizes the mortgagor's
credit history with local merchants and lenders and any record of bankruptcy.
The mortgagor may also have been required to authorize verifications of deposits
at financial institutions where the mortgagor had demand or savings accounts. In
the case of investment properties and two- to four-unit dwellings, income
derived from the mortgaged property may have been considered for loan purchasing
purposes, in addition to the income of the mortgagor from other sources. With
respect to


                                      S-31



mortgaged property consisting of vacation or second homes, no income derived
from the property generally will have been considered for loan purchasing
purposes. In the case of certain borrowers with acceptable payment histories, no
income will be required to be stated (or verified) in connection with the loan
application.

          Based on the data provided in the application and certain verification
(if required), a determination is made by the original lender that the
mortgagor's monthly income (if required to be stated) will be sufficient to
enable the mortgagor to meet its monthly obligations on the mortgage loan and
other expenses related to the property such as property taxes, utility costs,
standard hazard insurance and other fixed obligations other than housing
expenses. Generally, 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 equal no more than a specified percentage of the
prospective mortgagor's gross income. The percentage applied varies on a case by
case basis depending on a number of loan purchasing criteria, including the
Loan-to-Value Ratio of the mortgage loan. The originator may also consider the
amount of liquid assets available to the mortgagor after origination.

          Certain of the mortgage loans have been originated under alternative,
reduced documentation, no-stated-income, no-documentation, no-ratio or stated
income/stated assets programs, which require less documentation and verification
than do traditional full documentation programs. Generally, under an alternative
documentation program, the borrower provides alternate forms of documentation to
verify employment, income and assets. Under a reduced documentation program, no
verification of one of either a mortgagor's income or a mortgagor's assets is
undertaken by the originator. Under a no-stated-income program or a no-ratio
program, certain borrowers with acceptable payment histories will not be
required to provide any information regarding income and no other investigation
regarding the borrower's income will be undertaken. Under a stated income/stated
assets program, no verification of both a mortgagor's income and a mortgagor's
assets is undertaken by the originator. Under a no-documentation program, no
verification of a mortgagor's income or assets is undertaken by the originator
and such information may not even be stated by the mortgagor. The loan
purchasing decisions for such mortgage loans may be based primarily or entirely
on an appraisal of the mortgaged property and the Loan-to-Value Ratio at
origination.

          The adequacy of the mortgaged property as security for repayment of
the related mortgage loan will generally have been determined by an appraisal in
accordance with pre-established appraisal procedure guidelines for appraisals
established by or acceptable to the originator. All appraisals conform to the
Uniform Standards of Professional Appraisal Practice adopted by the Appraisal
Standards Board of the Appraisal Foundation and must be on forms acceptable to
Fannie Mae and/or Freddie Mac. Appraisers may be staff appraisers employed by
the originator or independent appraisers selected in accordance with
pre-established appraisal procedure guidelines established by the originator.
The appraisal procedure guidelines generally will have required the appraiser or
an agent on its behalf to personally inspect the property and to verify whether
the property was in good condition and that construction, if new, had been
substantially completed. The appraisal generally will have been based upon a
market data analysis of recent sales of comparable properties and, when deemed
applicable, an analysis based on income generated from the property or a
replacement cost analysis based on the current cost of constructing or
purchasing a similar property.

                                  THE SERVICERS

GENERAL

          Each Servicer will initially have primary responsibility for servicing
the Mortgage Loans originated and/or sold by it, including, but not limited to,
all collection, advancing and loan-level reporting obligations, maintenance of
escrow accounts, maintenance of insurance and enforcement of foreclosure
proceedings with respect to the Mortgage Loans and related Mortgaged Properties.
All of the Mortgage Loans will be master serviced by Wells Fargo Bank, National
Association.

          The Servicer listed below has provided disclosure regarding the
performance of the mortgage loans serviced by it. No assurances can be given
that the foreclosure and delinquency experience presented in these tables will
be indicative of the actual experience on the Mortgage Loans serviced by it.


                                      S-32



          The following information has been provided by the Servicer listed
below, and neither the Depositor nor the underwriter makes any representations
or warranties as to the accuracy or completeness of such information.

GMAC MORTGAGE CORPORATION

          GMAC is an indirect wholly-owned subsidiary of General Motors
Acceptance Corporation and is one of the nation's largest mortgage bankers. GMAC
is engaged in the mortgage banking business, including origination, purchase,
sale and servicing of residential loans. GMAC maintains its executive and
principal offices at 100 Witmer Road, Horsham, Pennsylvania 19044. Its telephone
number is (215) 682-1000.

          Foreclosure, Delinquency and Loss Experience. The following table
summarizes the delinquency experience for all the mortgage loans originated
under the GMACM Solutions Programs and GMAC Expanded Criteria Programs as of
December 31, 2002, December 31, 2003 and December 31, 2004, the delinquency
experience for the fixed mortgage loans originated under the GMACM Solutions
Programs and GMAC Expanded Criteria Programs as of September 30, 2005, and the
delinquency experience for the adjustable rate mortgage loans originated under
the GMACM Solutions Programs and GMAC Expanded Criteria Programs as of September
30, 2005. The data presented in the following table does not include any of the
mortgage loans to be serviced pursuant to the Servicing Agreement and is for
illustrative purposes only. There is no assurance that the delinquency
experience of the Mortgage Loans included in the Mortgage Pool will be similar
to that set forth below.


                                      S-33





                                      September 30, 2005           September 30, 2005
                                          Fixed Rate                 Adjustable Rate             December 31, 2004
                                 ---------------------------   --------------------------   ---------------------------
                                                    % of                         % of                          % of
                                                Portfolio by                 Portfolio by                  Portfolio by
                                   Principal      Principal     Principal      Principal      Principal      Principal
                                    Balance        Balance       Balance        Balance        Balance        Balance
                                 ------------   ------------   -----------   ------------   ------------   ------------

Total Active Loans............          1,252                          357                         1,771
Current UPB...................   $172,249,624      100.00%     $69,189,325      100.00%     $284,103,987      100.00%

Period of Delinquency
   30 -59 Days................   $  6,632,452        3.85%     $ 4,078,948        5.90%     $ 10,758,280        3.79%
   60 -89 Days................   $    610,859        0.35%     $ 1,749,991        2.53%     $  2,058,292        0.72%
   90+ Days...................   $    489,526        0.28%     $    69,306        0.10%     $     86,706        0.03%
   Sub - Total................   $  7,732,837        4.49%     $ 5,898,245        8.52%     $ 12,903,278        4.54%

Delinquency Status
   Bankruptcy.................   $  1,822,481        1.06%     $    45,940        0.07%     $  2,138,671        0.75%
   Foreclosure................   $    768,887        0.45%     $   939,894        1.36%     $  3,518,786        1.24%
   REO........................   $    166,721        0.10%     $    67,635        0.10%     $    481,204        0.17%
   Sub - Total................   $  2,758,088        1.60%     $ 1,053,469        1.52%     $  6,138,661        2.16%

Total.........................   $ 10,490,925        6.09%     $ 6,951,714       10.05%     $ 19,041,939        6.70%



                                       December 31, 2003            December 31, 2002
                                 ---------------------------   ---------------------------
                                                    % of                          % of
                                                Portfolio by                  Portfolio by
                                   Principal      Principal      Principal      Principal
                                    Balance        Balance        Balance        Balance
                                 ------------   ------------   ------------   ------------

Total Active Loans............          1,475                         1,678
Current UPB...................   $193,962,581      100.00%     $193,408,035      100.00%

Period of Delinquency
   30 -59 Days................   $  5,939,567       3.06%      $  7,796,197        4.03%
   60 -89 Days................   $    730,076       0.38%      $  2,607,028        1.35%
   90+ Days...................   $    550,729       0.28%      $    733,483        0.38%
   Sub - Total................   $  7,220,372       3.72%      $ 11,136,707        5.76%

Delinquency Status
   Bankruptcy.................   $  1,529,148       0.79%      $  1,117,364        0.58%
   Foreclosure................   $    746,105       0.38%      $  1,309,260        0.68%
   REO........................   $    689,392       0.36%      $  1,350,091        0.70%
   Sub - Total................   $  2,964,645       1.53%      $  3,776,714        1.95%

Total.........................   $ 10,185,017       5.25%      $ 14,913,422        7.71%



                                      S-34



                         SERVICING OF THE MORTGAGE LOANS

GENERAL

          Wells Fargo Bank, National Association ("WELLS FARGO"), with its
principal master servicing offices at 9062 Old Annapolis Road, Columbia,
Maryland 21045, will perform the duties of Master Servicer in accordance with
the terms set forth in the Pooling and Servicing Agreement. Wells Fargo is one
of the banking subsidiaries of Wells Fargo & Company. The Master Servicer will
not be ultimately responsible for the performance of the servicing activities by
a Servicer under its supervision as Master Servicer, except as described under
"--Servicing Compensation and Payment of Expenses; Master Servicing
Compensation," "--Adjustment to Servicing Fees in Connection with Certain
Prepaid Mortgage Loans" and "--Advances" below. If any Servicer fails to fulfill
its obligations under the applicable underlying servicing agreement, as modified
by the related Assignment Agreement, Wells Fargo, as master servicer, is
obligated to terminate that Servicer and appoint a successor servicer as
provided in the Pooling and Servicing Agreement.

SERVICING AND COLLECTION PROCEDURES

          Servicing functions to be performed by each Servicer under the related
underlying servicing agreement include collection and remittance of principal
and interest payments, administration of mortgage escrow accounts, collection of
certain insurance claims and, if necessary, foreclosure. Each Servicer may
contract with subservicers to perform some or all of such Servicer's servicing
duties, but the Servicer will not thereby be released from its obligations under
the related underlying servicing agreement. When used in this prospectus
supplement with respect to servicing obligations, the term Servicer includes a
subservicer.

          Each Servicer will make reasonable efforts to collect all payments
called for under each Mortgage Loan serviced by it and will, consistent with the
related underlying servicing agreement or the Pooling and Servicing Agreement,
as applicable, and any primary mortgage insurance policy, follow such collection
procedures as are customary with respect to mortgage loans that are comparable
to the Mortgage Loans serviced by it. Consistent with the above, such Servicer
may, in its discretion, (i) waive any assumption fee, late payment or other
charge in connection with a Mortgage Loan and (ii) to the extent not consistent
with the coverage of such Mortgage Loan by a primary mortgage insurance policy,
arrange with a mortgagor a schedule for the liquidation of delinquencies. Prior
approval or consent may be required for certain servicing activities such as
modification of the terms of any Mortgage Loan and the sale of any defaulted
Mortgage Loan or REO Property.

          Pursuant to each underlying servicing agreement, each Servicer will
deposit collections on the Mortgage Loans serviced by it into the Custodial
Account established by it. Each Custodial Account is required to be kept
segregated from operating accounts of the related Servicer and to meet the
eligibility criteria set forth in the related underlying servicing agreement. If
permitted under the related underlying servicing agreement, amounts on deposit
in the related Custodial Account may be invested in certain permitted
investments described therein. Any losses resulting from such investments are
required to be reimbursed to such Custodial Account by the related Servicer out
of its own funds.

          On or before the Closing Date, the Securities Administrator, on behalf
of the Trustee, will establish the Distribution Account into which each Servicer
will remit all amounts required to be deposited therein pursuant to the related
underlying servicing agreement (net of such Servicer's servicing compensation)
on, with respect to each Servicer, the 18th day of each month (or, if the 18th
is not a Business Day, then no later than the immediately following Business
Day) (such date, the "SERVICER REMITTANCE DATE").

          Events of default under the underlying servicing agreements include,
among other things, (i) any failure of the Servicers to remit to the
Distribution Account any required payment which continues unremedied for a
specified period; (ii) any failure by the Servicers duly to observe or perform
in any material respect any of the covenants or agreements in the related
underlying servicing agreement, which continues unremedied for a specified
period after the giving of written notice of such failure to the Servicer; and
(iii) certain events of insolvency and certain actions by or on behalf of the
Servicers indicating their insolvency, reorganization or inability to pay their
obligations.


                                      S-35



          In the event of a default by a Servicer under its underlying servicing
agreement, the Master Servicer will have the right to remove such Servicer and
will exercise that right if it considers such removal to be in the best interest
of the Certificateholders. In the event that the Master Servicer removes a
Servicer, the Master Servicer will, in accordance with the Pooling and Servicing
Agreement, act as successor servicer under the related underlying servicing
agreement or will appoint a successor servicer reasonably acceptable to the
Depositor and the Trustee. In connection with the removal of a Servicer, the
Master Servicer will be entitled to be reimbursed from the assets of the Trust
Fund for all of its reasonable costs associated with the termination of such
Servicer and the transfer of servicing to a successor servicer.

SERVICING COMPENSATION AND PAYMENT OF EXPENSES; MASTER SERVICING COMPENSATION

          Each Servicer will be entitled to receive, from interest actually
collected on each Mortgage Loan serviced by it, a servicing fee (the "SERVICING
FEE") as follows:

               o    Morgan Stanley Credit Corp. will be entitled to receive a
                    Servicing Fee on each Mortgage Loan serviced by it (each, an
                    "MSCC SERVICED MORTGAGE LOAN") equal to 1/12 of the product
                    of (1) the principal balance of such Mortgage Loans as of
                    the first day of the related Due Period and (2) a per annum
                    rate (the "SERVICING FEE RATE") of 0.250%.

               o    GMAC will be entitled to receive a Servicing Fee on each
                    Mortgage Loan serviced by it (each, a "GMAC SERVICED
                    MORTGAGE LOAN") equal to 1/12 of the product of (1) the
                    principal balance of such Mortgage Loans as of the first day
                    of the related Due Period and (2) a Servicing Fee Rate which
                    will be between 0.250% and 0.375%. As of the Cut-off Date
                    the weighted average Servicing Fee Rate on the GMAC Serviced
                    Mortgage Loans is approximately 0.297% per annum.

               o    HSBC will be entitled to receive a Servicing Fee on each
                    Mortgage Loan serviced by it (each, an "HSBC SERVICED
                    MORTGAGE LOAN") equal to 1/12 of the product of (1) the
                    principal balance of such Mortgage Loans as of the first day
                    of the related Due Period and (2) a Servicing Fee Rate which
                    will be between 0.250% and 0.375%. As of the Cut-off Date
                    the weighted average Servicing Fee Rate on the HSBC Serviced
                    Mortgage Loans is approximately 0.252% per annum.

               o    Wachovia will be entitled to receive a Servicing Fee on each
                    Mortgage Loan serviced by it (each, a "WACHOVIA SERVICED
                    MORTGAGE LOAN") equal to 1/12 of the product of (1) the
                    principal balance of such Mortgage Loans as of the first day
                    of the related Due Period and (2) a Servicing Fee Rate of
                    0.250% per annum.

               o    Wells Fargo Servicer will be entitled to receive a Servicing
                    Fee on each Mortgage Loan serviced by it (each, a "WELLS
                    FARGO SERVICED MORTGAGE LOAN") equal to 1/12 of the product
                    of (1) the principal balance of such Mortgage Loans as of
                    the first day of the related Due Period and (2) a Servicing
                    Fee Rate of 0.250% per annum.

          The Servicers are also entitled to receive, as additional servicing
compensation, all late payment fees, assumption fees and other similar charges
(other than any prepayment penalties) with respect to the Mortgage Loans
directly serviced by such Servicer and, if applicable, all reinvestment income
earned on amounts on deposit in the related Custodial Accounts.

          Wells Fargo is entitled to receive as its master servicing
compensation the investment earnings on amounts on deposit in the Distribution
Account. The Master Servicer will pay all of the fees of the Trustee and, for so
long as Wells Fargo is the Master Servicer, the Master Servicer will pay all of
the fees of the Securities Administrator. Each of the Master Servicer, the
Trustee, any custodian and the Servicers will be entitled to reimbursement from
the Trust Fund for certain expenses and other amounts prior to payments to
Certificateholders.


                                      S-36



          The amount of the Servicer's respective Servicing Fees are subject to
adjustment with respect to prepaid Mortgage Loans serviced or master serviced
thereby, as described below under "--Adjustment to Servicing Fees in Connection
with Certain Prepaid Mortgage Loans."

          The expense fee rate (the "EXPENSE FEE RATE") with respect to each
Mortgage Loan and any Distribution Date will be the sum of the related Servicing
Fee Rate and, if applicable, the interest premium charged by the related lenders
for mortgage insurance on the LPMI Mortgage Loans.

          The net mortgage rate (the "NET MORTGAGE RATE") with respect to any
Mortgage Loan is the related Mortgage Rate minus the related Expense Fee Rate.
The weighted average net mortgage rate (the "WEIGHTED AVERAGE NET MORTGAGE
RATE") for any Distribution Date is the weighted average of the Net Mortgage
Rates of each Mortgage Loan, weighted on the basis of their respective Stated
Principal Balances as of the Due Date in the month preceding the month of the
applicable Distribution Date.

ADJUSTMENT TO SERVICING FEES IN CONNECTION WITH CERTAIN PREPAID MORTGAGE LOANS

          When a borrower prepays a Mortgage Loan in full or in part between Due
Dates, the borrower is required to pay interest on the amount prepaid only to
the date of prepayment and not thereafter. Principal prepayments by borrowers
received by a Servicer or the Master Servicer during the related Prepayment
Period for a Distribution Date will be distributed to Certificateholders on the
related Distribution Date. Thus, less than one month's interest may have been
collected on Mortgage Loans that have been prepaid with respect to any
Distribution Date. Pursuant to each underlying servicing agreement, the related
Servicer, or the Master Servicer, pursuant to the Pooling and Servicing
Agreement, will be required to make payments in respect of certain prepayment
interest shortfalls from its own funds with respect to Mortgage Loans serviced
by such Servicer or the Master Servicer, as applicable.

          The Servicers are each obligated to compensate the Trust Fund for
prepayment interest shortfalls on the Mortgage Loans that they service. The
amount of the compensation may be limited by their Servicing Fees for that
Prepayment Period or by the provisions of the underlying servicing agreements.
The Master Servicer is obligated to reduce a portion of its master servicing
compensation for the related Distribution Date to the extent necessary to fund
any prepayment interest shortfalls required to be paid but not paid by the
Servicers. The coverage of these interest shortfalls by the Master Servicer will
not exceed the compensation payable to the Master Servicer. The amount of
interest available to be paid to Certificateholders will be reduced by any
uncompensated prepayment interest shortfalls (referred to as "NET PREPAYMENT
INTEREST SHORTFALLS").

ADVANCES

          Subject to the limitations described in the following paragraph, each
Servicer will be required to advance prior to each Distribution Date, from its
own funds, or funds in its Custodial Account that are not otherwise required to
be remitted to the Distribution Account for such Distribution Date, an amount
equal to the scheduled payment of interest at the related Net Mortgage Rate and
scheduled principal payment on each Mortgage Loan serviced by it which were due
on the related Due Date and which were not received prior to the 15th calendar
day of each month or such other date as may be specified in the related
underlying servicing agreement (each such date, the "DETERMINATION DATE" and any
such advance, a "MONTHLY ADVANCE"). The Master Servicer will be obligated to
make any required Monthly Advance if a Servicer fails in its obligation to do
so, to the extent provided in the Pooling and Servicing Agreement and the
related underlying servicing agreement.

          Monthly Advances are intended to maintain a regular flow of scheduled
interest and principal payments on the Certificates rather than to guarantee or
insure against losses. Each Servicer is obligated to make Monthly Advances with
respect to delinquent payments of interest and principal on each Mortgage Loan
serviced by it, to the extent that such Monthly Advances are, in its good faith
judgment, recoverable from future payments and collections or insurance payments
or proceeds of liquidation of the related Mortgage Loans. If a Servicer fails to
make a Monthly Advance as required under the related underlying servicing
agreement, the Master Servicer will be required to make, or shall cause the
successor servicer to make, a Monthly Advance in accordance with the terms of
the Pooling and Servicing Agreement; provided, however, that in no event will
the Master Servicer be required to make a Monthly Advance that is not, in its
reasonable judgment, recoverable from future payments and collections


                                      S-37



or insurance payments or proceeds of liquidation of the related Mortgage Loans.
If a Servicer determines on any Determination Date to make a Monthly Advance,
such Monthly Advance will be included with the payment to Certificateholders on
the related Distribution Date. Any failure by the Master Servicer to make a
Monthly Advance on a Mortgage Loan, as required under the Pooling and Servicing
Agreement, will constitute a Master Servicer Default thereunder, in which case
the successor Master Servicer (which may be the Trustee) will be obligated to
make such Monthly Advance.

EVIDENCE AS TO COMPLIANCE

          Each underlying servicing agreement, as modified by the related
Assignment Agreement, and the Pooling and Servicing Agreement provide that on or
before a specified date in each year, a firm of independent public accountants
will furnish a statement to the Master Servicer, the Depositor and the Trustee
to the effect that, on the basis of the examination by such firm conducted
substantially in compliance with the Uniform Single Attestation Program for
Mortgage Bankers, the servicing by or on behalf of the related Servicer was
conducted in compliance with its underlying servicing agreement, except for any
material exceptions or such other exception set forth in such statement that, in
the opinion of the firm, the Uniform Single Attestation Program for Mortgage
Bankers requires it to report.

          Each underlying servicing agreement and the Pooling and Servicing
Agreement also provide for delivery to the Master Servicer, the Depositor and
the Trustee, on or before a specified date in each, of an annual officer's
certificate to the effect that the related Servicer has fulfilled its
obligations under its underlying servicing agreement throughout the preceding
year.

MASTER SERVICER DEFAULT; SERVICER DEFAULT

          Events of default by the Master Servicer under the Pooling and
Servicing Agreement (each a "MASTER SERVICER DEFAULT") include (i) any failure
by the Master Servicer to make a Monthly Advance as required under the Pooling
and Servicing Agreement, unless cured as specified therein; (ii) any failure by
the Master Servicer duly to observe or perform in any material respect any of
its other covenants or agreements in the Pooling and Servicing Agreement which
continues unremedied for a specified period after the giving of written notice
of such failure to the Master Servicer; and (iii) certain events of insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceeding and certain actions by on or behalf of the Master Servicer indicating
its insolvency, reorganization or inability to pay its obligations.

          If the Master Servicer is in default in its obligations under the
Pooling and Servicing Agreement, the Trustee may, and must if directed to do so
by Certificateholders having more than 50% of the Class Principal Balance
applicable to each Class of Certificates affected thereby, terminate the Master
Servicer and either appoint a successor Master Servicer in accordance with the
Pooling and Servicing Agreement or succeed to the responsibilities of the Master
Servicer. See "--Resignation of the Master Servicer or a Servicer; Assignment
and Merger" below. In connection with the removal of the Master Servicer, the
Master Servicer will be responsible for the reasonable costs associated with the
transfer of master servicing to its successor (which may be the Trustee) and if
the Master Servicer does not make such payments, the Trustee will be entitled to
be reimbursed from the assets of the Trust Fund for all of its reasonable costs
associated with the termination of the Master Servicer and the transfer of
master servicing to a successor master servicer.

          If a Servicer is in default in its obligations under the applicable
underlying servicing agreement, the Master Servicer may, at its option,
terminate the defaulting Servicer and either appoint a successor Servicer in
accordance with the applicable underlying servicing agreement and the Pooling
and Servicing Agreement or succeed to the responsibilities of the terminated
Servicer. Notwithstanding the foregoing, the Master Servicer shall terminate any
Servicer who fails to make the required Monthly Advance as required under the
underlying servicing agreement and assume (or appoint a successor servicer to
assume) the role of the successor servicer to that Servicer. The successor
servicer will then make all required Monthly Advances.


                                      S-38



RESIGNATION OF THE MASTER SERVICER OR A SERVICER; ASSIGNMENT AND MERGER

          Neither the Master Servicer nor any Servicer may resign from its
obligations and duties under the Pooling and Servicing Agreement or its
underlying servicing agreement, as applicable, or assign or transfer its rights,
duties or obligations except (i) upon a determination that its duties thereunder
are no longer permissible under applicable law or (ii) with the approval of the
Depositor, which approval may not be unreasonably withheld. No such resignation
will become effective until a successor servicer or master servicer has assumed
the related Servicer's or the Master Servicer's respective obligations and
duties under such underlying servicing agreement or the Pooling and Servicing
Agreement, as applicable. The Pooling and Servicing Agreement provides that, if
Wells Fargo is removed in its capacity as either Master Servicer or Securities
Administrator, it will be required to resign or be removed in its other
capacity.

          Any person into which the Master Servicer or a Servicer may be merged
or consolidated, any person resulting from any merger or consolidation which the
Master Servicer or a Servicer is a party, any person succeeding to the business
of the Master Servicer or a Servicer or any person to whom the Master Servicer
or a Servicer assigns or transfers its duties and obligations, will be the
successor of the Master Servicer or such Servicer under the Pooling and
Servicing Agreement or the related underlying servicing agreement, as
applicable.

SELLER'S RETENTION OF SERVICING RIGHTS

          Although the Seller is selling the Mortgage Loans to the Trust Fund on
the Closing Date, with respect to certain of the Mortgage Loans, the Seller has
retained the right to terminate the Servicer of those Mortgage Loans without
cause and transfer the servicing to a third party. Should the Seller choose to
do so, the transfer must meet certain conditions set forth in the Pooling and
Servicing Agreement, including that the Seller must provide 30 days' notice, the
terminated Servicer must be reimbursed for any unreimbursed Monthly Advances,
Servicing Fees and any related expenses, and the replacement Servicer must be
qualified to service mortgage loans for Fannie Mae and Freddie Mac. Any such
successor must be reasonably acceptable to the Master Servicer, and, unless the
successor servicer meets the requirements set forth in the Pooling and Servicing
Agreement, requires the receipt of confirmation from the Rating Agencies that
the transfer of the servicing of these Mortgage Loans will not result in a
downgrade, qualification or withdrawal of the then current rating of the
Certificates.

                         DESCRIPTION OF THE CERTIFICATES

GENERAL

          On or about December 29, 2005 (the "CLOSING DATE"), the Certificates
will be issued pursuant to the Pooling and Servicing Agreement. Set forth below
are summaries of the specific terms and provisions of the Pooling and Servicing
Agreement. The following summaries are subject to, and are qualified in their
entirety by reference to, the provisions of the Pooling and Servicing Agreement.
When particular provisions or terms used in the Pooling and Servicing Agreement
are referred to, the actual provisions (including definitions of terms) are
incorporated herein by reference.

SENIOR CERTIFICATES

The Morgan Stanley Mortgage Loan Trust 2005-11AR, Mortgage Pass-Through
Certificates, Series 2005-11AR will include the following five Classes of
Certificates (the "SENIOR CERTIFICATES") which are offered hereby:

o    Class A-1 Certificates;

o    Class A-2 Certificates;

o    Class A-3 Certificates;

o    Class X Certificates; and

o    Class A-R Certificates.


                                      S-39



SUBORDINATED CERTIFICATES

          In addition to the Senior Certificates, the Morgan Stanley Mortgage
Loan Trust 2005-11AR, Mortgage Pass-Through Certificates, Series 2005-11AR, will
also include the following twelve Classes of Subordinated Certificates (the
"SUBORDINATED CERTIFICATES"):

The Subordinated Certificates will include

               (a) the Class M-1 Certificates, which are subordinate to the
          Senior Certificates,

               (b) the Class M-2 Certificates, which are subordinate to the
          Senior Certificates and the Class M-1 Certificates,

               (c) the Class M-3 Certificates, which are subordinate to the
          Senior Certificates and the Class M-1 and Class M-2 Certificates,

               (d) the Class M-4 Certificates, which are subordinate to the
          Senior Certificates and the Class M-1, Class M-2 and Class M-3
          Certificates,

               (e) the Class M-5 Certificates, which are subordinate to the
          Senior Certificates and the Class M-1, Class M-2, Class M-3 and Class
          M-4 Certificates,

               (f) the Class M-6 Certificates, which are subordinate to the
          Senior Certificates and the Class M-1, Class M-2, Class M-3, Class M-4
          and Class M-5 Certificates,

               (g) the Class B-1 Certificates, which are subordinate to the
          Senior Certificates and the Class M-1, Class M-2, Class M-3, Class
          M-4, Class M-5 and Class M-6 Certificates,

               (h) the Class B-2 Certificates, which are subordinate to the
          Senior Certificates and the Class M-1, Class M-2, Class M-3, Class
          M-4, Class M-5, Class M-6 and Class B-1 Certificates,

               (i) the Class B-3 Certificates, which are subordinate to the
          Senior Certificates and the Class M-1, Class M-2, Class M-3, Class
          M-4, Class M-5, Class M-6, Class B-1 and Class B-2 Certificates,

               (j) the Class B-4 Certificates, which are subordinate to the
          Senior Certificates and the Class M-1, Class M-2, Class M-3, Class
          M-4, Class M-5, Class M-6, Class B-1, Class B-2 and Class B-3
          Certificates,

               (k) the Class B-5 Certificates, which are subordinate to the
          Senior Certificates and the Class M-1, Class M-2, Class M-3, Class
          M-4, Class M-5, Class M-6, Class B-1, Class B-2, Class B-3 and Class
          B-4 Certificates, and

               (l) the Class B-6 Certificates, which are subordinate to the
          Senior Certificates and the Class M-1, Class M-2, Class M-3, Class
          M-4, Class M-5, Class M-6, Class B-1, Class B-2, Class B-3, Class B-4
          and Class B-5 Certificates.

CLASS P CERTIFICATES

          In addition to the Senior Certificates and the Subordinated
Certificates, the Morgan Stanley Mortgage Loan Trust 2005-11AR will also issue
the Class P Certificates (the "CLASS P CERTIFICATES"). The Class P Certificates
will have an initial certificate principal balance of $100 and will not be
entitled to distributions in respect of interest. The Class P Certificates will
be entitled to all prepayment charges received in respect of the Mortgage Loans.
Such amounts will not be available for distribution to the Holders of the
Offered Certificates.


                                      S-40



CLASS C CERTIFICATES

          In addition to the Senior Certificates, the Subordinated Certificates
and the Class P Certificates, the Morgan Stanley Mortgage Loan Trust 2005-11AR
will also issue the Class C Certificates (the "CLASS C Certificates"). The Class
C Certificates will have an initial certificate principal balance of $100 and
will not be entitled to distributions in respect of interest. The Class C
Certificates will be entitled to receive the excess proceeds, if any, of an
auction of the Mortgage Loans. Such amounts will not be available for
distribution to the Holders of the Offered Certificates.

          All Classes of Subordinated Certificates, other than the Class B-4,
Class B-5 and Class B-6 Certificates, and the Class P and Class C Certificates
(together, the "PRIVATELY OFFERED CERTIFICATES"), are offered by this prospectus
supplement. The Privately Offered Certificates are not offered under this
prospectus supplement. Accordingly, the description of the Privately Offered
Certificates provided in this prospectus supplement is solely for informational
purposes.

DESIGNATIONS

o    The Class A-1, Class A-2, Class A-3, Class M-1, Class M-2, Class M-3, Class
     M-4, Class M-5 and Class M-6 Certificates are together referred to as the
     "LIBOR CERTIFICATES."

o    The Class M-1, Class M-2, Class M-3, Class M-4, Class M-5 and Class M-6
     Certificates are referred to as the "CLASS M CERTIFICATES."

o    The Class M-1, Class M-2 and Class M-3 Certificates are referred to as the
     "CLASS M SENIOR CERTIFICATES."

o    The Class M-4, Class M-5 and Class M-6 Certificates are referred to as the
     "CLASS M JUNIOR CERTIFICATES."

o    The Class B-1, Class B-2, Class B-3, Class B-4, Class B-5 and Class B-6
     Certificates are referred to as the "CLASS B CERTIFICATES."

o    The Class X Certificates are also referred to as the "NOTIONAL AMOUNT
     CERTIFICATES."

o    The Class A-R Certificates are also referred to as the "RESIDUAL
     CERTIFICATES."

          The "OFFERED CERTIFICATES" will be issued in the initial Class
Principal Balances and initial Notional Amounts set forth set forth on page iv
in the table under "The Series 2005-11AR Certificates." The Privately Offered
Certificates will be issued in the approximate initial Class Principal Balances
set forth on page iv of this prospectus supplement. The initial Class Principal
Balances and initial Notional Amounts of each Class of Certificates may be
increased or decreased by up to 5% to the extent that the Stated Principal
Balance of the Mortgage Loans is increased or decreased as described at
"Description of the Mortgage Loans."

          The "CLASS PRINCIPAL BALANCE" of any Class of Certificates (other than
the Notional Amount Certificates) as of any Distribution Date is the initial
Class Principal Balance of the Class listed on the page iv of this prospectus
supplement reduced by the sum of:

          o    all amounts previously distributed to holders of Certificates of
               the Class as payments of principal, and

          o    the amount of Realized Losses (including Excess Losses) allocated
               to the Class;

provided, however, that the Class Principal Balance of each Class of
Certificates to which Realized Losses have been allocated will be increased,
sequentially in the order of payment priority, by the amount of Subsequent
Recoveries on the related Mortgage Loans distributed as principal to any related
Class of Certificates, but not by


                                      S-41



more than the amount of Realized Losses previously allocated to reduce the Class
Principal Balance of such Class of Certificates.

          In addition, the Class Principal Balance of the Class of Subordinated
Certificates then outstanding with the highest numerical Class designation will
be reduced if and to the extent that the aggregate Class Principal Balance of
all Classes of Certificates, following all distributions and the allocation of
Realized Losses on the Mortgage Loans on any Distribution Date exceeds the
aggregate Stated Principal Balance of the Mortgage Loans as of the Due Date
occurring in the month of the Distribution Date.

          The Notional Amount Certificates do not have Class Principal Balances
and are not entitled to any distributions in respect of principal of the
Mortgage Loans.

          The initial Class Principal Balance of each of the Class P and Class C
Certificates is equal to $100. The Pooling and Servicing Agreement does not
permit the allocation of Realized Losses to the Class P or Class C Certificates.

          The Senior Certificates will have an aggregate Class Principal Balance
as of the Cut-off Date of $487,774,100, and will evidence in the aggregate an
initial beneficial ownership interest in the Mortgage Loans of approximately
91.00%. The Class Subordination Percentage of each Class of Subordinated
Certificates as of the Closing Date, which represents the initial beneficial
ownership of each such Class, is approximately as follows:

                                                                       CLASS
                                                                   SUBORDINATION
THE SUBORDINATED CERTIFICATES                                        PERCENTAGE
----------------------------------------------------------------   -------------
Class M-1.......................................................       2.10%
Class M-2.......................................................       1.60%
Class M-3.......................................................       0.55%
Class M-4.......................................................       0.65%
Class M-5.......................................................       0.50%
Class M-6.......................................................       0.40%
Class B-1.......................................................       0.40%
Class B-2.......................................................       0.30%
Class B-3.......................................................       0.30%
Class B-4.......................................................       0.65%
Class B-5.......................................................       0.95%
Class B-6.......................................................       0.60%

          Distributions of interest and principal on the Subordinated
Certificates will be based on interest and principal, as applicable, received
on, or advanced with respect to, the Mortgage Loans.

NOTIONAL AMOUNT CERTIFICATES

          The Class X Certificates are Notional Amount Certificates.

          The "NOTIONAL AMOUNT" of the Class X Certificates for the interest
accrual period related to any Distribution Date will be equal to the aggregate
Class Principal Balances of the LIBOR Certificates for that Distribution Date.
The initial Notional Amount of the Class X Certificates is approximately
$518,863,000 (subject to the permitted variance described in this prospectus
supplement).

FORMS AND DENOMINATIONS OF OFFERED CERTIFICATES; DISTRIBUTIONS TO CERTIFICATES

          The Offered Certificates, other than the Class A-R Certificates, will
be issued in book-entry form as described below. The Offered Certificates will
be issued in the minimum dollar denominations described in the table below,
except that one Certificate of each Class may be issued in a different
denomination.


                                      S-42



                                      ORIGINAL          MINIMUM
              CLASS               CERTIFICATE FORM   DENOMINATION   DENOMINATION
-------------------------------   ----------------   ------------   ------------
Offered Certificates
(other than the Notional Amount
Certificates and Class A-R
Certificates)                        Book-Entry        $ 25,000        $1,000
Notional Amount Certificates         Book-Entry        $100,000        $1,000
Class A-R Certificates                Physical         $    100          N/A

          Distributions on the Certificates will be made by the Securities
Administrator, on behalf of the Trustee, on the 25th day of each month, or if
such day is not a Business Day, on the first Business Day thereafter, commencing
in January 2006 (each, a "DISTRIBUTION DATE"), to the persons in whose names
such Certificates are registered on the applicable Record Date. For this
purpose, a "BUSINESS DAY" is any day other than (i) a Saturday or Sunday, or
(ii) a day on which banking institutions in the City of New York, New York, the
states of Maryland or Minnesota or the city in which the Corporate Trust Office
of the Trustee is located are authorized or obligated by law or executive order
to be closed. The "RECORD DATE" for the LIBOR Certificates and any Distribution
Date will be the Business Day immediately preceding that Distribution Date, or
if the LIBOR Certificates are no longer Book-Entry Certificates, the Record Date
will be the last Business Day of the calendar month preceding the month of that
Distribution Date. For each other Class of Offered Certificates and any
Distribution Date, the Record Date will be the last Business Day of the calendar
month immediately prior to the month in which that Distribution Date occurs.

          On each Distribution Date distributions on the Certificates will be
made by check mailed to the address of the holder of the certificate (the
"CERTIFICATEHOLDER") entitled thereto as it appears on the applicable
certificate register or, in the case of a Certificateholder who holds the Class
A-R Certificate or who holds Certificates with an aggregate initial Class
Principal Balance of $1,000,000 or more or who holds a Notional Amount
Certificate and who has so notified the Securities Administrator in writing in
accordance with the Pooling and Servicing Agreement, by wire transfer in
immediately available funds to the account of such Certificateholder at a bank
or other depository institution having appropriate wire transfer facilities;
provided, however, that the final payment in retirement of the Certificates will
be made only upon presentment and surrender of such Certificates at the
Corporate Trust Office of the Securities Administrator. See "--Book-Entry
Certificates" below for the method of payment to beneficial owners of Book-Entry
Certificates.

BOOK-ENTRY CERTIFICATES

          The Offered Certificates of each Class, other than the Class A-R
Certificates, will be issued as "BOOK-ENTRY CERTIFICATES." Persons acquiring
beneficial ownership interests in the offered certificates will hold
certificates through The Depository Trust Company ("DTC") or indirectly through
organizations which are participants in that system. The book-entry certificates
of each Class will be issued in one or more certificates which equal the
aggregate Certificate Principal Balance or Notional Amount of that class and
will initially be registered in the name of Cede & Co., the nominee of DTC.
Except as described below, no person acquiring a book-entry certificate will be
entitled to receive a physical certificate. Unless and until Definitive
Certificates are issued, it is anticipated that the only Certificateholder of
the Offered Certificates will be Cede & Co., as nominee of DTC. Beneficial
owners will not be Certificateholders as that term is used in the Pooling and
Servicing Agreement. Beneficial owners are only permitted to exercise their
rights indirectly through DTC and participants of DTC.

          The beneficial owner's ownership of a book-entry certificate will be
recorded on the records of the brokerage firm, bank, thrift institution or other
financial intermediary that maintains the beneficial owner's account for that
purpose. In turn, the financial intermediary's ownership of the book-entry
certificate will be recorded on the records of DTC or of a participating firm
that acts as agent for the financial intermediary, whose interest will in turn
be recorded on the records of DTC, if the beneficial owner's financial
intermediary is not a DTC participant.


                                      S-43



          Beneficial owners will receive all distributions of principal of and
interest on the book-entry certificates from the Securities Administrator
through DTC and the participants of DTC. While the book-entry certificates are
outstanding, except under the circumstances described below, under the rules,
regulations and procedures creating and affecting DTC and its operations, DTC is
required to make book-entry transfers among the DTC participants on whose behalf
it acts with respect to the book-entry certificates and is required to receive
and transmit distributions of principal of, and interest on, the book-entry
certificates. Participants and indirect participants of DTC with whom beneficial
owners have accounts with respect to book-entry certificates are similarly
required to make book-entry transfers and receive and transmit the distributions
on behalf of their respective beneficial owners. Accordingly, although
beneficial owners will not possess certificates representing their respective
interests in the book-entry certificates, the rules of DTC provide a mechanism
by which beneficial owners will receive distributions and will be able to
transfer their interest.

          Certificateholders will not receive or be entitled to receive
certificates representing their respective interests in the book-entry
certificates, except under the limited circumstances described below. Unless and
until Definitive Certificates are issued, Certificateholders who are not
participants of DTC may transfer ownership of book-entry certificates only
through participants of DTC and indirect participants of DTC by instructing the
participants and indirect participants to transfer book-entry certificates, by
book-entry transfer, through DTC for the account of the purchasers of the
book-entry certificates, which account is maintained with their respective
participants of DTC. Under the rules of DTC and in accordance with DTC's normal
procedures, transfers of ownership of book-entry certificates will be executed
through DTC and the accounts of the respective participants at DTC will be
debited and credited. Similarly, the participants and indirect participants of
DTC will make debits or credits, as the case may be, on their records on behalf
of the selling and purchasing Certificateholders.

          For information with respect to tax documentation procedures relating
to the certificates, see "Federal Income Tax Consequences--REMICs--Taxation of
Owners of REMIC Regular Certificates" in the accompanying prospectus.

          Transfers between participants of DTC will occur in accordance with
DTC rules.

          In accordance with its normal procedures, DTC is expected to record
the positions held by each DTC participant in the book-entry certificates,
whether held for its own account or as a nominee for another person. In general,
beneficial ownership of book-entry certificates will be subject to the rules of
DTC, as in effect from time to time.

          Distributions on the book-entry certificates will be made on each
Distribution Date by the Securities Administrator to Cede & Co., as nominee of
DTC. DTC will be responsible for crediting the amount of such payments to the
accounts of the applicable DTC participants in accordance with DTC's normal
procedures. Each DTC participant will be responsible for disbursing such
payments to the beneficial owners of the book-entry certificates that it
represents and to each financial intermediary for which it acts as agent. Each
financial intermediary will be responsible for disbursing funds to the
beneficial owners of the book-entry certificates that it represents.

          Under a book-entry format, beneficial owners of the book-entry
certificates may experience some delay in their receipt of payments, since such
payments will be forwarded by the Securities Administrator to Cede & Co. Because
DTC can only act on behalf of DTC participants, the ability of a beneficial
owner to pledge book-entry certificates to persons or entities that do not
participate in the depository system, or otherwise take actions in respect of
the book-entry certificates, may be limited due to the lack of physical
certificates for the book-entry certificates. In addition, issuance of the
book-entry certificates in book-entry form may reduce the liquidity of those
certificates in the secondary market since certain potential investors may be
unwilling to purchase certificates for which they cannot obtain physical
certificates.

          Monthly and annual reports relating to the trust will be provided to
Cede & Co., as nominee of DTC. These reports may be made available by Cede & Co.
to beneficial owners upon request, in accordance with the rules, regulations and
procedures creating and affecting the DTC participants to whose DTC accounts the
book-entry certificates of such beneficial owners are credited.


                                      S-44



          DTC has advised the Securities Administrator that, unless and until
Definitive Certificates are issued, DTC will take any action permitted to be
taken by the holders of the book-entry certificates under the Pooling and
Servicing Agreement only at the direction of one or more financial
intermediaries to whose DTC accounts the book-entry certificates are credited,
to the extent that such actions are taken on behalf of financial intermediaries
whose holdings include the book-entry certificates. DTC may take actions, at the
direction of the related participants of DTC, with respect to some book-entry
certificates which conflict with actions taken with respect to other book-entry
certificates.

          Definitive Certificates will be issued to beneficial owners of the
book-entry certificates, or their nominees, rather than to DTC, only if:

          (1) DTC or the Depositor advises the Trustee or Securities
Administrator 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 certificates and the Depositor is unable to locate a qualified
successor; or

          (2) beneficial owners having percentage interests aggregating not less
than 51% of the book-entry certificates advise the Trustee or Securities
Administrator and DTC through the financial intermediaries and the DTC
participants in writing that the continuation of a book-entry system through
DTC, or a successor to it, is no longer in the best interests of the beneficial
owners.

          Upon the occurrence of any of the events described in the immediately
preceding paragraph, the Securities Administrator will be required to notify all
beneficial owners of the occurrence of the event and the availability through
DTC of Definitive Certificates. Upon surrender by DTC of the certificates
representing the book-entry certificates and instructions for re-registration,
the Securities Administrator will issue Definitive Certificates. The Securities
Administrator will then recognize the holders of the Definitive Certificates as
Certificateholders under the Pooling and Servicing Agreement.

          Although DTC has agreed to the foregoing procedures in order to
facilitate transfers of book-entry certificates among participants of DTC, it is
under no obligation to perform or continue to perform such procedures and such
procedures may be discontinued at any time.

          None of the Depositor, the Master Servicer, the Servicers, the
Securities Administrator 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 certificates held by Cede & Co., as
nominee for DTC, or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests or the transfer thereof.

PHYSICAL CERTIFICATES

          The Residual Certificates will be issued in fully-registered,
certificated form. The Residual Certificates will be transferable and
exchangeable on a certificate register to be maintained at the Corporate Trust
Office of the Securities Administrator. Under the Pooling and Servicing
Agreement, the Securities Administrator will be required to maintain, or cause
to be maintained, a register of certificates. No service charge will be made for
any registration of transfer or exchange of the Residual Certificates but
payment of a sum sufficient to cover any tax or other governmental charge may be
required by the Securities Administrator. The Residual Certificates will be
subject to certain restrictions on transfer. See "Material Federal Income Tax
Consequences--The Class A-R Certificates," and "ERISA Matters" below.

          Distributions of principal and interest, if any, on each Distribution
Date on the Residual Certificates will be made to the persons in whose names
such certificates are registered at the close of business on the Record Date.
Distributions will be made by check or money order mailed to the person entitled
to them at the address appearing in the certificate register or, to the extent
permitted in the Pooling and Servicing Agreement, upon written request by the
Certificateholder to the Securities Administrator, by wire transfer to a United
States depository institution designated by such Certificateholder and
acceptable to the Securities Administrator or by such other means of payment as
such Certificateholder and the Securities Administrator may agree; provided,
however, that the final distribution in retirement of the Residual Certificates
will be made only upon presentation and surrender of such


                                      S-45



certificates at the office or agency of the Securities Administrator specified
in the notice to the holders of the Residual Certificates of such final
distribution.

CALCULATION OF ONE-MONTH LIBOR

          One-month LIBOR ("LIBOR") shall be established by the Securities
Administrator, except in the case of the initial Interest Accrual Period. As to
any Interest Accrual Period for the LIBOR Certificates, one-month LIBOR will
equal the rate for United States dollar deposits for one month which appears on
the Telerate Screen Page 3750 as of 11:00 A.M., London time, on the second LIBOR
Business Day prior to the first day of such Interest Period. "TELERATE SCREEN
PAGE 3750" means the display designated as page 3750 on the Bridge Telerate
Service (or such other page as may replace page 3750 on that service for the
purpose of displaying London interbank offered rates of major banks). If such
rate does not appear on such page (or such other page as may replace that page
on that service, or if such service is no longer offered, such other service for
displaying one-month LIBOR or comparable rates as may be selected by the
Securities Administrator after consultation with the Seller), the rate will be
the Reference Bank Rate. The "REFERENCE BANK RATE" for any Interest Accrual
Period will be determined on the basis of the rates at which deposits in U.S.
Dollars are offered by the reference banks (which shall be three major banks
that are engaged in transactions in the London interbank market, selected by the
Securities Administrator after consultation with the Seller) as of 11:00 A.M.,
London time, on the second LIBOR Business Day prior to the first day of such
Interest Accrual Period to prime banks in the London interbank market for a
period of one month. "LIBOR BUSINESS DAY" means any day other than (i) a
Saturday or a Sunday or (ii) a day on which banking institutions in the city of
London, England and New York, New York are required or authorized by law to be
closed. The Securities Administrator will request the principal London office of
each of the reference banks to provide a quotation of its rate. If at least two
such quotations are provided, the rate will be the arithmetic mean of the
quotations. If on such date fewer than two quotations are provided as requested,
the rate will be the arithmetic mean of the rates quoted by one or more major
banks in New York City, selected by the Securities Administrator after
consultation with the Seller, as of 11:00 A.M., New York City time, on such date
for loans in U.S. Dollars to leading European banks for a period of one month.
If no such quotations can be obtained, LIBOR will remain the same as the prior
Distribution Date.

          One-month LIBOR for the initial Interest Accrual Period will be
4.370%.

          The establishment of LIBOR as to each Interest Accrual Period by the
Securities Administrator and the Securities Administrator's calculation of the
rate of interest applicable to the LIBOR Certificates for the related Interest
Accrual Period shall (in the absence of manifest error) be final and binding.

PAYMENTS ON MORTGAGE LOANS; ACCOUNTS

          On or prior to the Closing Date, each Servicer will establish and
maintain or cause to be established and maintained an account or accounts for
the collection of payments on the Mortgage Loans which will be separate from
such Servicer's or Master Servicer's (in its capacity as successor servicer)
other assets (each, a "CUSTODIAL ACCOUNT"). On or prior to the Closing Date, the
Securities Administrator will establish an account (the "DISTRIBUTION ACCOUNT"),
which will be maintained with the Securities Administrator in trust for the
benefit of the Certificateholders. On the 18th day of each month (or, if such
18th day is not a Business Day, on the immediately following Business Day), each
Servicer will remit all amounts on deposit in the related Custodial Account to
the Distribution Account. On each Distribution Date, to the extent of the
Available Distribution Amount on deposit in the Distribution Account, the
Securities Administrator, on behalf of the Trustee, will withdraw the Available
Funds to pay the Certificateholders.

          As further compensation, if permitted under the related underlying
servicing agreement, funds credited to the Custodial Account established by a
Servicer may be invested at the discretion of such Servicer for its own benefit
in permitted investments.


                                      S-46



PRIORITY OF DISTRIBUTIONS AMONG CERTIFICATES

          As more fully described in this prospectus supplement, distributions
on the Offered Certificates will be made on each Distribution Date from
Available Funds for such Distribution Date. These distributions will be made in
the following order of priority:

          o    to interest on each Class of Senior Certificates, pro rata, based
               on their respective interest distribution amounts; provided,
               however, that with respect to the Senior Certificates on each
               Distribution Date, the interest distribution amount that would
               otherwise be distributed to the Class X Certificates will be
               reduced by the Required Reserve Fund Deposit (as defined below)
               and will not be distributed to the Class X Certificates;

          o    to principal of the Classes of Senior Certificates then entitled
               to receive distributions of principal, in the order and subject
               to the priorities set forth under "Description of the
               Certificates--Principal," in each case up to the maximum amount
               of principal to be distributed to those Classes on that
               Distribution Date;

          o    sequentially, to interest on and then principal of the Class M-1,
               Class M-2, Class M-3, Class M-4, Class M-5 and Class M-6
               Certificates, in that order, subject to the limitations set forth
               under "Description of the Certificates--Interest" and
               "--Principal" in this prospectus supplement;

          o    from the Reserve Fund, to the Classes of LIBOR Certificates and
               the Class X Certificates in the manner, order and priority
               described under "Description of the Certificates--The Reserve
               Fund and the Corridor Contracts";

          o    sequentially, to interest on and then principal of the Class B-1,
               Class B-2, Class B-3, Class B-4, Class B-5 and Class B-6
               Certificates, in that order, subject to the limitations set forth
               under "Description of the Certificates--Interest" and
               "--Principal" in this prospectus supplement;

          o    on the Distribution Date immediately following a successful
               auction (as described in this prospectus supplement under
               "--Auction and Optional Termination of the Certificates") any
               excess auction proceeds to the Class C Certificates; and

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

          "AVAILABLE FUNDS" for any Distribution Date will be equal to the sum
of:

          o    all scheduled installments of interest (net of the related
               Expense Fees) and principal due on the Mortgage Loans on the Due
               Date in the month in which the Distribution Date occurs and
               received before the related Determination Date, together with any
               advances with respect to them;

          o    all proceeds of any primary mortgage guaranty insurance policies
               and any other insurance policies with respect to the Mortgage
               Loans, to the extent the proceeds are not applied to the
               restoration of the related mortgaged property or released to the
               mortgagor in accordance with the related Servicer's normal
               servicing procedures and all other cash amounts received and
               retained in connection with (a) the liquidation of defaulted
               Mortgage Loans, by foreclosure or otherwise during the calendar
               month preceding the month of the Distribution Date (in each case,
               net of unreimbursed expenses incurred in connection with a
               liquidation or foreclosure and unreimbursed advances, if any) and
               (b) any Subsequent Recoveries with respect to Mortgage Loans;

          o    all partial or full prepayments with respect to Mortgage Loans
               received during the related Prepayment Period; and


                                      S-47



          o    amounts received with respect to the Distribution Date as the
               Substitution Adjustment Amount or purchase price in respect of a
               deleted Mortgage Loan or a Mortgage Loan repurchased by the
               Seller or the related Originator as of the Distribution Date;

reduced by amounts in reimbursement for Monthly Advances previously made and
other amounts as to which the Servicers are entitled to reimbursement from the
Custodial Accounts pursuant to the underlying servicing agreements, and as to
which the Master Servicer, the Securities Administrator, the Trustee and/or any
custodian, as applicable, are entitled with respect to the Mortgage Loans or
otherwise allocable to the Certificates to be reimbursed from the Distribution
Account or otherwise pursuant to the Pooling and Servicing Agreement, the
underlying servicing agreements or the custody agreements, as applicable.

INTEREST

          The Classes of Certificates will have the respective pass-through
rates set forth or described on pages iv and v hereof.

          On each Distribution Date, to the extent of funds available therefor,
each interest-bearing Class of Certificates will be entitled to receive an
amount allocable to interest for the related interest accrual period. This
"INTEREST DISTRIBUTION AMOUNT" for any interest-bearing Class will be equal to
the sum of (a) interest at the applicable pass-through rate on the related Class
Principal Balance or Notional Amount, as applicable, immediately prior to the
applicable Distribution Date and (b) the sum of the amounts, if any, by which
the amount described in clause (a) above on each prior Distribution Date
exceeded the amount actually distributed as interest on the prior Distribution
Dates and not subsequently distributed (which are called unpaid interest
amounts).

          With respect to each Distribution Date for all of the interest bearing
certificates other than the LIBOR Certificates, the "INTEREST ACCRUAL PERIOD"
will be the calendar month preceding the month of the Distribution Date. With
respect to the LIBOR Certificates, the Interest Accrual Period will be the
period commencing on the 25th day of the month prior to the month in which that
Distribution Date occurs and ending on the 24th day of the month in which that
Distribution Date occurs. Each Interest Accrual Period will be deemed to consist
of 30 days. Interest will be calculated and payable on the basis of a 360-day
year divided into twelve 30-day months.

          The interest entitlement described above for each Class of
Certificates for any Distribution Date will be reduced by the amount of Net
Interest Shortfalls experienced by the Mortgage Loans. With respect to any
Distribution Date, the "NET INTEREST SHORTFALL" is equal to

          o    any net prepayment interest shortfalls for that Distribution
               Date, and

          o    the amount of interest that would otherwise have been received
               with respect to any Mortgage Loan that was the subject of a
               Relief Act Reduction or a Special Hazard Loss, Fraud Loss, Debt
               Service Reduction or Deficient Valuation, after the exhaustion of
               the respective amounts of coverage provided by the Subordinated
               Certificates for those types of losses.

          Notwithstanding the foregoing, on each Distribution Date, the interest
distribution amount that would otherwise be distributed to the Class X
Certificates will be reduced by the Required Reserve Fund Deposit (as defined
below) and will not be distributed or reimbursable to the Class X Certificates.

          Net Interest Shortfalls on any Distribution Date will be allocated pro
rata among all interest-bearing Classes of the Senior Certificates and the
Subordinated Certificates on such Distribution Date, based on the amount of
interest each such Class of Certificates would otherwise be entitled to receive
on such Distribution Date, in each case before taking into account any reduction
in such amounts from such Net Interest Shortfalls.

          A "RELIEF ACT REDUCTION" is a reduction in the amount of the monthly
interest payment on a Mortgage Loan pursuant to the Servicemembers' Civil Relief
Act. See "Legal Aspects of the Mortgage Loans--Servicemembers' Civil Relief Act"
in the accompanying prospectus. With respect to any Distribution Date, a net


                                      S-48



prepayment interest shortfall is the amount by which the aggregate of prepayment
interest shortfalls experienced by the Mortgage Loans during the portion of the
related Prepayment Period occurring in the calendar month preceding the month of
the Distribution Date exceeds the aggregate amount payable on the Distribution
Date by the Servicers and the Master Servicer as described under "Servicing of
the Mortgage Loans--Adjustment to Servicing Fees in Connection with Certain
Prepaid Mortgage Loans" in this prospectus supplement. A prepayment interest
shortfall is the amount by which interest paid by a borrower in connection with
a prepayment of principal on a Mortgage Loan is less than one month's interest
at the related mortgage rate on the Stated Principal Balance of the Mortgage
Loan. Each Class' pro rata share of the Net Interest Shortfalls on the Mortgage
Loans will be based on the amount of interest the Class otherwise would have
been entitled to receive on such Distribution Date.

          If on a particular Distribution Date, Available Funds in the
Distribution Account applied in the order described above under "--Priority of
Distributions Among Certificates" are not sufficient to make a full distribution
of the interest entitlement on the Certificates, interest will be distributed on
each Class of Certificates of equal priority based on the amount of interest it
would otherwise have been entitled to receive in the absence of the shortfall.
Any unpaid interest amount will be carried forward and added to the amount
holders of each Class of Certificates will be entitled to receive on the next
Distribution Date. A shortfall could occur, for example, if losses realized on
the Mortgage Loans were exceptionally high or were concentrated in a particular
month. Any unpaid interest amount so carried forward will not bear interest.

THE RESERVE FUND AND THE CORRIDOR CONTRACTS

          The Reserve Fund. Pursuant to the Pooling and Servicing Agreement, the
Securities Administrator will establish and maintain an account (the "RESERVE
FUND"), which is held in trust by the Securities Administrator on behalf of the
Trustee and the Holders of the LIBOR Certificates and the Class X Certificates.
The Reserve Fund will not be an asset of any REMIC. The Reserve Fund will be the
sole source of payments to the holders of the LIBOR Certificates with respect to
any Net WAC Shortfalls on such Certificates that remain unpaid after application
of the payments received under the Corridor Contracts.

          On each Distribution Date, Current Interest that would otherwise be
distributable with respect to the Class X Certificates will be deposited instead
in the Reserve Fund, to the extent of the "REQUIRED RESERVE FUND DEPOSIT" in the
manner described below.

          For any Distribution Date, the "REQUIRED RESERVE FUND DEPOSIT" for the
Class X Certificates will be an amount equal to the lesser of (i) the Current
Interest for the Class X Certificates for such Distribution Date and (ii) the
amount required to bring the balance on deposit in the Reserve Fund up to an
amount equal to the sum of (a) the aggregate Net WAC Shortfalls for the LIBOR
Certificates for such Distribution Date remaining unpaid after application of
payments under the Corridor Contracts on that Distribution Date and (b) $8,500.

          For any Distribution Date, the Securities Administrator will deposit
into the Reserve Fund any Required Reserve Fund Deposit for such date.

          On any Distribution Date for which a Net WAC Shortfall exists with
respect to the LIBOR Certificates, the Securities Administrator will withdraw
the amounts on deposit in the Reserve Fund, and distribute them first,
concurrently, to the Class A-1, Class A-2 and Class A-3 Certificates, pro rata
based upon the extent of their respective Net WAC Shortfalls for that
Distribution Date, and then sequentially, to the Class M-1, Class M-2, Class
M-3, Class M-4, Class M-5 and Class M-6 Certificates, in that order, in each
case in an amount up to their remaining respective accrued and unpaid Net WAC
Shortfalls.

          If, immediately after any Distribution Date, the amount on deposit in
the Reserve Fund exceeds the initial deposit therein, the Securities
Administrator will distribute such excess to the Class X Certificates. On the
Distribution Date on which the aggregate Class Principal Balance of the LIBOR
Certificates is reduced to zero, the Securities Administrator shall distribute
any amounts remaining in each of the Reserve Fund to the Underwriter and such
amounts will not be available for distribution to certificateholders.


                                      S-49



          "CURRENT INTEREST" for each Class of Certificates and any Distribution
Date will equal the amount of interest accrued during the related Interest
Accrual Period on the related Class Principal Balance immediately prior to that
Distribution Date (or, in the case of the Notional Amount Certificates, the
related Notional Amount for that Distribution Date) at such Class's Pass-Through
Rate.

          "NET WAC PASS-THROUGH RATE" for the LIBOR Certificates and any
Distribution Date will be a per annum rate equal to the weighted average of the
Net Mortgage Rates of the Mortgage Loans as of the first day of the month
preceding the month in which such Distribution Date occurs.

          "NET WAC SHORTFALLS" for any Class of LIBOR Certificates and any
Distribution Date will equal the excess, if any, of an amount that would have
been the Current Interest for such class if the Pass-Through Rate for such class
were calculated without regard to Net WAC Pass-Through Rate for that
Distribution Date, over the actual Current Interest for such Class for such
Distribution Date.

          The Corridor Contracts. The LIBOR Certificates will have the benefit
of the Corridor Contracts (each, a "CORRIDOR CONTRACT") provided by Morgan
Stanley Capital Services Inc., as Corridor Contract Counterparty (the "CORRIDOR
CONTRACT COUNTERPARTY"). All obligations of the Trust under the Corridor
Contracts will be paid on or prior to the closing date.

          The separate Corridor Contract relating to the Class or Classes of
LIBOR Certificates listed below will have the respective initial Notional Amount
set forth below. In connection with each Distribution Date from the Distribution
Date in February 2006 to and including the respective Distribution Dates set
forth in the table below, on the Business Day immediately prior to such
Distribution Date, the Corridor Contract Counterparty will be obligated under
the Corridor Contracts to pay to the Securities Administrator, on behalf of the
Trustee, for the benefit of the Holders of the related Class or Classes of LIBOR
Certificates an amount equal to the product of (a) the excess, if any, of the
lesser of (i) the then current one-month LIBOR rate and (ii) the specified "CAP
CEILING RATE" for such Class or Classes of LIBOR Certificates, over the
specified "CAP STRIKE RATE" for such Class or Classes of LIBOR Certificates, in
each case calculated on a "30/360" basis, (b) the "NOTIONAL BALANCE" specified
below for such Class or Classes of LIBOR Certificates and (c) 100. The Corridor
Contract Counterparty's respective obligations under each Corridor Contract for
the related Class or Classes of Certificates will terminate immediately
following the Distribution Date set forth below for such Class or Classes of
Certificates.



       Class or Classes                                       Corridor Contract Final
        of Certificates          Initial Notional Balance   Scheduled Distribution Date
------------------------------   ------------------------   ---------------------------

Class A-1 Certificates........         $3,687,951.76              September 2014
Class A-2 Certificates........         $  979,122.16              September 2014
Class A-3 Certificates........         $  108,829.43              September 2014
Class M Senior Certificates...         $  227,746.45              September 2014
Class M Junior Certificates...         $   83,070.47              September 2014


          The specified Cap Ceiling Rates, Cap Strike Rates and Notional
Balances for each Corridor Contract are set forth on Annex II to this prospectus
supplement. Amounts, if any, payable under any Corridor Contract with respect to
any Distribution Date will be used to cover shortfalls in payments of interest
on the LIBOR Certificates to which the Corridor Contract relates, if the
Pass-Through Rates on those Classes of Certificates are limited for any of the
Distribution Dates for which such Class of LIBOR Certificates has the benefit of
the related Corridor Contract due to the imposition of the Net WAC Pass-Through
Rate on their respective Pass-Through Rates described in this prospectus
supplement.

          The Corridor Contracts will be governed by and construed in accordance
with the law of the State of New York. The obligations of the Corridor Contract
Counterparty are limited to those specifically set forth in the Corridor
Contracts.


                                      S-50



DESCRIPTION OF THE CORRIDOR CONTRACT COUNTERPARTY

          The Corridor Contract Counterparty, is a wholly-owned, unregulated,
special purpose subsidiary of Morgan Stanley ("MORGAN STANLEY"). The Corridor
Contract Counterparty conducts business in the over-the-counter derivatives
market, engaging in a variety of derivatives products, including interest rate
swaps, currency swaps, credit default swaps and interest rate options with
institutional clients. The obligations of the Corridor Contract Counterparty are
100% guaranteed by Morgan Stanley.

          As of the date hereof, Morgan Stanley is rated "AA-" by Fitch Ratings,
"A+" by Standard & Poor's Rating Services and "Aa3" by Moody's Investors
Service, Inc.

PRINCIPAL

          Principal Amount. On each Distribution Date, from remaining Available
Funds after distributions in respect of interest, the Principal Amount will be
distributed as principal with respect to the Senior Certificates in an amount up
to the Senior Principal Distribution Amount and as principal of the Subordinated
Certificates, in an amount up to the Subordinated Principal Distribution Amount.

          The "PRINCIPAL AMOUNT" for any Distribution Date will equal the sum
of:

               1.   all monthly payments of principal due on each Mortgage Loan
                    (other than a Liquidated Mortgage Loan) on the related Due
                    Date,

               2.   the principal portion of the purchase price of each Mortgage
                    Loan that was repurchased by the Seller pursuant to the
                    Pooling and Servicing Agreement or the related Originator
                    pursuant to the related underlying mortgage loan purchase
                    agreement as of the Distribution Date,

               3.   the Substitution Adjustment Amount in connection with any
                    deleted Mortgage Loan received with respect to the
                    Distribution Date,

               4.   any insurance proceeds or liquidation proceeds allocable to
                    recoveries of principal of Mortgage Loans that are not yet
                    Liquidated Mortgage Loans received during the calendar month
                    preceding the month of the Distribution Date,

               5.   with respect to each Mortgage Loan that became a Liquidated
                    Mortgage Loan during the calendar month preceding the month
                    of the Distribution Date, the amount of the liquidation
                    proceeds allocable to principal received with respect to
                    that Mortgage Loan, and, if such Liquidated Mortgage Loan is
                    an Additional Collateral Mortgage Loan, the principal
                    portion of the proceeds of any related Additional
                    Collateral,

               6.   all partial and full principal prepayments by borrowers on
                    the Mortgage Loans received during the related Prepayment
                    Period, and

               7.   any Subsequent Recoveries on the Mortgage Loans received
                    during the calendar month preceding the month of the
                    Distribution Date.

          Senior Principal Distribution Amount. On each Distribution Date, the
Principal Amount, up to the amount of the Senior Principal Distribution Amount
for the Distribution Date, will be distributed as principal sequentially, in the
following order of priority:

               1.   to the Class A-R Certificates, until its Class Principal
                    Balance is reduced to zero; and

               2.   concurrently, to the Class A-1, Class A-2 and Class A-3
                    Certificates, pro rata, until their respective Class
                    Principal Balances have been reduced to zero.


                                      S-51



          In addition, on each Distribution Date, the Class P Distribution
Amount shall be distributed to the Class P Certificates.

GLOSSARY

          The capitalized terms used herein shall have the following meanings:

          "CLASS P DISTRIBUTION AMOUNT" for each Distribution Date and the Class
P Certificates is an amount equal to the total of all prepayment penalties
received on the Mortgage Loans since the Due Date related to the prior
Distribution Date. The Class P Distribution Amount is not part of the Available
Distribution Amount and is therefore not available for distributions to the
Classes of Offered Certificates.

          "DUE DATE" means, with respect to a Mortgage Loan, the day of the
calendar month on which scheduled payments are due on that Mortgage Loan. With
respect to any Distribution Date, the related Due Date is the first day of the
calendar month in which that Distribution Date occurs.

          "PREPAYMENT PERIOD" means for any Distribution Date the calendar month
preceding that Distribution Date.

          The "SENIOR PRINCIPAL DISTRIBUTION AMOUNT" for any Distribution Date
will equal the sum of

          o    the Senior Percentage of all amounts described in clauses 1.
               through 4. of the definition of Principal Amount for that
               Distribution Date,

          o    for each Mortgage Loan that became a Liquidated Mortgage Loan
               during the calendar month preceding the month of the Distribution
               Date, the lesser of

               o    the Senior Percentage of the Stated Principal Balance of the
                    Mortgage Loan as of the Due Date in the month preceding the
                    month of that Distribution Date and

               o    either (i) the Senior Prepayment Percentage of the amount of
                    the liquidation proceeds allocable to principal received on
                    the Mortgage Loan or (ii) if an Excess Loss was sustained on
                    the Liquidated Mortgage Loan during the preceding calendar
                    month, the Senior Percentage of the amount of the
                    liquidation proceeds allocable to principal received on the
                    Mortgage Loan, and

          o    the sum of the Senior Prepayment Percentage of amounts described
               in clauses 6. and 7. of the definition of Principal Amount for
               that Distribution Date;

provided, however, that if a Bankruptcy Loss that is an Excess Loss is sustained
on a Mortgage Loan that is not a Liquidated Mortgage Loan, the Senior Principal
Distribution Amount will be reduced on the related Distribution Date by the
Senior Percentage of the principal portion of the Bankruptcy Loss.

          "STATED PRINCIPAL BALANCE" means for any Mortgage Loan and Due Date,
the unpaid principal balance of the Mortgage Loan as of that Due Date, as
specified in its amortization schedule at that time (before any adjustment to
the amortization schedule for any moratorium or similar waiver or grace period),
after giving effect to (i) the payment of principal due on that Due Date,
irrespective of any delinquency in payment by the related mortgagor, and (ii)
prepayments of principal and liquidation proceeds received with respect to that
Mortgage Loan through the last day of the related Prepayment Period. The "POOL
PRINCIPAL BALANCE" equals the aggregate of the Stated Principal Balances of the
Mortgage Loans.

          The "SENIOR PERCENTAGE" for any Distribution Date is the percentage
equivalent of a fraction, the numerator of which is the aggregate of the Class
Principal Balances of each Class of Senior Certificates (other than the Notional
Amount Certificates) immediately before that Distribution Date and the
denominator of which is the


                                      S-52



aggregate of the Stated Principal Balances of the Mortgage Loans as of the Due
Date occurring in the month prior to the month of that Distribution Date (after
giving effect to prepayments in the Prepayment Period related to such prior Due
Date).

          The "SUBORDINATED PERCENTAGE" for the Subordinated Certificates for
each Distribution Date will be calculated as the difference between 100% and the
Senior Percentage on such Distribution Date.

          The "SENIOR PREPAYMENT PERCENTAGE" for any Distribution Date occurring
during the seven years beginning on the first Distribution Date will equal 100%.
Thereafter, the Senior Prepayment Percentage will be subject to gradual
reduction as described in the following paragraph. This disproportionate
allocation of unscheduled payments of principal will have the effect of
accelerating the amortization of the Senior Certificates (other than the
Notional Amount Certificates) which receive these unscheduled payments of
principal while, in the absence of Realized Losses, increasing the interest in
the Mortgage Loans evidenced by the Subordinated Certificates. Increasing the
respective interest of the Subordinated Certificates relative to the Senior
Certificates is intended to preserve the availability of the subordination
provided by the Subordinated Certificates.

          The Senior Prepayment Percentage for any Distribution Date occurring
on or after the seventh anniversary of the first Distribution Date will be as
follows: for any Distribution Date in the first year thereafter, the Senior
Percentage plus 70% of the Subordinated Percentage for such Distribution Date;
for any Distribution Date in the second year thereafter, the Senior Percentage
plus 60% of the Subordinated Percentage for the Distribution Date; for any
Distribution Date in the third year thereafter, the Senior Percentage plus 40%
of the Subordinated Percentage for such Distribution Date; for any Distribution
Date in the fourth year thereafter, the Senior Percentage plus 20% of the
Subordinated Percentage for such Distribution Date; and for any Distribution
Date thereafter, the Senior Percentage for such Distribution Date (unless on any
Distribution Date the Senior Percentage exceeds the Senior Percentage as of the
Closing Date, in which case the Senior Prepayment Percentage for the
Distribution Date will once again equal 100%).

          Notwithstanding the foregoing, no decrease in the Senior Prepayment
Percentage will occur unless both of the step down conditions listed below are
satisfied:

          o    the outstanding principal balance of all Mortgage Loans
               delinquent 60 days or more (including Mortgage Loans in
               foreclosure, real estate owned by the Trust Fund and Mortgage
               Loans in which the mortgagors are in bankruptcy) (averaged over
               the preceding six month period), as a percentage of the aggregate
               Class Principal Balance of the Subordinated Certificates, does
               not equal or exceed 50%, and

          o    cumulative Realized Losses on all of the Mortgage Loans do not
               exceed

               o    commencing with the Distribution Date on the seventh
                    anniversary of the first Distribution Date, 30% of the
                    aggregate Class Principal Balance of the Subordinated
                    Certificates as of the Closing Date (with respect to the
                    Subordinated Certificates, the "original subordinate
                    principal balance"),

               o    commencing with the Distribution Date on the eighth
                    anniversary of the first Distribution Date, 35% of the
                    original subordinate principal balance,

               o    commencing with the Distribution Date on the ninth
                    anniversary of the first Distribution Date, 40% of the
                    original subordinate principal balance,

               o    commencing with the Distribution Date on the tenth
                    anniversary of the first Distribution Date, 45% of the
                    original subordinate principal balance, and

               o    commencing with the Distribution Date on the eleventh
                    anniversary of the first Distribution Date, 50% of the
                    original subordinate principal balance.


                                      S-53



          Notwithstanding the preceding paragraph, if (x) on or before the
Distribution Date in December 2008, the Subordinated Percentage is at least 200%
of the Subordinated Percentage as of the Closing Date, the delinquency test set
forth above is satisfied and cumulative Realized Losses on the Mortgage Loans do
not exceed 20% of the original subordinate principal balance, the Senior
Prepayment Percentage will equal the Senior Percentage for that Distribution
Date plus 50% of the amount equal to 100% minus the Senior Percentage and (y)
after the Distribution Date in December 2008, the Subordinated Percentage is at
least 200% of the Subordinated Percentage as of the Closing Date, the
delinquency test set forth above is satisfied and cumulative Realized Losses on
the Mortgage Loans do not exceed 30% of the original subordinate principal
balance (the "TWO TIMES TEST"), the Senior Prepayment Percentage will equal the
Senior Percentage.

          If on any Distribution Date the allocation to the Class or Classes of
Senior Certificates then entitled to distributions of principal of full and
partial principal prepayments and other amounts in the percentage required above
would reduce the outstanding Class Principal Balance of the Class or Classes
below zero, the distribution to the Class or Classes of Certificates of the
Senior Percentage and/or Senior Prepayment Percentage, as applicable, of the
principal amounts for the Distribution Date will be limited to the percentage
necessary to reduce the related Class Principal Balance(s) to zero.

          The "SUBORDINATED PREPAYMENT PERCENTAGE" for any Distribution Date
will be calculated as the difference between 100% and the Senior Prepayment
Percentage.

          The "SENIOR TERMINATION DATE" is the date on which the aggregate Class
Principal Balance of the Senior Certificates is reduced to zero.

          Subordinated Principal Distribution Amount. On each Distribution Date,
to the extent of Available Funds available therefor, the Principal Amount, up to
the amount of the Subordinated Principal Distribution Amount for the
Distribution Date, will be distributed as principal of the Subordinated
Certificates. Except as provided below, each Class of Subordinated Certificates
will be entitled to receive its pro rata share of the Subordinated Principal
Distribution Amount (based on its respective Class Principal Balance), in each
case to the extent of the amount available from Available Funds for distribution
of principal. Distributions of principal of the Subordinated Certificates will
be made sequentially first to the Class M Certificates, beginning with the Class
M-1 Certificates, and then to the Class B Certificates, beginning with the Class
B-1 Certificates, in the order of their numerical Class designations, in each
case until their respective Class Principal Balances are reduced to zero.

          With respect to each Class of Subordinated Certificates (other than
the Class of Subordinated Certificates then outstanding with the highest
priority of distribution), if on any Distribution Date the sum of the Class
Subordination Percentages of such Class and all Classes of Subordinated
Certificates which have higher numerical Class designations than such Class (the
"APPLICABLE CREDIT SUPPORT PERCENTAGE") is less than the Applicable Credit
Support Percentage for such Class on the date of issuance of the Certificates
(the "ORIGINAL APPLICABLE CREDIT SUPPORT PERCENTAGE"), no distribution of
partial principal prepayments and principal prepayments in full will be made to
any of those Classes of Subordinated Certificates (the "RESTRICTED CLASSES") and
the amount of partial principal prepayments and principal prepayments in full
otherwise distributable to the Restricted Classes will be allocated among the
remaining Classes of Subordinated Certificates, pro rata, based upon their
respective Class Principal Balances, and distributed in the sequential order
described above.

          For purposes of allocating distributions and losses to the
Subordinated Certificates, the Class M Certificates have higher payment
priorities than the Class B Certificates. Within the Class M and Class B
Certificates, the payment priorities are in numerical order.

          The "CLASS SUBORDINATION PERCENTAGE" with respect to any Distribution
Date and each Class of Subordinated Certificates, will equal the fraction,
expressed as a percentage, the numerator of which is the Class Principal Balance
of the Class of Subordinated Certificates immediately before the Distribution
Date, and the denominator of which is the aggregate of the Class Principal
Balances of all Classes of Certificates immediately before the Distribution
Date.


                                      S-54



          The approximate Original Applicable Credit Support Percentages for the
Subordinated Certificates on the date of issuance of the certificates are
expected to be as follows:

                                                          ORIGINAL APPLICABLE
THE SUBORDINATED CERTIFICATES                          CREDIT SUPPORT PERCENTAGE
----------------------------------------------------   -------------------------
Class M-1...........................................             9.00%
Class M-2...........................................             6.90%
Class M-3...........................................             5.30%
Class M-4...........................................             4.75%
Class M-5...........................................             4.10%
Class M-6...........................................             3.60%
Class B-1...........................................             3.20%
Class B-2...........................................             2.80%
Class B-3...........................................             2.50%
Class B-4...........................................             2.20%
Class B-5...........................................             1.55%
Class B-6...........................................             0.60%

          The "SUBORDINATED PRINCIPAL DISTRIBUTION AMOUNT" for any Distribution
Date will equal the sum of

          o    the Subordinated Percentage of all amounts described in clauses
               1. through 4. of the definition of Principal Amount and that
               Distribution Date,

          o    for each Mortgage Loan that became a Liquidated Mortgage Loan
               during the calendar month preceding the month of the Distribution
               Date, the liquidation proceeds allocable to principal received on
               the Mortgage Loan, after application of the amounts pursuant to
               the second bulleted item of the definition of Senior Principal
               Distribution Amount up to the related Subordinated Percentage of
               the Stated Principal Balance of the Liquidated Mortgage Loan as
               of the Due Date in the month preceding the month of that
               Distribution Date, and

          o    the related Subordinated Prepayment Percentage of the sum of the
               amounts described in clauses 6. and 7. of the definition of
               Principal Amount and that Distribution Date;

provided, however, that if a Bankruptcy Loss that is an Excess Loss is sustained
on a Mortgage Loan that is not a Liquidated Mortgage Loan, the Subordinated
Principal Distribution Amount will be reduced on the related Distribution Date
by the Subordinated Percentage of the principal portion of the Bankruptcy Loss.

          Residual Certificates. The Class A-R Certificates will remain
outstanding for so long as the Trust Fund shall exist, whether or not they are
receiving current distributions of principal or interest. In addition to
distributions of interest and principal as described above, on each Distribution
Date, the holders of the Class A-R Certificates will be entitled to receive
certain amounts as described in the Pooling and Servicing Agreement. It is not
anticipated that there will be any significant amounts remaining for that
distribution.

ALLOCATION OF LOSSES

          The "SENIOR CREDIT SUPPORT DEPLETION DATE" is the date on which the
aggregate Class Principal Balance of the Subordinated Certificates has been
reduced to zero.

          On each Distribution Date, the amount of any Realized Loss, other than
any Excess Loss, will be allocated first to the Subordinated Certificates, in
the reverse order of their numerical Class designations (beginning with the
Class of Subordinated Certificates then outstanding with the highest numerical
Class designation), in each case until the Class Principal Balance of the
respective Class of Certificates has been reduced to zero, and then to the
Senior Certificates (other than the Notional Amount Certificates), pro rata,
based upon their respective Class Principal Balances except that any Realized
Losses on the Mortgage Loans that would otherwise be allocated to the Class A-2


                                      S-55



Certificates will instead be allocated to the Class A-3 Certificates, until its
Class Principal Balance is reduced to zero.

          On each Distribution Date, Excess Losses on the Mortgage Loans will be
allocated pro rata among the Senior Certificates (other than any Notional Amount
Certificates) and the Subordinated Certificates pro rata based on their Class
Principal Balances immediately prior to that Distribution Date.

          Because principal distributions are paid to some Classes of
Certificates (other than the Notional Amount Certificates) before other Classes
of Certificates, holders of the certificates that are entitled to receive
principal later bear a greater risk of being allocated Realized Losses on the
Mortgage Loans than holders of Classes that are entitled to receive principal
earlier.

          The Pooling and Servicing Agreement does not permit the allocation of
Realized Losses to the Class P or Class C Certificates.

          In general, a "REALIZED LOSS" means, for a Liquidated Mortgage Loan,
the amount by which the remaining unpaid principal balance of the Mortgage Loan
exceeds the amount of liquidation proceeds applied to the principal balance of
the related Mortgage Loan. "EXCESS LOSSES" are Special Hazard Losses in excess
of the Special Hazard Loss Coverage Amount, Bankruptcy Losses in excess of the
Bankruptcy Loss Coverage Amount and Fraud Losses in excess of the Fraud Loss
Coverage Amount. "BANKRUPTCY LOSSES" are losses that are incurred as a result of
Debt Service Reductions and Deficient Valuations. "SPECIAL HAZARD LOSSES" are
Realized Losses in respect of Special Hazard Mortgage Loans. "FRAUD LOSSES" are
losses sustained on a Liquidated Mortgage Loan by reason of a default arising
from fraud, dishonesty or misrepresentation. See "Credit
Enhancement--Subordination" in this prospectus supplement and "Description of
Credit Support--Subordinate Certificates" in the accompanying prospectus.

          A "LIQUIDATED MORTGAGE LOAN" is a defaulted Mortgage Loan as to which
the related Servicer has determined that all recoverable liquidation and
insurance proceeds have been received. A "SPECIAL HAZARD MORTGAGE LOAN" is a
Liquidated Mortgage Loan as to which the ability to recover the full amount due
thereunder was substantially impaired by a hazard not insured against under a
standard hazard insurance policy of the type described in the accompanying
prospectus under "Description of the Agreements--Hazard Insurance Policies." See
"Credit Enhancement--Subordination" in this prospectus supplement and
"Description of Credit Support--Subordinate Certificates" in the accompanying
prospectus.

SUBSEQUENT RECOVERIES

          The Pooling and Servicing Agreement will provide that Class Principal
Balances that have been reduced because of allocations of Realized Losses may
also be increased as a result of Subsequent Recoveries. If a final liquidation
of a Mortgage Loan resulted in a Realized Loss and thereafter the related
Servicer receives a recovery specifically related to that Mortgage Loan, such
recovery (net of any reimbursable expenses) shall be distributed to the
Certificateholders in the same manner as prepayments received in the related
Prepayment Period, to the extent that the related Realized Loss was allocated to
any Class of Certificates. In addition, the Class Principal Balance of each
Class of Certificates to which Realized Losses have been allocated, will be
increased, sequentially in the order of payment priority, to the extent that
such Subsequent Recoveries are distributed as principal to any Class of
Certificates. However, the Class Principal Balance of each such Class of
Certificates will not be increased by more than the amount of Realized Losses
previously applied to reduce the Class Principal Balance of each such Class of
Certificates. Holders of certificates whose Class Principal Balance is increased
in this manner will not be entitled to interest on the increased balance for any
Interest Accrual Period preceding the Distribution Date on which the increase
occurs. The foregoing provisions will apply even if the Class Principal Balance
of a Class of Certificates was previously reduced to zero. Accordingly, each
Class of Certificates will be considered to remain outstanding until the
termination of the trust.

          "SUBSEQUENT RECOVERIES" are unexpected recoveries, net of reimbursable
expenses, received by the related Servicer and remitted by it to the Securities
Administrator, with respect to a Liquidated Mortgage Loan that resulted in a
Realized Loss in a month prior to the month of receipt of such recoveries.


                                      S-56



          An increase in a Certificate Balance caused by a Subsequent Recovery
should be treated by the Certificateholder as ordinary (or capital) income to
the extent that the Certificateholder claimed an ordinary (or capital) deduction
for any decrease in the Certificate Balance caused by Realized Losses. Potential
investors and holders of the certificates are urged to consult their own tax
advisors regarding the appropriate timing, amount and character of any income
realized with respect to their certificates as a result of Subsequent
Recoveries.

REPORTS TO CERTIFICATEHOLDERS

          On each Distribution Date, the Securities Administrator will make
available to the Trustee, the Depositor, each Certificateholder and the Rating
Agencies a statement (based on information received from the Master Servicer and
each Servicer) generally setting forth, among other things:

          o    the amount of the distributions, separately identified, with
               respect to each Class of Certificates;

          o    the amount of the distributions set forth in the first clause
               above allocable to principal, separately identifying the
               aggregate amount of any principal prepayments or other
               unscheduled recoveries of principal included in that amount;

          o    the amount of the distributions set forth in the first clause
               above allocable to interest and how it was calculated;

          o    the amount of any unpaid Interest Shortfall with respect to each
               Class of Certificates, and with respect to the LIBOR
               Certificates, the amount paid under the related Corridor
               Contract;

          o    the Class Principal Balance or Notional Amount, as applicable, of
               each Class of Certificates after giving effect to the
               distribution of principal on that Distribution Date;

          o    the aggregate Stated Principal Balance of the Mortgage Loans at
               the end of the related Prepayment Period, and the Weighted
               Average Net Mortgage Rate of the Mortgage Pool at the beginning
               of the related Due Period;

          o    the Senior Percentage and the Subordinated Percentage for the
               following Distribution Date;

          o    the Senior Prepayment Percentage and Subordinate Prepayment
               Percentage for the following Distribution Date;

          o    the amount of the Servicing Fee paid to or retained by the Master
               Servicer and by each Servicer;

          o    the amount of Monthly Advances for the related Due Period;

          o    the number and aggregate principal balance of the Mortgage Loans
               using the MBA Method that were (A) delinquent (exclusive of
               Mortgage Loans in foreclosure) (1) 30 to 59 days, (2) 60 to 89
               days and (3) 90 or more days, (B) in foreclosure and delinquent
               (1) 30 to 59 days, (2) 60 to 89 days and (3) 90 or more days and
               (C) in bankruptcy as of the close of business on the last day of
               the calendar month preceding that Distribution Date;

          o    the total number and principal balance of any REO properties as
               of the close of business on the last day of the preceding Due
               Period;

          o    the amount of Realized Losses incurred during the preceding
               calendar month;

          o    the cumulative amount of Realized Losses incurred since the
               Closing Date;


                                      S-57



          o    the Class Principal Balance or Notional Amount, as applicable, of
               each Class of Certificates after giving effect to the
               distribution of principal on the Distribution Date;

          o    the Special Hazard Loss Coverage Amount, the Fraud Loss Coverage
               Amount and the Bankruptcy Loss Coverage Amount, in each case as
               of the related Determination Date;

          o    the Pass-Through Rate for each Class of Certificates for that
               Distribution Date; and

          o    the total amount of prepayment penalties received with respect to
               such Distribution Date.

          The Securities Administrator may make available each month, to any
interested party, the monthly statement to Certificateholders via the Securities
Administrator's website. The Securities Administrator's website will be located
at www.ctslink.com, and assistance in using the website can be obtained by
calling the Securities Administrator's customer service desk at (301) 815-6600.
Parties that are unable to use the above distribution option are entitled to
have a paper copy mailed to them via first class mail by notifying the
Securities Administrator at the following address: Wells Fargo Bank, National
Association, P.O. Box 98, Columbia, Maryland 21046 (or for overnight deliveries
at 9062 Old Annapolis Road, Columbia, Maryland 21045). The Securities
Administrator will have the right to change the way such reports are distributed
in order to make such distributions more convenient and/or more accessible, and
the Securities Administrator will provide timely and adequate notification to
such parties regarding any such changes.

          In addition, within a reasonable period of time after the end of each
calendar year, the Securities Administrator will, upon request, prepare and
deliver to the Depositor and each holder of a Certificate of record during the
previous calendar year a statement containing information necessary to enable
holders of the Certificates to prepare their tax returns. These statements will
not have been examined and reported upon by an independent public accountant.

LAST SCHEDULED DISTRIBUTION DATE

          The "LAST SCHEDULED DISTRIBUTION DATE" for the Certificates is the
Distribution Date in January 2036, which is the Distribution Date in the month
following the scheduled maturity date for the latest maturing Mortgage Loan in
the Mortgage Pool. The actual final Distribution Date of any Class of
Certificates may be earlier or later, and could be substantially earlier, than
such class' Last Scheduled Distribution Date.


                                      S-58



STRUCTURING ASSUMPTIONS

          Unless otherwise specified, the information in the tables in this
prospectus supplement has been prepared on the basis of the following assumed
characteristics of the mortgage loans and the following additional assumptions,
which combined are the "STRUCTURING ASSUMPTIONS":

          o    The Mortgage Pool consists of 116 Mortgage Loans with the
               following characteristics:



                              CURRENT    CURRENT  ORIGINAL  REMAINING   INITIAL  SUBSEQUENT
                              MORTGAGE    NET      TERM TO   TERM TO   PERIODIC   PERIODIC
                 PRINCIPAL      RATE    MORTGAGE  MATURITY   MATURITY    RATE       RATE
     INDEX       BALANCE($)     (%)     RATE (%)  (MONTHS)   (MONTHS)   CAP (%)    CAP (%)
-------------  -------------  --------  --------  --------  ---------  --------  ----------

6 Month LIBOR     419,462.85   7.36707   6.99207     360        358     2.00000    2.00000
6 Month LIBOR      99,543.06   6.50000   6.12500     360        355     3.00000    1.00000
6 Month LIBOR   9,611,528.01   7.70855   7.33355     360        359     6.00000    1.91541
6 Month LIBOR   2,140,346.99   7.35072   6.97572     360        358     6.00000    1.96567
6 Month LIBOR   1,677,653.53   6.85043   6.47543     360        358     2.00000    2.00000
6 Month LIBOR     474,750.00   7.12500   6.75000     360        350     3.00000    1.00000
6 Month LIBOR  20,082,653.83   7.51924   7.14424     360        358     6.00000    2.00000
6 Month LIBOR     230,400.00   6.13000   5.75500     360        359     6.00000    2.00000
6 Month LIBOR   7,423,017.67   7.11367   6.73867     360        358     6.00000    2.00000
6 Month LIBOR     212,000.00   5.87500   5.50000     360        358     3.00000    1.00000
6 Month LIBOR     338,464.00   5.72745   5.35245     360        358     3.00000    1.00000
6 Month LIBOR     245,000.00   5.00000   4.62500     360        358     3.00000    1.00000
6 Month LIBOR   1,803,940.00   7.23286   6.85786     360        358     6.00000    2.00000
6 Month LIBOR     856,531.63   6.71606   6.34106     360        357     6.00000    1.24284
6 Month LIBOR   2,455,256.78   7.33976   6.96476     360        358     6.00000    2.00000
1 Year LIBOR      524,430.12   6.20530   5.83030     360        358     6.00000    2.00000
1 Year CMT      8,791,119.89   5.00247   4.75247     360        331     2.00000    2.00000
1 Year CMT        134,880.23   6.00000   5.62500     360        358     3.00000    2.00000
1 Year LIBOR      613,516.33   5.70389   5.32889     360        354     2.00000    2.00000
1 Year LIBOR    6,170,596.97   5.99497   5.61997     360        356     6.00000    2.00000
1 Year CMT        507,888.87   5.25000   5.00000     360        356     2.00000    2.00000
1 Year CMT        248,784.00   5.25000   4.87500     360        358     3.00000    2.00000
1 Year LIBOR   24,376,355.00   6.14220   5.76720     360        358     6.00000    2.00000
1 Year LIBOR    1,569,500.00   6.35919   5.98419     360        358     6.00000    2.00000
6 Month LIBOR     335,528.24   7.83048   7.45548     360        358     6.00000    2.00000
6 Month LIBOR   7,454,601.65   7.13330   6.75830     360        358     6.00000    2.00000


                                                                     REMAINING
               GROSS     MAXIMUM   MINIMUM   MONTHS TO    RESET    INTEREST-ONLY
               MARGIN   MORTGAGE  MORTGAGE   NEXT RATE  FREQUENCY      PERIOD
     INDEX       (%)    RATE (%)  RATE (%)  ADJUSTMENT   (MONTHS)     (MONTHS)
-------------  -------  --------  --------  ----------  ---------  -------------

6 Month LIBOR  5.00000  13.36707   6.91604       22          6          N/A
6 Month LIBOR  5.00000  11.50000   5.00000       19          6          N/A
6 Month LIBOR  4.80968  13.67068   2.29229       23          6          N/A
6 Month LIBOR  4.92275  13.35010   2.26717       22          6          N/A
6 Month LIBOR  5.00000  12.85010   6.65818       22          6           58
6 Month LIBOR  3.25000  13.12500   3.25000       14          6           50
6 Month LIBOR  4.83662  13.51837   2.28944       22          6           58
6 Month LIBOR  5.00000  12.12500   2.25000       23          6           59
6 Month LIBOR  5.00000  13.11271   2.25000       22          6           58
6 Month LIBOR  2.25000  11.87500   2.75000       22          6          118
6 Month LIBOR  2.80686  11.72745   2.80686       22          6          118
6 Month LIBOR  2.75000  11.00000   2.75000       22          6          118
6 Month LIBOR  5.00000  13.23286   2.25000       22          6          118
6 Month LIBOR  3.29639  12.71606   2.62858       21          6          117
6 Month LIBOR  5.00000  13.33976   2.25000       22          6          118
1 Year LIBOR   2.25000  12.20530   2.25000       34         12          N/A
1 Year CMT     2.75000  10.96787   2.75000       10         12          N/A
1 Year CMT     2.75000  12.00000   2.75000       34         12          N/A
1 Year LIBOR   2.25000  11.70389   2.25000       30         12           30
1 Year LIBOR   2.25000  11.99497   2.25000       32         12           32
1 Year CMT     2.75000  11.25000   2.75000       32         12           32
1 Year CMT     2.75000  11.25000   2.75000       34         12           34
1 Year LIBOR   2.25000  12.14220   2.24525       34         12          118
1 Year LIBOR   2.25000  12.35919   2.25000       34         12          118
6 Month LIBOR  5.00000  13.83048   2.25000       34          6          N/A
6 Month LIBOR  4.64097  13.13227   2.25000       34          6          N/A



                                      S-59





                              CURRENT    CURRENT  ORIGINAL  REMAINING   INITIAL  SUBSEQUENT
                              MORTGAGE     NET     TERM TO   TERM TO   PERIODIC   PERIODIC
                 PRINCIPAL      RATE    MORTGAGE  MATURITY   MATURITY    RATE       RATE
     INDEX       BALANCE($)     (%)     RATE (%)  (MONTHS)   (MONTHS)   CAP (%)    CAP (%)
-------------  -------------  --------  --------  --------  ---------  --------  ----------

6 Month LIBOR   2,467,440.12   5.02182   4.77182     360        354     6.00000    2.00000
6 Month LIBOR     102,176.00   7.50000   7.12500     360        358     2.00000    2.00000
6 Month LIBOR   2,420,450.39   7.22246   6.84746     360        358     6.00000    2.00000
6 Month LIBOR     144,000.00   7.00000   6.62500     360        358     6.00000    2.00000
6 Month LIBOR     276,000.00   7.50000   7.12500     360        358     6.00000    2.00000
6 Month LIBOR  25,003,506.17   7.13410   6.75910     360        359     6.00000    2.00000
6 Month LIBOR      67,100.00   7.12500   6.75000     360        356     2.00000    2.00000
6 Month LIBOR     248,100.00   7.67609   7.30109     360        358     3.00000    1.00000
6 Month LIBOR     110,000.00   6.62500   5.17000     360        353     4.00000    1.00000
6 Month LIBOR   1,362,819.75   7.89651   7.52151     360        359     6.00000    2.00000
6 Month LIBOR     285,120.00   6.79181   6.41681     360        359     6.00000    2.00000
6 Month LIBOR     324,000.00   6.12500   5.75000     360        358     6.00000    2.00000
6 Month LIBOR   9,409,158.51   6.74739   6.37239     360        358     6.00000    1.87679
1 Year LIBOR    3,641,186.17   5.91264   5.66264     360        357     2.00000    2.00000
1 Year LIBOR    7,772,395.79   5.96400   5.71400     360        357     5.00000    2.00000
1 Year LIBOR      499,838.73   6.44142   6.19142     360        358     6.00000    2.00000
1 Year LIBOR      298,729.11   5.50000   5.25000     360        358     6.00000    2.00000
1 Year LIBOR    4,618,955.43   6.24674   5.99674     360        357     2.00000    2.00000
1 Year LIBOR   11,179,441.54   5.80807   5.55807     360        357     5.00000    2.00000
1 Year LIBOR      650,000.00   5.87500   5.62500     360        356     5.00000    2.00000
1 Year LIBOR    2,744,015.00   6.69629   6.44629     360        356     6.00000    2.00000
1 Year LIBOR    2,189,379.00   5.98969   5.73969     360        357     6.00000    2.00000
1 Year LIBOR    2,384,999.70   6.02570   5.77570     360        359     6.00000    2.00000
1 Year CMT        298,374.00   6.75000   6.50000     360        358     5.00000    2.00000
1 Year LIBOR   22,150,245.41   6.27677   6.02677     360        357     5.00000    2.00000
1 Year LIBOR    1,869,900.00   6.61215   6.36215     360        358     6.00000    2.00000
1 Year LIBOR    7,113,848.16   6.28893   6.03893     360        358     6.00000    2.00000
1 Year LIBOR      202,000.00   6.12500   5.87500     360        358     6.00000    2.00000
6 Month LIBOR     439,754.42   7.21280   6.96280     360        357     5.00000    1.00000
6 Month LIBOR     195,708.17   7.50000   7.25000     360        358     5.00000    1.00000
6 Month LIBOR   3,066,791.82   6.86179   6.61179     360        358     6.00000    2.00000
6 Month LIBOR     261,732.88   5.87500   5.62500     360        359     6.00000    2.00000
6 Month LIBOR   6,357,089.51   6.44983   6.19983     360        358     6.00000    1.82022


                                                                     REMAINING
               GROSS     MAXIMUM   MINIMUM   MONTHS TO     RESET   INTEREST-ONLY
               MARGIN   MORTGAGE  MORTGAGE   NEXT RATE  FREQUENCY     PERIOD
     INDEX       (%)    RATE (%)  RATE (%)  ADJUSTMENT   (MONTHS)    (MONTHS)
-------------  -------  --------  --------  ----------  ---------  -------------

6 Month LIBOR  2.00000  11.02182   2.00000       30          6           30
6 Month LIBOR  5.00000  13.50000   7.50000       34          6           58
6 Month LIBOR  5.00000  13.22225   2.61991       34          6           58
6 Month LIBOR  5.00000  13.00000   2.25000       34          6           58
6 Month LIBOR  5.00000  13.50000   2.25000       34          6           58
6 Month LIBOR  4.98874  13.13283   2.25000       35          6           59
6 Month LIBOR  5.00000  13.12500   5.00000       32          6          116
6 Month LIBOR  3.42443  12.67609   3.42443       34          6          118
6 Month LIBOR  2.25000  11.62500   2.25000       29          6          113
6 Month LIBOR  5.00000  13.89651   2.25000       35          6          119
6 Month LIBOR  5.00000  12.79181   2.25000       35          6          119
6 Month LIBOR  5.00000  12.12500   2.25000       34          6          118
6 Month LIBOR  4.01124  12.74716   2.46963       34          6          118
1 Year LIBOR   2.25000  10.91264   2.25000       57         12          N/A
1 Year LIBOR   2.25000  10.96400   2.25000       57         12          N/A
1 Year LIBOR   2.25000  12.44142   2.25000       58         12          N/A
1 Year LIBOR   2.25000  11.50000   2.25000       58         12          N/A
1 Year LIBOR   2.25000  11.24674   2.25000       57         12           57
1 Year LIBOR   2.25000  10.80807   2.25000       57         12           57
1 Year LIBOR   2.25000  10.87500   2.25000       56         12           56
1 Year LIBOR   2.25000  12.69629   2.25000       56         12           56
1 Year LIBOR   2.25000  11.98969   2.25000       57         12           57
1 Year LIBOR   2.25000  12.02570   2.25000       59         12           59
1 Year CMT     2.75000  12.75000   2.75000       58         12           58
1 Year LIBOR   2.25000  11.27677   2.25000       57         12          117
1 Year LIBOR   2.25000  12.61215   2.25000       58         12          118
1 Year LIBOR   2.25000  12.28893   2.25000       58         12          118
1 Year LIBOR   2.25000  12.12500   2.25000       58         12          118
6 Month LIBOR  2.25000  12.51042   2.25000       57          6          N/A
6 Month LIBOR  2.25000  12.50000   2.50000       58          6          N/A
6 Month LIBOR  2.44333  12.86146   2.25000       58          6          N/A
6 Month LIBOR  2.75000  11.87500   2.25000       59          6          N/A
6 Month LIBOR  2.59364  12.44890   2.44192       58          6          N/A



                                      S-60





                              CURRENT    CURRENT  ORIGINAL  REMAINING   INITIAL  SUBSEQUENT
                              MORTGAGE     NET     TERM TO   TERM TO   PERIODIC   PERIODIC
                 PRINCIPAL      RATE    MORTGAGE  MATURITY   MATURITY    RATE       RATE
     INDEX       BALANCE($)     (%)     RATE (%)  (MONTHS)   (MONTHS)   CAP (%)    CAP (%)
-------------  -------------  --------  --------  --------  ---------  --------  ----------

6 Month LIBOR   1,480,801.23   6.30204   6.05204     360        358     6.00000    1.32386
6 Month LIBOR  27,881,878.12   6.29889   6.04889     360        357     5.00000    1.00000
6 Month LIBOR     689,200.00   7.04041   6.79041     360        357     5.00000    1.00000
6 Month LIBOR   6,459,727.26   5.38261   5.13261     360        355     6.00000    2.00000
6 Month LIBOR     600,000.00   7.25000   7.00000     360        359     6.00000    2.00000
6 Month LIBOR     536,720.00   6.98700   6.73700     360        358     6.00000    2.00000
6 Month LIBOR   2,542,444.77   6.98021   6.73021     360        356     5.00000    1.00000
6 Month LIBOR     499,307.00   6.30627   6.05627     360        358     5.00000    1.00000
6 Month LIBOR     441,000.00   6.51786   5.59332     360        353     5.00000    1.00000
6 Month LIBOR     318,434.00   6.82032   6.57032     360        356     5.00000    1.00000
6 Month LIBOR     627,200.00   7.36703   7.11703     360        359     5.00000    1.00000
6 Month LIBOR   4,103,831.50   6.84549   6.59549     360        358     5.00000    1.00000
6 Month LIBOR     361,000.00   6.72126   6.47126     360        356     5.00000    1.00000
6 Month LIBOR   8,350,765.53   7.14766   6.89766     360        358     6.00000    1.94209
6 Month LIBOR     455,000.00   5.87500   5.62500     360        359     6.00000    2.00000
6 Month LIBOR     433,382.41   5.95250   5.70250     360        358     6.00000    1.62001
6 Month LIBOR     631,392.00   7.61993   7.36993     360        358     6.00000    2.00000
6 Month LIBOR  40,779,905.68   6.67041   6.41428     360        358     6.00000    1.78247
6 Month LIBOR   5,426,719.74   6.24960   5.99960     360        358     6.00000    1.25153
1 Month LIBOR   2,612,250.00   6.11791   5.74291     360        357     1.00000    1.00000
1 Month LIBOR     159,000.00   6.25000   5.87500     360        358     1.00000    1.00000
1 Month LIBOR     300,000.00   6.75000   6.37500     360        359     6.00000      N/A
6 Month LIBOR     399,361.47   6.12500   5.75000     360        359     1.00000    1.00000
6 Month LIBOR     532,300.00   5.75000   5.37500     360        355     6.00000    1.00000
6 Month LIBOR  25,853,260.68   5.17729   4.80229     360        358     1.00000    1.00000
6 Month LIBOR     140,000.00   5.87500   5.50000     360        358     1.00000    1.00000
6 Month LIBOR   2,093,200.00   5.45523   5.08023     360        358     1.00000    1.00000
6 Month LIBOR     810,500.00   4.62889   4.25389     360        358     1.00000    1.00000
6 Month LIBOR     980,000.00   5.87500   5.50000     360        359     1.00000    1.00000
6 Month LIBOR     959,408.67   5.48220   5.10720     360        356     6.00000    1.70360
Fixed Rate     26,670,359.15   6.29472   6.04472     360        358       N/A        N/A
Fixed Rate      4,726,915.43   5.96737   5.71737     360        358       N/A        N/A
Fixed Rate        598,604.77   8.09100   7.84100     360        359       N/A        N/A


                                                                     REMAINING
               GROSS    MAXIMUM    MINIMUM   MONTHS TO     RESET   INTEREST-ONLY
               MARGIN   MORTGAGE  MORTGAGE   NEXT RATE  FREQUENCY     PERIOD
     INDEX       (%)    RATE (%)  RATE (%)  ADJUSTMENT   (MONTHS)    (MONTHS)
-------------  -------  --------  --------  ----------  ---------  -------------

6 Month LIBOR  2.58807  12.30075   2.58807       58          6          N/A
6 Month LIBOR  2.25000  11.29889   2.25000       57          6           57
6 Month LIBOR  2.58459  12.04041   2.58459       57          6           57
6 Month LIBOR  2.04778  11.38261   2.04778       55          6           55
6 Month LIBOR  2.25000  13.25000   2.25000       59          6           59
6 Month LIBOR  2.25000  12.98700   2.25000       58          6           58
6 Month LIBOR  2.25000  11.84585   2.27030       56          6          116
6 Month LIBOR  2.25000  11.30524   2.25000       58          6          118
6 Month LIBOR  2.25000  11.51786   2.25000       53          6          113
6 Month LIBOR  2.25000  11.82032   2.25000       56          6          116
6 Month LIBOR  2.25000  12.36703   2.59279       59          6          119
6 Month LIBOR  2.65158  11.84549   2.67887       58          6          118
6 Month LIBOR  2.91343  11.72126   2.91343       56          6          116
6 Month LIBOR  2.55208  13.14760   2.73942       58          6          118
6 Month LIBOR  2.25000  11.87500   2.25000       59          6          119
6 Month LIBOR  2.44000  11.95250   2.44000       58          6          118
6 Month LIBOR  2.75000  13.61847   2.25000       58          6          118
6 Month LIBOR  2.72974  12.66985   2.49509       58          6          118
6 Month LIBOR  2.64773  12.24960   2.64773       58          6          118
1 Month LIBOR  2.25000  12.07271   2.25000        1          1          117
1 Month LIBOR  2.25000  12.25000   2.25000        1          1          118
1 Month LIBOR  2.25000  12.75000   2.25000        2          1          119
6 Month LIBOR  2.25000  12.12500   5.12500        5          6          N/A
6 Month LIBOR  2.25000  11.75000   2.25000        1          6            7
6 Month LIBOR  2.70987  11.28577   2.70282        4          6          118
6 Month LIBOR  3.25000  11.87500   3.25000        4          6          118
6 Month LIBOR  2.31750  11.45352   2.31750        4          6          118
6 Month LIBOR  2.50000  10.62500   2.50000        4          6          118
6 Month LIBOR  3.25000  11.87500   3.25500        5          6          119
6 Month LIBOR  2.51723  11.13039   2.51723        5          6          116
Fixed Rate       N/A       N/A       N/A        N/A         N/A         N/A
Fixed Rate       N/A       N/A       N/A        N/A         N/A         N/A
Fixed Rate       N/A       N/A       N/A        N/A         N/A         N/A



                                      S-61





                              CURRENT    CURRENT  ORIGINAL  REMAINING   INITIAL  SUBSEQUENT
                              MORTGAGE     NET     TERM TO   TERM TO   PERIODIC   PERIODIC
                 PRINCIPAL      RATE    MORTGAGE  MATURITY   MATURITY    RATE       RATE
     INDEX       BALANCE($)     (%)     RATE (%)  (MONTHS)   (MONTHS)   CAP (%)    CAP (%)
-------------  -------------  --------  --------  --------  ---------  --------  ----------

Fixed Rate        892,963.99   6.61385   6.36385     360        358       N/A        N/A
Fixed Rate      3,196,971.51   6.58362   6.28241     360        357       N/A        N/A
Fixed Rate        546,962.22   5.50000   5.25000     360        355       N/A        N/A
Fixed Rate         63,794.93   7.00000   6.75000     360        358       N/A        N/A
Fixed Rate         71,600.00   6.50000   6.25000     360        360       N/A        N/A
Fixed Rate        149,362.66   6.87500   6.62500     360        355       N/A        N/A
Fixed Rate     21,904,648.46   6.05861   5.80861     359        356       N/A        N/A
Fixed Rate        124,886.99   6.50000   6.25000     360        359       N/A        N/A
Fixed Rate        134,761.12   6.62500   6.37500     360        358       N/A        N/A
Fixed Rate     15,439,164.95   5.65029   5.40029     360        358       N/A        N/A
Fixed Rate        163,736.92   7.12500   6.87500     360        358       N/A        N/A
Fixed Rate        131,950.00   7.50000   7.25000     360        357       N/A        N/A
Fixed Rate        218,400.00   7.75000   7.50000     360        357       N/A        N/A
Fixed Rate        394,000.00   5.37500   5.12500     360        355       N/A        N/A
Fixed Rate     36,253,114.65   6.50633   6.25633     360        358       N/A        N/A
Fixed Rate      4,154,300.57   6.48560   6.23560     360        358       N/A        N/A
Fixed Rate        660,000.00   7.12500   6.87500     360        359       N/A        N/A
Fixed Rate      9,492,000.00   7.18203   6.93203     360        358       N/A        N/A
Fixed Rate      3,822,250.00   6.49707   6.21823     360        358       N/A        N/A
Fixed Rate         85,050.00   8.00000   7.75000     360        357       N/A        N/A
Fixed Rate      4,003,299.68   6.51289   6.26289     360        358       N/A        N/A
Fixed Rate        595,000.00   7.87500   7.62500     360        357       N/A        N/A
Fixed Rate     32,845,481.29   6.04860   5.79860     360        358       N/A        N/A
Fixed Rate     12,266,277.55   6.13042   5.88042     360        358       N/A        N/A


                                                                   REMAINING
             GROSS    MAXIMUM    MINIMUM   MONTHS TO    RESET    INTEREST-ONLY
             MARGIN   MORTGAGE  MORTGAGE   NEXT RATE  FREQUENCY     PERIOD
     INDEX     (%)    RATE (%)  RATE (%)  ADJUSTMENT   (MONTHS)    (MONTHS)
-----------  -------  --------  --------  ----------  ---------  -------------

Fixed Rate     N/A       N/A       N/A        N/A         N/A         N/A
Fixed Rate     N/A       N/A       N/A        N/A         N/A         N/A
Fixed Rate     N/A       N/A       N/A        N/A         N/A         N/A
Fixed Rate     N/A       N/A       N/A        N/A         N/A         N/A
Fixed Rate     N/A       N/A       N/A        N/A         N/A         N/A
Fixed Rate     N/A       N/A       N/A        N/A         N/A         N/A
Fixed Rate     N/A       N/A       N/A        N/A         N/A         N/A
Fixed Rate     N/A       N/A       N/A        N/A         N/A         N/A
Fixed Rate     N/A       N/A       N/A        N/A         N/A         N/A
Fixed Rate     N/A       N/A       N/A        N/A         N/A         N/A
Fixed Rate     N/A       N/A       N/A        N/A         N/A         N/A
Fixed Rate     N/A       N/A       N/A        N/A         N/A          57
Fixed Rate     N/A       N/A       N/A        N/A         N/A          57
Fixed Rate     N/A       N/A       N/A        N/A         N/A          55
Fixed Rate     N/A       N/A       N/A        N/A         N/A         118
Fixed Rate     N/A       N/A       N/A        N/A         N/A         118
Fixed Rate     N/A       N/A       N/A        N/A         N/A         119
Fixed Rate     N/A       N/A       N/A        N/A         N/A         118
Fixed Rate     N/A       N/A       N/A        N/A         N/A         118
Fixed Rate     N/A       N/A       N/A        N/A         N/A         117
Fixed Rate     N/A       N/A       N/A        N/A         N/A         118
Fixed Rate     N/A       N/A       N/A        N/A         N/A         117
Fixed Rate     N/A       N/A       N/A        N/A         N/A         118
Fixed Rate     N/A       N/A       N/A        N/A         N/A         118



                                      S-62



          o    the Mortgage Loans prepay at the specified constant percentages
               of the related Prepayment Assumption,

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

          o    scheduled payments on the Mortgage Loans are received on the
               first day of each month commencing in the calendar month
               following the Closing Date and are computed before giving effect
               to prepayments received on the last day of the prior month,

          o    the scheduled monthly payment for each Mortgage Loan is
               calculated based on its principal balance, mortgage rate and
               remaining term to maturity so that each Mortgage Loan will
               amortize in amounts sufficient to repay the remaining principal
               balance of such Mortgage Loan by its remaining term to maturity,
               in some cases following an interest only period, as indicated in
               the table above,

          o    prepayments are allocated as described in this prospectus
               supplement without giving effect to loss and delinquency tests,

          o    the initial Class Principal Balance or initial Notional Amount,
               as applicable, of each Class of Certificates is as set forth on
               page iv hereof,

          o    there are no Net Interest Shortfalls and prepayments represent
               prepayments in full of individual Mortgage Loans and are received
               on the last day of each month, commencing in the calendar month
               of the Closing Date,

          o    distributions in respect of the Certificates are received in cash
               on the 25th day of each month commencing in the calendar month
               following the Closing Date,

          o    the Closing Date of the sale of the Certificates is December 29,
               2005,

          o    neither the Seller nor any Originator is required to repurchase
               or substitute for any Mortgage Loan,

          o    the levels of the One-Month LIBOR, Six-Month LIBOR, One-Year
               LIBOR, and One-Year CMT Indices remain constant at 4.370%,
               4.671%, 4.826% and 4.374%, respectively,

          o    except as indicated with respect to the weighted average lives to
               optional termination, the Master Servicer does not exercise the
               option to purchase the Mortgage Loans described under "--Auction
               and Optional Termination of the Trust Fund" and a successful
               auction does not occur,

          o    no Class of Certificates becomes a Restricted Class,

          o    the Mortgage Rate on each Adjustable-Rate Mortgage Loan will be
               adjusted on each interest adjustment date (as necessary) to a
               rate equal to the applicable Mortgage Index (as described above),
               plus the Gross Margin, subject to Maximum Mortgage Rates, Minimum
               Mortgage Rates and Periodic Rate Caps (as applicable),

          o    scheduled monthly payments on each Mortgage Loan will be adjusted
               in the month immediately following the interest adjustment date
               (as necessary) for such Mortgage Loan to equal the fully
               amortizing payment described above, and

          o    the initial Class Principal Balance of each of the Class P and
               Class C Certificates is $0.


                                      S-63



          Prepayments of mortgage loans commonly are measured relative to a
prepayment standard or model. The model used in this prospectus supplement with
respect to the Adjustable-Rate Mortgage Loan assumes a constant prepayment rate
("CPR"), which represents an assumed rate of prepayment each month of the then
outstanding principal balance of a pool of mortgage loans. A 100% prepayment
assumption ("PPC") used in this prospectus supplement with respect to the
Fixed-Rate Mortgage Loans assumes a CPR of 8% per annum of the then outstanding
principal balance of such mortgage loans in the first month of the life of the
mortgage loans and an additional 1.0909090909% (precisely 12/11%) per annum in
the second through eleventh months. Beginning in the twelfth month and in each
month thereafter during the life of the mortgage loans, a 100% Prepayment
Assumption with respect to the Fixed-Rate Mortgage Loans assumes a CPR of 20%
per annum each month. 0% CPR assumes no prepayments. No Prepayment Assumption
purports to be either a historical description of the prepayment experience of
any pool of mortgage loans or a prediction of the anticipated rate of prepayment
of any pool of mortgage loans, including the Mortgage Loans. There is no
assurance that prepayments of any of the Mortgage Loans will occur at any
constant prepayment rate.

          The prepayment scenario (the "PREPAYMENT SCENARIO") used with respect
to the Certificates assumes that the Mortgage Loans prepay at the following
percentages of the related Prepayment Assumption:

                                  ASSUMED PREPAYMENTS ON THE MORTGAGE LOANS
                            ----------------------------------------------------
        MORTGAGE RATE          I         II         III         IV          V
-------------------------   ------   ---------   --------   ---------   --------
Fixed Rate...............   0% PPC     50% PPC   100% PPC    150% PPC   200% PPC
Adjustable Rate..........   0% CPR   12.5% CPR    25% CPR   37.5% CPR    50% CPR

          While it is assumed that each of the Mortgage Loans prepays at the
specified constant percentages of CPR or PPC, as applicable, this is not likely
to be the case. Moreover, discrepancies may exist between the characteristics of
the actual Mortgage Loans which will be delivered to the Trustee and
characteristics of the mortgage loans used in preparing the tables.

AUCTION AND OPTIONAL TERMINATION OF THE CERTIFICATES

          On any Distribution Date on or after the first Distribution Date on
which the aggregate outstanding Stated Principal Balance of the Mortgage Loans
and any related REO Property owned by the Trust as of the related Due Date is
equal to or less than 10% of the aggregate Stated Principal Balance of the
Mortgage Loans as of the Cut-off Date (such Distribution Date and any subsequent
Distribution Date, an "OPTIONAL TERMINATION DATE"), the Auction Administrator
shall solicit bids for the purchase of the Mortgage Loans from at least three
institutions that are regular purchasers and/or sellers in the secondary market
of residential whole mortgage loans similar to the Mortgage Loans. If the
Auction Administrator receives at least three bids for the Mortgage Loans, any
related REO Property and any other property remaining in the trust fund
(collectively, the "TRUST ASSETS"), and one of those bids is at least equal to
the Minimum Auction Price, the Auction Administrator shall sell the Trust Assets
to the highest bidder (the "AUCTION PURCHASER") at the price offered by the
Auction Purchaser (the "MORTGAGE LOAN AUCTION PRICE"). If the Auction
Administrator receives less than three bids, or does not receive any bid that is
at least equal to the Minimum Auction Price, the Auction Administrator shall,
subject to the Master Servicer's right to repurchase the Mortgage Loans
described below, on each six-month anniversary of the initial Optional
Termination Date for the Mortgage Loans, repeat these auction procedures until
the Auction Administrator receives a bid that is at least equal to the Minimum
Auction Price, at which time the Auction Administrator shall sell the Assets to
the Auction Purchaser at that Mortgage Loan Auction Price; provided, however,
that the Auction Administrator shall not be required to repeat these auction
procedures on any Distribution Date for any six-month anniversary of the initial
Optional Termination Date unless the Auction Administrator reasonably believes
that there is a reasonable likelihood of receiving a bid of at least the Minimum
Auction Price.

          The "MINIMUM AUCTION PRICE" with respect to any Distribution Date on
which an auction is being held, will equal the sum of (a) 100% of the current
aggregate principal balance of the Mortgage Loans, plus accrued interest
thereon, (b) the fair market value of any related REO Property in the trust fund
and all other property in the


                                      S-64



trust fund being purchased, (c) any unreimbursed servicing advances related to
the Mortgage Loans and (d) any expenses incurred by the Auction Administrator
relating to the Auction process.

          On the Distribution Date on which the proceeds of an Auction are
distributed, the excess, if any of the amount of the highest bid over the
Mortgage Loan Auction Price will be distributed to the Class C Certificates.

          Commencing with the first Distribution Date following the first
Optional Termination Date for the Mortgage Loans, if an auction is held but the
Auction Administrator does not receive the Minimum Auction Price, then the
Master Servicer will have the option, subject to the provisions of the Pooling
and Servicing Agreement, to purchase the Trust Assets for a price equal to 100%
of the then aggregate outstanding Class Principal Balance of the Certificates,
plus accrued interest thereon (up to a maximum rate of Net WAC) through the end
of the related Interest Accrual Period immediately preceding the related
Distribution Date.

THE TRUSTEE AND THE SECURITIES ADMINISTRATOR

          Deutsche Bank National Trust Company will be the Trustee under the
Pooling and Servicing Agreement. The Depositor, the Seller and the Master
Servicer may maintain other banking relationships in the ordinary course of
business with Deutsche Bank National Trust Company. Correspondence may be
directed to the Trustee at its corporate trust office located at 1761 East St.
Andrew Place, Santa Ana, California 92705, Attention: Trust Administration -
MS0511.

          Wells Fargo, for so long as it is Master Servicer, will, in its role
as Securities Administrator, perform certain administrative duties with respect
to the Certificates, on behalf of the Trustee including acting as authentication
agent, calculation agent, paying agent, and the party responsible for preparing
distribution statements and tax information for Certificateholders and preparing
tax and SEC filings for the Trust Fund. Offered Certificates may be surrendered
at the Corporate Trust Office of the Securities Administrator or at any other
address the Securities Administrator designates from time to time. The
Securities Administrator's "Corporate Trust Office" for purposes of transfer,
presentment and surrender of the Certificates for final payment thereon is Sixth
Street and Marquette Avenue, Minneapolis, Minnesota 55479, Attn: Morgan Stanley
Mortgage Loan Trust 2005-11AR. The Securities Administrator will be entitled to
reimbursement from the Trust Fund for certain expenses and other amounts prior
to payment of any amounts to Certificateholders.

VOTING RIGHTS

          Voting rights will be allocated among the classes of Certificates in
proportion to their respective Class Principal Balances or Notional Amounts, as
applicable, and among Certificates of such class in proportion to their
Percentage Interests. The Pooling and Servicing Agreement does not allocate any
voting rights to the Class P Certificates.

          The "PERCENTAGE INTEREST" of a Certificate will be a fraction,
expressed as a percentage, the numerator of which is that Certificate's
Certificate Principal Balance or Notional Amount, and the denominator of which
is the applicable Class Principal Balance or Notional Amount.

                   YIELD, PREPAYMENT AND WEIGHTED AVERAGE LIFE

GENERAL

          The effective yield to the holders of each interest-bearing Class of
Certificates, other than the LIBOR Certificates, will be lower than the yield
otherwise produced by the applicable rate at which interest is passed through to
the holders and the purchase price of the certificates because monthly
distributions will not be payable to the holders until the 25th day (or, if that
day is not a business day, the following business day) of the month following
the month in which interest accrues on the Mortgage Loans (without any
additional distribution of interest or earnings on them for the delay).


                                      S-65



          Delinquencies on the Mortgage Loans that are not advanced by the
related Servicer or by the Master Servicer (because amounts, if advanced, would
be nonrecoverable) will adversely affect the yield on the Certificates. Because
of the priority of distributions, shortfalls resulting from delinquencies not so
advanced will be borne first by the Subordinated Certificates, in the reverse
order of their numerical Class designations, and then by the Senior Certificates
pro rata. If, as a result of the shortfalls, the aggregate of the Class
Principal Balances of all Classes of Certificates exceeds the aggregate Stated
Principal Balance of the Mortgage Loans as of the related Due Date, the Class
Principal Balance of the Class of Subordinated Certificates then outstanding
with the highest numerical Class designation will be reduced by the amount of
the excess. In addition, following the Senior Credit Support Depletion Date, if
an Excess Loss occurs with respect to a Mortgage Loan, that Excess Loss will be
allocated, pro rata, among the Classes of Senior Certificates (other than the
Notional Amount Certificates) based on their respective Class Principal Balances
immediately prior to such Distribution Date.

          Net Interest Shortfalls will adversely affect the yields on the
Classes of Offered Certificates. In addition, although all losses on the
Mortgage Loans initially will be borne by the Subordinated Certificates, in the
reverse order of their numerical Class designations, Excess Losses will be borne
by all Classes of Certificates (other than the Notional Amount Certificates) on
a pro rata basis. As a result, the yields on the Offered Certificates will
depend on the rate and timing of Realized Losses, including Excess Losses on the
Mortgage Loans. Excess Losses could occur at a time when one or more Classes of
Subordinated Certificates are still outstanding and otherwise available to
absorb other types of Realized Losses on the Mortgage Loans.

          For purposes of allocating distributions and losses to the
Subordinated Certificates, the Class M Certificates have higher payment
priorities than the Class B Certificates. Within the Class M and Class B
Certificates, the payment priorities are in numerical order.

PREPAYMENT CONSIDERATIONS AND RISKS

          The rate of principal payments on the Offered Certificates, the
aggregate amount of distributions on the Offered Certificates and the yield to
maturity of the Offered Certificates will be related to the rate and timing of
payments of principal on the Mortgage Loans. The rate of principal payments on
the Mortgage Loans will in turn be affected by the amortization schedules of the
Mortgage Loans and by the rate of principal prepayments, including for this
purpose, prepayments resulting from refinancing, liquidations of the Mortgage
Loans due to defaults, casualties, condemnations and repurchases by the Seller
or the related Originator. Except for certain of the Mortgage Loans, each of
which has a prepayment penalty if the related mortgagor prepays such Mortgage
Loan during a period of up to five years after origination, the Mortgage Loans
may be prepaid by the mortgagors at any time without a prepayment penalty.
Because certain of the Mortgage Loans may contain prepayment penalties, the rate
of principal prepayments may be less than the rate of principal prepayments for
Mortgage Loans that did not have prepayment penalties. The holders of the Class
P Certificates will be entitled to all prepayment penalties received on the
Mortgage Loans. Those amounts will not be available for distribution on the
other Classes of Certificates. The Mortgage Loans are subject to the
"due-on-sale" provisions included therein. See "Description of the Mortgage
Loans" in this prospectus supplement. In addition, certain of the Mortgage Loans
do not provide for any payments of principal for an extended period following
their origination. These Mortgage Loans may involve a greater degree of risk
because, if the related mortgagor defaults, the outstanding principal balance of
the Mortgage Loans will be higher than for amortizing Mortgage Loans. During
their interest-only periods, the Interest Only Loans may be less likely to
prepay as the interest-only feature may reduce the perceived benefits of
refinancing due to the smaller monthly payment. However, as an Interest Only
Loan approaches the end of its interest-only period, it may be more likely to be
prepaid, even if market interest rates at the time are only slightly higher or
lower than the interest rate on that Interest Only Loan as the related borrowers
seek to avoid increases in their respective monthly mortgage payment. In
addition, the Adjustable-Rate Mortgage Loans have Mortgage Rates which will not
adjust for a period of up to ten years after origination.

          Prepayments, liquidations and purchases of the Mortgage Loans will
result in distributions on the Offered Certificates of principal amounts which
would otherwise be distributed over the remaining terms of those Mortgage Loans.
This includes any optional purchase or auction of the remaining Mortgage Loans
in connection with the termination of the Trust Fund, in each case as described
in this prospectus supplement. Since the rate of payment of principal of the
Mortgage Loans will depend on future events and a variety of factors, no
assurance can be given as


                                      S-66



to the rate of payment of principal of the Mortgage Loans or the rate of
principal prepayments. The extent to which the yield to maturity of a Class of
Offered Certificates may vary from the anticipated yield will depend upon the
degree to which the Offered Certificate is purchased at a discount or premium,
and the degree to which the timing of payments thereon is sensitive to
prepayments, liquidations and purchases of the Mortgage Loans. Further, an
investor should consider the risk that, in the case of any Offered Certificate
purchased at a discount (other than the Notional Amount Certificates), a slower
than anticipated rate of principal payments (including prepayments) on the
Mortgage Loans could result in an actual yield to the investor that is lower
than the anticipated yield and, in the case of any Notional Amount Certificate
or any Offered Certificate purchased at a premium, a faster than anticipated
rate of principal payments on the Mortgage Loans could result in an actual yield
to the investor that is lower than the anticipated yield. Investors in the
Notional Amount Certificates should carefully consider the risk that a rapid
rate of principal payments on the Mortgage Loans could result in the failure of
the investors to recover their initial investments.

          Certain of the Adjustable-Rate Mortgage Loans will be hybrid
adjustable rate mortgage loans subject to initial fixed rate periods of between
2 and 5 years. Adjustable rate mortgage loans may be subject to a greater rate
of principal prepayments in a declining interest rate environment. For example,
if prevailing interest rates fall significantly, adjustable rate mortgage loans
could be subject to higher prepayment rates than if prevailing interest rates
remain constant because the availability of fixed rate mortgage loans at lower
interest rates may encourage mortgagors to refinance their adjustable rate
mortgage loans to a lower fixed interest rate. Prepayments on the hybrid
adjustable-rate mortgage loans and the Interest Only Loans may differ as they
approach their respective first Adjustment Dates. No assurance can be given as
to the level of prepayment that the Mortgage Loans will experience.

          The Mortgage Rate applicable to all of the Adjustable-Rate Mortgage
Loans and any Adjustment Date will be based on the Mortgage Index value most
recently announced as of a date generally 45 days prior to such Adjustment Date.
Thus, if the Mortgage Index value rises, the lag in time before the
corresponding Mortgage Rate increases will, all other things being equal, slow
the upward adjustment of the pass-through rate on the related certificates. See
"Description of the Mortgage Loans" in this prospectus supplement.

          The rate of prepayment on the Mortgage Loans will affect the
pass-through rates on the Offered Certificates. Prepayments of Mortgage Loans
with Mortgage Rates in excess of the then-current Weighted Average Mortgage Rate
may reduce the pass-through rates on the Offered Certificates. Mortgage Loans
with higher Mortgage Rates may prepay at faster rates than Mortgage Loans with
relatively lower Mortgage Rates in response to a given change in market interest
rates. Any such disproportionate rate of prepayments may adversely affect the
pass-through rate on the Subordinated Certificates.

          As described in this prospectus supplement under "Description of the
Certificates--Principal," the Senior Prepayment Percentage of all principal
prepayments on the Mortgage Loans will be initially distributed to the Classes
of Senior Certificates then entitled to receive principal prepayment
distributions. This may result in all (or a disproportionate percentage) of the
principal prepayments being distributed to holders of the Classes of Senior
Certificates and none (or less than their pro rata share) of the principal
prepayments being distributed to holders of the Subordinated Certificates during
the periods of time described in the definition of the Senior Prepayment
Percentage.

          The timing of changes in the rate of prepayments on the Mortgage Loans
may significantly affect an investor's actual yield to maturity, even if the
average rate of principal payments is consistent with an investor's expectation.
In general, the earlier a prepayment of principal on the Mortgage Loans, the
greater the effect on an investor's yield to maturity. The effect on an
investor's yield as a result of principal payments occurring at a rate higher
(or lower) than the rate anticipated by the investor during the period
immediately following the issuance of the offered certificates may not be offset
by a subsequent like decrease (or increase) in the rate of principal payments.


                                      S-67



SENSITIVITY OF THE CLASS X CERTIFICATES

          The yield to maturity of the Class X Certificates will be sensitive to
the rate and timing of principal payments (including prepayments, liquidations,
repurchases and defaults) on the Mortgage Loans, which may fluctuate
significantly from time to time. An investor should fully consider the
associated risks, including the risk that a relatively fast rate of principal
payments (including prepayments, liquidations, repurchases and defaults) on the
Mortgage Loans will have a material negative effect on the yield to investors in
the Class X Certificates and could result in the failure of investors in the
Class X Certificates to recoup their initial investment.

          The following table (the "YIELD TABLE") was prepared on the basis of
the Structuring Assumptions (except for the pricing assumptions that are listed
below) and demonstrate the sensitivity of the pre-tax yields on the Class X
Certificates to various constant rates of prepayment by projecting the aggregate
payments of interest on such Certificates and the corresponding pre-tax yields
on a corporate bond equivalent ("CBE") basis, assuming distributions on the
Mortgage Loans are made as set forth in the Pooling and Servicing Agreement.

             SENSITIVITY OF THE CLASS X CERTIFICATES TO PREPAYMENTS
                           (PRE-TAX YIELD TO MATURITY)

                                     PERCENTAGE OF PREPAYMENT SCENARIO
                                 -----------------------------------------
ASSUMED PURCHASE PRICE*             I       II       III      IV       V
------------------------------   ------   ------   ------   -----   ------
1.250%........................   146.01%  126.25%  105.09%  82.25%  57.34%
1.500%........................   120.68%  102.04%   82.14%  60.68%  37.31%
1.750%........................   103.14%   85.28%   66.27%  45.80%  23.51%
2.000%........................    90.26%   72.98%   54.64%  34.91%  13.45%
2.250%........................    80.38%   63.56%   45.75%  26.59%   5.78%
2.500%........................    72.56%   56.10%   38.72%  20.02%  (0.26)%
2.750%........................    66.20%   50.04%   33.01%  14.70%  (5.14)%

----------
*    The price does not include accrued interest. Accrued interest has been
     added to the price in calculating the yield set forth in the table above.

          Based upon the above assumptions, at approximately 229% PPC, with
respect to the Fixed-Rate Mortgage Loans, and at approximately 57.25% CPR, with
respect to the Adjustable-Rate Mortgage Loans, (at an assumed purchase price of
2.00% of the Notional Amount, excluding accrued interest, but adding accrued
interest to the price for purposes of calculating yield), the pre-tax yield to
maturity of the Class X Certificates will be approximately 0%. If the rate of
prepayments on the Mortgage Loans were to exceed the applicable levels for as
little as one month, while equaling such level for all other months, the Class X
Certificates would not fully recoup their initial investment. In addition, you
should note that the 0% yield to maturity for the Class X Certificates described
in the first sentence of this paragraph was computed on the assumption that each
Mortgage Loan prepays on the basis of CPR while each yield set forth in the
Yield Table was computed on the basis of the related Prepayment Scenario.
Consequently, the respective yields may not be directly comparable.

          The pre-tax yields set forth in the Yield Table were calculated by
determining the monthly discount rates which, when applied to the assumed
streams of cash flows to be paid on the Class X Certificates, would cause the
discounted present value of such assumed stream of cash flows to the Closing
Date to equal the assumed purchase prices (plus accrued interest), and
converting such monthly rates to CBE rates. Such calculation does not take into
account the interest rates at which funds received by Certificateholders as
distributions on the Class X Certificates may be reinvested and consequently
does not purport to reflect the return on any investment in such classes of
certificates when such reinvestment rates are considered.

          It is highly unlikely that the Mortgage Loans will prepay at the same
rate until maturity or that all of the Mortgage Loans will prepay at the same
rate or time or that prepayments will be spread evenly among Mortgage Loans with
differing gross margins. As a result of these factors, the pre-tax yields on the
Class X Certificates are likely to differ from those shown in the Yield Table,
even if all of the Mortgage Loans prepay, on average, at the


                                      S-68



indicated percentages of the related Prepayment Scenario. No representation is
made as to the actual rate of principal payments on the Mortgage Loans (or the
Mortgage Rates thereon) for any period or over the lives of the Class X
Certificates or as to the yields on such Certificates. Investors must make their
own decisions as to the appropriate prepayment assumptions to be used in
deciding whether to purchase the Class X Certificates.

ADDITIONAL INFORMATION

          The Depositor intends to file additional yield tables and other
computational materials with respect to one or more classes of Offered
Certificates with the Securities and Exchange Commission in a report on Form
8-K. The tables and materials were prepared by the underwriter at the request of
prospective investors, based on assumptions provided by, and satisfying their
special requirements. The tables and assumptions may be based on assumptions
that differ from the structuring assumptions. Accordingly, the tables and other
materials may not be relevant to or appropriate for investors other than those
specifically requesting them.

WEIGHTED AVERAGE LIVES OF THE OFFERED CERTIFICATES

          The weighted average life of an Offered Certificate is determined by
(a) multiplying the amount of the net reduction, if any, of the Class Principal
Balance or Notional Amount, as applicable, of the Certificate on each
Distribution Date by the number of years from the date of issuance to the
Distribution Date, (b) summing the results and (c) dividing the sum by the
aggregate amount of the net reductions in Class Principal Balance or Notional
Amount, as applicable, of the certificate referred to in clause (a).

          For a discussion of the factors which may influence the rate of
payments (including prepayments) of the Mortgage Loans, see "Prepayment
Considerations and Risks" in this prospectus supplement and "Yield
Considerations" in the prospectus.

          In general, the weighted average lives of the Offered Certificates
will be shortened if the level of prepayments of principal of the Mortgage Loans
increases. However, the weighted average lives of the Offered Certificates will
depend upon a variety of other factors, including the timing of changes in such
rate of principal payments, the priority sequence of distributions of principal
of the Classes of Certificates and the distribution of the amount available for
distribution of principal to the Classes of Senior Certificates in accordance
with the rules governing the priorities of payment among the Classes of Senior
Certificates set forth in this prospectus supplement. See "Description of the
Certificates--Principal" in this prospectus supplement.

          The interaction of the foregoing factors may have different effects on
various Classes of Offered Certificates and the effects on any Class may vary at
different times during the life of the Class. Accordingly, no assurance can be
given as to the weighted average life of any Class of Offered Certificates.
Further, to the extent the prices of the Offered Certificates represent
discounts or premiums to their respective original Class Principal Balances or
Notional Amounts, variability in the weighted average lives of the Classes of
Offered Certificates will result in variability in the related yields to
maturity. For an example of how the weighted average lives of the Classes of
Offered Certificates may be affected at various constant percentages of the
related prepayment assumption, see the Decrement Tables under the next heading.


                                      S-69



DECREMENT TABLES

          The following tables indicate the percentages of the initial Class
Principal Balances of the Classes of Offered Certificates that would be
outstanding after each of the dates shown at various constant percentages of the
related prepayment assumption and the corresponding weighted average lives of
the Classes. The tables have been prepared on the basis of the structuring
assumptions. It is not likely that the Mortgage Loans will have the precise
characteristics described in this prospectus supplement or all of the Mortgage
Loans will prepay at the constant percentages of the related prepayment
assumption specified in the tables or at any other constant rate. Moreover, the
diverse remaining terms to maturity of the Mortgage Loans could produce slower
or faster principal distributions than indicated in the tables, which have been
prepared using the specified constant percentages of the related prepayment
assumption, even if the remaining term to maturity of the Mortgage Loans is
consistent with the remaining terms to maturity of the Mortgage Loans specified
in the structuring assumptions.


                                      S-70



             PERCENT OF INITIAL CLASS PRINCIPAL BALANCES OUTSTANDING



                                      CLASS A-1, CLASS A-2 AND
                                              CLASS A-3                         CLASS A-R
                                 ---------------------------------   --------------------------------
                                         PREPAYMENT SCENARIO                PREPAYMENT SCENARIO
                                 ---------------------------------   --------------------------------
DISTRIBUTION DATE                  I      II     III    IV      V      I     II     III    IV      V
------------------------------   -----   ----   ----   ----   ----   ----   ----   ----   ----   ----

Initial.......................     100    100    100    100    100    100    100    100    100    100
December 2006.................     100     88     76     63     51      0      0      0      0      0
December 2007.................      99     76     56     38     25      0      0      0      0      0
December 2008.................      99     66     41     24     12      0      0      0      0      0
December 2009.................      99     57     31     15      7      0      0      0      0      0
December 2010.................      98     49     24     10      4      0      0      0      0      0
December 2011.................      98     42     18      7      2      0      0      0      0      0
December 2012.................      97     37     14      4      1      0      0      0      0      0
December 2013.................      96     32     11      3      1      0      0      0      0      0
December 2014.................      95     28      8      2      *      0      0      0      0      0
December 2015.................      94     25      6      1      *      0      0      0      0      0
December 2016.................      92     21      5      1      *      0      0      0      0      0
December 2017.................      89     19      4      1      *      0      0      0      0      0
December 2018.................      87     16      3      *      *      0      0      0      0      0
December 2019.................      84     14      2      *      *      0      0      0      0      0
December 2020.................      81     12      2      *      *      0      0      0      0      0
December 2021.................      78     10      1      *      *      0      0      0      0      0
December 2022.................      75      8      1      *      *      0      0      0      0      0
December 2023.................      71      7      1      *      *      0      0      0      0      0
December 2024.................      67      6      *      *      *      0      0      0      0      0
December 2025.................      63      5      *      *      *      0      0      0      0      0
December 2026.................      58      4      *      *      *      0      0      0      0      0
December 2027.................      53      3      *      *      *      0      0      0      0      0
December 2028.................      48      3      *      *      *      0      0      0      0      0
December 2029.................      42      2      *      *      *      0      0      0      0      0
December 2030.................      36      2      *      *      *      0      0      0      0      0
December 2031.................      30      1      *      *      *      0      0      0      0      0
December 2032.................      23      1      *      *      *      0      0      0      0      0
December 2033.................      15      *      *      *      *      0      0      0      0      0
December 2034.................       7      *      *      *      *      0      0      0      0      0
December 2035.................       0      0      0      0      0      0      0      0      0      0
Weighted Average Life to
   Maturity (in years)**......   21.27   6.86   3.54   2.21   1.52   0.07   0.07   0.07   0.07   0.07


                                     SUBORDINATED CERTIFICATES
                                 ---------------------------------
                                        PREPAYMENT SCENARIO
                                 ---------------------------------
DISTRIBUTION DATE                  I      II     III    IV      V
------------------------------   -----   ----   ----   ----   ----
Initial.......................     100    100    100    100    100
December 2006.................     100    100    100    100    100
December 2007.................      99     99     99     94     79
December 2008.................      99     99     96     76     58
December 2009.................      99     99     73     50     32
December 2010.................      98     98     56     33     18
December 2011.................      98     95     43     21     10
December 2012.................      97     83     33     14      5
December 2013.................      96     73     25      9      3
December 2014.................      95     64     19      6      2
December 2015.................      94     56     15      4      1
December 2016.................      92     48     11      3      1
December 2017.................      89     42      8      2      *
December 2018.................      87     36      6      1      *
December 2019.................      84     31      5      1      *
December 2020.................      81     26      4      *      *
December 2021.................      78     22      3      *      *
December 2022.................      75     19      2      *      *
December 2023.................      71     16      1      *      *
December 2024.................      67     13      1      *      *
December 2025.................      63     11      1      *      *
December 2026.................      58      9      1      *      *
December 2027.................      53      7      *      *      *
December 2028.................      48      6      *      *      *
December 2029.................      42      5      *      *      *
December 2030.................      36      3      *      *      *
December 2031.................      30      3      *      *      *
December 2032.................      23      2      *      *      *
December 2033.................      15      1      *      *      *
December 2034.................       7      *      *      *      *
December 2035.................       0      0      0      0      0
Weighted Average Life to
   Maturity (in years)**......   21.27   12.18  6.57   4.68   3.61

----------
*    Indicates greater than zero but less than 0.50%

**   Determined as specified under "Weighted Average Lives of the Offered
     Certificates" herein.


                                      S-71



THE SUBORDINATED CERTIFICATES

          The weighted average life of, and the yield to maturity on, each Class
of Subordinated Certificates, in increasing order of their respective priorities
of payment, will be progressively more sensitive to the rate and timing of
mortgagor defaults and the severity of ensuing losses on the Mortgage Loans. In
particular, the rate and timing of mortgagor defaults and the severity of
ensuing losses on the Mortgage Loans may be affected by the characteristics of
the Mortgage Loans as described under "Description of the Mortgage Loans" in
this prospectus supplement. If the actual rate and severity of losses on the
Mortgage Loans is higher than those assumed by a holder of a Subordinated
Certificate, the actual yield to maturity of the Certificate may be lower than
the yield expected by the holder based on the holder's assumptions. The timing
of losses on the Mortgage Loans will also affect an investor's actual yield to
maturity, even if the rate of defaults and severity of losses over the life of
such Mortgage Loans are consistent with an investor's expectations. In general,
the earlier a loss on a Mortgage Loan occurs, the greater the effect on the
yield to maturity. Realized Losses on the Mortgage Loans will reduce the Class
Principal Balance of the Class of Subordinated Certificates to the extent of any
losses allocated to it (as described under "Description of the
Certificates--Allocation of Losses" in this prospectus supplement), without the
receipt of cash attributable to the reduction. In addition, shortfalls in cash
available for distributions from the Mortgage Loans on the Subordinated
Certificates will result in a reduction in the Class Principal Balance of the
Class of Subordinated Certificates then outstanding with the lowest priority of
payment if and to the extent that the aggregate of the Class Principal Balances
of all Classes of Certificates, following all distributions and the allocation
of Realized Losses on the Mortgage Loans on a Distribution Date, exceeds the
aggregate Stated Principal Balance of the Mortgage Loans as of the Due Date
occurring in the month of the Distribution Date. As a result of the reductions,
less interest will accrue on the Class of Subordinated Certificates than
otherwise would be the case. The yield to maturity of the Subordinated
Certificates will also be affected by the disproportionate allocation of
principal prepayments to the Senior Certificates, Net Interest Shortfalls and
other cash shortfalls in Available Funds. See "Description of the
Certificates--Allocation of Losses" in this prospectus supplement.

          For purposes of allocating distributions and losses to the
Subordinated Certificates, the Class M Certificates have higher payment
priorities than the Class B Certificates. Within the Class M and Class B
Certificates, the payment priorities are in numerical order.

          If on any Distribution Date, the Applicable Credit Support Percentage
for any Class of Subordinated Certificates then outstanding with the highest
priority of distribution, is less than its Original Applicable Credit Support
Percentage, all partial principal prepayments and principal prepayments in full
on the Mortgage Loans available for distribution on the Subordinated
Certificates will be allocated solely to that Class of Subordinated
Certificates, thereby accelerating their amortization relative to that of the
Restricted Classes and reducing the weighted average lives of the Classes of
Subordinated Certificates receiving the distributions. Accelerating the
amortization of the Classes of Subordinated Certificates with lower numerical
Class designations relative to the other Classes of Subordinated Certificates is
intended to preserve the availability of the subordination provided by the other
Classes.

                               CREDIT ENHANCEMENT

SUBORDINATION

          Realized Losses on the Mortgage Loans that occur after the Senior
Credit Support Depletion Date will be allocated among the Classes of Senior
Certificates in the manner, order and priority described under "Description of
the Certificates--Allocation of Losses" in this prospectus supplement.

          The rights of the holders of the Subordinated Certificates to receive
distributions with respect to the Mortgage Loans will be subordinated to the
rights of the holders of the Senior Certificates and the rights of the holders
of each Class of Subordinated Certificates (other than the Class M-1
Certificates) to receive the distributions will be further subordinated to the
rights of the Class or Classes of Subordinated Certificates with lower numerical
class designations, in each case only to the extent described in this prospectus
supplement. The subordination of the Subordinated Certificates to the Senior
Certificates and the subordination of the Classes of Subordinated Certificates
with higher numerical class designations to those with lower numerical class
designations is intended to increase the


                                      S-72



likelihood of receipt, respectively, by the senior Certificateholders and the
holders of Subordinated Certificates with lower numerical class designations of
the maximum amount to which they are entitled on any Distribution Date and to
provide the holders protection against Realized Losses, other than Excess
Losses. In addition, the Subordinated Certificates will provide limited
protection against Special Hazard Losses, Bankruptcy Losses and Fraud Losses up
to the Special Hazard Loss Coverage Amount, Bankruptcy Loss Coverage Amount and
Fraud Loss Coverage Amount, respectively, as described in the following
paragraphs. Realized Losses, other than Excess Losses, on the Mortgage Loans
will be allocated to the Class of Subordinated Certificates then outstanding
with the highest numerical class designation.

          For purposes of allocating Realized Losses to the Subordinated
Certificates, the Class M Certificates have higher payment priorities than the
Class B Certificates. Within the Class M and Class B Certificates, the payment
priorities are in numerical order.

EXCESS LOSSES

          The Subordinated Certificates will provide limited protection to the
Classes of Certificates of higher relative priority against

               o    Special Hazard Losses in an initial amount expected to be up
                    to approximately $5,360,159 (the "SPECIAL HAZARD LOSS
                    COVERAGE AMOUNT"),

               o    Bankruptcy Losses in an initial amount expected to be up to
                    approximately $190,916 (the "BANKRUPTCY LOSS COVERAGE
                    AMOUNT") and

               o    Fraud Losses in an initial amount expected to be up to
                    approximately $16,080,476 (the "FRAUD LOSS COVERAGE
                    AMOUNT").

          The Special Hazard Loss Coverage Amount will be reduced, from time to
time, to be an amount equal on any Distribution Date to the lesser of

               o    that Special Hazard Loss Coverage Amount as of the Closing
                    Date less the amount, if any, of losses attributable to
                    Special Hazard Mortgage Loans incurred since the Closing
                    Date, or

               o    the greatest of

                    o    1% of the aggregate of the principal balances of the
                         Mortgage Loans,

                    o    twice the principal balance of the largest Mortgage
                         Loan or

                    o    the aggregate Stated Principal Balance of the Mortgage
                         Loans secured by mortgaged properties located in the
                         single California postal zip code area having the
                         highest aggregate principal balance of any zip code
                         area.

All principal balances for the purpose of this definition will be calculated as
of the first day of the month before the month in which the Distribution Date
occurs after giving effect to scheduled installments of principal and interest
on the Mortgage Loans then due, whether or not paid.

          The Fraud Loss Coverage Amount for the Mortgage Loans will be reduced,
from time to time, by the amount of Fraud Losses allocated to the Certificates.
In addition, the Fraud Loss Coverage Amount for the Mortgage Loans will be
reduced on the fifth anniversary of the cut-off date, to zero and on the first,
second, third and fourth anniversaries of the cut-off date, to an amount equal
to the lesser of (x) 2%, in the case of the first anniversary, and 1%, in the
case of the second, third and fourth anniversaries, of the then current
aggregate Stated Principal Balance of the Mortgage Loans and (y) the excess of
the Fraud Loss Coverage Amount as of the preceding


                                      S-73



anniversary of the Cut-off Date over the cumulative amount of Fraud Losses
allocated to the Certificates since the preceding anniversary.

          The Bankruptcy Loss Coverage Amount will be reduced, from time to
time, by the amount of Bankruptcy Losses allocated to the Certificates.

          The amount of coverage provided by the Subordinated Certificates for
Special Hazard Losses, Bankruptcy Losses and Fraud Losses may be cancelled or
reduced from time to time for each of the risks covered, provided that the then
current ratings of the Certificates assigned by the Rating Agencies are not
adversely affected as a result. In addition, a reserve fund or other form of
credit enhancement may be substituted for the protection provided by the
Subordinated Certificates for Special Hazard Losses, Bankruptcy Losses and Fraud
Losses.

          A "DEFICIENT VALUATION" is a bankruptcy proceeding whereby the
bankruptcy court may establish the value of the Mortgaged Property at an amount
less than the then outstanding principal balance of the Mortgage Loan secured by
the Mortgaged Property or may reduce the outstanding principal balance of a
Mortgage Loan. In the case of a reduction in that value of the related Mortgaged
Property, the amount of the secured debt could be reduced to that value, and the
holder of the Mortgage Loan thus would become an unsecured creditor to the
extent the outstanding principal balance of the Mortgage Loan exceeds the value
so assigned to the Mortgaged Property by the bankruptcy court. In addition,
other modifications of the terms of a Mortgage Loan can result from a bankruptcy
proceeding, including the reduction (a "DEBT SERVICE REDUCTION") of the amount
of the monthly payment on the related Mortgage Loan. However, none of these
shall be considered a Debt Service Reduction or Deficient Valuation so long as
the related Servicer is pursuing any other remedies that may be available with
respect to the related Mortgage Loan and either the Mortgage Loan has not
incurred payment default or scheduled monthly payments of principal and interest
are being advanced by the related Servicer without giving effect to any Debt
Service Reduction or Deficient Valuation.

                                 USE OF PROCEEDS

          The net proceeds from the sale of the Offered Certificates will be
applied by the Depositor to pay for the acquisition of the Mortgage Loans from
the Seller. See "Use of Proceeds" in the accompanying prospectus and "Method of
Distribution" in this prospectus supplement.

                    MATERIAL FEDERAL INCOME TAX CONSEQUENCES

GENERAL

          For federal income tax purposes, the Trust Fund (exclusive of certain
Additional Collateral, the Corridor Contracts and the assets held in the Reserve
Fund) will consist of one or more REMICs in a tiered structure. The highest
REMIC will be referred to as the "Master REMIC", and each REMIC below the Master
REMIC (if any) will be referred to as an "underlying REMIC". Each underlying
REMIC (if any) will issue multiple classes of uncertificated, regular interests
(the "underlying REMIC Regular Interests") that will be held by another REMIC
above it in a tiered structure. The assets of the lowest underlying REMIC (or
the Master REMIC if there is no underlying REMIC) will consist of the Mortgage
Loans and any other assets designated in the Pooling and Servicing Agreement.
The Master REMIC will issue the Certificates (excluding the Class A-R and Class
C Certificates, the "Regular Certificates"). The Regular Certificates will be
designated as the regular interests in the Master REMIC. The Class A-R
Certificates will represent the beneficial ownership of the residual interest in
each underlying REMIC (if any) and the residual interest in the Master REMIC.
Aggregate distributions on the underlying REMIC Regular Interests held by the
Master REMIC (if any) will equal the aggregate distributions on the Regular
Certificates issued by the Master REMIC.

          The Regular Interest component of the LIBOR Certificates and the other
classes of Regular Certificates will be treated as debt instruments issued by
the Master REMIC for federal income tax purposes. In addition, each class of
LIBOR Certificates will represent a beneficial interest in the right to receive
payments of Net WAC Shortfalls and the Notional Amount Certificates will
represent the obligation to make payments of Net WAC Shortfalls.


                                      S-74



          Upon the issuance of the Certificates, Sidley Austin Brown & Wood LLP
("TAX COUNSEL"), will deliver its opinion concluding, assuming compliance with
the pooling and servicing agreement, for federal income tax purposes, that each
REMIC created under the pooling and servicing agreement will qualify as a REMIC
within the meaning of Section 860D of the Internal Revenue Code of 1986, as
amended (the "CODE"), and that the Regular Certificates will represent regular
interests in a REMIC. Moreover, Tax Counsel will deliver an opinion concluding
that any rights of the holders of the LIBOR Certificates to receive Net WAC
Shortfalls will represent, for federal income tax purposes, contractual rights
coupled with regular interests within the meaning of Treasury regulations
Section 1.860G-2(i). The obligations of: (i) the Corridor Counterparty to make
payments to the trust fund under the Corridor Contracts and (ii) the Class X
Certificates to pay the Required Reserve Fund Deposit to the Reserve Fund are
referred individually as a "CORRIDOR CONTRACT" and collectively, as the
"CORRIDOR CONTRACTS".

TAXATION OF REGULAR CERTIFICATES

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

          A holder of a LIBOR Certificate must allocate the purchase price for
such Certificate between three components--the REMIC Regular Interest component
and the Cap Contract components. The Cap Contract components should further be
viewed as deemed obligations of the Corridor Contract Counterparty and the
certificateholders of the Notional Amount Certificates. For information
reporting purposes, it will be assumed in accordance with the pooling and
servicing agreement that, with respect to any LIBOR Certificate, the Cap
Contract components in the aggregate will have an insubstantial value relative
to the value of the corresponding Regular Interest component. The IRS could,
however, argue that one or both Cap Contract components, respectively, has a
greater value, and if that argument were to be sustained, the Regular Interest
component of the LIBOR Certificates could be viewed as having been issued with
either an additional amount of original issue discount ("OID") (which could
cause the total amount of discount to exceed a statutorily defined de minimis
amount) or with less premium (which would reduce the amount of premium available
to be used as an offset against interest income). See "Federal Income Tax
Consequences--REMICs- a. Taxation of Owners of REMIC Regular Interests- Original
Issue Discount and Premium" in the accompanying prospectus.

          Upon the sale, exchange, or other disposition of a LIBOR Certificate
or a Notional Amount Certificate, the holder of a LIBOR Certificate must
allocate the amount realized between the Regular Interest component and Cap
Contract component, and the holder of a Notional Amount Certificate must
allocate the amount realized (which includes relief from the obligation to pay
the Required Reserve Fund Deposit) between the regular interest component and
the Cap Contract Component, in each case based on the relative fair market
values of those components at the time of sale. Assuming that these certificates
are held as "capital assets" within the meaning of section 1221 of the Code,
gain or loss on the disposition of an interest in each Cap Contract component
should be capital gain or loss, and, gain or loss on the disposition of the
Regular Interest component should, subject to the limitation described below, be
capital gain or loss. Gain attributable to the Regular Interest component of
such a certificate will be treated as ordinary income, however, to the extent
such gain does not exceed the excess, if any, of:

          (1) the amount that would have been includable in the holder's gross
income with respect to the Regular Interest component had income thereon accrued
at a rate equal to 110% of the applicable federal rate as defined in section
1274(d) of the Code determined as of the date of purchase of the certificate

over

          (2) the amount actually included in such holder's income.


                                      S-75



As stated above, a portion of the purchase price paid by a holder to acquire a
LIBOR Certificate will be attributable to each Cap Contract component of such
certificate. The portion of the overall purchase price attributable to each Cap
Contract component must be amortized over the life of such certificate, taking
into account the declining balance of the related Regular Interest component.
Treasury regulations concerning notional principal contracts provide alternative
methods for amortizing the purchase price of an interest rate cap contract.
Under the level yield constant interest method discussed below, the price paid
for an interest rate cap agreement is amortized over the life of the cap as
though it were the principal amount of a loan bearing interest at a reasonable
rate. Holders are urged to consult their tax advisors concerning the methods
that can be employed to amortize the portion of the purchase price paid for each
Cap Contract component of such a certificate.

          Any payments received by a holder of a LIBOR Certificate of Net WAC
Shortfalls will be treated as periodic payments on two separate interest rate
cap agreements. To the extent the sum of such periodic payments for any year
exceeds that year's amortized price of the Cap Contract components, such excess
is ordinary income to a holder of a LIBOR Certificate and allowable as an
ordinary deduction to a Notional Amount Certificateholder to the extent of any
Required Reserve Fund Deposit made by such Certificates. If for any year the
amount of that year's amortized price exceeds the sum of the periodic payments,
such excess is allowable as an ordinary deduction to a holder of a LIBOR
Certificate and is ordinary income to a holder of any class of Notional Amount
Certificates to the extent that the amortized price attributable to the right to
receive Net WAC Shortfalls from such Notional Amount Certificates exceeds any
Required Reserve Fund Deposit made by the Notional Amount Certificates. In the
case of an individual, such deduction will be (i) an "item of preference" for
purposes of the "alternative minimum tax" imposed by section 55 of the Code,
(ii) subject to the 2% floor imposed on miscellaneous itemized deductions under
section 67 of the Code and (iii) may be subject to the overall limitation on
itemized deductions imposed under section 68 of the Code.

          Income on the Regular Interest component of the LIBOR Certificates and
the other classes of Regular Certificates must be reported under an accrual
method of accounting. Under the accrual method of accounting, interest income
may be required to be included in a holder's gross income in advance of the
holder's actual receipt of that interest income.

          The Notional Amount Certificates will, and the other classes of
offered certificates may, be treated for federal income tax purposes as having
been issued with an amount of Original Issue Discount ("OID"). Although the tax
treatment is not entirely certain, the Notional Amount Certificates will be
treated as having OID for federal income tax purposes in an amount equal to the
excess of (1) the sum of all payments on the Notional Amount Certificates,
determined under the Prepayment Assumption (as defined herein), over (2) the
price at which the Notional Amount Certificates are issued. For purposes of
determining the amount and rate of accrual of OID and market discount, the Trust
Fund intends to assume that there will be prepayments on the Mortgage Loans at a
rate equal to 100% PPC for the Fixed-Rate Mortgage Loans, and 25% CPR, for the
Adjustable-Rate Mortgage Loans. No representation is made that the mortgage
loans will prepay at the foregoing rate or any other rate. Although the tax
treatment of the Regular Certificates is uncertain, in accordance with the
Pooling and Servicing Agreement the Securities Administrator will treat interest
payments in respect of the Regular Certificates as "qualified stated interest"
within the meaning of the Code. See "Federal Income Tax Consequences--REMICs -
a. Taxation of Owners of REMIC Regular Certificates - Original Issue Discount
and Premium" in the accompanying prospectus. If the holders of any Regular
Certificates are treated as holding their certificates at a premium, the holders
are encouraged to consult their tax advisors regarding the election to amortize
bond premium and the method to be employed. See "Federal Income Tax
Consequences--REMICs - a. Taxation of Owners of Regular Certificates--Premium"
in the accompanying prospectus.

          Computing accruals of OID in the manner described in the accompanying
prospectus may (depending on the actual rate of prepayments during the accrual
period) result in the accrual of negative amounts of OID on the certificates
issued with OID in an accrual period. Holders will be entitled to offset
negative accruals of OID only against future OID accrual on their certificates.
Although unclear, a holder of a Notional Amount Certificate may be entitled to
deduct a loss to the extent that its remaining basis exceeds the maximum amount
of future payments to which the Certificateholder would be entitled if there
were no further prepayments of the Mortgage Loans.


                                      S-76



          As described more fully under "Federal Income Tax Consequences" in the
accompanying prospectus, the offered certificates will represent "real estate
assets" under Section 856(c)(5)(B) of the Internal Revenue Code of 1986, as
amended (the "Code") and qualifying assets under Section 7701(a)(19)(C) of the
Code in the same (or greater) proportion that the assets of the Trust Fund will
be so treated, and income on the Regular Interest component of the LIBOR
Certificates and the other classes of offered certificates will represent
"interest on obligations secured by mortgages on real property or on interests
in real property" under Section 856(c)(3)(B) of the Code in the same (or
greater) proportion that the income on the assets of the Trust Fund will be so
treated. The Regular Interest component of the LIBOR Certificates and the other
classes of Regular Certificates will represent qualified mortgages under Section
860G(a) (3) of the Code if acquired by a REMIC within the prescribed time
periods of the Code. The Cap Contract component of a LIBOR Certificate will not,
however, qualify as an asset described in Section 7701(a)(19)(C) of the Code, as
a real estate asset under Section 856(c)(5)(B) of the Code, or a qualified
mortgage under Section 860G(a)(3) of the Code. Due to their obligations under
the Cap Contract, the Notional Amount Certificates may not be appropriate assets
for resecuritization in a REMIC. Investors in the Regular Certificates are urged
to consult their tax advisors before resecuritizing those classes of
Certificates in a REMIC.

THE CLASS A-R CERTIFICATES

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

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

          Purchasers of a Class A-R Certificate (that is, one of the Class A-R
Certificates) are encouraged to consider carefully the tax consequences of an
investment in Class A-R Certificates discussed in the accompanying prospectus
and consult their tax advisors with respect to those consequences. See "Federal
Income Tax Consequences--REMICs - b. Tax Related Restrictions on Transfers of
REMIC Residual Certificates" in the accompanying prospectus. Specifically,
prospective holders of Class A-R Certificates are urged to consult their tax
advisors regarding whether, at the time of acquisition, a Class A-R Certificate
will be treated as a "noneconomic" residual interest, as a "tax avoidance
potential" residual interest or as both. Among other things, holders of
noneconomic Class A-R Certificates should be aware of REMIC regulations that may
affect their ability to transfer their Class A-R Certificates. See "Federal
Income Tax Consequences--Tax Related Restrictions on Transfers of REMIC Residual
Certificates," "--REMICs - b. Taxation of Owners of REMIC Residual
Certificates-- Mark to Market Rules" and "-- Excess Inclusions" and "Federal
Income Tax Consequences--Residual Certificate Payments - Non-U.S. Persons" in
the accompanying prospectus.

          Additionally, for information regarding certain transactions
prohibited to REMICs and the treatment of Realized Losses, see "Federal Income
Tax Consequences --Prohibited Transactions and Other Taxes" and "Federal Income
Tax Consequences--REMICs - a. Taxation of Owners of REMIC Regular
Certificates--Effects of Defaults, Delinquencies and Losses" in the accompanying
prospectus.

OTHER TAXES

          No representations are made regarding the tax consequences of the
purchase, ownership or disposition of the certificates under any state, local or
foreign tax law. All investors are urged to consult their own advisors regarding
the federal, state, local or foreign tax consequences of purchasing, owning or
disposing of the certificates.


                                      S-77



                                  ERISA MATTERS

          The Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and Section 4975 of the Code impose requirements on certain 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 plans, accounts or arrangements
are invested (together, "PLANS"), and on persons who are fiduciaries with
respect to these Plans.

          ERISA prohibits "parties in interest" with respect to a Plan from
engaging in certain transactions involving the Plan and its assets unless a
statutory, regulatory or administrative exemption applies to the transaction.
Section 4975 of the Code imposes certain excise taxes on prohibited transactions
involving plans described under that section; ERISA authorizes the imposition of
civil penalties for prohibited transactions involving plans not covered under
Section 4975 of the Code. Any Plan fiduciary which proposes to cause a Plan to
acquire any of the Offered Certificates should consult with its counsel with
respect to the potential consequences under ERISA and the Code of the Plan's
acquisition and ownership of such certificates. See "ERISA Considerations" in
the accompanying prospectus.

          Certain employee benefit plans, including governmental plans and
certain church plans, are not subject to ERISA's requirements. Accordingly,
assets of those plans may be invested in the Offered Certificates without regard
to the ERISA considerations described in this prospectus supplement and in the
accompanying prospectus, subject to the provisions of other applicable federal
and state law. Any such plan which is qualified and exempt from taxation under
Sections 401(a) and 501(a) of the Code may be subject to the prohibited
transaction rules set forth in Section 503 of the Code.

          Investments by Plans that are subject to ERISA are subject to ERISA's
general fiduciary requirements, including the requirement of investment prudence
and diversification and the requirement that a Plan's investments be made in
accordance with the documents governing the Plan. A fiduciary which decides to
invest the assets of a Plan in the Offered Certificates should consider, among
other factors, the extreme sensitivity of the investment to the rate of
principal payments (including prepayments) on the Mortgage Loans.

          The U.S. Department of Labor has granted to the Underwriter an
administrative exemption (the "EXEMPTION"), which exempts from the application
of the prohibited transaction rules transactions relating to:

o    the acquisition, holding and sale by Plans of certain securities issued by
     a trust with respect to which the Underwriter or any of its affiliates is
     the sole underwriter or the manager or co-manager of the underwriting
     syndicate, and

o    the servicing, operation and management of such trusts,

provided that the general conditions and certain other requirements set forth in
the Exemption are satisfied.

     Among the conditions which must be satisfied for the Exemption to apply:

o    The acquisition of the Offered Certificates by a Plan is on terms
     (including the price for the certificates) that are at least as favorable
     to the Plan as they would be in an arm's length transaction with an
     unrelated party.

o    The Offered Certificates acquired by the Plan have received a rating at the
     time of such acquisition that is one of the four highest generic rating
     categories from a rating agency identified in the exemption, such as S&P,
     Fitch or Moody's.

o    The Trustee is not an affiliate of any other member of the "restricted
     group" (defined below in the second following paragraph), other than an
     Underwriter.


                                      S-78



o    The sum of all payments made to and retained by the Underwriter in
     connection with the distribution of the Offered Certificates represents not
     more than reasonable compensation for underwriting the Offered
     Certificates; the sum of all payments made to and retained by the Seller
     and the Depositor pursuant to the assignment of the trust assets to the
     Trust Fund represents not more than the fair market value of such assets;
     the sum of all payments made to and retained by any Servicer represents not
     more than reasonable compensation for the Servicer's services under the
     related Purchaser and Servicing Agreement and reimbursements of such
     person's reasonable expenses in connection therewith.

o    The Plan investing in the Offered Certificates is an "accredited investor"
     as defined in Rule 501(a)(1) of Regulation D of the SEC under the
     Securities Act of 1933.

          The Trust Fund must also meet each of the requirements listed below:

o    The Mortgage Pool must consist solely of assets of the type that have been
     included in other investment pools.

o    Certificates representing beneficial ownership in such other investment
     pools must have been rated in one of the four highest generic rating
     categories by a rating agency for at least one year prior to the Plan's
     acquisition of Offered Certificates.

o    Certificates evidencing beneficial ownership in such other investment pools
     must have been purchased by investors other than Plans for at least one
     year prior to any Plan's acquisition of Offered Certificates.

          Moreover, the Exemption provides relief from certain
self-dealing/conflict of interest prohibited transactions that may occur when
the Plan fiduciary causes a Plan to acquire an interest in a trust holding
receivables as to which the fiduciary (or its affiliate) is an obligor provided,
among other requirements, that:

o    in the case of an acquisition in connection with the initial issuance of
     Certificates, at least 50% of each Class of Certificates in which Plans
     have invested and at least 50% of the aggregate interests in the trust are
     acquired by persons independent of the restricted group;

o    such fiduciary (or its affiliate) is an obligor with respect to not more
     than 5% of the fair market value of the obligations contained in the trust;

o    the Plan's investment in Offered Certificates of any class does not exceed
     25% of all of the Certificates of that class outstanding at the time of the
     acquisition; and

o    immediately after the acquisition, no more than 25% of the assets of any
     Plan with respect to which such person is a fiduciary are invested in
     securities representing indebtedness of one or more issuers containing
     assets sold or serviced by the same entity.

This relief does not apply to Plans sponsored by members of the "restricted
group" consisting of the Seller, the Depositor, the Master Servicer, any
Servicer, the Trustee, each underwriter, any obligor with respect to Mortgage
Loans included in the assets of the Trust Fund constituting more than 5% of the
aggregate unamortized principal balance of the assets of the Trust Fund, a
provider of credit enhancement to the Trust Fund, a counterparty to an eligible
swap agreement held by the Trust Fund or any affiliate of one of these parties.

          It is expected that the Exemption will apply to the acquisition and
holding by Plans of the Offered Certificates (except for the Class A-R
Certificate) and that all conditions of the Exemption other than those within
the control of the investors will be met.

          The rating of a class of Offered Certificates may change. If a class
of Offered Certificates no longer has a rating of at least "BBB-" from at least
one rating agency, Certificates of that class will no longer be eligible for
relief under the Exemption (although a Plan that had purchased the Certificate
when it had an investment-grade rating would not be required by the Exemption to
dispose of it). However, insurance company general accounts


                                      S-79



investing assets of Plans may be eligible to purchase such Offered Certificates
pursuant to Sections I and III of PTCE 95-60.

          BECAUSE THE CHARACTERISTICS OF THE CLASS A-R CERTIFICATE MAY NOT MEET
THE REQUIREMENTS OF THE EXEMPTION DISCUSSED ABOVE OR ANY OTHER ISSUED EXEMPTION
UNDER ERISA INCLUDING PROHIBITED TRANSACTION CLASS EXEMPTION ("PTCE") 83-1, THE
PURCHASE AND HOLDING OF THE CLASS A-R CERTIFICATE BY A PLAN, INCLUDING
INDIVIDUAL RETIREMENT ACCOUNTS AND OTHER PLANS SUBJECT TO SECTION 4975 OF THE
CODE, MAY RESULT IN PROHIBITED TRANSACTIONS AND THE IMPOSITION OF EXCISE TAXES
OR CIVIL PENALTIES. CONSEQUENTLY, THE ACQUISITION AND TRANSFER OF THE CLASS A-R
CERTIFICATE WILL NOT BE REGISTERED BY THE SECURITIES ADMINISTRATOR UNLESS THE
SECURITIES ADMINISTRATOR ON BEHALF OF THE TRUSTEE RECEIVES:

o    a representation from the transferee of the Class A-R Certificate to the
     effect that the transferee is not an employee benefit plan subject to
     Section 406 of ERISA or a plan or arrangement subject to Section 4975 of
     the Code, or a person acting on behalf of any such plan or arrangement or
     using the assets of any such plan or arrangement to effect such transfer;

o    a representation that the transferee is an insurance company which is
     purchasing the Class A-R Certificate with funds contained in an "insurance
     company general account" (as such term is defined in Section V(e) of PTCE
     95-60) and that the purchase and holding of the Class A-R Certificate are
     eligible for exemptive relief under Sections I and III of PTCE 95-60; or

o    an opinion of counsel satisfactory to the Securities Administrator and the
     certificate registrar to the effect that the proposed transfer will not (i)
     constitute or result in a non-exempt prohibited transaction under ERISA or
     Section 4975 of the Code or (ii) subject the certificate registrar, the
     Trustee, the Depositor, the Master Servicer, any Servicer, or the
     Securities Administrator to any obligation in addition to those undertaken
     by them in the Pooling and Servicing Agreement.

          Prospective Plan investors should consult with their legal advisors
concerning the impact of ERISA and the Code, the applicability of the Exemption,
described above, and PTCE 83-1, described in the accompanying prospectus, and
the potential consequences in their specific circumstances prior to making an
investment in the Offered Certificates. Moreover, each Plan fiduciary should
determine whether under the general fiduciary standards of investment prudence
and diversification, an investment in the Offered Certificates is appropriate
for the Plan, taking into account the overall investment policy of the Plan and
the composition of the Plan's investment portfolio.

          The sale of Offered Certificates to a Plan is in no respect a
representation by the Trust Fund or the Underwriter of the certificates that
this investment meets all relevant legal requirements with respect to
investments by Plans generally or any particular Plan, or that this investment
is appropriate for Plans generally or any particular Plan.

                             METHOD OF DISTRIBUTION

          Subject to the terms and conditions set forth in the Underwriting
Agreement between the Depositor and Morgan Stanley & Co. Incorporated (the
"UNDERWRITER"), the Depositor has agreed to sell the Offered Certificates to the
Underwriter, and the Underwriter has agreed to purchase from the Depositor the
Offered Certificates. Distribution of the Offered Certificates will be made by
the Underwriter from time to time in negotiated transactions or otherwise at
varying prices to be determined at the time of sale. In connection with the sale
of the Offered Certificates, the Underwriter may be deemed to have received
compensation from the Depositor in the form of underwriting discounts.

          The Underwriter intends to make a secondary market in the Offered
Certificates, but has no obligation to do so. There can be no assurance that a
secondary market for the Offered Certificates will develop or, if it does


                                      S-80



develop, that it will continue or that it will provide Certificateholders with a
sufficient level of liquidity of investment. The Offered Certificates will not
be listed on any national securities exchange.

          The Depositor has agreed to indemnify the Underwriter against, or make
contributions to the Underwriter with respect to, certain liabilities, including
liabilities under the Securities Act of 1933, as amended.

          The Underwriter is an affiliate of the Depositor, the Seller, the
Corridor Contract Counterparty and MSCC.

                                  LEGAL MATTERS

          The validity of the Certificates will be passed upon for the Depositor
by Sidley Austin Brown & Wood llp, New York, New York. Certain tax matters will
be passed upon for the Depositor by Sidley Austin Brown & Wood LLP. Sidley
Austin Brown & Wood LLP will act as counsel for the Underwriter.

                                     RATINGS

          It is a condition of the issuance of the Certificates that they
receive the respective ratings set forth on page iv of this prospectus
supplement by Standard and Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc. ("S&P") and by Moody's Investors Service, Inc.
("MOODY'S" and, together with S&P, the "RATING AGENCIES").

          The ratings assigned to mortgage pass-through certificates address the
likelihood of the receipt of all payments on the Mortgage Loans by the related
Certificateholders under the agreements pursuant to which such certificates are
issued. The rating assigned to the Class A-R Certificates only addresses the
return of its Principal Balance. The rating assigned to the notional amount
certificates does not address whether investors will recoup their initial
investment. The ratings of the LIBOR Certificates do not address the likelihood
that any Net WAC Shortfall will be paid to certificateholders. Such ratings take
into consideration the credit quality of the related Mortgage Pool, including
any credit support providers, structural and legal aspects associated with such
certificates, and the extent to which the payment stream on the Mortgage Pool is
adequate to make the payments required by such certificates. Ratings on such
certificates do not, however, constitute a statement regarding frequency of
prepayments of the Mortgage Loans.

          The ratings assigned to the Offered Certificates should be evaluated
independently from similar ratings on other types of securities. A rating is not
a recommendation to buy, sell or hold securities and may be subject to revision
or withdrawal at any time by the Rating Agencies.

          The Depositor has not requested a rating of the Offered Certificates
by any rating agency other than the Rating Agencies; there can be no assurance,
however, as to whether any other rating agency will rate the Offered
Certificates or, if it does, what rating would be assigned by such other rating
agency. The rating assigned by such other rating agency to the Offered
Certificates could be lower than the respective ratings assigned by the Rating
Agencies.


                                      S-81



                          INDEX OF CERTAIN DEFINITIONS

2/6 Month Mortgage Loan......................................               S-22
3/1 Mortgage Loan............................................               S-22
3/6 Month Mortgage Loan......................................               S-22
5/1 Mortgage Loan............................................               S-22
5/6 Month Mortgage Loan......................................               S-22
Additional Collateral........................................               S-20
Additional Collateral Mortgage Loans.........................               S-20
Adjustable-Rate Mortgage Loans...............................               S-19
Adjustment Date..............................................               S-21
Aggregate Cut-off Date Pool Principal Balance................               S-19
Applicable Credit Support Percentage.........................               S-54
Assignment Agreements........................................               S-20
Auction Purchaser............................................               S-64
Available Funds..............................................               S-47
Bankruptcy Loss Coverage Amount..............................               S-73
Bankruptcy Losses............................................               S-56
book-entry certificates......................................               S-43
Business Day.................................................               S-43
Cap Ceiling Rate.............................................               S-50
Cap Strike Rate..............................................               S-50
CBE..........................................................               S-68
Certificateholder............................................               S-43
Class B Certificates.........................................               S-41
Class C Certificates.........................................               S-41
Class M Certificates.........................................               S-41
Class M Junior Certificates..................................               S-41
Class M Senior Certificates..................................               S-41
Class P Certificates.........................................               S-40
Class P Distribution Amount..................................               S-52
Class Principal Balance......................................               S-41
Class Subordination Percentage...............................               S-54
Closing Date.................................................               S-39
Code.........................................................               S-75
Corridor Contract............................................         S-50, S-75
Corridor Contract Counterparty...............................               S-50
Corridor Contracts...........................................               S-75
CPR..........................................................               S-64
Current Interest.............................................               S-50
Custodial Account............................................               S-46
Cut-off Date.................................................               S-19
Debt Service Reduction.......................................               S-74
Defective Mortgage Loan......................................               S-30
Deficient Valuation..........................................               S-74
Deleted Mortgage Loan........................................               S-31
Depositor....................................................               S-30
Determination Date...........................................               S-37
Distribution Account.........................................               S-46
Distribution Date............................................               S-43
DTC..........................................................          S-43, I-1
Due Date.....................................................         S-20, S-52
Effective Loan-to-Value Ratio................................               S-22
ERISA........................................................               S-78
Excess Losses................................................               S-56
Exemption....................................................               S-78
Expense Fee Rate.............................................               S-37
Fixed-Rate Mortgage Loans....................................               S-19
FNBN.........................................................               S-19
FNBN Mortgage Loans..........................................               S-19
Fraud Loss Coverage Amount...................................               S-73
Fraud Losses.................................................               S-56
Global Securities............................................                I-1
GMAC.........................................................               S-20
GMAC Serviced Mortgage Loan..................................               S-36
Gross Margin.................................................               S-22
HSBC Serviced Mortgage Loan..................................               S-36
Initial Periodic Rate Cap....................................               S-22
Interest Accrual Period......................................               S-48
interest distribution amount.................................               S-48
Interest Only Loans..........................................               S-21
Last Scheduled Distribution Date.............................               S-58
LIBOR........................................................               S-46
LIBOR Business Day...........................................               S-46
LIBOR Certificates...........................................               S-41
Limited Purpose Surety Bond..................................               S-20
Liquidated Mortgage Loan.....................................               S-56
Loan-to-Value Ratio..........................................               S-22
LPMI Mortgage Loans..........................................               S-22
Master Servicer..............................................         S-20, S-30
Master Servicer Default......................................               S-38
Maximum Mortgage Rate........................................               S-22
Minimum Auction Price........................................               S-64
Minimum Mortgage Rate........................................               S-22
Monthly Advance..............................................               S-37
Moody's......................................................               S-81
Morgan Stanley...............................................               S-51
Mortgage.....................................................               S-30
Mortgage File................................................               S-30
Mortgage Index...............................................               S-21
Mortgage Loan Auction Price..................................               S-64
Mortgage Loan Purchase Agreement.............................               S-20
Mortgage Loans...............................................               S-19
Mortgage Note................................................               S-30
Mortgage Pool................................................               S-19
Mortgage Rate................................................               S-21
Mortgaged Property...........................................               S-19
MSCC Serviced Mortgage Loan..................................               S-36
MSMC.........................................................               S-19
MSMC Mortgage Loans..........................................               S-19
Net Interest Shortfall.......................................               S-48
Net Mortgage Rate............................................               S-37
net prepayment interest shortfalls...........................               S-37
Net WAC......................................................               S-11


                                      S-82



Net WAC......................................................                 iv
Net WAC Pass-Through Rate....................................               S-50
Net WAC Shortfalls...........................................               S-50
Notional Amount Certificates.................................               S-41
Notional Balance.............................................               S-50
Offered Certificates.........................................               S-41
OID..........................................................         S-75, S-76
One-Month LIBOR Index........................................               S-21
One-Year CMT Index...........................................               S-21
One-Year LIBOR Index.........................................               S-21
Optional Termination Date....................................               S-64
Original Applicable Credit Support Percentage................               S-54
original subordinate principal balance.......................               S-53
Originator...................................................               S-20
Other Mortgage Loans.........................................               S-19
Percentage Interest..........................................               S-65
Plans........................................................               S-78
Pool Principal Balance.......................................               S-52
Pooling and Servicing Agreement..............................               S-30
PPC..........................................................               S-64
Prepayment Period............................................               S-52
Prepayment Scenario..........................................               S-64
Principal Amount.............................................               S-51
Privately Offered Certificates...............................               S-41
Prospectus Directive.........................................                iii
PTCE.........................................................               S-80
Rating Agencies..............................................               S-81
Realized Loss................................................               S-56
Record Date..................................................               S-43
Reference Bank Rate..........................................               S-46
Relevant Implementation Date.................................                 ii
Relevant Member State........................................                 ii
Relief Act Reduction.........................................               S-48
Replacement Mortgage Loan....................................               S-31
Required Reserve Fund Deposit................................               S-49
Reserve Fund.................................................               S-49
Residual Certificates........................................               S-41
Restricted Classes...........................................               S-54
restricted group.............................................               S-78
S&P..........................................................               S-81
Securities Administrator.....................................               S-30
Seller.......................................................               S-30
Senior Certificates..........................................               S-39
Senior Credit Support Depletion Date.........................               S-55
Senior Percentage............................................               S-52
Senior Prepayment Percentage.................................               S-53
Senior Principal Distribution Amount.........................               S-52
Senior Termination Date......................................               S-54
Servicer Remittance Date.....................................               S-35
Servicing Fee................................................               S-36
Servicing Fee Rate...........................................               S-36
Six-Month LIBOR Index........................................               S-21
Special Hazard Loss Coverage Amount..........................               S-73
Special Hazard Losses........................................               S-56
Special Hazard Mortgage Loan.................................               S-56
Stated Principal Balance.....................................               S-52
structuring assumptions......................................               S-59
Subordinated Certificates....................................               S-40
Subordinated Percentage......................................               S-53
Subordinated Prepayment Percentage...........................               S-54
Subordinated Principal Distribution Amount...................               S-55
Subsequent Periodic Rate Cap.................................               S-22
Subsequent Recoveries........................................               S-56
Substitution Adjustment Amount...............................               S-31
Tax Counsel..................................................               S-75
Telerate Screen Page 3750....................................               S-46
Trust Assets.................................................               S-64
Trust Fund...................................................               S-19
Trustee......................................................               S-30
Two Times Test...............................................               S-54
U.S. Person..................................................                I-3
underlying mortgage loan purchase agreement..................               S-20
underlying servicing agreement...............................               S-20
Underwriter..................................................               S-80
Wachovia.....................................................               S-19
Wachovia Mortgage Loans......................................               S-19
Wachovia Serviced Mortgage Loan..............................               S-36
Weighted Average Net Mortgage Rate...........................               S-37
Wells Fargo..................................................   S-20, S-30, S-35
Wells Fargo Serviced Mortgage Loan...........................               S-36
Yield Table..................................................               S-68


                                      S-83




















                      [THIS PAGE INTENTIONALLY LEFT BLANK]








                                     ANNEX I

          GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES

          Except in certain limited circumstances, the Offered Certificates will
be offered globally (the "Global Securities") and will be available only in
book-entry form. Investors in the Global Securities may hold Such Global
Securities through any of The Depository Trust Company ("DTC"), Clearstream or
Euroclear. The Global Securities will be tradable as home market instruments in
both the European and U.S. domestic markets. Initial settlement and all
secondary trades will settle in same-day funds.

          Secondary market trading between investors holding Global Securities
through Clearstream and Euroclear will be conducted in the ordinary way in
accordance with their normal rules and operating procedures and in accordance
with conventional eurobond practice (i.e., seven calendar day settlement).

          Secondary market trading between investors holding Global Securities
through DTC will be conducted according to the rules and procedures applicable
to U.S. corporate debt obligations.

          Secondary cross-market trading between Clearstream or Euroclear and
DTC Participants holding Certificates will be effected on a
delivery-against-payment basis through the respective Depositaries of
Clearstream and Euroclear (in such capacity) and as DTC Participants.

          Non-U.S. holders (as described below) of Global Securities will be
Subject to U.S. withholding taxes unless such holders meet certain requirements
and deliver appropriate U.S. tax documents to the securities clearing
organizations or their participants.

INITIAL SETTLEMENT

          All Global Securities will be held in book-entry form by DTC in the
name of Cede & Co. as nominee of DTC. Investors' interests in the Global
Securities will be represented through financial institutions acting on their
behalf as direct and indirect Participants in DTC. As a result, Clearstream and
Euroclear will hold positions on behalf of their participants through their
respective 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 conventional eurobonds, except
that there will be no temporary global Security and no "lock-up" or restricted
period. Investor securities custody accounts will be credited with their
holdings against payment in same-day funds on the settlement date.

          Investors electing to hold their Global Securities through Clearstream
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 certificates issues in same-day funds.

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


                                       I-1



          Trading between DTC Seller and Clearstream or Euroclear purchaser.
When Global Securities are to be transferred from the account of a DTC
Participant to the account of a Clearstream Participant or a Euroclear
Participant, the purchaser will send instructions to Clearstream or Euroclear
through a Clearstream Participant or Euroclear Participant at least one business
day prior to settlement. Clearstream or Euroclear will instruct the respective
Depositary, as the case may be, to receive the Global Securities against
payment. Payment will include interest accrued on the Global Securities from and
including the last coupon payment date to and excluding the settlement date, on
the basis of the actual number of days in such accrual period, and a year
assumed to consist of 360 days. For transactions settling on the 31st of the
month, payment will include interest accrued to and excluding the first day of
the following month. Payment will then be made by the respective Depositary of
the DTC Participant's account against delivery of the Global Securities. After
settlement has been completed, the Global Securities will be credited to the
respective clearing system and by the clearing system, in accordance with its
usual procedures, to the Clearstream 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 or Euroclear cash debt will be valued
instead as of the actual settlement date.

          Clearstream Participants and Euroclear Participants will need to make
available to the respective clearing systems the funds necessary to process
same-day funds settlement. The most direct means of doing so is to preposition
funds for settlement, either from cash on hand or existing lines of credit, as
they would for any settlement occurring within Clearstream or Euroclear. Under
this approach, they may take on credit exposure to Clearstream or Euroclear
until the Global Securities are credited to their accounts one day later.

          As an alternative, if Clearstream or Euroclear has extended at line of
credit to them, Clearstream Participants or Euroclear Participants can elect not
to preposition funds and allow that credit line to be drawn upon the finance
settlement. Under this procedure, Clearstream Participants or Euroclear
Participants purchasing Global Securities would incur overdraft charges for one
day, assuming they cleared the overdraft when the Global Securities were
credited to their accounts. However, interest on the Global Securities would
accrue from the value date. Therefore, in many cases the investment income on
the Global Securities earned during that one-day period may substantially reduce
or offset the amount of such overdraft charges, although this result will depend
on each Clearstream Participant's or Euroclear Participant's particular cost of
funds.

          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
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 or Euroclear Seller and DTC Purchaser. Due
to time zone differences in their favor, Clearstream Participants and Euroclear
Participants may employ their customary procedures for transactions in which
Global Securities are to be transferred by the respective clearing system,
through the respective Depositary, to a DTC Participant. The seller will send
instructions to Clearstream or Euroclear through a Clearstream Participant or
Euroclear Participant at least one business day prior to settlement. In these
cases Clearstream or Euroclear will instruct the respective Depositary, as
appropriate, to deliver the Global Securities to the DTC Participant's account
against payment. Payment will include interest accrued on the Global Securities
from and including the last Coupon payment to and excluding the settlement date
on the basis of the actual number of days in such accrual period and a year
assumed to consist of 360 days. For transactions settling on the 31st of the
month, payment will include interest accrued to and excluding the first day of
the following month. The payment will then be reflected in the account of the
Clearstream Participant or Euroclear Participant the following day, and receipt
of the cash proceeds in the Clearstream Participant's or Euroclear Participant's
account would be back-valued to the value date (which would be the preceding
day, when settlement occurred in New York). Should the Clearstream Participant
or Euroclear Participant have a line of credit with its respective clearing
system and elect to be in debt in anticipation of receipt of the sale proceeds
in its account, the back-valuation will extinguish any overdraft incurred over
that one-day period. If settlement is not completed on the intended value date
(i.e., the trade


                                       I-2



fails), receipt of the cash proceeds in the Clearstream Participant's or
Euroclear Participant's account would instead be valued as of the actual
settlement date.

          Finally, day traders that use Clearstream or Euroclear and that
purchase Global Securities from DTC Participants for delivery to Clearstream
Participants or Euroclear Participants should note that these trades would
automatically fail on the sale side unless affirmative action were taken. At
least three techniques should be readily available to eliminate this potential
problem:

               1.   borrowing through Clearstream or Euroclear for one day
                    (until the purchase side of the day trade is reflected in
                    their Clearstream or Euroclear accounts) in accordance with
                    the clearing System's Customary procedures;

               2.   borrowing the Global Securities in the U.S. from a DTC
                    Participant no later than one day prior to settlement, which
                    would give the Global Securities sufficient time to be
                    reflected in their Clearstream or Euroclear account in order
                    to settle the sale side of the trade; or

               3.   staggering the value dates for the buy and sell sides of the
                    trade so that the value date for the purchase from the DTC
                    Participant is at least one day prior to the value date for
                    the sale to the Clearstream Participant or Euroclear
                    Participant.

CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS

          A beneficial owner of Global Securities holding Securities through
Clearstream or Euroclear (or through DTC if the holder has an address outside
the U.S.) will be subject to the 30% U.S. withholding tax that generally applies
to payments of interest (including original issue discount) on registered debt
issued by U.S. Persons, unless (i) each clearing system, bank or other financial
institution that holds customers' securities in the ordinary course of its trade
or business in the chain of intermediaries between Such beneficial owner and the
U.S. entity required to withhold tax complies with applicable certification
requirements and (ii) such beneficial owner takes one of the following steps to
obtain an exemption or reduced tax rate:

          Exemption for non-U.S. Persons (Form W-8BEN). Beneficial owners of
Global Securities that are non-U.S. Persons can obtain a complete exemption from
the withholding tax by filing a signed Form W-8BEN (Certificate of Foreign
Status of Beneficial Owner for United States Tax Withholding). Non-U.S. Persons
that are Certificate Owners residing in a country that has a tax treaty with the
United States can obtain an exemption or reduced tax rate (depending on the
treaty terms) by filing Form W-8BEN (Certificate of Foreign Status of Beneficial
Owner for United States Tax Withholding). If the information shown on Form
W-8BEN changes, a new Form W-8BEN must be filed within 30 days of such change.

          Exemption for non-U.S. Persons with effectively connected income (Form
W-8ECI). A non-U.S. Person, including a non-U.S. corporation or bank with a U.S.
branch, for which the interest income is effectively connected with its conduct
of a trade or business in the United States, can obtain an exemption from the
withholding tax by filing Form W-8ECI (Certificate of Foreign Person's Claim for
Exemption from Withholding on Income Effectively Connected with the Conduct of a
Trade or Business in the United States).

          Exemptions for U.S. Persons (Form W-9). U.S. Persons can obtain a
complete exemption from the withholding tax by filing Form W-9 (Payer's Request
for Taxpayer Identification Number and Certification),

          U.S. Federal Income Tax Reporting Procedure. The Certificate Owner of
a Global Security files by submitting the appropriate form to the person through
whom it holds (the clearing agency, in the case of persons holding directly on
the books of the clearing agency). Form W-8BEN and Form W-8ECI are effective
until the third succeeding calendar year from the date such form is signed.

          The term "U.S. Person" means (i) a citizen or resident of the United
States, (ii) a corporation, partnership or other entity treated as a corporation
or partnership for United States federal income tax purposes organized in or
under the laws of the United States or any state thereof or the District of
Columbia (unless, in the case of a


                                       I-3



partnership, Treasury regulations provide otherwise) or (iii) an estate the
income of which is includible in gross income for United States tax purposes,
regardless of its source, or (iv) a trust if a Court within the United States is
able to exercise primary Supervision over the administration of the trust and
one or more United States persons have authority to control all substantial
decisions of the trust. Notwithstanding the preceding sentence, to the extent
provided in Treasury regulations, certain trusts in existence on October 20,
1996, and treated as United States persons prior to such date, that elect to
continue to be treated as United States persons will also be a U.S. Person. This
Summary does not deal with all aspects of U.S. Federal income tax withholding
that may be relevant to foreign holders of the Global Securities. Investors are
advised to consult their own tax advisors for specific tax advice concerning
their holding and disposing of the Global Securities.


                                       I-4



                                    ANNEX II
             CORRIDOR CONTRACT SCHEDULES FOR THE LIBOR CERTIFICATES



                                  CLASS A-1 CERTIFICATES                CLASS A-2 CERTIFICATES
                          -------------------------------------  -----------------------------------
                             NOTIONAL                             NOTIONAL
DISTRIBUTION DATES           BALANCE    CAP STRIKE  CAP CEILING   BALANCE    CAP STRIKE  CAP CEILING
------------------------  ------------  ----------  -----------  ----------  ----------  -----------

February 25, 2006.......  3,687,951.76     5.823       11.220    979,122.16     5.833       11.230
March 25, 2006..........  3,609,608.63     5.832       11.220    958,322.68     5.842       11.230
April 25, 2006..........  3,531,549.84     5.836       11.220    937,598.69     5.846       11.230
May 25, 2006............  3,453,768.38     5.894       11.220    916,948.32     5.904       11.230
June 25, 2006...........  3,376,261.75     5.911       11.220    896,370.92     5.921       11.230
July 25, 2006...........  3,299,032.24     5.915       11.220    875,867.10     5.925       11.230
August 25, 2006.........  3,222,085.55     5.915       11.220    855,438.36     5.925       11.230
September 25, 2006......  3,145,439.36     5.915       11.220    835,089.39     5.925       11.230
October 25, 2006........  3,069,108.56     5.914       11.220    814,824.17     5.924       11.230
November 25, 2006.......  2,993,308.13     5.997       11.220    794,699.75     6.007       11.230
December 25, 2006.......  2,919,205.79     5.999       11.220    775,026.16     6.009       11.230
January 25, 2007........  2,846,754.46     5.999       11.220    755,790.90     6.009       11.230
February 25, 2007.......  2,775,917.29     5.999       11.220    736,984.19     6.009       11.230
March 25, 2007..........  2,706,658.08     6.001       11.220    718,596.42     6.011       11.230
April 25, 2007..........  2,638,941.43     6.000       11.220    700,618.18     6.010       11.230
May 25, 2007............  2,572,732.76     6.051       11.220    683,040.30     6.061       11.230
June 25, 2007...........  2,507,998.24     6.053       11.220    665,853.79     6.063       11.230
July 25, 2007...........  2,444,705.07     6.053       11.220    649,049.95     6.063       11.230
August 25, 2007.........  2,382,820.70     6.053       11.220    632,620.14     6.063       11.230
September 25, 2007......  2,322,313.76     6.053       11.220    616,556.03     6.063       11.230
October 25, 2007........  2,263,153.20     6.062       11.220    600,849.36     6.072       11.230
November 25, 2007.......  2,205,308.87     6.513       11.220    585,492.15     6.523       11.230
December 25, 2007.......  2,148,767.48     6.616       11.220    570,480.85     6.626       11.230
January 25, 2008........  2,093,503.77     6.615       11.220    555,808.77     6.625       11.230
February 25, 2008.......  2,039,467.97     6.613       11.220    541,462.70     6.623       11.230
March 25, 2008..........  1,986,632.67     6.613       11.220    527,435.34     6.623       11.230
April 25, 2008..........  1,934,970.99     6.611       11.220    513,719.57     6.621       11.230
May 25, 2008............  1,884,456.70     6.669       11.220    500,308.42     6.679       11.230
June 25, 2008...........  1,835,064.43     6.670       11.220    487,195.16     6.680       11.230
July 25, 2008...........  1,786,768.95     6.696       11.220    474,373.09     6.706       11.230
August 25, 2008.........  1,739,540.20     6.695       11.220    461,834.23     6.705       11.230
September 25, 2008......  1,693,359.98     6.760       11.220    449,573.75     6.770       11.230
October 25, 2008........  1,648,196.08     6.758       11.220    437,583.09     6.768       11.230
November 25, 2008.......  1,608,035.05     7.332       11.220    426,920.65     7.342       11.230
December 25, 2008.......  1,568,828.39     7.607       11.220    416,511.59     7.617       11.230
January 25, 2009........  1,530,532.97     7.604       11.220    406,344.46     7.614       11.230
February 25, 2009.......  1,496,993.04     7.600       11.220    397,439.87     7.610       11.230
March 25, 2009..........  1,464,194.39     7.597       11.220    388,732.09     7.607       11.230
April 25, 2009..........  1,432,120.48     7.594       11.220    380,216.72     7.604       11.230
May 25, 2009............  1,400,755.16     7.597       11.220    371,889.47     7.607       11.230


                                 CLASS A-3 CERTIFICATES
                          -----------------------------------
                           NOTIONAL
DISTRIbUTION DATES          BALANCE   CAP STRIKE  CAP CEILING
------------------------  ----------  ----------  -----------

February 25, 2006.......  108,829.43     5.753       11.150
March 25, 2006..........  106,517.57     5.762       11.150
April 25, 2006..........  104,214.09     5.766       11.150
May 25, 2006............  101,918.81     5.824       11.150
June 25, 2006...........   99,631.63     5.841       11.150
July 25, 2006...........   97,352.63     5.845       11.150
August 25, 2006.........   95,081.97     5.845       11.150
September 25, 2006......   92,820.19     5.845       11.150
October 25, 2006........   90,567.71     5.844       11.150
November 25, 2006.......   88,330.88     5.927       11.150
December 25, 2006.......   86,144.16     5.929       11.150
January 25, 2007........   84,006.16     5.929       11.150
February 25, 2007.......   81,915.79     5.929       11.150
March 25, 2007..........   79,871.99     5.931       11.150
April 25, 2007..........   77,873.71     5.930       11.150
May 25, 2007............   75,919.93     5.981       11.150
June 25, 2007...........   74,009.65     5.983       11.150
July 25, 2007...........   72,141.90     5.983       11.150
August 25, 2007.........   70,315.73     5.983       11.150
September 25, 2007......   68,530.20     5.983       11.150
October 25, 2007........   66,784.41     5.992       11.150
November 25, 2007.......   65,077.45     6.443       11.150
December 25, 2007.......   63,408.95     6.546       11.150
January 25, 2008........   61,778.15     6.545       11.150
February 25, 2008.......   60,183.58     6.543       11.150
March 25, 2008..........   58,624.44     6.543       11.150
April 25, 2008..........   57,099.93     6.541       11.150
May 25, 2008............   55,609.28     6.599       11.150
June 25, 2008...........   54,151.74     6.600       11.150
July 25, 2008...........   52,726.57     6.626       11.150
August 25, 2008.........   51,332.87     6.625       11.150
September 25, 2008......   49,970.12     6.690       11.150
October 25, 2008........   48,637.36     6.688       11.150
November 25, 2008.......   47,452.23     7.262       11.150
December 25, 2008.......   46,295.26     7.537       11.150
January 25, 2009........   45,165.19     7.534       11.150
February 25, 2009.......   44,175.44     7.530       11.150
March 25, 2009..........   43,207.57     7.527       11.150
April 25, 2009..........   42,261.09     7.524       11.150
May 25, 2009............   41,335.51     7.527       11.150



                                      II-1





                                  CLASS A-1 CERTIFICATES                CLASS A-2 CERTIFICATES
                          -------------------------------------  -----------------------------------
                             NOTIONAL                             NOTIONAL
DISTRIBUTION DATES           BALANCE    CAP STRIKE  CAP CEILING   BALANCE    CAP STRIKE  CAP CEILING
------------------------  ------------  ----------  -----------  ----------  ----------  -----------

June 25, 2009...........  1,370,082.62     7.594       11.220    363,746.15     7.604       11.230
July 25, 2009...........  1,340,087.42     7.592       11.220    355,782.66     7.602       11.230
August 25, 2009.........  1,310,754.86     7.589       11.220    347,995.10     7.599       11.230
September 25, 2009......  1,282,069.76     7.587       11.220    340,379.43     7.597       11.230
October 25, 2009........  1,254,018.04     7.583       11.220    332,931.92     7.593       11.230
November 25, 2009.......  1,226,585.24     7.582       11.220    325,648.73     7.592       11.230
December 25, 2009.......  1,199,757.78     7.578       11.220    318,526.25     7.588       11.230
January 25, 2010........  1,173,521.98     7.575       11.220    311,560.85     7.585       11.230
February 25, 2010.......  1,147,864.67     7.571       11.220    304,749.04     7.581       11.230
March 25, 2010..........  1,122,772.97     7.568       11.220    298,087.39     7.578       11.230
April 25, 2010..........  1,098,233.92     7.564       11.220    291,572.46     7.574       11.230
May 25, 2010............  1,074,235.61     7.561       11.220    285,201.10     7.571       11.230
June 25, 2010...........  1,050,766.01     7.561       11.220    278,970.10     7.571       11.230
July 25, 2010...........  1,027,813.36     7.559       11.220    272,876.36     7.569       11.230
August 25, 2010.........  1,005,366.42     7.620       11.220    266,916.87     7.630       11.230
September 25, 2010......    983,406.01     7.677       11.220    261,086.56     7.687       11.230
October 25, 2010........    961,926.58     8.299       11.220    255,383.94     8.309       11.230
November 25, 2010.......    940,883.63     9.095       11.220    249,797.20     9.105       11.230
December 25, 2010.......    920,297.75     9.130       11.220    244,331.81     9.140       11.230
January 25, 2011........    900,147.12     9.123       11.220    238,981.98     9.133       11.230
February 25, 2011.......    880,440.58     9.116       11.220    233,750.05     9.126       11.230
March 25, 2011..........    861,168.26     9.109       11.220    228,633.40     9.119       11.230
April 25, 2011..........    842,320.51     9.102       11.220    223,629.47     9.112       11.230
May 25, 2011............    823,887.91     9.095       11.220    218,735.76     9.105       11.230
June 25, 2011...........    805,861.23     9.088       11.220    213,949.82     9.098       11.230
July 25, 2011...........    788,231.46     9.081       11.220    209,269.25     9.091       11.230
August 25, 2011.........    770,989.78     9.074       11.220    204,691.72     9.084       11.230
September 25, 2011......    754,127.59     9.066       11.220    200,214.94     9.076       11.230
October 25, 2011........    737,636.45     9.085       11.220    195,836.67     9.095       11.230
November 25, 2011.......    721,511.00     9.078       11.220    191,555.49     9.088       11.230
December 25, 2011.......    705,740.23     9.071       11.220    187,368.48     9.081       11.230
January 25, 2012........    690,316.24     9.064       11.220    183,273.53     9.074       11.230
February 25, 2012.......    675,231.36     9.057       11.220    179,268.61     9.067       11.230
March 25, 2012..........    660,478.05     9.050       11.220    175,351.72     9.060       11.230
April 25, 2012..........    646,048.98     9.042       11.220    171,520.92     9.052       11.230
May 25, 2012............    631,936.96     9.035       11.220    167,774.29     9.045       11.230
June 25, 2012...........    618,134.97     9.028       11.220    164,109.97     9.038       11.230
July 25, 2012...........    604,636.14     9.021       11.220    160,526.14     9.031       11.230
August 25, 2012.........    591,433.76     9.014       11.220    157,021.01     9.024       11.230
September 25, 2012......    578,521.27     9.006       11.220    153,592.84     9.016       11.230
October 25, 2012........    565,892.24     9.012       11.220    150,239.94     9.022       11.230
November 25, 2012.......    553,541.33     9.004       11.220    146,960.87     9.014       11.230
December 25, 2012.......    541,461.45     8.997       11.220    143,753.75     9.007       11.230
January 25, 2013........    529,646.59     8.990       11.220    140,617.00     9.000       11.230
February 25, 2013.......    518,090.91     8.983       11.220    137,549.06     8.993       11.230


                                 CLASS A-3 CERTIFICATES
                          -----------------------------------
                           NOTIONAL
DISTRIbUTION DATES          BALANCE   CAP STRIKE  CAP CEILING
------------------------  ----------  ----------  -----------

June 25, 2009...........   40,430.38     7.524       11.150
July 25, 2009...........   39,545.24     7.522       11.150
August 25, 2009.........   38,679.66     7.519       11.150
September 25, 2009......   37,833.17     7.517       11.150
October 25, 2009........   37,005.38     7.513       11.150
November 25, 2009.......   36,195.86     7.512       11.150
December 25, 2009.......   35,404.19     7.508       11.150
January 25, 2010........   34,629.99     7.505       11.150
February 25, 2010.......   33,872.86     7.501       11.150
March 25, 2010..........   33,132.41     7.498       11.150
April 25, 2010..........   32,408.28     7.494       11.150
May 25, 2010............   31,700.10     7.491       11.150
June 25, 2010...........   31,007.53     7.491       11.150
July 25, 2010...........   30,330.21     7.489       11.150
August 25, 2010.........   29,667.81     7.550       11.150
September 25, 2010......   29,019.77     7.607       11.150
October 25, 2010........   28,385.92     8.229       11.150
November 25, 2010.......   27,764.96     9.025       11.150
December 25, 2010.......   27,157.48     9.060       11.150
January 25, 2011........   26,562.85     9.053       11.150
February 25, 2011.......   25,981.32     9.046       11.150
March 25, 2011..........   25,412.60     9.039       11.150
April 25, 2011..........   24,856.42     9.032       11.150
May 25, 2011............   24,312.48     9.025       11.150
June 25, 2011...........   23,780.52     9.018       11.150
July 25, 2011...........   23,260.28     9.011       11.150
August 25, 2011.........   22,751.48     9.004       11.150
September 25, 2011......   22,253.89     8.996       11.150
October 25, 2011........   21,767.25     9.015       11.150
November 25, 2011.......   21,291.39     9.008       11.150
December 25, 2011.......   20,826.01     9.001       11.150
January 25, 2012........   20,370.85     8.994       11.150
February 25, 2012.......   19,925.71     8.987       11.150
March 25, 2012..........   19,490.34     8.980       11.150
April 25, 2012..........   19,064.55     8.972       11.150
May 25, 2012............   18,648.11     8.965       11.150
June 25, 2012...........   18,240.82     8.958       11.150
July 25, 2012...........   17,842.48     8.951       11.150
August 25, 2012.........   17,452.89     8.944       11.150
September 25, 2012......   17,071.84     8.936       11.150
October 25, 2012........   16,699.17     8.942       11.150
November 25, 2012.......   16,334.70     8.934       11.150
December 25, 2012.......   15,978.23     8.927       11.150
January 25, 2013........   15,629.58     8.920       11.150
February 25, 2013.......   15,288.58     8.913       11.150



                                      II-2





                              CLASS A-1 CERTIFICATES               CLASS A-2 CERTIFICATES              CLASS A-3 CERTIFICATES
                       -----------------------------------  -----------------------------------  ----------------------------------
                        NOTIONAL                             NOTIONAL                             NOTIONAL
DISTRIBUTION DATES       BALANCE   CAP STRIKE  CAP CEILING    BALANCE   CAP STRIKE  CAP CEILING   BALANCE   CAP STRIKE  CAP CEILING
---------------------  ----------  ----------  -----------  ----------  ----------  -----------  ---------  ----------  -----------

March 25, 2013.......  506,788.67     8.975       11.220    134,548.40     8.985       11.230    14,955.05     8.905       11.150
April 25, 2013.......  495,734.26     8.968       11.220    131,613.54     8.978       11.230    14,628.85     8.898       11.150
May 25, 2013.........  484,922.21     8.961       11.220    128,743.03     8.971       11.230    14,309.79     8.891       11.150
June 25, 2013........  474,347.18     8.954       11.220    125,935.44     8.964       11.230    13,997.72     8.884       11.150
July 25, 2013........  464,003.91     8.946       11.220    123,189.39     8.956       11.230    13,692.50     8.876       11.150
August 25, 2013......  453,887.29     8.939       11.220    120,503.50     8.949       11.230    13,393.96     8.869       11.150
September 25, 2013...  443,992.32     8.932       11.220    117,876.47     8.942       11.230    13,101.97     8.862       11.150
October 25, 2013.....  434,314.10     8.925       11.220    115,306.98     8.935       11.230    12,816.37     8.855       11.150
November 25, 2013....  424,847.85     8.917       11.220    112,793.76     8.927       11.230    12,537.03     8.847       11.150
December 25, 2013....  415,588.89     8.910       11.220    110,335.58     8.920       11.230    12,263.80     8.840       11.150
January 25, 2014.....  406,532.65     8.903       11.220    107,931.22     8.913       11.230    11,996.55     8.833       11.150
February 25, 2014....  397,674.65     8.895       11.220    105,579.49     8.905       11.230    11,735.16     8.825       11.150
March 25, 2014.......  389,010.53     8.888       11.220    103,279.23     8.898       11.230    11,479.49     8.818       11.150
April 25, 2014.......  380,536.00     8.881       11.220    101,029.31     8.891       11.230    11,229.41     8.811       11.150
May 25, 2014.........  372,246.89     8.874       11.220     98,828.62     8.884       11.230    10,984.80     8.804       11.150
June 25, 2014........  364,139.11     8.866       11.220     96,676.07     8.876       11.230    10,745.54     8.796       11.150
July 25, 2014........  356,208.66     8.859       11.220     94,570.60     8.869       11.230    10,511.52     8.789       11.150
August 25, 2014......  348,451.64     8.852       11.220     92,511.17     8.862       11.230    10,282.62     8.782       11.150
September 25, 2014...  340,864.23     8.844       11.220     90,496.77     8.854       11.230    10,058.72     8.774       11.150
October 25, 2014
  and thereafter.....        0.00     0.000        0.000          0.00     0.000        0.000         0.00     0.000        0.000



                                      II-3





                           CLASS M SENIOR CERTIFICATES          CLASS M JUNIOR CERTIFICATES
                       -----------------------------------  -----------------------------------
                        NOTIONAL                             NOTIONAL
DISTRIBUTION DATES       BALANCE   CAP STRIKE  CAP CEILING    BALANCE   CAP STRIKE  CAP CEILING
---------------------  ----------  ----------  -----------  ----------  ----------  -----------

February 25, 2006....  227,746.45     5.603       11.000     83,070.47     5.403       10.800
March 25, 2006.......  227,692.42     5.612       11.000     83,050.76     5.412       10.800
April 25, 2006.......  227,637.94     5.616       11.000     83,030.89     5.416       10.800
May 25, 2006.........  227,583.00     5.674       11.000     83,010.85     5.474       10.800
June 25, 2006........  227,527.62     5.691       11.000     82,990.65     5.491       10.800
July 25, 2006........  227,471.84     5.695       11.000     82,970.30     5.495       10.800
August 25, 2006......  227,415.64     5.695       11.000     82,949.81     5.495       10.800
September 25, 2006...  227,358.96     5.695       11.000     82,929.13     5.495       10.800
October 25, 2006.....  227,301.89     5.694       11.000     82,908.32     5.494       10.800
November 25, 2006....  227,244.45     5.777       11.000     82,887.36     5.577       10.800
December 25, 2006....  227,188.12     5.779       11.000     82,866.82     5.579       10.800
January 25, 2007.....  227,131.45     5.779       11.000     82,846.15     5.579       10.800
February 25, 2007....  227,074.39     5.779       11.000     82,825.33     5.579       10.800
March 25, 2007.......  227,016.94     5.781       11.000     82,804.38     5.581       10.800
April 25, 2007.......  226,959.11     5.780       11.000     82,783.28     5.580       10.800
May 25, 2007.........  226,900.88     5.831       11.000     82,762.05     5.631       10.800
June 25, 2007........  226,842.27     5.833       11.000     82,740.67     5.633       10.800
July 25, 2007........  226,783.28     5.833       11.000     82,719.15     5.633       10.800
August 25, 2007......  226,723.89     5.833       11.000     82,697.49     5.633       10.800
September 25, 2007...  226,664.12     5.833       11.000     82,675.69     5.633       10.800
October 25, 2007.....  226,603.94     5.842       11.000     82,653.74     5.642       10.800
November 25, 2007....  226,543.36     6.293       11.000     82,631.64     6.093       10.800
December 25, 2007....  226,484.08     6.396       11.000     82,610.02     6.196       10.800
January 25, 2008.....  226,426.62     6.395       11.000     82,589.06     6.195       10.800
February 25, 2008....  226,368.75     6.393       11.000     82,567.95     6.193       10.800
March 25, 2008.......  226,310.48     6.393       11.000     82,546.70     6.193       10.800
April 25, 2008.......  226,251.79     6.391       11.000     82,525.29     6.191       10.800
May 25, 2008.........  226,192.68     6.449       11.000     82,503.73     6.249       10.800
June 25, 2008........  226,133.19     6.450       11.000     82,482.03     6.250       10.800
July 25, 2008........  226,073.29     6.476       11.000     82,460.18     6.276       10.800
August 25, 2008......  226,012.26     6.475       11.000     82,437.92     6.275       10.800
September 25, 2008...  225,950.79     6.540       11.000     82,415.50     6.340       10.800
October 25, 2008.....  225,887.68     6.538       11.000     82,392.48     6.338       10.800
November 25, 2008....  223,377.96     7.112       11.000     81,477.06     6.912       10.800
December 25, 2008....  220,899.30     7.387       11.000     80,572.97     7.187       10.800
January 25, 2009.....  218,448.40     7.384       11.000     79,679.01     7.184       10.800
February 25, 2009....  213,661.35     7.380       11.000     77,932.93     7.180       10.800
March 25, 2009.......  208,980.09     7.377       11.000     76,225.44     7.177       10.800
April 25, 2009.......  204,402.28     7.374       11.000     74,555.69     7.174       10.800
May 25, 2009.........  199,925.60     7.377       11.000     72,922.82     7.177       10.800
June 25, 2009........  195,547.80     7.374       11.000     71,326.02     7.174       10.800
July 25, 2009........  191,266.68     7.372       11.000     69,764.48     7.172       10.800
August 25, 2009......  187,080.13     7.369       11.000     68,237.44     7.169       10.800
September 25, 2009...  182,985.99     7.367       11.000     66,744.10     7.167       10.800
October 25, 2009.....  178,982.25     7.363       11.000     65,283.74     7.163       10.800



                                      II-4





                             CLASS M SENIOR CERTIFICATES             CLASS M JUNIOR CERTIFICATES
                        -------------------------------------   ------------------------------------
                         NOTIONAL                                NOTIONAL
DISTRIBUTION DATES        BALANCE    CAP STRIKE   CAP CEILING    BALANCE    CAP STRIKE   CAP CEILING
---------------------   ----------   ----------   -----------   ---------   ----------   -----------

November 25, 2009....   175,066.85      7.362        11.000     63,855.59      7.162        10.800
December 25, 2009....   171,237.85      7.358        11.000     62,458.97      7.158        10.800
January 25, 2010.....   167,493.29      7.355        11.000     61,093.14      7.155        10.800
February 25, 2010....   163,831.30      7.351        11.000     59,757.43      7.151        10.800
March 25, 2010.......   160,250.03      7.348        11.000     58,451.16      7.148        10.800
April 25, 2010.......   156,747.65      7.344        11.000     57,173.67      7.144        10.800
May 25, 2010.........   153,322.44      7.341        11.000     55,924.33      7.141        10.800
June 25, 2010........   149,972.69      7.341        11.000     54,702.51      7.141        10.800
July 25, 2010........   146,696.73      7.339        11.000     53,507.60      7.139        10.800
August 25, 2010......   143,492.95      7.400        11.000     52,339.02      7.200        10.800
September 25, 2010...   140,358.60      7.457        11.000     51,195.77      7.257        10.800
October 25, 2010.....   137,292.91      8.079        11.000     50,077.56      7.879        10.800
November 25, 2010....   134,289.51      8.875        11.000     48,982.07      8.675        10.800
December 25, 2010....   131,351.35      8.910        11.000     47,910.38      8.710        10.800
January 25, 2011.....   128,475.31      8.903        11.000     46,861.34      8.703        10.800
February 25, 2011....   125,662.66      8.896        11.000     45,835.43      8.696        10.800
March 25, 2011.......   122,911.97      8.889        11.000     44,832.12      8.689        10.800
April 25, 2011.......   120,221.89      8.882        11.000     43,850.91      8.682        10.800
May 25, 2011.........   117,591.06      8.875        11.000     42,891.31      8.675        10.800
June 25, 2011........   115,018.17      8.868        11.000     41,952.85      8.668        10.800
July 25, 2011........   112,501.92      8.861        11.000     41,035.05      8.661        10.800
August 25, 2011......   110,041.07      8.854        11.000     40,137.46      8.654        10.800
September 25, 2011...   107,634.38      8.846        11.000     39,259.62      8.646        10.800
October 25, 2011.....   105,280.65      8.865        11.000     38,401.09      8.665        10.800
November 25, 2011....   102,979.11      8.858        11.000     37,561.61      8.658        10.800
December 25, 2011....   100,728.19      8.851        11.000     36,740.59      8.651        10.800
January 25, 2012.....    98,526.78      8.844        11.000     35,937.62      8.644        10.800
February 25, 2012....    96,373.75      8.837        11.000     35,152.31      8.637        10.800
March 25, 2012.......    94,268.06      8.830        11.000     34,384.25      8.630        10.800
April 25, 2012.......    92,208.64      8.822        11.000     33,633.08      8.622        10.800
May 25, 2012.........    90,194.48      8.815        11.000     32,898.42      8.615        10.800
June 25, 2012........    88,224.56      8.808        11.000     32,179.89      8.608        10.800
July 25, 2012........    86,297.91      8.801        11.000     31,477.14      8.601        10.800
August 25, 2012......    84,413.57      8.794        11.000     30,789.83      8.594        10.800
September 25, 2012...    82,570.61      8.786        11.000     30,117.61      8.586        10.800
October 25, 2012.....    80,768.11      8.792        11.000     29,460.15      8.592        10.800
November 25, 2012....    79,005.30      8.784        11.000     28,817.17      8.584        10.800
December 25, 2012....    77,281.18      8.777        11.000     28,188.29      8.577        10.800
January 25, 2013.....    75,594.88      8.770        11.000     27,573.21      8.570        10.800
February 25, 2013....    73,945.57      8.763        11.000     26,971.63      8.563        10.800
March 25, 2013.......    72,332.43      8.755        11.000     26,383.24      8.555        10.800
April 25, 2013.......    70,754.67      8.748        11.000     25,807.75      8.548        10.800
May 25, 2013.........    69,211.50      8.741        11.000     25,244.88      8.541        10.800
June 25, 2013........    67,702.16      8.734        11.000     24,694.35      8.534        10.800
July 25, 2013........    66,225.89      8.726        11.000     24,155.88      8.526        10.800



                                      II-5





                             CLASS M SENIOR CERTIFICATES             CLASS M JUNIOR CERTIFICATES
                        -------------------------------------   ------------------------------------
                         NOTIONAL                                NOTIONAL
DISTRIBUTION DATES        BALANCE    CAP STRIKE   CAP CEILING    BALANCE    CAP STRIKE   CAP CEILING
---------------------   ----------   ----------   -----------   ---------   ----------   -----------

August 25, 2013......    64,781.98      8.719        11.000     23,629.21      8.519        10.800
September 25, 2013...    63,369.70      8.712        11.000     23,114.08      8.512        10.800
October 25, 2013.....    61,988.35      8.705        11.000     22,610.24      8.505        10.800
November 25, 2013....    60,637.27      8.697        11.000     22,117.43      8.497        10.800
December 25, 2013....    59,315.76      8.690        11.000     21,635.41      8.490        10.800
January 25, 2014.....    58,023.19      8.683        11.000     21,163.95      8.483        10.800
February 25, 2014....    56,758.92      8.675        11.000     20,702.80      8.475        10.800
March 25, 2014.......    55,522.31      8.668        11.000     20,251.75      8.468        10.800
April 25, 2014.......    54,312.77      8.661        11.000     19,810.57      8.461        10.800
May 25, 2014.........    53,129.69      8.654        11.000     19,379.04      8.454        10.800
June 25, 2014........    51,972.49      8.646        11.000     18,956.95      8.446        10.800
July 25, 2014........    50,840.60      8.639        11.000     18,544.10      8.439        10.800
August 25, 2014......    49,733.46      8.632        11.000     18,140.27      8.432        10.800
September 25, 2014...    48,650.53      8.624        11.000     17,745.27      8.424        10.800
October 25, 2014
   and thereafter....         0.00      0.000         0.000          0.00      0.000         0.000



                                      II-6

PROSPECTUS

                          MORGAN STANLEY CAPITAL I INC.
                                    DEPOSITOR

                       MORTGAGE PASS-THROUGH CERTIFICATES
                     (ISSUABLE IN SERIES BY SEPARATE TRUSTS)

                                   ----------

     Morgan Stanley Capital I Inc. will offer one or more series of
certificates, which represent beneficial ownership interests in the related
trust. The assets of each trust will primarily be:

     o    conventional, fixed or adjustable interest rate mortgage loans secured
          by first liens or junior liens, or first and junior liens on one- to
          four-family residential properties, including mortgage participations;

     o    mortgage pass-through certificates and mortgage-backed securities;

     o    direct obligations of the United States or other governmental
          agencies; or

     o    any combination of the above.

     The certificates of any series will not be obligations of Morgan Stanley
Capital I Inc. or any of its affiliates, and neither the certificates of any
series nor the underlying mortgage loans are insured or guaranteed by any
governmental agency.

                                   ----------

             Investing in any series of certificates involves risks.
           See "Risk Factors" beginning on page 10 of this prospectus.

                                   ----------

     The Securities and Exchange Commission and state securities regulators have
not approved or disapproved the certificates or determined if this prospectus is
truthful or complete. Any representation to the contrary is a criminal offense.

                                   ----------

                                 MORGAN STANLEY

                  The date of this prospectus is July 27, 2005



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

     Information about the certificates being offered to you is contained in two
separate documents that progressively provide more detail:

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

          o    the accompanying prospectus supplement, which describes the
               specific terms of your series of certificates. If the terms of a
               particular series of certificates vary between this prospectus
               and the accompanying prospectus supplement, you should rely on
               the information in the prospectus supplement.

     You should rely only on the information contained in this prospectus and
the accompanying prospectus supplement. We have not authorized anyone to provide
you with information that is different from that contained in this prospectus
and the prospectus supplement. This prospectus and the accompanying prospectus
supplement include cross references to sections in these materials where you can
find further related discussions. The tables of contents in this prospectus and
the prospectus supplement identify the pages where these sections are located.

     Morgan Stanley Capital I Inc.'s principal executive office is located at
1585 Broadway, 37th Floor, New York, New York 10036, and Morgan Stanley Capital
I Inc.'s telephone number is (212) 761-4000.


                                        2



                                TABLE OF CONTENTS

                                                                            PAGE
                                                                            ----
SUMMARY OF PROSPECTUS....................................................     5
RISK FACTORS.............................................................    10
DESCRIPTION OF THE TRUST FUNDS...........................................    27
   Assets................................................................    27
   Mortgage Loans........................................................    27
   Mortgage-Backed Securities............................................    29
   Government Securities.................................................    30
   Accounts..............................................................    31
   Credit Support........................................................    31
   Cash Flow Agreements..................................................    31
USE OF PROCEEDS..........................................................    32
YIELD CONSIDERATIONS.....................................................    32
   General...............................................................    32
   Pass-Through Rate.....................................................    32
   Timing of Payment of Interest.........................................    32
   Payments of Principal; Prepayments....................................    33
   Prepayments, Maturity and Weighted Average Life.......................    34
   Other Factors Affecting Weighted Average Life.........................    35
THE DEPOSITOR............................................................    36
DESCRIPTION OF THE CERTIFICATES..........................................    37
   General...............................................................    37
   Categories of Classes of Certificates.................................    37
   Indices Applicable to Floating Rate and Inverse Floating
      Rate Classes.......................................................    40
   LIBOR.................................................................    40
   COFI..................................................................    41
   Treasury Index........................................................    42
   Prime Rate............................................................    42
   Distributions.........................................................    43
   Available Distribution Amount.........................................    43
   Distributions of Interest on the Certificates.........................    43
   Distributions of Principal of the Certificates........................    44
   Components............................................................    45
   Distributions on the Certificates of Prepayment Premiums..............    45
   Allocation of Losses and Shortfalls...................................    45
   Advances in Respect of Delinquencies..................................    45
   Reports to Certificateholders.........................................    46
   Termination...........................................................    48
   Book-Entry Registration and Definitive Certificates...................    48
   Assignment of Assets; Repurchases.....................................    53
   Representations and Warranties; Repurchases...........................    55
   Certificate Account and Other Collection Accounts.....................    56
   Collection and Other Servicing Procedures.............................    59
   Subservicers..........................................................    60
   Realization Upon Defaulted Mortgage Loans.............................    60
   Hazard Insurance Policies.............................................    62
   Fidelity Bonds and Errors and Omissions Insurance.....................    63
   Due-on-Sale Provisions................................................    64
   Retained Interest; Servicing Compensation and Payment of Expenses.....    64
   Evidence as to Compliance.............................................    64
   Matters Regarding a Master Servicer and the Depositor.................    65
   Events of Default.....................................................    66
   Rights Upon Event of Default..........................................    66
   Amendment.............................................................    67
   The Trustee...........................................................    68
   Duties of the Trustee.................................................    68
   Matters Regarding the Trustee.........................................    68


                                        3



   Resignation and Removal of the Trustee................................    69
DESCRIPTION OF CREDIT SUPPORT............................................    69
   General...............................................................    69
   Subordinate Certificates..............................................    70
   Cross-Support Provisions..............................................    70
   Insurance or Guarantees for the Mortgage Loans........................    70
   Letter of Credit......................................................    70
   Insurance Policies and Surety Bonds...................................    71
   Reserve Funds.........................................................    71
   Credit Support for Mortgage-Backed Securities.........................    71
LEGAL ASPECTS OF MORTGAGE LOANS..........................................    72
   General...............................................................    72
   Types of Mortgage Instruments.........................................    72
   Interest in Real Property.............................................    73
   Cooperative Loans.....................................................    73
   Foreclosure...........................................................    74
   Junior Mortgages......................................................    78
   Anti-Deficiency Legislation and Other Limitations on Lenders..........    78
   Environmental Legislation.............................................    79
   Due-on-Sale Clauses...................................................    79
   Prepayment Charges....................................................    80
   Subordinate Financing.................................................    80
   Applicability of Usury Laws...........................................    80
   Alternative Mortgage Instruments......................................    81
   Servicemembers' Civil Relief Act......................................    82
   Forfeiture for Drug, RICO and Money Laundering Violations.............    82
FEDERAL INCOME TAX CONSEQUENCES..........................................    83
   General...............................................................    83
   Grantor Trust Funds...................................................    83
   a.  Single Class of Grantor Trust Certificates........................    83
   b.  Multiple Classes of Grantor Trust Certificates....................    87
   c.  Sale or Exchange of a Grantor Trust Certificate...................    90
   d.  Non-U.S. Persons..................................................    91
   e.  Information Reporting and Backup Withholding......................    91
   REMICs................................................................    92
   a.  Taxation of Owners of REMIC Regular Certificates..................    93
   b.  Taxation of Owners of REMIC Residual Certificates.................   102
   Prohibited Transactions and Other Taxes...............................   107
   Liquidation and Termination...........................................   107
   Administrative Matters................................................   108
   Tax-Exempt Investors..................................................   108
   Residual Certificate Payments--Non-U.S. Persons.......................   108
   Tax Related Restrictions on Transfers of REMIC Residual Certificates..   109
   Reportable Transactions...............................................   111
STATE TAX CONSIDERATIONS.................................................   111
ERISA CONSIDERATIONS.....................................................   112
   General...............................................................   112
   Prohibited Transactions...............................................   112
   Review by Plan Fiduciaries............................................   115
LEGAL INVESTMENT.........................................................   116
PLAN OF DISTRIBUTION.....................................................   117
LEGAL MATTERS............................................................   119
FINANCIAL INFORMATION....................................................   119
RATING...................................................................   119
INCORPORATION OF INFORMATION BY REFERENCE................................   119
GLOSSARY OF TERMS........................................................   121


                                        4



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

                              SUMMARY OF PROSPECTUS

     This summary highlights selected information from this prospectus. It does
not contain all of the information you need to consider in making your
investment decision. TO UNDERSTAND ALL OF THE TERMS OF A SERIES OF CERTIFICATES,
READ THIS ENTIRE DOCUMENT AND THE ACCOMPANYING PROSPECTUS SUPPLEMENT CAREFULLY.

                RELEVANT PARTIES FOR EACH SERIES OF CERTIFICATES

Issuer.............................   Each series of certificates will be issued
                                      by a separate trust. Each trust will be
                                      formed pursuant to a pooling and servicing
                                      agreement among Morgan Stanley Capital I
                                      Inc., one or more servicers and a trustee.

Depositor..........................   Morgan Stanley Capital I Inc. a
                                      wholly-owned subsidiary of Morgan Stanley.

Master Servicer....................   The servicer or servicers for
                                      substantially all the mortgage loans for
                                      each series of certificates, which
                                      servicer(s) may be affiliates of Morgan
                                      Stanley Capital I Inc., will be named in
                                      the related prospectus supplement.

Trustee............................   The trustee for each series of
                                      certificates will be named in the related
                                      prospectus supplement.

                               THE MORTGAGE ASSETS

General............................   Each trust will own the related mortgage
                                      loan, including mortgage participations,
                                      or mortgage-backed securities or both or,
                                      if specified in the applicable prospectus
                                      supplement, direct obligations of the
                                      United States or other governmental
                                      agencies. You should refer to the
                                      applicable prospectus supplement for the
                                      precise characteristics or expected
                                      characteristics of the mortgage loans and
                                      mortgage-backed securities included in
                                      each trust fund.

Mortgage Loans.....................   The mortgage loans in each trust will be
                                      conventional, fixed or adjustable interest
                                      rate mortgage loans, or mortgage
                                      participations, secured by first liens or
                                      junior liens or first and junior liens on
                                      one- to four-family residential properties
                                      or shares issued by cooperative housing
                                      corporations. Unless otherwise provided in
                                      the related prospectus supplement, all
                                      mortgage loans will have individual
                                      principal balances at origination of not
                                      less than $25,000 and original terms to
                                      maturity of not more than 40 years. All
                                      mortgage loans will have been originated
                                      by persons other than Morgan Stanley
                                      Capital I Inc.

Mortgage-Backed Securities.........   The mortgage-backed securities in each
                                      trust will be mortgage pass-through
                                      certificates or other mortgage-backed
                                      securities evidencing interests in or
                                      secured by conventional, fixed or
                                      adjustable rate mortgage loans secured by
                                      first liens or junior liens or first and
                                      junior liens on one- to four-family
                                      residential properties or shares issued by
                                      cooperative housing corporations.

Government Securities..............   Each trust may own, in addition to the
                                      mortgage loans and mortgage-backed
                                      securities, direct obligations of the
                                      United States or other governmental
                                      agencies which provide for payment of
                                      interest or principal or both.

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


                                        5



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

                                  OTHER ASSETS

Other Assets.......................   If so specified in the applicable
                                      prospectus supplement, the trust fund may
                                      include the following agreements and other
                                      similar agreements:

                                      o    guaranteed investment contracts;

                                      o    interest rate exchange agreements;

                                      o    interest rate cap or floor contracts;

                                      o    currency exchange contracts; or

                                      o    other swap or notional balance
                                           contracts.

                               CREDIT ENHANCEMENT

Subordination......................   A series of certificates may include one
                                      or more classes of senior certificates and
                                      one or more classes of subordinate
                                      certificates. The rights of the holders of
                                      subordinate certificates of a series to
                                      receive distributions will be subordinated
                                      to such rights of the holders of the
                                      senior certificates of the same series to
                                      the extent and in the manner specified in
                                      the applicable prospectus supplement.

                                      Subordination is intended to enhance the
                                      likelihood of the timely receipt by the
                                      senior certificateholders of their
                                      proportionate shares of scheduled monthly
                                      principal and interest payments on the
                                      related mortgage loans and to protect them
                                      from losses. This protection will be
                                      effected by:

                                      o    the preferential right of the senior
                                           certificateholders to receive, prior
                                           to any distribution being made in
                                           respect of the related subordinate
                                           certificates on each distribution
                                           date, current distributions on the
                                           related mortgage loans and
                                           mortgage-backed securities of
                                           principal and interest due them on
                                           each distribution date out of the
                                           funds available for distributions on
                                           such date;

                                      o    the right of such holders to receive
                                           future distributions on the mortgage
                                           loans and mortgage-backed securities
                                           that would otherwise have been
                                           payable to the holders of subordinate
                                           certificates;

                                      o    the prior allocation to the
                                           subordinate certificates of all or a
                                           portion of losses realized on the
                                           underlying mortgage loans and
                                           mortgage-backed securities; or

                                      o    any combination of the above.

Other Types of Credit
   Enhancement.....................   If so specified in the applicable
                                      prospectus supplement, the certificates of
                                      any series, or any one or more classes of
                                      a series may be entitled to the benefits
                                      of other types of credit enhancement,
                                      including but not limited to:

                                      o    limited guarantee

                                      o    financial guaranty insurance policy

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


                                        6



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

                                      o    surety bond

                                      o    letter of credit

                                      o    mortgage pool insurance policy

                                      o    reserve fund

                                      o    cross-support

                                      o    any credit support will be described
                                           in the applicable prospectus
                                           supplement.

                          DISTRIBUTIONS ON CERTIFICATES

General............................   Each series of certificates will consist
                                      of one or more classes of certificates
                                      that will be entitled, to the extent of
                                      funds available, to one of the following:

                                      o    principal and interest payments in
                                           respect of the related mortgage loans
                                           and mortgage-backed securities;

                                      o    principal distributions, with no
                                           interest distribution;

                                      o    interest distributions, with no
                                           principal distributions;

                                      o    sequential or concurrent
                                           distributions of principal;

                                      o    senior or subordinate distributions
                                           of interest or principal or both;

                                      o    distributions of interest after an
                                           interest accrual period; or

                                      o    such other distributions as are
                                           described in the applicable
                                           prospectus supplement.

Interest Distributions.............   With respect to each series of
                                      certificates, other than classes of
                                      certificates which may be entitled to
                                      disproportionately low, nominal or no
                                      interest distributions, interest on the
                                      related mortgage loans and mortgage-backed
                                      securities at the weighted average of
                                      their mortgage rates--net of servicing
                                      fees and other amounts as described in
                                      this prospectus or in the applicable
                                      prospectus supplement, will be passed
                                      through to holders of the related classes
                                      of certificates in accordance with the
                                      particular terms of each such class of
                                      certificates. The terms of each class of
                                      certificates will be described in the
                                      related prospectus supplement.

                                      Except as otherwise specified in the
                                      applicable prospectus supplement, interest
                                      on each class of certificates of each
                                      series will accrue at the fixed, floating
                                      or weighted average pass-through rate for
                                      each class indicated in the applicable
                                      prospectus supplement on their outstanding
                                      principal balance or notional amount.

Principal..........................   With respect to a series of certificates,
                                      principal payments including prepayments
                                      on the related mortgage loans and
                                      mortgage-backed securities will be passed
                                      through to holders of the related
                                      certificates or otherwise applied in
                                      accordance with the related pooling and
                                      servicing agreement on each distribution
                                      date. Distributions in reduction of

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


                                        7



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

                                      certificate balance will be allocated
                                      among the classes of certificates of a
                                      series in the manner specified in the
                                      applicable prospectus supplement.

Distribution Dates.................   The dates upon which distributions on each
                                      series of certificates will be made will
                                      be specified in the related prospectus
                                      supplement.

Advances...........................   Unless otherwise provided in the related
                                      prospectus supplement, in the event that a
                                      payment on a mortgage loan is delinquent,
                                      the master servicer will be obligated to
                                      make advances that the master servicer
                                      determines are recoverable. The master
                                      servicer will be reimbursed for advances
                                      as described in this prospectus and in the
                                      related prospectus supplement. The
                                      prospectus supplement for any series of
                                      certificates relating to a trust that
                                      includes mortgage-backed securities will
                                      describe any corresponding advancing
                                      obligation of any person in connection
                                      with such mortgage-backed securities.

                ADDITIONAL ASPECTS OF EACH SERIES OF CERTIFICATES

Termination........................   If so specified in the prospectus
                                      supplement with respect to a series of
                                      certificates, all, but not less than all,
                                      of the mortgage loans and mortgage-backed
                                      securities in the related trust fund and
                                      any property acquired with respect to such
                                      mortgage loans may be purchased by the
                                      party as is specified in the applicable
                                      prospectus supplement. Any such purchase
                                      must be made in the manner and at the
                                      price specified in such prospectus
                                      supplement. If so provided in the related
                                      prospectus supplement with respect to a
                                      series, upon the reduction of the
                                      certificate balance of a specified class
                                      or classes of certificates by a specified
                                      percentage or amount or on and after a
                                      date specified in the related prospectus
                                      supplement, the party specified in the
                                      related prospectus supplement will solicit
                                      bids for the purchase of all of the
                                      trust's assets, or of a sufficient portion
                                      of such assets to retire such class or
                                      classes, or purchase such assets at a
                                      price set forth in the related prospectus
                                      supplement. In addition, if so provided in
                                      the related prospectus supplement, certain
                                      classes of certificates may be purchased
                                      subject to similar conditions.

Forms of Certificates..............   The certificates will be issued either:

                                      o    in book-entry form through the
                                           facilities of The Depository Trust
                                           Company; or

                                      o    in fully registered, certificated
                                           form.

                                      If you own book-entry certificates, you
                                      will not receive physical certificates
                                      representing your ownership interest in
                                      such book-entry certificates, except under
                                      extraordinary circumstances. Instead, The
                                      Depository Trust Company will effect
                                      payments and transfers by means of its
                                      electronic recordkeeping services, acting
                                      through participating organizations. This
                                      may result in delays in your receipt of
                                      distributions and may restrict your
                                      ability to pledge your securities. Your
                                      rights with respect to book-entry
                                      certificates may generally only be
                                      exercised through The Depository Trust
                                      Company and its participating
                                      organizations.

Tax Status of Certificates.........   The treatment of the certificates for
                                      federal income tax purposes will depend
                                      on:

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


                                        8



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

                                      o    whether a "real estate mortgage
                                           investment conduit" election is made
                                           with respect to a series of
                                           certificates; and

                                      o    if a "real estate mortgage investment
                                           conduit" election is made, whether
                                           the certificates are regular
                                           interests or residual interests.

                                      If a "real estate mortgage investment
                                      conduit" election is not made, the
                                      certificates will be treated as interests
                                      in a grantor trust.

ERISA Considerations...............   If you are a fiduciary of any employee
                                      benefit plan subject to the fiduciary
                                      responsibility provisions of the Employee
                                      Retirement Income Security Act of 1974, as
                                      amended, also known as ERISA, you should
                                      carefully review with your own legal
                                      advisors whether the purchase or holding
                                      of certificates could give rise to a
                                      transaction prohibited or otherwise
                                      impermissible under ERISA or the Internal
                                      Revenue Code.

Legal Investment...................   The applicable prospectus supplement will
                                      specify whether the class or classes of
                                      certificates offered will constitute
                                      "mortgage related securities" for purposes
                                      of the Secondary Mortgage Market
                                      Enhancement Act of 1984, as amended. If
                                      your investment authority is subject to
                                      legal restrictions, you should consult
                                      your own legal advisors to determine
                                      whether and to what extent such
                                      certificates constitute legal investments
                                      for you.

Rating.............................   Certificates of any series will not be
                                      offered pursuant to this prospectus and a
                                      prospectus supplement unless each offered
                                      class of certificates offered is rated in
                                      one of the four highest rating categories
                                      by at least one nationally recognized
                                      statistical rating organization.

                                      o    A security rating is not a
                                           recommendation to buy, sell or hold
                                           the certificates of any series and is
                                           subject to revision or withdrawal at
                                           any time by the assigning rating
                                           agency.

                                      o    Ratings do not address the effect of
                                           prepayments on the yield you may
                                           anticipate when you purchase your
                                           certificates.

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


                                        9



                                  RISK FACTORS

     You should consider, among other things, the following factors in
connection with the purchase of certificates. The risks and uncertainties
described below, together with those in the related prospectus supplement under
"Risk Factors," summarize the material risks relating to your certificates.

LACK OF A SECONDARY MARKET MAY MAKE
   IT DIFFICULT FOR YOU TO RESELL
   YOUR CERTIFICATES                  The liquidity of your certificates may be
                                      limited. You should consider that:

                                      o    a secondary market for the
                                           certificates of any series may not
                                           develop, or if it does, it may not
                                           provide you with liquidity of
                                           investment, or it may not continue
                                           for the life of the certificates of
                                           any series;

                                      o    the prospectus supplement for any
                                           series of certificates may indicate
                                           that an underwriter intends to
                                           establish a secondary market in such
                                           certificates, but no underwriter will
                                           be obligated to do so; and

                                      o    unless specified in the applicable
                                           prospectus supplement, the
                                           certificates will not be listed on
                                           any securities exchange.

                                      Certain classes of securities may not
                                      constitute "mortgage related securities"
                                      for purposes of the Secondary Mortgage
                                      Market Enhancement Act of 1984, as
                                      amended. Accordingly, many institutions
                                      that lack the legal authority to invest in
                                      securities that do not constitute
                                      "mortgage related securities" will not be
                                      able to invest in such securities, thereby
                                      limiting the market for those securities.
                                      If your investment activities are subject
                                      to legal investment laws and regulations,
                                      regulatory capital requirements or review
                                      by regulatory authorities, then you may be
                                      subject to restrictions on investment in
                                      the securities. You should consult your
                                      own legal advisors for assistance in
                                      determining the suitability of and
                                      consequences to you of the purchase,
                                      ownership, and sale of the securities. We
                                      refer you to "Legal Investment" for
                                      additional information.

THE TRUST FUND'S ASSETS MAY BE
   INSUFFICIENT TO PAY YOUR
   CERTIFICATES IN FULL               Except for any related insurance policies
                                      and any reserve fund or credit enhancement
                                      described in the applicable prospectus
                                      supplement, the sole source of payment on
                                      your certificates will be proceeds from
                                      the assets included in the trust fund for
                                      each series of certificates and any form
                                      of credit enhancement specified in the
                                      related prospectus supplement. You will
                                      not have any claim against, or security
                                      interest in, the trust fund for any other
                                      series. In addition, in general, there is
                                      no recourse to Morgan Stanley Capital I
                                      Inc. or any other entity, and neither the
                                      certificates nor the underlying mortgage
                                      loans are guaranteed or insured by any
                                      governmental agency or instrumentality or
                                      any other entity. Therefore, if the trust
                                      fund's assets are insufficient to pay you
                                      your expected return, in most situations
                                      you will not receive payment from any
                                      other source. Exceptions include:

                                      o    loan repurchase obligations in
                                           connection with a breach of certain
                                           of the representations and
                                           warranties; and


                                       10



                                      o    advances on delinquent loans, to the
                                           extent the master servicer deems the
                                           advance will be recoverable.

                                      Because some of the representations and
                                      warranties with respect to the mortgage
                                      loans and mortgage-backed securities may
                                      have been made or assigned in connection
                                      with transfers of the mortgage loans and
                                      mortgage-backed securities prior to the
                                      closing date, the rights of the trustee
                                      and the certificateholders with respect to
                                      those representations or warranties will
                                      be limited to their rights as assignees.
                                      Unless the related prospectus supplement
                                      so specifies, neither Morgan Stanley
                                      Capital I Inc., the master servicer nor
                                      any affiliate thereof will have any
                                      obligation with respect to representations
                                      or warranties made by any other entity.
                                      There may be accounts, as described in the
                                      related prospectus supplement maintained
                                      as credit support. The amounts in these
                                      accounts may be withdrawn amounts and will
                                      not be available for the future payment of
                                      principal or interest on the certificates.
                                      If a series of certificates consists of
                                      one or more classes of subordinate
                                      certificates, the amount of any losses or
                                      shortfalls in collections of assets on any
                                      distribution date will be borne first by
                                      one or more classes of the subordinate
                                      certificates, as described in the related
                                      prospectus supplement.

                                      Thereafter, those losses or shortfalls
                                      will be borne by the remaining classes of
                                      certificates, in the priority and manner
                                      and subject to the limitations specified
                                      in the related prospectus supplement.

CREDIT ENHANCEMENT IS LIMITED IN
   AMOUNT AND COVERAGE                With respect to each series of
                                      certificates, credit enhancement may be
                                      provided to cover losses on the underlying
                                      mortgage loans and mortgage-backed
                                      securities up to specified amounts.

                                      Regardless of the form of credit
                                      enhancement provided:

                                      o    the amount of coverage will be
                                           limited in amount and in most cases
                                           will be subject to periodic reduction
                                           in accordance with a schedule or
                                           formula;

                                      o    the amount of coverage may provide
                                           only very limited coverage as to
                                           certain types of losses such as
                                           hazard losses, bankruptcy losses and
                                           fraud losses, and may provide no
                                           coverage as to certain other types of
                                           losses; and

                                      o    all or a portion of the credit
                                           enhancement for any series of
                                           certificates will generally be
                                           permitted to be reduced, terminated
                                           or substituted for, if each
                                           applicable rating agency indicates
                                           that the then-current ratings will
                                           not be adversely affected.

                                      In the event losses exceed the amount of
                                      coverage provided by any credit
                                      enhancement or losses of a type not
                                      covered by any credit enhancement occur,
                                      such losses will be borne by the holders
                                      of the related certificates. The rating of
                                      any series of certificates by any
                                      applicable rating agency may be lowered
                                      following the initial issuance thereof as
                                      a result of the downgrading of the
                                      obligations of any applicable credit
                                      support provider, or as a result of losses
                                      on the related mortgage loans in excess of
                                      the levels contemplated by such rating
                                      agency at the time of its initial rating
                                      analysis.


                                       11



                                      None of Morgan Stanley Capital I Inc., any
                                      servicer, or any of their affiliates, will
                                      have any obligation to replace or
                                      supplement any credit enhancement, or to
                                      take any other action to maintain any
                                      rating of any class of certificates.

CHANGES IN CONDITIONS IN THE REAL
   ESTATE MARKET WILL AFFECT
   MORTGAGE LOAN PERFORMANCE          An investment in securities such as the
                                      certificates, which generally represent
                                      interests in pools of residential mortgage
                                      loans, may be affected by a decline in
                                      real estate values and changes in the
                                      borrower's financial condition. There is
                                      no assurance that the values of the
                                      mortgaged properties securing the mortgage
                                      loans underlying any series of
                                      certificates have remained or will remain
                                      at their levels on the dates of
                                      origination of the related mortgage loans.

                                      If the residential real estate market
                                      should experience an overall decline in
                                      property values such that the outstanding
                                      balances of the mortgage loans contained
                                      in a particular trust fund and any
                                      secondary financing on the mortgaged
                                      properties, become equal to or greater
                                      than the value of the mortgaged
                                      properties, delinquencies, foreclosures
                                      and losses could be higher than those now
                                      generally experienced in the mortgage
                                      lending industry and those experienced in
                                      the servicer's or other servicers'
                                      servicing portfolios.

                                      To the extent that losses on mortgage
                                      loans underlying a series are not covered
                                      by credit enhancement, holders of
                                      certificates of the series will bear all
                                      risk of loss resulting from default by
                                      borrowers. Such loss may also be greater
                                      than anticipated as a result of a decline
                                      in real estate values.

GEOGRAPHIC CONCENTRATION MAY
   INCREASE RATES OF LOSS AND
   DELINQUENCY                        In addition to risk factors related to the
                                      residential real estate market generally,
                                      certain geographic regions of the United
                                      States from time to time will experience
                                      weaker regional economic conditions and
                                      housing markets or be directly or
                                      indirectly affected by natural disasters
                                      or civil disturbances such as earthquakes,
                                      hurricanes, floods, eruptions or riots.
                                      Mortgage assets in such areas will
                                      experience higher rates of loss and
                                      delinquency than on mortgage loans
                                      generally. Although mortgaged properties
                                      located in certain identified flood zones
                                      will be required to be covered, to the
                                      maximum extent available, by flood
                                      insurance, no mortgaged properties will
                                      otherwise be required to be insured
                                      against earthquake damage or any other
                                      loss not covered by standard hazard
                                      insurance policies.

                                      The ability of borrowers to make payments
                                      on the mortgage assets may also be
                                      affected by factors which do not
                                      necessarily affect property values, such
                                      as adverse economic conditions generally,
                                      in particular geographic areas or
                                      industries, or affecting particular
                                      segments of the borrowing community--such
                                      as borrowers relying on commission income
                                      and self-employed borrowers. Such
                                      occurrences may accordingly affect the
                                      actual rates of delinquencies, foreclosure
                                      and losses with respect to any trust fund.


                                       12



THE RATE OF PREPAYMENT ON MORTGAGE
   ASSETS MAY ADVERSELY AFFECT
   AVERAGE LIVES AND YIELDS ON
   CERTIFICATES                       The yield of the certificates of each
                                      series will depend in part on the rate of
                                      principal payment on the mortgage loans
                                      and mortgage-backed securities, including
                                      prepayments, liquidations due to defaults
                                      and mortgage loan repurchases. Such yield
                                      may be adversely affected, depending upon
                                      whether a particular certificate is
                                      purchased at a premium or a discount, by a
                                      higher or lower than anticipated rate of
                                      prepayments on the related mortgage loans
                                      and mortgage-backed securities, in
                                      particular:

                                      The yield on classes of certificates
                                      entitling their holders primarily or
                                      exclusively to payments of interest or
                                      primarily or exclusively to payments of
                                      principal will be extremely sensitive to
                                      the rate of prepayments on the related
                                      mortgage loans and mortgage-backed
                                      securities; and the yield on certain
                                      classes of certificates may be relatively
                                      more sensitive to the rate of prepayment
                                      of specified mortgage loans and
                                      mortgage-backed securities than other
                                      classes of certificates.

                                      The rate of prepayments on mortgage loans
                                      is influenced by a number of factors,
                                      including:

                                      o    prevailing mortgage market interest
                                           rates;

                                      o    local and national economic
                                           conditions;

                                      o    homeowner mobility; and

                                      o    the ability of the borrower to obtain
                                           refinancing.

                                      In addition, your yield may be adversely
                                      affected by interest shortfalls which may
                                      result from the timing of the receipt of
                                      prepayments or liquidations to the extent
                                      that such interest shortfalls are not
                                      covered by aggregate fees payable to the
                                      servicer or other mechanisms specified in
                                      the applicable prospectus supplement. Your
                                      yield will be also adversely affected to
                                      the extent that losses on the mortgage
                                      loans and mortgage-backed securities in
                                      the related trust fund are allocated to
                                      your certificates and may be adversely
                                      affected to the extent of unadvanced
                                      delinquencies on the mortgage loans and
                                      mortgage-backed securities in the related
                                      trust fund. Classes of certificates
                                      identified in the applicable prospectus
                                      supplement as subordinate certificates are
                                      more likely to be affected by
                                      delinquencies and losses than other
                                      classes of certificates.

RATINGS ON CERTIFICATES REFLECT
   LIMITED ASSESSMENTS                Any rating assigned by a rating agency to
                                      a class of certificates will reflect such
                                      rating agency's assessment solely of the
                                      likelihood that holders of certificates of
                                      such class will receive payments to which
                                      they are entitled under the related
                                      pooling and servicing agreement. A rating
                                      will not constitute an assessment of the
                                      likelihood that principal prepayments,
                                      including those caused by defaults, on the
                                      related mortgage loans and mortgage-backed
                                      securities will be made, the degree to
                                      which the rate of such prepayments might
                                      differ from that originally anticipated or
                                      the likelihood of early optional
                                      termination of the series of certificates.
                                      A rating will not address the possibility
                                      that prepayment at higher or lower rates
                                      than anticipated by an investor may cause
                                      such investor to experience a lower than
                                      anticipated yield or that an investor
                                      purchasing a certificate at a significant
                                      premium might fail


                                       13



                                      to recoup its initial investment under
                                      certain prepayment scenarios. Each
                                      prospectus supplement will identify any
                                      payment to which holders of certificates
                                      of the related series are entitled that is
                                      not covered by the applicable rating.

                                      The amount, type and nature of credit
                                      support, if any, established with respect
                                      to a series of certificates will be
                                      determined on the basis of criteria
                                      established by each rating agency. These
                                      criteria are sometimes based upon an
                                      actuarial analysis of the behavior of
                                      mortgage loans in a larger group. The
                                      historical data supporting any such
                                      actuarial analysis may not accurately
                                      reflect future experience or accurately
                                      predict the actual delinquency,
                                      foreclosure or loss experience of the
                                      mortgage loans and mortgage-backed
                                      securities included in any trust fund.

RATINGS DO NOT GUARANTY VALUE         If one or more rating agencies downgrade
                                      certificates of a series, your certificate
                                      will decrease in value. Because none of
                                      Morgan Stanley Capital I Inc., the seller,
                                      the master servicer, the trustee or any
                                      affiliate has any obligation to maintain a
                                      rating of a class of certificates, you
                                      will have no recourse if your certificate
                                      decreases in value.

PAYMENTS IN FULL OF A BALLOON LOAN
   DEPEND ON THE BORROWER'S ABILITY
   TO REFINANCE THE BALLOON LOAN OR
   SELL THE MORTGAGED PROPERTY        Certain of the mortgage loans may not be
                                      fully amortizing over their terms to
                                      maturity and, thus, will require
                                      substantial principal payments, i.e.,
                                      balloon payments, at their stated
                                      maturity. Mortgage loans with balloon
                                      payments involve a greater degree of risk
                                      because the ability of a borrower to make
                                      a balloon payment typically will depend
                                      upon its ability either to timely
                                      refinance the loan or to timely sell the
                                      related mortgaged property. The ability of
                                      a borrower to accomplish either of these
                                      goals will be affected by a number of
                                      factors, including:

                                      o    the level of available mortgage
                                           interest rates at the time of sale or
                                           refinancing;

                                      o    the borrower's equity in the related
                                           mortgaged property;

                                      o    the financial condition of the
                                           mortgagor;

                                      o    tax laws;

                                      o    prevailing general economic
                                           conditions; and

                                      o    the availability of credit for single
                                           family real properties generally.

MORTGAGE LOANS SECURED BY JUNIOR
   LIENS MAY ONLY BE SATISFIED
   AFTER THE RELATED FIRST LIEN
   MORTGAGE HAS BEEN SATISFIED        Certain of the mortgage loans may be
                                      secured by junior liens and the related
                                      first liens may not be included in the
                                      trust fund. The primary risk to holders of
                                      mortgage loans secured by junior liens is
                                      the possibility that adequate funds will
                                      not be received in connection with a
                                      foreclosure of the related first lien to
                                      satisfy fully both the first lien and the
                                      mortgage loan. In the event that a holder
                                      of the first lien forecloses on a
                                      mortgaged property, the proceeds of the
                                      foreclosure or similar sale will be
                                      applied first to the payment of court
                                      costs and fees in connection with the
                                      foreclosure, second to real estate taxes,
                                      third in


                                       14



                                      satisfaction of all principal, interest,
                                      prepayment or acceleration penalties, if
                                      any, and any other sums due and owing to
                                      the holder of the first lien. The claims
                                      of the holder of the first lien will be
                                      satisfied in full out of proceeds of the
                                      liquidation of the mortgage loan, if such
                                      proceeds are sufficient, before the trust
                                      fund as holder of the junior lien receives
                                      any payments in respect of the mortgage
                                      loan. In the event that such proceeds from
                                      a foreclosure or similar sale of the
                                      related mortgaged property were
                                      insufficient to satisfy both loans in the
                                      aggregate, the trust fund, as the holder
                                      of the junior lien, and, accordingly,
                                      holders of the certificates, would bear
                                      the risk of delay in distributions while a
                                      deficiency judgment against the borrower
                                      was being obtained and the risk of loss if
                                      the deficiency judgment were not realized
                                      upon.

OBLIGORS MAY DEFAULT IN PAYMENT OF
   MORTGAGE LOANS                     If so specified in the related prospectus
                                      supplement, in order to maximize
                                      recoveries on defaulted mortgage loans, a
                                      servicer or a subservicer will be
                                      permitted within prescribed parameters to
                                      extend and modify mortgage loans that are
                                      in default or as to which a payment
                                      default is imminent, including in
                                      particular with respect to balloon
                                      payments. While any such entity generally
                                      will be required to determine that any
                                      such extension or modification is
                                      reasonably likely to produce a greater
                                      recovery on a present value basis than
                                      liquidation, such extensions or
                                      modifications may not increase the present
                                      value of receipts from or proceeds of
                                      mortgage loans.

THE HOLDERS OF SUBORDINATE
   CERTIFICATES WILL BEAR A GREATER
   RISK OF PAYMENT DELAYS AND
   LOSSES                             The rights of holders of subordinate
                                      certificates to receive distributions to
                                      which they would otherwise be entitled
                                      with respect to the mortgage loans and
                                      mortgage-backed securities will be
                                      subordinate to the rights of the servicer
                                      to receive its fee and reimbursement for
                                      advances and the holders of senior
                                      certificates to the extent described in
                                      this prospectus. As a result of the
                                      foregoing, investors must be prepared to
                                      bear the risk that they may be subject to
                                      delays in payment and may not recover
                                      their initial investments in the
                                      subordinate certificates.

                                      The yields on the subordinate certificates
                                      may be extremely sensitive to the loss
                                      experience of the mortgage loans and
                                      mortgage-backed securities and the timing
                                      of any such losses. If the actual rate and
                                      amount of losses experienced by the
                                      mortgage loans and mortgage-backed
                                      securities exceed the rate and amount of
                                      such losses assumed by an investor, the
                                      yields to maturity on the subordinate
                                      certificates may be lower than
                                      anticipated.

MORTGAGE LOAN ACCELERATION CLAUSES
   MAY NOT BE ENFORCEABLE             Mortgages may contain a due-on-sale
                                      clause, which permits the lender to
                                      accelerate the maturity of the mortgage
                                      loan if the borrower sells, transfers or
                                      conveys the related mortgaged property or
                                      its interest in the mortgaged property.
                                      Mortgages may also include a
                                      debt-acceleration clause, which permits
                                      the lender to accelerate the debt upon a
                                      monetary or non-monetary default of the
                                      borrower. Such clauses are generally
                                      enforceable subject to certain exceptions.
                                      The courts of all states will enforce
                                      clauses providing for acceleration in the
                                      event of a material payment default. The
                                      equity courts of any state, however, may
                                      refuse the foreclosure of a mortgage or
                                      deed of trust when an acceleration of the
                                      indebtedness would be inequitable or
                                      unjust or the circumstances would render
                                      the acceleration unconscionable.


                                       15



THERE ARE RESTRICTIONS ON INVESTORS
   SUBJECT TO ERISA                   Generally, ERISA applies to investments
                                      made by employee benefit plans and
                                      transactions involving the assets of such
                                      plans. Due to the complexity of
                                      regulations which govern such plans,
                                      prospective investors that are subject to
                                      ERISA are urged to consult their own
                                      counsel regarding consequences under ERISA
                                      of acquisition, ownership and disposition
                                      of the certificates of any series. In
                                      particular, investors that are insurance
                                      companies should consult with their
                                      counsel with respect to the United States
                                      Supreme Court case, John Hancock Mutual
                                      Life Insurance Co. v. Harris Trust &
                                      Savings Bank.

IF YOUR CERTIFICATES ARE INTEREST
   ONLY CERTIFICATES, THE RETURN ON
   YOUR INVESTMENT WILL BE
   ESPECIALLY SENSITIVE TO
   PREPAYMENTS ON THE LOANS           An investment in interest only
                                      certificates is especially sensitive to
                                      prepayments on the loans held by the
                                      related trust because payments on interest
                                      only certificates depend entirely on the
                                      interest payments received on the loans.
                                      When borrowers prepay their loans, no
                                      further interest payments are made on such
                                      loans, and therefore no further amounts
                                      from such loans are available to make
                                      payments on the interest only
                                      certificates. If borrowers prepay their
                                      loans at a particularly high rate,
                                      investors in interest only certificates
                                      may not recover their initial investments.

PREPAYMENTS ON THE LOANS COULD LEAD
   TO SHORTFALLS IN THE
   DISTRIBUTION OF INTEREST ON YOUR
   CERTIFICATES                       When a voluntary principal prepayment is
                                      made by the borrower on a loan (excluding
                                      any payments made upon liquidation of any
                                      loan), the borrower is generally charged
                                      interest only up to the date of the
                                      prepayment, instead of for a full month.
                                      However, principal prepayments will only
                                      be passed through to the holders of the
                                      certificates on the distribution date that
                                      follows the prepayment period in which the
                                      prepayment was received by the applicable
                                      servicer. If and to the extent described
                                      in the related prospectus supplement, the
                                      applicable servicer will be obligated,
                                      without any right of reimbursement, for
                                      the amount of shortfalls in interest
                                      collections that are attributable to the
                                      difference between the interest paid by a
                                      borrower in connection with those
                                      principal prepayments and thirty (or such
                                      other number as may be specified in the
                                      related prospectus supplement) days'
                                      interest on the prepaid loans, but only to
                                      the extent those shortfalls do not exceed
                                      all or the specified percentage set forth
                                      in the prospectus supplement of the
                                      servicing fees for that distribution date
                                      payable to that servicer.

                                      For trusts to which this obligation of the
                                      servicer is applicable, if the servicer
                                      fails to make such payments or the
                                      resulting shortfall exceeds the applicable
                                      portion of the servicing fees payable to
                                      that servicer for the month, there will be
                                      fewer funds available for the distribution
                                      of interest on the certificates. In
                                      addition, no such payments from any
                                      servicer will be available to cover
                                      prepayment interest shortfalls resulting
                                      from involuntary prepayments such as
                                      liquidation of a defaulted loan. Such
                                      shortfalls of interest, if they result in
                                      the inability of the trust to pay the full
                                      amount of the current interest on the
                                      certificates, will result in a reduction
                                      the yield on your certificates.


                                       16



IF THE TRUST INCLUDES A PRE-FUNDING
   ACCOUNT AND IF THE FUNDS ON
   DEPOSIT IN THE PRE-FUNDING
   ACCOUNT ARE NOT USED TO PURCHASE
   ADDITIONAL LOANS, THOSE FUNDS
   WILL BE DISTRIBUTED AS A PAYMENT
   OF PRINCIPAL, WHICH MAY
   ADVERSELY AFFECT THE YIELD ON
   THE AFFECTED CERTIFICATES          If, as described in the related prospectus
                                      supplement, the trust includes a
                                      pre-funding account and if all of the
                                      money originally deposited in the
                                      pre-funding account has not been used by
                                      the end of the pre-funding period as
                                      described in the related prospectus
                                      supplement, the remaining amount will be
                                      applied as a payment of principal on the
                                      following distribution date to the holders
                                      of the certificates in the manner
                                      described in the prospectus supplement. If
                                      the amount of cash is substantial, the
                                      affected certificates will receive a
                                      significant unexpected early payment of
                                      principal. These payments could adversely
                                      affect your yield, particularly if you
                                      purchased the affected certificates at a
                                      premium.

                                      Any purchase of additional loans by the
                                      trust using funds on deposit in the
                                      pre-funding account will be subject to the
                                      following conditions, among others:

                                      o    each additional loan must satisfy
                                           specified statistical criteria and
                                           representations and warranties; and

                                      o    additional loans will not be selected
                                           in a manner that is believed to be
                                           adverse to the interests of the
                                           holders of the certificates.

                                      The ability of the related seller to
                                      acquire subsequent loans meeting the
                                      requirements for inclusion in the loan
                                      pool may be affected as a result of a
                                      variety of social and economic factors.
                                      Economic factors include interest rates,
                                      unemployment levels, the rate of inflation
                                      and consumer perception of economic
                                      conditions generally. However, we cannot
                                      assure you as to whether or to what extent
                                      economic or social factors will affect the
                                      seller's ability to acquire additional
                                      loans and therefore the ability of the
                                      trust to fully utilize the amount
                                      deposited into the pre-funding account.

YOUR INVESTMENT WILL BE SUBJECT TO
   COUNTERPARTY RISK IF PAYMENTS ON
   YOUR CERTIFICATES ARE DEPENDANT
   TO ANY DEGREE ON PAYMENT ON CASH
   FLOW AGREEMENTS                    The assets of the trust may, if specified
                                      in the related prospectus supplement,
                                      include agreements, such as interest rate
                                      swaps, caps, floors or other similar
                                      agreements which will require the provider
                                      of such instrument to make payments to the
                                      trust under the circumstances described in
                                      the prospectus supplement. If payments on
                                      one or more classes of the securities of
                                      the related series depend in part on
                                      payments to be received under such a cash
                                      flow agreement, the ability of the trust
                                      to make payments on the applicable classes
                                      will be subject to the credit risk of the
                                      provider of the cash flow agreement. The
                                      related prospectus supplement will
                                      describe any mechanism, such as the
                                      payment of "breakage fees," which may
                                      exist to facilitate replacement of a cash
                                      flow agreement upon the default or credit
                                      impairment of the provider of the
                                      agreement. However, there can be no
                                      assurance that any such mechanism will be
                                      successful in enabling the related trust
                                      to obtain a replacement cash flow
                                      agreement in the event the credit of its
                                      provider


                                       17



                                      becomes impaired, and the yield on the
                                      affected classes of certificates could be
                                      adversely affected as a result.

THE INTEREST RATES OF THE
   CERTIFICATES WITH ADJUSTABLE
   INTEREST RATES MAY BE LIMITED BY
   THE EFFECT OF INTEREST RATES ON
   THE LOANS AND OTHER FACTORS        The certificates may accrue interest at
                                      interest rates based on an index plus a
                                      specified margin as specified in the
                                      related prospectus supplement, but are
                                      subject to certain limitations. Those
                                      limitations on the interest rates for such
                                      certificates may, in part, be based on the
                                      weighted average of the interest rates on
                                      the loans net of certain fees and expenses
                                      of the trust.

                                      A variety of factors, in addition to those
                                      described in the next Risk Factor, could
                                      limit the interest rates and adversely
                                      affect the yield to maturity on such
                                      certificates. Some of these factors are
                                      described below:

                                      o    The interest rates on fixed-rate
                                           loans will not adjust, and the
                                           interest rates on adjustable-rate
                                           loans may be based on a variety of
                                           indexes, as specified in the related
                                           prospectus supplement.
                                           Adjustable-rate loans generally have
                                           periodic, minimum and maximum
                                           limitations on adjustments to their
                                           interest rates, and, as discussed in
                                           the next Risk Factor, most
                                           adjustable-rate loans will not have
                                           the first adjustment to their
                                           interest rates for some period of
                                           time after the origination of those
                                           loans. As a result of the limit on
                                           the interest rates for the
                                           certificates bearing an adjustable
                                           interest rate, these certificates may
                                           accrue less interest than they would
                                           accrue if their interest rates were
                                           based solely on the applicable index
                                           plus the specified margins.

                                      o    The index for the loans may change at
                                           different times and in different
                                           amounts than the index for the
                                           certificates. As a result, it is
                                           possible that interest rates on
                                           certain of the adjustable-rate loans
                                           may decline while the interest rates
                                           on such certificates are stable or
                                           rising. It is also possible that the
                                           interest rates on certain of the
                                           adjustable-rate loans and the
                                           interest rates for such certificates
                                           may decline or increase during the
                                           same period, but that the interest
                                           rates on such certificates may
                                           decline more slowly or increase more
                                           rapidly.

                                      o    If prepayments, defaults and
                                           liquidations occur more rapidly on
                                           the loans with relatively higher
                                           interest rates than on the loans with
                                           relatively lower interest rates, the
                                           interest rates on the securities with
                                           adjustable interest rates that are
                                           subject to cap based on weighted
                                           average net-mortgage rates are more
                                           likely to be limited.

                                      o    To the extent specified in the
                                           related prospectus supplement, if the
                                           interest rates on securities with
                                           adjustable interest rates are limited
                                           for any distribution date due to a
                                           cap based on the weighted average net
                                           interest rates of the loans or any
                                           particular groups, the resulting
                                           interest shortfalls may be recovered
                                           by the holders of these certificates
                                           on the same distribution date or on
                                           future distribution dates on a
                                           subordinated basis to the extent that
                                           on that distribution date or future
                                           distribution dates there are
                                           available funds remaining after
                                           certain other distributions on the
                                           certificates


                                       18



                                           and the payment of certain fees and
                                           expenses of the trust. These
                                           shortfalls suffered by such
                                           certificates may, to the extent
                                           specified in the related prospectus
                                           supplement, also be covered by
                                           amounts payable under an interest
                                           rate cap or other similar agreement
                                           relating to such certificates.
                                           However, we cannot assure you that
                                           these funds, if available, will be
                                           sufficient to fully cover these
                                           shortfalls.

IF THE CREDIT ENHANCEMENT FOR YOUR
   CERTIFICATES IS PROVIDED IN
   WHOLE OR IN PART BY
   OVERCOLLATERALIZATION, THE
   INTEREST GENERATED BY THE LOANS
   MAY BE INSUFFICIENT TO MAINTAIN
   THE REQUIRED LEVEL OF
   OVERCOLLATERALIZATION              For certificates credit enhanced by
                                      overcollateralization, the weighted
                                      average of the net interest rates on the
                                      loans is expected to be higher than the
                                      weighted average of the interest rates on
                                      the certificates. In such cases, the loans
                                      are expected to generate more interest
                                      than is needed to pay interest owed on the
                                      certificates and to pay certain fees and
                                      expenses of the trust. Any remaining
                                      interest generated by the loans will then
                                      be used to absorb losses that occur on the
                                      loans. After these financial obligations
                                      of the trust are covered, the available
                                      excess interest generated by the loans
                                      will be used to maintain
                                      overcollateralization at the required
                                      level determined as provided in the
                                      related agreement. We cannot assure you,
                                      however, that enough excess interest will
                                      be generated to absorb losses or to
                                      maintain the required level of
                                      overcollateralization. The factors
                                      described below, as well as the factors
                                      described in the previous Risk Factor,
                                      will affect the amount of excess interest
                                      that the loans will generate:

                                      o   Every time a loan is prepaid in full,
                                          excess interest may be reduced because
                                          the loan will no longer be outstanding
                                          and generating interest or, in the
                                          case of a partial prepayment, the loan
                                          will be generating less interest.

                                      o   Every time a loan is liquidated or
                                          written off, excess interest may be
                                          reduced because those loans will no
                                          longer be outstanding and generating
                                          interest.

                                      o   If the rates of delinquencies,
                                          defaults or losses on the 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 make required distributions on the
                                          certificates.

                                      o   To the extent the mortgage pool
                                          includes adjustable-rate loans, such
                                          loans may have interest rates that
                                          adjust based on an index that is
                                          different from the index used to
                                          determine the interest rates on the
                                          certificates that bear adjustable
                                          rates of interest, and any fixed-rate
                                          loans have interest rates that do not
                                          adjust. In addition, the first
                                          adjustment of the interest rates for
                                          any adjustable rate loans may not
                                          occur for a significant period after
                                          the date of origination. As a result,
                                          the interest rates on any adjustable
                                          rate certificates may increase
                                          relative to the weighted average of
                                          the interest rates on the loans, or
                                          the interest rate on any adjustable
                                          rate certificates may remain constant
                                          as the weighted average of the
                                          interest rates on the loans declines.
                                          In either case, this would require
                                          that more of the interest generated
                                          by the loans be applied to cover
                                          interest on the securities.


                                       19



                                      o    If prepayments, defaults and
                                           liquidations occur more rapidly on
                                           the loans with relatively higher
                                           interest rates that on the loans with
                                           relatively lower interest rates, the
                                           amount of excess interest generated
                                           by the loans will be less than would
                                           otherwise be the case.

                                      o    Investors in certificates, and
                                           particularly subordinate
                                           certificates, should consider the
                                           risk that the overcollateralization
                                           may not be sufficient to protect your
                                           securities from losses.

THE VALUE OF YOUR CERTIFICATES MAY
   BE ADVERSELY AFFECTED BY LOSSES
   ON THE LOANS EVEN IF LOSSES ARE
   NOT ALLOCATED TO YOUR
   CERTIFICATES                       If the rate of default and the amount of
                                      losses on the loans is higher than you
                                      expect, then your yield may be lower than
                                      you expect. Liquidations of defaulted
                                      loans, whether or not realized losses are
                                      incurred upon the liquidations, are likely
                                      to result in an earlier return of
                                      principal to senior certificates and are
                                      likely to influence the yield on such
                                      certificates in a manner similar to the
                                      manner in which principal prepayments on
                                      the loans would influence the yield on
                                      such certificates. You may be particularly
                                      affected if credit enhancement is provided
                                      in the form of overcollateralization as
                                      described in the applicable prospectus
                                      supplement. Such overcollateralization
                                      provisions are intended to result in an
                                      accelerated rate of principal
                                      distributions to holders of the securities
                                      then entitled to principal distributions
                                      at any time that the overcollateralization
                                      provided by the loan pool falls below the
                                      required level. An earlier return of
                                      principal to the holders of the
                                      certificates as a result of the
                                      overcollateralization provisions will
                                      influence the yield on the certificates in
                                      a manner similar to the manner in which
                                      principal prepayments on the loans will
                                      influence the yield on the certificates.

                                      The value of your certificates may be
                                      reduced if the rate of default or the
                                      amount of losses is higher than expected.
                                      If the performance of loans is
                                      substantially worse than assumed by the
                                      rating agencies, the ratings of any class
                                      of the certificates may be lowered or
                                      withdrawn in the future. This may reduce
                                      the value of those certificates. No one
                                      will be required to supplement any credit
                                      enhancement or to take any other action to
                                      maintain any rating of the certificates.

NEWLY ORIGINATED LOANS MAY BE MORE
   LIKELY TO DEFAULT, WHICH MAY
   CAUSE LOSSES ON THE CERTIFICATES   Defaults on loans tend to occur at higher
                                      rates during the early years of the loans.
                                      The loans described in the related
                                      prospectus supplement may primarily have
                                      been originated within the 12 months prior
                                      to their sale to the trust. In any such
                                      case, the trust may experience higher
                                      rates of default than if the loans had
                                      been outstanding for a longer period of
                                      time.

DECLINING PROPERTY VALUES AND
   DELAYS AND EXPENSES INHERENT IN
   FORECLOSURE PROCEDURES COULD
   DELAY DISTRIBUTIONS TO YOU OR
   RESULT IN LOSSES                   Delays Due to Liquidation Procedures.
                                      Substantial delays may occur before
                                      defaulted loans are liquidated and the
                                      proceeds forwarded to investors. Property
                                      foreclosure actions are regulated by state
                                      statutes and rules and, like many
                                      lawsuits, are characterized by significant
                                      delays and expenses if defenses or
                                      counterclaims are made. As a result,


                                       20



                                      foreclosure actions can sometimes take
                                      several years to complete and property
                                      proceeds may not cover the defaulted loan
                                      amount. Expenses incurred in the course of
                                      liquidating defaulted loans will be
                                      applied to reduce the foreclosure proceeds
                                      available to investors. Also, some states
                                      prohibit a mortgage lender from obtaining
                                      a judgment against the borrower for
                                      amounts not covered by property proceeds
                                      if the property is sold outside of a
                                      judicial proceeding. As a result, you may
                                      experience delays in receipt of moneys or
                                      reductions in payable to you.

                                      There is no assurance that the value of
                                      the trust assets for any series of
                                      securities at any time will equal or
                                      exceed the principal amount of the
                                      outstanding certificates of the series. If
                                      trust assets have to be sold because of an
                                      event of default or otherwise, providers
                                      of services to the trust (including the
                                      trustee, the master servicer and the
                                      credit enhancer, if any) generally will be
                                      entitled to receive the proceeds of the
                                      sale to the extent of their unpaid fees
                                      and other amounts due them before any
                                      proceeds are paid to certificateholders.
                                      As a result, you may not receive the full
                                      amount of interest and principal due on
                                      your certificate.

                                      Decline in Property Values May Increase
                                      Loan Losses. Your investment may be
                                      adversely affected by declines in property
                                      values. If the outstanding balance of a
                                      loan or contract and any secondary
                                      financing on the underlying property is
                                      greater than the value of the property,
                                      there is an increased risk of delinquency,
                                      foreclosure and loss. A decline in
                                      property values could extinguish the value
                                      of a junior mortgagee's interest in a
                                      property and, thus, reduce proceeds
                                      payable to the certificateholders.

                                      We refer you to "Material Legal Aspects of
                                      the Loans--Anti-Deficiency Legislation and
                                      other Limitations on Lenders" for
                                      additional information.

THE TRUST MAY CONTAIN LOANS SECURED
   BY JUNIOR LIENS; THESE LOANS ARE
   MORE LIKELY THAN LOANS SECURED
   BY SENIOR LIENS TO EXPERIENCE
   LOSSES                             The trust may contain loans that are in a
                                      junior lien position. Mortgages or deeds
                                      of trust securing junior loans will be
                                      satisfied after the claims of the senior
                                      mortgage holders and the foreclosure costs
                                      are satisfied. In addition, a junior
                                      mortgage lender may only foreclose in a
                                      manner that is consistent with the rights
                                      of the senior mortgage lender. As a
                                      result, the junior mortgage lender
                                      generally must either pay the related
                                      senior mortgage lender in full at or
                                      before the foreclosure sale or agree to
                                      make the regular payments on the senior
                                      mortgage. Since the trust will not have
                                      any source of funds to satisfy any senior
                                      mortgage or to continue making payments on
                                      that mortgage, the trust's ability as a
                                      practical matter to foreclose on any
                                      junior mortgage will be limited. In
                                      addition, since foreclosure proceeds first
                                      retire any senior liens, the foreclosure
                                      proceeds may not be sufficient to pay all
                                      amounts owed to you.

THE LOANS WILL BE UNDERWRITTEN
   USING VARYING STANDARDS, AND
   LESS STRINGENT UNDERWRITING
   STANDARDS AND THE RESULTANT
   POTENTIAL FOR DELINQUENCIES ON
   THE LOANS COULD LEAD TO LOSSES
   ON YOUR CERTIFICATES               The trust may contain loans that were
                                      made, in part, to borrowers who, for one
                                      reason or another, are not able, or do not
                                      wish, to obtain financing from traditional
                                      sources. These loans may be considered to


                                       21



                                      be of a riskier nature than loans made by
                                      traditional sources of financing, so that
                                      the holders of the certificates may be
                                      deemed to be at greater risk than if the
                                      loans were made to other types of
                                      borrowers. In this event, the underwriting
                                      standards used in the origination of the
                                      loans held by the trust will generally be
                                      less stringent than those of Fannie Mae or
                                      Freddie Mac with respect to a borrower's
                                      credit history and in certain other
                                      respects. Borrowers on the loans may have
                                      an impaired or unsubstantiated credit
                                      history. As a result of this less
                                      stringent approach to underwriting, the
                                      loans purchased by the trust for your
                                      series of certificates may experience
                                      higher rates of delinquencies, defaults
                                      and foreclosures than loans underwritten
                                      in a manner which is more similar to the
                                      Fannie Mae and Freddie Mac guidelines.

SOME TYPES OF LOANS MAY BE MORE
   PRONE TO DEFAULTS AND THE TRUST
   MAY CONTAIN LARGE CONCENTRATIONS
   OF THESE LOANS                     Because your certificates represent an
                                      interest in the loans held by the related
                                      trust, your investment may be affected by
                                      a decline in real estate values and
                                      changes in individual borrowers' financial
                                      conditions. You should be aware that the
                                      value of the mortgaged properties may
                                      decline. If the outstanding balance of a
                                      loan and any secondary financing on the
                                      underlying property is greater than the
                                      value of the property, there is an
                                      increased risk of delinquency, foreclosure
                                      and losses. If the residential real estate
                                      market experiences an overall decline in
                                      property values, the rates of
                                      delinquencies, foreclosures and losses
                                      could be higher than those now generally
                                      experienced in the lending industry. To
                                      the extent your certificates are not
                                      covered by credit enhancements, you will
                                      bear all of the risks resulting from
                                      defaults by borrowers.

                                      In addition, certain types of loans which
                                      have higher than average rates of default
                                      may be included in the trust that issues
                                      your securities. The following types of
                                      loans may be included:

                                      o    loans that are subject to "negative
                                           amortization." The principal balances
                                           of such loans may be increased to
                                           amounts greater than the value of the
                                           underlying property. This increases
                                           the likelihood of default;

                                      o    loans that do not fully amortize over
                                           their terms to maturity, which are
                                           sometimes referred to as balloon
                                           loans. Such loans require a large
                                           payment at their stated maturity.
                                           These loans involve a greater degree
                                           of risk because the ability of a
                                           borrower to make this final payment
                                           typically depends on the ability to
                                           refinance the loan or sell the
                                           related mortgaged property;

                                      o    loans that provide for escalating or
                                           variable interest payments by the
                                           borrower. The borrower may have
                                           qualified for such loans based on an
                                           income level sufficient to make the
                                           initial payments only. As the
                                           payments increase, the likelihood of
                                           default will increase; and

                                      o    loans that are concentrated in
                                           certain regions, states or zip code
                                           areas of the United States. Such
                                           geographic units may experience weak
                                           economic conditions and housing
                                           markets. This may cause higher rates
                                           of loss and delinquency.


                                       22



                                      We refer you to "The Trust Fund - The
                                      Loans" for additional information. The
                                      related prospectus supplement will
                                      disclose the extent to which any of these
                                      or other types of special risk loans are
                                      present in the pool applicable to your
                                      securities.

SOME OF THE LOANS MAY HAVE AN
   INITIAL INTEREST-ONLY PERIOD,
   WHICH MAY RESULT IN INCREASED
   DELINQUENCIES AND LOSSES           To the extent specified in the related
                                      prospectus supplement, certain loans may
                                      be interest-only until for a period of
                                      months or years after the date of
                                      origination. During this period, the
                                      payment made by the related borrower will
                                      be less than it would be if the principal
                                      of the loan was required to amortize. In
                                      addition, the loan principal balance will
                                      not be reduced because there will be no
                                      scheduled monthly payments of principal
                                      during this period. As a result, no
                                      principal payments will be made on the
                                      securities with respect to these loans
                                      during their interest-only period unless
                                      there is a principal prepayment.

                                      After the initial interest-only period,
                                      the scheduled monthly payment on these
                                      loans will increase, which may result in
                                      increased delinquencies by the related
                                      borrowers. In addition, losses may be
                                      greater on these loans as a result of
                                      there being no principal amortization
                                      during the early years of these loans.
                                      Although the amount of principal included
                                      in each scheduled monthly payment for a
                                      traditional loan is relatively small
                                      during the first few years after the
                                      origination of a loan, in the aggregate,
                                      the amount can be significant. Any
                                      resulting delinquencies and losses, to the
                                      extent not covered by available credit
                                      enhancement, will be allocated to the
                                      securities in reverse order of seniority.

                                      Loans with an initial interest-only period
                                      are relatively new in the mortgage
                                      marketplace. The performance of these
                                      loans may be significantly different from
                                      loans that amortize from origination. In
                                      particular, the failure by the related
                                      borrower to build equity in the property
                                      may affect the delinquency, loss and
                                      prepayment experience with respect to
                                      these loans.

IF CONSUMER PROTECTION LAWS ARE
   VIOLATED IN THE ORIGINATION OR
   SERVICING OF THE LOANS, LOSSES
   ON YOUR INVESTMENT COULD RESULT    There has been an increased focus by state
                                      and federal banking regulatory agencies,
                                      state attorneys general offices, the
                                      Federal Trade Commission, the U.S.
                                      Department of Justice, the U.S. Department
                                      of Housing and Urban Development and state
                                      and local governmental authorities on
                                      certain lending practices by some
                                      companies in the subprime industry,
                                      sometimes referred to as "predatory
                                      lending" practices. Sanctions have been
                                      imposed by state, local and federal
                                      governmental agencies for practices
                                      including, but not limited to, charging
                                      borrowers excessive fees, imposing higher
                                      interest rates than the borrower's credit
                                      risk warrants and failing to adequately
                                      disclose the material terms of loans to
                                      the borrowers.

                                      Applicable state and local laws generally
                                      regulate interest rates and other charges,
                                      require certain disclosure, and require
                                      licensing of the originators. In addition,
                                      other state and local 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 loans.


                                       23



                                      The loans are also subject to federal
                                      laws, including:

                                      o    the Federal Truth in Lending Act and
                                           Regulation Z promulgated under that
                                           Act, which require certain
                                           disclosures to the borrowers
                                           regarding the terms of the loans;

                                      o    the Equal Credit Opportunity Act and
                                           Regulation B promulgated under that
                                           Act, 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, state and local laws may limit
                                      the ability of the servicers to collect
                                      all or part of the principal of, or
                                      interest on, the loans and in addition
                                      could subject the trust to damages and
                                      administrative enforcement (including
                                      disgorgement of prior interest and fees
                                      paid). In particular, an originator's
                                      failure to comply with certain
                                      requirements of these federal, state or
                                      local laws could subject the trust (and
                                      other assignees of the loans) to monetary
                                      penalties, and result in the obligors'
                                      rescinding the loans against either the
                                      trust or subsequent holders of the loans.

                                      The loan seller, and other responsible
                                      parties making representations with
                                      respect to the mortgage loans, will
                                      represent that each mortgage loan sold by
                                      it is in compliance with applicable
                                      federal, state and local laws and
                                      regulations. In addition, such party will
                                      represent that none of the mortgage loans
                                      sold by it are covered by the Home
                                      Ownership and Equity Protection Act of
                                      1994 or are classified as a "high cost
                                      home," "threshold," "covered," "high risk
                                      home," "predatory," or similar loan under
                                      any other applicable federal, state or
                                      local law. In the event of a breach of any
                                      such representations, such party will be
                                      obligated to cure such breach or
                                      repurchase or replace the affected
                                      mortgage loan, in the manner and to the
                                      extent described in the related prospectus
                                      supplement.

LOSSES COULD RESULT IF VIOLATIONS
   OF ENVIRONMENTAL LAWS OCCURRED
   AFFECTING THE MORTGAGED
   PROPERTIES                         Under the laws of some states,
                                      contamination of a property may give rise
                                      to a lien on the property to assure the
                                      costs of cleanup. In several states, a
                                      lien to assure cleanup has priority over
                                      the lien of an existing mortgage. In
                                      addition, the trust issuing your
                                      certificates, because it is a mortgage
                                      holder, may be held responsible for the
                                      costs associated with the clean up of
                                      hazardous substances released at a
                                      property. Those costs could result in a
                                      loss to the certificateholders.

                                      We refer you to "Material Legal Aspects of
                                      the Loans--Environmental Risks" for
                                      additional information.

DELAY IN RECEIPT OF LIQUIDATION
   PROCEEDS; LIQUIDATION PROCEEDS
   MAY BE LESS THAN THE LOAN
   BALANCE                            Substantial delays could be encountered in
                                      connection with the liquidation of
                                      delinquent loans. Further, reimbursement
                                      of advances made on a loan, liquidation
                                      expenses such as legal fees, real estate


                                       24



                                      taxes, hazard insurance and maintenance
                                      and preservation expenses may reduce the
                                      portion of liquidation proceeds payable on
                                      the securities. If a mortgaged property
                                      fails to provide adequate security for the
                                      loan, you will incur a loss on your
                                      investment if the credit enhancements are
                                      insufficient to cover the loss.

THE BANKRUPTCY OF THE DEPOSITOR OR
   A SELLER MAY DELAY OR REDUCE
   COLLECTIONS ON LOANS               Neither the United States Bankruptcy Code
                                      nor similar applicable state insolvency
                                      laws prohibit the depositor from filing a
                                      voluntary application for bankruptcy
                                      relief under applicable law. However, the
                                      transactions contemplated by the related
                                      prospectus will be structured so that

                                      o    the voluntary or involuntary
                                           application for bankruptcy relief by
                                           the depositor is unlikely,

                                      o    in the event of a bankruptcy filing
                                           by the depositor, the loans backing
                                           your series of securities should be
                                           treated by the bankruptcy court as
                                           property of the related trust and not
                                           as part of the bankrupt estate of the
                                           depositor, and

                                      o    a bankruptcy filing by a seller which
                                           is an affiliate of the depositor from
                                           whom the depositor acquires the loans
                                           should not result in consolidation of
                                           the assets and liabilities of the
                                           depositor with those of such seller.

                                      These steps include the creation of the
                                      depositor as a separate, limited purpose
                                      subsidiary, the certificate of
                                      incorporation of which contains
                                      limitations on the nature of the
                                      depositor's business, restrictions on the
                                      ability of the depositor to commence
                                      voluntary or involuntary cases or
                                      proceedings under insolvency laws without
                                      the prior unanimous affirmative vote of
                                      all its directors and the structuring of
                                      each transfer of loans from the depositor
                                      to the related trust as a sale rather than
                                      a pledge. However, there can be no
                                      assurance that the activities of the
                                      depositor would not result in a court
                                      concluding that the assets and liabilities
                                      of the depositor should be consolidated
                                      with those of such a seller, or that the
                                      transfer of loans to the trust would in
                                      fact be treated by a court as a sale.

                                      The trust assets will be acquired by the
                                      depositor, either directly or through
                                      affiliates, from sellers. Each seller will
                                      transfer its related loans to the
                                      depositor and the depositor will transfer
                                      the loans to the related trust. If a
                                      seller were to become a debtor in a
                                      bankruptcy case, a creditor or trustee, or
                                      the debtor itself, may take the position
                                      that the transfer of the loans by the
                                      seller should be characterized as a pledge
                                      of the related loans to secure a borrowing
                                      of such debtor, with the result that the
                                      depositor or the trust is deemed to be a
                                      creditor of such seller, secured by a
                                      pledge of the applicable loans.

                                      An attempt to recharacterize the loan
                                      transfers related to your series of
                                      certificates, if successful, could result
                                      in delays in payments of collections on
                                      the loans or reductions in the amount of
                                      such payments which could result in losses
                                      on the certificates, or in a trustee in
                                      bankruptcy electing to accelerate payment
                                      by liquidating the loans. Even if such an
                                      attempt were unsuccessful, delays in
                                      payments on the loans and resulting delays
                                      or losses on the certificates could
                                      result.


                                       25



THE LOAN SELLER OR OTHER
   RESPONSIBLE PARTIES MAY NOT BE
   ABLE TO REPURCHASE DEFECTIVE
   LOANS                              Each loan seller or another responsible
                                      party will make various representations
                                      and warranties related to the loans. If
                                      any such loan seller or responsible party
                                      fails to cure a material breach of its
                                      representations and warranties with
                                      respect to any loan in a timely manner,
                                      then it would be required to repurchase
                                      or, if so specified in the related
                                      prospectus supplement, substitute for the
                                      defective loan. It is possible that any
                                      such loan seller or responsible party may
                                      not be capable of repurchasing or
                                      substituting any defective loans, for
                                      financial or other reasons. The inability
                                      of any such party to repurchase or
                                      substitute for defective loans would
                                      likely cause the loans to experience
                                      higher rates of delinquencies, defaults
                                      and losses. As a result, shortfalls in the
                                      distributions due on the certificates
                                      could occur.

EXTERNAL EVENTS MAY INCREASE THE
   RISK OF LOSS ON THE LOANS          In response to previously executed and
                                      threatened terrorist attacks in the United
                                      States and foreign countries, the United
                                      States has initiated military operations
                                      and has placed a substantial number of
                                      armed forces reservists and members of the
                                      National Guard on active duty status. It
                                      is possible that the number of reservists
                                      and members of the National Guard placed
                                      on active duty status in the near future
                                      may increase. To the extent that a member
                                      of the military, or a member of the armed
                                      forces reserves or National Guard who is
                                      called to active duty is a borrower of a
                                      loan in the trust, the interest rate
                                      limitation of the Servicemembers Civil
                                      Relief Act, and any comparable state law,
                                      will apply. Generally, substantially all
                                      of the loans in the trust for a series of
                                      certificates are expected to have interest
                                      rates which exceed such limitation, if
                                      applicable. This may result in interest
                                      shortfalls on the loans, which may result
                                      in shortfalls of interest on your
                                      certificates.

DRUG, RICO AND MONEY LAUNDERING
   VIOLATIONS COULD LEAD TO
   PROPERTY FORFEITURES               Federal law provides that property
                                      purchased or improved with assets derived
                                      from criminal activity or otherwise
                                      tainted, or used in the commission of
                                      certain offenses, can be seized and
                                      ordered forfeited to the United States of
                                      America. The offenses which can trigger
                                      such a seizure and forfeiture include,
                                      among others, violations of the Racketeer
                                      Influenced and Corrupt Organizations Act,
                                      the Bank Secrecy Act, the anti-money
                                      laundering laws and regulations, including
                                      the USA Patriot Act of 2001 and the
                                      regulations issued pursuant to that Act,
                                      as well as the narcotic drug laws. In many
                                      instances, the United States may seize the
                                      property even before a conviction occurs.

                                      In the event of a forfeiture proceeding, a
                                      lender may be able to establish its
                                      interest in the property by proving that
                                      (1) its mortgage was executed and recorded
                                      before the commission of the illegal
                                      conduct from which the assets used to
                                      purchase or improve the property were
                                      derived or before the commission of any
                                      other crime upon which the forfeiture is
                                      based, or (2) the lender, at the time of
                                      the execution of the mortgage, did not
                                      know or was reasonably without cause to
                                      believe that the property was subject to
                                      forfeiture. However, there is no assurance
                                      that such a defense would be successful.


                                       26



                         DESCRIPTION OF THE TRUST FUNDS

     Capitalized terms are defined in the "Glossary of Terms" beginning on page
121.

ASSETS

     The primary assets of each trust fund will include:

          o    single family mortgage loans, including mortgage participations;

          o    pass-through certificates or other mortgage-backed securities
               evidencing interests in or secured by one or more mortgage loans
               or mortgage participations;

          o    direct obligations of the United States or other governmental
               agencies which are not subject to redemption prior to maturity at
               the option of the issuer and are:

               o    interest-bearing securities;

               o    non-interest-bearing securities;

               o    originally interest-bearing securities from which coupons
                    representing the right to payment of interest have been
                    removed;

               o    interest-bearing securities from which the right to payment
                    of principal has been removed; or

          o    a combination of mortgage loans, mortgage-backed securities and
               government securities.

     The mortgage loans and mortgage-backed securities will not be guaranteed or
insured by Morgan Stanley Capital I Inc. or any of its affiliates or, unless
otherwise provided in the prospectus supplement, by any governmental agency or
instrumentality or by any other person. Each asset will be selected by Morgan
Stanley Capital I Inc. for inclusion in a trust fund from among those purchased,
either directly or indirectly, from a prior holder thereof, which may be an
affiliate of Morgan Stanley Capital I Inc. and, with respect to mortgage loans
and mortgage-backed securities, which prior holder may or may not be the
originator of the mortgage loans or the issuer of the mortgage-backed
securities.

     The certificates will be entitled to payment from the assets of the related
trust fund. If so specified in the related prospectus supplement, the
certificates will also be entitled to payments in respect of the assets of
another trust fund or trust funds established by Morgan Stanley Capital I Inc.
If specified in the related prospectus supplement, the assets of a trust fund
will consist of certificates representing beneficial ownership interests in
another trust fund that contains the assets.

MORTGAGE LOANS

     General

     To the extent specified in the related prospectus supplement, the mortgage
loans will be secured by:

          o    liens on mortgaged properties consisting of one- to four-family
               residential properties or security interests in shares issued by
               private cooperative housing corporations; or

          o    liens on mortgaged properties located in any one of the fifty
               states, the District of Columbia or the Commonwealth of Puerto
               Rico, or, if so specified in the related prospectus supplement,
               mortgaged properties may be located elsewhere.


                                       27



To the extent specified in the related prospectus supplement, the mortgage loans
will be secured by first liens or junior liens, or both, mortgages or deeds of
trust or other similar security instruments creating a first or junior lien on
mortgaged property. The mortgaged properties may include apartments owned by
cooperatives. The mortgaged properties may include leasehold interests in
properties, the title to which is held by third party lessors. To the extent
specified in the related prospectus supplement, the term of any such leasehold
shall exceed the term of the related mortgage note by at least five years. Each
mortgage loan will have been originated by a person other than Morgan Stanley
Capital I Inc. The related prospectus supplement will indicate if any originator
is an affiliate of Morgan Stanley Capital I Inc. The mortgage loans will be
evidenced by promissory notes secured by mortgages or deeds of trust creating a
lien on the mortgaged properties.

     Mortgage Loan Information in Prospectus Supplements

     Each prospectus supplement will contain information, as of the date of that
prospectus supplement and to the extent then applicable and specifically known
to Morgan Stanley Capital I Inc., with respect to the mortgage loans, including:

          o    the aggregate outstanding principal balance and the largest,
               smallest and average outstanding principal balance of the
               mortgage loans as of the applicable cut-off date;

          o    the type of property securing the mortgage loans;

          o    the weighted average, by principal balance, of the original and
               remaining terms to maturity of the mortgage loans;

          o    the earliest and latest origination date and maturity date of the
               mortgage loans;

          o    the weighted average, by principal balance, of the loan-to-value
               ratios at origination of the mortgage loans;

          o    the mortgage rates or range of mortgage rates and the weighted
               average mortgage rate borne by the mortgage loans;

          o    the states or, if applicable, countries in which most of the
               mortgaged properties are located;

          o    information with respect to the prepayment provisions, if any, of
               the mortgage loans;

          o    any interest retained by a seller;

          o    with respect to mortgage loans with adjustable mortgage rates,
               the index, the frequency of the adjustment dates, the highest,
               lowest and weighted average note margin and pass-through margin,
               and the maximum mortgage rate or monthly payment variation at the
               time of any adjustment thereof and over the life of the loan and
               the frequency of monthly payment adjustments; and

          o    information regarding the payment characteristics of the mortgage
               loans, including without limitation balloon payment and other
               amortization provisions.

     If specific information respecting the mortgage loans is not known to
Morgan Stanley Capital I Inc. at the time certificates are initially offered,
more general information of the nature described above will be provided in the
prospectus supplement, and specific information will be set forth in a report
which will be available to purchasers of the related certificates at or before
the initial issuance thereof and will be filed as part of a Current Report on
Form 8-K with the Securities and Exchange Commission within fifteen days after
the initial issuance.


                                       28



     Payment Provisions of the Mortgage Loans

     Unless otherwise specified in the related prospectus supplement, all of the
mortgage loans will:

          o    have individual principal balances at origination of not less
               than $25,000;

          o    have original terms to maturity of not more than 40 years; and

          o    provide for payments of principal, interest or both, on due dates
               that occur monthly, quarterly or semi-annually or at another
               interval as is specified in the related prospectus supplement.

     Each mortgage loan may provide for no accrual of interest or for accrual of
interest at a Mortgage Rate. Each mortgage loan may provide for scheduled
payments to maturity or payments that adjust from time to time to accommodate
changes in the mortgage rate or to reflect the occurrence of specified events.
Each mortgage loan may also provide for negative amortization or accelerated
amortization, in each case as described in the related prospectus supplement.
Each mortgage loan may be fully amortizing or require a balloon payment due on
its stated maturity date, in each case as described in the related prospectus
supplement. Each mortgage loan may contain prohibitions on prepayment or require
payment of a premium or a yield maintenance penalty in connection with a
prepayment, in each case as described in the related prospectus supplement.

     In the event that holders of any class or classes of offered certificates
will be entitled to all or a portion of any prepayment premiums collected in
respect of mortgage loans, the related prospectus supplement will specify the
method or methods by which these amounts will be allocated.

MORTGAGE-BACKED SECURITIES

     Any mortgage-backed security will have been issued pursuant to a pooling
and servicing agreement, a trust agreement, an indenture or similar agreement. A
seller or servicer or both of the underlying mortgage loans or underlying
mortgage-backed securities will have entered into an agreement with a trustee or
a custodian or with the original purchaser of the interest in the underlying
mortgage loans or mortgage-backed securities evidenced by the mortgage-backed
securities.

     Distributions of any principal or interest, as applicable, will be made on
mortgage-backed securities on the dates specified in the related prospectus
supplement. The mortgage-backed securities may be issued in one or more classes
with characteristics similar to the classes of certificates described in this
prospectus. Any principal or interest distributions will be made on the
mortgage-backed securities by the related trustee or servicer. The issuer of the
mortgage-backed securities or a servicer or other person specified in the
related prospectus supplement may have the right or obligation to repurchase or
substitute assets underlying the mortgage-backed securities after a certain date
or under other circumstances specified in the related prospectus supplement.

     Enhancement in the form of reserve funds, subordination or other forms of
credit support similar to that described for the certificates under "Description
of Credit Support" may be provided with respect to the mortgage-backed
securities. The type, characteristics and amount of the credit support, if any,
will be a function of certain characteristics of the mortgage loans or
underlying mortgage-backed securities evidenced by or securing the
mortgage-backed securities and other factors. The type, characteristics and
amount of the credit support generally will have been established for the
mortgage-backed securities on the basis of requirements of any rating agency
that may have assigned a rating to the mortgage-backed securities or the initial
purchasers of the mortgage-backed securities.

     The prospectus supplement for a series of certificates evidencing interests
in mortgage assets that include mortgage-backed securities will specify, to the
extent available:

          o    the aggregate approximate initial and outstanding principal
               amount or notional amount, as applicable, and type of the
               mortgage-backed securities to be included in the trust fund;

          o    the original and remaining term to stated maturity of the
               mortgage-backed securities, if applicable;


                                       29



          o    whether the mortgage-backed securities are entitled only to
               interest payments, only to principal payments or to both;

          o    the pass-through or bond rate of the mortgage-backed securities
               or formula for determining the rates, if any;

          o    the applicable payment provisions for the mortgage-backed
               securities, including, but not limited to, any priorities,
               payment schedules and subordination features;

          o    the issuer, servicer and trustee, as applicable;

          o    certain characteristics of the credit support, if any, such as
               subordination, reserve funds, insurance policies, letters of
               credit or guarantees relating to the related underlying mortgage
               loans, the underlying mortgage-backed securities or directly to
               such mortgage-backed securities;

          o    the terms on which the related underlying mortgage loans or
               underlying mortgage-backed securities for such mortgage-backed
               securities or the mortgage-backed securities may, or are required
               to, be purchased prior to their maturity;

          o    the terms on which mortgage loans or underlying mortgage-backed
               securities may be substituted for those originally underlying the
               mortgage-backed securities;

          o    the applicable servicing fees;

          o    the type of information in respect of the underlying mortgage
               loans described under "--Mortgage Loans--Mortgage Loan
               Information in Prospectus Supplements" above, and the type of
               information in respect of the underlying mortgage-backed
               securities described in this paragraph;

          o    the characteristics of any cash flow agreements that are included
               as part of the trust fund evidenced or secured by the
               mortgage-backed securities; and

          o    whether the mortgage-backed securities are in certificated form,
               book-entry form or held through a depository such as The
               Depository Trust Company or the Participants Trust Company.

GOVERNMENT SECURITIES

     The prospectus supplement for a series of certificates evidencing interests
in assets of a trust fund that include government securities will specify, to
the extent available:

          o    the aggregate approximate initial and outstanding principal
               amounts or notional amounts, as applicable, and types of the
               government securities to be included in the trust fund;

          o    the original and remaining terms to stated maturity of the
               government securities;

          o    whether the government securities are entitled only to interest
               payments, only to principal payments or to both;

          o    the interest rates of the government securities or the formula to
               determine the rates, if any;

          o    the applicable payment provisions for the government securities;
               and

          o    to what extent, if any, the obligation evidenced thereby is
               backed by the full faith and credit of the United States.


                                       30



ACCOUNTS

     Each trust fund will include one or more accounts established and
maintained on behalf of the certificateholders into which the person or persons
designated in the related prospectus supplement will, to the extent described in
this prospectus and in such prospectus supplement deposit all payments and
collections received or advanced with respect to the assets and other assets in
the trust fund. Such an account may be maintained as an interest bearing or a
non-interest bearing account, and funds held in the account may be held as cash
or invested in certain short-term, investment grade obligations, in each case as
described in the related prospectus supplement. See "Description of the
Agreements--Certificate Account and Other Collection Accounts."

CREDIT SUPPORT

     If so provided in the related prospectus supplement, partial or full
protection against defaults and losses on the assets in the related trust fund
may be provided to one or more classes of certificates in the related series:

          o    in the form of subordination of one or more other classes of
               certificates in the series; or

          o    by one or more other types of credit support, such as a letter of
               credit, insurance policy, guarantee, reserve fund or another type
               of credit support, or a combination thereof.

     The amount and types of coverage, the identification of the entity
providing the coverage, if applicable, and related information with respect to
each type of credit support, if any, will be described in the prospectus
supplement for a series of certificates. See "Risk Factors--Credit Enhancement
is Limited in Amount and Coverage" and "Description of Credit Support."

CASH FLOW AGREEMENTS

     If so provided in the related prospectus supplement, the trust fund may
include guaranteed investment contracts pursuant to which moneys held in the
funds and accounts established for the related series will be invested at a
specified rate. The trust fund may also include other agreements, such as:

          o    interest rate exchange agreements,

          o    interest rate cap or floor agreements,

          o    currency exchange agreements,

          o    swap agreements,

          o    notional balance agreements, or

          o    similar agreements provided to reduce the effects of interest
               rate or currency exchange rate fluctuations on the assets or on
               one or more classes of certificates. Currency exchange agreements
               might be included in the trust fund if some or all of the
               mortgage loans and mortgage-backed securities, such as mortgage
               loans secured by mortgaged properties located outside the United
               States, were denominated in a non-United States currency. The
               principal terms of any guaranteed investment contract or other
               agreement, including, without limitation, provisions relating to
               the timing, manner and amount of payments and provisions relating
               to termination, will be described in the prospectus supplement
               for the related series. In addition, the related prospectus
               supplement will provide information with respect to the obligor
               under any cash flow agreement.


                                       31



                                 USE OF PROCEEDS

     The net proceeds to be received from the sale of the certificates will be
applied by Morgan Stanley Capital I Inc. to the purchase of assets and to pay
for certain expenses incurred in connection with the purchase of assets and sale
of certificates. Morgan Stanley Capital I Inc. expects to sell the certificates
from time to time, but the timing and amount of offerings of certificates will
depend on a number of factors, including the volume of assets acquired by Morgan
Stanley Capital I Inc., prevailing interest rates, availability of funds and
general market conditions.

                              YIELD CONSIDERATIONS

GENERAL

     The yield on any offered certificate will depend on the price paid by the
certificateholder, the pass-through rate of the certificate, the receipt and
timing of receipt of distributions on the certificate and the weighted average
life of the assets in the related trust fund, which may be affected by
prepayments, defaults, liquidations or repurchases. See "Risk Factors."

PASS-THROUGH RATE

     Certificates of any class within a series may have fixed, variable or
adjustable pass-through rates, which may or may not be based upon the interest
rates borne by the assets in the related trust fund. The prospectus supplement
with respect to any series of certificates will specify:

          o    the pass-through rate for each class of certificates or, in the
               case of a variable or adjustable pass-through rate, the method of
               determining the pass-through rate;

          o    the effect, if any, of the prepayment of any mortgage loan or
               mortgage-backed security on the pass-through rate of one or more
               classes of certificates; and

          o    whether the distributions of interest on the certificates of any
               class will be dependent, in whole or in part, on the performance
               of any obligor under a cash flow agreement.

     The effective yield to maturity to each holder of certificates entitled to
payments of interest will be below that otherwise produced by the applicable
pass-through rate and purchase price of the certificate because, while interest
may accrue on each asset during a certain period, the distribution of interest
will be made on a day which may be several days, weeks or months following the
period of accrual.

TIMING OF PAYMENT OF INTEREST

     Each payment of interest on the certificates or addition to the certificate
balance of a class of accrual certificates on a distribution date will include
interest accrued during the interest accrual period for such distribution date.
As indicated in this prospectus under "--Pass-Through Rate" above, if the
interest accrual period ends on a date other than a distribution date for the
related series, the yield realized by the holders of the certificates may be
lower than the yield that would result if the interest accrual period ended on
that distribution date. In addition, if so specified in the related prospectus
supplement, interest accrued for an interest accrual period for one or more
classes of certificates may be calculated on the assumption that:

          o    distributions of principal,

          o    additions to the certificate balance of accrual certificates, and

          o    allocations of losses on the assets.


                                       32



may be made on the first day of the interest accrual period for a distribution
date and not on that distribution date. This method would produce a lower
effective yield than if interest were calculated on the basis of the actual
principal amount outstanding during an interest accrual period. The interest
accrual period for any class of offered certificates will be described in the
related prospectus supplement.

PAYMENTS OF PRINCIPAL; PREPAYMENTS

     The yield to maturity on the certificates will be affected by the rate of
principal payments on the assets, including principal prepayments on mortgage
loans resulting from both voluntary prepayments by the borrowers and involuntary
liquidations. The rate at which principal prepayments occur on the mortgage
loans will be affected by a variety of factors, including, without limitation,
the terms of the mortgage loans, the level of prevailing interest rates, the
availability of mortgage credit and economic, demographic, geographic, tax,
legal and other factors. In general, however, if prevailing interest rates fall
significantly below the mortgage rates on the mortgage loans comprising or
underlying the assets in a particular trust fund, the mortgage loans are likely
to be the subject of higher principal prepayments than if prevailing rates
remain at or above the rates borne by the mortgage loans. In this regard, it
should be noted that assets may consist of mortgage loans with different
mortgage rates and the stated pass-through or pay-through interest rate of
mortgage-backed securities may be a number of percentage points higher or lower
than certain of the underlying mortgage loans. The rate of principal payments on
some or all of the classes of certificates of a series:

          o    will correspond to the rate of principal payments on the assets
               in the related trust fund;

          o    is likely to be affected by the existence of lock-out periods and
               prepayment premium provisions of the mortgage loans underlying or
               comprising the assets; and

          o    is likely to be affected to the extent the servicer of any
               mortgage loan is able to enforce the lockout period and
               prepayment premium provisions.

Mortgage loans with a lock-out period or a prepayment premium provision, to the
extent enforceable, generally would be expected to experience a lower rate of
principal prepayments than otherwise identical mortgage loans without these
provisions, with shorter lock-out periods or with lower prepayment premiums.

     If the purchaser of a certificate offered at a discount calculates its
anticipated yield to maturity based on an assumed rate of distributions of
principal that is faster than that actually experienced on the assets, the
actual yield to maturity will be lower than that so calculated. Conversely, if
the purchaser of a certificate offered at a premium calculates its anticipated
yield to maturity based on an assumed rate of distributions of principal that is
slower than that actually experienced on the assets, the actual yield to
maturity will be lower than that so calculated. In either case, if so provided
in the prospectus supplement for a series of certificates, the effect on yield
on one or more classes of the certificates of the series of prepayments of the
assets in the related trust fund may be mitigated or exacerbated by any
provisions for sequential or selective distribution of principal to these
classes.

     When a full prepayment is made on a mortgage loan, the borrower is charged
interest on the principal amount of the mortgage loan so prepaid for the number
of days in the month actually elapsed up to the date of the prepayment. To the
extent specified in the related prospectus supplement, the effect of prepayments
in full will be to reduce the amount of interest paid in the following month to
holders of certificates entitled to payments of interest because interest on the
principal amount of any mortgage loan so prepaid will be paid only to the date
of prepayment rather than for a full month. To the extent specified in the
related prospectus supplement, a partial prepayment of principal is applied so
as to reduce the outstanding principal balance of the related mortgage loan as
of the due date in the month in which the partial prepayment is received. As a
result, to the extent set forth in the related prospectus supplement, the effect
of a partial prepayment on a mortgage loan will be to reduce the amount of
interest passed through to holders of certificates in the month following the
receipt of the partial prepayment by an amount equal to one month's interest at
the applicable pass-through rate on the prepaid amount.

     The timing of changes in the rate of principal payments on the mortgage
loans and mortgage-backed securities may significantly affect an investor's
actual yield to maturity, even if the average rate of distributions of principal
is consistent with an investor's expectation. In general, the earlier a
principal payment is received on the mortgage loans


                                       33



and mortgage-backed securities and distributed on a certificate, the greater the
effect on the investor's yield to maturity. 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 a given period may not be offset by a subsequent like
decrease or increase in the rate of principal payments.

PREPAYMENTS, MATURITY AND WEIGHTED AVERAGE LIFE

     The rates at which principal payments are received on the assets included
in or comprising a trust fund and the rate at which payments are made from any
credit support or cash flow agreement for the related series of certificates may
affect the ultimate maturity and the weighted average life of each class of a
series. Prepayments on the mortgage loans comprising or underlying the mortgage
loans and mortgage-backed securities in a particular trust fund will generally
accelerate the rate at which principal is paid on some or all of the classes of
the certificates of the related series.

     If so provided in the prospectus supplement for a series of certificates,
one or more classes of certificates may have a final scheduled distribution
date, which is the date on or prior to which the certificate balance thereof is
scheduled to be reduced to zero, calculated on the basis of the assumptions
applicable to that series set forth in the related prospectus supplement.

     Weighted average life refers to the average amount of time that will elapse
from the date of issue of a security until each dollar of principal of the
security will be repaid to the investor. The weighted average life of a class of
certificates of a series will be influenced by the rate at which principal on
the mortgage loans comprising or underlying the mortgage loans and
mortgage-backed securities is paid to that class. The principal may be in the
form of scheduled amortization or prepayments which include prepayments, in
whole or in part, and liquidations due to default.

     In addition, the weighted average life of the certificates may be affected
by the varying maturities of the mortgage loans comprising or underlying the
mortgage-backed securities. If any mortgage loans comprising or underlying the
assets in a particular trust fund have actual terms to maturity of less than
those assumed in calculating final scheduled distribution dates for the classes
of certificates of the related series, one or more classes of certificates may
be fully paid prior to their respective final scheduled distribution dates, even
in the absence of prepayments. Accordingly, the prepayment experience of the
assets will, to some extent, be a function of the mix of mortgage rates and
maturities of the mortgage loans comprising or underlying the assets. See
"Description of the Trust Funds."

     Prepayments on loans are also commonly measured relative to a prepayment
standard or model, such as the Constant Prepayment Rate prepayment model--also
known as CPR--or the Standard Prepayment Assumption prepayment model--also known
as SPA, each as described below. CPR represents a constant assumed rate of
prepayment each month relative to the then outstanding principal balance of a
pool of loans for the life of the loans. SPA represents an assumed rate of
prepayment each month relative to the then outstanding principal balance of a
pool of loans. A Prepayment Assumption of 100% of SPA assumes prepayment rates
of 0.2% per annum of the then outstanding principal balance of the loans in the
first month of the life of the loans and an additional 0.2% per annum in each
month thereafter until the thirtieth month. Beginning in the thirtieth month and
in each month thereafter during the life of the loans, 100% of SPA assumes a
constant prepayment rate of 6% per annum each month.

     Neither CPR nor SPA nor any other prepayment model or assumption purports
to be a historical description of prepayment experience or a prediction of the
anticipated rate of prepayment of any pool of loans, including the mortgage
loans underlying or comprising the mortgage loans and mortgage-backed
securities.

     In general, if interest rates fall below the mortgage rates on fixed-rate
mortgage loans, the rate of prepayment would be expected to increase.

     The prospectus supplement with respect to each series of certificates will
contain tables, if applicable, setting forth the projected weighted average life
of each class of offered certificates of the series and the percentage of the
initial certificate balance of each class that would be outstanding on specified
distribution dates. The information in these tables will be based on the
assumptions stated in the prospectus supplement, including assumptions that
prepayments on the mortgage loans comprising or underlying the related assets
are made at rates corresponding to various percentages of CPR, SPA or at other
rates specified in the prospectus supplement. These tables and


                                       34



assumptions are intended to illustrate the sensitivity of weighted average life
of the certificates to various prepayment rates and will not be intended to
predict or to provide information that will enable investors to predict the
actual weighted average life of the certificates. It is unlikely that prepayment
of any mortgage loans comprising or underlying the mortgage loans and
mortgage-backed securities for any series will conform to any particular level
of CPR, SPA or any other rate specified in the related prospectus supplement.

OTHER FACTORS AFFECTING WEIGHTED AVERAGE LIFE

     Type of Mortgage Asset

     If so specified in the related prospectus supplement, a number of mortgage
loans may have balloon payments due at maturity. Because the ability of a
borrower to make a balloon payment typically will depend upon its ability either
to refinance the loan or to sell the related mortgaged property, there is a risk
that mortgage loans having balloon payments may default at maturity. In the case
of defaults, recovery of proceeds may be delayed by, among other things,
bankruptcy of the borrower or adverse conditions in the market where the
property is located. In order to minimize losses on defaulted mortgage loans,
the servicer may, to the extent and under the circumstances set forth in the
related prospectus supplement, be permitted to modify mortgage loans that are in
default or as to which a payment default is imminent. Any defaulted balloon
payment or modification that extends the maturity of a mortgage loan will tend
to extend the weighted average life of the certificates, thereby lengthening the
period of time elapsed from the date of issuance of a certificate until it is
retired.

     With respect to certain mortgage loans, including adjustable rate loans,
the mortgage rate at origination may be below the rate that would result if the
index and margin relating thereto were applied at origination. Under the
applicable underwriting standards, the borrower under each mortgage loan
generally will be qualified on the basis of the mortgage rate in effect at
origination. The repayment of any mortgage loan may thus be dependent on the
ability of the borrower to make larger level monthly payments following the
adjustment of the mortgage rate.

     In addition, certain mortgage loans may be subject to temporary buydown
plans pursuant to which the monthly payments made by the borrower during the
early years of the mortgage loan will be less than the scheduled monthly
payments thereon. The periodic increase in the amount paid by the borrower of a
buydown mortgage loan during or at the end of the applicable buydown period may
create a greater financial burden for the borrower, who might not have otherwise
qualified for a mortgage, and may accordingly increase the risk of default with
respect to the related mortgage loan.

     The mortgage rates on adjustable rate loans subject to negative
amortization generally adjust monthly and their amortization schedules adjust
less frequently. During a period of rising interest rates as well as immediately
after origination (initial mortgage rates are generally lower than the sum of
the applicable index at origination and the related margin over the index at
which interest accrues), the amount of interest accruing on the principal
balance of the mortgage loans may exceed the amount of the minimum scheduled
monthly payment thereon. As a result, a portion of the accrued interest on
negatively amortizing mortgage loans may be added to the principal balance
thereof and will bear interest at the applicable mortgage rate. The addition of
any Deferred Interest to the principal balance of any related class or classes
of certificates will lengthen the weighted average life thereof and may
adversely affect yield to holders thereof, depending upon the price at which
those certificates were purchased.

     In addition, with respect to an adjustable rate loan subject to negative
amortization, during a period of declining interest rates, it might be expected
that each minimum scheduled monthly payment on that mortgage loan would exceed
the amount of scheduled principal and accrued interest on the principal balance
of that mortgage loan. Since the excess will be applied to reduce the principal
balance of the related class or classes of certificates, the weighted average
life of those certificates will be reduced and may adversely affect yield to
holders thereof, depending upon the price at which those certificates were
purchased.

     Defaults

     The rate of defaults on the mortgage loans will also affect the rate and
timing of principal payments on the assets and thus the yield on the
certificates. In general, defaults on mortgage loans are expected to occur with
greater frequency in their early years. The rate of default on mortgage loans
which are refinance or limited documentation mortgage loans, and on mortgage
loans with high loan-to-value ratios, may be higher than for other types of
mortgage


                                       35



loans. Furthermore, the rate and timing of prepayments, defaults and
liquidations on the mortgage loans will be affected by the general economic
condition of the region of the country in which the related mortgaged properties
are located. The risk of delinquencies and loss is greater and prepayments are
less likely in regions where a weak or deteriorating economy exists, as may be
evidenced by, among other factors, increasing unemployment or falling property
values.

     Foreclosures

     The number of foreclosures and the principal amount of the mortgage loans
comprising or underlying the mortgage loans and mortgage-backed securities that
are foreclosed in relation to the number and principal amount of mortgage loans
that are repaid in accordance with their terms will affect the weighted average
life of the mortgage loans comprising or underlying the mortgage loans and
mortgage-backed securities and that of the related series of certificates.

     Refinancing

     At the request of a borrower, the servicer or a subservicer may allow the
refinancing of a mortgage loan in any trust fund by accepting prepayments on
that loan and permitting a new loan secured by a mortgage on the same property.
In the event of a refinancing, the new loan would not be included in the related
trust fund and, therefore, the refinancing would have the same effect as a
prepayment in full of the related mortgage loan. The master servicer or a
subservicer may, from time to time, implement programs designed to encourage
refinancing. These programs may include, without limitation, modifications of
existing loans, general or targeted solicitations, the offering of pre-approved
applications, reduced origination fees or closing costs, or other financial
incentives. In addition, subservicers may encourage the refinancing of mortgage
loans, including defaulted mortgage loans, that would permit creditworthy
borrowers to assume the outstanding indebtedness of those mortgage loans.

     Due-on-Sale Clauses

     Acceleration of mortgage payments as a result of transfers of underlying
mortgaged property is another factor affecting prepayment rates that may not be
reflected in the prepayment standards or models used in the relevant prospectus
supplement. A number of the mortgage loans comprising or underlying the assets
may include "due-on-sale" clauses that allow the holder of the mortgage loans to
demand payment in full of the remaining principal balance of the mortgage loans
upon sale, transfer or conveyance of the related mortgaged property. With
respect to any mortgage loans, unless otherwise provided in the related
prospectus supplement, the servicer will generally enforce any due-on-sale
clause to the extent it has knowledge of the conveyance or proposed conveyance
of the underlying mortgaged property and it is entitled to do so under
applicable law. However, the servicer will not take any action in relation to
the enforcement of any due-on-sale provision which would adversely affect or
jeopardize coverage under any applicable insurance policy. See "Legal Aspects of
Mortgage Loans--Due-on-Sale Clauses" and "Description of the
Agreements--Due-on-Sale Provisions."

                                  THE DEPOSITOR

     Morgan Stanley Capital I Inc., the depositor, is a direct wholly-owned
subsidiary of Morgan Stanley and was incorporated in the State of Delaware on
January 28, 1985. The principal executive offices of Morgan Stanley Capital I
Inc. are located at 1585 Broadway, 37th Floor, New York, New York 10036. Its
telephone number is (212) 761-4000.

     Morgan Stanley Capital I Inc. does not have, nor is it expected in the
future to have, any significant assets.


                                       36



                         DESCRIPTION OF THE CERTIFICATES

GENERAL

     The certificates of each series, including any class of certificates not
offered by this prospectus, will represent the entire beneficial ownership
interest in the trust fund created pursuant to the related Agreement. Each
series of certificates will consist of one or more classes of certificates that
may:

          o    provide for the accrual of interest thereon based on fixed,
               variable or adjustable rates;

          o    be senior or subordinate to one or more other classes of
               certificates in respect of distributions on the certificates;

          o    be entitled to principal distributions, with disproportionately
               low, nominal or no interest distributions;

          o    be entitled to interest distributions, with disproportionately
               low, nominal or no principal distributions;

          o    provide for distributions of accrued interest thereon commencing
               only following the occurrence of events, such as the retirement
               of one or more other classes of certificates of the series;

          o    provide for payments of principal sequentially, based on
               specified payment schedules, from only a portion of the assets in
               the trust fund or based on specified calculations, to the extent
               of available funds, in each case as described in the related
               prospectus supplement;

          o    provide for distributions based on a combination of two or more
               components thereof with one or more of the characteristics
               described in this paragraph including a stripped principal
               certificate component and a stripped interest certificate
               component; or

          o    do all or any combination of the above.

     If so specified in the related prospectus supplement, distributions on one
or more classes of a series of certificates may be limited to collections from a
designated portion of the mortgage loans in the related mortgage pool. Any of
the foregoing may be included in the certificates being offered to you.

     Each class of offered certificates of a series will be issued in minimum
denominations corresponding to the certificate balances or, in case of stripped
interest certificates, notional amounts or percentage interests specified in the
related prospectus supplement. The transfer of any offered certificates may be
registered and these certificates may be exchanged without the payment of any
service charge payable in connection with the registration of transfer or
exchange. However, Morgan Stanley Capital I Inc. or the trustee or any agent
thereof may require payment of a sum sufficient to cover any tax or other
governmental charge. One or more classes of certificates of a series may be
issued in definitive form or in book-entry form, as provided in the related
prospectus supplement. See "Risk Factors--Book-Entry Certificates May Experience
Decreased Liquidity and Payment Delay" and "Description of the
Certificates--Book-Entry Registration and Definitive Certificates." Definitive
certificates will be exchangeable for other certificates of the same class and
series of a like aggregate certificate balance, notional amount or percentage
interest but of different authorized denominations. See "Risk Factors--Lack of a
Secondary Market May Make it Difficult for You to Resell Your Certificates" and
"--The Trust Fund's Assets May be Insufficient to Pay Your Certificates in
Full."

CATEGORIES OF CLASSES OF CERTIFICATES

     The certificates of any series may be comprised of one or more classes.
Classes of certificates, in general, fall into different categories. The
following chart identifies and generally describes the more typical categories.
The prospectus supplement for a series of certificates may identify the classes
which comprise that series by reference to the following categories.


                                       37


       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
                                      Mortgage Assets or other assets of the
                                      trust fund for the related series.

Companion Class....................   A class that receives principal payments
                                      on any distribution date only if scheduled
                                      payments have been made on specified
                                      planned principal classes, targeted
                                      principal classes or scheduled principal
                                      classes.

Component Certificates.............   A class consisting of "components." The
                                      components of a class of component
                                      certificates may have different principal
                                      and interest payment characteristics but
                                      together constitute a single class. Each
                                      component of a class of component
                                      certificates may be identified as falling
                                      into one or more of the categories in this
                                      chart.

Non-Accelerated Senior or NAS......   A class that, for the period of time
                                      specified in the related prospectus
                                      supplement, generally will not receive (in
                                      other words, is locked out of) (1)
                                      principal prepayments on the underlying
                                      Mortgage Assets that are allocated
                                      disproportionately to the senior
                                      certificates because of the shifting
                                      interest structure of the certificates in
                                      the trust and/or (2) scheduled principal
                                      payments on the underlying Mortgage
                                      Assets, as specified in the related
                                      prospectus supplement. During the lock-out
                                      period, the portion of the principal
                                      distributions on the underlying Mortgage
                                      Assets that the NAS class is locked out of
                                      will be distributed to the other classes
                                      of senior certificates.

Notional Amount Certificates.......   A class having no principal balance and
                                      bearing interest on the related notional
                                      amount. The notional amount is used for
                                      purposes of the determination of interest
                                      distributions.

Planned Principal Class or PACs....   A class that is designed to receive
                                      principal payments using a predetermined
                                      principal balance schedule derived by
                                      assuming two constant prepayment rates for
                                      the underlying Mortgage 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 Mortgage 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

                                       38



                                      single class that receives principal
                                      payments before or after all other classes
                                      in the same series of certificates 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 Mortgage Assets
                                      or other assets of the trust fund.

Super Senior.......................   A class that will not bear its
                                      proportionate share of realized losses
                                      (other than excess losses) as its share is
                                      directed to another class, referred to as
                                      the "support class" until the class
                                      certificate balance of the support class
                                      is reduced to zero.

Support Class......................   A class that absorbs the realized losses
                                      other than excess losses that would
                                      otherwise be allocated to a Super Senior
                                      class after the related classes of
                                      subordinated certificates are no longer
                                      outstanding.

Targeted Principal Class or TACs...   A class that is designed to receive
                                      principal payments using a predetermined
                                      principal balance schedule derived by
                                      assuming a single constant prepayment rate
                                      for the underlying Mortgage Assets.

Interest Types

Fixed Rate.........................   A class with an interest rate that is
                                      fixed throughout the life of the class.

Floating Rate......................   A class with an interest rate that resets
                                      periodically based upon a designated index
                                      and that varies directly with changes in
                                      the index.

Inverse Floating Rate..............   A class with an interest rate that resets
                                      periodically based upon a designated index
                                      and that varies inversely with changes in
                                      the index.

Variable Rate......................   A class with an interest rate that resets
                                      periodically and is calculated by
                                      reference to the rate or rates of interest
                                      applicable to specified assets or
                                      instruments (e.g., the mortgage rates
                                      borne by the underlying mortgage loans).

Interest Only......................   A class that receives some or all of the
                                      interest payments made on the underlying
                                      Mortgage Assets or other assets of the
                                      trust fund and little or no principal.
                                      Interest only classes have either a
                                      nominal principal balance or a notional
                                      amount. A nominal principal balance
                                      represents actual principal that will be
                                      paid on the class. It is referred to as
                                      nominal since it is extremely small
                                      compared to other classes. A notional
                                      amount is the amount used as a reference
                                      to calculate the amount of interest due on
                                      an interest only class that is not
                                      entitled to any distributions of
                                      principal.

Principal Only.....................   A class that does not bear interest and is
                                      entitled to receive only distributions of
                                      principal.

Partial Accrual....................   A class that accretes a portion of the
                                      amount of accrued interest on it, which
                                      amount will be added to the principal
                                      balance of the class on each applicable
                                      distribution date, with the remainder of
                                      the accrued interest to be distributed
                                      currently as interest on the class. The
                                      accretion may continue until a specified
                                      event has occurred or until the partial
                                      accrual class is retired.

Accrual............................   A class that accretes the amount of
                                      accrued interest otherwise distributable
                                      on the class, which amount will be added
                                      as principal to the


                                       39



                                      principal balance of the class on each
                                      applicable distribution date. The
                                      accretion may continue until some
                                      specified event has occurred or until the
                                      accrual class is retired.

INDICES APPLICABLE TO FLOATING RATE AND INVERSE FLOATING RATE CLASSES

     The indices applicable to floating rate and inverse floating rate classes
will be LIBOR, COFI, the Treasury Index, the Prime Rate, in each case calculated
as described in this prospectus or any other index described in the related
prospectus supplement.

LIBOR

     On the date specified in the related prospectus supplement for any class of
certificates the interest rate of which is determined by reference to an index
designated as LIBOR, the calculation agent designated in the prospectus
supplement will determine LIBOR for the related interest accrual period. On that
determination date, the calculation agent will determine the quotations, as of
11:00 a.m., London time, offered by the principal London office of each of the
designated reference banks meeting the criteria set forth below, for making
one-month United States dollar deposits in the London Interbank market. The
calculation agent will determine those quotations by reference to the Reuters
Screen LIBO Page, as defined in the International Swap Dealers Association, Inc.
Code of Standard Wording, Assumptions and Provisions for Swaps, 1986 Edition, or
to the Telerate Screen Page 3750. In lieu of relying on the quotations for those
reference banks that appear at that time on the Reuters Screen LIBO Page or on
the Telerate Screen Page 3750, the calculation agent may request each of the
reference banks to provide offered quotations at that time.

     LIBOR will be established as follows:

          (1) 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%).

          (2) 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 rate is the rate per annum which the calculation agent
determines to be either (a) 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 quotations are, in the
opinion of the calculation agent, being so made, or (b) in the event that the
calculation agent can determine no 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.

          (3) 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 (2)
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 deemed 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 any reference bank
should be unwilling or unable to act or if appointment of any reference bank is
terminated, another leading bank meeting the criteria specified above will be
appointed.


                                       40



     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

     On the date specified in the related prospectus supplement for any class of
certificates the interest rate of which is determined by reference to an index
designated as COFI, the calculation agent designated in the prospectus
supplement will ascertain the Eleventh District Cost of Funds Index for the
related interest accrual period. 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 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, or 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:

          o    savings deposits,

          o    time deposits,

          o    FHLBSF advances,

          o    repurchase agreements, and

          o    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 with
similar maturities. Moreover, as stated above, the Eleventh District Cost of
Funds Index is designed to represent the average cost of funds for Eleventh
District savings institutions for the month prior to the month in which it is
due to be published. Additionally, the Eleventh District Cost of Funds Index may
not necessarily move in the same direction as market interest rates at all
times, since, as longer term deposits or borrowings mature and are renewed at
prevailing market interest rates, the Eleventh District Cost of Funds Index is
influenced by the differential between the prior and the new rates on those
deposits or borrowings. In addition, movements of the Eleventh District Cost of
Funds Index, as 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. In addition, 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


                                       41



guarantee the announcement" of the index on an exact date. On the tenth day, or
any other day of the month specified in the related prospectus supplement, COFI
for each class of COFI certificates for the interest accrual period commencing
in that month shall be the most recently published Eleventh District Cost of
Funds Index, unless the most recently published index relates to a month prior
to the third preceding month. If the most recently published Eleventh District
Cost of Funds Index relates to a month prior to the third preceding month, COFI
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 Cost of Funds Index published by the OTS. 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 COFI
is based on the National Cost of Funds Index it will be based on the most
recently published index, unless the most recently published index, as of the
tenth or other designated day of the month in which an interest accrual period
commences, relates to a month prior to the fourth preceding month. In that case,
the index applicable to each class of COFI certificates, for that 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 related 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, particularly if LIBOR is the alternative index,
could increase its volatility.

     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

     On the date specified in the related prospectus supplement for any class of
certificates the interest rate of which is determined by reference to an index
denominated as a Treasury Index, the calculation agent designated in the
prospectus supplement will ascertain the Treasury Index for Treasury securities
of the maturity and for the period, or, if applicable, date, specified in the
prospectus supplement. As described in the related prospectus supplement, the
Treasury Index for any period means the average of the yield for each business
day during the period specified in the related prospectus supplement, and for
any date means the yield for that date, expressed as a per annum percentage
rate, on

     (1) U.S. Treasury securities adjusted to the "constant maturity" specified
in that prospectus supplement or

     (2) if no "constant maturity" is so specified, U.S. Treasury securities
trading on the secondary market having the maturity specified in that 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
that week, then it will use the Statistical Release from the immediately
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
certificates. 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

     On the date specified in the related prospectus supplement for any class of
certificates the interest rate of which is determined by reference to an index
denominated as the Prime Rate, the calculation agent designated in the
prospectus supplement will ascertain the Prime Rate for the related interest
accrual period. As described in the related prospectus supplement, 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


                                       42



newspaper of general circulation selected by the calculation agent in its sole
discretion, on the related 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 certificates. 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.

DISTRIBUTIONS

     Distributions on the certificates of each series will be made by or on
behalf of the trustee on each distribution date as specified in the related
prospectus supplement from the Available Distribution Amount for the series and
the distribution date. Except as otherwise specified in the related prospectus
supplement, distributions other than the final distribution will be made to the
persons in whose names the certificates are registered on the Record Date, and
the amount of each distribution will be determined as of the close of business
on the date specified in the related prospectus supplement. All distributions
with respect to each class of certificates on each distribution date will be
allocated pro rata among the outstanding certificates in the class or by random
selection, as described in the related prospectus supplement or otherwise
established by the related trustee. Payments will be made either:

          o    by wire transfer in immediately available funds to the account of
               a certificateholder at a bank or other entity having appropriate
               wire transfer facilities, if the certificateholder has so
               notified the trustee or other person required to make the
               payments no later than the date specified in the related
               prospectus supplement and, if so provided in the related
               prospectus supplement, holds certificates in the requisite amount
               specified in the related prospectus supplement, or

          o    by check mailed to the address of the person entitled thereto as
               it appears on the certificate register;

provided, however, that the final distribution in retirement of the certificates
whether definitive certificates or book-entry certificates, will be made only
upon presentation and surrender of the certificates at the location specified in
the notice to certificateholders of the final distribution.

AVAILABLE DISTRIBUTION AMOUNT

     All distributions on the certificates of each series on each distribution
date will be made from the Available Distribution Amount, in accordance with the
terms described in the related prospectus supplement.

     The entire Available Distribution Amount will be distributed among the
related certificates, including any certificates not offered hereby, on each
distribution date, and accordingly will be released from the trust fund and will
not be available for any future distributions.

DISTRIBUTIONS OF INTEREST ON THE CERTIFICATES

     Each class of certificates, other than classes of Stripped Principal
Certificates that have no pass-through rate, may have a different pass-through
rate, which will be a fixed, variable or adjustable rate at which interest will
accrue on the class or a component thereof. The related prospectus supplement
will specify the pass-through rate for each class or component or, in the case
of a variable or adjustable pass-through rate, the method for determining the
pass-through rate. If so specified in the related prospectus supplement,
interest on the certificates will be calculated on the basis of a 360-day year
consisting of twelve 30-day months.

     Distributions of interest in respect of the certificates of any class will
be made on each distribution date--other than any class of accrual certificates,
which will be entitled to distributions of accrued interest commencing only on
the distribution date, or under the circumstances specified in the related
prospectus supplement, and any class of Stripped Principal Certificates that are
not entitled to any distributions of interest--based on the accrued certificate
interest for the class and the distribution date, subject to the sufficiency of
the portion of the Available Distribution Amount allocable to the class on the
distribution date. Prior to the time interest is distributable on any class of
accrual certificates, the amount of accrued certificate interest otherwise
distributable on the class will be added to the certificate balance thereof on
each distribution date. Unless otherwise provided in the prospectus supplement,
accrued


                                       43



certificate interest on stripped interest certificates will be equal to interest
accrued for a specified period on the outstanding certificate balance of the
stripped interest certificates immediately prior to the distribution date, at
the applicable pass-through rate, reduced as described below. To the extent
specified in the prospectus supplement, accrued certificate interest on stripped
interest certificates will be equal to interest accrued for a specified period
on the outstanding notional amount of the stripped interest certificates
immediately prior to each distribution date, at the applicable pass-through
rate, reduced as described below in the next paragraph.

     The method of determining the notional amount for any class of stripped
interest certificates will be described in the related prospectus supplement.
Reference to notional amount is solely for convenience in certain calculations
and does not represent the right to receive any distributions of principal.
Unless otherwise provided in the related prospectus supplement, the accrued
certificate interest on a series of certificates will be reduced in the event of
prepayment interest shortfalls, which are shortfalls in collections of interest
for a full accrual period resulting from prepayments prior to the due date in
the accrual period on the mortgage loans comprising or underlying the mortgage
loans and mortgage-backed securities in the trust fund for the series. The
particular manner in which these shortfalls are to be allocated among some or
all of the classes of certificates of that series will be specified in the
related prospectus supplement. The related prospectus supplement will also
describe the extent to which the amount of accrued certificate interest that is
otherwise distributable on, or, in the case of accrual certificates, that may
otherwise be added to the certificate balance of, a class of offered
certificates may be reduced as a result of any other contingencies, including:

          o    delinquencies,

          o    losses, and

          o    Deferred Interest

on or in respect of the mortgage loans comprising or underlying the mortgage
loans and mortgage-backed securities in the related trust fund. To the extent
specified in the related prospectus supplement, any reduction in the amount of
accrued certificate interest otherwise distributable on a class of certificates
by reason of the allocation to the class of a portion of any Deferred Interest
on the mortgage loans comprising or underlying the mortgage loans and
mortgage-backed securities in the related trust fund will result in a
corresponding increase in the certificate balance of the class. See "Risk
Factors--The Rate of Prepayment on Mortgage Assets May Adversely Affect Average
Lives and Yields on Certificates" and "Yield Considerations."

DISTRIBUTIONS OF PRINCIPAL OF THE CERTIFICATES

     The certificates of each series, other than certain classes of stripped
interest certificates, will have a certificate balance. The certificate balance
will equal the maximum principal amount that the holder will be entitled to
receive out of future cash flow on the assets in the trust fund. The outstanding
certificate balance of a certificate will be reduced to the extent of
distributions of principal and, if and to the extent so provided in the related
prospectus supplement, by the amount of losses incurred in respect of the
related assets. The outstanding certificate balance may be increased in respect
of Deferred Interest on the related mortgage loans to the extent provided in the
related prospectus supplement. The outstanding certificate balance may be
increased, in the case of accrual certificates prior to the distribution date on
which distributions of interest are required to commence, by any related accrued
certificate interest. Unless otherwise provided in the related prospectus
supplement, the initial aggregate certificate balance of all classes of
certificates of a series will not be greater than the outstanding aggregate
principal balance of the related assets as of the applicable cut-off date. The
initial aggregate certificate balance of a series and each class thereof will be
specified in the related prospectus supplement. Unless otherwise provided in the
related prospectus supplement, distributions of principal will be made on each
distribution date to the class or classes of certificates entitled to the
distributions of principal in accordance with the provisions described in the
prospectus supplement until the certificate balance of that class has been
reduced to zero. Stripped Interest Certificates with no certificate balance are
not entitled to any distributions of principal.


                                       44



COMPONENTS

     To the extent specified in the related prospectus supplement, distribution
on a class of certificates may be based on a combination of two or more
different components as described under "--General" above. The descriptions set
forth under "--Distributions of Interest on the Certificates" and
"--Distributions of Principal of the Certificates" above also relate to
components of a class of certificates. In this case, references to certificate
balance and pass-through rate refer to the principal balance, if any, of any
component and the pass-through rate, if any, on any component, respectively.

DISTRIBUTIONS ON THE CERTIFICATES OF PREPAYMENT PREMIUMS

     If so provided in the related prospectus supplement, prepayment premiums
that are collected on the mortgage loans and mortgage-backed securities in the
related trust fund will be distributed on each distribution date to the class or
classes of certificates entitled thereto in accordance with the provisions
described in the prospectus supplement.

ALLOCATION OF LOSSES AND SHORTFALLS

     If so provided in the prospectus supplement for a series of certificates
consisting of one or more classes of subordinate certificates, on any
distribution date in respect of which losses or shortfalls in collections on the
mortgage loans and mortgage-backed securities have been incurred, the amount of
losses or shortfalls will be borne first by a class of subordinate certificates
in the priority and manner and subject to the limitations specified in the
prospectus supplement. See "Description of Credit Support" for a description of
the types of protection that may be included in a trust fund against losses and
shortfalls on mortgage loans and mortgage-backed securities comprising the trust
fund.

ADVANCES IN RESPECT OF DELINQUENCIES

     With respect to any series of certificates evidencing an interest in a
trust fund, unless otherwise provided in the related prospectus supplement, the
master servicer or another entity described in the prospectus supplement will be
required as part of its servicing responsibilities to advance on or before each
distribution date its own funds or funds held in the certificate account that
are not included in the Available Distribution Amount for the distribution date,
in an amount equal to the aggregate of payments of principal other than any
balloon payments, and interest, net of related servicing fees and retained
interest loans and mortgage-backed securities, that were due on the mortgage
loans in the trust fund during the related Due Period and were delinquent on the
related Determination Date. The advances will be made subject to the master
servicer's or another entity's good faith determination that the advances will
be reimbursable from Related Proceeds. In the case of a series of certificates
that includes one or more classes of subordinate certificates and if so provided
in the related prospectus supplement, the master servicer's or another entity's
advance obligation may be limited only to the portion of the delinquencies
necessary to make the required distributions on one or more classes of senior
certificates. The advance obligation may be subject to the master servicer's or
another entity's good faith determination that the advances will be reimbursable
not only from Related Proceeds but also from collections on other assets
otherwise distributable on one or more classes of subordinate certificates. See
"Description of Credit Support."

     Advances are intended to maintain a regular flow of scheduled interest and
principal payments to holders of the class or classes of certificates. Advances
do not guaranty or insure against losses. Unless otherwise provided in the
related prospectus supplement, advances of the master servicer's or another
entity's funds will be reimbursable only out of Related Proceeds and, if so
provided in the prospectus supplement, out of any amounts otherwise
distributable on one or more classes of subordinate certificates of the series.
However, advances will be reimbursable from amounts in the certificate account
prior to distributions being made on the certificates, to the extent that the
master servicer or another entity shall determine in good faith that the advance
is a nonrecoverable advance. If advances have been made by the master servicer
from excess funds in the certificate account, the master servicer is required to
replace the funds in the certificate account on any future distribution date to
the extent that funds in the certificate account on the distribution date are
less than payments required to be made to certificateholders on that date. If so
specified in the related prospectus supplement, the obligations of the master
servicer or another entity to make advances may be secured by a cash advance
reserve fund, a surety bond, a letter of credit or another form of limited
guaranty. If applicable, information regarding the characteristics of, and the
identity of any obligor on, any surety bond, will be set forth in the related
prospectus supplement.


                                       45



     If and to the extent so provided in the related prospectus supplement, the
master servicer or another entity will be entitled to receive interest at the
rate specified in the related prospectus supplement on its outstanding advances
and will be entitled to pay itself interest periodically from general
collections on the assets prior to any payment to certificateholders or as
otherwise provided in the related Agreement and described in the prospectus
supplement.

     The prospectus supplement for any series of certificates evidencing an
interest in a trust fund that includes mortgage-backed securities will describe
any corresponding advancing obligation of any person in connection with such
mortgage-backed securities.

REPORTS TO CERTIFICATEHOLDERS

     Unless otherwise provided in the prospectus supplement, with each
distribution to holders of any class of certificates of a series, the servicer
or the trustee, as provided in the related prospectus supplement, will forward
or cause to be forwarded to each holder, to Morgan Stanley Capital I Inc. and to
the other parties as may be specified in the related Agreement, a statement
setting forth, in each case to the extent applicable and available:

     (1) the amount of the distribution to holders of certificates of that class
applied to reduce the certificate balance thereof;

     (2) the amount of the distribution to holders of certificates of that class
allocable to accrued certificate interest;

     (3) the amount of the distribution allocable to prepayment premiums;

     (4) the amount of related servicing compensation received by a servicer
and, if payable directly out of the related trust fund, by any subservicer and
any other customary information as that servicer or trustee deems necessary or
desirable, or that a certificateholder reasonably requests, to enable
certificateholders to prepare their tax returns;

     (5) the aggregate amount of advances included in that distribution, and the
aggregate amount of unreimbursed advances at the close of business on that
distribution date;

     (6) the aggregate principal balance of the assets at the close of business
on that distribution date;

     (7) the number and aggregate principal balance of mortgage loans in respect
of which:

          o    one scheduled payment is delinquent;

          o    two scheduled payments are delinquent;

          o    three or more scheduled payments are delinquent; and

          o    foreclosure proceedings have been commenced;

     (8) with respect to any mortgage loan liquidated during the related Due
Period:

          o    the portion of liquidation proceeds payable or reimbursable to
               the servicer or any other entity in respect of such mortgage
               loan; and

          o    the amount of any loss to certificateholders;

     (9) with respect to each REO property relating to a mortgage loan and
included in the trust fund as of the end of the related Due Period:

          o    the loan number of the related mortgage loan; and

          o    the date of acquisition;


                                       46



     (10) with respect to each REO property relating to a mortgage loan and
included in the trust fund as of the end of the related Due Period:

          o    the book value;

          o    the principal balance of the related mortgage loan immediately
               following the distribution date, calculated as if the mortgage
               loan were still outstanding taking into account certain limited
               modifications to the terms thereof specified in the Agreement;

          o    the aggregate amount of unreimbursed servicing expenses and
               unreimbursed advances in respect thereof; and

          o    if applicable, the aggregate amount of interest accrued and
               payable on related servicing expenses and related advances;

     (11) with respect to any REO property sold during the related Due Period:

          o    the aggregate amount of sale proceeds;

          o    the portion of sales proceeds payable or reimbursable to the
               servicer in respect of the REO property or the related mortgage
               loan; and

          o    the amount of any loss to certificateholders in respect of the
               related mortgage loan;

     (12) the aggregate certificate balance or notional amount, as the case may
be, of each class of certificates including any class of certificates not
offered hereby at the close of business on the distribution date, separately
identifying any reduction in the certificate balance due to the allocation of
any loss and increase in the certificate balance of a class of accrual
certificates in the event that accrued certificate interest has been added to
the balance;

     (13) the aggregate amount of principal prepayments made during the related
Due Period;

     (14) the amount deposited in the reserve fund, if any, on the distribution
date;

     (15) the amount remaining in the reserve fund, if any, as of the close of
business on the distribution date;

     (16) the aggregate unpaid accrued certificate interest, if any, on each
class of certificates at the close of business on the distribution date;

     (17) in the case of certificates with a variable pass-through rate, the
pass-through rate applicable to the distribution date, and, if available, the
immediately succeeding distribution date, as calculated in accordance with the
method specified in the related prospectus supplement;

     (18) in the case of certificates with an adjustable pass-through rate, for
statements to be distributed in any month in which an adjustment date occurs,
the adjustable pass-through rate applicable to the distribution date and the
immediately succeeding distribution date as calculated in accordance with the
method specified in the related prospectus supplement;

     (19) as to any series which includes credit support, the amount of coverage
of each instrument of credit support included therein as of the close of
business on the distribution date; and

     (20) the aggregate amount of payments by the borrowers of:

          o    default interest;

          o    late charges; and


                                       47



          o    assumption and modification fees collected during the related Due
               Period.

     In the case of information furnished pursuant to subclauses (1)-(4) above,
the amounts shall be expressed as a dollar amount per minimum denomination of
certificates or for another specified portion thereof. In addition, in the case
of information furnished pursuant to subclauses (1), (2), (12), (16) and (17)
above, the amounts shall also be provided with respect to each component, if
any, of a class of certificates. The servicer or the trustee, as specified in
the related prospectus supplement, will forward or cause to be forwarded to each
holder, to Morgan Stanley Capital I Inc. and to any other parties as may be
specified in the Agreement, a copy of any statements or reports received by the
servicer or the trustee, as applicable, with respect to any mortgage-backed
securities. The prospectus supplement for each series of offered certificates
will describe any additional information to be included in reports to the
holders of certificates.

     Within a reasonable period of time after the end of each calendar year, the
servicer or the trustee, as provided in the related prospectus supplement, shall
furnish to each person who at any time during the calendar year was a holder of
a certificate a statement containing the information set forth in subclauses
(1)-(4) above, aggregated for the calendar year or the applicable portion of the
calendar year during which the person was a certificateholder. This obligation
of the servicer or the trustee shall be deemed to have been satisfied to the
extent that substantially comparable information shall be provided by the
servicer or the trustee pursuant to any requirements of the Internal Revenue
Code as are from time to time in force. See "Description of the
Certificates--Book-Entry Registration and Definitive Certificates."

TERMINATION

     The obligations created by the related Agreement for each series of
certificates will terminate upon the payment to certificateholders of that
series of all amounts held in the certificate account or by the servicer, if
any, or the trustee and required to be paid to them pursuant to the Agreement
following the earlier of:

          o    the final payment or other liquidation of the last asset subject
               thereto or the disposition of all property acquired upon
               foreclosure of any mortgage loan subject thereto; and

          o    the purchase of all of the assets of the trust fund by the party
               entitled to effect the termination, under the circumstances and
               in the manner set forth in the related prospectus supplement.

     In no event, however, will the trust fund created by the Agreement continue
beyond the date specified in the related prospectus supplement. Written notice
of termination of the Agreement will be given to each certificateholder, and the
final distribution will be made only upon presentation and surrender of the
certificates at the location to be specified in the notice of termination.

     If so specified in the related prospectus supplement, a series of
certificates may be subject to optional early termination through the repurchase
of the assets in the related trust fund by the party specified in the related
prospectus supplement, under the circumstances and in the manner set forth in
the related prospectus supplement. If so provided in the related prospectus
supplement, upon the reduction of the certificate balance of a specified class
or classes of certificates by a specified percentage or amount, the party
specified in the related prospectus supplement will solicit bids for the
purchase of all assets of the trust fund, or of a sufficient portion of the
assets to retire the class or classes or purchase the class or classes at a
price set forth in the related prospectus supplement, in each case, under the
circumstances and in the manner set forth in the related prospectus supplement.

BOOK-ENTRY REGISTRATION AND DEFINITIVE CERTIFICATES

     As described in the related prospectus supplement, if not issued in fully
registered form, each class of certificates will be registered as book-entry
certificates. Persons acquiring beneficial ownership interests in the
certificates--the certificate owners--will hold their certificates through The
Depository Trust Company in the United States, or, if provided in the related
prospectus supplement, Clearstream Banking (formerly Cedelbank) or Euroclear
Bank S.A./N.V., as operator of the Euroclear System in Europe, or indirectly
through organizations that are Participants in these systems. The Depository
Trust Company is referred to as "DTC." Clearstream Banking, societe anonyme is
referred to as "Clearstream." The Euroclear System is referred to as
"Euroclear."


                                       48



     The book-entry certificates will be issued in one or more certificates
which equal the aggregate principal balance of the certificates and will
initially be registered in the name of Cede & Co., the nominee of DTC or one of
the relevant depositories. If the aggregate principal amount of any book-entry
certificate exceeds $500 million, one certificate will be issued with respect to
each $500 million of principal amount and an additional certificate will be
issued with respect to any remaining principal amount. Clearstream and Euroclear
will hold omnibus positions on behalf of their participants through customers'
securities accounts in Clearstream's and Euroclear's names on the books of their
respective depositaries which in turn will hold those positions in customers'
securities accounts in the depositaries' names on the books of DTC. Citibank,
N.A., will act as depositary for Clearstream and The Chase Manhattan Bank will
act as depositary for Euroclear. Except as described in this prospectus, no
person acquiring a book-entry certificate will be entitled to receive a physical
certificate representing that certificate. Unless and until definitive
certificates are issued, it is anticipated that the only certificateholders of
the certificates will be Cede & Co., as nominee of DTC or one of the relevant
depositories. Certificate owners are only permitted to exercise their rights
indirectly through participants and DTC.

     Purchases of book-entry certificates under the DTC system must be made by
or through Participants, which will receive a credit for the book-entry
certificates on DTC's records. The ownership interest of each certificateholder
is in turn to be recorded on the Participants' or Securities Intermediaries'
records. The Securities Intermediary's ownership of a book-entry certificate
will be recorded on the records of DTC or of a participating firm that acts as
agent for the Securities Intermediary, whose interest will in turn be recorded
on the records of DTC, if the beneficial owner's Securities Intermediary is not
a Participant and on the records of Clearstream or Euroclear, as appropriate.
certificateholders will not receive written confirmation from DTC of their
purchase, but certificateholders are expected to receive written confirmations
providing details of the transaction, as well as periodic statements of their
holdings, from the Participant or indirect participant through which the
certificateholder entered into the transaction. Transfers of ownership interests
in the book-entry certificates are to be accomplished by entries made on the
books of Participants and indirect participants acting on behalf of
certificateholders. certificateholders will not receive certificates
representing their ownership interests in the book-entry certificates, except in
the event that use of the book-entry system for the book-entry certificates is
discontinued.

     To facilitate subsequent transfers, all book-entry certificates deposited
by Participants with DTC are registered in the name of DTC's partnership
nominee, Cede & Co., or such other name as may be requested by an authorized
representative of DTC. The deposit of book-entry certificates with DTC and their
registration in the name of Cede & Co. or such other nominee do not effect any
change in beneficial ownership. DTC has no knowledge of the actual
certificateholders of the book-entry certificates; DTC's records reflect only
the identity of the Participants to whose accounts such book-entry certificates
are credited, which may or may not be the certificateholders. The Participants
and indirect participants will remain responsible for keeping account of their
holdings on behalf of their customers.

     Conveyance of notices and other communications by DTC to Participants, by
Participants to indirect participants, and by Participants and indirect
participants to certificateholders will be governed by arrangements among them,
subject to any statutory or regulatory requirements as may be in effect from
time to time.

     Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent or
vote with respect to the book-entry certificates. Under its usual procedures,
DTC mails an omnibus proxy to the issuer as soon as possible after the record
date. The omnibus proxy assigns Cede & Co.'s consenting or voting rights to
those Participants to whose accounts the book-entry certificates are credited on
the record date (identified in a listing attached to the omnibus proxy).

     Distributions on the book-entry certificates will be made to Cede & Co., or
such other nominee as may be requested by an authorized representative of DTC.
DTC's practice is to credit Participants' accounts, upon DTC's receipt of funds
and corresponding detail information from the issuer or agent on the payable
date in accordance with their respective holdings shown on DTC's records.
Payments by Participants to certificateholders will be governed by standing
instructions and customary practices, as is the case with securities held for
the accounts of customers in bearer form or registered in "street name," and
will be the responsibility of such Participant and not of DTC, agent, or issuer,
subject to any statutory or regulatory requirements as may be in effect from
time to time. Payment of distributions to Cede & Co. (or such other nominee as
may be requested by an authorized representative of DTC) is the responsibility
of issuer or agent, disbursement of such payments to Participants shall be the
responsibility of DTC, and disbursement of such payments to the
certificateholders shall be the responsibility of Participants and indirect
participants.


                                       49



     Because of time zone differences, credits of certificates received in
Clearstream 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. Credits or any transactions in
certificates settled during the processing will be reported to the relevant
Euroclear or Clearstream Participants on that business day. Cash received in
Clearstream or Euroclear as a result of sales of certificates by or through a
Clearstream 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 or Euroclear cash account only as of the business day
following settlement in DTC.

     Transfers between participants will occur in accordance with the DTC rules.
Transfers between Clearstream 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
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, each of which is a participating
member of DTC. However, such 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. 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 certificates in DTC, and
making or receiving payment in accordance with normal procedures for same day
funds settlement applicable to DTC. Clearstream Participants and Euroclear
Participants may not deliver instructions directly to the relevant depositaries
for Clearstream or Euroclear.

     DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934. DTC holds securities that its Participants deposit with DTC. DTC
also facilitates the settlement among Participants of securities transactions,
such as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates. Participants include
securities brokers and dealers, banks, trust companies, clearing corporations,
and certain other organizations. DTC is owned by a number of its Participants
and Members of the National Securities Clearing Corporation, Government
Securities Clearing Corporation, MBS Clearing Corporation, and Emerging Markets
Clearing Corporation, as well as by the New York Stock Exchange, Inc., the
American Stock Exchange LLC, and the National Association of Securities Dealers,
Inc. Access to the DTC system is also available to others such as securities
brokers and dealers, banks, and trust companies that clear through or maintain a
custodial relationship with a Direct Participant, either directly or indirectly.
The rules applicable to DTC and its Participants and indirect participants are
on file with the Securities and Exchange Commission.

     Clearstream is a duly licensed bank organized as a "societe anonyme",
limited company, under the laws of Luxembourg. Clearstream holds securities for
its Participant organizations and facilitates the clearance and settlement of
securities transactions between Clearstream Participants through electronic
book-entry changes in accounts of Clearstream Participants, thus eliminating the
need for physical movement of certificates. Transactions may be settled in
Clearstream in any of 37 currencies, including United States dollars.
Clearstream provides to its Clearstream Participants, among other things,
services for safekeeping, administration, clearance and settlement of
internationally traded securities and securities lending and borrowing.
Clearstream interfaces with domestic markets in several countries. As a licensed
bank, Clearstream is regulated by the Luxembourg Monetary Institute. Clearstream
Participants are recognized financial institutions around the world, including
underwriters, securities brokers and dealers, banks, trust companies, clearing
corporations and other organizations. Indirect access to Clearstream is also
available to others, such as banks, brokers, dealers and trust companies that
clear through or maintain a custodial relationship with a Clearstream
participant, either directly or indirectly.

     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 certificates 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
interfaces with domestic markets in several countries


                                       50



generally similar to the arrangements for cross-market transfers with DTC
described above. Euroclear is operated by the Brussels.

     Belgium office of Euroclear Bank, as Euroclear Operator, under contract
with Euroclear Clearance Systems S.C., a Belgian cooperative corporation. All
operations are conducted by Euroclear Bank, and all Euroclear securities
clearance accounts and Euroclear cash accounts are accounts with the Euroclear
operator, not the Belgian cooperative. The Belgian cooperative establishes
policy for Euroclear on behalf of Euroclear participants. Euroclear participants
include banks, central banks, securities brokers and dealers and other
professional financial intermediaries. Indirect access to Euroclear is also
available to other firms that clear through or maintain a custodial relationship
with a Euroclear participant, either directly or indirectly.

     The Euroclear Operator holds securities and book-entry interests in
securities for participating organizations and facilitates the clearance and
settlement of securities transactions between Euroclear Participants, and
between Euroclear Participants and Participants of certain other securities
intermediaries through electronic book-entry changes in accounts of such
Participants or other securities intermediaries. Non-Participants of Euroclear
may hold and transfer book-entry interests in the offered certificates through
accounts with a direct Participant of Euroclear or any other securities
intermediary that holds a book-entry interest in the offered certificates
through one or more securities intermediaries standing between such other
securities intermediary and the Euroclear Operator.

     Securities clearance accounts and cash accounts for Euroclear participants
with Euroclear Bank are governed by the Terms and Conditions Governing Use of
Euroclear and the related Operating Procedures of the Euroclear system and
applicable Belgian law. The Terms and Conditions govern transfers of securities
and cash within Euroclear, withdrawals of securities and cash from Euroclear,
and receipts of payments with respect to securities in Euroclear. All securities
in Euroclear are held on a fungible basis without attribution of specific
certificates to specific securities clearance accounts. The Euroclear operator
acts under the Terms and Conditions only on behalf of Euroclear participants,
and has no record of or relationship with persons holding through Euroclear
participants.

     Under a book-entry format, beneficial owners of the book-entry certificates
may experience some delay in their receipt of payments, since payments will be
forwarded by the trustee to Cede & Co., as nominee of DTC. Distributions with
respect to certificates held through Clearstream or Euroclear will be credited
to the cash accounts of Clearstream participants or Euroclear participants in
accordance with the relevant system's rules and procedures, to the extent
received by the relevant depositary. Distributions will be subject to tax
reporting in accordance with relevant United States tax laws and regulations.
See "Material Federal Income Tax Consequences--Tax Treatment of Foreign
Investors" and "--Tax Consequences to Holders of the Notes--Backup Withholding."
Because DTC can only act on behalf of Securities Intermediaries, the ability of
a beneficial owner to pledge book-entry certificates to persons or entities that
do not participate in the depository system, may be limited due to the lack of
physical certificates for book-entry certificates.

     Monthly and annual reports on the trust fund will be provided to Cede &
Co., as nominee of DTC, and may be made available by Cede & Co. to beneficial
owners upon request, in accordance with the rules, regulations and procedures
creating and affecting the depository, and to the Securities Intermediaries to
whose DTC accounts the book-entry certificates of those beneficial owners are
credited.

     DTC has advised the depositor that, unless and until definitive
certificates are issued, DTC will take any action permitted to be taken by the
holders of the book-entry certificates under the applicable agreement only at
the direction of one or more Securities Intermediaries to whose DTC accounts the
book-entry certificates are credited, to the extent that actions are taken on
behalf of Securities Intermediaries whose holdings include those book-entry
certificates. Clearstream or the Euroclear operator, as the case may be, will
take any other action permitted to be taken by a certificateholder under the
agreement on behalf of a Clearstream participant or Euroclear participant only
in accordance with its and DTC's relevant rules and procedures. DTC may take
actions, at the direction of the related participants, with respect to some
certificates which conflict with actions taken with respect to other
certificates.

     Upon the occurrence of any of the events described in the immediately
preceding paragraph, the trustee will be required to notify all beneficial
owners of the occurrence of that event and the availability through DTC of
definitive certificates. Upon surrender by DTC of the global certificate or
certificates representing the book-entry certificates and instructions for
re-registration, the trustee will issue definitive certificates and then will
recognize the holders of the definitive certificates as certificateholders under
the applicable agreement.


                                       51



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

     None of the master servicer, the depositor or the trustee will have any
responsibility for any aspect of the records relating to or payments made on
account of beneficial ownership interests of the book-entry certificates held by
Cede & Co., as nominee of DTC, or for maintaining, supervising or reviewing any
records relating to the beneficial ownership interests.


                                       52



                          DESCRIPTION OF THE AGREEMENTS

     The certificates will be offered pursuant to a pooling and servicing
agreement or a trust agreement.

          o    A pooling and servicing agreement will be used where the trust
               fund includes mortgage loans. The parties to a pooling and
               servicing agreement will be Morgan Stanley Capital I Inc., a
               trustee and a master servicer appointed as of the date of the
               pooling and servicing agreement. If a master servicer is not
               appointed, a servicer, with, generally, the same obligations as
               described in this prospectus with respect to the master servicer,
               unless otherwise specified in the prospectus supplement, will be
               appointed. This servicer will service all or a significant number
               of mortgage loans directly without a subservicer. References in
               this prospectus to master servicer and its rights and
               obligations, to the extent set forth in the related prospectus
               supplement, shall be deemed to also be references to any servicer
               servicing mortgage loans directly.

          o    A trust agreement will be used where the trust fund does not
               include mortgage loans. The parties to a trust agreement will be
               Morgan Stanley Capital I Inc. and a trustee. A manager or
               administrator may be appointed pursuant to the trust agreement
               for any trust fund to administer the trust fund.

     The provisions of each Agreement will vary depending upon the nature of the
certificates to be issued thereunder and the nature of the related trust fund. A
form of a pooling and servicing agreement has been filed as an exhibit to the
registration statement of which this prospectus is a part. Any trust agreement
will generally conform to the form of pooling and servicing agreement filed
herewith, but will not contain provisions with respect to the servicing and
maintenance of mortgage loans. The following summaries describe some of the
provisions that may appear in each Agreement. The prospectus supplement for a
series of certificates will describe any provision of the Agreement relating to
a series that materially differs from the description thereof contained in this
prospectus. The summaries do not purport to be complete and are subject to, and
are qualified in their entirety by reference to, all of the provisions of the
Agreement for each trust fund and the description of the provisions in the
related prospectus supplement. Morgan Stanley Capital I Inc. will provide a copy
of the Agreement, without exhibits, relating to any series of certificates
without charge upon written request of a holder of a certificate of a series
addressed to Morgan Stanley Capital I Inc., c/o Morgan Stanley & Co.
Incorporated, 1585 Broadway, 37th Floor, New York, New York 10036. Attention:
Mortgage Securities.

ASSIGNMENT OF ASSETS; REPURCHASES

     At the time of issuance of any series of certificates, Morgan Stanley
Capital I Inc. will assign or cause to be assigned to the designated trustee the
assets to be included in the related trust fund, together with all principal and
interest to be received on or with respect to the assets after the cut-off date,
other than principal and interest due on or before the cut-off date and other
than any retained interest. The trustee will, concurrently with the assignment,
deliver the certificates to Morgan Stanley Capital I Inc. in exchange for the
assets and the other assets comprising the trust fund for the series. Each
mortgage loan and mortgaged-backed security will be identified in a schedule
appearing as an exhibit to the related Agreement. Unless otherwise provided in
the related prospectus supplement, the schedule will include detailed
information:

          o    in respect of each mortgage loan included in the related trust
               fund, including without limitation, the address of the related
               mortgaged property and type of the property, the mortgage rate
               and, if applicable, the applicable index, margin, adjustment date
               and any rate cap information, the original and remaining term to
               maturity, the original and outstanding principal balance and
               balloon payment, if any, the Value and loan-to-value ratio as of
               the date indicated and payment and prepayment provisions, if
               applicable; and

          o    in respect of each mortgage-backed security included in the
               related trust fund, including without limitation, the related
               issuer, servicer and trustee, the pass-through or bond rate or
               formula for determining the rate, the issue date and original and
               remaining term to maturity, if applicable, the original and
               outstanding principal amount and payment provisions, if
               applicable.

     With respect to each mortgage loan, Morgan Stanley Capital I Inc. will
deliver or cause to be delivered to the trustee or to the custodian, loan
documents, which to the extent specified in the related prospectus supplement
will include:


                                       53



          o    the original mortgage note endorsed, without recourse, in blank
               or to the order of the trustee,

          o    the original mortgage or a certified copy with evidence of
               recording, and

          o    an assignment of the mortgage to the trustee in recordable form.

Notwithstanding the foregoing, a trust fund may include mortgage loans where the
original mortgage note is not delivered to the trustee if Morgan Stanley Capital
I Inc. delivers to the trustee or the custodian a copy or a duplicate original
of the mortgage note, together with an affidavit certifying that the original
thereof has been lost or destroyed. With respect to these mortgage loans, the
trustee or its nominee may not be able to enforce the mortgage note against the
related borrower. To the extent specified in the related prospectus supplement,
the asset seller will be required to agree to repurchase, or substitute for,
this type of mortgage loan that is subsequently in default if the enforcement
thereof or of the related mortgage is materially adversely affected by the
absence of the original mortgage note.

     Unless otherwise provided in the related prospectus supplement, the related
Agreement will require Morgan Stanley Capital I Inc. or another party specified
in the related prospectus supplement to promptly cause each assignment of
mortgage to be recorded in the appropriate public office for real property
records. However, recordation of the assignment of mortgage is not required in
the State of California or in other states where, in the opinion of counsel
acceptable to the trustee, recording is not required to protect the trustee's
interest in the related mortgage loan against the claim of any subsequent
transferee or any successor to or creditor of Morgan Stanley Capital I Inc., the
master servicer, the relevant asset seller or any other prior holder of the
mortgage loan.

     The trustee or a custodian will review the mortgage loan documents within a
specified period of days after receipt thereof, and the trustee or a custodian
will hold the documents in trust for the benefit of the certificateholders.
Unless otherwise specified in the related prospectus supplement, if any of these
documents are found to be missing or defective in any material respect, the
trustee or custodian shall immediately notify the master servicer and Morgan
Stanley Capital I Inc., and the master servicer shall immediately notify the
relevant asset seller. If the asset seller cannot cure the omission or defect
within a specified number of days after receipt of notice, then unless otherwise
specified in the related prospectus supplement, the asset seller will be
obligated, within a specified number of days of receipt of notice, to repurchase
the related mortgage loan from the trustee at the Purchase Price or substitute
for the mortgage loan. There can be no assurance that an asset seller will
fulfill this repurchase or substitution obligation, and neither the master
servicer nor Morgan Stanley Capital I Inc. will be obligated to repurchase or
substitute the mortgage loan if the asset seller defaults on its obligation. To
the extent specified in the related prospectus supplement, this repurchase or
substitution obligation constitutes the sole remedy available to the
certificateholders or the trustee for omission of, or a material defect in, a
constituent document. To the extent specified in the related prospectus
supplement, in lieu of curing any omission or defect in the asset or
repurchasing or substituting for the asset, the asset seller may agree to cover
any losses suffered by the trust fund as a result of this type of breach or
defect.

     With respect to each government security or mortgage-backed security in
certificated form, Morgan Stanley Capital I Inc. will deliver or cause to be
delivered to the trustee or the custodian the original certificate or other
definitive evidence of the government security or mortgage-backed security, as
applicable, together with bond power or other instruments, certifications or
documents required to transfer fully the government security or mortgage-backed
security, as applicable, to the trustee for the benefit of the
certificateholders. With respect to each government security or mortgage-backed
security in uncertificated or book-entry form or held through a "clearing
corporation" within the meaning of the Uniform Commercial Code, Morgan Stanley
Capital I Inc. and the trustee will cause the government security or
mortgage-backed security to be registered directly or on the books of the
clearing corporation or of a financial intermediary in the name of the trustee
for the benefit of the certificateholders. Unless otherwise provided in the
related prospectus supplement, the related Agreement will require that either
Morgan Stanley Capital I Inc. or the trustee promptly cause any mortgage-backed
securities and government securities in certificated form not registered in the
name of the trustee to be re-registered, with the applicable persons, in the
name of the trustee.


                                       54



REPRESENTATIONS AND WARRANTIES; REPURCHASES

     Unless otherwise provided in the related prospectus supplement, Morgan
Stanley Capital I Inc. will, with respect to each mortgage loan, make or assign
certain representations and warranties, as of a specified date covering, by way
of example, the following types of matters:

          o    the accuracy of the information set forth for the mortgage loan
               on the schedule of assets appearing as an exhibit to the related
               Agreement;

          o    the existence of title insurance insuring the lien priority of
               the mortgage loan;

          o    the authority of the warrantying party to sell the mortgage loan;

          o    the payment status of the mortgage loan and the status of
               payments of taxes, assessments and other charges affecting the
               related mortgaged property;

          o    the existence of customary provisions in the related mortgage
               note and mortgage to permit realization against the mortgaged
               property of the benefit of the security of the mortgage; and

          o    the existence of hazard and extended perils insurance coverage on
               the mortgaged property.

     Any warrantying party, if other than Morgan Stanley Capital I Inc., shall
be an asset seller or an affiliate thereof or another person acceptable to
Morgan Stanley Capital I Inc. and shall be identified in the related prospectus
supplement.

     Representations and warranties made in respect of a mortgage loan may have
been made as of a date prior to the applicable cut-off date. A substantial
period of time may have elapsed between the date on which the representations
are made and the date of initial issuance of the related series of certificates
evidencing an interest in the mortgage loan. Unless otherwise specified in the
related prospectus supplement, in the event of a breach of any representation or
warranty, the warrantying party will be obligated to reimburse the trust fund
for losses caused by the breach or either cure the breach or repurchase or
replace the affected mortgage loan as described in the next paragraph. Since the
representations and warranties may not address events that may occur following
the date as of which they were made, the warrantying party will have a
reimbursement, cure, repurchase or substitution obligation in connection with a
breach of such a representation and warranty only if the relevant event that
causes such breach occurs prior to the date on which they were made. The
warrantying party would have no obligations if the relevant event that causes
the breach occurs after that date.

     Unless otherwise provided in the related prospectus supplement, each
Agreement will provide that the master servicer or trustee or both, will be
required to notify promptly the relevant warrantying party of any breach of any
representation or warranty made by it in respect of a mortgage loan that
materially and adversely affects the value of the mortgage loan or the interests
in the mortgage loan of the certificateholders. If the warrantying party cannot
cure the breach within a specified period following the date on which the party
was notified of the breach, then:

          o    the warrantying party will be obligated to repurchase the
               mortgage loan from the trustee within a specified period from the
               date on which the warrantying party was notified of the breach,
               at the Purchase Price; or

          o    if so provided in the prospectus supplement for a series, the
               warrantying party will have the option, within a specified period
               after initial issuance of such series of certificates, to cause
               the mortgage loan to be removed from the trust fund and
               substitute in its place one or more other mortgage loans, in
               accordance with the standards described in the related prospectus
               supplement; or

          o    if so provided in the prospectus supplement for a series, the
               warrantying party will have the option to reimburse the trust
               fund or the certificateholders for any losses caused by the
               breach.


                                       55



     Unless otherwise provided in the related prospectus supplement, this
reimbursement, repurchase or substitution obligation will constitute the sole
remedy available to holders of certificates or the trustee for a breach of
representation by a warrantying party.

     Neither Morgan Stanley Capital I Inc. except to the extent that it is the
warrantying party, nor the master servicer will be obligated to purchase or
substitute for a mortgage loan if a warrantying party defaults on its obligation
to do so, and no assurance can be given that warrantying parties will carry out
their obligations with respect to mortgage loans.

     Unless otherwise provided in the related prospectus supplement the
warrantying party will, with respect to a trust fund that includes government
securities or mortgage-backed securities, make or assign certain representations
or warranties, as of a specified date, with respect to the government securities
or mortgage-backed securities, covering:

          o    the accuracy of the information set forth therefor on the
               schedule of assets appearing as an exhibit to the related
               Agreement; and

          o    the authority of the warrantying party to sell the assets.

     The related prospectus supplement will describe the remedies for a breach
thereof.

     A master servicer will make certain representations and warranties
regarding its authority to enter into, and its ability to perform its
obligations under, the related Agreement. A breach of any representation of the
master servicer which materially and adversely affects the interests of the
certificateholders and which continues unremedied for thirty days after the
giving of written notice of the breach to the master servicer by the trustee or
Morgan Stanley Capital I Inc., or to the master servicer, Morgan Stanley Capital
I Inc. and the trustee by the holders of certificates evidencing not less than
25% of the voting rights unless otherwise provided in the related prospectus
supplement, will constitute an Event of Default under the Agreement. See
"--Events of Default" and "--Rights Upon Event of Default" below.

CERTIFICATE ACCOUNT AND OTHER COLLECTION ACCOUNTS

     General

     The master servicer or the trustee or both will, as to each trust fund,
establish and maintain or cause to be established and maintained the certificate
account, which must be either an account or accounts:

          o    the deposits in which are insured by the Bank Insurance Fund or
               the Savings Association Insurance Fund of the Federal Deposit
               Insurance Corporation, to the limits established by the Federal
               Deposit Insurance Corporation, and the uninsured deposits in
               which are otherwise secured such that the certificateholders have
               a claim with respect to the funds in the certificate account or a
               perfected first priority security interest against any collateral
               securing the funds that is superior to the claims of any other
               depositors or general creditors of the institution with which the
               certificate account is maintained; or

          o    otherwise maintained with a bank or trust company, and in a
               manner, satisfactory to the rating agency or agencies rating any
               class of certificates of the series.

The collateral eligible to secure amounts in the certificate account is limited
to Permitted Investments. A certificate account may be maintained as an interest
bearing or a non-interest bearing account and the funds held in the account may
be invested pending each succeeding distribution date in short-term Permitted
Investments. Unless otherwise provided in the related prospectus supplement, any
interest or other income earned on funds in the certificate account will be paid
to a master servicer or its designee as additional servicing compensation. The
certificate account may be maintained with an institution that is an affiliate
of the master servicer, if applicable, provided that the institution meets the
standards imposed by the rating agency or agencies. If permitted by the rating
agency or agencies and so specified in the related prospectus supplement, a
certificate account may contain funds relating to more than one series of
mortgage pass-through certificates and may contain other funds respecting
payments on mortgage loans belonging to the master servicer or serviced or
master serviced by it on behalf of others.


                                       56



     Deposits

     A master servicer or the trustee will deposit or cause to be deposited in
the certificate account for one or more trust funds on a daily basis, unless
otherwise provided in the related Agreement, the following payments and
collections received, or advances made, by the master servicer or the trustee or
on its behalf subsequent to the cut-off date, other than payments due on or
before the cut-off date, and exclusive of any amounts representing a retained
interest:

     (1) all payments on account of principal, including principal prepayments,
on the assets;

     (2) all payments on account of interest on the assets, including any
default interest collected, in each case net of any portion thereof retained by
a master servicer or a subservicer as its servicing compensation and net of any
retained interest;

     (3) all proceeds of the hazard insurance policies to be maintained in
respect of each mortgaged property securing a mortgage loan in the trust fund,
to the extent the proceeds are not applied to the restoration of the property or
released to the borrower in accordance with the normal servicing procedures of a
master servicer or the related subservicer, subject to the terms and conditions
of the related mortgage and mortgage note, insurance proceeds and all
liquidation proceeds, together with the net proceeds on a monthly basis with
respect to any mortgaged properties acquired for the benefit of
certificateholders by foreclosure or by deed in lieu of foreclosure or
otherwise;

     (4) any amounts paid under any instrument or drawn from any fund that
constitutes credit support for the related series of certificates as described
under "Description of Credit Support";

     (5) any advances made as described under "Description of the
Certificates--Advances in Respect of Delinquencies";

     (6) any amounts paid under any cash flow agreement, as described under
"Description of the Trust Funds--Cash Flow Agreements";

     (7) all proceeds of any asset or, with respect to a mortgage loan, property
acquired in respect thereof purchased by Morgan Stanley Capital I Inc., any
asset seller or any other specified person as described above under
"--Assignment of Assets; Repurchases" and "--Representations and Warranties;
Repurchases," all proceeds of any defaulted mortgage loan purchased as described
under "--Realization Upon Defaulted Mortgage loans," and all proceeds of any
asset purchased as described above under "Description of the
Certificates--Termination";

     (8) any amounts paid by a master servicer to cover certain interest
shortfalls arising out of the prepayment of mortgage loans in the trust fund as
described under "Description of the Agreements--Retained Interest; Servicing
Compensation and Payment of Expenses";

     (9) to the extent that any item does not constitute additional servicing
compensation to a master servicer, any payments on account of modification or
assumption fees, late payment charges or prepayment premiums on the mortgage
loans and mortgage-backed securities;

     (10) all payments required to be deposited in the certificate account with
respect to any deductible clause in any blanket insurance policy described under
"--Hazard Insurance Policies";

     (11) any amount required to be deposited by a master servicer or the
trustee in connection with losses realized on investments for the benefit of the
master servicer or the trustee, as the case may be, of funds held in the
certificate account; and

     (12) any other amounts required to be deposited in the certificate account
as provided in the related Agreement and described in the related prospectus
supplement.


                                       57



     Withdrawals

     A master servicer or the trustee may, from time to time, unless otherwise
provided in the related Agreement and described in the related prospectus
supplement, make withdrawals from the certificate account for each trust fund
for any of the following purposes:

     (1) to make distributions to the certificateholders on each distribution
date;

     (2) to reimburse a master servicer for unreimbursed amounts advanced as
described under "Description of the Certificates--Advances in Respect of
Delinquencies," the reimbursement to be made out of amounts received which were
identified and applied by the master servicer as late collections of interest,
net of related servicing fees and retained interest, on and principal of the
particular mortgage loans with respect to which the advances were made or out of
amounts drawn under any form of credit support with respect to those mortgage
loans;

     (3) to reimburse a master servicer for unpaid servicing fees earned and
certain unreimbursed servicing expenses incurred with respect to mortgage loans
and properties acquired in respect thereof, such reimbursement to be made out of
amounts that represent liquidation proceeds and insurance proceeds collected on
the particular mortgage loans and properties, and net income collected on the
particular properties, with respect to which the fees were earned or the
expenses were incurred or out of amounts drawn under any form of credit support
with respect to such mortgage loans and properties;

     (4) to reimburse a master servicer for any advances described in clause (2)
above and any servicing expenses described in clause (3) above which, in the
master servicer's good faith judgment, will not be recoverable from the amounts
described in clauses (2) and (3), respectively, the reimbursement to be made
from amounts collected on other assets or, if and to the extent so provided by
the related Agreement and described in the related prospectus supplement, just
from that portion of amounts collected on other assets that is otherwise
distributable on one or more classes of subordinate certificates, if any, remain
outstanding, and otherwise any outstanding class of certificates, of the related
series;

     (5) if and to the extent described in the related prospectus supplement, to
pay a master servicer interest accrued on the advances described in clause (2)
above and the servicing expenses described in clause (3) above while these
remain outstanding and unreimbursed;

     (6) to reimburse a master servicer, Morgan Stanley Capital I Inc., or any
of their respective directors, officers, employees and agents, as the case may
be, for certain expenses, costs and liabilities incurred thereby, as and to the
extent described under "--Matters Regarding a Master Servicer and the
Depositor";

     (7) if and to the extent described in the related prospectus supplement, to
pay or to transfer to a separate account for purposes of escrowing for the
payment of the trustee's fees;

     (8) to reimburse the trustee or any of its directors, officers, employees
and agents, as the case may be, for certain expenses, costs and liabilities
incurred thereby, as and to the extent described below under "--Matters
Regarding the Trustee";

     (9) unless otherwise provided in the related prospectus supplement, to pay
a master servicer, as additional servicing compensation, interest and investment
income earned in respect of amounts held in the certificate account;

     (10) to pay the person entitled thereto any amounts deposited in the
certificate account that were identified and applied by the master servicer as
recoveries of retained interest;

     (11) to pay for costs reasonably incurred in connection with the proper
management and maintenance of any mortgaged property acquired for the benefit of
certificateholders by foreclosure or by deed in lieu of foreclosure or
otherwise, these payments to be made out of income received on this type of
property;

     (12) if one or more elections have been made to treat the trust fund or
designated portions thereof as a REMIC, to pay any federal, state or local taxes
imposed on the trust fund or its assets or transactions, as and to the extent
described below under "Federal Income Tax Consequences--REMICs--Prohibited
Transactions and Other Taxes";


                                       58



     (13) to pay for the cost of an independent appraiser or other expert in
real estate matters retained to determine a fair sale price for a defaulted
mortgage loan or a property acquired in respect thereof in connection with the
liquidation of the defaulted mortgage loan or property;

     (14) to pay for the cost of various opinions of counsel obtained pursuant
to the related Agreement for the benefit of certificateholders;

     (15) to pay for the costs of recording the related Agreement if recordation
materially and beneficially affects the interests of certificateholders,
provided that the payment shall not constitute a waiver with respect to the
obligation of the warrantying party to remedy any breach of representation or
warranty under the Agreement;

     (16) to pay the person entitled thereto any amounts deposited in the
certificate account in error, including amounts received on any asset after its
removal from the trust fund whether by reason of purchase or substitution as
contemplated by "--Assignment of Assets; Repurchases" and "--Representations and
Warranties; Repurchases" or otherwise;

     (17) to make any other withdrawals permitted by the related Agreement and
described in the related prospectus supplement; and

     (18) to clear and terminate the certificate account at the termination of
the trust fund.

     Other Collection Accounts

     Notwithstanding the foregoing, if so specified in the related prospectus
supplement, the Agreement for any series of certificates may provide for the
establishment and maintenance of a separate collection account into which the
master servicer or any related subservicer will deposit on a daily basis the
amounts described under "--Deposits" above for one or more series of
certificates. Any amounts on deposit in any collection account will be withdrawn
from the collection account and deposited into the appropriate certificate
account by a time specified in the related prospectus supplement. To the extent
specified in the related prospectus supplement, any amounts which could be
withdrawn from the certificate account as described under "--Withdrawals" above,
may also be withdrawn from any collection account. The prospectus supplement
will set forth any restrictions with respect to any collection account,
including investment restrictions and any restrictions with respect to financial
institutions with which any collection account may be maintained.

COLLECTION AND OTHER SERVICING PROCEDURES

     The master servicer, directly or through subservicers, is required to make
reasonable efforts to collect all scheduled payments under the mortgage loans
and will follow or cause to be followed the collection procedures as it would
follow with respect to mortgage loans that are comparable to the mortgage loans
and held for its own account, provided the procedures are consistent with the
Servicing Standard. In connection therewith, the master servicer will be
permitted in its discretion to waive any late payment charge or penalty interest
in respect of a late mortgage loan payment.

     Each master servicer will also be required to perform other customary
functions of a servicer of comparable loans, including maintaining hazard
insurance policies as described in this prospectus and in any related prospectus
supplement, and filing and settling claims thereunder; maintaining escrow or
impoundment accounts of borrowers for payment of taxes, insurance and other
items required to be paid by any borrower pursuant to the mortgage loan;
processing assumptions or substitutions in those cases where the master servicer
has determined not to enforce any applicable due-on-sale clause; attempting to
cure delinquencies; supervising foreclosures; inspecting and managing mortgaged
properties under certain circumstances; and maintaining accounting records
relating to the mortgage loans. To the extent specified in the related
prospectus supplement, the master servicer will be responsible for filing and
settling claims in respect of particular mortgage loans under any applicable
instrument of credit support. See "Description of Credit Support."

     The master servicer may agree to modify, waive or amend any term of any
mortgage loan in a manner consistent with the Servicing Standard so long as the
modification, waiver or amendment will not:


                                       59



          o    affect the amount or timing of any scheduled payments of
               principal or interest on the mortgage loan; or

          o    in its judgment, materially impair the security for the mortgage
               loan or reduce the likelihood of timely payment of amounts due
               thereon.

     The master servicer also may agree to any modification, waiver or amendment
that would so affect or impair the payments on, or the security for, a mortgage
loan if, unless otherwise provided in the related prospectus supplement:

          o    in its judgment, a material default on the mortgage loan has
               occurred or a payment default is imminent; and

          o    in its judgment, that modification, waiver or amendment is
               reasonably likely to produce a greater recovery with respect to
               the mortgage loan on a present value basis than would
               liquidation.

     The master servicer is required to notify the trustee in the event of any
modification, waiver or amendment of any mortgage loan.

SUBSERVICERS

     A master servicer may delegate its servicing obligations in respect of the
mortgage loans to a subservicer, but the master servicer will remain obligated
under the related Agreement. Each sub-servicing agreement must be consistent
with the terms of the related Agreement and must provide that, if for any reason
the master servicer for the related series of certificates is no longer acting
in the capacity, the trustee or any successor master servicer may assume the
master servicer's rights and obligations under a subservicing agreement.

     Unless otherwise provided in the related prospectus supplement, the master
servicer will be solely liable for all fees owed by it to any subservicer,
irrespective of whether the master servicer's compensation pursuant to the
related Agreement is sufficient to pay those fees. However, a subservicer may be
entitled to a retained interest in certain mortgage loans. Each subservicer will
be reimbursed by the master servicer for certain expenditures which it makes,
generally to the same extent the master servicer would be reimbursed under an
Agreement. See "--Retained Interest; Servicing Compensation and Payment of
Expenses."

REALIZATION UPON DEFAULTED MORTGAGE LOANS

     A borrower's failure to make required payments may reflect inadequate
income or the diversion of that income from the service of payments due under
the mortgage loan, and may call into question the borrower's ability to make
timely payment of taxes and to pay for necessary maintenance of the related
mortgaged property. Unless otherwise provided in the related prospectus
supplement, the master servicer is required to:

          o    monitor any mortgage loan which is in default;

          o    contact the borrower concerning the default;

          o    evaluate whether the causes of the default can be cured over a
               reasonable period without significant impairment of the value of
               the mortgaged property;

          o    initiate corrective action in cooperation with the borrower if
               cure is likely;

          o    inspect the mortgaged property; and

          o    take any other actions as are consistent with the Servicing
               Standard.

     A significant period of time may elapse before the master servicer is able
to assess the success of the corrective action or the need for additional
initiatives.


                                       60



     The time within which the master servicer makes the initial determination
of appropriate action, evaluates the success of corrective action, develops
additional initiatives, institutes foreclosure proceedings and actually
forecloses or takes a deed to a mortgaged property in lieu of foreclosure on
behalf of the certificateholders, may vary considerably depending on the
particular mortgage loan, the mortgaged property, the borrower, the presence of
an acceptable party to assume the mortgage loan and the laws of the jurisdiction
in which the mortgaged property is located. Under federal bankruptcy law, the
master servicer in certain cases may not be permitted to accelerate a mortgage
loan or to foreclose on a mortgaged property for a considerable period of time.
See "Legal Aspects of Mortgage Loans."

     Any Agreement relating to a trust fund that includes mortgage loans may
grant to the master servicer or the holder or holders of certain classes of
certificates, or both, a right of first refusal to purchase from the trust fund
at a predetermined purchase price any mortgage loan as to which a specified
number of scheduled payments thereunder are delinquent. Any such right granted
to the holder of an offered certificate will be described in the related
prospectus supplement. The related prospectus supplement will also describe any
such right granted to any person if the predetermined purchase price is less
than the Purchase Price described under "--Representations and Warranties;
Repurchases."

     If so specified in the related prospectus supplement, the master servicer
may offer to sell any defaulted mortgage loan described in the preceding
paragraph and not otherwise purchased by any person having a right of first
refusal with respect thereto, if and when the master servicer determines,
consistent with the Servicing Standard, that this sale would produce a greater
recovery on a present value basis than would liquidation through foreclosure or
similar proceeding. The related Agreement will provide that any sale of this
type be made in a commercially reasonable manner for a specified period and that
the master servicer accept the highest cash bid received from any person
including itself, an affiliate of the master servicer or any certificateholder
that constitutes a fair price for the defaulted mortgage loan. In the absence of
any bid determined in accordance with the related Agreement to be fair, the
master servicer shall proceed with respect to the defaulted mortgage loan as
described in the paragraphs below. Any bid in an amount at least equal to the
Purchase Price described under "--Representations and Warranties; Repurchases"
will in all cases be deemed fair.

     If a default on a mortgage loan has occurred or, in the master servicer's
judgment is imminent, and the action is consistent with the Servicing Standard,
the master servicer, on behalf of the trustee, may at any time:

          o    institute foreclosure proceedings;

          o    exercise any power of sale contained in any mortgage;

          o    obtain a deed in lieu of foreclosure; or

          o    otherwise acquire title to a mortgaged property securing the
               mortgage loan.

     Unless otherwise provided in the related prospectus supplement, if title to
any mortgaged property is acquired by a trust fund as to which a REMIC election
has been made, the master servicer, on behalf of the trust fund, will be
required to sell the mortgaged property by the close of the third calendar year
following the year of acquisition, unless:

          o    the Internal Revenue Service grants an extension of time to sell
               the property; or

          o    the trustee receives an opinion of independent counsel to the
               effect that the holding of the property by the trust fund will
               not result in the imposition of a tax on the trust fund or cause
               the trust fund to fail to qualify as a REMIC under the Internal
               Revenue Code at any time that any certificate is outstanding.

     Subject to the foregoing, the master servicer will be required to:

          o    solicit bids for any mortgaged property so acquired by the trust
               fund as will be reasonably likely to realize a fair price for the
               property; and


                                       61



          o    accept the first and, if multiple bids are contemporaneously
               received, the highest cash bid received from any person that
               constitutes a fair price.

     The limitations imposed by the related Agreement and the REMIC provisions
of the Internal Revenue Code, if a REMIC election has been made with respect to
the related trust fund, on the ownership and management of any mortgaged
property acquired on behalf of the trust fund may result in the recovery of an
amount less than the amount that would otherwise be recovered. See "Legal
Aspects of Mortgage Loans--Foreclosure."

     If recovery on a defaulted mortgage loan under any related instrument of
credit support is not available, the master servicer nevertheless will be
obligated to follow or cause to be followed normal practices and procedures as
it deems necessary or advisable to realize upon the defaulted mortgage loan. If
the proceeds of any liquidation of the property securing the defaulted mortgage
loan are less than the outstanding principal balance of the defaulted mortgage
loan plus interest accrued thereon at the mortgage rate plus the aggregate
amount of expenses incurred by the master servicer in connection with such
proceedings and which are reimbursable under the Agreement, the trust fund will
realize a loss in the amount of that difference. The master servicer will be
entitled to withdraw or cause to be withdrawn from the certificate account out
of the liquidation proceeds recovered on any defaulted mortgage loan, prior to
the distribution of the liquidation proceeds to certificateholders, amounts
representing its normal servicing compensation on the mortgage loan,
unreimbursed servicing expenses incurred with respect to the mortgage loan and
any unreimbursed advances of delinquent payments made with respect to the
mortgage loan.

     If any property securing a defaulted mortgage loan is damaged and proceeds,
if any, from the related hazard insurance policy are insufficient to restore the
damaged property to a condition sufficient to permit recovery under the related
instrument of credit support, if any, the master servicer is not required to
expend its own funds to restore the damaged property unless it determines:

          o    that the restoration will increase the proceeds to
               certificateholders on liquidation of the mortgage loan after
               reimbursement of the master servicer for its expenses; and

          o    that the expenses will be recoverable by it from related
               insurance proceeds or liquidation proceeds.

     As servicer of the mortgage loans, a master servicer, on behalf of itself,
the trustee and the certificateholders, will present claims to the obligor under
each instrument of credit support, and will take such reasonable steps as are
necessary to receive payment or to permit recovery thereunder with respect to
defaulted mortgage loans.

     If a master servicer or its designee recovers payments under any instrument
of credit support with respect to any defaulted mortgage loan, the master
servicer will be entitled to withdraw or cause to be withdrawn from the
certificate account out of those proceeds, prior to distribution thereof to
certificateholders, amounts representing its normal servicing compensation on
the mortgage loan, unreimbursed servicing expenses incurred with respect to the
mortgage loan and any unreimbursed advances of delinquent payments made with
respect to the mortgage loan. See "--Hazard Insurance Policies" and "Description
of Credit Support."

HAZARD INSURANCE POLICIES

     To the extent specified in the related prospectus supplement, each
Agreement for a trust fund that includes mortgage loans will require the master
servicer to cause the borrower on each mortgage loan to maintain a hazard
insurance policy providing for the coverage required under the related mortgage
or, if any mortgage permits the holder thereof to dictate to the borrower the
insurance coverage to be maintained on the related mortgaged property, then the
coverage that is consistent with the Servicing Standard. To the extent specified
in the related prospectus supplement, the coverage will be in general in an
amount equal to the lesser of the principal balance owing on the mortgage loan
and the amount necessary to fully compensate for any damage or loss to the
improvements on the mortgaged property on a replacement cost basis, but in
either case not less than the amount necessary to avoid the application of any
co-insurance clause contained in the hazard insurance policy. The ability of the
master servicer to assure that hazard insurance proceeds are appropriately
applied may be dependent upon its being named as an additional insured under any
hazard insurance policy and under any other insurance policy referred to below,
or upon the extent to which information in this regard is furnished by
borrowers. All amounts collected by the master servicer under any policy, except
for amounts to be applied to the restoration or repair of the mortgaged property
or released


                                       62



to the borrower in accordance with the master servicer's normal servicing
procedures, subject to the terms and conditions of the related mortgage and
mortgage note will be deposited in the certificate account. The Agreement will
provide that the master servicer may satisfy its obligation to cause each
borrower to maintain a hazard insurance policy by the master servicer's
maintaining a blanket policy insuring against hazard losses on the mortgage
loans. If the blanket policy contains a deductible clause, the master servicer
will be required to deposit in the certificate account all sums that would have
been deposited in the certificate 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 of the property by fire,
lightning, explosion, smoke, windstorm and hail, and riot, strike and civil
commotion, subject to the conditions and exclusions specified in each policy.
Although the policies relating to the mortgage loans will be underwritten by
different insurers under different state laws in accordance with different
applicable state forms, and therefore will not contain identical terms and
conditions, the basic terms thereof are dictated by respective state laws, and
most of these policies typically do not cover any physical damage resulting from
war, revolution, governmental actions, floods and other water-related causes,
earth movement, including earthquakes, landslides and mud flows, wet or dry rot,
vermin, domestic animals and certain other kinds of uninsured risks.

     The hazard insurance policies covering the mortgaged properties securing
the mortgage loans will typically contain a co-insurance clause that in effect
requires the insured at all times to carry insurance of a specified percentage,
generally 80% to 90% of the full replacement value of the improvements on the
property in order to recover the full amount of any partial loss. If the
insured's coverage falls below this specified percentage, the co-insurance
clause generally provides that the insurer's liability in the event of partial
loss does not exceed the lesser of:

          o    the replacement cost of the improvements less physical
               depreciation; and

          o    the proportion of the loss as the amount of insurance carried
               bears to the specified percentage of the full replacement cost of
               the improvements.

     Each Agreement for a trust fund that includes mortgage loans will require
the master servicer to cause the borrower on each mortgage loan to maintain all
other insurance coverage with respect to the related mortgaged property as is
consistent with the terms of the related mortgage and the Servicing Standard,
which insurance may typically include flood insurance if the related mortgaged
property was located at the time of origination in a federally designated flood
area.

     Any cost incurred by the master servicer in maintaining any insurance
policy will be added to the amount owing under the mortgage loan where the terms
of the mortgage loan so permit; provided, however, that the addition of this
cost will not be taken into account for purposes of calculating the distribution
to be made to certificateholders. These costs may be recovered by the master
servicer or subservicer, as the case may be, from the collection account, with
interest thereon, as provided by the Agreement.

     Under the terms of the mortgage loans, borrowers will generally be required
to present claims to insurers under hazard insurance policies maintained on the
related mortgaged properties. The master servicer, on behalf of the trustee and
certificateholders, is obligated to present or cause to be presented claims
under any blanket insurance policy insuring against hazard losses on mortgaged
properties securing the mortgage loans. However, the ability of the master
servicer to present or cause to be presented these claims is dependent upon the
extent to which information in this regard is furnished to the master servicer
by borrowers.

FIDELITY BONDS AND ERRORS AND OMISSIONS INSURANCE

     To the extent specified in the related prospectus supplement, each
Agreement will require that the master servicer obtain and maintain in effect a
fidelity bond or similar form of insurance coverage which may provide blanket
coverage or any combination thereof insuring against loss occasioned by fraud,
theft or other intentional misconduct of the officers, employees and agents of
the master servicer. The related Agreement will allow the master servicer to
self-insure against loss occasioned by the errors and omissions of the officers,
employees and agents of the master servicer so long as criteria set forth in the
Agreement are met.


                                       63



DUE-ON-SALE PROVISIONS

     Some of the mortgage loans may contain clauses requiring the consent of the
lender to any sale or other transfer of the related mortgaged property, or
due-on-sale clauses entitling the lender to accelerate payment of the mortgage
loan upon any sale, transfer or conveyance of the related mortgaged property.
Unless otherwise provided in the related prospectus supplement, the master
servicer will generally enforce any due-on-sale clause to the extent it has
knowledge of the conveyance or proposed conveyance of the underlying mortgaged
property and it is entitled to do so under applicable law; provided, however,
that the master servicer will not take any action in relation to the enforcement
of any due-on-sale provision which would adversely affect or jeopardize coverage
under any applicable insurance policy. To the extent specified in the related
prospectus supplement, any fee collected by or on behalf of the master servicer
for entering into an assumption agreement will be retained by or on behalf of
the master servicer as additional servicing compensation. See "Legal Aspects of
Mortgage Loans--Due-on-Sale Clauses."

RETAINED INTEREST; SERVICING COMPENSATION AND PAYMENT OF EXPENSES

     The prospectus supplement for a series of certificates will specify whether
there will be any retained interest in the assets, and, if so, the initial owner
thereof. If so, the retained interest will be established on a loan-by-loan
basis and will be specified on an exhibit to the related Agreement.

     To the extent specified in the related prospectus supplement, the master
servicer's and a subservicer's primary servicing compensation with respect to a
series of certificates will come from the periodic payment to it of a portion of
the interest payment on each asset. Since any retained interest and a master
servicer's primary compensation are percentages of the principal balance of each
asset, these amounts will decrease in accordance with the amortization of the
assets. The prospectus supplement with respect to a series of certificates
evidencing interests in a trust fund that includes mortgage loans may provide
that, as additional compensation, the master servicer or the subservicers may
retain all or a portion of assumption fees, modification fees, late payment
charges or prepayment premiums collected from borrowers and any interest or
other income which may be earned on funds held in the certificate account or any
account established by a subservicer pursuant to the Agreement.

     The master servicer may, to the extent provided in the related prospectus
supplement, pay from its servicing compensation certain expenses incurred in
connection with its servicing and managing of the assets, including, without
limitation, payment of the fees and disbursements of the trustee and independent
accountants, payment of expenses incurred in connection with distributions and
reports to certificateholders, and payment of any other expenses described in
the related prospectus supplement. Certain other expenses, including certain
expenses relating to defaults and liquidations on the mortgage loans and, to the
extent so provided in the related prospectus supplement, interest thereon at the
rate specified in the related prospectus supplement may be borne by the trust
fund.

     If and to the extent provided in the related prospectus supplement, the
master servicer may be required to apply a portion of the servicing compensation
otherwise payable to it in respect of any Due Period to certain interest
shortfalls resulting from the voluntary prepayment of any mortgage loans in the
related trust fund during that period prior to their respective due dates
therein.

EVIDENCE AS TO COMPLIANCE

     Each Agreement relating to assets which include mortgage loans will provide
that on or before a specified date in each year, beginning with the first such
date at least six months after the related cut-off date, 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 either the Uniform Single Attestation Program for Mortgage
Bankers or the Audit Program for Mortgages serviced for the Federal Home Loan
Mortgage Corporation, the servicing by or on behalf of the master servicer of
mortgage loans under pooling and servicing agreements substantially similar to
each other, including the related Agreement, was conducted in compliance with
the terms of such agreements except for any significant exceptions or errors in
records that, in the opinion of the firm, either the Audit Program for Mortgages
serviced for FHLMC, or paragraph 4 of the Uniform Single Attestation Program for
Mortgage Bankers, requires it to report. In rendering its statement that firm
may rely, as to matters relating to the direct servicing of mortgage 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


                                       64



FHLMC, rendered within one year of that 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 master servicer to the effect that the master servicer has fulfilled its
obligations under the Agreement throughout the preceding calendar year or other
specified twelve-month period.

     Unless otherwise provided in the related prospectus supplement, copies of
annual accountants' statement and statements of officers will be obtainable by
certificateholders without charge upon written request to the master servicer at
the address set forth in the related prospectus supplement.

MATTERS REGARDING A MASTER SERVICER AND THE DEPOSITOR

     The master servicer, if any, or a servicer for substantially all the
mortgage loans under each Agreement will be named in the related prospectus
supplement. The entity serving as master servicer or as servicer may be an
affiliate of Morgan Stanley Capital I Inc. and may have other normal business
relationships with Morgan Stanley Capital I Inc. or Morgan Stanley Capital I
Inc.'s affiliates. Reference to the master servicer shall be deemed to be to the
servicer of substantially all of the mortgage loans, if applicable.

     To the extent specified in the related prospectus supplement, the related
Agreement will provide that the master servicer may resign from its obligations
and duties thereunder only upon a determination that its duties under the
Agreement are no longer permissible under applicable law or are in material
conflict by reason of applicable law with any other activities carried on by it;
provided that the other activities of the master servicer causing the conflict
were carried on by the master servicer at the date of the Agreement. No
resignation will become effective until the trustee or a successor servicer has
assumed the master servicer's obligations and duties under the Agreement.

     To the extent specified in the related prospectus supplement, each
Agreement will further provide that neither any master servicer, Morgan Stanley
Capital I Inc. nor any director, officer, employee, or agent of a master
servicer or Morgan Stanley Capital I Inc. will be under any liability to the
related trust fund or certificateholders for any action taken, or for refraining
from the taking of any action, in good faith pursuant to the Agreement;
provided, however, that neither a master servicer, Morgan Stanley Capital I Inc.
nor any director, officer, employee or agent of a master servicer or Morgan
Stanley Capital I Inc. will be protected against any breach of a representation,
warranty or covenant made in the Agreement, or against any liability
specifically imposed thereby, or against any liability which would otherwise be
imposed by reason of willful misfeasance, bad faith or gross negligence in the
performance of obligations or duties thereunder or by reason of reckless
disregard of obligations and duties thereunder. Unless otherwise described in
the related prospectus supplement, each Agreement will further provide that any
master servicer, Morgan Stanley Capital I Inc. and any director, officer,
employee or agent of a master servicer or Morgan Stanley Capital I Inc. 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 certificates; provided, however, that
the indemnification will not extend to any loss, liability or expense:

          o    specifically imposed by the Agreement or otherwise incidental to
               the performance of obligations and duties thereunder, including,
               in the case of a master servicer, the prosecution of an
               enforcement action in respect of any specific mortgage loan or
               mortgage loans, except as any loss, liability or expense shall be
               otherwise reimbursable pursuant to the Agreement;

          o    incurred in connection with any breach of a representation,
               warranty or covenant made in the Agreement;

          o    incurred by reason of misfeasance, bad faith or gross negligence
               in the performance of obligations or duties thereunder, or by
               reason of reckless disregard of its obligations or duties;

          o    incurred in connection with any violation of any state or federal
               securities law; or

          o    imposed by any taxing authority if the loss, liability or expense
               is not specifically reimbursable pursuant to the terms of the
               related Agreement.


                                       65



     In addition, each Agreement will provide that neither any master servicer
nor Morgan Stanley Capital I Inc. will be under any obligation to appear in,
prosecute or defend any legal action which is not incidental to its respective
responsibilities under the Agreement and which in its opinion may involve it in
any expense or liability. The master servicer or Morgan Stanley Capital I Inc.
may, however, in its discretion undertake any such 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 certificateholders 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
certificateholders, and the master servicer or Morgan Stanley Capital I Inc., as
the case may be, will be entitled to be reimbursed therefor and to charge the
certificate account.

     Any person into which the master servicer or Morgan Stanley Capital I Inc.
may be merged or consolidated, or any person resulting from any merger or
consolidation to which the master servicer or Morgan Stanley Capital I Inc. is a
party, or any person succeeding to the business of the master servicer or Morgan
Stanley Capital I Inc., will be the successor of the master servicer or Morgan
Stanley Capital I Inc., as the case may be, under the related Agreement.

EVENTS OF DEFAULT

     Unless otherwise provided in the related prospectus supplement for a trust
fund that includes mortgage loans, Events of Default under the related Agreement
will include:

          o    any failure by the master servicer to distribute or cause to be
               distributed to certificateholders, or to remit to the trustee for
               distribution to certificateholders, any required payment;

          o    any failure by the master servicer duly to observe or perform in
               any material respect any of its other covenants or obligations
               under the Agreement which continues unremedied for thirty days
               after written notice of the failure has been given to the master
               servicer by the trustee or Morgan Stanley Capital I Inc., or to
               the master servicer, Morgan Stanley Capital I Inc. and the
               trustee by the holders of certificates evidencing not less than
               25% of the voting rights;

          o    any breach of a representation or warranty made by the master
               servicer under the Agreement which materially and adversely
               affects the interests of certificateholders and which continues
               unremedied for thirty days after written notice of that breach
               has been given to the master servicer by the trustee or Morgan
               Stanley Capital I Inc., or to the master servicer, Morgan Stanley
               Capital I Inc. and the trustee by the holders of certificates
               evidencing not less than 25% of the voting rights; and

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

     Material variations to the foregoing Events of Default--other than to
shorten cure periods or eliminate notice requirements--will be specified in the
related prospectus supplement. Unless otherwise described in the related
prospectus supplement, the trustee shall, not later than the later of 60 days
after the occurrence of any event which constitutes or, with notice or lapse of
time or both, would constitute an Event of Default and five days after certain
officers of the trustee become aware of the occurrence of such an event,
transmit by mail to Morgan Stanley Capital I Inc. and all certificateholders of
the applicable series notice of the occurrence, unless the default shall have
been cured or waived.

RIGHTS UPON EVENT OF DEFAULT

     So long as an Event of Default under an Agreement remains unremedied,
Morgan Stanley Capital I Inc. or the trustee may, and at the direction of
holders of certificates evidencing not less than 51% of the voting rights, the
trustee shall, terminate all of the rights and obligations of the master
servicer under the Agreement and in and to the mortgage loans, other than as a
certificateholder or as the owner of any retained interest, whereupon the
trustee will succeed to all of the responsibilities, duties and liabilities of
the master servicer under the Agreement, except that if the trustee is
prohibited by law from obligating itself to make advances regarding delinquent
mortgage loans, or if the


                                       66



related prospectus supplement so specifies, then the trustee will not be
obligated to make the advances, and will be entitled to similar compensation
arrangements. Unless otherwise described in the related prospectus supplement,
in the event that the trustee is unwilling or unable so to act, it may or, at
the written request of the holders of certificates entitled to at least 51% of
the voting rights, it shall appoint, or petition a court of competent
jurisdiction for the appointment of, a loan servicing institution acceptable to
the rating agency with a net worth at the time of appointment of at least
$15,000,000 to act as successor to the master servicer under the Agreement.
Pending appointment, the trustee is obligated to act in the capacity of master
servicer. The trustee and any successor may agree upon the servicing
compensation to be paid, which in no event may be greater than the compensation
payable to the master servicer under the Agreement.

     Unless otherwise described in the related prospectus supplement, the
holders of certificates representing at least 66 2/3% of the voting rights
allocated to the respective classes of certificates affected by any Event of
Default will be entitled to waive that Event of Default; provided, however, that
an Event of Default involving a failure to distribute a required payment to
certificateholders described in the first bullet point under "--Events of
Default" may be waived only by all of the certificateholders. Upon any waiver of
an Event of Default, the Event of Default shall cease to exist and shall be
deemed to have been remedied for every purpose under the Agreement.

     No certificateholder will have the right under any Agreement to institute
any proceeding with respect thereto unless the holder previously has given to
the trustee written notice of default and unless the holders of certificates
evidencing not less than 25% of the voting rights 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 sixty
days has neglected or refused to institute any proceeding. The trustee, however,
is under no obligation to exercise any of the trusts or powers vested in it by
any Agreement or to make any investigation of matters arising thereunder or to
institute, conduct or defend any litigation thereunder or in relation thereto at
the request, order or direction of any of the holders of certificates covered by
the Agreement, unless the certificateholders have offered to the trustee
reasonable security or indemnity against the costs, expenses and liabilities
which may be incurred therein or thereby.

AMENDMENT

     Each Agreement may be amended by the parties thereto, without the consent
of any of the holders of certificates covered by the Agreement:

          o    to cure any ambiguity;

          o    to conform the Agreement to this Prospectus and the prospectus
               supplement provided to investors in connection with the initial
               offering of the related certificates

          o    to correct, modify or supplement any provision in the Agreement
               which may be inconsistent with any other provision in the
               Agreement;

          o    to make any other provisions with respect to matters or questions
               arising under the Agreement which are not inconsistent with the
               provisions thereof; or

          o    to comply with any requirements imposed by the Internal Revenue
               Code;

provided that the amendment--other than an amendment for the purpose specified
in the fourth bullet point above--will not, as evidenced by an opinion of
counsel to that effect, adversely affect in any material respect the interests
of any holder of certificates covered by the Agreement.

     To the extent specified in the related prospectus supplement, each
Agreement may also be amended by Morgan Stanley Capital I Inc., the master
servicer, if any, and the trustee, with the consent of the holders of
certificates affected thereby evidencing not less than 51% of the voting rights,
for any purpose; provided, however, that to the extent specified in the related
prospectus supplement, no such amendment may:


                                       67



          o    reduce in any manner the amount of or delay the timing of,
               payments received or advanced on mortgage loans which are
               required to be distributed on any certificate without the consent
               of the holder of that certificate;

          o    adversely affect in any material respect the interests of the
               holders of any class of certificates in a manner other than as
               described in (1), without the consent of the holders of all
               certificates of that class; or

          o    modify the provisions of the Agreement described in this
               paragraph without the consent of the holders of all certificates
               covered by the Agreement then outstanding.

     However, with respect to any series of certificates as to which a REMIC
election is to be made, the trustee will not consent to any amendment of the
Agreement unless it shall first have received an opinion of counsel to the
effect that the amendment will not result in the imposition of a tax on the
related trust fund or cause the related trust fund to fail to qualify as a REMIC
at any time that the related certificates are outstanding.

THE TRUSTEE

     The trustee under each Agreement will be named in the related prospectus
supplement. The commercial bank, national banking association, banking
corporation or trust company serving as trustee may have a banking relationship
with Morgan Stanley Capital I Inc. and its affiliates and with any master
servicer and its affiliates.

DUTIES OF THE TRUSTEE

     The trustee will make no representations as to the validity or sufficiency
of any Agreement, the certificates or any asset or related document and is not
accountable for the use or application by or on behalf of any master servicer of
any funds paid to the master servicer or its designee in respect of the
certificates or the assets, or deposited into or withdrawn from the certificate
account or any other account by or on behalf of the master servicer. If no Event
of Default has occurred and is continuing, the trustee is required to perform
only those duties specifically required under the related Agreement. However,
upon receipt of the various certificates, reports or other instruments required
to be furnished to it, the trustee is required to examine the documents and to
determine whether they conform to the requirements of the Agreement.

MATTERS REGARDING THE TRUSTEE

     Unless otherwise described in the related prospectus supplement, the
trustee and any director, officer, employee or agent of the trustee shall be
entitled to indemnification out of the certificate account for any loss,
liability or expense, including costs and expenses of litigation, and of
investigation, counsel fees, damages, judgments and amounts paid in settlement,
incurred in connection with the trustee's:

          o    enforcing its rights and remedies and protecting the interests,
               and enforcing the rights and remedies, of the certificateholders
               during the continuance of an Event of Default;

          o    defending or prosecuting any legal action in respect of the
               related Agreement or series of certificates;

          o    being the lender of record with respect to the mortgage loans in
               a trust fund and the owner of record with respect to any
               mortgaged property acquired in respect thereof for the benefit of
               certificateholders; or

          o    acting or refraining from acting in good faith at the direction
               of the holders of the related series of certificates entitled to
               not less than 25% or a higher percentage as is specified in the
               related Agreement with respect to any particular matter of the
               voting rights for the series; provided, however, that the
               indemnification will not extend to any loss, liability or expense
               that constitutes a specific liability of the trustee pursuant to
               the related Agreement, or to any loss, liability or expense
               incurred by reason of willful misfeasance, bad faith or
               negligence on the part of the trustee in the performance of its
               obligations and duties under the related Agreement, or by reason
               of its reckless disregard of the


                                       68



               obligations or duties, or as may arise from a breach of any
               representation, warranty or covenant of the trustee made in the
               related Agreement.

RESIGNATION AND REMOVAL OF THE TRUSTEE

     The trustee may at any time resign from its obligations and duties under an
Agreement by giving written notice thereof to Morgan Stanley Capital I Inc., the
master servicer, if any, and all certificateholders. Upon receiving the notice
of resignation, Morgan Stanley Capital I Inc. is required promptly to appoint a
successor trustee acceptable to the master servicer, if any. If no successor
trustee shall have been so appointed and have accepted appointment within 30
days after the giving of the notice of resignation, the resigning trustee may
petition any court of competent jurisdiction for the appointment of a successor
trustee.

     If at any time the trustee shall cease to be eligible to continue as
trustee under the related Agreement, or if at any time the trustee shall become
incapable of acting, or shall be adjudged bankrupt or insolvent, or a receiver
of the trustee or of its property shall be appointed, or any public officer
shall take charge or control of the trustee or of its property or affairs for
the purpose of rehabilitation, conservation or liquidation, then Morgan Stanley
Capital I Inc. may remove the trustee and appoint a successor trustee acceptable
to the master servicer, if any. Holders of the certificates of any series
entitled to at least 51% of the voting rights for that series may at any time
remove the trustee without cause and appoint a successor trustee.

     Any resignation or removal of the trustee and appointment of a successor
trustee shall not become effective until acceptance of appointment by the
successor trustee.

                          DESCRIPTION OF CREDIT SUPPORT

GENERAL

     For any series of certificates, credit support may be provided with respect
to one or more classes thereof or the related assets. Credit support may be in
the form of the subordination of one or more classes of certificates, letters of
credit, insurance policies, guarantees, the establishment of one or more reserve
funds or another method of credit support described in the related prospectus
supplement, or any combination of the foregoing. If so provided in the related
prospectus supplement, any form of credit support may be structured so as to be
drawn upon by more than one series to the extent described in the related
prospectus supplement.

     Unless otherwise provided in the related prospectus supplement for a series
of certificates, the credit support will not provide protection against all
risks of loss and will not guarantee repayment of the entire certificate balance
of the certificates and interest thereon. If losses or shortfalls occur that
exceed the amount covered by credit support or that are not covered by credit
support, certificateholders will bear their allocable share of deficiencies.
Moreover, if a form of credit support covers more than one series of
certificates, holders of certificates evidencing interests in any of the trusts
will be subject to the risk that the credit support will be exhausted by the
claims of other trusts prior to the trust fund receiving any of its intended
share of coverage.

     If credit support is provided with respect to one or more classes of
certificates of a series, or the related assets, the related prospectus
supplement will include a description of:

          o    the nature and amount of coverage under the credit support;

          o    any conditions to payment thereunder not otherwise described in
               this prospectus;

          o    the conditions, if any, under which the amount of coverage under
               the credit support may be reduced and under which the credit
               support may be terminated or replaced;

          o    the material provisions relating to such credit support; and

          o    information regarding the obligor under any instrument of credit
               support, including:


                                       69



          o    a brief description of its principal business activities;

          o    its principal place of business, place of incorporation and the
               jurisdiction under which it is chartered or licensed to do
               business;

          o    if applicable, the identity of regulatory agencies that exercise
               primary jurisdiction over the conduct of its business; and

          o    its total assets, and its stockholders or policyholders surplus,
               if applicable, as of the date specified in the prospectus
               supplement.

     See "Risk Factors--Credit Enhancement is Limited in Amount and Coverage."

SUBORDINATE CERTIFICATES

     If so specified in the related prospectus supplement, one or more classes
of certificates of a series may be subordinate certificates. To the extent
specified in the related prospectus supplement, the rights of the holders of
subordinate certificates to receive distributions of principal and interest from
the certificate account on any distribution date will be subordinated to the
rights of the holders of senior certificates. If so provided in the related
prospectus supplement, the subordination of a class may apply only in the event
of or may be limited to certain types of losses or shortfalls. The related
prospectus supplement will set forth information concerning the amount of
subordination of a class or classes of subordinate certificates in a series, the
circumstances in which the subordination will be applicable and the manner, if
any, in which the amount of subordination will be effected.

CROSS-SUPPORT PROVISIONS

     If the assets for a series are divided into separate groups, each
supporting a separate class or classes of certificates of a series, credit
support may be provided by cross-support provisions requiring that distributions
be made on senior certificates evidencing interests in one group of mortgage
loans and mortgage-backed securities prior to distributions on subordinate
certificates evidencing interests in a different group of mortgage loans and
mortgage-backed securities within the trust fund. The prospectus supplement for
a series that includes a cross-support provision will describe the manner and
conditions for applying these provisions.

INSURANCE OR GUARANTEES FOR THE MORTGAGE LOANS

     If so provided in the prospectus supplement for a series of certificates,
the mortgage loans in the related trust fund will be covered for various default
risks by insurance policies or guarantees. A copy of any material instrument for
a series will be filed with the Securities and Exchange Commission as an exhibit
to a Current Report on Form 8-K to be filed within 15 days of issuance of the
certificates of the related series.

LETTER OF CREDIT

     If so provided in the prospectus supplement for a series of certificates,
deficiencies in amounts otherwise payable on the certificates or certain classes
thereof will be covered by one or more letters of credit, issued by the letter
of credit bank. Under a letter of credit, the letter of credit bank will be
obligated to honor draws thereunder in an aggregate fixed dollar amount, net of
unreimbursed payments thereunder, generally equal to a percentage specified in
the related prospectus supplement of the aggregate principal balance of the
mortgage loans and mortgage-backed securities on the related cut-off date or of
the initial aggregate certificate balance of one or more classes of
certificates. If so specified in the related prospectus supplement, the letter
of credit may permit draws in the event of only certain types of losses and
shortfalls. The amount available under the letter of credit will, in all cases,
be reduced to the extent of the unreimbursed payments thereunder and may
otherwise be reduced as described in the related prospectus supplement. The
obligations of the letter of credit bank under the letter of credit for each
series of certificates will expire at the earlier of the date specified in the
related prospectus supplement or the termination of the trust fund. A copy of
any letter of credit for a series will be filed with the Securities and Exchange
Commission as an exhibit to a Current Report on Form 8-K to be filed within 15
days of issuance of the certificates of the related series.


                                       70



INSURANCE POLICIES AND SURETY BONDS

     If so provided in the prospectus supplement for a series of certificates,
deficiencies in amounts otherwise payable on the certificates or certain classes
thereof will be covered by insurance policies or surety bonds provided by one or
more insurance companies or sureties. The instruments may cover, with respect to
one or more classes of certificates of the related series, timely distributions
of interest 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. A copy of any instrument for a series will be
filed with the Securities and Exchange Commission as an exhibit to a Current
Report on Form 8-K to be filed with the Securities and Exchange Commission
within 15 days of issuance of the certificates of the related series.

RESERVE FUNDS

     If so provided in the prospectus supplement for a series of certificates,
deficiencies in amounts otherwise payable on the certificates or certain classes
thereof will be covered by one or more reserve funds in which cash, a letter of
credit, Permitted Investments, a demand note or a combination thereof will be
deposited, in the amounts so specified in the prospectus supplement. The reserve
funds for a series may also be funded over time by depositing in the reserve
funds a specified amount of the distributions received on the related assets as
specified in the related prospectus supplement.

     Amounts on deposit in any reserve fund for a series, together with the
reinvestment income thereon, if any, will be applied for the purposes, in the
manner, and to the extent described in the related prospectus supplement. A
reserve fund may be provided to increase the likelihood of timely distributions
of principal of and interest on the certificates. If so specified in the related
prospectus supplement, reserve funds may be established to provide limited
protection against only certain types of losses and shortfalls. Following each
distribution date amounts in a reserve fund in excess of any amount required to
be maintained in the reserve fund may be released from the reserve fund under
the conditions and to the extent specified in the related prospectus supplement
and will not be available for further application to the certificates.

     Moneys deposited in any reserve funds will be invested in Permitted
Investments, except as otherwise specified in the related prospectus supplement.
Unless otherwise described in the related prospectus supplement, any
reinvestment income or other gain from these investments will be credited to the
related reserve fund for the series, and any loss resulting from these
investments will be charged to the reserve fund. However, the income may be
payable to any related master servicer or another service provider as additional
compensation. The reserve fund, if any, for a series will not be a part of the
trust fund unless otherwise described in the related prospectus supplement.

     Additional information concerning any reserve fund will be set forth in the
related prospectus supplement, including the initial balance of the reserve
fund, the balance required to be maintained in the reserve fund, the manner in
which the required balance will decrease over time, the manner of funding the
reserve fund, the purposes for which funds in the reserve fund may be applied to
make distributions to certificateholders and use of investment earnings from the
reserve fund, if any.

CREDIT SUPPORT FOR MORTGAGE-BACKED SECURITIES

     If so provided in the prospectus supplement for a series of certificates,
the mortgage-backed securities in the related trust fund or the mortgage loans
underlying the mortgage-backed securities may be covered by one or more of the
types of credit support described in this prospectus. The related prospectus
supplement will specify as to each form of credit support the information
indicated above under "Description of Credit Support--General" to the extent the
information is material and available.


                                       71



                         LEGAL ASPECTS OF MORTGAGE LOANS

     The following discussion contains general summaries of certain legal
aspects of loans secured by single-family residential properties. The legal
aspects are governed primarily by applicable state law, which laws may differ
substantially. As such, the summaries do not purport to:

          o    be complete;

          o    reflect the laws of any particular state; or

          o    encompass the laws of all states in which the security for the
               mortgage loans is situated.

The summaries are qualified in their entirety by reference to the applicable
federal and state laws governing the mortgage loans. See "Description of the
Trust Funds--Assets."

GENERAL

     All of the mortgage loans are loans evidenced by a note or bond and secured
by instruments granting a security interest in real property. The instrument
granting a security interest may be a mortgage, deed of trust, security deed or
deed to secure debt, depending upon the prevailing practice and law in the state
in which the mortgaged property is located. Any of the foregoing types of
mortgages will create a lien upon, or grant a title interest in, the subject
property. The priority of the mortgage will depend on the terms of the
particular security instrument, as well as separate, recorded, contractual
arrangements with others holding interests in the mortgaged property, the
knowledge of the parties to the instrument as well as the order of recordation
of the instrument in the appropriate public recording office. However, recording
does not generally establish priority over governmental claims for real estate
taxes and assessments and other charges imposed under governmental police
powers.

TYPES OF MORTGAGE INSTRUMENTS

     A mortgage either creates a lien against or constitutes a conveyance of
real property between two parties:

          o    a mortgagor--the borrower and usually the owner of the subject
               property, and

          o    a mortgagee--the lender.

     In contrast, a deed of trust is a three-party instrument, among:

          o    a trustor--the equivalent of a borrower,

          o    a trustee to whom the mortgaged property is conveyed, and

          o    a beneficiary--the lender--for whose benefit the conveyance is
               made.

     Under a deed of trust, the borrower grants the property, irrevocably until
the debt is paid, in trust, generally with a power of sale as security for the
indebtedness evidenced by the related note. A deed to secure debt typically has
two parties.

     By executing a 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 time that the underlying debt is repaid, generally with a power of
sale as security for the indebtedness evidenced by the related mortgage note. If
a borrower under a mortgage is a land trust, there would be an additional party
because legal title to the property is held by a land trustee under a land trust
agreement for the benefit of the borrower. At origination of a mortgage loan
involving a land trust, the borrower executes a separate undertaking to make
payments on the mortgage note. The lender's authority under a mortgage, the
trustee's authority under a deed of trust and the grantee's authority under a
deed to secure debt are governed by


                                       72



the express provisions of the mortgage, the law of the state in which the real
property is located, certain federal laws including, without limitation, the
Soldiers' and Sailors' Civil Relief Act of 1940 and, in some cases, in deed of
trust transactions, the directions of the beneficiary.

INTEREST IN REAL PROPERTY

     The real property covered by a mortgage, deed of trust, security deed or
deed to secure debt is most often the fee estate in land and improvements.
However, the mortgage or other instrument may encumber other interests in real
property such as:

          o    a tenant's interest in a lease of land or improvements, or both,
               and

          o    the leasehold estate created by the lease.

A mortgage or other instrument covering an interest in real property other than
the fee estate requires special provisions in the instrument creating the
interest to protect the lender against termination of the interest before the
note secured by the mortgage, deed of trust, security deed or deed to secure
debt is paid. To the extent specified in the prospectus supplement, Morgan
Stanley Capital I Inc. or the asset seller will make certain representations and
warranties in the Agreement with respect to any mortgage loans that are secured
by an interest in a leasehold estate. The representations and warranties, if
applicable, will be set forth in the prospectus supplement.

COOPERATIVE LOANS

     If specified in the prospectus supplement relating to a series of offered
certificates, the mortgage loans may also consist of cooperative apartment loans
secured by security interests in shares issued by a cooperative and in the
related proprietary leases or occupancy agreements granting exclusive rights to
occupy specific dwelling units in the cooperatives' buildings. The security
agreement will create a lien upon, or grant a title interest in, the property
which it covers, the priority of which will depend on the terms of the
particular security agreement as well as the order of recordation of the
agreement in the appropriate recording office. This type of lien or title
interest is not prior to the lien for real estate taxes and assessments and
other charges imposed under governmental police powers.

     Each cooperative owns in fee or has a leasehold interest in all the real
property and owns in fee or leases the building and all separate dwelling units
therein. The cooperative is directly responsible for property management and, in
most cases, payment of real estate taxes, other governmental impositions and
hazard and liability insurance. If there is a blanket mortgage or mortgages on
the cooperative apartment building or underlying land, as is generally the case,
or an underlying lease of the land, as is the case in some instances, the
cooperative, as property borrower, or lessee, as the case may be, is also
responsible for meeting these mortgage or rental obligations. A blanket mortgage
is ordinarily incurred by the cooperative in connection with either the
construction or purchase of the cooperative's apartment building or obtaining of
capital by the cooperative. The interest of the occupant under proprietary
leases or occupancy agreements as to which that cooperative is the landlord are
generally subordinate to the interest of the holder of a blanket mortgage and to
the interest of the holder of a land lease. If the cooperative is unable to meet
the payment obligations:

          o    arising under a blanket mortgage, the lender holding a blanket
               mortgage could foreclose on that mortgage and terminate all
               subordinate proprietary leases and occupancy agreements, or

          o    arising under its land lease, the holder of the landlord's
               interest under the land lease could terminate it and all
               subordinate proprietary leases and occupancy agreements.

     Also, a 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 final payment at maturity. The inability of the
cooperative to refinance a mortgage and its consequent inability to make the
final payment could lead to foreclosure by the lender. Similarly, a land lease
has an expiration date and the inability of the cooperative to extend its term
or, in the alternative, to purchase the land could lead to termination of the
cooperatives' interest in the property and termination of all proprietary leases
and occupancy agreement. In either event, a foreclosure by the holder of a
blanket mortgage or the termination of the underlying lease could eliminate or
significantly diminish the value of any


                                       73



collateral held by the lender that financed the purchase by an individual tenant
stockholder of cooperative shares or, in the case of the mortgage loans, the
collateral securing the cooperative loans.

     The cooperative is owned by tenant-stockholders who, through ownership of
stock or shares in the corporation, receive proprietary lease 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 occupancy rights are financed through
a cooperative share loan evidenced by a promissory note and secured by an
assignment of and a security interest in the occupancy agreement or proprietary
lease and a security interest in the related cooperative shares. The lender
generally takes possession of the share certificate and a counterpart of the
proprietary lease or occupancy agreement and a financing statement covering the
proprietary lease or occupancy agreement and the cooperative shares is filed in
the appropriate state and local offices to perfect the lender's interest in its
collateral. Subject to the limitations discussed below, upon default of the
tenant-stockholder, the lender may sue for judgment on the promissory note,
dispose of the collateral at a public or private sale or otherwise proceed
against the collateral or tenant-stockholder as an individual as provided in the
security agreement covering the assignment of the proprietary lease or occupancy
agreement and the pledge of cooperative shares. See "--Foreclosure--Cooperative
Loans" below.

FORECLOSURE

     General

     Foreclosure is a legal procedure that allows the lender to recover its
mortgage debt by enforcing its rights and available legal remedies under the
mortgage. If the borrower defaults in payment or performance of its obligations
under the note or mortgage, the lender has the right to institute foreclosure
proceedings to sell the mortgaged property at public auction to satisfy the
indebtedness.

     Foreclosure procedures with respect to the enforcement of a mortgage vary
from state to state. Two primary methods of foreclosing a mortgage are judicial
foreclosure and non-judicial foreclosure pursuant to a power of sale granted in
the mortgage instrument. There are several other foreclosure procedures
available in some states that are either infrequently used or available only in
certain limited circumstances, such as strict foreclosure.

     Judicial Foreclosure

     A judicial foreclosure proceeding is conducted in a court having
jurisdiction over the mortgaged property. Generally, the action is initiated by
the service of legal pleadings upon all parties having an interest of record in
the real property. Delays in completion of the foreclosure may occasionally
result from difficulties in locating defendants. When the lender's right to
foreclose is contested, the legal proceedings can be time-consuming. Upon
successful completion of a judicial foreclosure proceeding, the court generally
issues a judgment of foreclosure and appoints a referee or other officer to
conduct a public sale of the mortgaged property, the proceeds of which are used
to satisfy the judgment. The sales are made in accordance with procedures that
vary from state to state.

     Equitable Limitations on Enforceability of Certain Provisions

     United States courts have traditionally imposed general equitable
principles to limit the remedies available to a lender in connection with
foreclosure. These equitable principles are generally designed to relieve the
borrower from the legal effect of mortgage defaults, to the extent that the
effect is perceived as harsh or unfair. Relying on these principles, a court may
alter the specific terms of a loan to the extent it considers necessary to
prevent or remedy an injustice, undue oppression or overreaching, or may require
the lender to undertake affirmative and expensive actions to determine the cause
of the borrower's default and the likelihood that the borrower will be able to
reinstate the loan. In some cases, courts have substituted their judgment for
the lender's and have required that lenders reinstate loans or recast payment
schedules in order to accommodate borrowers who are suffering from a temporary
financial disability. In other cases, courts have limited the right of the
lender to foreclose if the default under the mortgage is not monetary, e.g., the
borrower failed to maintain the mortgaged property adequately or the borrower
executed a junior mortgage on the mortgaged property. The exercise by the court
of its equity powers will depend on the individual


                                       74



circumstances of each case presented to it. Finally, some courts have been faced
with the issue of whether federal or state constitutional provisions reflecting
due process concerns for adequate notice require that a borrower receive notice
in addition to statutorily-prescribed minimum notice. For the most part, these
cases have upheld the reasonableness of the notice provisions or have found that
a public sale under a mortgage providing for a power of sale does not involve
sufficient state action to afford constitutional protections to the borrower.

     Non-Judicial Foreclosure/Power of Sale

     Foreclosure of a deed of trust is generally accomplished by a non-judicial
trustee's sale pursuant to the power of sale granted in the deed of trust. A
power of sale is typically granted in a deed of trust. It may also be contained
in any other type of mortgage instrument. A power of sale allows a non-judicial
public sale to be conducted generally following a request from the
beneficiary/lender to the trustee to sell the property upon any default by the
borrower under the terms of the mortgage note or the mortgage instrument and
after notice of sale is given in accordance with the terms of the mortgage
instrument, as well as applicable state law. In some states, prior to the sale,
the trustee under a deed of trust must record a notice of default and notice of
sale and send a copy to the borrower and to any other party who has recorded a
request for a copy of a notice of default and notice of sale. In addition, in
some states the trustee must provide notice to any other party having an
interest of record in the real property, including junior lienholders. A notice
of sale must be posted in a public place and, in most states, published for a
specified period of time in one or more newspapers. The borrower or junior
lienholder may then have the right, during a reinstatement period required in
some states, to cure the default by paying the entire actual amount in arrears,
without acceleration, plus the expenses incurred in enforcing the obligation. In
other states, the borrower or the junior lienholder is not provided a period to
reinstate the loan, but has only the right to pay off the entire debt to prevent
the foreclosure sale. Generally, the procedure for public sale, the parties
entitled to notice, the method of giving notice and the applicable time periods
are governed by state law and vary among the states. Foreclosure of a deed to
secure debt is also generally accomplished by a non-judicial sale similar to
that required by a deed of trust, except that the lender or its agent, rather
than a trustee, is typically empowered to perform the sale in accordance with
the terms of the deed to secure debt and applicable law.

     Public Sale

     A third party may be unwilling to purchase a mortgaged property at a public
sale because of the difficulty in determining the value of the property at the
time of sale, due to, among other things, redemption rights which may exist and
the possibility of physical deterioration of the property during the foreclosure
proceedings. For these reasons, it is common for the lender to purchase the
mortgaged property for an amount equal to or less than the underlying debt and
accrued and unpaid interest plus the expenses of foreclosure. Generally, state
law controls the amount of foreclosure costs and expenses which may be recovered
by a lender. Thereafter, subject to the borrower's right in some states to
remain in possession during a redemption period, if applicable, the lender will
become the owner of the property and have both the benefits and burdens of
ownership of the mortgaged property. For example, the lender will become
obligated to pay taxes, obtain casualty insurance and to make 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. Moreover, a lender commonly
incurs substantial legal fees and court costs in acquiring a mortgaged property
through contested foreclosure or bankruptcy proceedings. Generally, state law
controls the amount of foreclosure expenses and costs, including attorneys'
fees, that may be recovered by a lender.

     A junior lender may not foreclose on the property securing the junior
mortgage unless it forecloses subject to senior mortgages and any other prior
liens, in which case it may be obliged to make payments on the senior mortgages
to avoid their foreclosure. In addition, in the event that the foreclosure of a
junior mortgage triggers the enforcement of a "due-on-sale clause" contained in
a senior mortgage, the junior lender may be required to pay the full amount of
the senior mortgage to avoid its foreclosure. Accordingly, with respect to those
mortgage loans, if any, that are junior mortgage loans, if the lender purchases
the property the lender's title will be subject to all senior mortgages, prior
liens and certain governmental liens.

     The proceeds received by the referee or trustee from the sale are applied
first to the costs, fees and expenses of sale and then in satisfaction of the
indebtedness secured by the mortgage under which the sale was conducted. Any


                                       75



proceeds remaining after satisfaction of senior mortgage debt are generally
payable to the holders of junior mortgages and other liens and claims in order
of their priority, whether or not the borrower is in default. Any additional
proceeds are generally payable to the borrower. The payment of the proceeds to
the holders of junior mortgages may occur in the foreclosure action of the
senior mortgage or a subsequent ancillary proceeding or may require the
institution of separate legal proceedings by these holders.

     REO Properties

     If title to any mortgaged property is acquired by the trustee on behalf of
the certificateholders, the master servicer or any related subservicer, on
behalf of the certificateholders, will be required to sell the mortgaged
property by the close of the third calendar year following the year of
acquisition, unless:

          o    the Internal Revenue Service grants an REO extension or

          o    it obtains an opinion of counsel generally to the effect that the
               holding of the property beyond the close of the third calendar
               year after its acquisition will not result in the imposition of a
               tax on the trust fund or cause any REMIC created pursuant to the
               Agreement to fail to qualify as a REMIC under the Internal
               Revenue Code.

Subject to the foregoing, the master servicer or any related subservicer will
generally be required to solicit bids for any mortgaged property so acquired in
a manner as will be reasonably likely to realize a fair price for the property.
The master servicer or any related subservicer may retain an independent
contractor to operate and manage any REO property; however, the retention of an
independent contractor will not relieve the master servicer or any related
subservicer of its obligations with respect to the REO property.

     In general, the master servicer or any related subservicer or an
independent contractor employed by the master servicer or any related
subservicer at the expense of the trust fund will be obligated to operate and
manage any mortgaged property acquired as REO property in a manner that would,
to the extent commercially feasible, maximize the trust fund's net after-tax
proceeds from the property. After the master servicer or any related subservicer
reviews the operation of the property and consults with the trustee to determine
the trust fund's federal income tax reporting position with respect to the
income it is anticipated that the trust fund would derive from the property, the
master servicer or any related subservicer could determine, particularly in the
case of an REO property that is a hospitality or residential health care
facility, that it would not be commercially feasible to manage and operate the
property in a manner that would avoid the imposition of an REO Tax. To the
extent that income the trust fund receives from an REO property is subject to a
tax on (i) "net income from foreclosure property" that income would be subject
to federal income tax at the highest marginal corporate tax rate--currently 35%
or (ii) "prohibited transactions," that income would be subject to federal
income tax at a 100% rate. The determination as to whether income from an REO
property would be subject to an REO Tax will depend on the specific facts and
circumstances relating to the management and operation of each REO property.
Generally, income from an REO property that is directly operated by the master
servicer or any related subservicer would be apportioned and classified as
"service" or "non-service" income. The "service" portion of the income could be
subject to federal income tax either at the highest marginal corporate tax rate
or at the 100% rate on "prohibited transactions," and the "non-service" portion
of the income could be subject to federal income tax at the highest marginal
corporate tax rate or, although it appears unlikely, at the 100% rate applicable
to "prohibited transactions." Any REO Tax imposed on the trust fund's income
from an REO property would reduce the amount available for distribution to
certificateholders.

     Certificateholders are advised to consult their tax advisors regarding the
possible imposition of REO Taxes in connection with the operation of commercial
REO properties by REMICs. See "Federal Income Tax Consequences" in this
prospectus and "Federal Income Tax Consequences" in the prospectus supplement.

     Rights of Redemption

     The purposes of a foreclosure action are to enable the lender to realize
upon its security and to bar the borrower, and all persons who have an interest
in the property which is subordinate to the mortgage being foreclosed, from
exercise of their "equity of redemption." The doctrine of equity of redemption
provides that, until the property covered by a mortgage has been sold in
accordance with a properly conducted foreclosure and foreclosure sale, those


                                       76



having an interest which is subordinate to that of the foreclosing lender have
an equity of redemption and may redeem the property by paying the entire debt
with interest. In addition, in some states, when a foreclosure action has been
commenced, the redeeming party must pay certain costs of the action. Those
having an equity of redemption must generally be made parties and joined in the
foreclosure proceeding in order for their equity of redemption to be cut off and
terminated.

     The equity of redemption is a common-law or non-statutory right which
exists prior to completion of the foreclosure, is not waivable by the borrower,
must be exercised prior to foreclosure sale and should be distinguished from the
post-sale statutory 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 some states, statutory redemption may occur only upon
payment of the foreclosure sale price. 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 a foreclosure sale or sale under a
deed of trust. Consequently, the practical effect of the redemption right is to
force the lender to maintain the property and pay the expenses of ownership
until the redemption period has expired. In some states, a post-sale statutory
right of redemption may exist following a judicial foreclosure, but not
following a trustee's sale under a deed of trust.

     Under the REMIC provisions currently in effect, property acquired by
foreclosure generally must not be held beyond the close of the third calendar
year following the year of acquisition. Unless otherwise provided in the related
prospectus supplement, with respect to a series of certificates for which an
election is made to qualify the trust fund or a part thereof as a REMIC, the
Agreement will permit foreclosed property to be held beyond the close of the
third calendar year following the year of acquisition if the Internal Revenue
Service grants an extension of time within which to sell the property or
independent counsel renders an opinion to the effect that holding the property
for such additional period is permissible under the REMIC provisions.

     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 by-laws, 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
permit 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 under the
proprietary lease or occupancy agreement which will usually constitute a default
under the security agreement between the lender and the tenant-stockholder.

     The recognition agreement generally provides that, in the event that the
tenant-stockholder has defaulted under the proprietary lease or occupancy
agreement, the cooperative will take no action to terminate the lease or
agreement until the lender has been provided with an opportunity to cure the
default. The recognition agreement typically provides that if the proprietary
lease or occupancy agreement is terminated, the cooperative will recognize the
lender's lien against proceeds from the sale of the cooperative apartment,
subject, however, to the cooperative's right to sums due under the proprietary
lease or occupancy agreement. The total amount owed to the cooperative by the
tenant-stockholder, which the lender generally cannot restrict and does not
monitor, could reduce the value of the collateral below the outstanding
principal balance of the cooperative loan and accrued and unpaid interest
thereon.

     Recognition agreements also provide that in the event of a foreclosure on a
cooperative loan, the lender must obtain the approval or consent of the
cooperative as required by the proprietary lease before transferring the
cooperative shares or assigning the proprietary lease. Generally, the lender is
not limited in any rights it may have to dispossess the tenant-stockholders.

     In some states, foreclosure on the cooperative shares is accomplished by a
sale in accordance with the provisions of Article 9 of the Uniform Commercial
Code and the security agreement relating to those shares. Article 9 of the
Uniform Commercial Code 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


                                       77



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 Uniform Commercial Code 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 cooperatives 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.

     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 was so converted.

JUNIOR MORTGAGES

     Some of the mortgage loans may be secured by junior mortgages or deeds of
trust, which are subordinate to first mortgages or deeds of trust held by other
lenders. The rights of the trust fund as the holder of a junior deed of trust or
a junior mortgage are subordinate in lien and in payment to those of the holder
of the senior mortgage or deed of trust, including the prior rights of the
senior lender or beneficiary to receive and apply hazard insurance and
condemnation proceeds and, upon default of the borrower, to cause a foreclosure
on the property. Upon completion of the foreclosure proceedings by the holder of
the senior mortgage or the sale pursuant to the deed of trust, the junior
lender's or junior beneficiary's lien will be extinguished unless the junior
lienholder satisfies the defaulted senior loan or asserts its subordinate
interest in a property in foreclosure proceedings. See "--Foreclosure" in this
prospectus.

     Furthermore, because the terms of the junior mortgage or deed of trust are
subordinate to the terms of the first mortgage or deed of trust, in the event of
a conflict between the terms of the first mortgage or deed of trust and the
junior mortgage or deed of trust, the terms of the first mortgage or deed of
trust will generally govern. Upon a failure of the borrower or trustor to
perform any of its obligations, the senior lender or beneficiary, subject to the
terms of the senior mortgage or deed of trust, may have the right to perform the
obligation itself. Generally, all sums so expended by the lender or beneficiary
become part of the indebtedness secured by the mortgage or deed of trust. To the
extent a first lender expends these sums, such sums will generally have priority
over all sums due under the junior mortgage.

ANTI-DEFICIENCY LEGISLATION AND OTHER LIMITATIONS ON LENDERS

     Statutes in some states limit the right of a beneficiary under a deed of
trust or a lender under a mortgage to obtain a deficiency judgment against the
borrower following foreclosure or sale under a deed of trust. A deficiency
judgment would be a personal judgment against the former borrower equal to the
difference between the net amount realized upon the public sale of the real
property and the amount due to the lender. Some states require the lender to
exhaust the security afforded under a 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 a personal action,
may be deemed to have elected a remedy and may be precluded from exercising
remedies with respect to the security. In some cases, a lender will be precluded
from exercising any additional rights under the note or mortgage if it has taken
any prior enforcement action. Consequently, the practical effect of the election
requirement, in those states permitting such election, is that lenders will
usually proceed against the security first rather than bringing a personal
action against the borrower. Finally, other statutory provisions limit any
deficiency judgment against the former borrower following a judicial 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
lender from obtaining a large deficiency judgment against the former borrower as
a result of low or no bids at the judicial sale.

     In addition to laws limiting or prohibiting deficiency judgments, numerous
other federal and state statutory provisions, including the federal bankruptcy
laws and state laws affording relief to debtors, may interfere with or


                                       78



affect the ability of the secured mortgage lender to realize upon collateral or
enforce a deficiency judgment. For example, with respect to federal bankruptcy
law, a court with federal bankruptcy jurisdiction may permit a debtor through
his or her Chapter 11 or Chapter 13 rehabilitative plan to cure a monetary
default in respect of a mortgage loan on a debtor's residence by paying
arrearages within a reasonable time period and reinstating the original mortgage
loan payment schedule even though the lender accelerated the mortgage loan and
final judgment of foreclosure had been entered in state court (provided no sale
of the residence had yet occurred) prior to the filing of the debtor's petition.
Some courts with federal bankruptcy jurisdiction have approved plans, based on
the particular facts of the reorganization case, that effected the curing of a
mortgage loan default by paying arrearages over a number of years.

     Courts with federal bankruptcy jurisdiction have also indicated that the
terms of a mortgage loan secured by property of the debtor may be modified.
These courts have allowed modifications that include reducing the amount of each
monthly payment, changing the rate of interest, altering the repayment schedule,
forgiving all or a portion of the debt and reducing the lender's security
interest to the value of the residence, thus leaving the lender a general
unsecured creditor for the difference between the value of the residence and the
outstanding balance of the loan. Generally, however, the terms of a mortgage
loan secured only by a mortgage on real property that is the debtor's principal
residence may not be modified pursuant to a plan confirmed pursuant to Chapter
11 or Chapter 13 except with respect to mortgage payment arrearages, which may
be cured within a reasonable time period.

     Certain tax liens arising under the Internal Revenue Code of 1986, as
amended, may in certain circumstances provide priority over the lien of a
mortgage or deed of trust. In addition, substantive requirements are imposed
upon mortgage lenders in connection with the origination and the servicing of
mortgage loans by numerous federal and some state consumer protection laws.
These laws include the federal Truth-in-Lending Act, Real Estate Settlement
Procedures Act, Equal Credit Opportunity Act, Fair Credit Billing Act, Fair
Credit Reporting Act and related statutes. These federal laws impose specific
statutory liabilities upon lenders who originate mortgage loans and who fail to
comply with the provisions of the law. In some cases this liability may affect
assignees of the mortgage loans.

     Generally, Article 9 of the Uniform Commercial Code governs foreclosure on
cooperative shares and the related proprietary lease or occupancy agreement.
Some courts have interpreted section 9-504 of the Uniform Commercial Code to
prohibit a deficiency award unless the creditor establishes that the sale of the
collateral which, in the case of a cooperative loan, would be the shares of the
cooperative and the related proprietary lease or occupancy agreement, was
conducted in a commercially reasonable manner.

ENVIRONMENTAL LEGISLATION

     Certain states impose a statutory lien for associated costs on property
that is the subject of a cleanup action by the state on account of hazardous
wastes or hazardous substances released or disposed of on the property. Such a
lien will generally have priority over all subsequent liens on the property and,
in certain of these states, will have priority over prior recorded liens
including the lien of a mortgage. In addition, under federal environmental
legislation and under state law in a number of states, a secured party that
takes a deed in lieu of foreclosure or acquires a mortgaged property at a
foreclosure sale or becomes involved in the operation or management of a
property so as to be deemed an "owner" or "operator" of the property may be
liable for the costs of cleaning up a contaminated site. Although such costs
could be substantial, it is unclear whether they would be imposed on a lender
(such as a trust fund) secured by residential real property. In the event that
title to a mortgaged property securing a mortgage loan in a trust fund was
acquired by the trust fund and cleanup costs were incurred in respect of the
mortgaged property, the holders of the related series of certificates might
realize a loss if such costs were required to be paid by the trust fund.

DUE-ON-SALE CLAUSES

     Unless the related prospectus supplement indicates otherwise, the mortgage
loans will contain due-on-sale clauses. These clauses generally provide that the
lender may accelerate the maturity of the loan if the borrower sells, transfers
or conveys the related mortgaged property. The enforceability of "due-on-sale"
clauses has been the subject of legislation or litigation in many states and, in
some cases, the enforceability of these clauses was limited or denied. However,
with respect to certain loans the Garn-St Germain Depository Institutions Act of
1982 preempts state constitutional, statutory and case law that prohibits the
enforcement of due-on-sale clauses and permits lenders to enforce these clauses
in accordance with their terms, subject to certain limited exceptions.
Due-on-sale clauses


                                       79



contained in mortgage loans originated by federal savings and loan associations
of federal savings banks are fully enforceable pursuant to regulations of the
United States Federal Home Loan Bank Board, as succeeded by the Office of Thrift
Supervision, which preempt state law restrictions on the enforcement of these
clauses. Similarly, "due-on-sale" clauses in mortgage loans made by national
banks and federal credit unions are now fully enforceable pursuant to preemptive
regulations of the Comptroller of the Currency and the National Credit Union
Administration, respectively.

     The Garn-St Germain Act also sets forth nine specific instances in which a
mortgage lender covered by the act (including federal savings and loan
associations and federal savings banks) may not exercise a "due-on-sale" clause,
notwithstanding the fact that a transfer of the property may have occurred.
These include intra-family transfers, certain transfers by operation of law,
leases of fewer than three years and the creation of a junior encumbrance.
Regulations promulgated under the Garn-St Germain Act also prohibit the
imposition of a prepayment penalty upon the acceleration of a loan pursuant to a
due-on-sale clause. The inability to enforce a "due-on-sale" clause may result
in a mortgage that bears an interest rate below the current market rate being
assumed by a new home buyer rather than being paid off, which may affect the
average life of the mortgage loans and the number of mortgage loans which may
extend to maturity.

PREPAYMENT CHARGES

     Under certain state laws, prepayment charges may not be imposed after a
certain period of time following the origination of mortgage loans secured by
liens encumbering owner-occupied residential properties, if the loans are paid
prior to maturity. Since many of the mortgaged properties will be
owner-occupied, it is anticipated that prepayment charges may not be imposed
with respect to many of the mortgage loans. The absence of a restraint on
prepayment, particularly with respect to fixed rate mortgage loans having higher
mortgage rates, may increase the likelihood of refinancing or other early
retirement of the loans.

SUBORDINATE FINANCING

     Where a borrower encumbers mortgaged property with one or more junior
liens, the senior lender is subjected to additional risks including:

          o    the borrower may have difficulty servicing and repaying multiple
               loans;

          o    if the junior loan permits recourse to the borrower--as junior
               loans often do--and the senior loan does not, a borrower may be
               more likely to repay sums due on the junior loan than those on
               the senior loan;

          o    acts of the senior lender that prejudice the junior lender or
               impair the junior lender's security may create a superior equity
               in favor of the junior lender. For example, if the borrower and
               the senior lender agree to an increase in the principal amount of
               or the interest rate payable on the senior loan, the senior
               lender may lose its priority to the extent any existing junior
               lender is harmed or the borrower is additionally burdened;

          o    if the borrower defaults on the senior loan or any junior loan or
               loans, the existence of junior loans and actions taken by junior
               lenders can impair the security available to the senior lender
               and can interfere with or delay the taking of action by the
               senior lender; and

          o    the bankruptcy of a junior lender may operate to stay foreclosure
               or similar proceedings by the senior lender.

APPLICABILITY OF USURY LAWS

     Title V of the Depository Institutions Deregulation and Monetary Control
Act of 1980, enacted in March 1980, provides that state usury limitations shall
not apply to certain types of residential first mortgage loans originated by
certain lenders after March 31, 1980. A similar federal statute was in effect
with respect to mortgage loans made during the first three months of 1980. The
Office of Thrift Supervision is authorized to issue rules and regulations and to
publish interpretations governing implementation of Title V. The statute
authorized any state to reimpose interest


                                       80



rate limits by adopting, before April 1, 1983, a law or constitutional provision
that expressly rejects application of the federal law. In addition, even where
Title V is not so rejected, any state is authorized by the law to adopt a
provision limiting discount points or other charges on mortgage loans covered by
Title V. Certain states have taken action to reimpose interest rate limits or to
limit discount points or other charges.

     Morgan Stanley Capital I Inc. has been advised by counsel that a court
interpreting Title V would hold that residential first mortgage loans that are
originated on or after January 1, 1980 are subject to federal preemption.
Therefore, in a state that has not taken the requisite action to reject
application of Title V or to adopt a provision limiting discount points or other
charges prior to origination of mortgage loans, any such limitation under the
state's usury law would not apply to the mortgage loans.

     In any state in which application of Title V has been expressly rejected or
a provision limiting discount points or other charges is adopted, no mortgage
loan originated after the date of the state action will be eligible for
inclusion in a trust fund unless the mortgage loan provides:

          o    the interest rate, discount points and charges as are permitted
               in that state; or

          o    that the terms of the loan shall be construed in accordance with
               the laws of another state under which the interest rate, discount
               points and charges would not be usurious and the borrower's
               counsel has rendered an opinion that the choice of law provision
               would be given effect.

     Statutes differ in their provisions as to the consequences of a usurious
loan. One group of statutes requires the lender to forfeit the interest due
above the applicable limit or impose a specified penalty. Under this statutory
scheme, the borrower may cancel the recorded mortgage or deed of trust upon
paying its debt with lawful interest, and the lender may foreclose, but only for
the debt plus lawful interest. A second group of statutes is more severe. A
violation of this type of usury law results in the invalidation of the
transaction, thereby permitting the borrower to cancel the recorded mortgage or
deed of trust without any payment or prohibiting the lender from foreclosing.

ALTERNATIVE MORTGAGE INSTRUMENTS

     Alternative mortgage instruments, including adjustable rate mortgage loans
and early ownership mortgage loans, originated by non-federally chartered
lenders have historically been subject to a variety of restrictions. The
restrictions differed from state to state, resulting in difficulties in
determining whether a particular alternative mortgage instrument originated by a
state-chartered lender was in compliance with applicable law. These difficulties
were alleviated substantially as a result of the enactment of Title VIII of the
Garn-St Germain Act. Title VIII of the Garn-St Germain Act provides that,
notwithstanding any state law to the contrary:

          o    state-chartered banks may originate alternative mortgage
               instruments in accordance with regulations promulgated by the
               Comptroller of the Currency with respect to origination of
               alternative mortgage instruments by national banks;

          o    state-chartered credit unions may originate alternative mortgage
               instruments in accordance with regulations promulgated by the
               National Credit Union Administration with respect to origination
               of alternative mortgage instruments by federal credit unions; and

          o    all other non-federally chartered housing creditors, including
               state-chartered savings and loan associations, state-chartered
               savings banks and mutual savings banks and mortgage banking
               companies, may originate alternative mortgage instruments in
               accordance with the regulations promulgated by the Federal Home
               Loan Bank Board, predecessor to the Office of Thrift Supervision,
               with respect to origination of alternative mortgage instruments
               by federal savings and loan associations.

     Title VIII of the Garn-St Germain Act provides that any state may reject
applicability of the provisions of Title VIII of the Garn-St Germain Act by
adopting, prior to October 15, 1985, a law or constitutional provision expressly
rejecting the applicability of the provisions. Certain states have taken this
type of action.


                                       81



SERVICEMEMBERS' CIVIL RELIEF ACT

     Under the terms of the Servicemembers' Civil Relief Act (formerly known as
the Soldiers' and Sailors' Civil Relief Act of 1940), as amended, a borrower who
enters military service after the origination of a mortgage loan, including a
borrower who was in reserve status and is called to active duty after
origination of the mortgage loan, may not be charged interest, including fees
and charges, above an annual rate of 6% during the period of the borrower's
active duty status, unless a court orders otherwise upon application of the
lender. The Servicemembers' Civil Relief Act, as amended, applies to borrowers
who are members of the Army, Navy, Air Force, Marines, National Guard, Reserves,
Coast Guard and officers of the U.S. Public Health Service assigned to duty with
the military. Because the Servicemembers' Civil Relief Act, as amended, applies
to borrowers who enter military service, including reservists who are called to
active duty, after origination of the related mortgage loan, no information can
be provided as to the number of loans that may be affected by the
Servicemembers' Civil Relief Act, as amended. Application of the Servicemembers'
Civil Relief Act, as amended, would adversely affect, for an indeterminate
period of time, the ability of any servicer to collect full amounts of interest
on certain of the mortgage loans. Any shortfalls in interest collections
resulting from the application of the Servicemembers' Civil Relief Act, as
amended, would result in a reduction of the amounts distributable to the holders
of the related series of certificates, and would not be covered by advances or,
to the extent specified in the related prospectus supplement, any form of credit
support provided in connection with the certificates. In addition, the Soldiers'
and Sailors' Civil Relief Act of 1940, as amended, imposes limitations that
would impair the ability of the servicer to foreclose on an affected mortgage
loan during the borrower's period of active duty status, and, under certain
circumstances, during an additional three month period thereafter. Thus, in the
event that an affected mortgage loan goes into default, there may be delays and
losses occasioned thereby.

FORFEITURE FOR DRUG, RICO AND MONEY LAUNDERING VIOLATIONS

     Federal law provides that property purchased or improved with assets
derived from criminal activity or otherwise tainted, or used in the commission
of certain offenses, can be seized and ordered forfeited to the United States of
America. The offenses which can trigger such a seizure and forfeiture include,
among others, violations of the Racketeer Influenced and Corrupt Organizations
Act, the Bank Secrecy Act, the anti-money laundering laws and regulations,
including the USA Patriot Act of 2001 and the regulations issued pursuant to
that Act, as well as the narcotic drug laws. In many instances, the United
States may seize the property even before a conviction occurs.

     In the event of a forfeiture proceeding, a lender may be able to establish
its interest in the property by proving that (1) its mortgage was executed and
recorded before the commission of the illegal conduct from which the assets used
to purchase or improve the property were derived or before the commission of any
other crime upon which the forfeiture is based, or (2) the lender, at the time
of the execution of the mortgage, "did not know or was reasonably without cause
to believe that the property was subject to forfeiture." However, there is no
assurance that such a defense will be successful.


                                       82



                         FEDERAL INCOME TAX CONSEQUENCES

     The following summary of the anticipated material federal income tax
consequences of the purchase, ownership and disposition of offered certificates
is based on the advice of Sidley Austin Brown & Wood LLP or Latham & Watkins LLP
or Cadwalader, Wickersham & Taft LLP, counsel to Morgan Stanley Capital I Inc.
This summary is based on laws, regulations, including the REMIC Regulations
promulgated by the Treasury Department, rulings and decisions now in effect or,
with respect to regulations, proposed, all of which are subject to change either
prospectively or retroactively. This summary does not address the federal income
tax consequences of an investment in certificates applicable to all categories
of investors, some of which, for example, banks and insurance companies, may be
subject to special rules. Prospective investors should consult their tax
advisors regarding the federal, state, local and any other tax consequences to
them of the purchase, ownership and disposition of certificates.

GENERAL

     The federal income tax consequences to certificateholders will vary
depending on whether an election is made to treat the trust fund relating to a
particular series of certificates as a REMIC under the Internal Revenue Code.
The prospectus supplement for each series of certificates will specify whether
one or more REMIC elections will be made.

GRANTOR TRUST FUNDS

     If a REMIC election is not made, Sidley Austin Brown & Wood LLP or
Cadwalader, Wickersham & Taft LLP or Latham & Watkins LLP will deliver its
opinion that the trust fund will not be classified as an association taxable as
a corporation and that the trust fund will be classified as a grantor trust
under subpart E, Part I of subchapter J of Chapter 1 of Subtitle A of the
Internal Revenue Code. In this case, owners of certificates will be treated for
federal income tax purposes as owners of a portion of the trust fund's assets as
described in this section of the prospectus.

A. SINGLE CLASS OF GRANTOR TRUST CERTIFICATES

     Characterization. The trust fund may be created with one class of grantor
trust certificates. In this case, each grantor trust certificateholder will be
treated as the owner of a pro rata undivided interest in the interest and
principal portions of the trust fund represented by the grantor trust
certificates and will be considered the equitable owner of a pro rata undivided
interest in each of the mortgage loans and mortgage-backed securities in the
pool. Any amounts received by a grantor trust certificateholder in lieu of
amounts due with respect to any mortgage loan and mortgage-backed security
because of a default or delinquency in payment will be treated for federal
income tax purposes as having the same character as the payments they replace.

     Each grantor trust certificateholder will be required to report on its
federal income tax return in accordance with the grantor trust
certificateholder's method of accounting its pro rata share of the entire income
from the mortgage loans in the trust fund represented by grantor trust
certificates, including interest, original issue discount, if any, prepayment
fees, assumption fees, any gain recognized upon an assumption and late payment
charges received by the master servicer. Under Internal Revenue Code Sections
162 or 212, each grantor trust certificateholder will be entitled to deduct its
pro rata share of servicing fees, prepayment fees, assumption fees, any loss
recognized upon an assumption and late payment charges retained by the master
servicer, provided that the amounts are reasonable compensation for services
rendered to the trust fund. Grantor trust certificateholders that are
individuals, estates or trusts will be entitled to deduct their share of
expenses as itemized deductions only to the extent these expenses plus all other
Internal Revenue Code Section 212 expenses exceed two percent of its adjusted
gross income. In addition, the amount of itemized deductions otherwise allowable
for the taxable year for an individual whose adjusted gross income exceeds the
applicable amount under Internal Revenue Code Section 68(b)--which amount will
be adjusted for inflation--will be reduced by the lesser of:

          o    3% of the excess of adjusted gross income over the applicable
               amount and

          o    80% of the amount of itemized deductions otherwise allowable for
               such taxable year.


                                       83



     This limitation will be phased out beginning in 2006 and eliminated after
2009.

     In general, a grantor trust certificateholder using the cash method of
accounting must take into account its pro rata share of income and deductions as
and when collected by or paid to the master servicer or, with respect to
original issue discount or certain other income items for which the
certificateholder has made an election, as the amounts are accrued by the trust
fund on a constant interest basis, and will be entitled to claim its pro rata
share of deductions, subject to the foregoing limitations, when the amounts are
paid or the certificateholder would otherwise be entitled to claim the
deductions had it held the mortgage loans and mortgage-backed securities
directly. A grantor trust certificateholder using an accrual method of
accounting must take into account its pro rata share of income as payment
becomes due or is paid to the master servicer, whichever is earlier, and may
deduct its pro rata share of expense items, subject to the foregoing
limitations, when the amounts are paid or the certificateholder otherwise would
be entitled to claim the deductions had it held the mortgage loans and
mortgage-backed securities directly. If the servicing fees paid to the master
servicer are deemed to exceed reasonable servicing compensation, the amount of
the excess could be considered as an ownership interest retained by the master
servicer or any person to whom the master servicer assigned for value all or a
portion of the servicing fees in a portion of the interest payments on the
mortgage loans and mortgage-backed securities. The mortgage loans and
mortgage-backed securities would then be subject to the "coupon stripping" rules
of the Internal Revenue Code discussed below under "--Stripped Bonds and
Coupons."

     Unless otherwise described in the related prospectus supplement or
otherwise provided below in this section of the prospectus, as to each series of
certificates, counsel to Morgan Stanley Capital I Inc. will have advised Morgan
Stanley Capital I Inc. that:

          o    a grantor trust certificate owned by a "domestic building and
               loan association" within the meaning of Internal Revenue Code
               Section 7701(a)(19) representing principal and interest payments
               on mortgage loans and mortgage-backed securities will be
               considered to represent "loans secured by an interest in real
               property which is ... residential property" within the meaning of
               Internal Revenue Code Section 7701(a)(19)(C)(v), to the extent
               that the mortgage loans and mortgage-backed securities
               represented by that grantor trust certificate are of a type
               described in that Internal Revenue Code section;

          o    a grantor trust certificate owned by a real estate investment
               trust representing an interest in mortgage loans and
               mortgage-backed securities will be considered to represent "real
               estate assets" within the meaning of Internal Revenue Code
               Section 856(c)(5)(B), and interest income on the mortgage loans
               and mortgage-backed securities will be considered "interest on
               obligations secured by mortgages on real property" within the
               meaning of Internal Revenue Code Section 856(c)(3)(B), to the
               extent that the mortgage loans and mortgage-backed securities
               represented by that grantor trust certificate are of a type
               described in that Internal Revenue Code section; and

          o    a grantor trust certificate owned by a REMIC will represent
               "obligation[s] which [are] principally secured by an interest in
               real property" within the meaning of Internal Revenue Code
               Section 860G(a)(3).

     Stripped Bonds and Coupons. Certain trust funds may consist of government
securities that constitute "stripped bonds" or "stripped coupons" as those terms
are defined in Internal Revenue Code Section 1286, and, as a result, these
assets would be subject to the stripped bond provisions of the Internal Revenue
Code. Under these rules, these government securities are treated as having
original issue discount based on the purchase price and the stated redemption
price at maturity of each security. As such, grantor trust certificateholders
would be required to include in income their pro rata share of the original
issue discount on each government security recognized in any given year on an
economic accrual basis even if the grantor trust certificateholder is a cash
method taxpayer. Accordingly, the sum of the income includible to the grantor
trust certificateholder in any taxable year may exceed amounts actually received
during such year.

     Buydown Loans. The assets constituting certain trust funds may include
buydown loans. The characterization of any investment in buydown loans will
depend upon the precise terms of the related buydown agreement, but to the
extent that buydown loans are secured in part by a bank account or other
personal property, they may not be treated in their entirety as assets described
in the foregoing sections of the Internal Revenue Code. There are no directly


                                       84



applicable precedents with respect to the federal income tax treatment or the
characterization of investments in buydown loans. Accordingly, grantor trust
certificateholders should consult their own tax advisors with respect to the
characterization of investments in grantor trust certificates representing an
interest in a trust fund that includes buydown loans.

     Premium. The price paid for a grantor trust certificate by a holder will be
allocated to the holder's undivided interest in each mortgage loan and
mortgage-backed security based on each asset's relative fair market value, so
that the holder's undivided interest in each asset will have its own tax basis.
A grantor trust certificateholder that acquires an interest in mortgage loans
and mortgage-backed securities at a premium may elect to amortize the premium
under a constant interest method, provided that the underlying mortgage loans
with respect to the mortgage loans and mortgage-backed securities were
originated after September 27, 1985. Premium allocable to mortgage loans
originated on or before September 27, 1985 should be allocated among the
principal payments on such mortgage loans and allowed as an ordinary deduction
as principal payments are made. Amortizable bond premium will be treated as an
offset to interest income on such grantor trust certificate. The basis for the
grantor trust certificate will be reduced to the extent that amortizable premium
is applied to offset interest payments. It is not clear whether a reasonable
Prepayment Assumption should be used in computing amortization of premium
allowable under Internal Revenue Code Section 171. A certificateholder that
makes this election for a certificate that is acquired at a premium will be
deemed to have made an election to amortize bond premium with respect to all
debt instruments having amortizable bond premium that such certificateholder
acquires during the year of the election or thereafter.

     If a premium is not subject to amortization using a reasonable Prepayment
Assumption, the holder of a grantor trust certificate acquired at a premium
should recognize a loss if a mortgage loan or an underlying mortgage loan with
respect to an asset prepays in full, equal to the difference between the portion
of the prepaid principal amount of such mortgage loan or underlying mortgage
loan that is allocable to the certificate and the portion of the adjusted basis
of the certificate that is allocable to the mortgage loan or underlying mortgage
loan. If a reasonable Prepayment Assumption is used to amortize the premium, it
appears that such a loss would be available, if at all, only if prepayments have
occurred at a rate faster than the reasonable assumed prepayment rate. It is not
clear whether any other adjustments would be required to reflect differences
between an assumed prepayment rate and the actual rate of prepayments. The
Internal Revenue Service has issued Amortizable Bond Premium Regulations. The
Amortizable Bond Premium Regulations specifically do not apply to prepayable
debt instruments or any pool of debt instruments the yield on which may be
affected by prepayments, such as the trust fund, which are subject to Internal
Revenue Code Section 1272(a)(6). Absent further guidance from the Internal
Revenue Service and unless otherwise described in the related prospectus
supplement, the trustee will account for amortizable bond premium in the manner
described above. Prospective purchasers should consult their tax advisors
regarding amortizable bond premium and the Amortizable Bond Premium Regulations.

     Original Issue Discount. The Internal Revenue Service has stated in
published rulings that, in circumstances similar to those described in this
prospectus, the OID Regulations will be applicable to a grantor trust
certificateholder's interest in those mortgage loans and mortgage-backed
securities meeting the conditions necessary for these sections to apply. Rules
regarding periodic inclusion of original issue discount income are applicable to
mortgages of corporations originated after May 27, 1969, mortgages of
noncorporate borrowers other than individuals originated after July 1, 1982, and
mortgages of individuals originated after March 2, 1984. Such original issue
discount could arise by the financing of points or other charges by the
originator of the mortgages in an amount greater than a statutory de minimis
exception to the extent that the points are not currently deductible under
applicable Internal Revenue Code provisions or are not for services provided by
the lender. Original issue discount generally must be reported as ordinary gross
income as it accrues under a constant interest method. See "--Multiple Classes
of Grantor Trust Certificates--Accrual of Original Issue Discount" below.

     Market Discount. A grantor trust certificateholder that acquires an
undivided interest in mortgage loans and mortgage-backed securities may be
subject to the market discount rules of Internal Revenue Code Sections 1276
through 1278 to the extent an undivided interest in the asset is considered to
have been purchased at a "market discount." Generally, the amount of market
discount is equal to the excess of the portion of the principal amount of the
mortgage loan or mortgage-backed security allocable to the holder's undivided
interest over the holder's tax basis in such interest. Market discount with
respect to a grantor trust certificate will be considered to be zero if the
amount allocable to the grantor trust certificate is less than 0.25% of the
grantor trust certificate's stated redemption price at maturity multiplied by
the weighted average maturity remaining after the date of purchase. Treasury
regulations


                                       85



implementing the market discount rules have not yet been issued; therefore,
investors should consult their own tax advisors regarding the application of
these rules and the advisability of making any of the elections allowed under
Internal Revenue Code Sections 1276 through 1278.

     The Internal Revenue Code provides that any principal payment, whether a
scheduled payment or a prepayment, or any gain on disposition of a market
discount bond acquired by the taxpayer after October 22, 1986 shall be treated
as ordinary income to the extent that it does not exceed the accrued market
discount at the time of such payment. The amount of accrued market discount for
purposes of determining the tax treatment of subsequent principal payments or
dispositions of the market discount bond is to be reduced by the amount so
treated as ordinary income.

     The Internal Revenue Code also grants the Treasury Department authority to
issue regulations providing for the computation of accrued market discount on
debt instruments, the principal of which is payable in more than one
installment. While the Treasury Department has not yet issued regulations, rules
described in the relevant legislative history will apply. Under those rules, the
holder of a market discount bond may elect to accrue market discount either on
the basis of a constant interest rate or according to one of the following
methods. If a grantor trust certificate is issued with original issue discount,
the amount of market discount that accrues during any accrual period would be
equal to the product of

          o    the total remaining market discount and

          o    a fraction, the numerator of which is the original issue discount
               accruing during the period and the denominator of which is the
               total remaining original issue discount at the beginning of the
               accrual period.

     For grantor trust certificates issued without original issue discount, the
amount of market discount that accrues during a period is equal to the product
of

          o    the total remaining market discount and

          o    a fraction, the numerator of which is the amount of stated
               interest paid during the accrual period and the denominator of
               which is the total amount of stated interest remaining to be paid
               at the beginning of the accrual period.

     For purposes of calculating market discount under any of the above methods
in the case of instruments, such as the grantor trust certificates, that provide
for payments that may be accelerated by reason of prepayments of other
obligations securing such instruments, the same Prepayment Assumption applicable
to calculating the accrual of original issue discount will apply. Because the
regulations described above have not been issued, it is impossible to predict
what effect those regulations might have on the tax treatment of a grantor trust
certificate purchased at a discount or premium in the secondary market.

     A holder who acquired a grantor trust certificate at a market discount also
may be required to defer a portion of its interest deductions for the taxable
year attributable to any indebtedness incurred or continued to purchase or carry
the grantor trust certificate purchased with market discount. For these
purposes, the de minimis rule referred to above applies. 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 the market discount is includible in income. If such holder elects to
include market discount in income currently as it accrues on all market discount
instruments acquired by such holder in that taxable year or thereafter, the
interest deferral rule described above will not apply.

     Election to Treat All Interest as Original Issue Discount. The OID
Regulations permit a certificateholder to elect to accrue all interest, discount
(including de minimis market or original issue discount) and premium in income
as interest, based on a constant yield method for certificates acquired on or
after April 4, 1994. If this election were to be made with respect to a grantor
trust certificate with market discount, the certificateholder would be deemed to
have made an election to include in income currently market discount with
respect to all other debt instruments having market discount that such
certificateholder acquires during the year of the election or thereafter.
Similarly, a certificateholder that makes this election for a certificate that
is acquired at a premium will be deemed to have made


                                       86



an election to amortize bond premium with respect to all debt instruments having
amortizable bond premium that such certificateholder owns or acquires. See
"--Single Class of Grantor Trust Certificates--Premium" above in this
prospectus. The election to accrue interest, discount and premium on a constant
yield method with respect to a certificate is irrevocable without the consent of
the Internal Revenue Service.

     Anti-abuse Rule. The Internal Revenue Service can apply or depart from the
rules contained in the OID Regulations as necessary or appropriate to achieve a
reasonable result where a principal purpose in structuring a mortgage loan,
mortgage-backed security or grantor trust certificate or the effect of applying
the otherwise applicable rules is to achieve a result that is unreasonable in
light of the purposes of the applicable statutes, which generally are intended
to achieve the clear reflection of income for both issuers and holders of debt
instruments.

B. MULTIPLE CLASSES OF GRANTOR TRUST CERTIFICATES

     1. Stripped Bonds and Stripped Coupons

     Pursuant to Internal Revenue Code Section 1286, the separation of ownership
of the right to receive some or all of the interest payments on an obligation
from ownership of the right to receive some or all of the principal payments
results in the creation of "stripped bonds" with respect to principal payments
and "stripped coupons" with respect to interest payments. For purposes of
Internal Revenue Code Sections 1271 through 1288, Internal Revenue Code Section
1286 treats a stripped bond or a stripped coupon as an obligation issued on the
date that such stripped interest is created.

     Excess Servicing will be Treated Under the Stripped Bond Rules. If the
excess servicing fee is less than 100 basis points, i.e., 1% interest on the
mortgage asset principal balance, or the certificates are initially sold with a
de minimis discount, assuming no prepayment assumption is required, any non-de
minimis discount arising from a subsequent transfer of the certificates should
be treated as market discount. The Internal Revenue Service appears to require
that reasonable servicing fees be calculated on a mortgage asset by mortgage
asset basis, which could result in some mortgage loans and mortgage-backed
securities being treated as having more than 100 basis points of interest
stripped off. See "--Multiple Classes of Grantor Trust Certificates--Stripped
Bonds and Stripped Coupons" in this prospectus.

     Although not entirely clear, a Stripped Bond Certificate generally should
be treated as an interest in mortgage loans and mortgage-backed securities
issued on the day the certificate is purchased for purposes of calculating any
original issue discount. Generally, if the discount on a mortgage loan or
mortgage-backed security is larger than a de minimis amount, as calculated for
purposes of the original issue discount rules, a purchaser of such a certificate
will be required to accrue the discount under the original issue discount rules
of the Internal Revenue Code. See "--Single Class of Grantor Trust
Certificates--Original Issue Discount" in this prospectus. However, a purchaser
of a Stripped Bond Certificate will be required to account for any discount on
the mortgage loans and mortgage-backed securities as market discount rather than
original issue discount if either

          o    the amount of original issue discount with respect to the
               mortgage loans and mortgage-backed securities is treated as zero
               under the original issue discount de minimis rule when the
               certificate was stripped or

          o    no more than 100 basis points, including any amount of servicing
               fees in excess of reasonable servicing fees, is stripped off of
               the trust fund's mortgage loans and mortgage-backed securities.

     Pursuant to Revenue Procedure 91-49, issued on August 8, 1991, purchasers
of Stripped Bond Certificates using an inconsistent method of accounting must
change their method of accounting and request the consent of the Internal
Revenue Service to the change in their accounting method on a statement attached
to their first timely tax return filed after August 8, 1991.

     The precise tax treatment of Stripped Coupon Certificates is substantially
uncertain. The Internal Revenue Code could be read literally to require that
original issue discount computations be made for each payment from each mortgage
loan or mortgage-backed security. Unless otherwise described in the related
prospectus supplement, all payments from a mortgage loan or mortgage-backed
security underlying a Stripped Coupon Certificate will be treated as a single
installment obligation subject to the original issue discount rules of the
Internal Revenue Code, in which


                                       87



case, all payments from the mortgage loan or mortgage-backed security would be
included in the stated redemption price at maturity for the mortgage loan and
mortgage-backed security purposes of calculating income on the certificate under
the original issue discount rules of the Internal Revenue Code.

     It is unclear under what circumstances, if any, the prepayment of mortgage
loans and mortgage-backed securities will give rise to a loss to the holder of a
Stripped Bond Certificate purchased at a premium or a Stripped Coupon
Certificate. If the certificate is treated as a single instrument rather than an
interest in discrete mortgage loans and the effect of prepayments is taken into
account in computing yield with respect to the grantor trust certificate, it
appears that no loss will be available as a result of any particular prepayment
unless prepayments occur at a rate faster than the assumed prepayment rate.
However, if the certificate is treated as an interest in discrete mortgage loans
or mortgage-backed securities, or if no Prepayment Assumption is used, then when
a mortgage loan or mortgage-backed security is prepaid, the holder of the
certificate should be able to recognize a loss equal to the portion of the
adjusted issue price of the certificate that is allocable to the mortgage loan
or mortgage-backed security.

     In light of the application of Internal Revenue Code Section 1286, a
beneficial owner of a Stripped Bond Certificate generally will be required to
compute accruals of original issue discount based on its yield, possibly taking
into account its own Prepayment Assumption. The information necessary to perform
the related calculations for information reporting purposes, however, generally
will not be available to the trustee. Accordingly, any information reporting
provided by the trustee with respect to these Stripped Bond Certificate, which
information will be based on pricing information as of the closing date, will
largely fail to reflect the accurate accruals of original issue discount for
these securities. Prospective investors therefore should be aware that the
timing of accruals of original issue discount applicable to a Stripped Bond
Certificate generally will be different than that reported to holders and the
Internal Revenue Service.

     Holders of Stripped Bond Certificates and Stripped Coupon Certificates are
urged to consult with their own tax advisors regarding the proper treatment of
these certificates for federal income tax purposes.

     Treatment of Certain Owners. Several Internal Revenue Code sections provide
beneficial treatment to certain taxpayers that invest in mortgage loans and
mortgage-backed securities of the type that make up the trust fund. With respect
to these Internal Revenue Code sections, no specific legal authority exists
regarding whether the character of the grantor trust certificates, for federal
income tax purposes, will be the same as that of the underlying mortgage loans
and mortgage-backed securities. While Internal Revenue Code Section 1286 treats
a stripped obligation as a separate obligation for purposes of the Internal
Revenue Code provisions addressing original issue discount, it is not clear
whether such characterization would apply with regard to these other Internal
Revenue Code sections. Although the issue is not free from doubt, each class of
grantor trust certificates, unless otherwise described in the related prospectus
supplement, should be considered to represent "real estate assets" within the
meaning of Internal Revenue Code Section 856(c)(5)(B) and "loans ... secured by,
an interest in real property which is ... residential real property" within the
meaning of Internal Revenue Code Section 7701(a)(19)(C)(v), and interest income
attributable to grantor trust certificates should be considered to represent
"interest on obligations secured by mortgages on real property" within the
meaning of Internal Revenue Code Section 856(c)(3)(B), provided that in each
case the underlying mortgage loans and mortgage-backed securities and interest
on such mortgage loans and mortgage-backed securities qualify for such
treatment. Prospective purchasers to which such characterization of an
investment in certificates is material should consult their own tax advisors
regarding the characterization of the grantor trust certificates and the income
therefrom. Unless otherwise specified in the related prospectus supplement,
grantor trust certificates will be "obligation[s]...which [are] principally
secured by an interest in real property" within the meaning of Code Section
860G(a)(3)(A).

     2. Grantor Trust Certificates Representing Interests in Loans Other Than
Adjustable Rate Loans

     The original issue discount rules of Internal Revenue Code Sections 1271
through 1275 will be applicable to a certificateholder's interest in those
mortgage loans and mortgage-backed securities as to which the conditions for the
application of those sections are met. Rules regarding periodic inclusion of
original issue discount in income are applicable to mortgages of corporations
originated after May 27, 1969, mortgages of noncorporate borrowers--other than
individuals--originated after July 1, 1982, and mortgages of individuals
originated after March 2, 1984. Under the OID Regulations, such original issue
discount could arise by the charging of points by the originator of the mortgage
in an amount greater than the statutory de minimis exception, including a
payment of points that is currently


                                       88



deductible by the borrower under applicable Internal Revenue Code provisions, or
under certain circumstances, by the presence of "teaser" rates on the mortgage
loans and mortgage-backed securities. Original issue discount on each grantor
trust certificate must be included in the owner's ordinary income for federal
income tax purposes as it accrues, in accordance with a constant interest method
that takes into account the compounding of interest, in advance of receipt of
the cash attributable to such income. The amount of original issue discount
required to be included in an owner's income in any taxable year with respect to
a grantor trust certificate representing an interest in mortgage loans and
mortgage-backed securities other than adjustable rate loans likely will be
computed as described below under "--Accrual of Original Issue Discount." The
following discussion is based in part on the OID Regulations and in part on the
provisions of the Tax Reform Act of 1986. The holder of a certificate should be
aware, however, that the OID Regulations do not adequately address certain
issues relevant to prepayable securities.

     Under the Internal Revenue Code, the mortgage loans and mortgage-backed
securities underlying the grantor trust certificate will be treated as having
been issued on the date they were originated with an amount of original issue
discount equal to the excess of such asset's stated redemption price at maturity
over its issue price. The issue price of a mortgage loan or mortgage-backed
security is generally the amount lent to the borrower, which may be adjusted to
take into account certain loan origination fees. The stated redemption price at
maturity of a mortgage loan or mortgage-backed security is the sum of all
payments to be made on these assets other than payments that are treated as
qualified stated interest payments. The accrual of this original issue discount,
as described below under "--Accrual of Original Issue Discount," will, unless
otherwise described in the related prospectus supplement, utilize the Prepayment
Assumption on the issue date of such grantor trust certificate, and will take
into account events that occur during the calculation period. The Prepayment
Assumption will be determined in the manner prescribed by regulations that have
not yet been issued.

     In the absence of such regulations, the Prepayment Assumption used will be
the prepayment assumption that is used in determining the offering price of such
certificate. No representation is made that any certificate will prepay at the
Prepayment Assumption or at any other rate.

     Accrual of Original Issue Discount. Generally, the owner of a grantor trust
certificate must include in gross income the sum of the "daily portions," as
defined below in this section, of the original issue discount on the grantor
trust certificate for each day on which it owns the certificate, including the
date of purchase but excluding the date of disposition. In the case of an
original owner, the daily portions of original issue discount with respect to
each component generally will be determined as set forth under the OID
Regulations. A calculation will be made by the master servicer or such other
entity specified in the related prospectus supplement of the portion of original
issue discount that accrues during each successive monthly accrual period, or
shorter period from the date of original issue, that ends on the day in the
calendar year corresponding to each of the distribution dates on the grantor
trust certificates, or the day prior to each such date. This will be done, in
the case of each full month accrual period, by

          o    adding (1) the present value at the end of the accrual
               period--determined by using as a discount factor the original
               yield to maturity of the respective component under the
               Prepayment Assumption--of all remaining payments to be received
               under the Prepayment Assumption on the respective component and
               (2) any payments included in the stated redemption price at
               maturity received during such accrual period, and

          o    subtracting from that total the "adjusted issue price" of the
               respective component at the beginning of such accrual period.

     The adjusted issue price of a grantor trust certificate at the beginning of
the first accrual period is its issue price; the adjusted issue price of a
grantor trust certificate at the beginning of a subsequent accrual period is the
adjusted issue price at the beginning of the immediately preceding accrual
period plus the amount of original issue discount allocable to that accrual
period reduced by the amount of any payment other than a payment of qualified
stated interest made at the end of or during that accrual period. The original
issue discount accruing during such accrual period will then be divided by the
number of days in the period to determine the daily portion of original issue
discount for each day in the period. With respect to an initial accrual period
shorter than a full monthly accrual period, the daily portions of original issue
discount must be determined according to an appropriate allocation under any
reasonable method.


                                       89



     Original issue discount generally must be reported as ordinary gross income
as it accrues under a constant interest method that takes into account the
compounding of interest as it accrues rather than when received. However, the
amount of original issue discount includible in the income of a holder of an
obligation is reduced when the obligation is acquired after its initial issuance
at a price greater than the sum of the original issue price and the previously
accrued original issue discount, less prior payments of principal. Accordingly,
if the mortgage loans and mortgage-backed securities acquired by a
certificateholder are purchased at a price equal to the then unpaid principal
amount of the asset, no original issue discount attributable to the difference
between the issue price and the original principal amount of the asset--i.e.,
points--will be includible by the holder. Other original issue discount on the
mortgage loans and mortgage-backed securities--e.g., that arising from a
"teaser" rate--would still need to be accrued.

     3. Grantor Trust Certificates Representing Interests in Adjustable Rate
Loans

     The OID Regulations do not address the treatment of instruments, such as
the grantor trust certificates, which represent interests in adjustable rate
loans. Additionally, the Internal Revenue Service has not issued guidance under
the Internal Revenue Code's coupon stripping rules with respect to such
instruments. In the absence of any authority, the master servicer will report
Stripped ARM Obligations to holders in a manner it believes is consistent with
the rules described above under the heading "--Grantor Trust Certificates
Representing Interests in Loans Other Than Adjustable Rate Loans" and with the
OID Regulations. In general, application of these rules may require inclusion of
income on a Stripped ARM Obligation in advance of the receipt of cash
attributable to such income. Further, the addition of Deferred Interest to the
principal balance of an adjustable rate loan may require the inclusion of the
amount in the income of the grantor trust certificateholder when the amount
accrues. Furthermore, the addition of Deferred Interest to the grantor trust
certificate's principal balance will result in additional income, including
possibly original issue discount income, to the grantor trust certificateholder
over the remaining life of such grantor trust certificates.

     Because the treatment of Stripped ARM Obligations is uncertain, investors
are urged to consult their tax advisors regarding how income will be includible
with respect to such certificates.

C. SALE OR EXCHANGE OF A GRANTOR TRUST CERTIFICATE

     Sale or exchange of a grantor trust certificate prior to its maturity will
result in gain or loss equal to the difference, if any, between the amount
received and the owner's adjusted basis in the grantor trust certificate. Such
adjusted basis generally will equal the seller's purchase price for the grantor
trust certificate, increased by the original issue discount included in the
seller's gross income with respect to the grantor trust certificate, and reduced
by principal payments on the grantor trust certificate previously received by
the seller. Such gain or loss will be capital gain or loss to an owner for which
a grantor trust certificate is a "capital asset" within the meaning of Internal
Revenue Code Section 1221, except to the extent described above with respect to
the market discount, and will generally be long-term capital gain if the grantor
trust certificate has been owned for more than one year.

     Long-term capital gains of individuals are subject to reduced maximum tax
rates while capital gains recognized by individuals on capital assets held
twelve months or less are generally subject to ordinary income tax rates. The
use of capital losses is limited.

     It is possible that capital gain realized by holders of one or more classes
of grantor trust certificates could be considered gain realized upon the
disposition of property that was part of a "conversion transaction." A sale of a
grantor trust certificate will be part of a conversion transaction if
substantially all of the holder's expected return is attributable to the time
value of the holder's net investment, and:

          o    the holder entered the contract to sell the grantor trust
               certificate substantially contemporaneously with acquiring the
               grantor trust certificate;

          o    the grantor trust certificate is part of a straddle;

          o    the grantor trust certificate is marketed or sold as producing
               capital gain; or


                                       90



          o    other transactions to be specified in Treasury regulations that
               have not yet been issued.

If the sale or other disposition of a grantor trust certificate is part of a
conversion transaction, all or any portion of the gain realized upon the sale or
other disposition would be treated as ordinary income instead of capital gain.

     Grantor trust certificates will be "evidences of indebtedness" within the
meaning of Internal Revenue Code Section 582(c)(1), so that gain or loss
recognized from the sale of a grantor trust certificate by a bank or a thrift
institution to which such section applies will be treated as ordinary income or
loss.

D. NON-U.S. PERSONS

     Generally, to the extent that a grantor trust certificate evidences
ownership in underlying mortgage loans and mortgage-backed securities that were
issued on or before July 18, 1984, interest or original issue discount paid by
the person required to withhold tax under Internal Revenue Code Section 1441 or
1442 to

          o    an owner that is not a U.S. Person or

          o    a grantor trust certificate holder holding on behalf of an owner
               that is not a U.S. Person

will be subject to federal income tax, collected by withholding, at a rate of
30% or such lower rate as may be provided for interest by an applicable tax
treaty, unless such income is effectively connected with a U.S. trade or
business of such owner or beneficial owner.

     Accrued original issue discount recognized by the owner on the sale or
exchange of such a grantor trust certificate also will be subject to federal
income tax at the same rate. Generally, such payments would not be subject to
withholding to the extent that a grantor trust certificate evidences ownership
in mortgage loans and mortgage-backed securities issued after July 18, 1984, by
natural persons if such grantor trust certificateholder complies with certain
identification requirements, including delivery of a statement, signed by the
grantor trust certificateholder under penalties of perjury, certifying that the
grantor trust certificateholder is not a U.S. Person and providing the name and
address of the grantor trust certificateholder. To the extent payments to
grantor trust certificateholders that are not U.S. Persons are payments of
"contingent interest" on the underlying mortgage loans and mortgage-backed
securities, or such grantor trust certificateholder is ineligible for the
exemption described in the preceding sentence, the 30% withholding tax will
apply unless such withholding taxes are reduced or eliminated by an applicable
tax treaty and such holder meets the eligibility and certification requirements
necessary to obtain the benefits of such treaty. Additional restrictions apply
to mortgage loans and mortgage-backed securities of where the borrower is not a
natural person in order to qualify for the exemption from withholding. If
capital gain derived from the sale, retirement or other disposition of a grantor
trust certificate is effectively connected with a U.S. trade or business of a
grantor trust certificateholder that is not a U.S. Person, the certificateholder
will be taxed on the net gain under the graduated U.S. federal income tax rates
applicable to U.S. Persons and, with respect to grantor trust certificates held
by or on behalf of corporations, also may be subject to branch profits tax. In
addition, if the trust fund acquires a United States real property interest
through foreclosure, deed in lieu of foreclosure or otherwise on a mortgage loan
or mortgage-backed security secured by such an interest, which for this purpose
includes real property located in the United States and the Virgin Islands, a
grantor trust certificateholder that is not a U.S. Person will potentially be
subject to federal income tax on any gain attributable to such real property
interest that is allocable to such holder. Non-U.S. Persons should consult their
tax advisors regarding the application to them of the foregoing rules.

E. INFORMATION REPORTING AND BACKUP WITHHOLDING

     The master servicer will furnish or make available, within a reasonable
time after the end of each calendar year, to each person who was a
certificateholder at any time during the year, such information as may be deemed
necessary or desirable to assist certificateholders in preparing their federal
income tax returns, or to enable holders to make the information available to
beneficial owners or financial intermediaries that hold such certificates as
nominees on behalf of beneficial owners. On June 20, 2002, the Treasury
Department published proposed regulations which will, when effective, establish
a reporting framework for interests in "widely held fixed investment trusts"
that will place the responsibility of reporting on the person in the ownership
chain who holds an interest for a beneficial owner. A widely-held fixed
investment trust is defined as an entity classified as a "trust" under Treasury
regulation Section


                                       91



301.7701-4(c), in which any interest is held by a middleman, which includes, but
is not limited to (i) a custodian of a person's account, (ii) a nominee and
(iii) a broker holding an interest for a customer in street name. These
regulations were proposed to be effective beginning January 1, 2004, but such
date has passed and the regulations have not been finalized. It is unclear when,
or if, these regulations will become final. If a holder, beneficial owner,
financial intermediary or other recipient of a payment on behalf of a beneficial
owner fails to supply a certified taxpayer identification number or if the
Secretary of the Treasury determines that such person has not reported all
interest and dividend income required to be shown on its federal income tax
return, backup withholding at a rate of 28% (increasing to 31% after 2010) may
be required with respect to any payments to registered owners who are not
"exempt recipients." In addition, upon the sale of a grantor trust certificate
to, or through, a broker, the broker must withhold at the above rate of the
entire purchase price, unless either

          o    the broker determines that the seller is a corporation or other
               exempt recipient, or

          o    the seller provides, in the required manner, certain identifying
               information and, in the case of a non-U.S. Person, certifies that
               the seller is a Non-U.S. Person, and other conditions are met.

     Such a sale must also be reported by the broker to the Internal Revenue
Service, unless either

          o    the broker determines that the seller is an exempt recipient or

          o    the seller certifies its non-U.S. Person status and other
               conditions are met.

     Certification of the registered owner's non-U.S. Person status normally
would be made on Internal Revenue Service Form W-8BEN under penalties of
perjury, although in some cases it may be possible to submit other documentary
evidence. Any amounts deducted and withheld from a distribution to a recipient
would be allowed as a credit against the recipient's federal income tax
liability.

     Final regulations have been issued by the Treasury Department, which
provide for a new series of certification forms and modify reliance standards
for withholding, backup withholding and information reporting. Prospective
investors are urged to consult their own tax advisors regarding these
regulations.

REMICS

     The trust fund relating to a series of certificates may elect to be treated
as one or more REMICs. Qualification as a REMIC requires ongoing compliance with
certain conditions. Although a REMIC is not generally subject to federal income
tax (see, however "--Taxation of Owners of REMIC Residual Certificates" and
"--Prohibited Transactions and Other Taxes" below), if a trust fund with respect
to which a REMIC election is made fails to comply with one or more of the
ongoing requirements of the Internal Revenue Code for REMIC status during any
taxable year, including the implementation of restrictions on the purchase and
transfer of the residual interests in a REMIC as described below under
"--Taxation of Owners of REMIC Residual Certificates," the Internal Revenue Code
provides that a trust fund will not be treated as a REMIC for the year and
thereafter. In that event, the entity may be taxable as a separate corporation,
and the REMIC Certificates may not be accorded the status or given the tax
treatment described below in this section. While the Internal Revenue Code
authorizes the Treasury Department to issue regulations providing relief in the
event of an inadvertent termination of the status of a trust fund as a REMIC, no
such regulations have been issued. Any relief, moreover, may be accompanied by
sanctions, such as the imposition of a corporate tax on all or a portion of the
REMIC's income for the period in which the requirements for such status are not
satisfied. With respect to each trust fund that elects REMIC status, Sidley
Austin Brown & Wood LLP or Cadwalader, Wickersham & Taft LLP or Latham & Watkins
LLP will deliver its opinion generally to the effect that, under then existing
law and assuming compliance with all provisions of the related Agreement, the
trust fund will qualify as one or more REMICs, and the related certificates will
be considered to be REMIC Regular Certificates or a sole class of REMIC Residual
Certificates. The related prospectus supplement for each series of certificates
will indicate whether the trust fund will make one or more REMIC elections and
whether a class of certificates will be treated as a regular or residual
interest in a REMIC.

     In general, with respect to each series of certificates for which a REMIC
election is made:


                                       92



          o    certificates held by a thrift institution taxed as a "domestic
               building and loan association" will constitute assets described
               in Internal Revenue Code Section 7701(a)(19)(C);

          o    certificates held by a real estate investment trust will
               constitute "real estate assets" within the meaning of Internal
               Revenue Code Section 856(c)(5)(B); and

          o    interest on certificates held by a real estate investment trust
               will be considered "interest on obligations secured by mortgages
               on real property" within the meaning of Internal Revenue Code
               Section 856(c)(3)(B).

     If less than 95% of the REMIC's assets are assets qualifying under any of
the foregoing Internal Revenue Code sections, the certificates will be
qualifying assets only to the extent that the REMIC's assets are qualifying
assets.

     In some instances the mortgage loans and mortgage-backed securities may not
be treated entirely as assets described in the foregoing sections. See, in this
regard, the discussion of buydown loans contained in "--Single Class of Grantor
Trust Certificates" above. REMIC Certificates held by a real estate investment
trust will not constitute "Government Securities" within the meaning of Internal
Revenue Code Section 856(c)(5)(B), and REMIC Certificates held by a regulated
investment company will not constitute "Government Securities" within the
meaning of Internal Revenue Code Section 851(b)(4)(A)(ii). REMIC Certificates
held by certain financial institutions will constitute "evidences of
indebtedness" within the meaning of Internal Revenue Code Section 582(c)(1).

     A "qualified mortgage" for REMIC purposes includes any obligation,
including certificates of participation in such an obligation, that is
principally secured by an interest in real property and that is transferred to
the REMIC within a prescribed time period in exchange for regular or residual
interests in the REMIC. The REMIC Regulations provide that manufactured housing
or mobile homes, not including recreational vehicles, campers or similar
vehicles, that are "single family residences" under Internal Revenue Code
Section 25(e)(10) will qualify as real property without regard to state law
classifications. Under Internal Revenue Code Section 25(e)(10), a single family
residence includes any manufactured home that has a minimum of 400 square feet
of living space and a minimum width in excess of 102 inches and that is of a
kind customarily used at a fixed location.

     Tiered REMIC Structures. For certain series of certificates, two or more
separate elections may be made to treat designated portions of the related trust
fund as REMICs for federal income tax purposes. Upon the issuance of any such
series of certificates, Sidley Austin Brown & Wood LLP or Cadwalader, Wickersham
& Taft LLP or Latham & Watkins LLP, counsel to Morgan Stanley Capital I Inc.,
will deliver its opinion generally to the effect that, assuming compliance with
all provisions of the related Agreement, the Master REMIC as well as any
Subsidiary REMIC will each qualify as a REMIC, and the REMIC Certificates issued
by the Master REMIC and the Subsidiary REMIC or REMICs, respectively, will be
considered REMIC Regular Certificates or REMIC Residual Certificates in the
related REMIC within the meaning of the REMIC Provisions.

     Other than the residual interest in a Subsidiary REMIC, only REMIC
Certificates issued by the Master REMIC will be offered hereunder. The
Subsidiary REMIC or REMICs and the Master REMIC will be treated as one REMIC
solely for purposes of determining whether the REMIC Certificates will be:

          o    "real estate assets" within the meaning of Internal Revenue Code
               Section 856(c)(5)(B);

          o    "loans secured by an interest in real property" under Internal
               Revenue Code Section 7701(a)(19)(C); and

          o    whether the income on such certificates is interest described in
               Internal Revenue Code Section 856(c)(3)(B).

A. TAXATION OF OWNERS OF REMIC REGULAR CERTIFICATES

     General. Except as otherwise stated in this discussion, REMIC Regular
Certificates will be treated for federal income tax purposes as debt instruments
issued by the REMIC and not as ownership interests in the REMIC or its


                                       93



assets. Moreover, holders of REMIC Regular Certificates that otherwise report
income under a cash method of accounting will be required to report income with
respect to REMIC Regular Certificates under an accrual method.

     Original Issue Discount and Premium. The REMIC Regular Certificates may be
issued with original issue discount. Generally, the original issue discount, if
any, will equal the difference between the "stated redemption price at maturity"
of a REMIC Regular Certificate and its "issue price." Holders of any class of
certificates issued with original issue discount will be required to include
such original issue discount in gross income for federal income tax purposes as
it accrues, in accordance with a constant interest method based on the
compounding of interest as it accrues rather than in accordance with receipt of
the interest payments. The following discussion is based in part on the OID
Regulations and in part on the provisions of the Tax Reform Act of 1986. The
REMIC Regular Certificateholders should be aware, however, that the OID
Regulations do not adequately address certain issues relevant to prepayable
securities, such as the REMIC Regular Certificates.

     Rules governing original issue discount are set forth in Internal Revenue
Code Sections 1271 through 1273 and 1275. These rules require that the amount
and rate of accrual of original issue discount be calculated based on the
Prepayment Assumption and the anticipated reinvestment rate, if any, relating to
the REMIC Regular Certificates and prescribe a method for adjusting the amount
and rate of accrual of the discount where the actual prepayment rate differs
from the Prepayment Assumption. Under the Internal Revenue Code, the Prepayment
Assumption must be determined in the manner prescribed by regulations, which
regulations have not yet been issued. The legislative history provides, however,
that Congress intended the regulations to require that the Prepayment Assumption
be the Prepayment Assumption that is used in determining the initial offering
price of such REMIC Regular Certificates. The prospectus supplement for each
series of REMIC Regular Certificates will specify the Prepayment Assumption to
be used for the purpose of determining the amount and rate of accrual of
original issue discount. No representation is made that the REMIC Regular
Certificates will prepay at the Prepayment Assumption or at any other rate.

     In general, each REMIC Regular Certificate will be treated as a single
installment obligation issued with an amount of original issue discount equal to
the excess of its "stated redemption price at maturity" over its "issue price."
The issue price of a REMIC Regular Certificate is the first price at which a
substantial amount of REMIC Regular Certificates of that class are first sold to
the public (excluding bond houses, brokers, underwriters or wholesalers). If
less than a substantial amount of a particular class of REMIC Regular
Certificates is sold for cash on or prior to the closing date, the issue price
for that class will be treated as the fair market value of that class on the
closing date. The issue price of a REMIC Regular Certificate also includes the
amount paid by an initial certificateholder for accrued interest that relates to
a period prior to the issue date of the REMIC Regular Certificate. The stated
redemption price at maturity of a REMIC Regular Certificate includes the
original principal amount of the REMIC Regular Certificate, but generally will
not include distributions of interest if the distributions constitute "qualified
stated interest." Qualified stated interest generally means interest payable at
a single fixed rate or qualified variable rate, provided that the interest
payments are unconditionally payable at intervals of one year or less during the
entire term of the REMIC Regular Certificate. Interest is payable at a single
fixed rate only if the rate appropriately takes into account the length of the
interval between payments. Distributions of interest on REMIC Regular
Certificates with respect to which Deferred Interest will accrue will not
constitute qualified stated interest payments, and the stated redemption price
at maturity of the REMIC Regular Certificates includes all distributions of
interest as well as principal thereon.

     Where the interval between the issue date and the first distribution date
on a REMIC Regular Certificate is longer than the interval between subsequent
distribution dates, the greater of any original issue discount, disregarding the
rate in the first period, and any interest foregone during the first period is
treated as the amount by which the stated redemption price at maturity of the
certificate exceeds its issue price for purposes of the de minimis rule
described below in this section. The OID Regulations suggest that all interest
on a long first period REMIC Regular Certificate that is issued with non-de
minimis original issue discount, as determined under the foregoing rule, will be
treated as original issue discount. Where the interval between the issue date
and the first distribution date on a REMIC Regular Certificate is shorter than
the interval between subsequent distribution dates, interest due on the first
distribution date in excess of the amount that accrued during the first period
would be added to the certificate's stated redemption price at maturity. REMIC
Regular Certificateholders should consult their own tax advisors to determine
the issue price and stated redemption price at maturity of a REMIC Regular
Certificate.

     Under the de minimis rule, original issue discount on a REMIC Regular
Certificate will be considered to be zero if such original issue discount is
less than 0.25% of the stated redemption price at maturity of the REMIC Regular


                                       94



Certificate multiplied by the weighted average maturity of the REMIC Regular
Certificate. For this purpose, the weighted average maturity of the REMIC
Regular Certificate is computed as the sum of the amounts determined by
multiplying the number of full years, i.e., rounding down partial years, from
the issue date until each distribution in reduction of stated redemption price
at maturity is scheduled to be made by a fraction, the numerator of which is the
amount of each distribution included in the stated redemption price at maturity
of the REMIC Regular Certificate and the denominator of which is the stated
redemption price at maturity of the REMIC Regular Certificate. Although
currently unclear, it appears that the schedule of the distributions should be
determined in accordance with the Prepayment Assumption. The Prepayment
Assumption with respect to a series of REMIC Regular Certificates will be set
forth in the related prospectus supplement. Holders generally must report de
minimis original issue discount pro rata as principal payments are received, and
the income will be capital gain if the REMIC Regular Certificate is held as a
capital asset. However, accrual method holders may elect to accrue all de
minimis original issue discount as well as market discount under a constant
interest method.

     The prospectus supplement with respect to a trust fund may provide for
Super-Premium Certificates. The income tax treatment of such REMIC Regular
Certificates is not entirely certain. For information reporting purposes, the
trust fund intends to take the position that the stated redemption price at
maturity of such REMIC Regular Certificates is the sum of all payments to be
made on such REMIC Regular Certificates determined under the Prepayment
Assumption, with the result that such REMIC Regular Certificates would be issued
with original issue discount. The calculation of income in this manner could
result in negative original issue discount, which delays future accruals of
original issue discount rather than being immediately deductible, when
prepayments on the mortgage loans and mortgage-backed securities exceed those
estimated under the Prepayment Assumption. The Internal Revenue Service might
contend, however, that certain contingent payment rules contained in final
regulations issued on June 11, 1996, with respect to original issue discount,
should apply to such certificates. Although such rules are not applicable to
instruments governed by Internal Revenue Code Section 1272(a)(6), they represent
the only guidance regarding the current views of the Internal Revenue Service
with respect to contingent payment instruments. These regulations, if
applicable, generally would require holders of Regular Interest Certificates to
take the payments considered contingent interest payments into income on a yield
to maturity basis in accordance with a schedule of projected payments provided
by Morgan Stanley Capital I Inc. and to make annual adjustments to income to
account for the difference between actual payments received and projected
payment amounts accrued. In the alternative, the Internal Revenue Service could
assert that the stated redemption price at maturity of such REMIC Regular
Certificates (other than interest only REMIC Regular Certificates) should be
limited to their principal amount, subject to the discussion below under
"--Accrued Interest Certificates," so that such REMIC Regular Certificates would
be considered for federal income tax purposes to be issued at a premium. If such
a position were to prevail, the rules described below under "--Taxation of
Owners of REMIC Regular Certificates--Premium" would apply. It is unclear when a
loss may be claimed for any unrecovered basis for a Super-Premium Certificate.
It is possible that a holder of a Super-Premium Certificate may only claim a
loss when its remaining basis exceeds the maximum amount of future payments,
assuming no further prepayments or when the final payment is received with
respect to such Super-Premium Certificate.

     Under the REMIC Regulations, if the issue price of a REMIC Regular
Certificate, other than a REMIC Regular Certificate based on a notional amount,
does not exceed 125% of its actual principal amount, the interest rate is not
considered disproportionately high. Accordingly, such REMIC Regular Certificate
generally should not be treated as a Super-Premium Certificate and the rules
described below under "--Premium" should apply. However, it is possible that
holders of REMIC Regular Certificates issued at a premium, even if the premium
is less than 25% of such certificate's actual principal balance, will be
required to amortize the premium under an original issue discount method or
contingent interest method even though no election under Internal Revenue Code
Section 171 is made to amortize such premium. Generally, a REMIC Regular
Certificateholder must include in gross income the "daily portions," as
determined below, of the original issue discount that accrues on a REMIC Regular
Certificate for each day a certificateholder holds the REMIC Regular
Certificate, including the purchase date but excluding the disposition date. In
the case of an original holder of a REMIC Regular Certificate, a calculation
will be made of the portion of the original issue discount that accrues during
each successive period--an "accrual period"--that ends on the day in the
calendar year corresponding to a distribution date, or if distribution dates are
on the first day or first business day of the immediately preceding month,
interest may be treated as payable on the last day of the immediately preceding
month and begins on the day after the end of the immediately preceding accrual
period or on the issue date in the case of the first accrual period. This will
be done, in the case of each full accrual period, by:


                                       95



          o    adding (1) the present value at the end of the accrual
               period--determined by using as a discount factor the original
               yield to maturity of the REMIC Regular Certificates as calculated
               under the Prepayment Assumption--of all remaining payments to be
               received on the REMIC Regular Certificates under the Prepayment
               Assumption and (2) any payments included in the stated redemption
               price at maturity received during such accrual period, and

          o    subtracting from that total the adjusted issue price of the REMIC
               Regular Certificates at the beginning of such accrual period.

     The adjusted issue price of a REMIC Regular Certificate at the beginning of
the first accrual period is its issue price; the adjusted issue price of a REMIC
Regular Certificate at the beginning of a subsequent accrual period is the
adjusted issue price at the beginning of the immediately preceding accrual
period plus the amount of original issue discount allocable to that accrual
period and reduced by the amount of any payment other than a payment of
qualified stated interest made at the end of or during that accrual period. The
original issue discount accrued during an accrual period will then be divided by
the number of days in the period to determine the daily portion of original
issue discount for each day in the accrual period. The calculation of original
issue discount under the method described above will cause the accrual of
original issue discount to either increase or decrease--but never below zero--in
a given accrual period to reflect the fact that prepayments are occurring faster
or slower than under the Prepayment Assumption. With respect to an initial
accrual period shorter than a full accrual period, the "daily portions" of
original issue discount may be determined according to an appropriate allocation
under any reasonable method.

     A subsequent purchaser of a REMIC Regular Certificate issued with original
issue discount who purchases the REMIC Regular Certificate at a cost less than
the remaining stated redemption price at maturity will also be required to
include in gross income the sum of the daily portions of original issue discount
on that REMIC Regular Certificate. In computing the daily portions of original
issue discount for such a purchaser, as well as an initial purchaser that
purchases at a price higher than the adjusted issue price but less than the
stated redemption price at maturity, however, the daily portion is reduced by
the amount that would be the daily portion for such day, computed in accordance
with the rules set forth above, multiplied by a fraction, the numerator of which
is the amount, if any, by which the price paid by such holder for that REMIC
Regular Certificate exceeds the following amount:

          o    the sum of the issue price plus the aggregate amount of original
               issue discount that would have been includible in the gross
               income of an original REMIC Regular Certificateholder, who
               purchased the REMIC Regular Certificate at its issue price, less

          o    any prior payments included in the stated redemption price at
               maturity, and the denominator of which is the sum of the daily
               portions for that REMIC Regular Certificate for all days
               beginning on the date after the purchase date and ending on the
               maturity date computed under the Prepayment Assumption.

     A holder who pays an acquisition premium instead may elect to accrue
original issue discount by treating the purchase as a purchase at original
issue.

     The Treasury Department proposed regulations on August 24, 2004 that create
a special rule for accruing original issue discount on REMIC Regular
Certificates providing for a delay between record and payment dates, such that
the period over which original issue discount accrues coincides with the period
over which the right of REMIC Regular Certificateholders to interest payment
accrues under the governing contract provisions rather than over the period
between distribution dates. If the proposed regulations are adopted in the same
form as proposed, REMIC Regular Certificateholders would be required to accrue
interest from the issue date to the first record date, but would not be required
to accrue interest after the last record date. The proposed regulations are
limited to REMIC Regular Certificates with delayed payment for periods of fewer
than 32 days. The proposed regulations are proposed to apply to any REMIC
Regular Certificate issued after the date the final regulations are published in
the Federal Register.

     Variable Rate REMIC Regular Certificates. REMIC Regular Certificates may
provide for interest based on a qualifying variable rate. Under the original
issue discount rules, interest based on a variable rate will constitute
qualified stated interest and not contingent interest if, generally:

          o    the interest is unconditionally payable at least annually;


                                       96



          o    the issue price of the debt instrument does not exceed the total
               noncontingent principal payments; and

          o    interest is based on a "qualified floating rate," an "objective
               rate," a combination of a single fixed rate and one or more
               "qualified floating rates," one "qualified inverse floating
               rate," or a combination of "qualified floating rates" that do not
               operate in a manner that significantly accelerates or defers
               interest payments on the REMIC Regular Certificate.

     The amount of original issue discount with respect to a REMIC Regular
Certificate bearing a variable rate of interest will accrue in the manner
described above under "--Original Issue Discount and Premium" by assuming
generally that the index used for the variable rate will remain fixed throughout
the term of the certificate at the rate applicable on the date they are issued.
Appropriate adjustments are made for the actual variable rate.

     Although unclear at present, Morgan Stanley Capital I Inc. intends to treat
interest on a REMIC Regular Certificate that is a weighted average of the net
interest rates on mortgage loans as qualified stated interest. In such case, the
weighted average rate used to compute the initial pass-through rate on the REMIC
Regular Certificates will be deemed to be the index in effect through the life
of the REMIC Regular Certificates. It is possible, however, that the Internal
Revenue Service may treat some or all of the interest on REMIC Regular
Certificates with a weighted average rate as taxable under the rules relating to
obligations providing for contingent payments. No guidance is currently
available as to how original issue discount would be determined for debt
instruments subject to Internal Revenue Code Section 1272(a)(6) that provide for
contingent interest. The treatment of REMIC Regular Certificates as contingent
payments debt instruments may affect the timing of income accruals on the REMIC
Regular Certificates.

     Election to Treat All Interest as Original Issue Discount. The OID
Regulations permit a certificateholder to elect to accrue all interest, discount
(including de minimis market discount or original issue discount) and premium in
income as interest, based on a constant yield method. If such an election were
to be made with respect to a REMIC Regular Certificate with market discount, the
certificateholder would be deemed to have made an election to include in income
currently market discount with respect to all other debt instruments having
market discount that such certificateholder acquires during the year of the
election or thereafter. Similarly, a certificateholder that makes this election
for a certificate that is acquired at a premium will be deemed to have made an
election to amortize bond premium with respect to all debt instruments having
amortizable bond premium that such certificateholder owns or acquires. See
"--Premium" in this prospectus. The election to accrue interest, discount and
premium on a constant yield method with respect to a certificate is irrevocable
without the consent of the Internal Revenue Service.

     Market Discount. A purchaser of a REMIC Regular Certificate may also be
subject to the market discount provisions of Internal Revenue Code Sections 1276
through 1278. Under these provisions and the OID Regulations, "market discount"
equals the excess, if any, of (1) the REMIC Regular Certificate's stated
principal amount or, in the case of a REMIC Regular Certificate with original
issue discount, the adjusted issue price, determined for this purpose as if the
purchaser had purchased such REMIC Regular Certificate from an original holder,
over (2) the price for such REMIC Regular Certificate paid by the purchaser. A
certificateholder that purchases a REMIC Regular Certificate at a market
discount will recognize income upon receipt of each distribution representing
amounts included in such certificate's stated redemption price at maturity. In
particular, under Internal Revenue Code Section 1276 such a holder generally
will be required to allocate each such distribution first to accrued market
discount not previously included in income, and to recognize ordinary income to
that extent. A certificateholder may elect to include market discount in income
currently as it accrues rather than including it on a deferred basis in
accordance with the foregoing. If made, the election will apply to all market
discount bonds acquired by the certificateholder on or after the first day of
the first taxable year to which the election applies. Market discount with
respect to a REMIC Regular Certificate will be considered to be zero if the
amount allocable to the REMIC Regular Certificate is less than 0.25% of the
REMIC Regular Certificate's stated redemption price at maturity multiplied by
the REMIC Regular Certificate's weighted average maturity remaining after the
date of purchase. If market discount on a REMIC Regular Certificate is
considered to be zero under this rule, the actual amount of market discount must
be allocated to the remaining principal payments on the REMIC Regular
Certificate, and gain equal to the allocated amount will be recognized when the
corresponding principal payment is made. Treasury regulations implementing the
market discount rules have not yet been issued; therefore, investors should
consult their own tax advisors regarding the application of these rules and the
advisability of making any of the elections allowed under Internal Revenue Code
Sections 1276 through 1278.


                                       97



     The Internal Revenue Code provides that any principal payment, whether a
scheduled payment or a prepayment, or any gain on disposition of a market
discount bond acquired by the taxpayer, shall be treated as ordinary income to
the extent that it does not exceed the accrued market discount at the time of
the payment. The amount of accrued market discount for purposes of determining
the tax treatment of subsequent principal payments or dispositions of the market
discount bond is to be reduced by the amount so treated as ordinary income.

     The Internal Revenue Code also grants authority to the Treasury Department
to issue regulations providing for the computation of accrued market discount on
debt instruments, the principal of which is payable in more than one
installment. Until such time as regulations are issued by the Treasury, rules
described in the legislative history will apply. Under those rules, the holder
of a market discount bond may elect to accrue market discount either on the
basis of a constant interest method rate or according to one of the following
methods. For REMIC Regular Certificates issued with original issue discount, the
amount of market discount that accrues during a period is equal to the product
of

     1) the total remaining market discount and

     2) a fraction, the numerator of which is the original issue discount
accruing during the period and the denominator of which is the total remaining
original issue discount at the beginning of the period.

     For REMIC Regular Certificates issued without original issue discount, the
amount of market discount that accrues during a period is equal to the product
of

     1) the total remaining market discount and

     2) a fraction, the numerator of which is the amount of stated interest paid
during the accrual period and the denominator of which is the total amount of
stated interest remaining to be paid at the beginning of the period.

     For purposes of calculating market discount under any of the above methods
in the case of instruments (such as the REMIC Regular Certificates) that provide
for payments that may be accelerated by reason of prepayments of other
obligations securing such instruments, the same Prepayment Assumption applicable
to calculating the accrual of original issue discount will apply.

     A holder who acquired a REMIC Regular Certificate at a market discount also
may be required to defer a portion of its interest deductions for the taxable
year attributable to any indebtedness incurred or continued to purchase or carry
the certificate purchased with market discount. For these purposes, the de
minimis rule referred to above applies. 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 holder elects to include market
discount in income currently as it accrues on all market discount instruments
acquired by such holder in that taxable year or thereafter, the interest
deferral rule described above will not apply.

     Premium. A purchaser of a REMIC Regular Certificate that purchases the
REMIC Regular Certificate at a cost, not including accrued qualified stated
interest greater than its remaining stated redemption price at maturity will be
considered to have purchased the REMIC Regular Certificate at a premium and may
elect to amortize the premium under a constant yield method. A certificateholder
that makes this election for a certificate that is acquired at a premium will be
deemed to have made an election to amortize bond premium with respect to all
debt instruments having amortizable bond premium that such certificateholder
acquires during the year of the election or thereafter. It is not clear whether
the Prepayment Assumption would be taken into account in determining the life of
the REMIC Regular Certificate for this purpose. However, the legislative history
states that the same rules that apply to accrual of market discount, which rules
require use of a Prepayment Assumption in accruing market discount with respect
to REMIC Regular Certificates without regard to whether such certificates have
original issue discount, will also apply in amortizing bond premium under
Internal Revenue Code Section 171. The Internal Revenue Code provides that
amortizable bond premium will be allocated among the interest payments on such
REMIC Regular Certificates and will be applied as an offset against the interest
payment. The Amortizable Bond Premium Regulations do not apply to prepayable
securities described in Internal Revenue Code Section 1272(a)(6), such as the
REMIC Regular Certificates. Certificateholders should consult their tax advisors
regarding the possibility of making an election to amortize any such bond
premium.


                                       98



     Deferred Interest. Certain classes of REMIC Regular Certificates may
provide for the accrual of Deferred Interest with respect to one or more
adjustable rate loans. Any Deferred Interest that accrues with respect to a
class of REMIC Regular Certificates will constitute income to the holders of
such certificates prior to the time distributions of cash with respect to such
Deferred Interest are made. It is unclear, under the OID Regulations, whether
any of the interest on such certificates will constitute qualified stated
interest or whether all or a portion of the interest payable on such
certificates must be included in the stated redemption price at maturity of the
certificates and accounted for as original issue discount, which could
accelerate such inclusion. Interest on REMIC Regular Certificates must in any
event be accounted for under an accrual method by the holders of such
certificates and, therefore, applying the latter analysis may result only in a
slight difference in the timing of the inclusion in income of interest on such
REMIC Regular Certificates.

     Effects of Defaults and Delinquencies. Certain series of certificates may
contain one or more classes of subordinate certificates, and in the event there
are defaults or delinquencies on the mortgage loans and mortgage-backed
securities, amounts that would otherwise be distributed on the subordinate
certificates may instead be distributed on the senior certificates. Subordinate
certificateholders nevertheless will be required to report income with respect
to such certificates under an accrual method without giving effect to delays and
reductions in distributions on such subordinate certificates attributable to
defaults and delinquencies on the mortgage loans and mortgage-backed securities,
except to the extent that it can be established that those amounts are
uncollectible. As a result, the amount of income reported by a subordinate
certificateholder in any period could significantly exceed the amount of cash
distributed to such holder in that period. The holder will eventually be allowed
a loss, or will be allowed to report a lesser amount of income, to the extent
that the aggregate amount of distributions on the subordinate certificate is
reduced as a result of defaults and delinquencies on the mortgage loans and
mortgage-backed securities. Timing and characterization of such losses is
discussed in "--Treatment of Realized Losses" below.

     Sale, Exchange or Redemption. If a REMIC Regular Certificate is sold,
exchanged, redeemed or retired, the seller will recognize gain or loss equal to
the difference between the amount realized on the sale, exchange, redemption, or
retirement and the seller's adjusted basis in the REMIC Regular Certificate.
Such adjusted basis generally will equal the cost of the REMIC Regular
Certificate to the seller, increased by any original issue discount and market
discount included in the seller's gross income with respect to the REMIC Regular
Certificate, and reduced, but not below zero, by payments included in the stated
redemption price at maturity previously received by the seller and by any
amortized premium. Similarly, a holder who receives a payment that is part of
the stated redemption price at maturity of a REMIC Regular Certificate will
recognize gain equal to the excess, if any, of the amount of the payment over an
allocable portion of the holder's adjusted basis in the REMIC Regular
Certificate. A REMIC Regular Certificateholder who receives a final payment that
is less than the holder's adjusted basis in the REMIC Regular Certificate will
generally recognize a loss. Except as provided in the following paragraph and as
provided under "--Market Discount" above, any such gain or loss will be capital
gain or loss, provided that the REMIC Regular Certificate is held as a "capital
asset" (generally, property held for investment) within the meaning of Internal
Revenue Code Section 1221.

     Such capital gain or loss will generally be long-term capital gain or loss
if the REMIC Regular Certificate was held for more than one year. Long-term
capital gains of individuals are subject to reduced maximum tax rates while
capital gains recognized by individuals on capital assets held less than twelve
months are generally subject to ordinary income tax rates. The use of capital
losses is limited.

     Gain from the sale or other disposition of a REMIC Regular Certificate that
might otherwise be capital gain will be treated as ordinary income to the extent
that the gain does not exceed the excess, if any, of

          o    the amount that would have been includible in the holder's income
               with respect to the REMIC Regular Certificate had income accrued
               thereon at a rate equal to 110% of the AFR as defined in Internal
               Revenue Code Section 1274(d) determined as of the date of
               purchase of such REMIC Regular Certificate, over

          o    the amount actually includible in such holder's income.


                                       99



     Gain from the sale or other disposition of a REMIC Regular Certificate that
might otherwise be capital gain will be treated as ordinary income if the REMIC
Regular Certificate is held as part of a "conversion transaction" as defined in
Internal Revenue Code Section 1258(c), up to the amount of interest that would
have accrued on the REMIC Regular Certificateholder's net investment in the
conversion transaction at 120% of the appropriate applicable federal rate under
Internal Revenue Code Section 1274(d) in effect at the time the taxpayer entered
into the transaction minus any amount previously treated as ordinary income with
respect to any prior disposition of property that was held as part of such
transaction, or if the REMIC Regular Certificate is held as part of a straddle.
A sale of a REMIC Regular Certificate will be part of a "conversion transaction"
if substantially all of the holder's expected return is attributable to the time
value of the holder's net investment; the holder entered the contract to sell
the REMIC Regular Certificate substantially contemporaneously with acquiring the
REMIC Regular Certificate; the REMIC Regular Certificate is part of a straddle;
the REMIC Regular Certificate is marketed or sold as producing capital gains; or
other transactions to be specified in Treasury regulations that have not yet
been issued. Potential investors should consult their tax advisors with respect
to tax consequences of ownership and disposition of an investment in REMIC
Regular Certificates in their particular circumstances.

     The certificates will be "evidences of indebtedness" within the meaning of
Internal Revenue Code Section 582(c)(1), so that gain or loss recognized from
the sale of a REMIC Regular Certificate by a bank or a thrift institution to
which this section applies will be ordinary income or loss.

     The REMIC Regular Certificate information reports will include a statement
of the adjusted issue price of the REMIC Regular Certificate at the beginning of
each accrual period. In addition, the reports will include information necessary
to compute the accrual of any market discount that may arise upon secondary
trading of REMIC Regular Certificates. Because exact computation of the accrual
of market discount on a constant yield method would require information relating
to the holder's purchase price which the REMIC may not have, it appears that the
information reports will only require information pertaining to the appropriate
proportionate method of accruing market discount.

     Accrued Interest Certificates. Payment Lag Certificates may provide for
payments of interest based on a period that corresponds to the interval between
distribution dates but that ends prior to each such distribution date. The
period between the closing date for Payment Lag Certificates and their first
distribution date may or may not exceed the interval. Purchasers of Payment Lag
Certificates for which the period between the closing date and the first
distribution date does not exceed the interval could pay upon purchase of the
REMIC Regular Certificates accrued interest in excess of the accrued interest
that would be paid if the interest paid on the distribution date were interest
accrued from distribution date to distribution date. If a portion of the initial
purchase price of a REMIC Regular Certificate is allocable to pre-issuance
accrued interest and the REMIC Regular Certificate provides for a payment of
stated interest on the first payment date and the first payment date is within
one year of the issue date that equals or exceeds the amount of the pre-issuance
accrued interest, then the REMIC Regular Certificate's issue price may be
computed by subtracting from the issue price the amount of pre-issuance accrued
interest, rather than as an amount payable on the REMIC Regular Certificate.
However, it is unclear under this method how the OID Regulations treat interest
on Payment Lag Certificates. Therefore, in the case of a Payment Lag
Certificate, the trust fund intends to include accrued interest in the issue
price and report interest payments made on the first distribution date as
interest to the extent such payments represent interest for the number of days
that the certificateholder has held the Payment Lag Certificate during the first
accrual period.

     Investors should consult their own tax advisors concerning the treatment
for federal income tax purposes of Payment Lag Certificates.

     Non-Interest Expenses of the REMIC. Under temporary Treasury regulations,
if the REMIC is considered to be a "single-class REMIC," a portion of the
REMIC's servicing, administrative and other non-interest expenses will be
allocated as a separate item to those REMIC Regular Certificateholders that are
"pass-through interest holders." Certificateholders that are pass-through
interest holders should consult their own tax advisors about the impact of these
rules on an investment in the REMIC Regular Certificates. See "Pass-Through of
Non-Interest Expenses of the REMIC" under "Taxation of Owners of REMIC Residual
Certificates" below.

     Effects of Defaults, Delinquencies and Losses. Certain series of
certificates may contain one or more classes of subordinate certificates, and in
the event there are defaults or delinquencies on the mortgage loans, amounts
that would otherwise be distributed on the subordinate certificates may instead
be distributed on the senior certificates. Subordinate certificateholders
nevertheless will be required to report income with respect to such certificates
under an


                                       100



accrual method without giving effect to delays and reductions in distributions
on the subordinate certificates attributable to defaults and delinquencies on
the mortgage loans, except to the extent that it can be established that the
amounts are uncollectible. As a result, the amount of income reported by a
subordinate certificateholder in any period could significantly exceed the
amount of cash distributed to the holder in that period. The holder will
eventually be allowed a loss (or will be allowed to report a lesser amount of
income) to the extent that the aggregate amount of distributions on the
subordinate certificate is reduced as a result of defaults and delinquencies on
the mortgage loans.

     Treatment of Realized Losses. Although not entirely clear, it appears that
holders of REMIC Regular Certificates that are corporations should in general be
allowed to deduct as an ordinary loss any loss sustained during the taxable year
on account of any such certificates becoming wholly or partially worthless, and
that, in general, holders of certificates that are not corporations should be
allowed to deduct as a short-term capital loss any loss sustained during the
taxable year on account of any such certificates becoming wholly worthless.
Potential investors and holders of the certificates are urged to consult their
own tax advisors regarding the appropriate timing, amount and character of any
loss sustained with respect to such certificates, including any loss resulting
from the failure to recover previously accrued interest or discount income.
Special loss rules are applicable to banks and thrift institutions, including
rules regarding reserves for bad debts. These taxpayers are advised to consult
their tax advisors regarding the treatment of losses on certificates.

     Non-U.S. Persons. Generally, payments of interest on the REMIC Regular
Certificates, including any payment with respect to accrued original issue
discount, to a REMIC Regular Certificateholder who is not a U.S. Person and is
not engaged in a trade or business within the United States will not be subject
to federal withholding tax if:

          o    the REMIC Regular Certificateholder does not actually or
               constructively own 10 percent or more of the combined voting
               power of all classes of equity in the issuer;

          o    the REMIC Regular Certificateholder is not a controlled foreign
               corporation, within the meaning of Internal Revenue Code Section
               957, related to the issuer; and

          o    the REMIC Regular Certificateholder complies with identification
               requirements, including delivery of a statement, signed by the
               REMIC Regular Certificateholder under penalties of perjury,
               certifying that the REMIC Regular Certificateholder is a foreign
               person and providing the name and address of the REMIC Regular
               Certificateholder.

     If a REMIC Regular Certificateholder is not exempt from withholding,
distributions of interest to the holder, including distributions in respect of
accrued original issue discount, may be subject to a 30% withholding tax,
subject to reduction under any applicable tax treaty. If the interest on a REMIC
Regular Certificate is effectively connected with the conduct by a holder that
is a non-U.S. Person of a trade or business in the United States, then the
holder will not be subject to the 30% withholding tax on gross income therefrom
but will be subject to U.S. income tax at regular graduated rates on its net
income and, if such holder is a corporation, may be subject to U.S. branch
profits tax as well.

     Further, a REMIC Regular Certificate will not be included in the estate of
a non-resident alien individual and will not be subject to United States estate
taxes. This exclusion may not apply if the non-resident alien individual
actually or constructively owns 10% or more of the residual interest in the
related REMIC. Certificateholders who are non-resident alien individuals should
consult their tax advisors concerning this question.

     REMIC Regular Certificateholders who are not U.S. Persons and persons
related to such holders should not acquire any REMIC Residual Certificates, and
REMIC Residual Certificateholders and persons related to REMIC Residual
Certificateholders should not acquire any REMIC Regular Certificates without
consulting their tax advisors as to the possible adverse tax consequences of
doing so. In addition, the Internal Revenue Service may assert that non-U.S.
Persons that own directly or indirectly, a greater than 10% interest in any
borrower, and foreign corporations that are "controlled foreign corporations" as
to the United States of which such a borrower is a "United States shareholder"
within the meaning of Internal Revenue Code Section 951(b), are subject to
United States withholding tax on interest distributed to them to the extent of
interest concurrently paid by the related borrower.


                                       101



     Information Reporting and Backup Withholding. The master servicer will
furnish or make available, within a reasonable time after the end of each
calendar year, to each person who was a REMIC Regular Certificateholder at any
time during that year, the information as may be deemed necessary or desirable
to assist REMIC Regular Certificateholders in preparing their federal income tax
returns, or to enable holders to make the information available to beneficial
owners or financial intermediaries that hold the REMIC Regular Certificates on
behalf of beneficial owners. If a holder, beneficial owner, financial
intermediary or other recipient of a payment on behalf of a beneficial owner
fails to supply a certified taxpayer identification number or if the Secretary
of the Treasury determines that such person has not reported all interest and
dividend income required to be shown on its federal income tax return, backup
withholding at a rate of 30% for 2003, 29% for 2004-05 and 28% for 2006-2010 may
be required with respect to any payments with respect to any payments to
registered owners who are not "exempt recipients." In addition, upon the sale of
a REMIC Regular Certificate to, or through, a broker, the broker must withhold
at the backup withholding rate on the entire purchase price, unless either:

          o    the broker determines that the seller is a corporation or other
               exempt recipient, or

          o    the seller provides, in the required manner, identifying
               information and, in the case of a non-U.S. Person, certifies that
               such seller is a non-U.S. Person, and other conditions are met.

     A sale of a REMIC Regular Certificate to, or through, a broker must also be
reported by the broker to the Internal Revenue Service, unless either:

          o    the broker determines that the seller is an exempt recipient, or

          o    the seller certifies its non-U.S. Person status and other
               conditions are met.

     Certification of the registered owner's non-U.S. Person status normally
would be made on Internal Revenue Service Form W-8BEN under penalties of
perjury, although in certain cases it may be possible to submit other
documentary evidence. Any amounts deducted and withheld from a distribution to a
recipient would be allowed as a credit against such recipient's federal income
tax liability.

     Final regulations have been issued by the Treasury Department, which
provide for a new series of certification forms and modify reliance standards
for withholding, backup withholding and information reporting. Prospective
investors are urged to consult their own tax advisors regarding these
regulations.

B. TAXATION OF OWNERS OF REMIC RESIDUAL CERTIFICATES

     Allocation of the Income of the REMIC to the REMIC Residual Certificates.
The REMIC will not be subject to federal income tax except with respect to
income from prohibited transactions and certain other transactions. See
"--Prohibited Transactions and Other Taxes" below. Instead, each original holder
of a REMIC Residual Certificate will report on its federal income tax return, as
ordinary income, its share of the taxable income of the REMIC for each day
during the taxable year on which the holder owns any REMIC Residual
Certificates. The taxable income of the REMIC for each day will be determined by
allocating the taxable income of the REMIC for each calendar quarter ratably to
each day in the quarter. Such a holder's share of the taxable income of the
REMIC for each day will be based on the portion of the outstanding REMIC
Residual Certificates that the holder owns on that day. The taxable income of
the REMIC will be determined under an accrual method and will be taxable to the
holders of REMIC Residual Certificates without regard to the timing or amounts
of cash distributions by the REMIC. Ordinary income derived from REMIC Residual
Certificates will be portfolio income for purposes of the taxation of taxpayers
subject to the limitations on the deductibility of passive losses. As residual
interests, the REMIC Residual Certificates will be subject to tax rules,
described below, that differ from those that would apply if the REMIC Residual
Certificates were treated for federal income tax purposes as direct ownership
interests in the certificates or as debt instruments issued by the REMIC.

     A REMIC Residual Certificateholder may be required to include taxable
income from the REMIC Residual Certificate in excess of the cash distributed.
For example, a structure where principal distributions are made serially on
regular interests, that is, a fast-pay, slow-pay structure, may generate such a
mismatching of income and cash distributions that is, phantom income. This
mismatching may be caused by the use of certain required tax accounting


                                       102



methods by the REMIC, variations in the prepayment rate of the underlying
mortgage loans and mortgage-backed securities and certain other factors.
Depending upon the structure of a particular transaction, the aforementioned
factors may significantly reduce the after-tax yield of a REMIC Residual
Certificate to a REMIC Residual Certificateholder or cause the REMIC Residual
Certificate to have negative value. Investors should consult their own tax
advisors concerning the federal income tax treatment of a REMIC Residual
Certificate and the impact of the tax treatment on the after-tax yield of a
REMIC Residual Certificate.

     A subsequent REMIC Residual Certificateholder also will report on its
federal income tax return amounts representing a daily share of the taxable
income of the REMIC for each day that the REMIC Residual Certificateholder owns
the REMIC Residual Certificate. Those daily amounts generally would equal the
amounts that would have been reported for the same days by an original REMIC
Residual Certificateholder, as described above. The legislative history
indicates that certain adjustments may be appropriate to reduce or increase the
income of a subsequent holder of a REMIC Residual Certificate that purchased the
REMIC Residual Certificate at a price greater than or less than the adjusted
basis the REMIC Residual Certificate would have in the hands of an original
REMIC Residual Certificateholder. See "--Sale or Exchange of REMIC Residual
Certificates" below. It is not clear, however, whether the adjustments will in
fact be permitted or required and, if so, how they would be made. The REMIC
Regulations do not provide for any such adjustments.

     Taxable Income of the REMIC Attributable to Residual Interests. The taxable
income of the REMIC will reflect a netting of:

          o    the income from the mortgage loans and mortgage-backed securities
               and the REMIC's other assets, and

          o    the deductions allowed to the REMIC for interest and original
               issue discount on the REMIC Regular Certificates and, except as
               described above under "--Taxation of Owners of REMIC Regular
               Certificates--Non-Interest Expenses of the REMIC," other
               expenses.

     REMIC taxable income is generally determined in the same manner as the
taxable income of an individual using the accrual method of accounting, except
that:

          o    the limitations on deductibility of investment interest expense
               and expenses for the production of income do not apply,

          o    all bad loans will be deductible as business bad debts, and

          o    the limitation on the deductibility of interest and expenses
               related to tax-exempt income will apply.

     The REMIC's gross income includes interest, original issue discount income,
and market discount income, if any, on the mortgage loans, reduced by
amortization of any premium on the mortgage loans, plus income on reinvestment
of cash flows and reserve assets, plus any cancellation of indebtedness income
upon allocation of realized losses to the REMIC Regular Certificates. Note that
the timing of cancellation of indebtedness income recognized by REMIC Residual
Certificateholders resulting from defaults and delinquencies on mortgage loans
and mortgage-backed securities may differ from the time of the actual loss on
the assets. The REMIC's deductions include interest and original issue discount
expense on the REMIC Regular Certificates, servicing fees on the mortgage loans,
other administrative expenses of the REMIC and realized losses on the mortgage
loans. The requirement that REMIC Residual Certificateholders 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 purposes of determining its taxable income, the REMIC will have an
initial aggregate tax basis in its assets equal to the sum of the issue prices
of the REMIC Regular Certificates and the REMIC Residual Certificates, or, if a
class of certificates is not sold initially, its fair market value. The
aggregate basis will be allocated among the mortgage loans and mortgage-backed
securities and other assets of the REMIC in proportion to their respective fair
market value. A mortgage loan or mortgage-backed security will be deemed to have
been acquired with discount or premium to the extent that the REMIC's basis
therein is less than or greater than its principal balance, respectively. Any
such discount, whether market discount or original issue discount, will be
includible in the income of the REMIC as it accrues, in advance of receipt of
the cash attributable to the income, under a method similar to the


                                       103



method described above for accruing original issue discount on the REMIC Regular
Certificates. The REMIC may elect under Internal Revenue Code Section 171 to
amortize any premium on the mortgage loans and mortgage-backed securities.
Premium on any mortgage loan or mortgage-backed security to which the election
applies would be amortized under a constant yield method. It is not clear
whether the yield of a mortgage loan or mortgage-backed security would be
calculated for this purpose based on scheduled payments or taking account of the
Prepayment Assumption. Additionally, such an election would not apply to the
yield with respect to any underlying mortgage loan originated on or before
September 27, 1985. Instead, premium with respect to such a mortgage loan would
be allocated among the principal payments thereon and would be deductible by the
REMIC as those payments become due.

     The REMIC will be allowed a deduction for interest and original issue
discount on the REMIC Regular Certificates. The amount and method of accrual of
original issue discount will be calculated for this purpose in the same manner
as described above with respect to REMIC Regular Certificates except that the
0.25% per annum de minimis rule and adjustments for subsequent holders described
therein will not apply.

     A REMIC Residual Certificateholder will not be permitted to amortize the
cost of the REMIC Residual Certificate as an offset to its share of the REMIC's
taxable income. However, REMIC taxable income will not include cash received by
the REMIC that represents a recovery of the REMIC's basis in its assets, and, as
described above, the issue price of the REMIC Residual Certificates will be
added to the issue price of the REMIC Regular Certificates in determining the
REMIC's initial basis in its assets. See "--Sale or Exchange of REMIC Residual
Certificates" below. For a discussion of possible adjustments to income of a
subsequent holder of a REMIC Residual Certificate to reflect any difference
between the actual cost of the REMIC Residual Certificate to the holder and the
adjusted basis the REMIC Residual Certificate would have in the hands of an
original REMIC Residual Certificateholder, see "--Allocation of the Income of
the REMIC to the REMIC Residual Certificates" above.

     Net Losses of the REMIC. The REMIC will have a net loss for any calendar
quarter in which its deductions exceed its gross income. The net loss would be
allocated among the REMIC Residual Certificateholders in the same manner as the
REMIC's taxable income. The net loss allocable to any REMIC Residual Certificate
will not be deductible by the holder to the extent that the net loss exceeds the
holder's adjusted basis in the REMIC Residual Certificate. Any net loss that is
not currently deductible by reason of this limitation may only be used by the
REMIC Residual Certificateholder to offset its share of the REMIC's taxable
income in future periods (but not otherwise). The ability of REMIC Residual
Certificateholders that are individuals or closely held corporations to deduct
net losses may be subject to additional limitations under the Internal Revenue
Code.

     Mark-to-Market Rules. Prospective purchasers of a REMIC Residual
Certificate should be aware that the Internal Revenue Service finalized
Mark-to-Market Regulations which provide that a REMIC Residual Certificate
cannot be marked to market.

     Pass-Through of Non-Interest Expenses of the REMIC. As a general rule, all
of the fees and expenses of a REMIC will be taken into account by holders of the
REMIC Residual Certificates. In the case of a single class REMIC, however, the
expenses and a matching amount of additional income will be allocated, under
temporary Treasury regulations, among the REMIC Regular Certificateholders and
the REMIC Residual Certificateholders on a daily basis in proportion to the
relative amounts of income accruing to each certificateholder on that day. In
general terms, a single class REMIC is one that either:

          o    would qualify, under existing Treasury regulations, as a grantor
               trust if it were not a REMIC, treating all interests as ownership
               interests, even if they would be classified as debt for federal
               income tax purposes, or

          o    is similar to such a trust and is structured with the principal
               purpose of avoiding the single class REMIC rules. Unless
               otherwise stated in the applicable prospectus supplement, the
               expenses of the REMIC will be allocated to holders of the related
               REMIC Residual Certificates in their entirety and not to holders
               of the related REMIC Regular Certificates.

     In the case of individuals or trusts, estates or other persons that compute
their income in the same manner as individuals who own an interest in a REMIC
Regular Certificate or a REMIC Residual Certificate directly or through


                                       104



a pass-through interest holder that is required to pass miscellaneous itemized
deductions through to its owners or beneficiaries, e.g., a partnership, an S
corporation or a grantor trust, such expenses will be deductible under Internal
Revenue Code Section 67 only to the extent that such expenses, plus other
miscellaneous itemized deductions of the individual, exceed 2% of such
individual's adjusted gross income. In addition, Internal Revenue Code Section
68 provides that the applicable amount will be reduced by the lesser of:

          o    3% of the excess of the individual's adjusted gross income over
               the applicable amount, or

          o    80% of the amount of itemized deductions otherwise allowable for
               the taxable year.

     This limitation will be phased out beginning in 2006 and eliminated after
2009.

     The amount of additional taxable income recognized by REMIC Residual
Certificateholders who are subject to the limitations of either Internal Revenue
Code Section 67 or Internal Revenue Code Section 68 may be substantial. Further,
holders other than corporations subject to the alternative minimum tax may not
deduct miscellaneous itemized deductions in determining such holders alternative
minimum taxable income. The REMIC is required to report to each pass-through
interest holder and to the Internal Revenue Service such holder's allocable
share, if any, of the REMIC's non-interest expenses. The term "pass-through
interest holder" generally refers to individuals, entities taxed as individuals
and certain pass-through entities, but does not include real estate investment
trusts. REMIC Residual Certificateholders that are pass-through interest holders
should consult their own tax advisors about the impact of these rules on an
investment in the REMIC Residual Certificates.

     Excess Inclusions. A portion of the income on a REMIC Residual Certificate
referred to in the Internal Revenue Code as an excess inclusion , for any
calendar quarter will be subject to federal income tax in all events. Thus, for
example, an excess inclusion:

          o    may not, except as described below, be offset by any unrelated
               losses, deductions or loss carryovers of a REMIC Residual
               Certificateholder;

          o    will be treated as unrelated business taxable income within the
               meaning of Internal Revenue Code Section 512 if the REMIC
               Residual Certificateholder is a pension fund or any other
               organization that is subject to tax only on its unrelated
               business taxable income, as discussed under "--Tax-Exempt
               Investors" below; and

          o    is not eligible for any reduction in the rate of withholding tax
               in the case of a REMIC Residual Certificateholder that is a
               foreign investor, as discussed under "--Residual Certificate
               Payments--Non-U.S. Persons" below.

     Except as discussed in the following paragraph, with respect to any REMIC
Residual Certificateholder, the excess inclusions for any calendar quarter is
the excess, if any, of (1) the income of such REMIC Residual Certificateholder
for that calendar quarter from its REMIC Residual Certificate over (2) the sum
of the daily accruals for all days during the calendar quarter on which the
REMIC Residual Certificateholder holds a REMIC Residual Certificate. For this
purpose, the daily accruals with respect to a REMIC Residual Certificate are
determined by allocating to each day in the calendar quarter its ratable portion
of the product of the adjusted issue price of the REMIC Residual Certificate at
the beginning of the calendar quarter and 120 percent of the Federal long-term
rate in effect at the time the REMIC Residual Certificate is issued. For this
purpose, the adjusted issue price of a REMIC Residual Certificate at the
beginning of any calendar quarter equals the issue price of the REMIC Residual
Certificate, increased by the amount of daily accruals for all prior quarters,
and decreased--but not below zero--by the aggregate amount of payments made on
the REMIC Residual Certificate before the beginning of the quarter. The "federal
long-term rate" is an average of current yields on Treasury securities with a
remaining term of greater than nine years, computed and published monthly by the
Internal Revenue Service.

     In the case of any REMIC Residual Certificates held by a real estate
investment trust, the aggregate excess inclusions with respect to the REMIC
Residual Certificates, reduced (but not below zero) by the real estate
investment trust taxable income (within the meaning of Internal Revenue Code
Section 857(b)(2), excluding any net capital gain), will be allocated among the
shareholders of such trust in proportion to the dividends received by the


                                       105



shareholders from such trust, and any amount so allocated will be treated as an
excess inclusion with respect to a REMIC Residual Certificate as if held
directly by the shareholder. Regulated investment companies, common trust funds
and certain cooperatives are subject to similar rules.

     The Internal Revenue Code provides three rules for determining the effect
on excess inclusions on the alternative minimum taxable income of a residual
holder. First, alternative minimum taxable income for the residual holder is
determined without regard to the special rule that taxable income cannot be less
than excess inclusions. Second, the amount of any alternative minimum tax net
operating loss deductions must be computed without regard to any excess
inclusions. Third, a residual holder's alternative minimum taxable income for a
tax year cannot be less than excess inclusions for the year. The effect of this
last statutory amendment is to prevent the use of nonrefundable tax credits to
reduce a taxpayer's income tax below its tentative minimum tax computed only on
excess inclusions.

     Payments. Any distribution made on a REMIC Residual Certificate to a REMIC
Residual Certificateholder will be treated as a non-taxable return of capital to
the extent it does not exceed the REMIC Residual Certificateholder's adjusted
basis in the REMIC Residual Certificate. To the extent a distribution exceeds
the adjusted basis, it will be treated as gain from the sale of the REMIC
Residual Certificate.

     Sale or Exchange of REMIC Residual Certificates. If a REMIC Residual
Certificate is sold or exchanged, the seller will generally recognize gain or
loss equal to the difference between the amount realized on the sale or exchange
and its adjusted basis in the REMIC Residual Certificate except that the
recognition of loss may be limited under the "wash sale" rules described in the
second following paragraph. A holder's adjusted basis in a REMIC Residual
Certificate generally equals the cost of the REMIC Residual Certificate to the
REMIC Residual Certificateholder, increased by the taxable income of the REMIC
that was included in the income of the REMIC Residual Certificateholder with
respect to the REMIC Residual Certificate, and decreased--but not below zero--by
the net losses that have been allowed as deductions to the REMIC Residual
Certificateholder with respect to the REMIC Residual Certificate and by the
distributions received thereon by the REMIC Residual Certificateholder. In
general, the gain or loss will be capital gain or loss provided the REMIC
Residual Certificate is held as a capital asset. However, REMIC Residual
Certificates will be "evidences of indebtedness" within the meaning of Internal
Revenue Code Section 582(c)(1), so that gain or loss recognized from sale of a
REMIC Residual Certificate by a bank or thrift institution to which such section
applies would be ordinary income or loss.

     The capital gain or loss will generally be long-term capital gain or loss
if the REMIC Residual Certificate was held for more than one year. Long-term
capital gains of individuals are subject to reduced maximum tax rates while
capital gains recognized by individuals on capital assets held twelve months or
less are generally subject to ordinary income tax rates. The use of capital
losses is limited. In addition, a transfer of a REMIC Residual Certificate that
is a "noneconomic residual interest" may be subject to different rules. See "Tax
Related Restrictions on Transfers of REMIC Residual Certificates--Noneconomic
Residual Certificates" below.

     Except as provided in Treasury regulations yet to be issued, if the seller
of a REMIC Residual Certificate reacquires such REMIC Residual Certificate, or
acquires any other REMIC Residual Certificate, any residual interest in another
REMIC or similar interest in a "taxable mortgage pool," as defined in Internal
Revenue Code Section 7701(i), during the period beginning six months before, and
ending six months after, the date of such sale, such sale will be subject to the
"wash sale" rules of Internal Revenue Code Section 1091. In that event, any loss
realized by the REMIC Residual Certificateholder on the sale will not be
deductible, but, instead, will increase such REMIC Residual Certificateholder's
adjusted basis in the newly acquired asset.

     A REMIC Residual Certificate may have a negative value if the net present
value of anticipated tax liabilities exceeds the present value of anticipated
cash flows. The REMIC Regulations appear to treat the issue price of such a
residual interest as zero rather than such negative amount for purposes of
determining the related REMIC's basis in its assets. Regulations have been
issued addressing the federal income tax treatment of "inducement fees" received
by transferees of non-economic residual interests. These regulations require
inducement fees to be included in income over a period reasonably related to the
period in which the related residual interest is expected to generate taxable
income or net loss to its holder. Under two safe harbor methods, inducement fees
must be included in income (i) in the same amounts and over the same period that
the taxpayer uses for financial reporting purposes, provided that such period is
not shorter than the period the related REMIC is expected to generate taxable
income or (ii) ratably over the remaining anticipated weighted average life of
all the regular and residual interests issued by the related REMIC, determined
based on actual distributions projected as remaining to be made on such
interests under


                                       106



the related prepayment assumption. If the holder of a non economic residual
interest sells or otherwise disposes of the non economic residual interest, any
unrecognized portion of the inducement fee must be taken into account at the
time of the sale or disposition. Prospective purchasers of the REMIC Residual
Certificates should consult with their tax advisors regarding these regulations.

PROHIBITED TRANSACTIONS AND OTHER TAXES

     The Internal Revenue Code imposes a tax on REMICs equal to 100% of the net
income derived from prohibited transactions. In general, subject to certain
specified exceptions, a prohibited transaction means:

          o    the disposition of a mortgage loan or mortgage-backed security;
               the receipt of income from a source other than a mortgage loan or
               mortgage-backed security or certain other permitted investments;

          o    the receipt of compensation for services; or

          o    gain from the disposition of an asset purchased with the payments
               on the mortgage loans and mortgage-backed securities for
               temporary investment pending distribution on the certificates.

     It is not anticipated that the trust fund for any series of certificates
will engage in any prohibited transactions in which it would recognize a
material amount of net income.

     In addition, certain contributions to a trust fund as to which an election
has been made to treat the trust fund as a REMIC made after the day on which the
trust fund issues all of its interests could result in the imposition of the
Contributions Tax. No trust fund for any series of certificates will accept
contributions that would subject it to such tax.

     In addition, a trust fund as to which an election has been made to treat
the trust fund as a REMIC may also be subject to federal income tax at the
highest corporate rate on net income from foreclosure property, determined by
reference to the rules applicable to real estate investment trusts. Net income
from foreclosure property generally means income from foreclosure property other
than qualifying income for a real estate investment trust.

     Where any Prohibited Transactions Tax, Contributions Tax, tax on net income
from foreclosure property or state or local income or franchise tax that may be
imposed on a REMIC relating to any series of certificates arises out of or
results from:

          o    a breach of the related servicer's, trustee's or depositor's
               obligations, as the case may be, under the related Agreement for
               such series, such tax will be borne by such servicer, trustee or
               depositor, as the case may be, out of its own funds; or

          o    Morgan Stanley Capital I Inc.'s obligation to repurchase a
               mortgage loan,

such tax will be borne by Morgan Stanley Capital I Inc.

     In the event that the servicer, trustee or depositor, as the case may be,
fails to pay or is not required to pay any Prohibited Transactions Tax,
Contributions Tax, tax on net income from foreclosure property or state or local
income or franchise tax, the tax will be payable out of the trust fund for the
series and will result in a reduction in amounts available to be distributed to
the certificateholders of the series.

LIQUIDATION AND TERMINATION

     If the REMIC adopts a plan of complete liquidation, within the meaning of
Internal Revenue Code Section 860F(a)(4)(A)(i), which may be accomplished by
designating in the REMIC's final tax return a date on which such adoption is
deemed to occur, and sells all of its assets other than cash within a 90-day
period beginning on such date, the REMIC will not be subject to any Prohibited
Transaction Tax, provided that the REMIC credits or distributes in liquidation
all of the sale proceeds plus its cash, other than the amounts retained to meet
claims, to holders of Regular and REMIC Residual Certificates within the 90-day
period.


                                       107



     The REMIC will terminate shortly following the retirement of the REMIC
Regular Certificates. If a REMIC Residual Certificateholder's adjusted basis in
the REMIC Residual Certificate exceeds the amount of cash distributed to such
REMIC Residual Certificateholder in final liquidation of its interest, then it
would appear that the REMIC Residual Certificateholder would be entitled to a
loss equal to the amount of such excess. It is unclear whether such a loss, if
allowed, will be a capital loss or an ordinary loss.

ADMINISTRATIVE MATTERS

     Solely for the purpose of the administrative provisions of the Internal
Revenue Code, the REMIC generally will be treated as a partnership and the REMIC
Residual Certificateholders will be treated as the partners. In general, the
holder of the largest percentage interest of a class of REMIC Residual
Certificates will be the "tax matters person" of the related REMIC for purposes
of representing REMIC Residual Certificateholders in connection with an Internal
Revenue Service proceeding. However, the duties of the tax matters person will
be delegated to the Trustee under the applicable Agreement.

     Certain tax information will be furnished quarterly to each REMIC Residual
Certificateholder who held a REMIC Residual Certificate on any day in the
previous calendar quarter.

     Each REMIC Residual Certificateholder is required to treat items on its
return consistently with their treatment on the REMIC's return, unless the REMIC
Residual Certificateholder either files a statement identifying the
inconsistency or establishes that the inconsistency resulted from incorrect
information received from the REMIC. The Internal Revenue Service may assert a
deficiency resulting from a failure to comply with the consistency requirement
without instituting an administrative proceeding at the REMIC level. The REMIC
does not intend to register as a tax shelter pursuant to Internal Revenue Code
Section 6111 because it is not anticipated that the REMIC will have a net loss
for any of the first five taxable years of its existence. Any person that holds
a REMIC Residual Certificate as a nominee for another person may be required to
furnish the REMIC, in a manner to be provided in Treasury regulations, with the
name and address of such person and other information.

TAX-EXEMPT INVESTORS

     Any REMIC Residual Certificateholder that is a pension fund or other entity
that is subject to federal income taxation only on its "unrelated business
taxable income" within the meaning of Internal Revenue Code Section 512 will be
subject to such tax on that portion of the distributions received on a REMIC
Residual Certificate that is considered an excess inclusion. See "--Taxation of
Owners of REMIC Residual Certificates--Excess Inclusions" above.

RESIDUAL CERTIFICATE PAYMENTS--NON-U.S. PERSONS

     Amounts paid to REMIC Residual Certificateholders who are not U.S. Persons
(see "--Taxation of Owners of REMIC Regular Certificates--Non-U.S. Persons"
above) are treated as interest for purposes of the 30% or lower treaty rate,
United States withholding tax. Amounts distributed to holders of REMIC Residual
Certificates should qualify as "portfolio interest," subject to the conditions
described in "--Taxation of Owners of REMIC Regular Certificates" above, but
only to the extent that the underlying mortgage loans were originated after July
18, 1984. Furthermore, the rate of withholding on any income on a REMIC Residual
Certificate that is excess inclusion income will not be subject to reduction
under any applicable tax treaties. See "--Taxation of Owners of REMIC Residual
Certificates--Excess Inclusions" above. If the portfolio interest exemption is
unavailable, such amount will be subject to United States withholding tax when
paid or otherwise distributed, or when the REMIC Residual Certificate is
disposed of, under rules similar to those for withholding upon disposition of
debt instruments that have original issue discount. The Internal Revenue Code,
however, grants the Treasury Department authority to issue regulations requiring
that those amounts be taken into account earlier than otherwise provided where
necessary to prevent avoidance of tax, for example, where the REMIC Residual
Certificates do not have significant value. See "--Taxation of Owners of REMIC
Residual Certificates--Excess Inclusions" above. If the amounts paid to REMIC
Residual Certificateholders that are not U.S. Persons are effectively connected
with their conduct of a trade or business within the United States, the 30% or
lower treaty rate withholding will not apply. Instead, the amounts paid to such
non-U.S. Person will be subject to U.S. federal income taxation at regular
graduated rates. For special


                                       108



restrictions on the transfer of REMIC Residual Certificates, see "--Tax Related
Restrictions on Transfers of REMIC Residual Certificates" below.

     REMIC Regular Certificateholders and persons related to such holders should
not acquire any REMIC Residual Certificates, and REMIC Residual
Certificateholders and persons related to REMIC Residual Certificateholders
should not acquire any REMIC Regular Certificates, without consulting their tax
advisors as to the possible adverse tax consequences of such acquisition.

TAX RELATED RESTRICTIONS ON TRANSFERS OF REMIC RESIDUAL CERTIFICATES

     Disqualified Organizations. An entity may not qualify as a REMIC unless
there are reasonable arrangements designed to ensure that residual interests in
the entity are not held by "disqualified organizations." Further, a tax is
imposed on the transfer of a residual interest in a REMIC to a "disqualified
organization." The amount of the tax equals the product of (A) an amount, as
determined under the REMIC Regulations, equal to the present value of the total
anticipated "excess inclusions" with respect to such interest for periods after
the transfer and (B) the highest marginal federal income tax rate applicable to
corporations. The tax is imposed on the transferor unless the transfer is
through an agent, including a broker or other middleman, for a disqualified
organization, in which event the tax is imposed on the agent. The person
otherwise liable for the tax shall be relieved of liability for the tax if the
transferee furnished to such person an affidavit that the transferee is not a
disqualified organization and, at the time of the transfer, such person does not
have actual knowledge that the affidavit is false. A "disqualified organization"
means:

          (A)  the United States, any State, possession or political subdivision
               thereof, any foreign government, any international organization
               or any agency or instrumentality of any of the foregoing
               (provided that such term does not include an instrumentality if
               all its activities are subject to tax and, except for FHLMC, a
               majority of its board of directors is not selected by any such
               governmental agency),

          (B)  any organization, other than certain farmers cooperatives,
               generally exempt from federal income taxes unless such
               organization is subject to the tax on "unrelated business taxable
               income," and

          (C)  a rural electric or telephone cooperative.

     A tax is imposed on a "pass-through entity" holding a residual interest in
a REMIC if at any time during the taxable year of the pass-through entity a
disqualified organization is the record holder of an interest in such entity,
provided that all partners of an "electing large partnership as defined in
Section 775 of the Code, are deemed to be disqualified organizations. The amount
of the tax is equal to the product of (A) the amount of excess inclusions for
the taxable year allocable to the interest held by the disqualified organization
and (B) the highest marginal federal income tax rate applicable to corporations.
The pass-through entity otherwise liable for the tax, for any period during
which the disqualified organization is the record holder of an interest in such
entity, will be relieved of liability for the tax if such record holder
furnishes to such entity an affidavit that such record holder is not a
disqualified organization and, for such period, the pass-through entity does not
have actual knowledge that the affidavit is false. For this purpose, a
"pass-through entity" means:

          o    a regulated investment company, real estate investment trust or
               common trust fund,

          o    a partnership, trust or estate and

          o    certain cooperatives.

     Except as may be provided in Treasury regulations not yet issued, any
person holding an interest in a pass-through entity as a nominee for another
will, with respect to such interest, be treated as a pass-through entity.
Electing large partnerships--generally, non-service partnerships with 100 or
more members electing to be subject to simplified Internal Revenue Service
reporting provisions under Internal Revenue Code sections 771 through 777--will
be taxable on excess inclusion income as if all partners were disqualified
organizations.

     In order to comply with these rules, the Agreement will provide that no
record or beneficial ownership interest in a REMIC Residual Certificate may be
purchased, transferred or sold, directly or indirectly, without the express


                                       109



written consent of the master servicer. The master servicer will grant consent
to a proposed transfer only if it receives the following:

          o    an affidavit from the proposed transferee to the effect that it
               is not a disqualified organization and is not acquiring the REMIC
               Residual Certificate as a nominee or agent for a disqualified
               organization and

          o    a covenant by the proposed transferee to the effect that the
               proposed transferee agrees to be bound by and to abide by the
               transfer restrictions applicable to the REMIC Residual
               Certificate.

     Noneconomic REMIC Residual Certificates. The REMIC Regulations disregard,
for federal income tax purposes, any transfer of a Noneconomic REMIC Residual
Certificate to a U.S. Person, unless no significant purpose of the transfer is
to enable the transferor to impede the assessment or collection of tax. A
Noneconomic REMIC Residual Certificate is any REMIC Residual Certificate,
including a REMIC Residual Certificate with a positive value at issuance,
unless, at the time of transfer, taking into account the Prepayment Assumption
and any required or permitted clean up calls or required liquidation provided
for in the REMIC's organizational documents,

          o    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 corporate income tax rate in effect for the year in which
               the transfer occurs and

          o    the transferor reasonably expects that the transferee will
               receive distributions from the REMIC at or after the time at
               which taxes accrue on the anticipated excess inclusions in an
               amount sufficient to satisfy the accrued taxes.

     A significant purpose to impede the assessment or collection of tax exists
if the transferor, at the time of the transfer, either knew or should have known
that the transferee would be unwilling or unable to pay taxes due on its share
of the taxable income of the REMIC. A transferor is presumed not to have such
knowledge if:

     (1) the transferor conducted, at the time of the transfer, a reasonable
investigation of the financial condition of the transferee and, as a result of
the investigation, the transferor determined that the transferee had
historically paid its debts as they came due and found no significant evidence
that the transferee would not continue to pay its debts as they come due in the
future;

     (2) the transferee represents to the transferor that (i) it understands
that, as the holder of the REMIC Residual Certificate, the transferee may incur
tax liabilities in excess of cash flows generated by the interest, (ii) that the
transferee intends to pay taxes associated with holding the residual interest as
they came due and (iii) that the transferee will not cause income with respect
to the REMIC Residual Certificate to be attributable to a foreign permanent
establishment or fixed base, within the meaning of an applicable income tax
treaty, of such transferee or any other person; and

     (3) the transfer is not a direct or indirect transfer to a foreign
permanent establishment or fixed base, within the meaning of an applicable
income tax treaty, and either:

          (i) the present value of the anticipated tax liabilities associated
     with holding the REMIC Residual Certificate does not exceed the sum of:

               (a) the present value of any consideration given to the
          transferee to acquire the REMIC Residual Certificate;

               (b) the present value of the expected future distributions on the
          REMIC Residual Certificate; and

               (c) the present value of the anticipated tax savings associated
          with the holding the REMIC Residual Certificate as the REMIC generates
          losses. For purposes of the computations under this "minimum transfer
          price" alternative, the transferee is assumed to pay tax at the
          highest rate of tax specified in Internal Revenue Code Section
          11(b)(1) (currently 35%) or, in certain circumstances the alternative
          minimum tax rate. Further, present values generally are computed using
          a discount rate equal to the short-term Federal rate set


                                       110



          forth in Internal Revenue Code Section 1274(d) for the month of such
          transfer and the compounding period used by the transferee; or

          (ii) (a) at the time of the transfer, and at the close of each of the
     transferee's two fiscal years preceding the year of transfer, the
     transferee's gross assets for financial reporting purposes exceed $100
     million and its net assets for financial reporting purposes exceed $10
     million;

               (b) the transferee is an eligible corporation (as defined in
          Treasury regulation section I.860E-1(c)(6)(i)) that makes a written
          agreement that any subsequent transfer of the interest will be to
          another eligible corporation in a transaction which will also satisfy
          clauses (1) and (2) above and this clause 3(ii); and

               (c) the facts and circumstances known to the transferor on or
          before the date of the transfer must not reasonably indicate that the
          taxes associated with the residual interest will not be paid. For
          purposes of clause 3(ii)(c), if the amount of consideration paid in
          respect of the residual interest is so low that under any set of
          reasonable assumptions a reasonable person would conclude that the
          taxes associated with holding the residual interest will not be paid,
          then the transferor is deemed to know that the transferee cannot or
          will not pay the taxes associated with the residual interest.

     If a transfer of a Noneconomic REMIC Residual Certificate is disregarded,
the transferor would continue to be treated as the owner of the REMIC Residual
Certificate and would continue to be subject to tax on its allocable portion of
the net income of the REMIC.

     Foreign Investors. The REMIC Regulations provide that the transfer of a
REMIC Residual Certificate that has a tax avoidance potential to a foreign
person will be disregarded for federal income tax purposes. This rule appears to
apply to a transferee who is not a U.S. Person unless the transferee's income in
respect of the REMIC Residual Certificate is effectively connected with the
conduct of a United Sates trade or business. A REMIC Residual Certificate is
deemed to have a tax avoidance potential unless, at the time of transfer, the
transferor reasonably expects that the REMIC will distribute to the transferee
amounts that will equal at least 30 percent of each excess inclusion, and that
such amounts will be distributed at or after the time the excess inclusion
accrues and not later than the end of the calendar year following the year of
accrual. If the non-U.S. Person transfers the REMIC Residual Certificate to a
U.S. Person, the transfer will be disregarded, and the foreign transferor will
continue to be treated as the owner, if the transfer has the effect of allowing
the transferor to avoid tax on accrued excess inclusions. The pooling and
servicing agreement will provide that no record or beneficial ownership interest
in a REMIC Residual Certificate may be transferred, directly or indirectly, to a
non-U.S. Person unless the person provides the trustee with a duly completed
Internal Revenue Service Form W-8ECI or applicable successor form adopted by the
Internal Revenue Service for such purposes and the trustee consents to the
transfer in writing.

     Any attempted transfer or pledge in violation of the transfer restrictions
shall be absolutely null and void and shall vest no rights in any purported
transferee. Investors in REMIC Residual Certificates are advised to consult
their own tax advisors with respect to transfers of the REMIC Residual
Certificates and, in addition, pass-through entities are advised to consult
their own tax advisors with respect to any tax which may be imposed on a
pass-through entity.

REPORTABLE TRANSACTIONS

     Any holder of an offered certificate that reports any item or items of
income, gain, expense, or loss in respect of an offered certificate for tax
purposes in an amount that differs from the amount reported for book purposes by
more than $10 million, on a gross basis, in any taxable year may be subject to
certain disclosure requirements for "reportable transactions." Prospective
investors should consult their tax advisers concerning any possible tax return
disclosure obligation with respect to the offered certificates.

                            STATE TAX CONSIDERATIONS

     In addition to the federal income tax consequences described in "Federal
Income Tax Consequences," potential investors should consider the state income
tax consequences of the acquisition, ownership, and disposition of the offered
certificates. State or 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. Therefore, potential


                                       111



investors should consult their own tax advisors with respect to the various tax
consequences of investments in the offered certificates.

                              ERISA CONSIDERATIONS

GENERAL

     The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
and Internal Revenue Code Section 4975 impose certain restrictions on Plans and
on persons who are parties in interest or disqualified persons with respect to
the Plans. Certain employee benefit plans, such as governmental plans and church
plans (if no election has been made under Internal Revenue Code Section 410(d)),
are not subject to the restrictions of ERISA. However, these plans may be
subject to other applicable federal, state or local law that is similar to the
provisions of ERISA or the Code. Moreover, any governmental or church plan that
is not subject to ERISA but is qualified under Internal Revenue Code Section
401(a) and exempt from taxation under Internal Revenue Code Section 501(a) is
subject to the prohibited transaction rules set forth in Internal Revenue Code
Section 503.

     Investments by Plans are subject to ERISA's general fiduciary requirements,
including the requirement of investment prudence and diversification and the
requirement that a Plan's investments be made in accordance with the documents
governing the Plan.

PROHIBITED TRANSACTIONS

     General

     Section 406 of ERISA prohibits parties in interest with respect to a Plan
from engaging in certain transactions involving the Plan and its assets unless a
statutory, regulatory or administrative exemption applies to the transaction.
Internal Revenue Code Section 4975 imposes excise taxes (or, in some cases, a
civil penalty may be assessed pursuant to Section 502(i) of ERISA) on parties in
interest that engage in non-exempt prohibited transactions.

     The United States Department of Labor has issued a final regulation (29
C.F.R. Section 2510.3-101) containing rules for determining what constitutes the
assets of a Plan. This regulation provides that, as a general rule, the
underlying assets and properties of corporations, partnerships, trusts and
certain other entities in which a Plan makes an "equity investment" will be
deemed for purposes of ERISA to be assets of the Plan unless an exception
applies.

     Under the terms of the regulation, the trust may be deemed to hold plan
assets by reason of a Plan's investment in a certificate; such plan assets would
include an undivided interest in the mortgage loans and any other assets held by
the trust. In this event, the asset seller, the master servicer, the trustee,
any insurer of the mortgage loans and mortgage-backed securities and other
persons, in providing services with respect to the assets of the trust, may be
parties in interest, subject to the fiduciary responsibility provisions of Title
I of ERISA, including the prohibited transaction provisions of Section 406 of
ERISA (and of Internal Revenue Code Section 4975), with respect to transactions
involving the plan assets unless such transactions are subject to a statutory,
regulatory or administrative exemption.

     The regulations contain a de minimis safe-harbor rule that exempts the
assets of any entity from plan assets status as long as the aggregate equity
investment in such entity by plans is not significant. For this purpose, equity
participation in the entity will be significant if immediately after any
acquisition of any equity interest in the entity, "benefit plan investors" in
the aggregate, own 25% or more of the value of any class of equity interest,
excluding from the calculation the value of equity interest held by persons who
have discretionary authority or control with access to the assets of the entity
or held by affiliates of such persons. "Benefit Plan Investors" include both
Plans and employee benefit plans not subject to ERISA (e.g., governmental and
foreign plans). To fit within the safe harbor, the 25% limitation must be met
with respect to each class of certificates, regardless of the portion of total
equity value represented by such class, on an ongoing basis.


                                       112



     Availability of Underwriter's Exemption for Certificates

     The United States Department of Labor has granted to Morgan Stanley & Co.
Incorporated Prohibited Transaction Exemption ("PTE") 90-24, Exemption
Application No. D-8019, 55 Fed. Reg. 20548 (1990) as amended by PTE 97-34,
Exemption Application Nos. D-10245 and D-10246, 55 Fed. Reg. 39021 (1997), by
PTE 2000-58, Exemption Application No. D-10829, 65 Fed. Reg. 67765 (2000) and by
PTE 2002-41, Exemption Application No. D-11077, 67 Fed. Reg. 54487 (2002) (the
"Exemption"), which, as amended, exempts from the application of the prohibited
transaction rules transactions relating to:

          o    the acquisition, sale and holding by Plans of certain securities,
               including certificates, representing an undivided interest in
               certain asset-backed pass-through entities, including trusts,
               with respect to which Morgan Stanley & Co. Incorporated or any of
               its affiliates is the sole underwriter or the manager or
               co-manager of the underwriting syndicate; and

          o    the servicing, operation and management of those asset-backed
               pass-through trusts,

provided that the general conditions and certain other conditions set forth in
the Exemption are satisfied.

     The Exemption sets forth the following general conditions which must be
satisfied before a transaction involving the acquisition, sale and holding of
the certificates or a transaction in connection with the servicing, operation
and management of the trust may be eligible for exemptive relief thereunder:

          (1) The acquisition of the certificates by a Plan is on terms
     (including the price for such certificates) that are at least as favorable
     to the investing Plan as they would be in an arm s-length transaction with
     an unrelated party;

          (2) The certificates acquired by the Plan have received a rating at
     the time of such acquisition that is in one of the three highest generic
     rating categories (or four highest, if the investment pool contains only
     certain types of assets, such as fully-secured mortgage loans) from any of
     the following rating agencies: Fitch, Inc., Moody's Investors Service, Inc.
     and Standard & Poor's Ratings Services;

          (3) The trustee is a substantial financial institution and is not an
     affiliate of any member of the Restricted Group (as defined below) other
     than an underwriter;

          (4) The sum of all payments made to and retained by the underwriter in
     connection with the distribution of the certificates represents not more
     than reasonable compensation for underwriting such certificates; the sum of
     all payments made to and retained by the asset seller pursuant to the sale
     of the mortgage loans to the trust represents not more than the fair market
     value of such mortgage loans; the sum of all payments made to and retained
     by each servicer represents not more than reasonable compensation for such
     servicer's services under the pooling and servicing agreement and
     reimbursement of such servicer's reasonable expenses in connection
     therewith;

          (5) The Plan investing in the certificates is an "accredited investor"
     as defined in Rule 501(a)(1) of Regulation D of the Securities and Exchange
     Commission under the Securities Act of 1933 as amended; and

          (6) Unless the investment pool contains only certain types of assets,
     such as fully secured mortgage loans, the rights and interests evidenced by
     the certificates acquired by the Plan are not subordinated to the rights
     and interests evidenced by other certificates of the trust.

     The trust fund must also meet the following requirements:

          (i) the corpus of the trust fund must consist solely of assets of a
     type that have been included in other investment pools;

          (ii) certificates evidencing interests in such other investment pools
     must have been rated in one of the three highest (four highest, if the
     trust contains only certain types of assets) rating categories of a rating
     agency for at least one year prior to the Plan's acquisition of the
     securities; and


                                       113



          (iii) certificates evidencing interests in such other investment pools
     must have been purchased by investors other than Plans for at least one
     year prior to any Plan's acquisition of the securities.

     The Exemption provides 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. Mortgage loans or other
secured receivables supporting payments to certificateholders, and having a
value equal to no more than twenty-five percent (25%) of the total principal
amount of the certificates being offered by the trust may be transferred to the
trust within a 90-day or three-month pre-funding period following the closing
date, instead of being required to be either identified or transferred on or
before the closing date. The relief is available when the following conditions
are met:

          (1) The ratio of the amount allocated to the pre-funding account to
     the total principal amount of the certificates being offered (the
     "pre-funding limit") must not exceed twenty-five percent (25%).

          (2) All receivables transferred after the closing date (the
     "additional obligations") must meet the same terms and conditions for
     eligibility as the original receivables used to create the trust, which
     terms and conditions have been approved by a rating agency.

          (3) The transfer of such additional obligations to the trust during
     the pre-funding period must not result in the certificates to be covered by
     the Exemption receiving a lower credit rating from a rating agency upon
     termination of the pre-funding period than the rating that was obtained at
     the time of the initial issuance of the certificates by the trust.

          (4) Solely as a result of the use of pre-funding, the weighted average
     annual percentage interest rate for all of the receivables in the trust at
     the end of the pre-funding period must not be more than 100 basis points
     lower than the average interest rate for the receivables transferred to the
     trust on the closing date.

          (5) In order to insure that the characteristics of the additional
     obligations are substantially similar to the original receivables which
     were transferred to the trust fund:

                    (i) the characteristics of the additional obligations must
               be monitored by an insurer or other credit support provider that
               is independent of Morgan Stanley Capital I Inc.; or

                    (ii) an independent accountant retained by Morgan Stanley
               Capital I Inc. must provide Morgan Stanley Capital I Inc. with a
               letter (with copies provided to each rating agency rating the
               certificates, the related underwriter and the related trustee)
               stating whether or not the characteristics of the additional
               obligations conform to the characteristics described in the
               related prospectus or prospectus supplement or pooling and
               servicing agreement. In preparing such letter, the independent
               accountant must use the same type of procedures as were
               applicable to the receivables transferred to the trust as of the
               closing date.

          (6) The pre-funding period must end no later than three months or 90
     days after the closing date or earlier if the pre-funding account falls
     below the minimum level specified in the pooling and servicing agreement or
     an Event of Default occurs.

          (7) Amounts transferred to any pre-funding account or capitalized
     interest account, or both, used in connection with the pre-funding may be
     invested only in certain permitted investments.

          (8) The related prospectus or prospectus supplement must describe:

                    (i) any pre-funding account or capitalized interest account,
               or both, used in connection with a pre-funding account;

                    (ii) the duration of the pre-funding period;

                    (iii) the percentage or dollar amount, or both, of the
               pre-funding limit for the trust; and

                    (iv) that the amounts remaining in the pre-funding account
               at the end of the pre-funding period will be remitted to
               certificateholders as repayments of principal.


                                       114



          (9) The related pooling and servicing agreement must describe the
     permitted investments for the pre-funding account or capitalized interest
     account, or both, and, if not disclosed in the related prospectus or
     prospectus supplement, the terms and conditions for eligibility of
     additional obligations.

     Moreover, the Exemption provides relief from certain self-dealing/conflict
of interest prohibited transactions that may occur when any person who has
discretionary authority or renders investment advice with respect to the
investment of plan assets causes a Plan to acquire certificates in a trust
holding receivables on which that person or an affiliate is an obligor, provided
that, among other requirements:

          o    the person or its affiliate is an obligor with respect to no more
               than five percent of the fair market value of the obligations or
               receivables contained in the trust;

          o    no member of the Restricted Group (as defined below) is the "plan
               sponsor" (as defined in Section 3(16)(B) of ERISA) of the Plan;

          o    in the case of an acquisition in connection with the initial
               issuance of certificates, at least fifty percent of each class of
               certificates in which Plans have invested and at least fifty
               percent of the aggregate interest in the trust fund is acquired
               by persons independent of the Restricted Group;

          o    a Plan's investment in certificates of any class does not exceed
               twenty-five percent of all of the certificates of that class
               outstanding at the time of the acquisition; and

          o    immediately after the acquisition, no more than twenty-five
               percent of the assets of any Plan with respect to which the
               person has discretionary authority or renders investment advice
               are invested in certificates representing an interest in one or
               more trusts containing assets sold or serviced by the same
               entity.

     This exemptive relief does not apply to Plans sponsored by the asset
seller, Morgan Stanley Capital I Inc., Morgan Stanley & Co. Incorporated and the
other underwriters set forth in the related prospectus supplement, the trustee,
the master servicer, any pool insurer, any obligor with respect to obligations
included in the trust fund constituting more than five percent of the aggregate
unamortized principal balance of the assets in the trust fund, any swap
counterparty of a permitted swap or notional principal contract included in the
trust, or any affiliate of any of such parties (the "Restricted Group").

     Before purchasing a certificate, a fiduciary of a Plan should itself
confirm (a) that the certificates constitute "securities" for purposes of the
Exemption and (b) that the specific and general conditions set forth in the
Exemption and the other requirements set forth in the Exemption would be
satisfied. The prospectus supplement for each series of certificates will
specify whether there is a "pre-funding period" and whether such additional
conditions will be satisfied. Each purchaser that is a Plan or that is investing
on behalf of or with plan assets of a Plan in reliance on the Exemption will be
deemed to represent that it qualifies as an accredited investor as defined in
Rule 501(a)(1) of Regulation D of the Securities Act. In addition, the rating of
a certificate may change. If a class of certificates no longer has a rating of
at least BBB- or its equivalent, then certificates of that class will no longer
be eligible for relief under the Exemption (although a Plan that had purchased
the certificates when they had a permitted rating would not be required by the
Exemption to dispose of them). If none of S&P, Moody's or Fitch rate the
applicable class of certificates in one of the four highest generic rating
categories at the time of such purchase, each transferee will be deemed to
represent that either (a) it is not purchasing the securities with plan assets
of a Plan, or (b) it is an insurance company using the assets of its general
account (within the meaning of PTE 95-60) to effect such purchase and is
eligible for exemptive release under and satisfies all of the conditions set
forth in Section I and III of PTE 95-60.

REVIEW BY PLAN FIDUCIARIES

     Any Plan fiduciary considering whether to purchase any certificates on
behalf of a Plan should consult with its counsel regarding the applicability of
the fiduciary responsibility and prohibited transaction provisions of ERISA and
the Internal Revenue Code and of the Plan Assets Regulation to such investment.
Among other things, before purchasing any certificates, a fiduciary of a Plan
should make its own determination as to the availability of the exemptive relief
provided in the Exemption, and also consider the availability of any other
prohibited transaction exemptions. In particular, in connection with a
contemplated purchase of certificates representing a beneficial


                                       115



ownership interest in a pool of single family residential first mortgage loans,
such Plan fiduciary should consider the availability of the Exemption or
Prohibited Transaction Class Exemption 83-1 ("PTCE 83-1") for certain
transactions involving mortgage pool investment trusts. PTCE 83-1 does not apply
to pools containing loans secured by shares issued by a cooperative association.
The prospectus supplement with respect to a series of certificates may contain
additional information regarding the application of any other exemption with
respect to the certificates offered thereby.

                                LEGAL INVESTMENT

     If so specified in the prospectus supplement, certain classes of
Certificates will constitute "mortgage related securities" for purposes of the
Secondary Mortgage Market Enhancement Act of 1984, as amended. Generally, the
only classes of Certificates which will qualify as "mortgage related securities"
will be those that (1) are rated in one of two highest rating categories by at
least one nationally recognized statistical rating organization; and (2) are
part of a series evidencing interests in a Trust Fund consisting of loans
originated by certain types of originators specified in SMMEA and secured by
first liens on real estate. The appropriate characterization of those
Certificates not qualifying as "mortgage related securities" for purposes of
SMMEA ("Non-SMMEA Certificates") under various legal investment restrictions,
and thus the ability of investors subject to these restrictions to purchase such
Certificates, may be subject to significant interpretive uncertainties.
Accordingly, all investors whose investment activities are subject to legal
investment laws and regulations, regulatory capital requirements, or review by
regulatory authorities should consult with their own legal advisors in
determining whether and to what extent the Non-SMMEA Certificates constitute
legal investments for them.

     Those classes of Certificates qualifying as "mortgage related securities"
will constitute legal investments for persons, trusts, corporations,
partnerships, associations, business trusts, and business entities, including
depository institutions, insurance companies, trustees, 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 regulation to the same extent that, under
applicable law, obligations issued by or guaranteed as to principal and interest
by the United States or any of its agencies or instrumentalities constitute
legal investments for those entities.

     Under SMMEA, a number of states enacted legislation, on or prior to the
October 3, 1991 cut-off for those enactments, limiting to varying extents the
ability of certain entities (in particular, insurance companies) to invest in
"mortgage related securities" secured by liens on residential, or mixed
residential and commercial properties, in most cases by requiring the affected
investors to rely solely upon existing state law, and not SMMEA. Pursuant to
Section 347 of the Riegle Community Development and Regulatory Improvement Act
of 1994, which amended the definition of "mortgage related security" to include,
in relevant part, Certificates satisfying the rating and qualified originator
requirements for "mortgage related securities," but evidencing interests in a
Trust Fund consisting, in whole or in part, of first liens on one or more
parcels of real estate upon which are located one or more commercial structures,
states were authorized to enact legislation, on or before September 23, 2001,
specifically referring to Section 347 and prohibiting or restricting the
purchase, holding or investment by state-regulated entities in those types of
Certificates. Accordingly, the investors affected by any state legislation
overriding the preemptive effect of SMMEA will be authorized to invest in
Certificates qualifying as "mortgage related securities" only to the extent
provided in that 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 "mortgage
related securities" without limitation as to the percentage of their assets
represented thereby, federal credit unions may invest in those securities, and
national banks may purchase those securities for their own account without
regard to the limitations generally applicable to investment securities set
forth in 12 U.S.C. Section 24 (Seventh), subject in each case to those
regulations as the applicable federal regulatory authority may prescribe. In
this connection, the Office of the Comptroller of the Currency (the "OCC") has
amended 12 C.F.R. Part 1 to authorize national banks to purchase and sell for
their own account, without limitation as to a percentage of the bank's capital
and surplus (but subject to compliance with certain general standards in 12
C.F.R. Section 1.5 concerning "safety and soundness" and retention of credit
information), certain "Type IV securities," defined in 12 C.F.R. Section 1.2(m)
to include certain "residential mortgage-related securities." As so defined,
"residential mortgage-related security" means, in relevant part, "mortgage
related security" within the meaning of SMMEA. The National Credit Union
Administration (the


                                       116



"NCUA") has adopted rules, codified at 12 C.F.R. Part 703, which permit federal
credit unions to invest in "mortgage related securities," other than stripped
mortgage related securities (unless the credit union complies with the
requirements of 12 C.F.R. Section 703.16(e) for investing in those securities),
residual interests in mortgage related securities, and commercial mortgage
related securities, subject to compliance with general rules governing
investment policies and practices; however, credit unions approved for the
NCUA's "investment pilot program" under 12 C.F.R. Section 703.19 may be able to
invest in those prohibited forms of securities, while "RegFlex credit unions"
may invest in commercial mortgage related securities under certain conditions
pursuant to 12 C.F.R. Section 742.4(b)(2). The Office of Thrift Supervision (the
"OTS") has issued Thrift Bulletin 13a (December 1, 1998), "Management of
Interest Rate Risk, Investment Securities, and Derivatives Activities," and
Thrift Bulletin 73a (December 18, 2001), "Investing in Complex Securities,"
which thrift institutions subject to the jurisdiction of the OTS should consider
before investing in any of the Certificates.

     All depository institutions considering an investment in the Certificates
should review the "Supervisory Policy Statement on Investment Securities and
End-User Derivatives Activities" (the "1998 Policy Statement") of the Federal
Financial Institutions Examination Council, which has been adopted by the Board
of Governors of the Federal Reserve System, the OCC, the Federal Deposit
Insurance Corporation and the OTS, effective May 26, 1998, and by the NCUA,
effective October 1, 1998. The 1998 Policy Statement sets forth general
guidelines which depository institutions must follow in managing risks
(including market, credit, liquidity, operational (transaction), and legal
risks) applicable to all securities (including mortgage pass-through securities
and mortgage-derivative products) used for investment purposes.

     Investors whose investment activities are subject to regulation by federal
or state authorities should review rules, policies, and guidelines adopted from
time to time by those authorities before purchasing any Certificates, as certain
classes may be deemed unsuitable investments, or may otherwise be restricted,
under those rules, policies, or guidelines (in certain instances irrespective of
SMMEA).

     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, provisions which
may restrict or prohibit investment in securities which are not
"interest-bearing" or "income-paying," and, with regard to any Certificates
issued in book-entry form, provisions which may restrict or prohibit investments
in securities which are issued in book-entry form.

     Except as to the status of certain classes of the Certificates as "mortgage
related securities," no representations are made as to the proper
characterization of the Certificates for legal investment purposes, financial
institution regulatory purposes, or other purposes, or as to the ability of
particular investors to purchase Certificates under applicable legal investment
restrictions. The uncertainties described above (and any unfavorable future
determinations concerning legal investment or financial institution regulatory
characteristics of the Certificates) may adversely affect the liquidity of the
Certificates.

     Accordingly, all investors whose investment activities are subject to legal
investment laws and regulations, regulatory capital requirements, or review by
regulatory authorities should consult with their own legal advisors in
determining whether and to what extent the Certificates constitute legal
investments or are subject to investment, capital, or other restrictions, and,
if applicable, whether SMMEA has been overridden in any jurisdiction relevant to
that investor.

                              PLAN OF DISTRIBUTION

     The offered certificates offered hereby and by the supplements to this
prospectus will be offered in series. The distribution of the certificates may
be effected from time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices to be
determined at the time of sale or at the time of commitment therefor. If so
specified in the related prospectus supplement, the offered certificates will be
distributed in a firm commitment underwriting, subject to the terms and
conditions of the underwriting agreement, by Morgan Stanley & Co. Incorporated
acting as underwriter with other underwriters, if any, named therein. In such
event, the prospectus supplement may also specify that the underwriters will not
be obligated to pay for any offered certificates agreed to be purchased by
purchasers pursuant to purchase agreements acceptable to Morgan Stanley Capital
I Inc. In connection with the sale of offered certificates, underwriters may
receive compensation from Morgan Stanley Capital


                                       117



I Inc. or from purchasers of offered certificates in the form of discounts,
concessions or commissions. The prospectus supplement will describe any such
compensation paid by Morgan Stanley Capital I Inc.

     Alternatively, the prospectus supplement may specify that offered
certificates will be distributed by Morgan Stanley & Co. Incorporated acting as
agent or in some cases as principal with respect to offered certificates that it
has previously purchased or agreed to purchase. If Morgan Stanley & Co.
Incorporated acts as agent in the sale of offered certificates, Morgan Stanley &
Co. Incorporated will receive a selling commission with respect to the offered
certificates, depending on market conditions, expressed as a percentage of the
aggregate certificate balance or notional amount of the offered certificates as
of the cut-off date. The exact percentage for each series of certificates will
be disclosed in the related prospectus supplement. To the extent that Morgan
Stanley & Co. Incorporated elects to purchase offered certificates as principal,
Morgan Stanley & Co. Incorporated may realize losses or profits based upon the
difference between its purchase price and the sales price. The prospectus
supplement with respect to any series offered other than through underwriters
will contain information regarding the nature of such offering and any
agreements to be entered into between Morgan Stanley Capital I Inc. and
purchasers of offered certificates of such series.

     Morgan Stanley Capital I Inc. will indemnify Morgan Stanley & Co.
Incorporated and any underwriters against certain civil liabilities, including
liabilities under the Securities Act of 1933, or will contribute to payments
Morgan Stanley & Co. Incorporated and any underwriters may be required to make
in respect thereof.

     In the ordinary course of business, Morgan Stanley & Co. Incorporated and
Morgan Stanley Capital I Inc. may engage in various securities and financing
transactions, including repurchase agreements to provide interim financing of
Morgan Stanley Capital I Inc.'s mortgage loans pending the sale of such mortgage
loans or interests in the mortgage loans, including the certificates.

     Offered certificates will be sold primarily to institutional investors.
Purchasers of offered certificates, including dealers, may, depending on the
facts and circumstances of the purchases, be deemed to be "underwriters" within
the meaning of the Securities Act of 1933 in connection with reoffers and sales
by them of offered certificates. Certificateholders should consult with their
legal advisors in this regard prior to any such reoffer or sale.

     If specified in the prospectus supplement relating to certificates of a
particular series offered hereby, Morgan Stanley Capital I Inc., any affiliate
thereof or any other person or persons specified in the prospectus supplement
may purchase some or all of the certificates of any series from Morgan Stanley &
Co. Incorporated and any other underwriters thereof. This purchaser may
thereafter from time to time offer and sell, pursuant to this prospectus and the
related prospectus supplement, some or all of the certificates so purchased,
directly, through one or more underwriters to be designated at the time of the
offering of the certificates, through dealers acting as agent or principal or in
such other manner as may be specified in the related prospectus supplement. The
offering may be restricted in the manner specified in the prospectus supplement.
The transactions may be effected at market prices prevailing at the time of
sale, at negotiated prices or at fixed prices. Any underwriters and dealers
participating in the purchaser's offering of the certificates may receive
compensation in the form of underwriting discounts or commissions from such
purchaser and such dealers may receive commissions from the investors purchasing
the certificates for whom they may act as agent (which discounts or commissions
will not exceed those customary in those types of transactions involved). Any
dealer that participates in the distribution of the certificates may be deemed
to be an "underwriter" within the meaning of the Securities Act, and any
commissions and discounts received by such dealer and any profit on the resale
or such certificates by such dealer might be deemed to be underwriting discounts
and commissions under the Securities Act.

     All or part of any class of certificates may be reacquired by Morgan
Stanley Capital I Inc. or acquired by an affiliate of Morgan Stanley Capital I
Inc. in a secondary market transaction or from an affiliate, including Morgan
Stanley & Co. Incorporated. Such certificates may then be included in a trust
fund, the beneficial ownership of which will be evidenced by one or more classes
of mortgage-backed certificates, including subsequent series of certificates
offered pursuant to this prospectus and a prospectus supplement.

     As to each series of certificates, only those classes rated in an
investment grade rating category by any rating agency will be offered hereby.
Any non-investment-grade class may be initially retained by Morgan Stanley
Capital I Inc., and may be sold by Morgan Stanley Capital I Inc. at any time in
private transactions.


                                       118



                                  LEGAL MATTERS

     Certain legal matters in connection with the certificates, including
certain federal income tax consequences, will be passed upon for Morgan Stanley
Capital I Inc. by Cadwalader, Wickersham & Taft LLP, Sidley Austin Brown & Wood
LLP or Latham & Watkins LLP.

                              FINANCIAL INFORMATION

     A new trust fund will be formed with respect to each series of certificates
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 certificates.
Accordingly, no financial statements with respect to any trust fund will be
included in this prospectus or in the related prospectus supplement.

                                     RATING

     It is a condition to the issuance of any class of offered certificates that
they shall have been rated not lower than investment grade, that is, in one of
the four highest rating categories, by a rating agency.

     Ratings on mortgage pass-through certificates address the likelihood of
receipt by certificateholders of all distributions on the underlying mortgage
loans. These ratings address the structural, legal and issuer-related aspects
associated with such certificates, the nature of the underlying mortgage loans
and the credit quality of the guarantor, if any, ratings on mortgage
pass-through certificates do not represent any assessment of the likelihood of
principal prepayments by borrowers or of the degree by which such prepayments
might differ from those originally anticipated. As a result, certificateholders
might suffer a lower than anticipated yield, and, in addition, holders of
stripped interest certificates in extreme cases might fail to recoup their
initial investments.

     A security rating is not a recommendation to buy, sell or hold securities
and may be subject to revision or withdrawal at any time by the assigning rating
organization. Each security rating should be evaluated independently of any
other security rating.

                    INCORPORATION OF INFORMATION BY REFERENCE

     The SEC allows Morgan Stanley Capital I Inc. to "incorporate by reference"
information it files with the SEC, which means that Morgan Stanley Capital I
Inc. can disclose important information to you by referring you to those
documents. The information incorporated by reference is considered to be part of
this prospectus. Information that Morgan Stanley Capital I Inc. files later with
the SEC will automatically update the information in this prospectus. In all
cases, you should rely on the later information rather than on any different
information included in this prospectus or the accompanying prospectus
supplement.

     Morgan Stanley Capital I Inc., as depositor, will file, or cause to be
filed, with the Commission, the periodic reports and the Agreement with respect
to each trust fund required under the Exchange Act and the rules and regulations
of the Commission.

     All documents and reports filed, or caused to be filed, by Morgan Stanley
Capital I Inc. with respect to a trust fund pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act prior to the termination of an offering of
certificates are incorporated in this prospectus by reference. Each person to
whom this prospectus is delivered may obtain, without charge, from Morgan
Stanley Capital I Inc. a copy of any documents or reports relating to the
certificates being offered. (Exhibits to those documents may only be obtained if
they are specifically incorporated by reference in those documents.) Requests
for this information should be directed in writing to Morgan Stanley Capital I
Inc., c/o Morgan Stanley & Co. Incorporated, 1585 Broadway, 37th Floor, New
York, New York 10036, Attention: John E. Westerfield, or by telephone at (212)
761-4000. Morgan Stanley Capital I Inc. has determined that its financial
statements are not material to the offering of any certificates.


                                       119



     Morgan Stanley Capital I Inc. filed a registration statement relating to
the certificates with the Securities and Exchange Commission. This prospectus is
part of the registration statement, but the registration statement includes
additional information. For further information regarding the documents referred
to in this prospectus and the accompanying prospectus supplement, you should
refer to the registration statement and the exhibits thereto. The registration
statement and exhibits and the periodic reports and the Agreement can be
inspected and copied at prescribed rates at the public reference facilities
maintained by the Commission at its Public Reference Room, 450 Fifth Street,
N.W., Washington, D.C. 20549 or be accessed at the internet site
http://www.sec.gov maintained by the Commission. Additional information
regarding the Public Reference Room can be obtained by calling the Commission at
1-800-SEC-0330.


                                       120



                                GLOSSARY OF TERMS

     The certificates will be issued pursuant to the Agreement. The following
Glossary of Terms is not complete. You should also refer to the prospectus
supplement and the Agreement for additional or more complete definitions. If you
send a written request to the trustee at its corporate office, the trustee will
provide to you without charge a copy of the Agreement (without exhibits and
schedules).

     Unless the context requires otherwise, the definitions contained in this
Glossary of Terms apply only to this series of certificates.

     "Agreement" means the pooling and servicing agreement or the trust
agreement, as applicable.

     "Amortizable Bond Premium Regulations" means final regulations issued by
the Internal Revenue Service which deal with the amortizable bond premium.

     "Available Distribution Amount" means for each distribution date, the sum
of the following amounts:

     o    the total amount of all cash on deposit in the related certificate
          account as of the corresponding Determination Date, exclusive of:

          o    all scheduled payments of principal and interest collected but
               due on a date subsequent to the related Due Period;

          o    unless the related prospectus supplement provides otherwise, all
               prepayments, together with related payments of the interest
               thereon and related prepayment premiums, liquidation proceeds,
               insurance proceeds and other unscheduled recoveries received
               subsequent to the related Due Period; and

          o    all amounts in the certificate account that are due or
               reimbursable to Morgan Stanley Capital I Inc., the trustee, an
               asset seller, a subservicer, the master servicer or any other
               entity as specified in the related prospectus supplement or that
               are payable in respect of certain expenses of the related trust
               fund;

     o    if the related prospectus supplement so provides, interest or
          investment income on amounts on deposit in the certificate account,
          including any net amounts paid under any cash flow agreements;

     o    all advances made by a servicer or any other entity as specified in
          the related prospectus supplement with respect to the distribution
          date;

     o    if and to the extent the related prospectus supplement so provides,
          amounts paid by a servicer or any other entity as specified in the
          related prospectus supplement with respect to interest shortfalls
          resulting from prepayments during the related prepayment period; and

     o    unless the related prospectus supplement provides otherwise, to the
          extent not on deposit in the related certificate account as of the
          corresponding Determination Date, any amounts collected under, from or
          in respect of any credit support with respect to the distribution
          date.

     "Contributions Tax" means a tax on the trust fund equal to 100% of the
value of the contributed property.

     "Deferred Interest" means interest deferred by reason of negative
amortization.

     "Determination Date" means the close of business on the date specified in
the related prospectus supplement.

     "Due Period" means the period which will commence on the second day of the
month in which the immediately preceding distribution date occurs, or the day
after the cut-off date in the case of the first Due Period, and will end on the
first day of the month of the related distribution date.


                                       121



     "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.

     "Events of Default" means, with respect to the master servicer under the
pooling and servicing agreement, any one of the following events:

     o    any failure by the master servicer to distribute or cause to be
          distributed to certificateholders, or to remit to the trustee for
          distribution to certificateholders, any required payment.

     o    any failure by the master servicer duly to observe or perform in any
          material respect any of its other covenants or obligations under the
          pooling and servicing agreement which continues unremedied for thirty
          days after written notice of such failure has been given to the master
          servicer by the trustee or Morgan Stanley Capital I Inc., or to the
          master servicer, Morgan Stanley Capital I Inc., and the trustee by the
          holders of certificates evidencing not less than 25% of the voting
          rights;

     o    any breach of a representation or warranty made by the master servicer
          under the pooling and servicing agreement which materially and
          adversely affects the interests of certificateholders and which
          continues unremedied for thirty days after written notice of such
          breach has been given to the master servicer by the trustee or Morgan
          Stanley Capital I Inc., or to the master servicer, Morgan Stanley
          Capital I Inc. and the trustee by the holders of certificates
          evidencing not less than 25% of the voting rights; and

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

     "FHLMC" means the Federal Home Loan Mortgage Corporation.

     "Mark-to-Market Regulations" means the finalized Internal Revenue Service
regulations which provide that a REMIC Residual Certificate acquired after
January 3, 1995 cannot be marked to market.

     "Mortgage Rate" means the interest rate for a mortgage loan which provides
for no accrual of interest or for accrual of interest thereon at an interest
rate that is fixed over its term or that adjusts from time to time, or that may
be converted from an adjustable to a fixed mortgage rate, or from a fixed to an
adjustable mortgage rate, from time to time pursuant to an election or as
otherwise specified on the related mortgage note, in each case as described in
the related prospectus supplement.

     "OID Regulations" means the special rules of the Internal Revenue Code
relating to original issue discount (currently Internal Revenue Code Sections
1271 through 1273 and 1275) and the related Treasury regulations.

     "Payment Lag Certificates" means certain of the REMIC Regular Certificates.

     "Permitted Investments" means United States government securities and other
investment grade obligations specified in the Agreement.

     "Plans" means employee benefit plans subject to ERISA and certain other
similar plans and arrangements, including but not limited to individual
retirement accounts and annuities.

     "Prepayment Assumption" means the original yield to maturity of the grantor
trust certificate calculated based on a reasonable assumed prepayment rate for
the mortgage loans underlying the grantor trust certificates.

     "Prohibited Transaction Tax" means the tax the Internal Revenue Code
imposes on REMICs equal to 100% of the net income derived from prohibited
transactions.

     "Purchase Price" means, with respect to any mortgage loan and to the extent
set forth in the related prospectus supplement, the amount that is equal to the
sum of the unpaid principal balance, plus unpaid accrued interest at the
mortgage rate from the date as to which interest was last paid to the due date
in the Due Period in which the relevant purchase is to occur, plus certain
servicing expenses that are reimbursable to the master servicer.


                                       122



     "Record Date" means the last business day of the month immediately
preceding the month in which the distribution date for a class of certificates
occurs.

     "Related Proceeds" means related recoveries on the mortgage loans,
including amounts received under any form of credit support, for which advances
were made.

     "REMIC Certificates" means a certificate issued by a trust fund relating to
a series of certificates where an election is made to treat the trust fund as a
REMIC.

     "REMIC Provisions" means provisions of the federal income tax law relating
to real estate mortgage investment conduits, which appear at Section 860A
through 860G of Subchapter M of Chapter 1 of the Internal Revenue Code of 1986,
as amended from time to time, and related provisions, and regulations (including
any proposed regulations) and rulings promulgated thereunder, as the foregoing
may be in effect from time to time.

     "REMIC Regular Certificates" means REMIC Certificates issued by the trust
fund that qualify as REMIC Certificates and are considered to be regular
interests.

     "REMIC Regular Certificateholders" means holders of REMIC and Regular
Certificates.

     "REMIC Regulations" means the REMIC Regulations promulgated by the Treasury
Department.

     "REMIC Residual Certificate" means the sole class of residual interests in
the REMIC.

     "REMIC Residual Certificateholders" means holders of the REMIC Regular
Certificates.

     "REO Tax" means a tax on net income from foreclosure property, within the
meaning of Internal Revenue Code Section 857(b)(4)(B).

     "Restricted Group" means the underwriter, the asset seller, the trustee,
the master servicer, any insurer of the mortgage loans and mortgage-backed
securities, any borrower whose obligations under one or more mortgage loans
constitute more than 5% of the aggregate unamortized principal balance of the
assets in the trust, any swap counterparty of a permitted swap or notional
principal contract included in the trust, or any of their respective affiliates.

     "RICO" means the Racketeer Influenced and Corrupt Organizations statute.

     "Servicing Standard" means:

     o    the standard for servicing the servicer must follow as defined by the
          terms of the related pooling and servicing agreement and any related
          hazard, business interruption, rental interruption or general
          liability insurance policy or instrument of credit support included in
          the related trust fund as described in this prospectus under
          "Description of Credit Support" and in the prospectus supplement;

     o    applicable law; and

     o    the general servicing standard specified in the related prospectus
          supplement or, if no such standard is so specified, its normal
          servicing practices.

     "SMMEA" means the Secondary Mortgage Market Enhancement Act of 1984, as
amended.

     "Stripped ARM Obligations" means original issue discount on grantor trust
certificates attributable to adjustable rate loans.

     "Stripped Bond Certificates" means a class of grantor trust certificates
that represents the right to principal and interest, or principal only, on all
or a portion of the mortgage loans and mortgage-backed securities, if a trust
fund is created with two classes of grantor trust certificates.


                                       123



     "Stripped Coupon Certificates" means a class of grantor trust certificates
that represents the right to some or all of the interest on a portion of the
mortgage loans and mortgage-backed securities, if a trust fund is created with
two classes of grantor trust certificates.

     "Stripped Interest Certificates" means certificates which are entitled to
interest distributions with disproportionately low, nominal or no principal
distributions.

     "Stripped Principal Certificates" means certificates which are entitled to
principal distributions with disproportionately low, or no interest
distributions.

     "Super-Premium Certificates" means certain REMIC Regular Certificates to be
issued at prices significantly exceeding their principal amounts or based on
notional principal balances.

     "Title V" means Title V of the depository Institutions Deregulation and
Monetary Control Act of 1980.

     "U.S. Person" means a citizen or resident of the United States, a
corporation or a partnership organized in or under the laws of the United States
or any political subdivision thereof (other than a partnership that is not
treated as a U.S. Person under any applicable Treasury regulations), an estate
the income of which from sources outside the United States is included in gross
income for federal income tax purposes regardless of its connection with the
conduct of a trade or business within the United States or a trust if a court
within the United States is able to exercise primary supervision of the
administration of the trust and one or more U.S. Persons have the authority to
control all substantial decisions of the trust. In addition, certain trusts
treated as U.S. Persons before August 20, 1996 may elect to continue to be so
treated to the extent provided in regulations.

     "Value" means:

     o    with respect to any mortgaged property other than a mortgaged property
          securing a refinance loan, generally the lesser of

          o    the appraised value determined in an appraisal obtained by the
               originator at origination of that loan, and

          o    the sales price for that property; and

     o    with respect to any refinance loan, unless otherwise specified in the
          related prospectus supplement, the appraised value determined in an
          appraisal obtained at the time of origination of the refinance loan.


                                       124



















                      [THIS PAGE INTENTIONALLY LEFT BLANK]




















                      [THIS PAGE INTENTIONALLY LEFT BLANK]