PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED MARCH 14, 2006)


                                  $646,024,100
                                 (APPROXIMATE)

                  MORGAN STANLEY MORTGAGE LOAN TRUST 2006-9AR
                                (ISSUING ENTITY)

              MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2006-9AR

                         MORGAN STANLEY CAPITAL I INC.
                                  (DEPOSITOR)


                      MORGAN STANLEY MORTGAGE CAPITAL INC.
                              (SPONSOR AND SELLER)


                     WELLS FARGO BANK, NATIONAL ASSOCIATION
                               (MASTER SERVICER)

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

MORGAN STANLEY MORTGAGE LOAN TRUST 2006-9AR IS ISSUING EIGHTEEN CLASSES OF
CERTIFICATES, BUT IS OFFERING ONLY SIXTEEN OF THESE CLASSES OF CERTIFICATES
THROUGH THIS PROSPECTUS SUPPLEMENT.

EACH CLASS OF CERTIFICATES WILL RECEIVE MONTHLY DISTRIBUTIONS OF INTEREST,
PRINCIPAL OR BOTH, COMMENCING AUGUST 25, 2006.

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

YOU SHOULD READ THE SECTION ENTITLED "RISK FACTORS" STARTING ON PAGE S-13 OF
THIS PROSPECTUS SUPPLEMENT AND PAGE 6 OF THE ACCOMPANYING PROSPECTUS AND
CONSIDER THESE FACTORS BEFORE MAKING A DECISION TO INVEST IN THE CERTIFICATES.

THE CERTIFICATES REPRESENT INTERESTS IN THE ASSETS OF THE ISSUING ENTITY 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.

THIS PROSPECTUS SUPPLEMENT MAY BE USED TO OFFER AND SELL THE OFFERED
CERTIFICATES ONLY IF ACCOMPANIED BY THE PROSPECTUS.

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

THE ASSETS OF THE ISSUING ENTITY--

o    THE ASSETS OF THE ISSUING ENTITY WILL CONSIST PRIMARILY OF ONE LOAN GROUP
     OF ADJUSTABLE-RATE AND HYBRID ADJUSTABLE-RATE MORTGAGE LOANS WHICH ARE
     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
     ISSUING ENTITY, AS DESCRIBED IN THIS PROSPECTUS SUPPLEMENT.

CREDIT ENHANCEMENT--

o    SUBORDINATION, EXCESS INTEREST AND OVERCOLLATERALIZATION AS DESCRIBED IN
     THIS PROSPECTUS SUPPLEMENT.

INTEREST ENHANCEMENT--

o    AN INTEREST RATE SWAP AGREEMENT AS DESCRIBED IN THIS PROSPECTUS SUPPLEMENT.

     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 100.00% 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 $700,000. 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 JULY 31, 2006.

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

                                 MORGAN STANLEY

July 26, 2006




   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
2006-9AR in any state or other jurisdiction 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.

      In this prospectus supplement, the terms "depositor," "we," "us" and "our"
refer to Morgan Stanley Capital I Inc.

      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;


                                       iii



      (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

      (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.


                                       iv





                                            THE SERIES 2006-9AR CERTIFICATES

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

Class A-1.............   $180,500,000   Floating Rate   Senior        Distribution     Actual/360 (6)      AAA         Aaa
                                          (3),(4)                     Date to
                                                                      Distribution
                                                                      Date (5)
Class A-2.............   $146,000,000   Floating Rate   Senior,       Distribution     Actual/360 (6)      AAA         Aaa
                                          (3),(7)      Sequential     Date to
                                                                      Distribution
                                                                      Date (5)
Class A-3.............   $109,600,000   Floating Rate   Senior,       Distribution     Actual/360 (6)      AAA         Aaa
                                          (3),(8)      Sequential     Date to
                                                                      Distribution
                                                                      Date (5)
Class A-4.............    $70,200,000   Floating Rate   Senior,       Distribution     Actual/360 (6)      AAA         Aaa
                                          (3),(9)      Sequential     Date to
                                                                      Distribution
                                                                      Date (5)
Class A-5.............    $39,315,000   Floating Rate   Senior,       Distribution     Actual/360 (6)      AAA         Aaa
                                          (3),(10)     Sequential     Date to
                                                                      Distribution
                                                                      Date (5)
Class A-6.............    $60,624,000   Floating Rate   Senior        Distribution     Actual/360 (6)      AAA         Aaa
                                          (3),(11)                    Date to
                                                                      Distribution
                                                                      Date (5)
Class M-1.............     $8,153,000   Floating Rate   Subordinate   Distribution     Actual/360 (6)      AA+         Aa1
                                          (3),(12)                    Date to
                                                                      Distribution
                                                                      Date (5)
Class M-2.............     $8,152,000   Floating Rate   Subordinate   Distribution     Actual/360 (6)      AA+         Aa2
                                          (3),(13)                    Date to
                                                                      Distribution
                                                                      Date (5)
Class M-3.............     $4,892,000   Floating Rate   Subordinate   Distribution     Actual/360 (6)       AA         Aa3
                                          (3),(14)                    Date to
                                                                      Distribution
                                                                      Date (5)
Class M-4.............     $3,913,000   Floating Rate   Subordinate   Distribution     Actual/360 (6)       AA         A1
                                          (3),(15)                    Date to
                                                                      Distribution
                                                                      Date (5)
Class M-5.............     $3,914,000   Floating Rate   Subordinate   Distribution     Actual/360 (6)       AA         A2
                                          (3),(16)                    Date to
                                                                      Distribution
                                                                      Date (5)
Class M-6.............     $2,609,000   Floating Rate   Subordinate   Distribution     Actual/360 (6)      AA-         A3
                                          (3),(17)                    Date to
                                                                      Distribution
                                                                      Date (5)
Class B-1.............     $2,608,000   Floating Rate   Subordinate   Distribution     Actual/360 (6)       A         Baa1
                                          (3),(18)                    Date to
                                                                      Distribution
                                                                      Date (5)
Class B-2.............     $2,283,000   Floating Rate   Subordinate   Distribution     Actual/360 (6)       A         Baa2
                                          (3),(19)                    Date to
                                                                      Distribution
                                                                      Date (5)
Class B-3.............     $3,261,000   Floating Rate   Subordinate   Distribution     Actual/360 (6)      BBB+       Baa3
                                          (3), (20)                   Date to
                                                                      Distribution
                                                                      Date (5)
Class A-R.............           $100   Variable (21)   Senior,       Calendar month   30/360 (23)         AAA         Aaa
                                                        Residual      (22)

NON-OFFERED CERTIFICATES
Class OC..............            (24)       N/A        Subordinate   N/A              N/A                 (25)       (25)
Class P...............         $1,000     N/A (26)          N/A       N/A              N/A                 (25)       (25)



(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 certificates do not address the likelihood that any prepayment
      interest shortfalls, relief act interest shortfalls, or basis risk carry
      forward amounts, each as described in this prospectus supplement, will be
      paid to certificateholders.


                                        v



(3)   The pass-through rate for each class of certificates will be subject to
      the weighted average adjusted net rate of the mortgage loans, minus any
      net payments payable to the swap counterparty (the "Net WAC Cap") as
      described in this prospectus supplement under "Description of the
      Certificates--Glossary" and "--Interest Distributions on the
      Certificates." The "Optional Termination Date" for the certificates is the
      first distribution date on which the aggregate stated principal balance of
      the mortgage loans is less than or equal to 10% of the aggregate stated
      principal balance of the mortgage loans as of the cut-off date.

(4)   The pass-through rate for the Class A-1 Certificates for the interest
      accrual period related to any distribution date on or prior to the first
      related Optional Termination Date will be a per annum rate equal to the
      lesser of (i) one-month LIBOR + 0.17% and (ii) the Net WAC Cap. Beginning
      with the interest accrual period related to the distribution date
      immediately following the first related Optional Termination Date, the
      pass-through rate for the Class A-1 Certificates will be a per annum rate
      equal to the lesser of (i) one-month LIBOR + 0.34% and (ii) the Net WAC
      Cap.

(5)   For the August 2006 distribution date, the interest accrual period for
      this class of certificates will be the period commencing on the closing
      date and ending on the day immediately preceding that distribution date.
      For any distribution date thereafter, the interest accrual period for this
      class of certificates will be the period commencing on the distribution
      date in the prior calendar month and ending on the day immediately
      preceding that distribution date.

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

(7)   The pass-through rate for the Class A-2 Certificates for the interest
      accrual period related to any distribution date on or prior to the first
      related Optional Termination Date will be a per annum rate equal to the
      lesser of (i) one-month LIBOR + 0.15% and (ii) the Net WAC Cap. Beginning
      with the interest accrual period related to the distribution date
      immediately following the first related Optional Termination Date, the
      pass-through rate for the Class A-2 Certificates will be a per annum rate
      equal to the lesser of (i) one-month LIBOR +0.30% and (ii) the Net WAC
      Cap.

(8)   The pass-through rate for the Class A-3 Certificates for the interest
      accrual period related to any distribution date on or prior to the first
      related Optional Termination Date will be a per annum rate equal to the
      lesser of (i) one-month LIBOR + 0.09% and (ii) the Net WAC Cap. Beginning
      with the interest accrual period related to the distribution date
      immediately following the first related Optional Termination Date, the
      pass-through rate for the Class A-3 Certificates will be a per annum rate
      equal to the lesser of (i) one-month LIBOR + 0.18% and (ii) the Net WAC
      Cap.

(9)   The pass-through rate for the Class A-4 Certificates for the interest
      accrual period related to any distribution date on or prior to the first
      related Optional Termination Date will be a per annum rate equal to the
      lesser of (i) one-month LIBOR +0.16% and (ii) the Net WAC Cap. Beginning
      with the interest accrual period related to the distribution date
      immediately following the first related Optional Termination Date, the
      pass-through rate for the Class A-4 Certificates will be a per annum rate
      equal to the lesser of (i) one-month LIBOR + 0.32% and (ii) the Net WAC
      Cap.

(10)  The pass-through rate for the Class A-5 Certificates for the interest
      accrual period related to any distribution date on or prior to the first
      related Optional Termination Date will be a per annum rate equal to the
      lesser of (i) one-month LIBOR + 0.26% and (ii) the Net WAC Cap. Beginning
      with the interest accrual period related to the distribution date
      immediately following the first related Optional Termination Date, the
      pass-through rate for the Class A-5 Certificates will be a per annum rate
      equal to the lesser of (i) one-month LIBOR +0.52% and (ii) the Net WAC
      Cap.

(11)  The pass-through rate for the Class A-6 Certificates for the interest
      accrual period related to any distribution date on or prior to the first
      related Optional Termination Date will be a per annum rate equal to the
      lesser of (i) one-month LIBOR + 0.24% and (ii) the Net WAC Cap. Beginning
      with the interest accrual period related to the distribution date
      immediately following the first related Optional Termination Date, the
      pass-through rate for the Class A-6 Certificates will be a per annum rate
      equal to the lesser of (i) one-month LIBOR +0.48% and (ii) the Net WAC
      Cap.

(12)  The pass-through rate for the Class M-1 Certificates for the interest
      accrual period related to any distribution date on or prior to the first
      related Optional Termination Date will be a per annum rate equal to the
      lesser of (i) one-month LIBOR + 0.30% and (ii) the Net WAC Cap. Beginning
      with the interest accrual period related to the distribution date
      immediately following the first related Optional Termination Date, the
      pass-through rate for the Class M-1 Certificates will be a per annum rate
      equal to the lesser of (i) one-month LIBOR + 0.45% and (ii) the Net WAC
      Cap.

(13)  The pass-through rate for the Class M-2 Certificates for the interest
      accrual period related to any distribution date on or prior to the first
      related Optional Termination Date will be a per annum rate equal to the
      lesser of (i) one-month LIBOR + 0.32% and (ii) the Net WAC Cap. Beginning
      with the interest accrual period related to the distribution date
      immediately following the first related Optional Termination Date, the
      pass-through rate for the Class M-2 Certificates will be a per annum rate
      equal to the lesser of (i) one-month LIBOR + 0.48% and (ii) the Net WAC
      Cap.

(14)  The pass-through rate for the Class M-3 Certificates for the interest
      accrual period related to any distribution date on or prior to the first
      related Optional Termination Date will be a per annum rate equal to the
      lesser of (i) one-month LIBOR + 0.34% and (ii) the Net WAC Cap. Beginning
      with the interest accrual period related to the distribution date
      immediately following the first related Optional Termination Date, the
      pass-through rate for the Class M-3 Certificates will be a per annum rate
      equal to the lesser of (i) one-month LIBOR + 0.51% and (ii) the Net WAC
      Cap.

(15)  The pass-through rate for the Class M-4 Certificates for the interest
      accrual period related to any distribution date on or prior to the first
      related Optional Termination Date will be a per annum rate equal to the
      lesser of (i) one-month LIBOR + 0.40% and (ii) the Net WAC Cap. Beginning
      with the interest accrual period related to the distribution date
      immediately following the first related Optional Termination Date, the
      pass-through rate for the Class M-4 Certificates will be a per annum rate
      equal to the lesser of (i) one-month LIBOR + 0.60% and (ii) the Net WAC
      Cap.


                                       vi



(16)  The pass-through rate for the Class M-5 Certificates for the interest
      accrual period related to any distribution date on or prior to the first
      related Optional Termination Date will be a per annum rate equal to the
      lesser of (i) one-month LIBOR + 0.42% and (ii) the Net WAC Cap. Beginning
      with the interest accrual period related to the distribution date
      immediately following the first related Optional Termination Date, the
      pass-through rate for the Class M-5 Certificates will be a per annum rate
      equal to the lesser of (i) one-month LIBOR + 0.63% and (ii) the Net WAC
      Cap.

(17)  The pass-through rate for the Class M-6 Certificates for the interest
      accrual period related to any distribution date on or prior to the first
      related Optional Termination Date will be a per annum rate equal to the
      lesser of (i) one-month LIBOR + 0.50% and (ii) the Net WAC Cap. Beginning
      with the interest accrual period related to the distribution date
      immediately following the first related Optional Termination Date, the
      pass-through rate for the Class M-6 Certificates will be a per annum rate
      equal to the lesser of (i) one-month LIBOR + 0.75% and (ii) the Net WAC
      Cap.

(18)  The pass-through rate for the Class B-1 Certificates for the interest
      accrual period related to any distribution date on or prior to the first
      related Optional Termination Date will be a per annum rate equal to the
      lesser of (i) one-month LIBOR + 1.00% and (ii) the Net WAC Cap. Beginning
      with the interest accrual period related to the distribution date
      immediately following the first related Optional Termination Date, the
      pass-through rate for the Class B-1 Certificates will be a per annum rate
      equal to the lesser of (i) one-month LIBOR + 1.50% and (ii) the Net WAC
      Cap.

(19)  The pass-through rate for the Class B-2 Certificates for the interest
      accrual period related to any distribution date on or prior to the first
      related Optional Termination Date will be a per annum rate equal to the
      lesser of (i) one-month LIBOR + 1.20% and (ii) the Net WAC Cap. Beginning
      with the interest accrual period related to the distribution date
      immediately following the first related Optional Termination Date, the
      pass-through rate for the Class B-2 Certificates will be a per annum rate
      equal to the lesser of (i) one-month LIBOR + 1.80% and (ii) the Net WAC
      Cap.

(20)  The pass-through rate for the Class B-3 Certificates for the interest
      accrual period related to any distribution date on or prior to the first
      related Optional Termination Date will be a per annum rate equal to the
      lesser of (i) one-month LIBOR + 2.20% and (ii) the Net WAC Cap. Beginning
      with the interest accrual period related to the distribution date
      immediately following the first related Optional Termination Date, the
      pass-through rate for the Class B-3 Certificates will be a per annum rate
      equal to the lesser of (i) one-month LIBOR + 3.30% and (ii) the Net WAC
      Cap.

(21)  The pass-through rate for the Class A-R Certificates for any distribution
      date will be a per annum rate equal to the weighted average net mortgage
      rate on the mortgage loans. The pass-through rate for the Class A-R
      Certificates for the first distribution date will be a per annum rate of
      approximately 6.96302%.

(22)  The interest accrual period for this class of certificates and any
      distribution date will be the calendar month before the month of that
      distribution date.

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

(24)  The class principal balance of the Class OC Certificates for any
      distribution date will be equal to the aggregate stated principal balance
      of the mortgage loans minus the aggregate class principal balance of the
      certificates (other than the Class A-R and Class P Certificates) as of
      that distribution date. As of the closing date, the class principal
      balance of the Class OC Certificates is expected to equal approximately
      $6,196,892. The Class OC Certificates are not entitled to receive any
      distributions of interest.

(25)  The depositor has not requested that this class of certificates be rated
      by this rating agency.

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


                                       vii



                          TRANSACTION PARTIES OVERVIEW

The following diagram illustrates the various parties involved in this
transaction and their respective functions:




                                  -------------------                      ------------------------
                                  First National Bank                      Originators of less than
                                       of Nevada                             10% of the Mortgage
                                     (Originator)                                   Loans
                                  -------------------                      ------------------------
                                        ^                                                ^
                                        |                                                |
                                        --------------------------------------------------
                                                          |             ^
                                           Mortgage Loans |             | $
                                                          V             |
                                              -------------------------------------
                                               Morgan Stanley Mortgage Capital Inc.
                                                     (Originator and Sponsor)
                                              -------------------------------------
                                                                |
                                                       Mortgage |
                                                          Loans |
                                                                V
   ----------------------                     -------------------------------------
   Morgan Stanley Capital                          Morgan Stanley Capital I Inc.                              ---------------------
       Services Inc.                                        (Depositor)                                       LaSalle Bank National
    (Swap Counterparty)                       -------------------------------------                     |--->      Association
   ----------------------                       |                        ^                              |          (Custodian)
Net Swap Receipts   |  ^ Net Swap               | Mortgage Loans         |                              |     ---------------------
to the Certificates |  | Payments               |                        | Certificates                 |
                    |  | to the                 V                        |                              |
                    |  | Swap Counterparty  -------------------------------------------                 |
                    |   ------------------- Morgan Stanley Mortgage Loan Trust 2006-9AR  Custody of     |
                    |                                    (Issuing Entity)                mortgage loan  |
                     --------------------->      LaSalle Bank National Association       files          |     ---------------------
                                                             (Trustee)                 <----------------|       J.P. Morgan Trust
                                                                                                        |         Company, N.A.
                                                                                              |-------->|--->      (Custodian)
                                  |------->                                                   |               ---------------------
            Master Servicer pays  |         -------------------------------------------       |
              Trustee fee out of  |                     |         ^                           |
                master servicing  |  Master Servicing   |         | Master Servicing and      |  Master Servicer pays
                    compensation  |      Compensation   |         | Securities Administration |  Custodians fees out
                                  |                     V         |                           |  of master servicing
                                  |        ----------------------------------------------     |  compensation
                                  |-------             Wells Fargo Bank, N.A.                 |
                                           (Master Servicer and Securities Administrator) ----
                                           ----------------------------------------------
       Servicing Fee (payable out of              |                                 ^    Primary Mortgage
       interest paid on the mortgage loans)       V                                 |    Loan Servicing
         ------------------------------------------------------------------------------------------------------
         |                                                      |                                             |
         V                                                      V                                             V
   -------------                                        -----------------                             -----------------
   GMAC Mortgage                                         The Hemisphere                               Wachovia Mortgage
    Corporation                                           National Bank                                  Corporation
    (Servicer)                                             (Servicer)                                    (Servicer)
   -------------                                        -----------------                             -----------------





                                              TABLE OF CONTENTS

                                            PROSPECTUS SUPPLEMENT



SUMMARY..................................................................................................S-1
RISK FACTORS............................................................................................S-13
      Certificates May Not Be Appropriate for Individual Investors......................................S-13
      Credit Enhancement May Not Be Adequate............................................................S-14
      There Are Risks Involving Unpredictability of Prepayments and the Effect of Prepayments on
           Yields.......................................................................................S-16
      Your Yield Will Be Affected By The Interest-Only Feature Of Some Of The Mortgage Loans............S-17
      Your Yield May Be Affected By Changes In Interest Rates...........................................S-17
      Your Yield Will Be Affected By How Mortgage Loan Interest Rate Adjustments Are Limited............S-18
      The Pass-Through Rates on the Certificates Are Subject to a Weighted Average Net Rate Cap and
           Are Sensitive to One-Month LIBOR.............................................................S-18
      The Swap Agreement will be Subject to Counterparty Risk...........................................S-19
      High Balance Mortgage Loans Pose Special Risks....................................................S-19
      High Loan-To-Value Ratios Increase Risk of Loss...................................................S-20
      Payments in Full of a Balloon Loan Depend on the Borrower's Ability to Refinance the Balloon
           Loan or Sell the Mortgaged Property..........................................................S-20
      Inadequacy of Value of Properties Could Affect Severity of Losses.................................S-20
      Bankruptcy of Borrowers May Adversely Affect Distributions on the Certificates....................S-20
      There Are Risks in Holding Subordinated Certificates..............................................S-21
      Excess Interest from the Mortgage Loans May Not Provide Adequate Credit Enhancement to the
           Certificates.................................................................................S-21
      Geographic Concentration Could Increase Losses on The Mortgage Loans..............................S-22
      Hurricane Katrina And Its Aftermath May Pose Special Risks........................................S-23
      Recourse on Defective Mortgage Loans Is Limited; Limited Recourse.................................S-23
      Bankruptcy or Insolvency May Affect the Timing and Amount of Distributions on the
           Certificates.................................................................................S-23
      You Could be Adversely Affected by Violations of Consumer Protection Laws.........................S-24
      Failure of Servicers and Master Servicer to Perform May Adversely Affect Distributions on
           Certificates.................................................................................S-24
      The Servicing Compensation May Be Insufficient To Engage Replacement Servicers or Master
           Servicer.....................................................................................S-25
      Your Yield May be Affected if There is a Transfer of Servicing of Certain Mortgage Loans..........S-25
      Limited Liquidity May Adversely Affect Market Value of Certificates...............................S-25
      Rights of Beneficial Owners May Be Limited by Book-Entry System...................................S-25
      Military Action and Terrorist Attacks.............................................................S-26
      Risks Related to the Class A-R Certificates.......................................................S-26
FORWARD-LOOKING STATEMENTS..............................................................................S-27
DESCRIPTION OF THE MORTGAGE LOANS.......................................................................S-27
      General...........................................................................................S-27
      Tabular Characteristics of the Mortgage Loans.....................................................S-32
      Assignment of the Mortgage Loans; Representations and Warranties Relating to the Mortgage
           Loans........................................................................................S-39
      Loan Purchasing Guidelines and/or Underwriting Standards..........................................S-41
      Loan Purchasing Guidelines - Morgan Stanley Mortgage Capital Inc..................................S-41
THE SERVICERS...........................................................................................S-42
           General......................................................................................S-42
      GMAC Mortgage Corporation.........................................................................S-42
SERVICING OF THE MORTGAGE LOANS.........................................................................S-44
      Servicing and Collection Procedures...............................................................S-44
      Servicing Compensation and Payment of Expenses; Master Servicing Compensation; Administrative
           Fees.........................................................................................S-46
      Adjustment to Servicing Fees in Connection with Certain Prepaid Mortgage Loans....................S-50
           Advances.....................................................................................S-50
      Evidence as to Compliance.........................................................................S-50
      Master Servicer Default; Servicer Default.........................................................S-51
      Resignation of the Master Servicer or a Servicer; Assignment and Merger...........................S-52
      Eligibility Requirements for Trustee and Securities Administrator; Resignation



                                       ix





           and Removal of Trustee or Securities Administrator...........................................S-52
      Seller's Retention of Servicing Rights............................................................S-53
THE SPONSOR.............................................................................................S-53
STATIC POOL INFORMATION.................................................................................S-54
THE DEPOSITOR...........................................................................................S-55
THE ISSUING ENTITY......................................................................................S-55
THE TRUSTEE.............................................................................................S-56
THE MASTER SERVICER AND SECURITIES ADMINISTRATOR........................................................S-57
THE CUSTODIANS..........................................................................................S-58
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..........................................................S-58
DESCRIPTION OF THE CERTIFICATES.........................................................................S-58
      General...........................................................................................S-58
      Senior Certificates...............................................................................S-58
      Subordinated Certificates.........................................................................S-59
      Class P Certificates..............................................................................S-59
      Designations......................................................................................S-60
      Forms and Denominations of Offered Certificates; Distributions to Certificates....................S-61
      Book-Entry Certificates...........................................................................S-62
      Physical Certificates.............................................................................S-64
      Calculation of One-Month LIBOR....................................................................S-64
      Payments on Mortgage Loans; Accounts..............................................................S-65
      Investments of Amounts Held in Accounts...........................................................S-65
      Priority of Distributions Among Certificates......................................................S-66
      Priority of Distributions.........................................................................S-68
      Glossary..........................................................................................S-69
      Interest Distributions on the Certificates........................................................S-78
      Principal Distributions on the Certificates.......................................................S-78
      Allocation of Principal Payments to Class A Certificates..........................................S-80
      Net Monthly Excess Cashflow and Overcollateralization Provisions on the Certificates..............S-81
      The Swap Account..................................................................................S-82
      The Swap Agreement................................................................................S-84
      Description of the Swap Counterparty..............................................................S-87
      Subordination and Allocation of Losses on the Certificates........................................S-87
      Residual Certificates.............................................................................S-88
      Reports to Certificateholders.....................................................................S-88
      Last Scheduled Distribution Date..................................................................S-91
      Structuring Assumptions...........................................................................S-91
      Depositor's Option to Purchase Breached Mortgage Loans............................................S-97
      Auction and Optional Termination of the Certificates..............................................S-97
      Voting Rights.....................................................................................S-98
      Amendment.........................................................................................S-98
      Certain Matters Regarding the Depositor, the Master Servicer, the Securities Administrator,
           the Servicers, the Custodians and the Trustee................................................S-99
YIELD, PREPAYMENT AND WEIGHTED AVERAGE LIFE............................................................S-100
      General .........................................................................................S-100
      Prepayment Considerations and Risks .............................................................S-100
      Overcollateralization ...........................................................................S-101
      Interest Shortfalls and Realized Losses .........................................................S-102
      Pass-Through Rates ..............................................................................S-103
      Weighted Average Lives of the Offered Certificates ..............................................S-103
      Decrement Tables ................................................................................S-104
      Hypothetical Available Funds and Supplemental Interest Rate Cap Table for the Certificates ......S-109
USE OF PROCEEDS .......................................................................................S-115
MATERIAL FEDERAL INCOME TAX CONSEQUENCES ..............................................................S-115
      General .........................................................................................S-115
      Taxation of Regular Certificates ................................................................S-116
      The Class A-R Certificates ......................................................................S-118
OTHER TAXES ...........................................................................................S-118
ERISA MATTERS .........................................................................................S-118
METHOD OF DISTRIBUTION ................................................................................S-122
LEGAL MATTERS .........................................................................................S-122
RATINGS ...............................................................................................S-122
INDEX OF CERTAIN DEFINITIONS ..........................................................................S-124
ANNEX I GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES ...................................I-1
ANNEX II SWAP AGREEMENT SCHEDULE .......................................................................II-1



                                        x





                                              TABLE OF CONTENTS
                                                  PROSPECTUS

SUMMARY OF PROSPECTUS......................................................................................1
RISK FACTORS...............................................................................................6
DESCRIPTION OF THE TRUST FUNDS............................................................................29
      Assets..............................................................................................29
      Mortgage Loans......................................................................................29
      Mortgage-Backed Securities..........................................................................31
      Government Securities...............................................................................32
      Accounts............................................................................................33
      Credit Support......................................................................................33
      Cash Flow Agreements and Derivatives................................................................33
USE OF PROCEEDS...........................................................................................35
YIELD CONSIDERATIONS......................................................................................35
      General.............................................................................................35
      Pass-Through Rate...................................................................................35
      Timing of Payment of Interest.......................................................................35
      Payments of Principal; Prepayments..................................................................36
      Prepayments, Maturity and Weighted Average Life.....................................................37
      Other Factors Affecting Weighted Average Life.......................................................38
THE DEPOSITOR.............................................................................................39
THE SPONSOR...............................................................................................40
STATIC POOL INFORMATION...................................................................................40
ISSUING ENTITY............................................................................................40
DESCRIPTION OF THE CERTIFICATES...........................................................................40
      General.............................................................................................40
      Categories of Classes of Certificates...............................................................41
      Indices Applicable to Floating Rate and Inverse Floating Rate Classes...............................43
      LIBOR ..............................................................................................43
      COFI ...............................................................................................44
      Treasury Index......................................................................................46
      Prime Rate..........................................................................................46
      Distributions.......................................................................................46
      Available Distribution Amount.......................................................................47
      Distributions of Interest on the Certificates.......................................................47
      Distributions of Principal of the Certificates......................................................48
      Components..........................................................................................48
      Distributions on the Certificates of Prepayment Premiums............................................48
      Allocation of Losses and Shortfalls.................................................................48
      Advances in Respect of Delinquencies................................................................49
      Reports to Certificateholders.......................................................................49
      Termination.........................................................................................52
      Book-Entry Registration and Definitive Certificates.................................................52
DESCRIPTION OF THE AGREEMENTS.............................................................................56
      Assignment of Assets; Repurchases...................................................................56
      Representations and Warranties; Repurchases.........................................................58
      Certificate Account and Other Collection Accounts...................................................59
      Pre-Funding Account.................................................................................62
      Collection and Other Servicing Procedures...........................................................63
      Subservicers........................................................................................64
      Realization Upon Defaulted Mortgage Loans...........................................................64
      Hazard Insurance Policies...........................................................................66
      Fidelity Bonds and Errors and Omissions Insurance...................................................68
      Due-on-Sale Provisions..............................................................................68
      Retained Interest; Servicing Compensation and Payment of Expenses...................................68
      Evidence as to Compliance...........................................................................69
      Matters Regarding a Master Servicer and the Depositor...............................................69
      Events of Default...................................................................................71
      Rights Upon Event of Default........................................................................71
      Amendment...........................................................................................72
      The Trustee.........................................................................................73
      Duties of the Trustee...............................................................................73
      Matters Regarding the Trustee.......................................................................73
      Resignation and Removal of the Trustee..............................................................74
DESCRIPTION OF CREDIT SUPPORT.............................................................................74
      General.............................................................................................74
      Subordinate Certificates............................................................................75
      Cross-Support Provisions............................................................................75
      Insurance or Guarantees for the Mortgage Loans......................................................75
      Letter of Credit....................................................................................75
      Insurance Policies and Surety Bonds.................................................................76
      Reserve Funds.......................................................................................76
      Derivative Products.................................................................................76
      Credit Support for Mortgage-Backed Securities.......................................................76
LEGAL ASPECTS OF MORTGAGE LOANS...........................................................................77
      General.............................................................................................77
      Types of Mortgage Instruments.......................................................................77
      Interest in Real Property...........................................................................78
      Cooperative Loans...................................................................................78
      Foreclosure.........................................................................................79
      Junior Mortgages....................................................................................83
      Anti-Deficiency Legislation and Other Limitations on Lenders........................................83
      Environmental Legislation...........................................................................84
      Due-on-Sale Clauses.................................................................................84
      Prepayment Charges..................................................................................85
      Subordinate Financing...............................................................................85
      Applicability of Usury Laws.........................................................................85
      Alternative Mortgage Instruments....................................................................86
      Servicemembers' Civil Relief Act....................................................................87
      Forfeiture for Drug, RICO and Money Laundering Violations...........................................87
FEDERAL INCOME TAX CONSEQUENCES...........................................................................88
      General.............................................................................................88
      Grantor Trust Funds.................................................................................88
      a. Single Class of Grantor Trust Certificates.......................................................88



                                       xi





      b. Multiple Classes of Grantor Trust Certificates...................................................92
      c. Sale or Exchange of a Grantor Trust Certificate .................................................95
      d. Non-U.S. Persons.................................................................................96
      e. Information Reporting and Backup Withholding.....................................................96
      REMICS..............................................................................................97
      a. Taxation of Owners of REMIC Regular Certificates.................................................99
      b. Taxation of Owners of REMIC Residual Certificates...............................................108
      Prohibited Transactions and Other Taxes............................................................112
      Liquidation and Termination........................................................................113
      Administrative Matters.............................................................................113
      Tax-Exempt Investors...............................................................................113
      Residual Certificate Payments - Non-U.S. Persons...................................................114
      Tax Related Restrictions on Transfers of REMIC Residual Certificates...............................114
      Reportable Transactions............................................................................117
STATE TAX CONSIDERATIONS.................................................................................117
ERISA CONSIDERATIONS.....................................................................................117
      General............................................................................................117
      Prohibited Transactions............................................................................117
      Review by Plan Fiduciaries.........................................................................121
LEGAL INVESTMENT.........................................................................................121
PLAN OF DISTRIBUTION.....................................................................................123
LEGAL MATTERS............................................................................................124
FINANCIAL INFORMATION....................................................................................124
RATING...................................................................................................124
INCORPORATION OF INFORMATION BY REFERENCE................................................................125
GLOSSARY OF TERMS........................................................................................126



                                       xii



                                     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.

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



RELEVANT PARTIES

                                     See "Transaction Parties Overview" in this prospectus supplement for
                                     a diagram that illustrates the various parties involved in the
                                     transaction and their functions.

   Issuing Entity.................   Morgan Stanley Mortgage Loan Trust 2006-9AR.  The issuing entity 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 LaSalle Bank National Association, as trustee.
                                     The issuing entity will be a common law trust formed under the laws
                                     of the State of New York.

   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 this
                                     prospectus supplement and in the accompanying prospectus.

   Sponsor and Seller.............   Morgan Stanley Mortgage Capital Inc., a New York corporation.  The
                                     sponsor and seller is an affiliate of the depositor, of Morgan
                                     Stanley & Co. Incorporated, the underwriter, and of the swap
                                     counterparty.  The sponsor's and 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; Representations and
                                     Warranties Relating to the Mortgage Loans" and "The Sponsor" 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" and "The
                                     Master Servicer and Securities Administrator" in this prospectus
                                     supplement.



                                       S-1





   Originators....................   The sponsor previously acquired the mortgage loans from various
                                     qualified correspondent lenders, other mortgage loan sellers who
                                     originated less than 10% of the mortgage loans and the following
                                     originator which originated 10% or more of the mortgage loans:

                                     o   First National Bank of Nevada
                                         17600 North Perimeter Drive
                                         Scottsdale, Arizona 85255

                                     On the closing date, the sponsor will sell all of its interest in the
                                     mortgage loans (other than the servicing rights on the mortgage loans
                                     serviced by GMAC Mortgage Corporation) to the depositor.

   Servicers......................   The following entities will initially act as the direct servicers of
                                     the mortgage loans:

                                     o   GMAC Mortgage Corporation
                                         100 Witmer Road
                                         Horsham, Pennsylvania 19044

                                     See "The Servicers--GMAC Mortgage Corporation" in this prospectus
                                     supplement.

                                     o   The Hemisphere National Bank
                                         8600 N. W. 36th Street, Suite 800
                                         Miami, Florida 33166

                                     o   Wachovia Mortgage Corporation
                                         1100 Corporate Center Drive
                                         Raleigh, North Carolina 27607

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

   Trustee........................   LaSalle Bank National Association having an address at 135 South
                                     LaSalle Street, Suite 1625, Chicago, Illinois 60603; Attn:
                                     Global-Securities and Trust Services MSM 2006-9AR.  See "The Trustee"
                                     in this prospectus supplement.

   Custodians.....................   J.P. Morgan Trust Company, N.A. having an address at 2220 Chemsearch
                                     Boulevard, Suite 150, Irving, Texas 75062.

                                     LaSalle Bank National Association having an address at 2571 Busse
                                     Road, Suite 200, Elk Grove Village Illinois 60007.

                                     See "The Custodians" in this prospectus supplement.

   Rating Agencies................   Standard & Poor's Ratings Services, a division of The McGraw-Hill
                                     Companies, Inc. and Moody's Investors Service, Inc. will issue
                                     ratings with respect to the offered certificates.

   Swap Counterparty..............   Morgan Stanley Capital Services Inc. See "Description of the
                                     Certificates--Description of the Swap Counterparty" in this prospectus
                                     supplement

RELEVANT DATES

   Cut-off Date...................   July 1, 2006.



                                       S-2





   Closing Date...................   On or about July 31, 2006.

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

   Interest Accrual Period........   For the August 2006 distribution date, the period commencing on the
                                     closing date and ending on the day immediately preceding that
                                     distribution date.  For any distribution date thereafter, the period
                                     commencing on the distribution date in the prior calendar month and
                                     ending on the day immediately preceding that distribution date.

   Record Date....................   For each class of offered certificates and any distribution date, the
                                     business day immediately preceding that distribution date, or if a
                                     class of offered 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.

   Last Scheduled
     Distribution Date............   The last scheduled distribution date is the distribution date
                                     occurring in August 2036 which is the distribution date in the month
                                     following the scheduled maturity date for the latest maturing
                                     mortgage loan in the assets of the Issuing Entity.  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.

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

                                     The certificates will consist of a total of eighteen classes. The
                                     Class OC and Class P 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
                                     calculated as set forth or described on pages vi and vii 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.

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

   Principal Distributions........   On each distribution date, one or more classes of the offered
                                     certificates will be entitled to distributions of principal.  See
                                     "Description of the Certificates--Principal Distributions on the
                                     Certificates" in this prospectus supplement for a detailed discussion
                                     of the amount and timing of principal distributions.



                                       S-3





   Distribution Priorities......     As more fully described in this prospectus supplement, distributions
                                     on the Certificates and payments to the swap counterparty will be
                                     made on each Distribution Date primarily from the Available
                                     Distribution Amount for such Distribution Date in the following order
                                     of priority:


       1. Distributions of Interest

            --------------------------------------------------------
                from the interest remittance amount, to the swap
             account for certain payments to the swap counterparty;
            --------------------------------------------------------
                                       |
            --------------------------------------------------------
               from the remaining interest remittance amount, to
                current interest and unpaid interest from prior
              Distribution Dates (other than any basis risk carry
             forward amounts) on each Class of Senior Certificates,
               pro rata, in each case up to the maximum amount of
              interest to be distributed to those Classes on that
                               Distribution Date;
            --------------------------------------------------------
                                       |
            --------------------------------------------------------
                 from the remaining interest remittance amount,
             sequentially, to current interest on the Subordinated
               Certificates, in the order of their priorities of
               payment, in each case up to the maximum amount of
              interest to be distributed to those Classes on that
                               Distribution Date;
            --------------------------------------------------------


       2. Distributions of Principal

            --------------------------------------------------------
              from the principal distribution amount, to the swap
             account for certain payments to the swap counterparty
                               remaining unpaid;
            --------------------------------------------------------
                                       |
            --------------------------------------------------------
              from the remaining principal distribution amount, to
              principal of the Classes of Senior Certificates then
            entitled to receive distributions of principal, in each
                case up to the maximum amount of principal to be
            distributed to those Classes on that Distribution Date;
            --------------------------------------------------------
                                       |
            --------------------------------------------------------
               from the remaining principal distribution amount,
                 sequentially, to principal on the Subordinated
               Certificates, in the order of their priorities of
               payment, in each case up to the maximum amount of
              principal to be distributed to those Classes on that
                               Distribution Date;
            --------------------------------------------------------


       3. Distributions of Net Monthly Excess Cashflow

            --------------------------------------------------------
             from net monthly excess cashflow, to the swap account
              held by the supplemental interest trust for certain
              payments to the swap counterparty remaining unpaid;
            --------------------------------------------------------
                                       |
            --------------------------------------------------------
               from the remaining net monthly excess cashflow, to
            unpaid interest shortfall amounts (other than any basis
             risk carry forward amounts) and allocated unreimbursed
             realized loss amounts, in that order, sequentially, to
              the Subordinated Certificates, in the order of their
                             priorities of payment;
            --------------------------------------------------------
                                       |
            --------------------------------------------------------
              from the remaining net monthly excess cashflow, to
               basis risk carry forward amounts on each Class of
                        Senior Certificates, pro rata;
            --------------------------------------------------------


                                       S-4



                                       |
            --------------------------------------------------------
               from the remaining net monthly excess cashflow, to
             basis risk carry forward amounts sequentially, to the
                Subordinated Certificates, in the order of their
                             priorities of payment;
            --------------------------------------------------------
                                       |
            --------------------------------------------------------
               from the remaining net monthly excess cashflow, to
             prepayment interest and Relief Act shortfalls on each
                    Class of Senior Certificates, pro rata;
            --------------------------------------------------------
                                       |
            --------------------------------------------------------
               from the remaining net monthly excess cashflow, to
                 prepayment interest and Relief Act shortfalls
             sequentially, to the Subordinated Certificates, in the
                     order of their priorities of payment;
            --------------------------------------------------------
                                       |
            --------------------------------------------------------
             from the remaining net monthly excess cashflow, to the
                             Class OC Certificates;
            --------------------------------------------------------


       4. Distributions of Amounts on Deposit in the Swap Account


            --------------------------------------------------------
              from amounts on deposit in the swap account, to the
             swap counterparty for certain amounts owed to the swap
                         counterparty remaining unpaid;
            --------------------------------------------------------
                                       |
            --------------------------------------------------------
               from the remaining amounts on deposit in the swap
              account, to unpaid interest shortfall amounts (other
               than any basis risk carry forward amounts) on each
                    Class of Senior Certificates, pro rata;
            --------------------------------------------------------
                                       |
            --------------------------------------------------------
               from the remaining amounts on deposit in the swap
              account, to distributions of principal in accordance
               with the distribution priorities in effect on that
             Distribution Date, sequentially, to the Certificates,
               in the order of their priorities of payment, in an
               amount up to the amount necessary to maintain the
                required level of overcollateralization for that
                               Distribution Date;
            --------------------------------------------------------
                                       |
            --------------------------------------------------------
               from the remaining amounts on deposit in the swap
             account, to remaining basis risk carry forward amounts
             on the Senior Certificates, concurrently, in an amount
              up to their pro rata portion of amounts remaining on
                          deposit in the swap account;
            --------------------------------------------------------
                                       |
            --------------------------------------------------------
               from the remaining amounts on deposit in the swap
             account, to remaining basis risk carry forward amounts
            on the Subordinated Certificates, sequentially, in each
               case in an amount up to their pro rata portion of
               amounts remaining on deposit in the swap account;
            --------------------------------------------------------
                                       |
            --------------------------------------------------------
               from the remaining amounts on deposit in the swap
            account, to remaining basis risk carry forward amounts,
                  concurrently, to the Certificates, pro rata;
            --------------------------------------------------------
                                       |
            --------------------------------------------------------
               from the remaining amounts on deposit in the swap
             account, to the swap counterparty for certain amounts
              owed to the swap counterparty remaining unpaid; and
            --------------------------------------------------------


                                       S-5



                                       |
            --------------------------------------------------------
               from the remaining amounts on deposit in the swap
                     account, to the Class OC Certificates.
            --------------------------------------------------------



AMOUNTS AVAILABLE FOR
DISTRIBUTIONS ON THE CERTIFICATES   The amount available for distributions on the offered certificates on
                                    any distribution date will generally consist of the following amounts
                                    (subject to fees and expenses to be netted as described below):

                                    o   all scheduled installments of interest (net of the related fees
                                        and expenses and net of net swap payments paid to the swap
                                        counterparty) and principal due and received on the mortgage
                                        loans in the applicable period, together with any advances with
                                        respect to them;

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

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

                                    o   subsequent recoveries with respect to mortgage loans;

                                    o   partial or full prepayments collected during the applicable
                                        period, together with interest paid in connection with the
                                        prepayment and the compensating interest payable by the related
                                        servicer;

                                    o   any substitution adjustment amounts or purchase price in respect
                                        of a deleted mortgage loan or a mortgage loan repurchased by the
                                        depositor, the seller or the related originator; and

                                    o   any net swap receipts received from the swap counterparty.

THE MORTGAGE LOANS...............   The assets of the issuing entity will be comprised primarily of a
                                    single group of adjustable -rate and hybrid adjustable -rate mortgage
                                    loans.  All of the mortgage loans 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 July 1,
                                    2006:

                                    Number of Mortgage Loans:........................................2,152
                                    Aggregate Scheduled Principal Balance:....................$652,220,892
                                    Range of Scheduled Principal Balances:...........$29,595 to $2,000,000
                                    Average Scheduled Principal Balance:..........................$303,077
                                    Range of Current Mortgage Interest Rates:.............4.750% to 9.750%
                                    Aggregate Original Principal Balance:.....................$652,385,480
                                    Weighted Average Current Mortgage Interest Rate:................7.334%
                                    Weighted Average Maximum Mortgage Interest Rate:...............13.084%



                                       S-6





                                    Weighted Average Gross Margin:..................................2.919%
                                    Weighted Average Months to Roll:.............................57 months
                                    Weighted Average Original Term to Maturity:.................360 months
                                    Weighted Average Remaining Scheduled
                                        Term to Maturity:.......................................358 months
                                    Weighted Average Original Loan-to-Value Ratio:..................76.83%
                                    Owner-Occupied:.................................................75.38%
                                    Weighted Average Credit Score:.....................................699
                                    Geographic Concentration of Mortgaged Properties
                                        Securing Mortgage Loans in Excess of 5% of the
                                        Aggregate Scheduled Principal Balance:    California........37.55%
                                                                                  Florida...........11.71%
                                                                                  Nevada.............8.03%
                                                                                  Virginia...........5.61%
                                                                                  Arizona............5.09%

                                    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,
                                    neither the master servicer nor the servicers will be obligated to
                                    make advances which it determines to be nonrecoverable from future
                                    payments and collections on the related mortgage loans, and such
                                    parties will be entitled to reimbursement for advances subsequently
                                    determined to be nonrecoverable prior to any distributions to
                                    certificateholders.

                                    The servicers will also make interest payments out of their servicing
                                    fees 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 servicing compensation to the extent
                                    necessary to fund any such shortfalls.

                                    Each servicer is entitled with respect to each mortgage loan serviced
                                    by it to a monthly servicing fee, which will be retained by the
                                    applicable servicer from such mortgage loan or payable monthly from
                                    amounts on deposit in the collection account.  The servicing fee will
                                    be an amount equal to interest at one twelfth of a rate equal to
                                    between 0.250% and 0.375% on the stated principal balance of each
                                    mortgage loan.  As of the cut-off date the weighted average servicing
                                    fee is approximately 0.371% per annum.

                                    For its compensation the master servicer will receive reinvestment
                                    income on amounts on deposit for the period from between the servicer
                                    remittance date and the Distribution Date.  From its compensation,
                                    the master servicer will pay the



                                       S-7





                                    fees of the Securities Administrator, the Trustee and any Custodians
                                    ongoing (safekeeping and loan file release only) fees.

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

RETENTION OF CERTAIN
  SERVICING RIGHTS...............   The sponsor, as the original owner of the mortgage loans to be sold
                                    to the issuing entity will retain certain rights relating to the
                                    servicing by GMAC Mortgage Corporation of certain of the mortgage
                                    loans, including the right to terminate GMAC Mortgage Corporation as
                                    servicer 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.

REQUIRED REPURCHASES
  OR SUBSTITUTIONS OF MORTGAGE
  LOANS..........................   The originators and the sponsor have each made or will make certain
                                    representations and warranties relating to the mortgage loans.  If
                                    with respect to any mortgage loan any of the representations and
                                    warranties made by the originators or the sponsor are breached in any
                                    material respect as of the date made, or there exists any uncured
                                    material document defect, the related originator or the sponsor will
                                    be obligated to repurchase, or substitute for, the mortgage loan as
                                    further described in this prospectus supplement under "Description of
                                    the Mortgage Loans--Assignment of the Mortgage Loans; Representations
                                    and Warranties Relating to the Mortgage Loans."

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

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

                                    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 in numerical order, with the class of
                                    certificates with the lowest numerical designation having the highest
                                    priority of payment.  The Class OC Certificates, which are not being
                                    offered to the public, are also subordinated to all of the classes of
                                    certificates.

                                    Subordination is designed to provide the holders of certificates with
                                    a higher payment priority with protection against 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.

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

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



                                       S-8





   Overcollateralization.........   The amount by which the aggregate stated principal balance of the
                                    mortgage loans is greater than the aggregate class principal balance
                                    of the certificates is referred to as "overcollateralization."  On
                                    the closing date the aggregate stated principal balance of the
                                    mortgage loans is expected to exceed the aggregate class principal
                                    balance of the certificates (other than the Class A-R and Class P
                                    Certificates) by approximately $6,196,892.  In other words, it is
                                    expected that there will be approximately 0.95% overcollateralization
                                    as of the closing date.  In addition, the mortgage loans are expected
                                    to generate more interest than is needed to pay interest on the
                                    certificates and related expenses of the trust fund because the
                                    weighted average interest rate of the mortgage loans is expected to
                                    be higher than the weighted average pass-through rate on the
                                    certificates, plus the related weighted average expense fee rate.
                                    Any interest payments received in respect of the mortgage loans in
                                    excess of the amount that is needed to pay interest on the
                                    certificates and related trust expense fees will be used to reduce
                                    the total class principal balance of the certificates creating and/or
                                    maintaining overcollateralization at the level of
                                    overcollateralization required by the pooling and servicing agreement.

                                    We refer you to "Description of the Certificates--Net Monthly Excess
                                    Cashflow and Overcollateralization Provisions on the Certificates" in
                                    this prospectus supplement for more information.

SUBORDINATION....................   If there is no overcollateralization or excess interest when realized
                                    losses occur, loss protection is accomplished by allocating realized
                                    losses on the mortgage loans among the certificates that are
                                    subordinated, beginning with the certificates then outstanding with
                                    the lowest payment priority, before realized losses are allocated to
                                    the classes of certificates with higher priorities of payment.  The
                                    pooling and servicing agreement does not permit the allocation of
                                    realized losses on the mortgage loans to the Class A-1, Class A-2,
                                    Class A-3, Class A-4, Class A-5 or Class A-6 Certificates; however,
                                    investors in the Class A-1, Class A-2, Class A-3, Class A-4, Class
                                    A-5 or Class A-6 Certificates should realize that under certain loss
                                    scenarios, there will not be enough principal and interest on the
                                    mortgage loans to pay the Class A-1, Class A-2, Class A-3, Class A-4,
                                    Class A-5 or Class A-6 Certificates all interest and principal
                                    amounts to which such classes of certificates are then entitled.

THE SWAP
  AGREEMENT......................   The holders of the certificates will have the benefit of a swap
                                    agreement entered into with Morgan Stanley Capital Services Inc., as
                                    swap counterparty.  The swap counterparty's payment obligations are
                                    100% guaranteed by Morgan Stanley. Morgan Stanley is rated "Aa3" by
                                    Moody's Investors Service, Inc., "A+" by Standard & Poor's Ratings
                                    Services, a division of The McGraw-Hill Companies, Inc., and "AA-" by
                                    Fitch, Inc.

                                    For further information regarding the Swap Counterparty, see
                                    "Description of the Certificates--Description of the Swap
                                    Counterparty" in this prospectus supplement.

                                    Under the swap agreement, with respect to each distribution date to
                                    and including the distribution date in June 2011, the supplemental
                                    interest trust will pay to the swap counterparty a fixed payment at a
                                    rate of 5.54% per annum, determined on a "30/360" basis from the 25th
                                    day of the month preceding that distribution date to the 24th day of
                                    the month in which the distribution date occurs (or, in the case of
                                    the first distribution date, the number of days in the period from
                                    the closing date to the day immediately preceding the first
                                    distribution date), and the swap counterparty will agree to pay to the



                                       S-9





                                    supplemental interest trust a floating payment at a rate of
                                    one-month LIBOR (as determined pursuant to the interest rate swap
                                    agreement), determined on an "actual/360" basis from distribution
                                    date to distribution date (or, in the case of the first distribution
                                    date, the number of days in the period from the closing date to the
                                    day immediately preceding the first distribution date), in each case
                                    calculated on the product of the scheduled notional amount and the
                                    multiplier set forth on annex II to this prospectus supplement for
                                    that distribution date. To the extent that the fixed payment payable
                                    by the supplemental interest trust exceeds the floating payment
                                    payable by the swap counterparty, amounts otherwise available for
                                    payments on the certificates will be applied on or prior to such
                                    distribution date to make a net payment to the swap counterparty
                                    (such payment by the issuing entity, a "net swap payment"), and to
                                    the extent that the floating payment payable by the swap counterparty
                                    exceeds the fixed payment payable by the supplemental interest trust,
                                    the swap counterparty will make a net payment to the supplemental
                                    interest trust (such payment by the swap counterparty to the
                                    supplemental interest trust, a "net swap receipt") on or prior to
                                    such distribution date. Since amounts payable with respect to the
                                    swap agreement will be paid prior to making any distributions to
                                    holders of the certificates, net swap receipts will increase and net
                                    swap payments will reduce the amount available to make payments on
                                    the certificates.

                                    For further information regarding the swap agreement, see
                                    "Description of the Certificates--The Swap Agreement" 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 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 assets of the issuing
                                    entity, 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.

                                    The offered certificates (other than the Class A-R Certificates) will
                                    be issued and available only in book entry form, in denominations of
                                    $25,000 initial principal balance and integral multiples of $1,000 in
                                    excess of $25,000, except that one certificate of each class may be
                                    issued in an amount less than $25,000.  One certificate of each class
                                    of offered certificates may be issued in an amount less than the
                                    amount described above.  The Class A-R Certificates will be issued as
                                    two certificates in the denominations specified in the pooling and
                                    servicing agreement.

                                    See "Description of the Certificates--Forms and Denominations of
                                    Offered Certificates; Distributions to Certificates" in this
                                    prospectus supplement.

DEPOSITOR'S OPTION TO PURCHASE
  BREACHED MORTGAGE LOANS........   The Depositor has the option, but is not obligated, to purchase from
                                    the Issuing Entity any Breached Mortgage Loan at the Purchase Price
                                    provided that certain conditions are met.

                                    See "Description of the Certificates--Depositor's Option to Purchase
                                    Breached Mortgage Loans" in this prospectus supplement.



                                      S-10





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 issuing entity and
                                    thereby effect the early retirement of the certificates.

TAX STATUS.......................   For federal income tax purposes, the Assets of the Issuing Entity
                                    (exclusive of the swap agreement and the assets held in the swap
                                    account) 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 OC
                                    Certificates) will represent a beneficial interest in the right to
                                    receive payments of basis risk carry forward amounts.  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.

                                    The swap agreement and the assets held in the swap account will be
                                    held by the supplemental interest trust and will not constitute any
                                    part of any REMIC created under the pooling and servicing agreement.

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

                                    In making a decision regarding investing in any class of
                                    certificates, fiduciaries of such plans or arrangements should
                                    consider the additional requirements resulting from the swap
                                    agreement as discussed under "ERISA Matters" in this prospectus
                                    supplement.

LEGAL INVESTMENT.................   The offered certificates (other than the 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.



                                      S-11





                                    The 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 v 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.

                                    The depositor has requested that S&P and Moody's maintain ongoing
                                    surveillance of the ratings assigned to the offered certificates in
                                    accordance with their respective policies, but we cannot assure you
                                    that either S&P or Moody's will continue its surveillance of the
                                    ratings assigned to the offered certificates.

                                    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-12



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

      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 related to your
          certificates.

      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   Approximately 0.23%, 5.00% 8.81%, 81.16%, 0.53% and 4.26% of the
          mortgage loans have fixed interest rates for less than or equal to 1
          year, 2 years 3 years, 5 years, 7 years and 10 years, respectively,
          from the date of origination and then adjust based upon a specified
          index either 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   All of the pass-through rates of the certificates are based to some
          extent on the weighted average of the net mortgage rates of the
          mortgage loans. If the mortgage loans with relatively higher mortgage
          rates prepay, the Net WAC Cap will be reduced and this could affect
          both the yield on the certificates and the amount of excess interest
          generated by the mortgage loans.


                                      S-13



CREDIT ENHANCEMENT MAY NOT BE ADEQUATE

      Risks Related to the Offered Certificates. 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.

      The certificates are not insured by any financial guaranty insurance
policy. The subordination, loss allocation and overcollateralization 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.

      Risks Related to the Certificates. The senior certificates will generally
receive 100% of principal payments received on the mortgage loans for three
years following the closing date and if the loss and delinquency levels
described in "Description of the Certificates--Glossary" are exceeded
thereafter, the senior certificates may once again receive 100% of principal
payments received on the mortgage loans and as a result the subordinated
certificates may continue (unless the aggregate class principal balance of the
senior certificates has been reduced to zero) to receive no portion of the
amount of principal then payable to the certificates. After taking into account
certain payments by the issuing entity pursuant to the swap agreement, the
weighted average lives of the subordinated certificates will therefore be longer
than would otherwise be the case. The effect on the market value of the
subordinated certificates of changes in market interest rates or market yields
for similar securities may be greater than for the senior certificates.

      If, as a result of losses on the mortgage loans, the certificate principal
balance of the Class OC Certificates is reduced to zero and there is no excess
interest on the mortgage loans, the yield on each class of subordinated
certificates will be extremely sensitive to losses on the mortgage loans since
such losses will then be allocated to the Class B-3, Class B-2, Class B-1, Class
M-6, Class M-5, Class M-4, Class M-3, Class M-2 and Class M-1 Certificates, in
that order, until their respective certificate principal balances are reduced to
zero.

      Delinquencies on the mortgage loans that are not covered by amounts
advanced by the servicers or the master servicer, as applicable, because the
servicers or the master servicer believe the amounts, if advanced, would not be
recoverable, will adversely affect the yield on the Class OC, Class B-3, Class
B-2, Class B-1, Class M-6, Class M-5, Class M-4, Class M-3, Class M-2 and Class
M-1 Certificates, in that order. Because of the priority of distributions,
shortfalls resulting from delinquencies on the mortgage loans after taking into
account certain payments received or paid by the issuing entity pursuant to the
swap agreement will be borne first by the Class OC Certificates and then by the
subordinated certificates, in the reverse order of their priority of payment.
Realized losses will be allocated to a class of subordinated certificates by
reducing or "writing down" the principal balance thereof. Such written down
amounts will not accrue interest, nor, except under certain circumstances, will
such amounts be reinstated. However, if funds are available after all payments
of interest and principal required to be made on a distribution date to the
certificates are paid to the certificateholders, the holders of subordinated
certificates may receive a payment in respect of such written down principal in
order of their seniority.

      The yield on the subordinated certificates, in decreasing order of their
seniority, will be progressively more sensitive to the rate and timing of
defaults and the severity of losses on the mortgage loans. In general, losses on
the mortgage loans and the resulting reduction in the principal balance of the
subordinated certificates will mean that less interest will accrue on such
certificates than would otherwise be the case. The earlier a loss and resulting
reduction in principal balance occurs, the greater the effect on an investor's
yields.

      The amount of any realized losses experienced on the mortgage loans, to
the extent not covered by either excess interest, or prior to the distribution
date in July 2011, any net swap receipts received from the swap counterparty,
will be applied to reduce the class principal balance of the Class OC, Class
B-3, Class B-2, Class B-1, Class M-6, Class M-5, Class M-4, Class M-3, Class M-2
and Class M-1 Certificates, in that order, until the principal balance of each
such class has been reduced to zero. If subordination is insufficient to absorb
losses, then holders of more senior classes will incur realized losses and may
never receive all of their principal payments. The pooling


                                      S-14



and servicing agreement does not permit the allocation of realized losses on the
mortgage loans to the Class A-1, Class A-2, Class A-3, Class A-4, Class A-5 or
Class A-6 Certificates; however, investors in the Class A-1, Class A-2, Class
A-3, Class A-4, Class A-5 or Class A-6 Certificates should realize that under
certain loss scenarios, there will not be enough principal and interest on the
mortgage loans to pay the Class A-1, Class A-2, Class A-3, Class A-4, Class A-5
or Class A-6 Certificates all interest and principal amounts to which these
classes of certificates are then entitled. 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 OC
                Certificates, the excess interest in that period and, prior to
                the distribution date in July 2011, any net swap receipts
                received from the swap counterparty, 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 and
                Class OC Certificates, the excess interest in that period and,
                prior to the distribution date in July 2011, any net swap
                receipts received from the swap counterparty, 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 and Class OC Certificates, the excess interest in that
                period and, prior to the distribution date in July 2011, any net
                swap receipts received from the swap counterparty, 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 and Class OC Certificates, the excess interest in
                that period and, prior to the distribution date in July 2011,
                any net swap receipts received from the swap counterparty, 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 and Class OC Certificates, the excess
                interest in that period and, prior to the distribution date in
                July 2011, any net swap receipts received from the swap
                counterparty, 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 and Class OC Certificates,
                the excess interest in that period and, prior to the
                distribution date in July 2011, any net swap receipts received
                from the swap counterparty, 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 and Class OC
                Certificates, the excess interest in that period and, prior to
                the distribution date in July 2011, any net swap receipts
                received from the swap counterparty, 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 and


                                      S-15



                Class OC Certificates, the excess interest in that period and,
                prior to the distribution date in July 2011, any net swap
                receipts received from the swap counterparty, 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; and

            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 and Class OC Certificates, the excess interest in that
                period and, prior to the distribution date in July 2011, any net
                swap receipts received from the swap counterparty, 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.

      Risks relating to the Class A-6 Certificates. The Class A-6 Certificates
are entitled to receive distributions of interest concurrently with the other
classes of Class A Certificates on a pro rata basis, and the Class A-6
Certificates are supported by the subordination of the subordinated certificates
and the Class OC Certificates. However, the Class A-6 Certificates will not
receive any principal distributions until the class principal balance of the
other Classes of Class A Certificates have been reduced to zero, if:

            o   with respect to any distribution date occurring before August
                2008, the aggregate amount of realized losses on the mortgage
                loans since the cut-off date, as a percentage of the aggregate
                stated principal balance of the mortgage loans as of the cut-off
                date, exceeds 0.25%, or

            o   with respect to any distribution date occurring in or after
                August 2008, delinquencies and/or cumulative realized losses on
                the mortgage loans exceed certain specified levels as described
                under "Description of the Certificates --Principal
                Distributions" and "--Allocation of Principal Payments to Class
                A Certificates" in this prospectus supplement.

      The allocation described above will increase the risk that shortfalls in
principal from the mortgage loans will be borne by the Class A-6 Certificates.
If such shortfalls are borne by the Class A-6 Certificates, the yield to
investors in the Class A-6 Certificates will be adversely affected.

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 issuing entity by the master
servicer or if a successful auction occurs.

      With the exception of approximately 50.58% 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


                                      S-16



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 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 an offered certificate at a premium, your yield
          may be lower than expected if principal payments on the mortgage loans
          occur at a faster rate than you expected;

      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 the 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," "Description
of the Certificates--Principal Distributions on the Certificates" and
"Description of the Certificates--Principal Distributions on the Certificates"
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 86.79% of the mortgage loans, by aggregate stated principal
balance of the mortgage loans as of the cut-off date, require monthly payments
of only accrued interest for a substantial period of time after origination.
During the interest-only period, less principal will be available for
distribution to the holders of the offered 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.

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

YOUR YIELD MAY BE AFFECTED BY CHANGES IN INTEREST 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


                                      S-17



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 Distributions on the
Certificates" in this prospectus supplement.

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

      The certificates will accrue interest at a pass-through rate based on or
subject to the weighted average of the interest rates on the mortgage loans, net
of certain expenses of the issuing entity. A majority of the mortgage loans that
have 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 ON THE CERTIFICATES ARE SUBJECT TO A WEIGHTED AVERAGE NET
RATE CAP AND ARE SENSITIVE TO ONE-MONTH LIBOR

      The pass-through rates on the certificates are subject to a cap (the "NET
WAC CAP") equal to the weighted average of the mortgage rates of the mortgage
loans, net of certain expenses of the issuing entity and any net swap payments
required to be made to the swap counterparty. Therefore, the prepayment of the
mortgage loans with higher mortgage rates may result in a lower pass-through
rate on the certificates.

      In addition, the pass-through rates on the certificates for any
distribution date will be equal to the value of one-month LIBOR plus the related
margin, but subject to the Net WAC Cap. Your yield on the certificates will be
sensitive to:

      (1)   the level of one-month LIBOR, and

      (2)   the imposition of the Net WAC Cap.

      The certificates accrue interest at pass-through rates based on the
one-month LIBOR index plus specified margins, but are subject to certain
limitations. Those limitations on the pass-through rates for the certificates
are, in part, based on the weighted average of the interest rates on the
mortgage loans reduced for net payments to the swap provider and net of certain
fees and expenses of the issuing entity. To the extent the pass-through rate for
any class of certificates is limited on any distribution date by the application
of the Net WAC Cap, the difference between that rate and the pass-through rate
that would otherwise have been paid to that class of certificates absent such
cap will create a shortfall. That shortfall will carry forward with interest
thereon. These shortfalls may remain unpaid on the optional termination date or
in the event of a successful auction or, if the optional termination is not
exercised and a successful auction does not occur, on the final payment date.

      In addition, when the Net WAC Cap applies, there may be little or no
excess cash flow or amounts paid by the swap counterparty to the issuing entity
to cover losses and to maintain the required level of overcollateralization. No
assurance can be given that the excess cash flow that may be available and/or
amounts paid by the swap counterparty to the issuing entity to cover the
shortfalls resulting from the Net WAC Cap will be sufficient for that purpose.

      Although holders of each class of certificates will be entitled to receive
any basis risk carry forward from and to the limited extent of amounts paid by
the swap counterparty to the issuing entity and any net monthly excess cashflow,
there is no assurance that those funds will be available or sufficient to pay
such basis risk carry forward amount. There can be no assurance that available
net monthly excess cashflow will be sufficient to cover these shortfalls,
particularly because in a situation where the pass-through rate on a class of
certificates is limited by the Net WAC Cap, there will be little or no net
monthly excess cashflow on the mortgage loans.

      See "Description of the Certificates--Interest Distributions on the
Certificates," "Description of the Certificates--The Swap Agreement",
"Description of the Certificates--The Swap Account" and "Yield, Prepayment


                                      S-18



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 SWAP AGREEMENT WILL BE SUBJECT TO COUNTERPARTY RISK

      The certificates will have the benefit of a supplemental interest trust,
which will hold the swap agreement entered into by the securities administrator
for the benefit of the certificates that will either require the swap
counterparty to make certain payments for the benefit of the certificates or the
Securities Administrator to make certain payments to the swap counterparty out
of funds otherwise distributable to the certificates. To the extent that
payments on the certificates depend in part on payments to be received by the
supplemental interest trust, under the swap agreement, the ability of the
securities administrator to make such payments on the certificates will be
subject to the credit risk of the counterparty. Payments from the swap
counterparty will only be available to cover certain shortfalls or losses on the
certificates, as described in this prospectus supplement under "Description of
the Certificates--The Swap Account" and "Description of the Certificates--The
Swap Agreement".

      Any net payments payable under the swap agreement by the swap counterparty
will only be payable if the amount owed by the swap counterparty on a
distribution date, which is equal to one-month LIBOR, exceeds the amount owed to
the swap counterparty, which is a fixed payment of 5.54% per annum, on such
distribution date. No assurance can be made that any amounts will be received
under the swap agreement, or that any such amounts that are received will be
sufficient for their intended purpose. Any net swap payment payable to the swap
counterparty under the terms of the swap agreement will reduce amounts available
for distribution to the certificateholders, and may reduce the amounts
distributed to the certificates. In addition, any swap termination payment
payable to the swap counterparty in the event of early termination of the swap
agreement (other than certain swap termination payments resulting from an event
of default or certain termination events with respect to the swap counterparty,
as described in this prospectus supplement under "Description of the
Certificates--The Swap Account" and "--The Swap Agreement") will reduce amounts
available for distribution to the certificateholders. The swap agreement will
terminate on or prior to the distribution date in June 2011.

      Upon early termination of a swap agreement, a payment may be owed by
either the swap counterparty or the supplemental interest trust, regardless of
which party caused the termination. The swap termination payment will be
computed in accordance with the procedures set forth in the swap agreement
described in this prospectus supplement under "Description of the
Certificates--The Swap Account" and "--The Swap Agreement". In the event that
the swap counterparty is entitled under the swap agreement to receive a swap
termination payment, the issuing entity, through the supplemental interest
trust, will be required to make that payment on the related distribution date,
and on any subsequent distribution dates until the swap counterparty has been
paid in full, prior to distributions to the certificateholders (other than
certain swap termination payments resulting from an event of default or certain
termination events with respect to the swap counterparty, which swap termination
payments generally will be subordinated to distributions to the holders of the
certificates, as described in this prospectus supplement under "Description of
the Certificates--The Swap Account" and "--The Swap Agreement"). This feature
may result in losses on the subordinated certificates. Due to the priority of
the applications of the available distribution amount, any classes of
certificates that are subordinated in right of payment to payments made to the
swap counterparty will bear the effects of any shortfalls resulting from a net
swap payment or swap termination payment before such effects are borne by the
certificates that are senior in right of payment to the swap counterparty.

HIGH BALANCE MORTGAGE LOANS POSE SPECIAL RISKS

      Approximately 28.25% of the mortgage loans, by aggregate stated principal
balance of the mortgage loans as of the cut-off date, 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-19



HIGH LOAN-TO-VALUE RATIOS INCREASE RISK OF LOSS

      Loans with higher loan-to-value ratios may present a greater risk of loss
than loans with loan-to-value ratios of 80.00% or below. Approximately 2.78% of
the mortgage loans, by aggregate stated principal balance of the mortgage loans
as of the cut-off date, had loan-to-value ratios at origination in excess of
80.00%. Additionally, the determination of the value of a mortgaged property
used in the calculation of the loan-to-value ratios of the mortgage loans may
differ from the appraised value of such mortgaged properties or the actual value
of such mortgaged properties.

PAYMENTS IN FULL OF A BALLOON LOAN DEPEND ON THE BORROWER'S ABILITY TO REFINANCE
THE BALLOON LOAN OR SELL THE MORTGAGED PROPERTY

      Approximately 0.55% of the mortgage loans, by aggregate stated principal
balance of the mortgage loans as of the cut-off date, are balloon loans.
Mortgage loans that are balloon 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.

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
Mortgage Loans--Foreclosure" in the accompanying prospectus.

BANKRUPTCY OF BORROWERS MAY ADVERSELY AFFECT DISTRIBUTIONS ON THE 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.


                                      S-20



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 class of subordinated
certificates, consider the following factors that may adversely impact your
yield:

            o   Because the subordinated certificates generally receive interest
                and principal distributions after the senior certificates
                receive those distributions, there is a greater likelihood that
                those 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.

            o   With respect to the certificates as a result of the absorption
                of realized losses on the mortgage loans by excess interest,
                after taking into account certain payments received or paid by
                the issuing entity pursuant to the swap agreement, and
                overcollateralization as described in this prospectus
                supplement, liquidations of defaulted mortgage loans, whether or
                not realized losses are incurred upon the liquidations, are
                likely to result in an earlier return of principal to the
                offered certificates and are likely to influence the yield on
                the certificates in a manner similar to the manner in which
                principal prepayments on the mortgage loans would influence the
                yield on the certificates. The overcollateralization provisions
                are intended to result in an accelerated rate of principal
                distributions to holders of the certificates then entitled to
                principal distributions at any time that the
                overcollateralization provided by the mortgage 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
                offered certificates in a manner similar to the manner in which
                principal prepayments on the mortgage loans will influence the
                yield on the certificates. In addition, losses resulting from
                the liquidation of defaulted loans that are mortgage loans that
                are not covered by excess interest, overcollateralization or net
                swap receipts paid by the counterparty to the issuing entity
                will be allocated 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 any of the mortgage loans to the Class P Certificates or the
senior certificates. See "Description of the Certificates" and "Yield,
Prepayment and Weighted Average Life" in this prospectus supplement.

      Unless the aggregate class principal balance of the senior certificates
has been reduced to zero, the subordinated certificates will not be entitled to
any principal distributions until at least August 2009 or a later date as
provided in this prospectus supplement, or during any period in which
delinquencies and/or realized losses on the mortgage loans exceed certain levels
set forth in this prospectus supplement. Additionally, if losses on the mortgage
loans exceed certain levels set forth in this prospectus supplement, the Class
A-6 Certificates will not receive any distributions of principal until the
aggregate class principal balance of the other classes of Class A Certificates
have been reduced to zero, as described under "Description of the Certificates
--Allocation of Principal Payments to Class A Certificates" in this prospectus
supplement.

EXCESS INTEREST FROM THE MORTGAGE LOANS MAY NOT PROVIDE ADEQUATE CREDIT
ENHANCEMENT TO THE CERTIFICATES

      After taking into account certain payments received or paid by the issuing
entity pursuant to the swap agreement, the mortgage loans are expected to
generate more interest than is needed to pay interest on the


                                      S-21



certificates and the related expenses of the issuing entity because the weighted
average interest rate on the mortgage loans is expected to be higher than is
needed to make distributions of interest on the certificates plus the related
weighted average expense fee rate. If the mortgage loans generate more interest
than is needed to pay interest on the certificates and make any payments to the
swap counterparty as required by the swap agreement, such "excess interest" will
be used to make additional principal payments on the certificates to the extent
described in this prospectus supplement. The use of excess interest to make
additional distributions of principal on the certificates will reduce the
aggregate class principal balance of the certificates below the aggregate stated
principal balance of the mortgage loans, thereby maintaining the required level
of "overcollateralization." Overcollateralization is intended to provide limited
protection to the holders of the certificates by absorbing these certificates'
share of losses from liquidated mortgage loans. However, we cannot assure you
that enough excess interest will be generated on the mortgage loans to maintain
the required level of overcollateralization.

      The excess interest available on any distribution date will be affected by
the actual amount of interest received, collected or advanced in respect of the
mortgage loans during the preceding month. Such amount will be influenced by
changes in the weighted average of the mortgage rates resulting from prepayments
and liquidations of the mortgage loans. If on any distribution date, the
pass-through rate of one or more classes of certificates is limited by the Net
WAC Cap, it may be necessary to apply all or a portion of the interest funds
available after taking into account certain payments received or paid by the
issuing entity pursuant to the interest rate swap agreement, to distribute
interest at the pass-through rates for such classes of certificates. As a
result, interest may be unavailable for any other purpose.

      In addition, when a borrower makes a full or partial prepayment on a
mortgage loan, the amount of interest that the borrower is required to pay may
be less than the amount of interest certificateholders would otherwise be
entitled to receive with respect to the mortgage loan. The related servicer and,
in certain circumstances, the master servicer, are each required to reduce its
servicing fee or master servicing compensation, as applicable, to offset this
shortfall (such reduction is a payment of "COMPENSATING INTEREST"), but the
reduction for any distribution date is limited. If the aggregate amount of
interest shortfalls resulting from prepayments on the mortgage loans exceeds the
amount of the related reduction in the master servicing compensation and the
servicing fee, the amount of interest available to make distributions of
interest to the certificates and to build or maintain overcollateralization will
be reduced.

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

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 37.55% 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 wildfires, earthquakes, floods, mudslides and other natural disasters.

      In addition, certain Mortgage Loans are secured by properties located on
the Gulf Coast of Texas, and in Louisiana, Mississippi, Alabama, Florida,
Georgia, South Carolina and other states that frequently experience hurricanes
and other significant storms during the hurricane season.

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


                                      S-22



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 assets of the issuing entity 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; LIMITED RECOURSE

      The seller or an originator may be required to purchase mortgage loans
from the assets of the issuing entity 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 assets of the issuing entity.

      Neither the certificates nor the assets of the issuing entity will be
guaranteed by the depositor, the seller, the master servicer, the servicers, the
securities administrator, the trustee or any of their respective affiliates or
insured by any governmental agency. Consequently, if collections on the mortgage
loans and net swap receipts received from the swap counterparty are insufficient
to make all payments required on the certificates and the protection against
losses provided by subordination, overcollateralization and excess spread is
exhausted, you may incur a loss on your investment.

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
held by the issuing entity by the seller to the depositor as a sale for
accounting purposes. The depositor and the issuing entity will treat the
transfer of the mortgage loans from the depositor to the issuing entity 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.


                                      S-23



      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 issuing entity may not have a
perfected interest in those collections. In this case the issuing entity 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 issuing entity 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 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 issuing entity as an assignee of
the mortgage loans, to monetary penalties and could result in the borrowers
rescinding such mortgage loans against the issuing entity. 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 assets of the issuing entity 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 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.


                                      S-24



THE SERVICING COMPENSATION MAY BE INSUFFICIENT TO ENGAGE REPLACEMENT SERVICERS
OR MASTER SERVICER

      The fees and expenses, including the servicing fee and master servicing
compensation, payable by that issuing entity are described in this prospectus
supplement under "Servicing of the Mortgage Loans--Servicing Compensation and
Payment of Expenses; Master Servicing Compensation; Administrative Fees." In the
event it becomes necessary to replace a servicer or master servicer, no
assurance can be made that the servicing fee or master servicing compensation,
as applicable, will be sufficient to attract replacement servicers or a
replacement master servicer to accept an appointment for the related issuing
entity. In addition, to the extent the loans of any series have amortized
significantly at the time that a replacement servicer or a replacement master
servicer is sought, the compensation that would be payable to any such
replacement may not be sufficient to attract a replacement to accept an
appointment for the issuing entity.

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
GMAC Mortgage Corporation as servicer 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 the effect 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 securities
          administrator will be sending distributions on the certificates to DTC
          instead of directly to you;

      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.


                                      S-25



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 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 issuing entity in determining its federal
taxable income. It is not anticipated that the residual certificateholders will
receive distributions from the issuing entity. 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 securities administrator 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 issuing entity. 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


                                      S-26



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 should 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.

                        DESCRIPTION OF THE MORTGAGE LOANS

GENERAL

      On the Closing Date, Morgan Stanley Mortgage Loan Trust 2006-9AR (the
"ISSUING ENTITY") will own approximately 2,152 mortgage loans (the "MORTGAGE
LOANS" or the "MORTGAGE POOL") with an aggregate unpaid principal balance of
approximately $652,220,892 (the "AGGREGATE CUT-OFF DATE POOL PRINCIPAL BALANCE,"
as of July 1, 2006 (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"). The Mortgage Loans were selected for the inclusion in the
mortgage pool from among mortgage loans purchased by the Sponsor from
correspondent lenders and mortgage loan originators based on the Sponsor's
assessment of investor preferences and rating agency criteria and not based upon
Morgan Stanley Mortgage Capital Inc.'s ("MSMC" ) loan purchase guidelines.


                                      S-27



      All of the Mortgage Loans have original terms to maturity of up to
approximately 30 years and have Mortgage Rates that adjust (the "ADJUSTABLE-RATE
MORTGAGE LOANS"), as described further below.

      The "ASSETS OF THE ISSUING ENTITY" 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) all insurance policies related to the Mortgage Loans and any
insurance proceeds, (v) 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; Representations and Warranties Relating to
the Mortgage Loans" below and (vi) $1,000 deposited on behalf of the Depositor
on the Closing Date in respect of the Class P Certificates and $100, plus
interest, deposited on behalf of the Depositor on the Closing Date in respect of
the Class A-R Certificates. The Certificates also have the right to receive
payments from the Supplemental Interest Trust which holds the Swap Agreement and
the amounts on deposit in the Swap Account (in each case, as defined below). The
rights in respect of the Swap Agreement and amounts on deposit in the Swap
Account will not be part of any REMIC.

      The following is a summary description of the Mortgage Loans as of the
Cut-off Date. The information presented herein does not take into account any
Mortgage Loans that have or may prepay in full or have been or may be removed
because of incomplete documentation or otherwise for the period from the Cut-off
Date to the Closing Date, or other Mortgage Loans that may be substituted
therefor. As a result, the information regarding the Mortgage Loans may vary
from comparable information based upon the actual composition of the Mortgage
Pool as of the Closing Date, although such variance will not be material.

      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--Glossary") of the Mortgage Loans in the aggregate as of the
Cut-off Date.

      Each of MSMC, First National Bank of Nevada ("FNBN") 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". The MSMC Mortgage Loans are Mortgage
Loans purchased by MSMC that were underwritten by various correspondents
generally in accordance with MSMC's loan purchasing guidelines. The following
table sets forth, by Aggregate Cut-off Date Pool Principal Balance, the
Originators for the Mortgage Loans:

                                                        PERCENT
                                                     ORIGINATED IN
            ORIGINATOR/PURCHASE                      MORTGAGE POOL
            --------------------------------------   -------------
            MSMC
            (the "MSMC MORTGAGE LOANS")...........      76.01%
            FNBN
            (the "FNBN MORTGAGE LOANS")...........      15.34%
            Other
            (the "OTHER MORTGAGE LOANS")..........       8.65%

      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.


                                      S-28



      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 Assets of the Issuing Entity 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, the related Originator or
Servicer, as applicable, and the Trustee, on behalf of the Issuing Entity, the
Seller and the Depositor will assign to the Trustee, on behalf of the Issuing
Entity, 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/or Underwriting Standards"
below. GMAC Mortgage Corporation ("GMAC"), The Hemisphere National Bank
("HEMISPHERE") and Wachovia Mortgage Corp. ("WACHOVIA") will each service
certain of 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, on behalf of the Issuing Entity. 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 application of such payments to principal and interest.
Approximately 13.21% 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 86.79% 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 12, 36, 60, 84 or 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 50.58% of the Mortgage Loans, 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.

      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, which may be as short as 1 month. 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


                                      S-29



                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, the Six-Month LIBOR Index, the One-Year
                LIBOR Index and the One-Year CMT Index, a "MORTGAGE INDEX"),

and (2) a fixed percentage amount specified in the related mortgage note (the
"GROSS MARGIN"); provided, however, that, unless the related Mortgage Note does
not provide for any limitations on adjustments to the Mortgage Rate, the
Mortgage Rate for 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 0.13% of the Mortgage Loans have Mortgage Rates that adjust
monthly beginning at the origination of such Mortgage Loans. Approximately 0.03%
of the Mortgage Loans have Mortgage Rates that adjust semi-annually beginning at
the origination of such Mortgage Loans. Approximately 0.07% of the Mortgage
Loans have Mortgage Rates that adjust annually beginning at the origination of
such Mortgage Loans. Approximately 5.00% of the Mortgage Loans are 2/6 Month
Mortgage Loans. Approximately 8.81% of the Mortgage Loans are 3/1 Mortgage Loans
or 3/6 Month Mortgage Loans. Approximately 81.16% of the Mortgage Loans are 5/1
Mortgage Loans or 5/6 Month Mortgage Loans. Approximately 0.53% of the Mortgage
Loans are 7/1 Mortgage Loans or 7/6 Month Mortgage Loans. Approximately 4.26% of
the Mortgage Loans are 10/1 Mortgage Loans or 10/6 Month Mortgage Loans. A "3/1
MORTGAGE LOAN," a "5/1 MORTGAGE LOAN", a "7/1 MORTGAGE LOAN" and a "10/1
MORTGAGE LOAN" has a mortgage rate that is fixed for approximately 36, 60, 84
and 120 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


                                      S-30



MORTGAGE LOAN," a "5/6 MONTH MORTGAGE LOAN", a "7/6 MONTH MORTGAGE LOAN" and
"10/6 MONTH MORTGAGE LOAN" has a mortgage rate that is fixed for approximately
24, 36, 60, 84 and 120 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 April 1, 2005, March 1, 2035 and
July 1, 2036, respectively.

      As calculated using the MBA methodology, as of the Cut-off Date, none of
the Mortgage Loans were more than 30 days' delinquent. The Servicer of certain
of the Mortgage Loans has changed at least one time since they were originated.
A servicing transfer in some cases may have contributed to the delinquency of
the mortgage loan. The records of a given servicer may indicate that payments on
mortgage loans on which servicing transferred may indicate that those mortgage
loans were delinquent even though the related mortgagor made the scheduled
monthly payment. In addition, servicers may have incompatible servicing
platforms which may also contribute to the incorrect reporting of delinquencies
on mortgage loans. Determining the correct information would require a review of
underlying servicer records that is not readily available to the Depositor and
would require unreasonable effort or expense for the Depositor to obtain. Based
on the information available to the Depositor, it is estimated that no more than
1.00% of the Mortgage Loans, by aggregate Stated Principal Balance as of the
Cut-off Date, have been delinquent 30 days or more at least once since they were
originated. None of the Mortgage Loans have been 60 or more days delinquent
since they were originated. According to the MBA methodology, a mortgage loan
increases its delinquency status if a scheduled monthly payment with respect to
that mortgage loan is not received by the end of the day immediately preceding
that mortgage loan's next due date.

      No Mortgage Loan had a Loan-to-Value Ratio at origination of more than
approximately 100%. Except with respect to approximately 0.37% 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.

      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. 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


                                      S-31



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%.


                                      S-32





                                      TABULAR CHARACTERISTICS OF THE MORTGAGE POOL

                                                CURRENT MORTGAGE RATES(1)
-----------------------------------------------------------------------------------------------------------------------
                                                              PERCENT OF                                      WEIGHTED
                                               AGGREGATE       AGGREGATE                                       AVERAGE
                                NUMBER OF      PRINCIPAL       PRINCIPAL                                      ORIGINAL
RANGE OF CURRENT                 MORTGAGE       BALANCE         BALANCE     WEIGHTED AVERAGE     WEIGHTED      SUBJECT
MORTGAGE RATES (%)                LOANS       OUTSTANDING     OUTSTANDING      COUPON (%)      AVERAGE FICO    LTV (%)
---------------------------     ---------   ---------------   -----------   ----------------   ------------   ---------

4.501 - 5.000 .............           4     $  1,249,447.52        0.19%         4.897              769         74.42
5.001 - 5.500 .............          10        2,959,165.98        0.45          5.408              741         71.88
5.501 - 6.000 .............          52       15,369,084.41        2.36          5.864              716         70.62
6.001 - 6.500 .............         218       60,454,476.15        9.27          6.397              719         76.40
6.501 - 7.000 .............         501      145,973,063.66       22.38          6.856              707         76.23
7.001 - 7.500 .............         640      200,667,986.51       30.77          7.337              699         76.86
7.501 - 8.000 .............         461      143,840,659.12       22.05          7.798              689         77.81
8.001 - 8.500 .............         205       65,131,467.05        9.99          8.317              685         77.31
8.501 - 9.000 .............          49       12,334,241.97        1.89          8.774              679         79.98
9.001 - 9.500 .............          10        3,736,836.85        0.57          9.250              687         78.34
9.501 - 10.000 ............           2          504,462.85        0.08          9.730              596         79.47
                                ---------   ---------------   -----------
  TOTAL/WEIGHTED AVERAGE ..       2,152     $652,220,892.07      100.00%         7.334              699         76.83
                                =========   ===============   ===========


      ____________

      (1)   As of the Cut-off Date, the weighted average mortgage rate of the
            Mortgage Loans is expected to be approximately 7.334% per annum.



                                       CURRENT MORTGAGE LOAN PRINCIPAL BALANCES(1)
-----------------------------------------------------------------------------------------------------------------------
                                                              PERCENT OF                                      WEIGHTED
                                               AGGREGATE       AGGREGATE                                       AVERAGE
                                NUMBER OF      PRINCIPAL       PRINCIPAL                                      ORIGINAL
RANGE OF CURRENT MORTGAGE        MORTGAGE       BALANCE         BALANCE     WEIGHTED AVERAGE     WEIGHTED      SUBJECT
LOAN PRINCIPAL BALANCES ($)       LOANS       OUTSTANDING     OUTSTANDING      COUPON (%)      AVERAGE FICO    LTV (%)
---------------------------     ---------   ---------------   -----------   ----------------   ------------   ---------

0.01 - 100,000.00 .........         127     $ 10,084,666.28        1.55%         7.702              707         75.30
100,000.01 - 200,000.00 ...         607       95,305,234.49       14.61          7.296              703         77.20
200,000.01 - 300,000.00 ...         630      157,594,514.41       24.16          7.204              697         77.95
300,000.01 - 400,000.00 ...         336      117,310,180.81       17.99          7.237              702         78.10
400,000.01 - 500,000.00 ...         198       87,670,296.78       13.44          7.317              700         77.64
500,000.01 - 600,000.00 ...         100       54,135,267.93        8.30          7.442              698         78.20
600,000.01 - 700,000.00 ...          58       37,496,449.89        5.75          7.437              702         75.69
700,000.01 - 800,000.00 ...          24       18,017,800.23        2.76          7.480              687         76.50
800,000.01 - 900,000.00 ...          21       17,856,464.29        2.74          7.673              696         72.92
900,000.01 - 1,000,000.00 .          33       32,346,368.19        4.96          7.466              705         71.49
1,000,000.01 - 1,500,000.00          15       18,974,947.53        2.91          7.721              691         69.13
1,500,000.01 and above ....           3        5,428,701.24        0.83          7.856              651         66.71
                                ---------   ---------------   -----------
  TOTAL/WEIGHTED AVERAGE ..       2,152     $652,220,892.07      100.00%         7.334              699         76.83
                                =========   ===============   ===========


      ____________

      (1)   As of the Cut-off Date, the average current Mortgage Loan principal
            balance of the Mortgage Loans is approximately $303,076.62.


                                      S-33





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

Limited ...................       1,039     $326,598,950.88       50.07%         7.319              697         77.38
No Ratio ..................         424      137,048,068.92       21.01          7.478              700         77.16
Full/Alternative ..........         332       81,354,467.15       12.47          6.897              708         77.15
No Documentation ..........         218       62,269,916.49        9.55          7.592              697         73.45
Stated Documentation ......         139       44,949,488.63        6.89          7.435              699         75.91
                                ---------   ---------------   -----------
  TOTAL/WEIGHTED AVERAGE ..       2,152     $652,220,892.07      100.00%         7.334              699         76.83
                                =========   ===============   ===========




                                           ORIGINAL LOAN-TO-VALUE RATIOS(1)(2)
-----------------------------------------------------------------------------------------------------------------------
                                                              PERCENT OF                                      WEIGHTED
                                               AGGREGATE       AGGREGATE                                       AVERAGE
                                NUMBER OF      PRINCIPAL       PRINCIPAL                                      ORIGINAL
RANGE OF ORIGINAL                MORTGAGE       BALANCE         BALANCE     WEIGHTED AVERAGE     WEIGHTED      SUBJECT
LOAN-TO-VALUE RATIOS (%)          LOANS       OUTSTANDING     OUTSTANDING      COUPON (%)      AVERAGE FICO    LTV (%)
---------------------------     ---------   ---------------   -----------   ----------------   ------------   ---------

30.00 and below ...........           6     $    720,598.23        0.11%         6.612              710         22.50
30.01 - 35.00 .............           3          299,915.99        0.05          6.750              720         31.79
35.01 - 40.00 .............          12        2,756,281.32        0.42          6.958              710         37.80
40.01 - 45.00 .............           8        2,831,070.10        0.43          6.885              695         42.17
45.01 - 50.00 .............          10        4,503,260.48        0.69          6.558              753         47.15
50.01 - 55.00 .............          16        4,917,798.22        0.75          7.050              687         53.12
55.01 - 60.00 .............          27        8,359,067.10        1.28          6.923              677         58.01
60.01 - 65.00 .............          64       29,112,264.20        4.46          7.131              682         63.58
65.01 - 70.00 .............         153       57,580,874.94        8.83          7.355              689         69.26
70.01 - 75.00 .............         178       60,738,543.67        9.31          7.550              694         74.36
75.01 - 80.00 .............       1,596      462,293,625.03       70.88          7.327              702         79.85
80.01 - 85.00 .............          14        3,226,098.77        0.49          7.607              682         84.33
85.01 - 90.00 .............          46       10,479,737.22        1.61          7.684              682         89.63
90.01 - 95.00 .............          17        3,977,729.89        0.61          7.689              697         94.87
95.01 - 100.00 ............           2          424,026.91        0.07          7.623              728        100.00
                                ---------   ---------------   -----------
  TOTAL/WEIGHTED AVERAGE ..       2,152     $652,220,892.07      100.00%         7.334              699         76.83
                                =========   ===============   ===========


      ____________

      (1)   The weighted average original Loan-to-Value Ratio of the Mortgage
            Loans by Aggregate Cut-off Date Loan Balance is approximately
            76.83%.

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



                                                     CREDIT SCORE(1)
-----------------------------------------------------------------------------------------------------------------------
                                                              PERCENT OF                                      WEIGHTED
                                               AGGREGATE       AGGREGATE                                       AVERAGE
                                NUMBER OF      PRINCIPAL       PRINCIPAL                                      ORIGINAL
                                 MORTGAGE       BALANCE         BALANCE     WEIGHTED AVERAGE     WEIGHTED      SUBJECT
RANGE OF CREDIT SCORES            LOANS       OUTSTANDING     OUTSTANDING      COUPON (%)      AVERAGE FICO    LTV (%)
---------------------------     ---------   ---------------   -----------   ----------------   ------------   ---------

576 - 600 .................          20     $  6,256,859.26        0.96%         7.667              586         69.82
601 - 625 .................          69       23,709,916.71        3.64          7.708              619         75.16
626 - 650 .................         239       71,407,712.71       10.95          7.536              639         75.37
651 - 675 .................         375      112,703,786.01       17.28          7.486              664         77.36
676 - 700 .................         455      145,038,546.90       22.24          7.361              688         76.76
701 - 725 .................         353      104,824,997.95       16.07          7.178              713         78.33
726 - 750 .................         288       83,352,578.13       12.78          7.213              737         77.61
751 - 775 .................         213       61,618,867.28        9.45          7.201              762         76.59
776 - 800 .................         117       36,513,162.09        5.60          7.052              785         75.46
801 - 825 .................          23        6,794,465.03        1.04          7.060              806         73.74
                                ---------   ---------------   -----------
  TOTAL/WEIGHTED AVERAGE ..       2,152     $652,220,892.07      100.00%         7.334              699         76.83
                                =========   ===============   ===========


      ____________

      (1)   As of the Cut-off Date, the weighted average Credit Score of the
            Mortgagors related to the Mortgage Loans is approximately 699.


                                      S-34





                                      STATE DISTRIBUTION OF MORTGAGED PROPERTIES(1)
-----------------------------------------------------------------------------------------------------------------------
                                                              PERCENT OF                                      WEIGHTED
                                               AGGREGATE       AGGREGATE                                       AVERAGE
                                NUMBER OF      PRINCIPAL       PRINCIPAL                                      ORIGINAL
                                 MORTGAGE       BALANCE         BALANCE     WEIGHTED AVERAGE     WEIGHTED      SUBJECT
STATE                             LOANS       OUTSTANDING     OUTSTANDING      COUPON (%)      AVERAGE FICO    LTV (%)
---------------------------     ---------   ---------------   -----------   ----------------   ------------   ---------

California ................         586     $244,894,938.00       37.55%         7.273              702         75.21
Florida ...................         307       76,351,876.17       11.71          7.503              696         77.36
Nevada ....................         181       52,389,322.17        8.03          7.113              705         78.31
Virginia ..................         115       36,574,587.12        5.61          7.532              693         77.87
Arizona ...................         138       33,177,558.17        5.09          7.316              702         77.09
New York ..................          83       30,626,054.35        4.70          7.494              692         77.59
Maryland ..................          86       27,258,744.67        4.18          7.605              684         79.16
Washington ................          89       25,282,605.31        3.88          6.992              708         77.92
New Jersey ................          51       17,774,541.40        2.73          7.326              683         75.55
Illinois ..................          72       17,263,495.76        2.65          7.296              698         78.20
Other .....................         444       90,627,168.95       13.90          7.375              700         78.09
                                ---------   ---------------   -----------
  TOTAL/WEIGHTED AVERAGE ..       2,152     $652,220,892.07      100.00%         7.334              699         76.83
                                =========   ===============   ===========


      ____________

      (1)   The Other row in the preceding table includes 33 other states and
            the District of Columbia. No more than approximately 0.57% 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
                                               AGGREGATE       AGGREGATE                                       AVERAGE
                                NUMBER OF      PRINCIPAL       PRINCIPAL                                      ORIGINAL
                                 MORTGAGE       BALANCE         BALANCE     WEIGHTED AVERAGE     WEIGHTED      SUBJECT
LOAN PURPOSE                      LOANS       OUTSTANDING     OUTSTANDING      COUPON (%)      AVERAGE FICO    LTV (%)
---------------------------     ---------   ---------------   -----------   ----------------   ------------   ---------

Purchase ..................       1,549     $461,384,754.74       70.74%         7.340              705         78.68
Refinance - Cashout .......         469      153,533,272.78       23.54          7.368              681         71.85
Refinance - Rate Term .....         134       37,302,864.55        5.72          7.114              692         74.45
                                ---------   ---------------   -----------
  TOTAL/WEIGHTED AVERAGE ..       2,152     $652,220,892.07      100.00%         7.334              699         76.83
                                =========   ===============   ===========




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

Single Family Residence ...       1,191     $363,188,393.46       55.68%         7.327              697         76.57
Planned Unit Development ..         534      165,626,776.33       25.39          7.267              700         77.95
Condominium ...............         268       66,626,337.30       10.22          7.376              698         77.55
2-4 Family ................         158       56,687,974.73        8.69          7.523              707         74.34
Cooperative ...............           1           91,410.25        0.01          7.375              679         79.89
                                ---------   ---------------   -----------
  TOTAL/WEIGHTED AVERAGE ..       2,152     $652,220,892.07      100.00%         7.334              699         76.83
                                =========   ===============   ===========




                                                   OCCUPANCY TYPES(1)
-----------------------------------------------------------------------------------------------------------------------
                                                              PERCENT OF                                      WEIGHTED
                                               AGGREGATE       AGGREGATE                                       AVERAGE
                                NUMBER OF      PRINCIPAL       PRINCIPAL                                      ORIGINAL
                                 MORTGAGE       BALANCE         BALANCE     WEIGHTED AVERAGE     WEIGHTED      SUBJECT
OCCUPANCY TYPES                   LOANS       OUTSTANDING     OUTSTANDING      COUPON (%)      AVERAGE FICO    LTV (%)
---------------------------     ---------   ---------------   -----------   ----------------   ------------   ---------

Primary ...................       1,507     $491,670,583.88       75.38%         7.249              695         77.20
Investment ................         507      122,021,392.65       18.71          7.588              715         75.31
Second Home ...............         138       38,528,915.54        5.91          7.605              699         76.83
                                ---------   ---------------   -----------
  TOTAL/WEIGHTED AVERAGE ..       2,152     $652,220,892.07      100.00%         7.334              699         76.83
                                =========   ===============   ===========


      ____________

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


                                      S-35





                                            REMAINING TERMS TO MATURITY(1)
-----------------------------------------------------------------------------------------------------------------------
                                                              PERCENT OF                                      WEIGHTED
                                               AGGREGATE       AGGREGATE                                       AVERAGE
                                NUMBER OF      PRINCIPAL       PRINCIPAL                                      ORIGINAL
RANGE OF REMAINING TERMS         MORTGAGE       BALANCE         BALANCE     WEIGHTED AVERAGE     WEIGHTED      SUBJECT
TO MATURITY (MONTHS)              LOANS       OUTSTANDING     OUTSTANDING      COUPON (%)      AVERAGE FICO    LTV (%)
---------------------------     ---------   ---------------   -----------   ----------------   ------------   ---------

331 - 360 .................       2,152     $652,220,892.07      100.00%         7.334              699         76.83
                                ---------   ---------------   -----------
  TOTAL/WEIGHTED AVERAGE ..       2,152     $652,220,892.07      100.00%         7.334              699         76.83
                                =========   ===============   ===========


      ____________

      (1)   As of the Cut-off Date, the weighted average remaining term to
            maturity of the Mortgage Loans is approximately 358 months.



                                                     SEASONING(1)
-----------------------------------------------------------------------------------------------------------------------
                                                              PERCENT OF                                      WEIGHTED
                                               AGGREGATE       AGGREGATE                                       AVERAGE
                                NUMBER OF      PRINCIPAL       PRINCIPAL                                      ORIGINAL
RANGE OF SEASONING               MORTGAGE       BALANCE         BALANCE     WEIGHTED AVERAGE     WEIGHTED      SUBJECT
(MONTHS)                          LOANS       OUTSTANDING     OUTSTANDING      COUPON (%)      AVERAGE FICO    LTV (%)
---------------------------     ---------   ---------------   -----------   ----------------   ------------   ---------

0 .........................           9     $  5,734,750.00        0.88%         7.642              694         76.19
1 - 3 .....................       1,982      606,771,110.86       93.03          7.343              699         76.69
4 - 6 .....................         104       26,597,190.04        4.08          7.384              701         79.12
7 - 9 .....................          43        9,443,413.58        1.45          6.859              689         80.18
10 - 12 ...................           7        1,928,752.59        0.30          6.580              680         73.20
13 - 15 ...................           6        1,500,875.00        0.23          5.652              706         77.93
16 - 18 ...................           1          244,800.00        0.04          5.375              725         80.00
                                ---------   ---------------   -----------
  TOTAL/WEIGHTED AVERAGE ..       2,152     $652,220,892.07      100.00%         7.334              699         76.83
                                =========   ===============   ===========


      ____________

      (1)   As of the Cut-off Date, the weighted average seasoning of the
            Mortgage Loans is approximately 2 months.




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

1 Month Arms - IO 10 Years            2     $    867,706.18        0.13%         7.993              743         82.16
1 Year Arms - IO 1 Year ...           1          449,999.88        0.07          6.375              778         78.95
10 Year Arms ..............          16        5,052,809.03        0.77          7.976              697         79.25
10 Year Arms - IO 10 Years           43       22,030,771.41        3.38          7.814              688         75.89
10-6 Arm Baln 30/40 .......           2          703,767.18        0.11          7.500              655         73.55
2 Year Arms ...............          23        4,436,635.28        0.68          7.783              658         75.31
2 Year Arms - IO 10 Years .          53       16,852,619.36        2.58          7.426              685         76.22
2 Year Arms - IO 5 Years ..          29        9,627,969.65        1.48          7.618              662         78.94
2-6 Arm Baln 30/40 ........           5        1,701,397.35        0.26          8.024              671         77.09
3 Year Arms ...............          44       11,339,578.15        1.74          7.343              687         76.68
3 Year Arms - IO 10 Years .         101       31,678,065.39        4.86          6.895              699         76.75
3 Year Arms - IO 3 Years ..          17        4,512,238.80        0.69          6.380              727         78.17
3 Year Arms - IO 5 Years ..          32        8,939,920.04        1.37          7.556              679         79.88
3-6 Arm Baln 30/40 ........           3          985,275.52        0.15          7.078              688         74.46
5 Year Arms ...............         252       60,075,257.67        9.21          7.287              694         74.24
5 Year Arms - IO 10 Years .       1,337      410,966,330.04       63.01          7.273              705         76.94
5 Year Arms - IO 5 Years ..         173       58,132,139.66        8.91          7.709              684         78.23
5-6 Arm Baln 30/40 ........           1          186,009.08        0.03          7.875              725         80.00
6 Month Arms - IO 10 Years            1          204,000.00        0.03          6.500              719         66.89
7 Year Arms ...............           7        1,655,085.30        0.25          7.618              713         78.47
7 Year Arms - IO 10 Years .           5          987,417.10        0.15          7.357              744         77.47
7 Year Arms - IO 7 Years ..           5          835,900.00        0.13          7.452              731         78.24
                                ---------   ---------------   -----------
  TOTAL/WEIGHTED AVERAGE ..       2,152     $652,220,892.07      100.00%         7.334              699         76.83
                                =========   ===============   ===========



                                      S-36





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

One-Year CMT ..............           1     $    211,446.96        0.03%         7.500              703         95.00
One-Month LIBOR ...........           2          867,706.18        0.13          7.993              743         82.16
Six-Month LIBOR ...........       1,569      481,179,606.74       73.78          7.426              695         76.88
One-Year LIBOR ............         580      169,962,132.19       26.06          7.069              709         76.63
                                ---------   ---------------   -----------
  TOTAL/WEIGHTED AVERAGE ..       2,152     $652,220,892.07      100.00%         7.334              699         76.83
                                =========   ===============   ===========




                                GROSS MARGINS OF THE ADJUSTABLE RATE MORTGAGE LOANS(1)
-----------------------------------------------------------------------------------------------------------------------
                                                              PERCENT OF                                      WEIGHTED
                                               AGGREGATE       AGGREGATE                                       AVERAGE
                                NUMBER OF      PRINCIPAL       PRINCIPAL                                      ORIGINAL
                                 MORTGAGE       BALANCE         BALANCE     WEIGHTED AVERAGE     WEIGHTED      SUBJECT
RANGE OF GROSS MARGINS (%)        LOANS       OUTSTANDING     OUTSTANDING      COUPON (%)      AVERAGE FICO    LTV (%)
---------------------------     ---------   ---------------   -----------   ----------------   ------------   ---------

1.501 - 2.000 .............           1     $    270,000.00        0.04%         6.250              773         76.06
2.001 - 2.500 .............         999      338,309,932.85       51.87          7.267              705         76.12
2.501 - 3.000 .............         599      150,592,400.44       23.09          7.351              700         77.99
3.001 - 3.500 .............         121       37,869,598.45        5.81          7.003              700         76.23
3.501 - 4.000 .............         154       47,591,911.53        7.30          7.699              685         78.16
4.001 - 4.500 .............          21        5,978,426.30        0.92          7.418              697         75.85
4.501 - 5.000 .............         199       50,977,824.48        7.82          7.438              676         76.54
5.001 - 5.500 .............           9        3,353,760.19        0.51          7.999              675         77.73
5.501 - 6.000 .............          15        5,296,798.35        0.81          7.613              705         77.57
6.001 - 6.500 .............           6        2,816,948.84        0.43          7.837              682         77.73
6.501 - 7.000 .............           6        2,325,612.61        0.36          7.694              693         78.19
7.001 - 7.500 .............           9        2,861,841.47        0.44          7.674              657         80.83
7.501 - 8.000 .............           8        2,390,726.74        0.37          7.715              661         82.46
8.001 - 8.500 .............           3          921,989.82        0.14          8.232              646         82.97
8.501 - 9.000 .............           2          663,120.00        0.10          8.725              655         80.00
                                ---------   ---------------   -----------
  TOTAL/WEIGHTED AVERAGE ..       2,152     $652,220,892.07      100.00%         7.334              699         76.83
                                =========   ===============   ===========


      ____________

      (1)   As of the Cut-off Date, the weighted average Gross Margin of the
            Adjustable Rate Mortgage Loans is approximately 2.919%.



                             INITIAL PERIODIC CAPS OF THE ADJUSTABLE RATE MORTGAGE LOANS (1)
-----------------------------------------------------------------------------------------------------------------------
                                                              PERCENT OF                                      WEIGHTED
                                               AGGREGATE       AGGREGATE                                       AVERAGE
                                NUMBER OF      PRINCIPAL       PRINCIPAL                                      ORIGINAL
RANGE OF INITIAL                 MORTGAGE       BALANCE         BALANCE     WEIGHTED AVERAGE     WEIGHTED      SUBJECT
PERIODIC CAPS (%)                 LOANS       OUTSTANDING     OUTSTANDING      COUPON (%)      AVERAGE FICO    LTV (%)
---------------------------     ---------   ---------------   -----------   ----------------   ------------   ---------

Uncapped ..................           1     $    187,706.18        0.03%         8.875              719         90.00
0.501 - 1.000 .............           2          884,000.00        0.14          7.462              743         76.97
1.501 - 2.000 .............         143       37,377,610.19        5.73          7.165              684         76.39
2.501 - 3.000 .............         103       35,366,580.85        5.42          7.366              687         78.25
4.001 - 4.500 .............           1          146,400.00        0.02          7.375              642         71.41
4.501 - 5.000 .............         462      158,592,084.68       24.32          7.495              699         76.33
5.501 - 6.000 .............       1,437      418,859,910.17       64.22          7.285              701         76.92
6.001 - 6.500 .............           1          417,000.00        0.06          7.375              693         79.43
6.501 - 7.000 .............           2          389,600.00        0.06          6.375              701         79.60
                                ---------   ---------------   -----------
  TOTAL/WEIGHTED AVERAGE ..       2,152     $652,220,892.07      100.00%         7.334              699         76.83
                                =========   ===============   ===========


      ____________

      (1)   As of the Cut-off Date, the weighted average Initial Periodic Cap of
            the Adjustable Rate Mortgage Loans (other than any uncapped mortgage
            loans) is approximately 5.358%.



                            SUBSEQUENT PERIODIC CAPS OF THE ADJUSTABLE RATE MORTGAGE LOANS(1)
-----------------------------------------------------------------------------------------------------------------------
                                                              PERCENT OF                                      WEIGHTED
                                               AGGREGATE       AGGREGATE                                       AVERAGE
                                NUMBER OF      PRINCIPAL       PRINCIPAL                                      ORIGINAL
RANGE OF SUBSEQUENT              MORTGAGE       BALANCE         BALANCE     WEIGHTED AVERAGE     WEIGHTED      SUBJECT
PERIODIC CAPS (%)                 LOANS       OUTSTANDING     OUTSTANDING      COUPON (%)      AVERAGE FICO    LTV (%)
---------------------------     ---------   ---------------   -----------   ----------------   ------------   ---------

Uncapped ..................           1     $    187,706.18        0.03%         8.875              719         90.00
0.501 - 1.000 .............         873      251,242,101.08       38.52          7.437              697         77.30
1.501 - 2.000 .............       1,276      400,177,538.88       61.36          7.268              701         76.52
2.001 - 2.500 .............           1          233,595.93        0.04          6.750              755         80.00
2.501 - 3.000 .............           1          379,950.00        0.06          7.375              672         79.99
                                ---------   ---------------   -----------
  TOTAL/WEIGHTED AVERAGE ..       2,152     $652,220,892.07      100.00%         7.334              699         76.83
                                =========   ===============   ===========


      ____________

      (1)   As of the Cut-off Date, the weighted average Subsequent Periodic Cap
            of the Adjustable Rate Mortgage Loans (other than any uncapped
            mortgage loans) is approximately 1.615%.


                                      S-37





                            MAXIMUM MORTGAGE RATES OF THE ADJUSTABLE RATE MORTGAGE LOANS(1)
-----------------------------------------------------------------------------------------------------------------------
                                                              PERCENT OF                                      WEIGHTED
                                               AGGREGATE       AGGREGATE                                       AVERAGE
                                NUMBER OF      PRINCIPAL       PRINCIPAL                                      ORIGINAL
RANGE OF MAXIMUM                 MORTGAGE       BALANCE         BALANCE     WEIGHTED AVERAGE     WEIGHTED      SUBJECT
MORTGAGE RATES (%)                LOANS       OUTSTANDING     OUTSTANDING      COUPON (%)      AVERAGE FICO    LTV (%)
---------------------------     ---------   ---------------   -----------   ----------------   ------------   ---------

9.001 - 10.000 ............           2     $    611,497.52        0.09%         4.869              778         68.61
10.001 - 11.000 ...........          18        5,487,661.26        0.84          5.705              737         74.33
11.001 - 12.000 ...........         137       44,360,593.11        6.80          6.526              708         74.22
12.001 - 13.000 ...........         936      276,408,315.29       42.38          7.010              706         76.44
13.001 - 14.000 ...........         857      268,890,188.86       41.23          7.606              693         77.40
14.001 - 15.000 ...........         192       52,430,729.33        8.04          8.374              681         78.41
15.001 - 16.000 ...........          10        4,031,906.70        0.62          9.310              673         78.39
                                ---------   ---------------   -----------
  TOTAL/WEIGHTED AVERAGE ..       2,152     $652,220,892.07      100.00%         7.334              699         76.83
                                =========   ===============   ===========


      ____________

      (1)   As of the Cut-off Date, the weighted average maximum mortgage rate
            of the Adjustable Rate Mortgage Loans is expected to be
            approximately 13.084% per annum.



                                 MONTHS TO NEXT RATE ADJUSTMENT OF THE ADJUSTABLE RATE
                                                   MORTGAGE LOANS(1)
-----------------------------------------------------------------------------------------------------------------------
                                                              PERCENT OF                                      WEIGHTED
                                               AGGREGATE       AGGREGATE                                       AVERAGE
                                NUMBER OF      PRINCIPAL       PRINCIPAL                                      ORIGINAL
RANGE OF MONTHS TO NEXT          MORTGAGE       BALANCE         BALANCE     WEIGHTED AVERAGE     WEIGHTED      SUBJECT
RATE ADJUSTMENT                   LOANS       OUTSTANDING     OUTSTANDING      COUPON (%)      AVERAGE FICO    LTV (%)
---------------------------     ---------   ---------------   -----------   ----------------   ------------   ---------

0 - 5 .....................           3     $  1,071,706.18        0.16%         7.709              739         79.26
6 - 11 ....................           1          449,999.88        0.07          6.375              778         78.95
12 - 17 ...................          13        2,878,236.17        0.44          6.453              691         83.01
18 - 23 ...................         103       31,225,460.47        4.79          7.561              675         76.48
24 - 29 ...................          23        6,032,472.26        0.92          6.687              681         75.21
30 - 35 ...................         167       49,587,530.64        7.60          7.136              697         77.49
36 - 41 ...................           1          350,000.00        0.05          7.875              595         79.10
48 - 53 ...................          15        2,722,057.74        0.42          7.473              689         82.73
54 - 59 ...................       1,742      522,983,528.71       80.19          7.320              701         76.73
60 - 65 ...................           6        3,654,150.00        0.56          7.632              717         78.53
78 - 83 ...................          17        3,478,402.40        0.53          7.504              726         78.13
114 - 119 .................          60       26,317,347.62        4.04          7.841              689         76.80
120 - 125 .................           1        1,470,000.00        0.23          7.750              681         70.00
                                ---------   ---------------   -----------
  TOTAL/WEIGHTED AVERAGE ..       2,152     $652,220,892.07      100.00%         7.334              699         76.83
                                =========   ===============   ===========


      ____________

      (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 57 months.


                                      S-38



ASSIGNMENT OF THE MORTGAGE LOANS; REPRESENTATIONS AND WARRANTIES RELATING TO 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 Issuing
Entity. 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 LaSalle Bank National
Association, as Trustee (the "TRUSTEE") of the Issuing Entity, 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 or on behalf of 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 related Originators, pursuant to their respective the Assignment
Agreements, and/or the Sponsor pursuant to the mortgage loan purchase agreement
or the Pooling and Servicing Agreement, will make certain representations and
warranties regarding the Mortgage Loans which will include, among other things,
that:

      o   as of the cut-off date, the information about the Mortgage Loans in
          this prospectus supplement was true and correct in all material
          respects;

      o   except as otherwise described in this prospectus supplement, each
          Mortgage Loan is secured by a first lien on the related mortgaged
          property is the subject of a primary insurance policy;

      o   the Sponsor and Seller had good title to the Mortgage Loans and,
          except as otherwise described in this prospectus supplement, no
          Mortgage Loan is subject to offsets, defenses or counterclaims except
          as may be provided under the Servicemembers' Civil Relief Act or
          similar state laws;


                                      S-39



      o   to the best of the Sponsor's or Originator's knowledge, the mortgaged
          property securing each Mortgage Loan is free of material damage and is
          in good repair;

      o   each Mortgage Loan complied in all material respects with all
          applicable local, state and federal laws at the time of origination;
          and

      o   to the best of the Sponsor's or Originator's knowledge, there is no
          delinquent tax or assessment lien against the mortgaged property on
          any Mortgage Loan.

      The Trustee or a Custodian on its behalf 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 or a Custodian on behalf of the Trustee will
hold such Mortgage Files in trust for the benefit of the Certificateholders in
accordance with their respective customary procedures, including storing the
documents in fire-resistant facilities. 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 assets of the
Issuing Entity. In addition if one of the above representations or any other
representation or warranty with respect to a Mortgage Loan in the mortgage loan
purchase agreement or an Assignment Agreement, as applicable, is breached 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
assets of the Issuing Entity. If required to repurchase a Mortgage Loan, the
Seller or the related Originator as applicable will be required to repurchase
that Mortgage Loan 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 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) 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, (iii) have a Loan-to-Value Ratio equal to or
less than that of the Deleted Mortgage Loan, (iv) have a remaining term to
maturity not greater than (and not more than one year less than) that of the
Deleted Mortgage Loan, (v) is otherwise acceptable to the Seller, (vi) have the
same adjustment date as that of the Deleted Mortgage Loan, (vii) have a minimum
Mortgage Rate not less than that of the Deleted Mortgage Loan, (viii) 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.


                                      S-40



LOAN PURCHASING GUIDELINES AND/OR UNDERWRITING STANDARDS

      General. Each of the Originators, and in certain circumstances, the
Seller, will represent and warrant that each of the Mortgage Loans sold by it
was underwritten in accordance with that Originator's underwriting guidelines.
The Seller's loan purchasing guidelines for the MSMC Mortgage Loans are
described below and may not apply to other mortgage loans sold to the Issuing
Entity.

      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.

      General. For a description of Morgan Stanley Mortgage Capital Inc. ("MSMC"
or the "SPONSOR") please see "The Sponsor" in this prospectus supplement.

      The loan purchasing guidelines below apply to MSMC Mortgage Loans and may
not apply to other Mortgage Loans sold by MSMC.

      Loan Purchasing Guidelines. 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, on a case-by-case basis, the Seller may
determine that, based upon compensating factors, a prospective borrower not
strictly qualifying under its loan purchasing guidelines warrants an
underwriting exception. Compensating factors may include, but are not limited
to, low loan-to-value ratios, low debt-to-income ratios, good credit history,
stable employment, financial reserves, and time in residence at the applicant's
current address. A significant number of the Mortgage Loans sold by the Seller
to the Issuing Entity may represent underwriting exceptions.

      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 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.


                                      S-41



      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 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

      The Sponsor has contracted with GMAC to service the Mortgage Loans owned
by the Issuing Entity respect to which the Sponsor owns the servicing rights
(the "SPONSOR SERVICING RIGHTS MORTGAGE LOANS"). GMAC did not originate any of
the Sponsor Servicing Rights Mortgage Loans. The Sponsor has the right to
terminate GMAC as servicer of the Sponsor Servicing Rights Mortgage Loans at any
time, without cause, and sell the servicing rights to a third party as described
in "Servicing of the Mortgage Loans -Seller's Retention of Servicing Rights" in
this prospectus supplement.

      General. GMAC Mortgage Corporation ("GMACM") is a Pennsylvania corporation
and a wholly-owned subsidiary of GMAC Residential Holding Corporation, which is
a wholly owned subsidiary of Residential Capital Corporation ("RESCAP"). ResCap
is a wholly-owned subsidiary of GMAC Mortgage Group, Inc., which is a
wholly-owned subsidiary of General Motors Acceptance Corporation ("GMAC"). GMAC
is a wholly-owned subsidiary of General Motors Corporation.


                                      S-42



      GMAC entered the residential real estate finance business in 1985 through
its acquisition of Colonial Mortgage Service Company, which was formed in 1926,
and the loan administration, servicing operations and portfolio of Norwest
Mortgage, which entered the residential mortgage loan business in 1906. These
businesses formed the original basis of what is now GMACM.

      GMACM maintains its executive and principal offices at 100 Witmer Road,
Horsham, Pennsylvania 19044. Its telephone number is (215) 682 1000.

      The diagram below illustrates the ownership structure among the parties
affiliated with GMACM.

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

                           General Motors Corporation

                        ---------------------------------
                                        |
                                        |
                        ---------------------------------

                            General Motors Acceptance
                                   Corporation
                                     (GMAC)

                        ---------------------------------
                                        |
                                        |
                        ---------------------------------

                         Residential Capital Corporation
                                    (ResCap)

                        ---------------------------------
                                        |
                                        |
                        ---------------------------------

                            GMAC Mortgage Corporation

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

      Servicing Activities. GMAC Mortgage Corporation generally retains the
servicing rights with respect to loans it sells or securitizes, and also
occasionally purchases mortgage servicing rights from other servicers or acts as
a subservicer of mortgage loans (and does not hold the corresponding mortgage
servicing right asset).

      As of December 31, 2005, GMAC Mortgage Corporation acted as primary
servicer and owned the corresponding servicing rights on approximately 2,036,298
of residential mortgage loans having an aggregate unpaid principal balance of
approximately $250 billion, and GMAC Mortgage Corporation acted as subservicer
(and did not own the corresponding servicing rights) on approximately 271,915
loans having an aggregate unpaid principal balance of over $38.9 billion.

      GMAC Mortgage Corporation Servicing Experience. The following tables set
forth the mortgage loans serviced by GMAC Mortgage Corporation for the periods
indicated, and the annual average number of such loans for the same period. GMAC
Mortgage Corporation was the servicer of a residential mortgage loan portfolio
of approximately $150.4 billion, $12.5 billion, $21.2 billion and $6.67 billion
during the year ended December 31, 2002 backed by prime conforming mortgage
loans, prime non-conforming mortgage loans, government mortgage loans and
second-lien mortgage loans, respectively. GMAC Mortgage Corporation was the
servicer of a residential mortgage loan portfolio of approximately $186.4
billion, $32.4 billion, $18.1 billion and $13.0 billion during the year ended
December 31, 2005 backed by prime conforming mortgage loans, prime
non-conforming mortgage loans, government mortgage loans and second-lien
mortgage loans, respectively. The percentages shown under


                                      S-43



"Percentage Change from Prior Year" represent the ratio of (a) the difference
between the current and prior year volume over (b) the prior year volume.



                                  GMAC MORTGAGE CORPORATION

                         PRIMARY SERVICING PORTFOLIO ($ IN MILLIONS)
--------------------------------------------------------------------------------------------
                                                  For the Year Ended December 31,
                                       -----------------------------------------------------
                                           2005         2004         2003           2002
                                       -----------  ------------  ------------  ------------

Prime Conforming Mortgage Loans
------------------------------------
No. of Loans                            1,392,870    1,323,249     1,308,284      1,418,843
Dollar Amount of Loans                   $186,364     $165,521      $153,601       $150,421
Percentage Change from Prior Year          12.59%        7.76%         2.11%            N/A

Prime Non-Conforming Mortgage Loans
------------------------------------
No. of Loans                               69,488       53,119        34,041         36,225
Dollar Amount of Loans                    $32,385      $23,604       $13,937        $12,543
Percentage Change from Prior Year          37.20%       69.36%        11.12%            N/A

Government Mortgage Loans
------------------------------------
No. of Loans                              181,679      191,844       191,023        230,085
Dollar Amount of Loans                    $18,098      $18,328       $17,594        $21,174
Percentage Change from Prior Year          -1.25%        4.17%       -16.91%            N/A

Second Lien Mortgage Loans
------------------------------------
No. of Loans                              392,261      350,334       282,128        261,416
Dollar Amount of Loans                    $13,034      $10,374        $7,023         $6,666
Percentage Change from Prior Year          25.64%       47.71%         5.36%            N/A

Total Mortgage Loans Serviced
------------------------------------
No. of Loans                            2,036,298    1,918,546     1,815,476      1,946,569
Dollar Amount of Loans                   $249,881     $217,827      $192,155       $190,804
Percentage Change from Prior Year          14.72%       13.36%         0.71%            N/A


      Billing and Payment Procedures. As servicer, GMAC Mortgage Corporation
collects and remits mortgage loan payments, responds to borrower inquiries,
accounts for principal and interest, holds custodial and escrow funds for
payment of property taxes and insurance premiums, counsels or otherwise works
with delinquent borrowers, supervises foreclosures and property dispositions and
generally administers the loans. GMAC Mortgage Corporation sends monthly
invoices or annual coupon books to borrowers to prompt the collection of the
outstanding payments. Borrowers may elect for monthly payments to be deducted
automatically from bank accounts on the same day every month or may take
advantage of on demand ACH payments made over the internet or via phone.

                         SERVICING OF THE MORTGAGE LOANS

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. 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


                                      S-44



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.

      Each Servicer may enter into subservicing agreements with subservicers for
the servicing and administration of the mortgage loans. However, no subservicing
agreement will take effect until 30 days after written notice is received by
both the Master Servicer and the Sponsor. The terms of any subservicing
agreement may not be inconsistent with any of the provisions of the Pooling and
Servicing Agreement or the related underlying servicing agreement as modified by
the related Assignment Agreement. Any subservicing agreement will include the
provision that such agreement may be immediately terminated by the Sponsor or
the Master Servicer without fee, in accordance with the terms of the Pooling and
Servicing Agreement, in the event that the applicable Servicer, for any reason,
is no longer a Servicer (including termination due to an event of default).

      Each Servicer will remain obligated and primarily liable to the Master
Servicer for the servicing and administering of the mortgage loans in accordance
with the provisions of the Pooling and Servicing Agreement without diminution of
such obligation or liability by virtue of the subservicing agreements or
arrangements or by virtue of indemnification from the subservicer and to the
same extent and under the same terms and conditions as if the applicable
servicer alone were servicing and administering the mortgage loans. The
applicable servicer will be solely liable for all fees owed by it to any
subservicer, regardless of whether the applicable servicer's compensation is
sufficient to pay the subservicer fees.

      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.
Amounts on deposit in the related Custodial Account may be invested by the
related Servicer in certain permitted investments unless otherwise prohibited by
the related underlying servicing agreement. Any losses resulting from such
investments are required to be reimbursed to such Custodial Account by the
related Servicer out of its own funds. The Servicers are not permitted to
commingle funds in the Custodial Accounts with any other funds or assets.

      Each servicer will be required to act with respect to mortgage loans in
default, or as to which default is reasonably foreseeable, in accordance with
procedures set forth in the Pooling and Servicing Agreement. These procedures
among other things, may result in (i) foreclosing on the mortgage loan, (ii)
accepting the deed to the related mortgaged property in lieu of foreclosure,
(iii) granting the borrower under the mortgage loan a modification or
forbearance, which may consist of waiving, modifying or varying any term of such
mortgage loan (including modifications that would change the mortgage interest
rate, forgive the payment of principal or interest, or extend the final maturity
date of such mortgage loan) or (iv) accepting payment from the borrower of an
amount less than the principal balance of the mortgage loan in final
satisfaction of the mortgage loan. In addition, the final maturity date of any
mortgage loan may not be extended beyond the Last Scheduled Distribution Date
for the offered certificates.

      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-45



      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 Issuing
Entity 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;
ADMINISTRATIVE FEES

      All funds collected on the Mortgage Loans that are available for
distribution to Certificateholders will be net of the certain fees payable on
each Mortgage Loan. On each Distribution Date, the Servicers, the Master
Servicer, each Custodian, the Securities Administrator and the Trustee will be
entitled to their fees and reimbursement of certain expenses (including
indemnification payments) prior to the Certificateholders receiving any
distributions. The Servicing Fee for any Distribution Date and for any Mortgage
Loan will be an amount equal to one-twelfth of the Servicing Fee rate described
below on the Stated Principal Balance of such Mortgage Loan. The fees of the
Trustee, each Custodian and the Securities Administrator are payable by the
Master Servicer out if its master servicing compensation.

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


                                      S-46





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

FEES

Master Servicing            Reinvestment income on     Compensation                 Amounts on deposit in     Monthly
Compensation / Master       amounts on deposit for                                  the Distribution Account
Servicer                    the period from between
                            the Servicer Remittance
                            Date and the
                            Distribution Date. (3)(4)

Servicing Fee / GMAC        Equal to 1/12 of the       Compensation (5)             Payments made by          Monthly
                            product of                                              obligors with respect
                            (i) the principal                                       to the Mortgage Loans
                            balance of such Mortgage                                serviced by GMAC, each,
                            Loans as of the first                                   a "GMAC SERVICED
                            day of the related Due                                  MORTGAGE LOAN."
                            Period and (ii) a
                            Servicing Fee Rate which
                            is between 0.250% and
                            0.375% per annum. As of
                            the Cut-off Date the
                            weighted average
                            Servicing Fee Rate on
                            the GMAC Serviced
                            Mortgage Loan is
                            approximately 0.375% per
                            annum.

Servicing Fee / Hemisphere  Equal to 1/12 of the       Compensation (5)             Payments made by          Monthly
                            product of (i) the                                      obligors with respect
                            principal  balance                                      to the Mortgage Loans
                            of such Mortgage                                        serviced by Hemisphere,
                            Loans as of the first                                   each, a "HEMISPHERE
                            day of the related Due                                  SERVICED MORTGAGE LOAN."
                            Period and (ii) a
                            Servicing Fee Rate which
                            is 0.375% per annum.

Servicing Fee / Wachovia    Equal to 1/12 of the       Compensation (5)             Payments made by          Monthly
                            product of (1) the                                      obligors with respect
                            principal balance                                       to the Mortgage Loans
                            of such Mortgage                                        serviced by Wachovia,
                            Loans as of the first                                   each, a "WACHOVIA
                            day of the related Due                                  SERVICED MORTGAGE LOAN."
                            Period and (2) a
                            Servicing Fee Rate which
                            is between 0.250% and
                            0.375% per annum. As of
                            the Cut-off Date the
                            weighted average
                            Servicing Fee Rate on
                            the Wachovia Serviced
                            Mortgage Loan is
                            approximately 0.259% per
                            annum.

Trustee Fee / Trustee       As determined between      Compensation                 Payable by the Master     As determined between
                            the Master Servicer and                                 Servicer out of its       the Master Servicer
                            the Trustee                                             funds                     and the Trustee



                                      S-47





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

Custodian Fee /             As determined between      Compensation                 Payable by the Master     As determined between
Custodians                  the Master Servicer and                                 Servicer out of its       the Master Servicer
                            the Custodians                                          funds                     and the Custodian

Securities Administrator    As determined between      Compensation                 Payable by the Master     As determined between
Fee / Securities            the Master Servicer and                                 Servicer out of its       the Master Servicer
Administrator               the Securities                                          funds                     and the Securities
                            Administrator (3)                                                                 Administrator

Net Swap Payments and       As described in            Contractual Obligation       Payable by the            Monthly in accordance
Swap Termination Payments   "Description of the                                     Securities                with the provisions
/ Swap Counterparty         Certificates--The Swap                                  Administrator out of      of the Swap Agreement
                            Account" and "--The Swap                                the Available
                            Agreement" in this                                      Distribution Amount for
                            prospectus supplement.                                  Loan

EXPENSES

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

Servicing Advances /        To the extent of funds     Reimbursement of Expenses    With respect to each      Time to time
Master Servicer and         available, the amount of                                Mortgage Loan, late
respective Servicers        any Servicing Advances.                                 recoveries of the
                                                                                    payments of the costs
                                                                                    and expenses,
                                                                                    liquidation proceeds,
                                                                                    Subsequent Recoveries,
                                                                                    purchase proceeds or
                                                                                    repurchase proceeds for
                                                                                    that Mortgage Loan (6)

Indemnification expenses    Amounts for which the      Indemnification              Amounts on deposit on     Time to time
/ respective Servicers      respective Servicers are                                the Custodial Account
                            entitled to                                             prior to the transfer
                            indemnification.                                        to the Distribution
                                                                                    Account

Indemnification expenses    Amounts for which the      Indemnification              Amounts on deposit on     Time to time
/ the Seller, Master        Seller, Master Servicer,                                the Distribution
Servicer, Trustee,          Trustee, Custodians and                                 Account prior to
Custodians and Depositor    Depositor are entitled                                  distributions to
                            to indemnification.                                     Certificateholders



                                      S-48



_____________

(1)   If the Trustee succeeds to the position of Master Servicer and/or
      Securities Administrator, it will be entitled to receive the same fees and
      expenses of the Master Servicer or Securities Administrator, as
      applicable, described in this prospectus supplement. Any change to the
      fees and expenses described in this prospectus supplement would require an
      amendment to the Pooling and Servicing Agreement.

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

(3)   If the positions of Securities Administrator and Master Servicer currently
      occupied by Wells Fargo Bank, National Association are subsequently
      assumed by multiple entities, then any succeeding entities will be
      entitled in the aggregate to the Master Servicer Compensation.

(4)   The "SERVICER REMITTANCE DATE" shall be the 18th day of each month (or, if
      the 18th is not a Business Day, then no later than the immediately
      following Business Day).

(5)   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.

(6)   Reimbursement of Servicing Advances for a Mortgage Loan is limited to the
      late recoveries of the payments of the costs and expenses, liquidation
      proceeds, Subsequent Recoveries, purchase proceeds or repurchase proceeds
      for that Mortgage Loan.


      The amount of each Servicer's respective Servicing Fees is 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" with respect to each Mortgage Loan and any
Distribution Date will be the related Servicing Fee Rate.

      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.


                                      S-49



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 Assets of the Issuing
Entity 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 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 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, 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 Servicer and the other transaction parties specified in the Pooling
and Servicing Agreement, is required to deliver to the Depositor, the Master
Servicer and the rating agencies in March of each year, starting in 2007, an
officer's certificate stating that:

      o     a review of the activities of that Servicer during the preceding
calendar year and of performance under the Pooling and Servicing Agreement has
been made under such officer's supervision; and


                                      S-50



      o     to the best of such officer's knowledge, based on such review, the
servicer has fulfilled all of its obligations under the Pooling and Servicing
Agreement for such year, or, if there has been a default in the fulfillment of
any such obligation, specifying each such default known to such officer and the
nature and status of such default, including the steps being taken by the
servicer to remedy such default.

      In addition, in March of each year, commencing with March 2007, each
servicer, each custodian, the Master Servicer, the Securities Administrator and
the Trustee, to the extent they provide a "servicing" function (as defined in
Regulation AB (17 CFR 229.1100 et seq.) ("REG AB") to the Issuing Entity, will
be required to deliver to the Depositor an Assessment of Compliance, with
respect to each Form 10-K filed, that contains the following:

      o     a statement of the party's responsibility for assessing compliance
with the servicing criteria applicable to it;

      o     a statement that the party used the criteria in Item 1122(d) of Reg
AB to assess compliance with the applicable servicing criteria;

      o     the party's assessment of compliance with the applicable servicing
criteria during and as of the end of the prior calendar month, setting forth any
material instance of noncompliance identified by the party; and

      o     a statement that a registered public accounting firm has issued an
attestation report on the party's assessment of compliance with the applicable
servicing criteria during and as of the end of the prior calendar month.

      Each party that is required to deliver an Assessment of Compliance will
also be required to simultaneously deliver an Attestation report of a registered
public accounting firm, prepared in accordance with the standards for
attestation engagements issued or adopted by the Public Company Accounting
Oversight Board, that expresses an opinion, or states that an opinion cannot be
expressed, concerning the party's assessment of compliance with the applicable
servicing criteria. You may obtain copies of these statements and reports for a
particular Issuing Entity without charge upon written request to the Securities
Administrator at the address provided in this prospectus supplement.

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 Issuing Entity 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


                                      S-51



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.

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.

      Each Servicer has agreed that, after that Servicer has received notice of
termination, the Master Servicer may execute and deliver, on behalf of the
terminated Servicer, as attorney-in-fact or otherwise, any and all documents and
other instruments, and do or accomplish all other acts or things necessary or
appropriate to effect the termination of the Servicer, including the transfer
and endorsement or assignment of the Mortgage Loans and related documents. Each
Servicer has agreed to cooperate with the Master Servicer in effecting its
termination, including the transfer to the Master Servicer for all cash amounts
that shall at the time be credited to the related Custodial Accounts, or
thereafter be received with respect to the Mortgage Loans. Upon request of the
Master Servicer, each Servicer has also agreed, at its expense, to deliver to
the assuming party all documents and records relating to any subservicing
arrangement and the Mortgage Loans being serviced by it and an accounting of
amounts collected held by it and otherwise us its best efforts to effect the
orderly and efficient transfer of the servicing of those Mortgage Loans to the
assuming party. No additional funds have been reserved to pay for any expenses
not paid by the Servicer in connection with a servicing transfer but will then
be required to be paid by the Issuing Entity.

ELIGIBILITY REQUIREMENTS FOR TRUSTEE AND SECURITIES ADMINISTRATOR; RESIGNATION
AND REMOVAL OF TRUSTEE OR SECURITIES ADMINISTRATOR

      Each of the Trustee and the Securities Administrator must be a corporation
or association organized and doing business under the laws of a state or the
United States of America, authorized under such laws to exercise corporate trust
powers. The Trustee must have a combined capital and surplus of at least
$50,000,000, be subject to supervision or examination by federal or state
authority and have a credit rating that would not cause any of the rating
agencies to reduce their respective then current ratings of the certificates. In
case at any time the Trustee or the Securities Administrator ceases to be
eligible, the Trustee or the Securities Administrator, as applicable, will
resign in the manner and with the effect as specified below.

      The Trustee or the Securities Administrator may at any time resign its
position by giving written notice of resignation to the Depositor, the Master
Servicer, the Sponsor, each servicer and each rating agency not less than 60
days before the date specified in such notice, when such resignation is to take
effect, and acceptance by a successor Trustee or Securities Administrator
meeting the above eligibility requirements. If no successor Trustee or
Securities Administrator meeting the eligibility requirements has been so
appointed and has accepted appointment within 30 days after the giving of such
notice or resignation, the resigning Trustee or Securities Administrator may
petition


                                      S-52



any court of competent jurisdiction for the appointment of a successor Trustee
or Securities Administrator, as applicable.

      If at any time the Trustee or the Securities Administrator ceases to meet
the eligibility requirements and fails to resign after written request by the
Depositor, or if at any time the Trustee or the Securities Administrator becomes
incapable of acting, or is adjudged as bankrupt or insolvent, or a receiver of
the Trustee or the Securities Administrator or of its property is appointed, or
any public officer takes charge or control of the Trustee or the Securities
Administrator or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, or a tax is imposed with respect to the Issuing
Entity by any state in which the Trustee or the Issuing Entity is located and
the imposition of such tax would be avoided by the appointment of a different
Trustee, then the Depositor or the applicable servicer may remove the Trustee or
the Securities Administrator and appoint a successor Trustee or a successor
Securities Administrator, 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.

      The holders of certificates entitled to a majority of the voting rights
may at any time remove the Trustee or the Securities Administrator and appoint a
successor Trustee or Securities Administrator by written instrument or
instruments, signed by such holders or their attorneys-in-fact duly authorized.

      Any resignation or removal of the Trustee or the Securities Administrator
and appointment of a successor Trustee or Securities Administrator will become
effective upon acceptance of appointment by the successor Trustee or Securities
Administrator, as applicable.

SELLER'S RETENTION OF SERVICING RIGHTS

      Although the Seller is selling the Mortgage Loans to the Issuing Entity on
the Closing Date, with respect to certain of the Mortgage Loans, the Seller may
have retained the right to terminate GMAC as 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 the
Seller shall have received prior 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. The preceding sentence notwithstanding, the Seller shall not be
required to get a no-downgrade letter from the Rating Agencies if: (i) the
Rating Agencies received prior written notice of the transfer of the servicing
rights and the name of the successor Servicer, (ii) such successor Servicer has
a servicing rating in the highest category of Fitch or Moody's to the extent
that Fitch or Moody's, respectively, is a Rating Agency, and such successor
Servicer has a servicer evaluation ranking in one of the two highest categories
of S&P to the extent that S&P is a Rating Agency, and (iii) such successor
Servicer shall service the related Mortgage Loans under either the Purchase and
Servicing Agreement together with the related Assignment Agreement under which
such Mortgage Loans are currently being serviced or under another Servicing
Agreement together with a related Assignment Agreement that have already been
reviewed and approved by the Rating Agencies.

                                   THE SPONSOR

      The sponsor is Morgan Stanley Mortgage Capital Inc., a New York
corporation ("MSMC"). MSMC is an affiliate, through common parent ownership, of
Morgan Stanley Capital Services Inc., Morgan Stanley Derivative Products Inc.
and Morgan Stanley & Co. Incorporated, one of the underwriters. MSMC is also an
affiliate of the depositor and a direct, wholly-owned subsidiary of Morgan
Stanley (NYSE:MS). The executive offices of MSMC are located at 1585 Broadway,
New York, New York 10036, telephone number (212) 761-4000. Morgan Stanley
Mortgage Capital Inc. provides warehouse and repurchase financing to mortgage
lenders and purchases closed, first- and subordinate-lien residential mortgage
loans for securitization or resale, or for its own investment. MSMC also
originates commercial mortgage loans. Morgan Stanley Mortgage Capital Inc. does
not currently service loans.


                                      S-53



Instead, MSMC contracts with other entities (including its affiliate Morgan
Stanley Credit Corp.) to service the loans on its behalf.

      MSMC acquires residential mortgage loans through bulk purchases and also
through purchases of single loans through MSMC's conduit loan purchase program.
The mortgage loans purchased through its conduit program generally conform to
the conduit origination standards.

      Prior to acquiring any residential mortgage loans, MSMC conducts a review
of the related mortgage loan seller that is based upon the credit quality of the
selling institution. MSMC's review process may include reviewing select
financial information for credit and risk assessment and conducting an
underwriting guideline review, senior level management discussion and/or
background checks. The scope of the loan due diligence varies based on the
credit quality of the mortgage loans.

      The underwriting guideline review entails a review of the mortgage loan
origination processes and systems. In addition, such review may involve a
consideration of corporate policy and procedures relating to state and federal
predatory lending, origination practices by jurisdiction, historical loan level
loss experience, quality control practices, significant litigation and/or
material investors.

      As mentioned above, MSMC currently contracts with its affiliate and with
third party servicers for servicing the mortgage loans that it originates or
acquires. Third party servicers are also assessed based upon the servicing
rating and the credit quality of the servicing institution. The servicers may be
reviewed for their systems and reporting capabilities, review of collection
procedures and confirmation of servicers' ability to provide loan-level data. In
addition, MSMC may conduct background checks, meet with senior management to
determine whether the servicer complies with industry standards or otherwise
monitor the servicer on an ongoing basis.

      MSMC has been the sponsor of securitizations backed by residential
mortgage loans, including prime and alt-a mortgage loans, since 2004. The
following table describes the approximate volume of prime and alt-a mortgage
loan securitizations (first-lien mortgage loans) sponsored by MSMC since 2004:

                   Year             Approximate Volume
            ------------------    ----------------------
                   2004               $7.44 billion
                   2005               $7.51 billion

      As a sponsor, Morgan Stanley Mortgage Capital Inc. acquires mortgage loans
and initiates their securitization by transferring the mortgage loans to the
depositor or another entity that acts in a similar capacity as the depositor,
which loans will ultimately be transferred to the issuing entity for the related
securitization. In coordination with Morgan Stanley & Co. Incorporated, Morgan
Stanley Mortgage Capital Inc. works with rating agencies, loan sellers and
servicers in structuring the securitization transaction.

                             STATIC POOL INFORMATION

      Information concerning the Sponsor's prior residential mortgage loan
securitizations involving fixed- and adjustable-rate mortgage loans secured by
first-mortgages or deeds of trust in residential real properties issued by the
Depositor is available on the internet at
http://www.morganstanley.com/institutional/abs_spi/Prime_AltA.html. On this
website, you can view for each of these securitizations, summary pool
information as of the applicable securitization cut-off date and delinquency,
cumulative loss, and prepayment information as of each distribution date by
securitization for the past two years, or since the applicable securitization
closing date if the applicable securitization closing date occurred less than
two years from the date of this prospectus supplement. These prior transactions
include, among other transactions, prior securitizations of the sponsor of
mortgage loans purchased from the Originators. Each of the mortgage loan
securitizations identified on this website is unique, and the characteristics of
each securitized mortgage loan pool varies from each other as well as from the
mortgage loans to be included in the Issuing Entity. In addition, the
performance information relating to the prior securitizations described above
may have been influenced by factors beyond the Sponsor's control, such as
housing prices and market interest rates. Therefore, the performance of these
prior mortgage loan securitizations is likely not to be indicative of the future
performance of the mortgage loans to be included in the Issuing Entity.


                                      S-54



      In the event any changes or updates are made to the information available
on the website, the Depositor will provide to any person a copy of the
information as it existed as of the date of this prospectus supplement upon
request who writes or calls the Depositor at 1585 Broadway, New York, New York
10036, Attention: Prospectus Department, telephone number (212) 761-4000.

      In addition, information concerning the performance of the Mortgage Loans
originated and serviced by MSCC in the sponsor's prior residential mortgage loan
securitizations involving fixed- and adjustable-rate mortgage loans secured by
first-mortgages or deeds of trust in residential real properties issued by the
depositor is available on the internet at
http://www.morganstanley.com/institutional/abs_spi/MSCC.html. On this website,
you can view delinquency, cumulative loss, and prepayment information by vintage
year for these Mortgage Loans for the past two years or if originated less than
two years ago, since origination. In addition, the performance information
relating to the Mortgage Loans described above may have been influenced by
factors beyond MSCC's control, such as housing prices and market interest rates.
Therefore, the performance of these prior mortgage loans securitizations is
likely not to be indicative of the future performance of the mortgage loans to
be included in the trust related to this offering.

      The information available on the websites above relating to any mortgage
loan securitizations issued prior to January 1, 2006 and mortgage loans
originated prior to January 1, 2006 is not deemed to be part of this prospectus
supplement, the accompanying prospectus or the Depositor's registration
statement.

                                  THE DEPOSITOR

      Morgan Stanley Capital I Inc., the Depositor, is an affiliate, through
common parent ownership, of the Sponsor, Morgan Stanley Capital Services Inc.
(the Swap Counterparty) and Morgan Stanley & Co. Incorporated, and is a direct,
wholly-owned subsidiary of Morgan Stanley (NYSE:MS) 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.

      The Depositor has been engaged since its incorporation in the
securitization of loans and other asset types included within the description of
the assets of the Issuing Entity in this prospectus. The Depositor is engaged in
the business of acting as Depositor of trusts that issue series of certificates
that represent interests in, the assets of the Issuing Entity. The Depositor
acquires assets specifically for inclusion in a securitization from the sellers
in privately negotiated transactions.

      The certificate of incorporation of the Depositor limits its activities to
those necessary or convenient to carry out its securitization activities. The
Depositor will have limited obligations with respect to a series of
certificates. The Depositor will obtain representations and warranties from the
Sponsor or other sellers or originators regarding the loans or other assets of
the Issuing Entity. The Depositor will also assign to the Trustee for the
related series the Depositor's rights with respect to those representations and
warranties. In addition, after the issuance of a series of certificates, the
Depositor may have limited obligations with respect to that series which may
include making filings necessary to maintain the perfected status of a Trustee's
securities interest or lien on the related assets, appointing a successor Master
Servicer, Securities Administrator or other transaction participant that resigns
or is otherwise removed and preparation of reports filed under the Exchange Act.

      Neither the Depositor nor any of the Depositor's affiliates will insure or
guarantee distributions on the certificates of any series.

                               THE ISSUING ENTITY

      Morgan Stanley Mortgage Loan Trust 2006-9AR, the Issuing Entity, will be
formed on the closing date pursuant to the Pooling and Servicing Agreement. The
Issuing Entity will be a New York common law trust with no officers or directors
and no continuing duties other than to hold and service the mortgage loans and
related assets


                                      S-55



and issue the certificates. The fiscal year end for the Issuing Entity will be
December 31, commencing with December 31, 2006.

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

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

                                   THE TRUSTEE

      LaSalle Bank National Association will be the Trustee and a Custodian
under the Pooling and Servicing Agreement. LaSalle Bank National Association is
a national banking association formed under the federal laws of the United
States of America. Its parent company, LaSalle Bank Corporation, is a subsidiary
of ABN AMRO Bank N.V., a Netherlands banking corporation. LaSalle has extensive
experience serving as Trustee on securitizations of residential mortgage loans.
Since January 1994, LaSalle has served as trustee or paying agent on over 400
residential mortgage-backed security transactions involving assets similar to
the mortgage loans. As of April 30, 2006, LaSalle serves as trustee or paying
agent on over 300 residential mortgage-backed security transactions. The
Depositor and Master Servicer may maintain other banking relationships in the
ordinary course of business with the Trustee. The Trustee's corporate trust
office is located at 135 South LaSalle Street, Suite 1625, Chicago, Illinois,
60603. Attention: Global Securities and Trust Services - MSM 2006-9 or at such
other address as the Trustee may designate from time to time.

      In its capacity as Custodian, LaSalle will hold the mortgage loan files
exclusively for the use and benefit of the trust. The Custodian will not have
any duty or obligation to inspect, review or examine any of the documents,
instruments, certificates or other papers relating to the mortgage loans
delivered to it to determine that the same are valid. The disposition of the
mortgage loan files will be governed by the Pooling and Servicing Agreement.
LaSalle provides custodial services on over 1000 residential, commercial and
asset-backed securitization transactions and maintains almost 2.5 million
custodial files in its two vault locations in Elk Grove, Illinois and Irvine,
California. LaSalle's two vault locations can maintain a total of approximately
6 million custody files. All custody files are segregated and maintained in
secure and fire resistant facilities in compliance with customary industry
standards. The vault construction complies with Fannie Mae/Ginnie Mae guidelines
applicable to document custodians. LaSalle maintains disaster recovery protocols
to ensure the preservation of custody files in the event of force majeure and
maintains, in full force and effect, such fidelity bonds and/or insurance
policies as are customarily maintained by banks which act as custodians. LaSalle
uses unique tracking numbers for each custody file to ensure segregation of
collateral files and proper filing of the contents therein and accurate file
labeling is maintained through a monthly quality assurance process. LaSalle uses
a licensed collateral review system to track and monitor the receipt and
movement internally or externally of custody files and any release or
reinstatement of collateral.

      LaSalle Bank National Association and Morgan Stanley Mortgage Capital Inc.
("MSMC") are parties to a custodial agreement whereby LaSalle, for
consideration, provides custodial services to MSMC for certain residential
mortgage loans purchased by it. Pursuant to this custodial agreement, LaSalle is
currently providing custodial services for most of the mortgage loans to be sold
by MSMC to the Depositor in connection with this securitization. The terms of
the custodial agreement are customary for the residential mortgage-backed
securitization industry providing for the delivery, receipts, review and
safekeeping of mortgage loan files.


                                      S-56



                THE MASTER SERVICER AND SECURITIES ADMINISTRATOR

      Wells Fargo Bank, National Association ("WELLS FARGO") will act as
Securities Administrator and Master Servicer under the Pooling and Servicing
Agreement. Wells Fargo is a national banking association and a wholly-owned
subsidiary of Wells Fargo & Company. A diversified financial services company
with approximately $482 billion in assets, 23 million customers and 153,000+
employees as of December 31, 2005, Wells Fargo & Company is a U.S. bank holding
company, providing banking, insurance, trust, mortgage and consumer finance
services throughout the United States and internationally. Wells Fargo provides
retail and commercial banking services and corporate trust, custody, securities
lending, securities transfer, cash management, investment management and other
financial and fiduciary services. The Depositor, the Sponsor and Seller and the
Servicers may maintain banking and other commercial relationships with Wells
Fargo and its affiliates. Wells Fargo maintains principal corporate trust
offices located at 9062 Old Annapolis Road, Columbia, Maryland 21045-1951 (among
other locations) and its office for certificate transfer services is located at
Sixth Street and Marquette Avenue, Minneapolis, Minnesota 55479.

      Securities Administrator. Under the terms of the Pooling and Servicing
Agreement, Wells Fargo is responsible for securities administration, which
includes pool performance calculations, distribution calculations and the
preparation of monthly distribution reports. As Securities Administrator, Wells
Fargo is responsible for the preparation of all REMIC tax returns on behalf of
the Issuing Entity and the preparation of monthly reports on Form 10-D, current
reports on Form 8-K and annual reports on Form 10-K that are required to be
filed with the Securities and Exchange Commission on behalf of the Issuing
Entity. Wells Fargo has been engaged in the business of securities
administration since June 30, 1995. As of June 30, 2006, Wells Fargo was acting
as Securities Administrator with respect to more than $894,773,136,436 of
outstanding residential mortgage-backed securities.

      Master Servicer. Wells Fargo acts as Master Servicer pursuant to the
Pooling and Servicing Agreement. The Master Servicer is responsible for the
aggregation of monthly Servicer reports and remittances and for the oversight of
the performance of the Servicers under the terms of their respective underlying
servicing agreements. In particular, the Master Servicer independently
calculates monthly loan balances based on servicer data, compares its results to
servicer loan-level reports and reconciles any discrepancies with the servicers.
The Master Servicer also reviews the servicing of defaulted loans for compliance
with the terms of the Pooling and Servicing Agreement. In addition, upon the
occurrence of certain Servicer events of default under the terms of any
underlying servicing agreement, the Master Servicer may be required to enforce
certain remedies on behalf of the Issuing Entity against such defaulting
Servicer. Wells Fargo has been engaged in the business of master servicing since
June 30, 1995. As of June 30, 2006, Wells Fargo was acting as Master Servicer
for approximately 1253 series of residential mortgage-backed securities with an
aggregate outstanding principal balance of approximately $651,189,990,090.

      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 of the Mortgage Loans--Servicing
Compensation and Payment of Expenses; Master Servicing Compensation;
Administrative Fees," "--Adjustment to Servicing Fees in Connection with Certain
Prepaid Mortgage Loans" and "--Advances" above.

      In particular, upon the failure of any Servicer to make a required advance
of delinquent monthly payments on the Mortgage Loans serviced by it, the Master
Servicer will be required to terminate that defaulting Servicer and to make such
advance to the extent that the Master Servicer determines that such advance is
recoverable from subsequent payments or recoveries on the related Mortgage Loan.

      Wells Fargo serves or may have served within the past two years as loan
file custodian for various mortgage loans owned by the Sponsor or an affiliate
of the Sponsor and anticipates that one or more of those mortgage loans may be
included in the assets of the Issuing Entity. The terms of any custodial
agreement under which those services are provided by Wells Fargo are customary
for the mortgage-backed securitization industry and provide for the delivery,
receipt, review and safekeeping of mortgage loan files.


                                      S-57



                                 THE CUSTODIANS

      LaSalle Bank National Association and J.P. Morgan Trust Company, N.A.
(each, a "CUSTODIAN" and together, the "CUSTODIANS") will each act as a
Custodian of the mortgage loan files. J.P. Morgan Trust Company, N.A. will act
as a Custodian under their respective custody agreement. LaSalle Bank National
Association will act as a Custodian pursuant to the Pooling and Servicing
Agreement.

      The principal executive office of LaSalle Bank National Association as
Custodian is located at 2571 Busse Road, Suite 200, Elk Grove Village Illinois
60007, and its telephone number is (847) 766-6429.

      The principal executive office of J.P. Morgan Trust Company, N.A. is
located at 2220 Chemsearch Boulevard, Suite 150, Irving, Texas 75062, and its
telephone number is (972) 785-5274.

      Each of the above Custodians will act as custodian of the mortgage loan
files pursuant to their respective custody agreement. The Custodians will be
responsible to hold and safeguard the mortgage notes and other contents of the
mortgage files on behalf of the certificateholders. The Custodians segregates
files for which they act as custodian by boarding each file in an electronic
tracking system, which identifies the owner of the file and the file's specific
location in the Custodians' vault.

                 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      The sponsor and the depositor are each affiliates of the underwriter and
of Morgan Stanley Capital Services Inc., the swap counterparty. Wells Fargo
Bank, National Association has been the Master Servicer and Securities
Administrator on mortgage-backed securitizations that were sponsored by the
Seller. LaSalle Bank National Association has been the trustee on
mortgage-backed securitizations sponsored by the Seller. J.P. Morgan Trust
Company, N.A. has been a custodian on mortgage-backed securitizations sponsored
by the Seller. Each of the sponsor, the depositor and the counterparty may
maintain other banking relationships in the ordinary course with Wells Fargo
Bank, National Association, LaSalle Bank National Association and J.P. Morgan
Trust Company, N.A.

                         DESCRIPTION OF THE CERTIFICATES

GENERAL

      On or about July 31, 2006 (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 2006-9AR, Mortgage Pass-Through
Certificates, Series 2006-9AR will include the following seven Classes of
Certificates (the "SENIOR CERTIFICATES") which are offered hereby:


                                      S-58



o     Class A-1 Certificates;

o     Class A-2 Certificates;

o     Class A-3 Certificates;

o     Class A-4 Certificates;

o     Class A-5 Certificates;

o     Class A-6 Certificates; and

o     Class A-R Certificates.

SUBORDINATED CERTIFICATES

      In addition to the Senior Certificates, the Morgan Stanley Mortgage Loan
Trust 2006-9AR, Mortgage Pass-Through Certificates, Series 2006-9AR, will also
include the following ten Classes of Subordinate Certificates (the "SUBORDINATE
CERTIFICATES"):

          (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, the Class M-1 and Class M-2 Certificates,

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

          (j) the Class OC Certificates, which are subordinate to all of the
      Offered Certificates.

CLASS P CERTIFICATES

      In addition to the Senior Certificates and the Subordinate Certificates,
the Morgan Stanley Mortgage Loan Trust 2006-9AR will also issue the Class P
Certificates, which are referred to in this prospectus supplement as the "CLASS
P CERTIFICATES." The Class P Certificates will have an initial certificate
principal balance of $1,000 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 all of the Mortgage Loans. Such amounts will not be
available for distribution to the Holders of the Offered Certificates.


                                      S-59



      All Classes of Subordinate Certificates, other than the Class OC
Certificates, and the Class P Certificates (the Class OC and Class P
Certificates are also referred to as 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

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

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

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

o   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 are referred to as the
    "SUBORDINATED CERTIFICATES."

o   The Senior Certificates and the Subordinated Certificates are referred to as
    the "CERTIFICATES" and are also referred to as the "OFFERED CERTIFICATES."

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

      The Offered Certificates will be issued by the Issuing Entity in the
initial Class Principal Balances set forth set forth on page v in the table
under "The Series 2006-9AR Certificates." The Privately Offered Certificates
will be issued in the approximate initial Class Principal Balances set forth on
page v of this prospectus supplement. The initial Class Principal Balances 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 under "Description of the Mortgage Loans."

      The "CLASS PRINCIPAL BALANCE" of any Class of Certificates as of any
Distribution Date is the initial Class Principal Balance of the Class listed on
page v 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   with respect to the Subordinated Certificates only, the amount of
          Realized Losses on the Mortgage Loans allocated to the Class, and

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 Mortgage Loans distributed as principal to any Class of
Certificates, but not by 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 lowest priority of payment and, if the
Class Principal Balance of the Class OC Certificates is equal to zero, will be
reduced 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 any Distribution Date


                                      S-60



exceeds the aggregate Stated Principal Balance of the Mortgage Loans as of the
Due Date occurring in the month of the Distribution Date.

      The initial Class Principal Balance of each of the Class P Certificates is
equal to $1,000. The Pooling and Servicing Agreement does not permit the
allocation of Realized Losses to the Class P Certificates or the Senior
Certificates.

      The Senior Certificates will have an initial aggregate Class Principal
Balance of $606,239,100, and will evidence in the aggregate an initial
beneficial ownership interest in the Mortgage Loans of approximately 92.95%. The
initial beneficial ownership of each Class of Subordinated Certificates is
approximately as follows:

                                                             BENEFICIAL
THE SUBORDINATED CERTIFICATES                                 INTEREST
-----------------------------------                        --------------
Class M-1................................................      1.25%
Class M-2................................................      1.25%
Class M-3................................................      0.75%
Class M-4................................................      0.60%
Class M-5................................................      0.60%
Class M-6................................................      0.40%
Class B-1................................................      0.40%
Class B-2................................................      0.35%
Class B-3................................................      0.50%

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.



                                     ORIGINAL                MINIMUM
           CLASS                 CERTIFICATE FORM          DENOMINATION          DENOMINATION
---------------------------     -------------------    --------------------    ----------------

Offered Certificates
(other than the Class A-R
Certificates)                       Book-Entry               $25,000                $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 August 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 Offered Certificates and any Distribution Date
will be the Business Day immediately preceding that Distribution Date, or if the
Offered 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 and who has so notified the Securities
Administrator in writing in accordance with the Pooling and Servicing Agreement,
by wire transfer in immediately


                                      S-61



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 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.

      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


                                      S-62



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 Issuing Entity 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.

      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.


                                      S-63



      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 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 Offered 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.


                                      S-64



      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 Offered 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"). Each of the Servicers will be required to
deposit into their respective Custodial Accounts the following:

          o   all payments on account of principal on the Mortgage Loans,
              including principal prepayments;

          o   all payments on account of interest on the Mortgage Loans, net of
              the related Servicing Fee and any lender paid mortgage insurance
              premiums;

          o   all payments on account of Prepayment Penalties on the Mortgage
              Loans;

          o   all insurance proceeds, Subsequent Recoveries and liquidation
              proceeds, other than proceeds to be applied to the restoration or
              repair of a mortgaged property or released to the mortgagor in
              accordance with that Servicer's normal servicing procedures;

          o   any amount required to be deposited by that Servicer pursuant to
              the related underlying servicing agreement in connection with any
              losses on permitted investments for which it is responsible;

          o   any amounts received by that Servicer with respect to primary
              mortgage insurance and in respect of net monthly rental income
              from REO Property;

          o   all Substitution Adjustment Amounts; and

          o   all Advances made by that Servicer.

      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 will withdraw the
Available Distribution Amount to pay the Certificateholders.

INVESTMENTS OF AMOUNTS HELD IN ACCOUNTS

      The Custodial Accounts and the Distribution Account. All funds in the
Custodial Accounts and the Distribution Account will be invested in permitted
investments at the direction of the related servicer and the Master Servicer,
respectively. All income and gain net of any losses realized from the investment
will be for the benefit of the Master Servicer as compensation and will be
remitted to it monthly as described herein.

      The amount of any losses incurred in a Custodial Account or the
Distribution Account in respect of the investments will be deposited by the
related servicer in its Custodial Account or, with respect to the Distribution
Account, deposited by the Master Servicer into the Distribution Account out of
their own funds immediately as realized.


                                      S-65



PRIORITY OF DISTRIBUTIONS AMONG CERTIFICATES

      As more fully described in this prospectus supplement, distributions on
the Certificates and payments to the Swap Counterparty will be made on each
Distribution Date primarily from the Available Distribution Amount for such
Distribution Date.

      The following chart illustrates generally the distribution priorities and
subordination features applicable to the Offered Certificates:

      1. Distributions of Interest

            ---------------------------------------------------------
                from the interest remittance amount, to the swap
             account for certain payments to the swap counterparty;
            ---------------------------------------------------------
                                        |
                                        |
            ---------------------------------------------------------
            from the remaining interest remittance amount, to current
              interest and unpaid interest from prior Distribution
             Dates (other than any basis risk carry forward amounts)
             on each Class of Senior Certificates, pro rata, in each
                 case up to the maximum amount of interest to be
             distributed to those Classes on that Distribution Date;
            ---------------------------------------------------------
                                        |
                                        |
            ---------------------------------------------------------
                 from the remaining interest remittance amount,
              sequentially, to current interest on the Subordinated
                Certificates, in the order of their priorities of
                payment, in each case up to the maximum amount of
               interest to be distributed to those Classes on that
                               Distribution Date;
            ---------------------------------------------------------

      2. Distributions of Principal

            ---------------------------------------------------------
               from the principal distribution amount, to the swap
              account for certain payments to the swap counterparty
                                remaining unpaid;
            ---------------------------------------------------------
                                        |
                                        |
            ---------------------------------------------------------
              from the remaining principal distribution amount, to
              principal of the Classes of Senior Certificates then
             entitled to receive distributions of principal, in each
                case up to the maximum amount of principal to be
             distributed to those Classes on that Distribution Date;
            ---------------------------------------------------------
                                        |
                                        |
            ---------------------------------------------------------
                from the remaining principal distribution amount,
                 sequentially, to principal on the Subordinated
                Certificates, in the order of their priorities of
                payment, in each case up to the maximum amount of
              principal to be distributed to those Classes on that
                               Distribution Date;
            ---------------------------------------------------------


                                      S-66



      3. Distributions of Net Monthly Excess Cashflow

            ---------------------------------------------------------
              from net monthly excess cashflow, to the swap account
               held by the supplemental interest trust for certain
               payments to the swap counterparty remaining unpaid;
            ---------------------------------------------------------
                                        |
                                        |
            ---------------------------------------------------------
            from the remaining net monthly excess cashflow, to unpaid
              interest shortfall amounts (other than any basis risk
                carry forward amounts) and allocated unreimbursed
             realized loss amounts, in that order, sequentially, to
              the Subordinated Certificates, in the order of their
                             priorities of payment;
            ---------------------------------------------------------
                                        |
                                        |
            ---------------------------------------------------------
            from the remaining net monthly excess cashflow, to basis
               risk carry forward amounts on each Class of Senior
                             Certificates, pro rata;
            ---------------------------------------------------------
                                        |
                                        |
            ---------------------------------------------------------
            from the remaining net monthly excess cashflow, to basis
                 risk carry forward amounts sequentially, to the
                Subordinated Certificates, in the order of their
                             priorities of payment;
            ---------------------------------------------------------
                                        |
                                        |
            ---------------------------------------------------------
               from the remaining net monthly excess cashflow, to
              prepayment interest and Relief Act shortfalls on each
                     Class of Senior Certificates, pro rata;
            ---------------------------------------------------------
                                        |
                                        |
            ---------------------------------------------------------
               from the remaining net monthly excess cashflow, to
                  prepayment interest and Relief Act shortfalls
             sequentially, to the Subordinated Certificates, in the
                      order of their priorities of payment;
            ---------------------------------------------------------
                                        |
                                        |
            ---------------------------------------------------------
             from the remaining net monthly excess cashflow, to the
                             Class OC Certificates;
            ---------------------------------------------------------

      4. Distributions of Amounts on Deposit in the Swap Account

            ---------------------------------------------------------
             from amounts on deposit in the swap account, to the swap
                counterparty for certain amounts owed to the swap
                          counterparty remaining unpaid;
            ---------------------------------------------------------
                                        |
                                        |
            ---------------------------------------------------------
                from the remaining amounts on deposit in the swap
            account, to unpaid interest shortfall amounts (other than
             any basis risk carry forward amounts) on each Class of
                         Senior Certificates, pro rata;
            ---------------------------------------------------------
                                        |
                                        |
            ---------------------------------------------------------
                from the remaining amounts on deposit in the swap
            account, to distributions of principal in accordance with
                  the distribution priorities in effect on that
            Distribution Date, sequentially, to the Certificates, in
            the order of their priorities of payment, in an amount up
            to the amount necessary to maintain the required level of
                overcollateralization for that Distribution Date;
            ---------------------------------------------------------


                                      S-67



            ---------------------------------------------------------
                from the remaining amounts on deposit in the swap
            account, to remaining basis risk carry forward amounts on
            the Senior Certificates, concurrently, in an amount up to
            their pro rata portion of amounts remaining on deposit in
                                the swap account;
            ---------------------------------------------------------
                                        |
                                        |
            ---------------------------------------------------------
                from the remaining amounts on deposit in the swap
            account, to remaining basis risk carry forward amounts on
            the Subordinated Certificates, sequentially, in each case
              in an amount up to their pro rata portion of amounts
                    remaining on deposit in the swap account;
            ---------------------------------------------------------
                                        |
                                        |
            ---------------------------------------------------------
                from the remaining amounts on deposit in the swap
             account, to remaining basis risk carry forward amounts,
                  concurrently, to the Certificates, pro rata;
            ---------------------------------------------------------
                                        |
                                        |
            ---------------------------------------------------------
                from the remaining amounts on deposit in the swap
              account, to the swap counterparty for certain amounts
               owed to the swap counterparty remaining unpaid; and
            ---------------------------------------------------------
                                        |
                                        |
            ---------------------------------------------------------
                from the remaining amounts on deposit in the swap
                     account, to the Class OC Certificates.
            ---------------------------------------------------------

PRIORITY OF DISTRIBUTIONS

      Available Distribution Amount. The Available Distribution Amount (as
defined below) for any Distribution Date will be distributed on each
Distribution Date by the Securities Administrator to the Certificateholders, as
specified in this prospectus supplement. The "DUE DATE" related to each Mortgage
Loan and Distribution Date will be the first day of the month in which such
Distribution Date occurs. The "DUE PERIOD" related to each Distribution Date and
Mortgage Loans will be the month preceding the month in which such Distribution
Date occurs.

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

      The "AVAILABLE DISTRIBUTION AMOUNT" for any Distribution Date will equal
the sum of the following amounts:

      (1)   the total amount of all cash received by or on behalf of each
Servicer with respect to the Mortgage Loans serviced by it and received by the
Master Servicer by the related Servicer Remittance Date and not previously
distributed (including Liquidation Proceeds, condemnation proceeds, Subsequent
Recoveries and insurance proceeds), except:

      o   all scheduled payments of principal and related interest collected on
          the Mortgage Loans but due on a date after the related Due Date;

      o   all partial principal prepayments received with respect to the
          Mortgage Loans after the related Prepayment Period, together with all
          related interest accrued on such Mortgage Loans;

      o   all prepayment penalties received in connection with the Mortgage
          Loans;

      o   all prepayments in full received with respect to the Mortgage Loans
          after the related Prepayment Period, together with all related
          interest accrued on such Mortgage Loans;


                                      S-68



      o   Liquidation Proceeds, condemnation proceeds, insurance proceeds and
          Subsequent Recoveries received on such Mortgage Loans after the
          previous calendar month;

      o   all amounts reimbursable to a Servicer pursuant to the terms of the
          related servicing agreement or the Pooling and Servicing Agreement, as
          applicable, or to the Master Servicer, the Securities Administrator,
          the Trustee and/or any Custodian pursuant to the terms of the Pooling
          and Servicing Agreement or the custody agreements, in each case with
          respect to the Mortgage Loans or otherwise allocable to the
          Certificates;

      o   reinvestment income on the balance of funds, if any, in the custodial
          accounts or distribution account; and

      o   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;

      (2)   all Monthly Advances on the Mortgage Loans made by each Servicer
and/or the Master Servicer for that Distribution Date;

      (3)   any amounts paid as "Compensating Interest" with respect to the
Mortgage Loans by each Servicer and/or the Master Servicer for that Distribution
Date; and

      (4)   the total amount of any cash deposited in the distribution account
in connection with the repurchase of any Mortgage Loans by the Depositor
pursuant to the Pooling and Servicing Agreement, the Seller pursuant to the
Pooling and Servicing Agreement or the Mortgage Loan Purchase Agreement or the
related Originator pursuant to the related Assignment Agreement.

GLOSSARY

      Certain additional definitions are necessary to understand the priority of
interest and principal distributions to the Offered Certificates. These terms
are defined below and highlighted within the various definitions:

      "BASIC PRINCIPAL DISTRIBUTION AMOUNT" for the Certificates and any
Distribution Date will equal the excess of the Principal Remittance Amount over
the Excess Subordinated Amount.

      "BASIS RISK CARRY FORWARD AMOUNT" with respect to any Class of
Certificates and any Distribution Date, an amount equal to the sum of (i) the
excess, if any, of (x) the amount of interest such Class of Certificates would
have been entitled to receive on such Distribution Date if the Net WAC Cap had
not been applicable to such Class on such Distribution Date over (y) the amount
of interest accrued on such Distribution Date at the Net WAC Cap and (ii) the
related Basis Risk Carry Forward Amount for the previous Distribution Date not
previously distributed together with interest thereon at a rate equal to the
related Pass-Through Rate for such Class of Certificates for the most recently
ended Interest Accrual Period.

      "CLASS A INTEREST DISTRIBUTION AMOUNT" will be, with respect to any Class
of Senior Certificates and any Distribution Date, interest accrued during the
related Interest Accrual Period on the related Class Principal Balance of that
Class immediately prior to the Distribution Date at the Pass-Through Rate for
that Class reduced (to an amount not less than zero), in the case of such Class,
by the allocable share, if any, for that Class of Prepayment Interest Shortfalls
to the extent not covered by Compensating Interest paid by the Master Servicer
or the Servicers and Relief Act Interest Shortfalls, together with the Interest
Carry Forward Amount, if any, for such Distribution Date for such Class of
Senior Certificates.


                                      S-69



      "CLASS A PRINCIPAL DISTRIBUTION AMOUNT" will be, with respect to the
Senior Certificates and any Distribution Date (i) prior to the Stepdown Date or
on or after the Stepdown Date if a Trigger Event is in effect, the Principal
Distribution Amount or (ii) on or after the Stepdown Date if a Trigger Event is
not in effect for that Distribution Date, the lesser of:

      o   the Principal Distribution Amount for that Distribution Date; and

      o   the excess (if any) of (A) the aggregate Class Principal Balance of
          the Class A Certificates immediately prior to that Distribution Date
          over (B) the lesser of (i) the aggregate Stated Principal Balance of
          the Mortgage Loans as of the last day of the related Due Period
          multiplied by approximately 85.90% and (ii) the amount, if any, by
          which (x) the aggregate Stated Principal Balance of the Mortgage Loans
          as of the last day of the related Due Period exceeds (y) $2,282,773.

      "CLASS M-1 PRINCIPAL DISTRIBUTION AMOUNT" will be, with respect to the
Class M-1 Certificates and any Distribution Date (i) prior to the Stepdown Date
or on or after the Stepdown Date if a Trigger Event is in effect for that
Distribution Date, the Principal Distribution Amount for that Distribution Date
remaining after distribution of the Class A Principal Distribution Amount or
(ii) on or after the Stepdown Date if a Trigger Event is not in effect for that
Distribution Date, the lesser of:

      o   the Principal Distribution Amount for that Distribution Date remaining
          after distribution of the Class A Principal Distribution Amount; and

      o   the excess (if any) of (A) the sum of (1) the Class Principal Balance
          of the Class M-1 Certificates immediately prior to that Distribution
          Date and (2) the aggregate Class Principal Balance of the Class A
          Certificates (after taking into account the payment of the Class A
          Principal Distribution Amount for such Distribution Date) over (B) the
          lesser of (i) the aggregate Stated Principal Balance of the Mortgage
          Loans as of the last day of the related Due Period multiplied by
          approximately 88.40% and (ii) the amount, if any, by which (x) the
          aggregate Stated Principal Balance of the Mortgage Loans as of the
          last day of the related Due Period exceeds (y) $2,282,773.

      "CLASS M-2 PRINCIPAL DISTRIBUTION AMOUNT" will be, with respect to the
Class M-2 Certificates and any Distribution Date (i) prior to the Stepdown Date
or on or after the Stepdown Date if a Trigger Event is in effect for that
Distribution Date, the Principal Distribution Amount for that Distribution Date
remaining after distribution of the Class A Principal Distribution Amount and
the Class M-1 Principal Distribution Amount or (ii) on or after the Stepdown
Date if a Trigger Event is not in effect for that Distribution Date, the lesser
of:

      o   the Principal Distribution Amount for that Distribution Date remaining
          after distribution of the Class A Principal Distribution Amount and
          the Class M-1 Principal Distribution Amount; and

      o   the excess (if any) of (A) the sum of (1) the Class Principal Balance
          of the Class M-2 Certificates immediately prior to that Distribution
          Date and (2) the aggregate Class Principal Balance of the Class A
          Certificates and the Class M-1 Certificates (after taking into account
          the payment of the Class A and Class M-1 Principal Distribution
          Amounts for such Distribution Date) over (B) the lesser of (i) the
          aggregate Stated Principal Balance of the Mortgage Loans as of the
          last day of the related Due Period multiplied by approximately 90.90%
          and (ii) the amount, if any, by which (x) the aggregate Stated
          Principal Balance of the Mortgage Loans as of the last day of the
          related Due Period exceeds (y) $2,282,773.

      "CLASS M-3 PRINCIPAL DISTRIBUTION AMOUNT" will be, with respect to the
Class M-3 Certificates and any Distribution Date (i) prior to the Stepdown Date
or on or after the Stepdown Date if a Trigger Event is in effect for that
Distribution Date, the Principal Distribution Amount for that Distribution Date
remaining after distribution of the Class A Principal Distribution Amount, the
Class M-1 Principal Distribution Amount and the Class M-2 Principal Distribution
Amount or (ii) on or after the Stepdown Date if a Trigger Event is not in effect
for that Distribution Date, the lesser of:


                                      S-70



      o   the Principal Distribution Amount for that Distribution Date remaining
          after distribution of the Class A Principal Distribution Amount, the
          Class M-1 Principal Distribution Amount and the Class M-2 Principal
          Distribution Amount; and

      o   the excess (if any) of (A) the sum of (1) the Class Principal Balance
          of the Class M-3 Certificates immediately prior to that Distribution
          Date and (2) the aggregate Class Principal Balance of the Class A
          Certificates and the Class M-1 and Class M-2 Certificates (after
          taking into account the payment of the Class A, Class M-1 and Class
          M-2 Principal Distribution Amounts for such Distribution Date) over
          (B) the lesser of (i) the aggregate Stated Principal Balance of the
          Mortgage Loans as of the last day of the related Due Period multiplied
          by approximately 92.40% and (ii) the amount, if any, by which (x) the
          aggregate Stated Principal Balance of the Mortgage Loans as of the
          last day of the related Due Period exceeds (y) $2,282,773.

      "CLASS M-4 PRINCIPAL DISTRIBUTION AMOUNT" will be, with respect to the
Class M-4 Certificates and any Distribution Date (i) prior to the Stepdown Date
or on or after the Stepdown Date if a Trigger Event is in effect for that
Distribution Date, the Principal Distribution Amount for that Distribution Date
remaining after distribution of the Class A Principal Distribution Amount, the
Class M-1 Principal Distribution Amount, the Class M-2 Principal Distribution
Amount and the Class M-3 Principal Distribution Amount or (ii) on or after the
Stepdown Date if a Trigger Event is not in effect for that Distribution Date,
the lesser of:

      o   the Principal Distribution Amount for that Distribution Date remaining
          after distribution of the Class A Principal Distribution Amount, the
          Class M-1 Principal Distribution Amount, the Class M-2 Principal
          Distribution Amount and the Class M-3 Principal Distribution Amount;
          and

      o   the excess (if any) of (A) the sum of (1) the Class Principal Balance
          of the Class M-4 Certificates immediately prior to that Distribution
          Date and (2) the aggregate Class Principal Balance of the Class A
          Certificates and the Class M Senior Certificates (after taking into
          account the payment of the Class A, Class M-1, Class M-2 and Class M-3
          Principal Distribution Amounts for such Distribution Date) over (B)
          the lesser of (i) the aggregate Stated Principal Balance of the
          Mortgage Loans as of the last day of the related Due Period multiplied
          by approximately 93.60% and (ii) the amount, if any, by which (x) the
          aggregate Stated Principal Balance of the Mortgage Loans as of the
          last day of the related Due Period exceeds (y) $2,282,773.

      "CLASS M-5 PRINCIPAL DISTRIBUTION AMOUNT" will be, with respect to the
Class M-5 Certificates and any Distribution Date (i) prior to the Stepdown Date
or on or after the Stepdown Date if a Trigger Event is in effect for that
Distribution Date, the Principal Distribution Amount for that Distribution Date
remaining after distribution of the Class A Principal Distribution Amount, the
Class M-1 Principal Distribution Amount, the Class M-2 Principal Distribution
Amount, the Class M-3 Principal Distribution Amount and the Class M-4 Principal
Distribution Amount or (ii) on or after the Stepdown Date if a Trigger Event is
not in effect for that Distribution Date, the lesser of:

      o   the Principal Distribution Amount for that Distribution Date remaining
          after distribution of the Class A Principal Distribution Amount, the
          Class M-1 Principal Distribution Amount, the Class M-2 Principal
          Distribution Amount, the Class M-3 Principal Distribution Amount and
          the Class M-4 Principal Distribution Amount; and

      o   the excess (if any) of (A) the sum of (1) the Class Principal Balance
          of the Class M-5 Certificates immediately prior to that Distribution
          Date and (2) the aggregate Class Principal Balance of the Class A
          Certificates, the Class M Senior Certificates and the Class M-4
          Certificates (after taking into account the payment of the Class A,
          Class M-1, Class M-2, Class M-3 and Class M-4 Principal Distribution
          Amounts for such Distribution Date) over (B) the lesser of (i) the
          aggregate Stated Principal Balance of the Mortgage Loans as of the
          last day of the related Due Period multiplied by approximately 94.80%
          and (ii) the amount, if any, by which (x) the aggregate Stated
          Principal Balance of the Mortgage Loans as of the last day of the
          related Due Period exceeds (y) $2,282,773.


                                      S-71



      "CLASS M-6 PRINCIPAL DISTRIBUTION AMOUNT" will be, with respect to the
Class M-6 Certificates and any Distribution Date (i) prior to the Stepdown Date
or on or after the Stepdown Date if a Trigger Event is in effect for that
Distribution Date, the Principal Distribution Amount for that Distribution Date
remaining after distribution of the Class A Principal Distribution Amount, the
Class M-1 Principal Distribution Amount, the Class M-2 Principal Distribution
Amount, the Class M-3 Principal Distribution Amount, the Class M-4 Principal
Distribution Amount and the Class M-5 Principal Distribution Amount or (ii) on
or after the Stepdown Date if a Trigger Event is not in effect for that
Distribution Date, the lesser of:

      o   the Principal Distribution Amount for that Distribution Date remaining
          after distribution of the Class A Principal Distribution Amount, the
          Class M-1 Principal Distribution Amount, the Class M-2 Principal
          Distribution Amount, the Class M-3 Principal Distribution Amount, the
          Class M-4 Principal Distribution Amount and the Class M-5 Principal
          Distribution Amount; and

      o   the excess (if any) of (A) the sum of (1) the Class Principal Balance
          of the Class M-6 Certificates immediately prior to that Distribution
          Date and (2) the aggregate Class Principal Balance of the Class A
          Certificates, the Class M Senior Certificates and the Class M-4 and
          Class M-5 Certificates (after taking into account the payment of the
          Class A, Class M-1, Class M-2, Class M-3, Class M-4 and Class M-5
          Principal Distribution Amounts for such Distribution Date) over (B)
          the lesser of (i) the aggregate Stated Principal Balance of the
          Mortgage Loans as of the last day of the related Due Period multiplied
          by approximately 95.60% and (ii) the amount, if any, by which (x) the
          aggregate Stated Principal Balance of the Mortgage Loans as of the
          last day of the related Due Period exceeds (y) $2,282,773.

      "CLASS B-1 PRINCIPAL DISTRIBUTION AMOUNT" will be, with respect to the
Class B-1 Certificates and any Distribution Date (i) prior to the Stepdown Date
or on or after the Stepdown Date if a Trigger Event is in effect for that
Distribution Date, the Principal Distribution Amount for that Distribution Date
remaining after distribution of the Class A Principal Distribution Amount, the
Class M-1 Principal Distribution Amount, the Class M-2 Principal Distribution
Amount, the Class M-3 Principal Distribution Amount, the Class M-4 Principal
Distribution Amount, the Class M-5 Principal Distribution Amount and the Class
M-6 Principal Distribution Amount or (ii) on or after the Stepdown Date if a
Trigger Event is not in effect for that Distribution Date, the lesser of:

      o   the Principal Distribution Amount for that Distribution Date remaining
          after distribution of the Class A Principal Distribution Amount, the
          Class M-1 Principal Distribution Amount, the Class M-2 Principal
          Distribution Amount, the Class M-3 Principal Distribution Amount, the
          Class M-4 Principal Distribution Amount, the Class M-5 Principal
          Distribution Amount and the Class M-6 Principal Distribution Amount;
          and

      o   the excess (if any) of (A) the sum of (1) the Class Principal Balance
          of the Class B-1 Certificates immediately prior to that Distribution
          Date and (2) the aggregate Class Principal Balance of the Class A
          Certificates and the Class M Certificates (after taking into account
          the payment of the Class A, Class M-1, Class M-2, Class M-3, Class
          M-4, Class M-5 and Class M-6 Principal Distribution Amounts for such
          Distribution Date) over (B) the lesser of (i) the aggregate Stated
          Principal Balance of the Mortgage Loans as of the last day of the
          related Due Period multiplied by approximately 96.40% and (ii) the
          amount, if any, by which (x) the aggregate Stated Principal Balance of
          the Mortgage Loans as of the last day of the related Due Period
          exceeds (y) $2,282,773.

      "CLASS B-2 PRINCIPAL DISTRIBUTION AMOUNT" will be, with respect to the
Class B-2 Certificates and any Distribution Date (i) prior to the Stepdown Date
or on or after the Stepdown Date if a Trigger Event is in effect for that
Distribution Date, the Principal Distribution Amount for that Distribution Date
remaining after distribution of the Class A Principal Distribution Amount, the
Class M-1 Principal Distribution Amount, the Class M-2 Principal Distribution
Amount, the Class M-3 Principal Distribution Amount, the Class M-4 Principal
Distribution Amount, the Class M-5 Principal Distribution Amount, the Class M-6
Principal Distribution Amount and the Class B-1 Principal Distribution Amount or
(ii) on or after the Stepdown Date if a Trigger Event is not in effect for that
Distribution Date, the lesser of:


                                      S-72



      o   the Principal Distribution Amount for that Distribution Date remaining
          after distribution of the Class A Principal Distribution Amount, the
          Class M-1 Principal Distribution Amount, the Class M-2 Principal
          Distribution Amount, the Class M-3 Principal Distribution Amount, the
          Class M-4 Principal Distribution Amount, the Class M-5 Principal
          Distribution Amount, the Class M-6 Principal Distribution Amount and
          the Class B-1 Principal Distribution Amount; and

      o   the excess (if any) of (A) the sum of (1) the Class Principal Balance
          of the Class B-2 Certificates immediately prior to that Distribution
          Date and (2) the aggregate Class Principal Balance of the Class A
          Certificates, the Class M Certificates and the Class B-1 Certificates
          (after taking into account the payment of the Class A, Class M-1,
          Class M-2, Class M-3, Class M-4, Class M-5, Class M-6 and Class B-1
          Principal Distribution Amounts for such Distribution Date) over (B)
          the lesser of (i) the aggregate Stated Principal Balance of the
          Mortgage Loans as of the last day of the related Due Period multiplied
          by approximately 97.10% and (ii) the amount, if any, by which (x) the
          aggregate Stated Principal Balance of the Mortgage Loans as of the
          last day of the related Due Period exceeds (y) $2,282,773.

      "CLASS B-3 PRINCIPAL DISTRIBUTION AMOUNT" will be, with respect to the
Class B-3 Certificates and any Distribution Date (i) prior to the Stepdown Date
or on or after the Stepdown Date if a Trigger Event is in effect for that
Distribution Date, the Principal Distribution Amount for that Distribution Date
remaining after distribution of the Class A Principal Distribution Amount, the
Class M-1 Principal Distribution Amount, the Class M-2 Principal Distribution
Amount, the Class M-3 Principal Distribution Amount, the Class M-4 Principal
Distribution Amount, the Class M-5 Principal Distribution Amount, the Class M-6
Principal Distribution Amount, the Class B-1 Principal Distribution Amount and
the Class B-2 Principal Distribution Amount or (ii) on or after the Stepdown
Date if a Trigger Event is not in effect for that Distribution Date, the lesser
of:

      o   the Principal Distribution Amount for that Distribution Date remaining
          after distribution of the Class A Principal Distribution Amount, the
          Class M-1 Principal Distribution Amount, the Class M-2 Principal
          Distribution Amount, the Class M-3 Principal Distribution Amount, the
          Class M-4 Principal Distribution Amount, the Class M-5 Principal
          Distribution Amount, the Class M-6 Principal Distribution Amount, the
          Class B-1 Principal Distribution Amount and the Class B-2 Principal
          Distribution Amount; and

      o   the excess (if any) of (A) the sum of (1) the Class Principal Balance
          of the Class B-3 Certificates immediately prior to that Distribution
          Date and (2) the aggregate Class Principal Balance of the Class A
          Certificates, the Class M Certificates and the Class B-1 and Class B-2
          Certificates (after taking into account the payment of the Class A,
          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 Principal Distribution Amounts for such
          Distribution Date) over (B) the lesser of (i) the aggregate Stated
          Principal Balance of the Mortgage Loans as of the last day of the
          related Due Period multiplied by approximately 98.10% and (ii) the
          amount, if any, by which (x) the aggregate Stated Principal Balance of
          the Mortgage Loans as of the last day of the related Due Period
          exceeds (y) $2,282,773.

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

      A "DEFAULTED SWAP TERMINATION PAYMENT" is any termination payment required
to be made by the Issuing Entity to the Swap Counterparty pursuant to the Swap
Agreement as a result of an event of default under the Swap Agreement with
respect to which the Swap Counterparty is the defaulting party or a termination
event under that agreement (other than illegality or a tax event of the Swap
Counterparty) with respect to which the Swap Counterparty is the sole affected
party.


                                      S-73



      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.

      "EXCESS SUBORDINATED AMOUNT" for any Distribution Date and the
Certificates will equal the excess, if any, of (i) the Overcollateralized Amount
on that Distribution Date over (ii) the Overcollateralization Target Amount for
such Distribution Date.

      "EXTRA PRINCIPAL DISTRIBUTION AMOUNT" for the Certificates and any
Distribution Date will be the lesser of the Net Monthly Excess Cashflow for such
Distribution Date and the Overcollateralization Increase Amount as of that
Distribution Date.

      "PRINCIPAL DISTRIBUTION AMOUNT" for the Certificates and any Distribution
Date will be the sum of the Basic Principal Distribution Amount, the Extra
Principal Distribution Amount, in each case for that Distribution Date, and the
$100 deposited in respect of the Class A-R Certificates.

      "PRINCIPAL REMITTANCE AMOUNT" for the Certificates and any Distribution
Date will be the sum of

      (i) the principal portion of all scheduled monthly payments on the
Mortgage Loans due during the related Due Period, whether or not received on or
prior to the related Determination Date;

      (ii) the principal portion of all proceeds received in respect of the
repurchase of a Mortgage Loan (or, in the case of a substitution, certain
amounts representing a principal adjustment as required by the Pooling and
Servicing Agreement) during the related Prepayment Period; and

      (iii) the principal portion of all other unscheduled collections,
including insurance proceeds, condemnation proceeds, Liquidation Proceeds and
all full and partial principal prepayments, received during the related
Prepayment Period, to the extent applied as recoveries of principal on the
Mortgage Loans.

      In no event will the Principal Remittance Amount with respect to any
Distribution Date be (x) less than zero or (y) greater than the then outstanding
aggregate Class Principal Balance of the Certificates.

      "INTEREST ACCRUAL PERIOD" For any Class of Certificates and the August
2006 Distribution Date will be the 25-day period commencing on the Closing Date
and ending on the day immediately preceding that Distribution Date. The Interest
Accrual Period for any Distribution Date thereafter and any Class of
Certificates shall be the one-month period commencing on the Distribution Date
in the month prior to the month in which that Distribution Date occurs and
ending on the day immediately preceding that Distribution Date. With respect to
each Class of Certificates, interest will be calculated on the basis of a
360-day year and the actual number of days that elapsed in the related Interest
Accrual Period.

      "INTEREST CARRY FORWARD AMOUNT" with respect to any Class of Certificates
and any Distribution Date will be equal to the amount, if any, by which the
Interest Distribution Amount for that Class of Certificates for the immediately
preceding Distribution Date exceeded the actual amount distributed on such Class
in respect of interest


                                      S-74



on the immediately preceding Distribution Date, together with any Interest Carry
Forward Amount with respect to such Class remaining unpaid from the previous
Distribution Date, plus interest accrued thereon at the related Pass-Through
Rate for the most recently ended Interest Accrual Period.

      "INTEREST DISTRIBUTION AMOUNT" for the Certificates and any Distribution
Date will be the aggregate of the Class A and Subordinated Interest Distribution
Amounts for that Distribution Date.

      "INTEREST REMITTANCE AMOUNT" for the Certificates and any Distribution
Date will be that portion of the Available Distribution Amount for such
Distribution Date that represents interest received or advanced on the Mortgage
Loans.

      "LIQUIDATED LOAN" will be a Mortgage Loan as to which the related Servicer
has determined that all amounts which it expects to recover from or on account
of such Mortgage Loan, whether from insurance proceeds, Liquidation Proceeds or
otherwise, have been recovered.

      "LIQUIDATION PROCEEDS" will be amounts received by the related Servicer or
the Master Servicer in connection with the liquidation of a defaulted Mortgage
Loan whether through foreclosure or otherwise, other than insurance proceeds,
other than any Subsequent Recoveries.

      "NET MONTHLY EXCESS CASHFLOW" for the Certificates and any Distribution
Date will be equal to the excess, if any, of (x) the Available Distribution
Amount for the Distribution Date over (y) the sum of the aggregate of the Class
A Interest Distribution Amounts payable to the holders of the Senior
Certificates, the Subordinated Interest Distribution Amounts payable to the
holders of the Subordinated Certificates and the Principal Distribution Amount.

      "NET MORTGAGE RATE" for each Mortgage Loan will be equal to the mortgage
interest rate thereon less the Expense Fee Rate.

      "NET WAC CAP" for the Certificates and any Distribution Date will be a per
annum rate equal to (i) 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, minus (ii) the Swap Payment Rate, adjusted, in
each case, to accrue on the basis of a 360-day year and the actual number of
days in the related Interest Accrual Period, except that with respect to the
August 2006 Distribution Date, the number of days in the related Interest
Accrual Period will be 25.

      "OVERCOLLATERALIZED AMOUNT" with respect to the Certificates as of the
Closing Date will be an amount equal to approximately $6,196,892. In other
words, it is expected that there will be approximately 0.95%
overcollateralization of the Certificates as of the Closing Date. With respect
to any Distribution Date following the Closing Date, the Overcollateralized
Amount is the amount by which the aggregate Stated Principal Balance of the
Mortgage Loans as of the last day of the related Due Period exceeds the
aggregate Class Principal Balance of the Certificates (other than the Class A-R
and Class P Certificates) after taking into account all payments of principal on
such Distribution Date.

      "OVERCOLLATERALIZATION INCREASE AMOUNT" with respect to the Certificates
and any Distribution Date will be the amount, if any, by which the
Overcollateralization Target Amount exceeds the Overcollateralized Amount for
such Distribution Date (calculated for this purpose only after assuming that
100% of the Principal Remittance Amount on such Distribution Date has been
distributed).

      "OVERCOLLATERALIZATION TARGET AMOUNT" for the Certificates and any
Distribution Date (i) prior to the Stepdown Date, the product of (x) 0.95% and
(y) the aggregate Stated Principal Balance of the Mortgage Loans as of the
Cut-off Date, (ii) on and after the Stepdown Date, provided that a Trigger Event
is not in effect, the lesser of (a) the product of (x) 1.90% and (y) the
aggregate Stated Principal Balance of the Mortgage Loans as of the related Due
Date and (b) the product of (x) 0.95% and (y) the aggregate Stated Principal
Balance of the Mortgage Loans as of the Cut-off Date and (iii) on and after the
Stepdown Date, if a Trigger Event is in effect, the Overcollateralization Target
Amount for the immediately preceding Distribution Date; provided, however, that
on each Distribution Date the Overcollateralization Target Amount shall not be
lower than approximately $2,282,773.


                                      S-75



      "PASS-THROUGH RATE" with respect to the Certificates and any Distribution
Date will be the lesser of (i) the per annum rate applicable to such
Distribution Date calculated as described on pages vi and vii of this prospectus
supplement and (ii) the Net WAC Cap.

      "PREPAYMENT INTEREST SHORTFALL" for the Certificates and any Distribution
Date will be the sum of all interest shortfalls resulting from prepayments in
full or in part on the Mortgage Loans during the related Prepayment Period.

      "REALIZED LOSS" with respect to any Distribution Date and any Mortgage
Loan that became a Liquidated Loan during the related Prepayment Period will be
the sum of (i) the principal balance of such Mortgage Loan remaining outstanding
(after all recoveries of principal have been applied thereto) and the principal
portion of Advances made by the related Servicer or the Master Servicer with
respect to such Mortgage Loan which have been reimbursed from Liquidation
Proceeds, and (ii) the accrued interest on such Mortgage Loan remaining unpaid
and the interest portion of Advances made by the related Servicer or the Master
Servicer with respect to such Mortgage Loan which have been reimbursed from
Liquidation Proceeds. The amounts set forth in clause (i) are the principal
portion of Realized Losses and the amounts set forth in clause (ii) are the
interest portion of Realized Losses. With respect to any Mortgage Loan that is
not a Liquidated Loan, the amount of any Debt Service Reduction or Deficient
Valuation incurred with respect to such Mortgage Loan as of the related Due Date
will be treated as a Realized Loss.

      "RELIEF ACT INTEREST SHORTFALL" for any Distribution Date and a Mortgage
Loan will be the reduction in the amount of interest collectible on such
Mortgage Loan for the most recently ended calendar month immediately preceding
the related Distribution Date as a result of the application of the Soldier's
and Sailors' Civil Relief Act of 1940, as amended, or similar state laws.

      "REPLACEMENT SWAP COUNTERPARTY PAYMENT" with respect to the Swap
Agreement, any payments received by the Issuing Entity as a result of entering
into a replacement Swap Agreement following an additional termination event
resulting from a ratings downgrade of the Swap Counterparty in accordance with
the terms of the Swap Agreement.

      "SENIOR DEFAULTED SWAP TERMINATION PAYMENT" means the lesser of (i) any
Replacement Swap Counterparty Payment, and (ii) any Swap Termination Payment
owed to the Swap Counterparty.

      "SENIOR ENHANCEMENT PERCENTAGE" for any Distribution Date, the percentage
obtained by dividing (x) the aggregate Class Principal Balance of the
Subordinate Certificates (together with the Overcollateralized Amount and taking
into account the distributions of the Principal Distribution Amount and all
payments of principal from the Swap Account, if any, for such Distribution Date)
by (y) the aggregate principal balance of the Mortgage Loans as of the last day
of the related Due Period

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

      "STEPDOWN DATE" with respect to the Certificates will be the
later to occur of:

      (1)   the earlier to occur of

            (x)   the Distribution Date in August 2009, and

            (y)   the Distribution Date on which the aggregate Class
      Principal Balance of the Class A Certificates is reduced to
      zero; and


                                      S-76



      (2)   the first Distribution Date on which the Class A Credit Enhancement
Percentage (calculated for this purpose only after taking into account
distributions of principal on the Mortgage Loans, but prior to any distribution
of the Principal Distribution Amount to the holders of the Certificates then
entitled to distributions of principal on the Distribution Date) is greater than
or equal to approximately 14.10%.

      "SUBORDINATED INTEREST DISTRIBUTION AMOUNT" will be, with respect to any
Class of Subordinated Certificates and any Distribution Date, interest accrued
during the related Interest Accrual Period on the related Class Principal
Balance of that Class immediately prior to the Distribution Date at the
Pass-Through Rate for that Class reduced (to an amount not less than zero), in
the case of such Class, by the allocable share, if any, for that Class of
Prepayment Interest Shortfalls to the extent not covered by Compensating
Interest paid by the Master Servicer or the Servicers and Relief Act Interest
Shortfalls.

      "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.

      With respect to any Distribution Date, a "TRIGGER EVENT" is in effect if

            (x) the Three Month Rolling Average with respect to the Mortgage
      Loans exceeds 40.00% of the Senior Enhancement Percentage for the prior
      Distribution Date, or

            (y) the aggregate amount of Realized Losses on the Mortgage Loans
      incurred since the Cut-off Date through the last day of the related Due
      Period divided by the aggregate outstanding principal balance of the
      Mortgage Loans as of the Cut-off exceeds the applicable percentages set
      forth below with respect to such Distribution Date:



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

August 2008 --July 2009.........................     0.25% for the first month, plus an additional 1/12th of 0.40%
                                                     for each month thereafter
August 2009 --July 2010.........................     0.65% for the first month, plus an additional 1/12th of 0.50%
                                                     for each month thereafter
August 2010 --July 2011.........................     1.15% for the first month, plus an additional 1/12th of 0.50%
                                                     for each month thereafter
August 2011 --July 2012.........................     1.65% for the first month, plus an additional 1/12th of 0.30%
                                                     for each month thereafter
August 2012 and thereafter......................     1.95%


      "SWAP PAYMENT ALLOCATION" for any Class of Certificates and any
Distribution Date is that Class's pro rata share of the Net Swap Receipts, if
any, for that Distribution Date, based on the respective Class Principal
Balances of the Certificates.

      "SWAP PAYMENT RATE" for any Distribution Date is a fraction expressed as a
percentage, the numerator of which is any Net Swap Payment or swap termination
payment (other than any Defaulted Swap Termination Payment) owed to the Swap
Counterparty for such Distribution Date, and the denominator of which is the
Stated Principal Balance of the Mortgage Loans as of the first day of the
related Due Period, multiplied by 12.

      "THREE MONTH ROLLING AVERAGE" with respect to the Mortgage Loans and the
end of the Due Period related to any Distribution Date, will equal the rolling 3
month average percentage of the aggregate Stated Principal Balance of the
Mortgage Loans that are 60 or more days delinquent (including Mortgage Loans in
foreclosure, REO Properties or discharged in bankruptcy).

      "UNPAID INTEREST SHORTFALL AMOUNT" for any Class of Certificates, the sum
of Relief Act Interest Shortfalls and net prepayment interest shortfalls on the
Mortgage Loans allocated to such Class of Certificates on that Distribution Date
and such amounts from any prior Distribution Date remaining unpaid.


                                      S-77



      "UNPAID REALIZED LOSS AMOUNT" for any Class of Certificates, the portion
of any Realized Losses previously allocated to that Class remaining unpaid from
prior Distribution Dates.

INTEREST DISTRIBUTIONS ON THE CERTIFICATES

      The Interest Remittance Amount allocable to each such Class of
Certificates will be distributed to the Certificates and the Swap Counterparty,
sequentially, as follows:

      o   first, to the Swap Account, the sum of (x) all Net Swap Payments and
          (y) any Swap Termination Payment owed to the Swap Counterparty,
          including, without limitation, any Senior Defaulted Swap Termination
          Payment, but not including any other Defaulted Swap Termination
          Payment owed to the Swap Counterparty, if any;

      o   second, concurrently, to the Class A-R, Class A-1, Class A-2, Class
          A-3, Class A-4, Class A-5 and Class A-6 Certificates their respective
          Class A Interest Distribution Amounts for such Distribution Date, pro
          rata based on their respective Class A Interest Distribution Amounts
          for such Distribution Date;

      o   third, sequentially, to 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, in that order, their respective Subordinated Interest
          Distribution Amounts, in each case, to the extent of the Interest
          Remittance Amount remaining after distributions of interest to the
          Classes of Certificates with a higher payment priority; and

      o   fourth, any remaining Interest Remittance Amount on any Distribution
          Date will be distributed as part of Net Monthly Excess Cashflow as
          described under "--Net Monthly Excess Cashflow and
          Overcollateralization Provisions on the Certificates" below.

PRINCIPAL DISTRIBUTIONS ON THE CERTIFICATES

      1.    On each Distribution Date (a) prior to the Stepdown Date or (b) on
which a Trigger Event is in effect, the holders of each Class of Certificates
shall be entitled to receive distributions in respect of principal from the
Principal Distribution Amount and the Swap Counterparty shall be entitled to the
payments described below, in each case to the extent of the Available
Distribution Amount available therefor after payment of the Interest
Distribution Amount, sequentially, as follows:

      o   first, to the Swap Account, the sum of (x) all Net Swap Payments and
          (y) any Swap Termination Payment owed to the Swap Counterparty,
          including, without limitation, any Senior Defaulted Swap Termination
          Payment, but not including any other Defaulted Swap Termination
          Payment owed to the Swap Counterparty, if any, remaining unpaid on
          that Distribution Date after distributions of the Interest
          Distribution Amount for that Distribution Date;

      o   second, sequentially, to the Class A-R Certificates, until its Class
          Principal Balance is reduced to zero, and then to the holders of the
          Senior Certificates, as described under "--Allocation of Principal
          Payments to Class A Certificates" below, until their respective Class
          Principal Balances are reduced to zero;

      o   third, to the holders of 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, in that order, until their respective Class Principal
          Balances are reduced to zero; and

      o   fourth, any remaining Principal Distribution Amount on any
          Distribution Date will be will be distributed as part of Net Monthly
          Excess Cashflow as described under "--Net Monthly Excess Cashflow and
          Overcollateralization Provisions on the Certificates" below.


                                      S-78



      2.    On each Distribution Date (a) on or after the Stepdown Date and (b)
on which a Trigger Event is not in effect, the holders of each Class of
Certificates and the Swap Counterparty shall be entitled to receive
distributions from the Principal Distribution Amount sequentially, in the
following order of priority:

            (A)   to the Swap Account, the sum of (x) all Net Swap Payments and
      (y) any Swap Termination Payment owed to the Swap Counterparty, including,
      without limitation, any Senior Defaulted Swap Termination Payment, but not
      including any other Defaulted Swap Termination Payment owed to the Swap
      Counterparty, if any, remaining unpaid on that Distribution Date after
      distributions of the Interest Distribution Amount for that Distribution
      Date;

            (B)   to the holders of the Senior Certificates, in an amount up to
      the Class A Principal Distribution Amount, as described under
      "--Allocation of Principal Payments to Class A Certificates" below, until
      their respective Class Principal Balances are reduced to zero;

            (C)   to the Class M-1 Certificates, in an amount up to the Class
      M-1 Principal Distribution Amount, until its Class Principal Balance is
      reduced to zero;

            (D)   to the Class M-2 Certificates, in an amount up to the Class
      M-2 Principal Distribution Amount, until its Class Principal Balance is
      reduced to zero;

            (E)   to the Class M-3 Certificates, in an amount up to the Class
      M-3 Principal Distribution Amount, until its Class Principal Balance is
      reduced to zero;

            (F)   to the Class M-4 Certificates, in an amount up to the Class
      M-4 Principal Distribution Amount, until its Class Principal Balance is
      reduced to zero;

            (G)   to the Class M-5 Certificates, in an amount up to the Class
      M-5 Principal Distribution Amount, until its Class Principal Balance is
      reduced to zero;

            (H)   to the Class M-6 Certificates, in an amount up to the Class
      M-6 Principal Distribution Amount, until its Class Principal Balance is
      reduced to zero;

            (I)   to the Class B-1 Certificates, in an amount up to the Class
      B-1 Principal Distribution Amount, until its Class Principal Balance is
      reduced to zero;

            (J)   to the Class B-2 Certificates, in an amount up to the Class
      B-2 Principal Distribution Amount, until its Class Principal Balance is
      reduced to zero;

            (K)   to the Class B-3 Certificates, in an amount up to the Class
      B-3 Principal Distribution Amount, until its Class Principal Balance is
      reduced to zero; and

            (L)   any remaining Principal Distribution Amount on any
      Distribution Date will be distributed as part of Net Monthly Excess
      Cashflow as described under "--Net Monthly Excess Cashflow and
      Overcollateralization Provisions on the Certificates" below.

      The allocation of distributions in respect of principal to the Senior
Certificates on each Distribution Date (a) prior to the Stepdown Date or (b) on
which a Trigger Event has occurred, will have the effect of accelerating the
amortization of the Senior Certificates while, in the absence of Realized
Losses, increasing the respective percentage interest in the aggregate Stated
Principal Balance of the Mortgage Loans evidenced by the Subordinated
Certificates. Increasing the respective percentage interest in the trust of the
Subordinated Certificates relative to that of the Senior Certificates is
intended to preserve the availability of the subordination provided by the
Subordinated Certificates.


                                      S-79



ALLOCATION OF PRINCIPAL PAYMENTS TO CLASS A CERTIFICATES

A.    On each Distribution Date on which a Sequential Trigger is not in effect,
      except as set forth in paragraph C. below, principal will be distributed
      to the Class A Certificates concurrently, as follows:

      1.    29.7737361008% to the Class A-1 Certificates, until its Class
            Principal Balance has been reduced to zero;

      2.    60.2262474041% to the Class A-2, Class A-3, Class A-4 and Class A-5
            Certificates, sequentially, in the following order of priority:

            a)    concurrently, to the Class A-2, Class A-3 and Class A-4
                  Certificates, as follows:

                  (i)   44.8127685697% to the Class A-2 Certificates, until its
                        Class Principal Balance has been reduced to zero; and

                  (ii)  55.1872314303% sequentially to the Class A-3 and Class
                        A-4 Certificates, in that order, until their respective
                        Class Principal Balances have been reduced to zero; and

            b)    to the Class A-5 Certificates, until its Class Principal
                  Balance has been reduced to zero; and

      3.    10.0000164951% to the Class A-6 Certificates, until its Class
            Principal Balance has been reduced to zero.

B.    On each Distribution Date on which a Sequential Trigger is in effect,
      except as set forth in paragraph C. below, principal will be distributed
      to the Class A Certificates sequentially, in the following order of
      priority:

      1.    concurrently, (a) 33.0819350641% to the Class A-1 Certificates,
            until its Class Principal Balance has been reduced to zero, and (b)
            66.9180649359% to the Class A-2, Class A-3, Class A-4 and Class A-5
            Certificates, sequentially, in the following order of priority:

            a)    concurrently, to the Class A-2, Class A-3 and Class A-4
                  Certificates, as follows:

                  (i)   44.8127685697% to the Class A-2 Certificates, until its
                        Class Principal Balance has been reduced to zero; and

                  (ii)  55.1872314303% sequentially to the Class A-3 and Class
                        A-4 Certificates, in that order, until their respective
                        Class Principal Balances have been reduced to zero; and

            b)    to the Class A-5 Certificates, until its Class Principal
                  Balance has been reduced to zero; and

      2.    To the Class A-6 Certificates, until its Class Principal Balance has
            been reduced to zero.

C.    Notwithstanding the allocation of principal to the Class A Certificates
      described above, in the event that the aggregate Class Principal Balance
      of the Subordinated Classes and the Class OC Certificates have been
      reduced to zero, principal distributions to the Class A Certificates will
      be distributed concurrently, to the Class A-1, Class A-2, Class A-3, Class
      A-4, Class A-5 and Class A-6 Certificates, pro rata, until, their
      respective Class Principal Balances are reduced to zero; with the
      exception that if a Sequential Trigger Event is in effect, principal
      distributions to the Class A Certificates will be allocated first,
      concurrently, to the Class A-1, Class A-2, Class A-3, Class A-4 and


                                      S-80



Class A-5 Certificates, pro rata, until their respective Class Principal
Balances are reduced to zero, and then to the Class A-6 Certificates, until its
Class Principal Balance is reduced to zero.

      A "SEQUENTIAL TRIGGER EVENT" means (a) with respect to any Distribution
Date occurring before August 2008, the circumstances in which the aggregate
amount of Realized Losses incurred since the Cut-off Date through the last day
of the related Prepayment Period divided by the aggregate Stated Principal
Balance of the Mortgage Loans as of the Cut-off Date exceeds 0.25% and (b) with
respect to any Distribution Date occurring in or after August 2008, a Trigger
Event.

NET MONTHLY EXCESS CASHFLOW AND OVERCOLLATERALIZATION PROVISIONS ON THE
CERTIFICATES

      The weighted average of the Net Mortgage Rates for the Mortgage Loans is
generally expected to be higher than the sum of the weighted average of the
Pass-Through Rates on the Certificates and the amount payable to the Swap
Counterparty. As a result, interest collections on the Mortgage Loans are
generally expected to be generated in excess of the amount of interest payable
to the holders of the Certificates, the fees and expenses payable by the Issuing
Entity in respect of the Mortgage Loans and the amount payable to the Swap
Counterparty. On each Distribution Date, the remaining Net Monthly Excess
Cashflow, after giving effect to the distribution of the Extra Principal
Distribution Amount for that Distribution Date, will be distributed to the
Certificates and the Swap Counterparty in the following order of priority:

            (i)   to the Swap Account, the sum of (x) all Net Swap Payments and
      (y) any Swap Termination Payment owed to the Swap Counterparty, including,
      without limitation, any Senior Defaulted Swap Termination Payment, but not
      including any other Defaulted Swap Termination Payment owed to the Swap
      Counterparty, if any, remaining unpaid on that Distribution Date after
      distributions of the Interest Distribution Amount and the Principal
      Distribution Amount for that Distribution Date;

            (ii)    to the Class M-1 Certificates, the related Interest Carry
      Forward Amount;

            (iii)   to the Class M-1 Certificates, the related Unpaid Realized
      Loss Amount;

            (iv)    to the Class M-2 Certificates, the related Interest Carry
      Forward Amount;

            (v)     to the Class M-2 Certificates, the related Unpaid Realized
      Loss Amount;

            (vi)    to the Class M-3 Certificates, the related Interest Carry
      Forward Amount;

            (vii)   to the Class M-3 Certificates, the related Unpaid Realized
      Loss Amount;

            (viii)  to the Class M-4 Certificates, the related Interest Carry
      Forward Amount;

            (ix)    to the Class M-4 Certificates, the related Unpaid Realized
      Loss Amount;

            (x)     to the Class M-5 Certificates, the related Interest Carry
      Forward Amount;

            (xi)    to the Class M-5 Certificates, the related Unpaid Realized
      Loss Amount;

            (xii)   to the Class M-6 Certificates, the related Interest Carry
      Forward Amount;

            (xiii)  to the Class M-6 Certificates, the related Unpaid Realized
      Loss Amount;

            (xiv)   to the Class B-1 Certificates, the related Interest Carry
      Forward Amount;

            (xv)    to the Class B-1 Certificates, the related Unpaid Realized
      Loss Amount;


                                      S-81



            (xvi)   to the Class B-2 Certificates, the related Interest Carry
      Forward Amount;

            (xvii)  to the Class B-2 Certificates, the related Unpaid Realized
      Loss Amount;

            (xviii) to the Class B-3 Certificates, the related Interest Carry
      Forward Amount;

            (xix)   to the Class B-3 Certificates, the related Unpaid Realized
      Loss Amount;

            (xx)    sequentially, first (i) concurrently, to the classes of
      Class A Certificates currently outstanding, first pro rata, based on their
      respective Class Principal Balances with Basis Risk Carry Forward Amounts
      on that Distribution Date, to the extent needed to pay any Basis Risk
      Carry Forward Amount for each such Class and then, pro rata, based on any
      Basis Risk Carry Forward Amount for each such Class, in an amount up to
      the amount of any Basis Risk Carry Forward Amount remaining unpaid for
      such Classes of Certificates and then (ii) sequentially, to 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, in that order, in an amount up to the
      amount of any Basis Risk Carry Forward Amount for such Classes of
      Certificates;

            (xxi)   sequentially, first (i) concurrently, to the Class A
      Certificates, first pro rata, based on their respective Class Principal
      Balances to the extent needed to pay any Unpaid Interest Shortfall Amount
      for each such Class and then, pro rata, based on any Unpaid Interest
      Shortfall Amount for each such Class, in an amount up to the amount of any
      Unpaid Interest Shortfall Amount remaining unpaid for such Classes of
      Certificates and then (ii) sequentially, to 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, in that order, in an amount up to the amount of any
      Unpaid Interest Shortfall Amount for such Classes of Certificates;

            (xxii)  to the Swap Account, the amount of any Defaulted Swap
      Termination Payment, other than a Senior Defaulted Swap Termination
      Payment, owed to the Swap Counterparty;

            (xxiii) to the holders of the Class OC Certificates as provided in
      the Pooling and Servicing Agreement; and

            (xxiv)  to the holders of the Class A-R Certificates, any remaining
      amounts; provided that if such Distribution Date is the Distribution Date
      immediately following the expiration of the latest prepayment charge term
      or any Distribution Date thereafter, then any such remaining amounts,
      together with the Class P Distribution Amount, will be distributed first,
      to the holders of the Class P Certificates, until the Class Principal
      Balance thereof has been reduced to zero; and second, to the holders of
      the Class A-R Certificates.

THE SWAP ACCOUNT

      On or prior to each Distribution Date prior to the Swap Termination Date,
Swap Termination Payments, Net Swap Payments owed to the Swap Counterparty and
Net Swap Receipts for that Distribution Date will be deposited into a trust
account (the "SWAP ACCOUNT"). The Swap Account will held by a separate trust
(the "SUPPLEMENTAL INTEREST TRUST"). The Supplemental Interest Trust will not be
an asset of any REMIC.

      Funds in the Swap Account will be distributed to the Certificates and to
the Swap Counterparty in the following order of priority:

            (i)     to the Swap Counterparty, all Net Swap Payments, if any,
      owed to the Swap Counterparty for that Distribution Date;

            (ii)    to the Swap Counterparty, any Swap Termination Payment,
      including, without limitation, any Senior Defaulted Swap Termination
      Payment but not including any other Defaulted Swap Termination Payment,
      for that Distribution Date;


                                      S-82



            (iii)   concurrently, to the Class A-1, Class A-2, Class A-3, Class
      A-4, Class A-5 and Class A-6 Certificates, pro rata, any unpaid Interest
      Carry Forward Amounts;

            (iv)    sequentially, to 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, in that order, any unpaid Interest Carry Forward Amounts;

            (v)     to the Certificates in accordance with the principal
      distribution rules in effect for such Distribution Date, in an amount
      equal to the lesser of: (i) the amount necessary to meet the
      Overcollateralization Target for that Distribution Date and (ii) the
      aggregate of all prior and current Unpaid Realized Loss Amounts not
      previously reimbursed;

            (vi)    concurrently, to the Class A-1, Class A-2, Class A-3, Class
      A-4, Class A-5 and Class A-6 Certificates, pro rata, in an amount up to
      their respective Swap Payment Allocations for that Distribution Date, any
      remaining Basis Risk Carry Forward Amounts;

            (vii)   sequentially, to 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, in that order, in an amount up to their respective Swap
      Payment Allocations for that Distribution Date, any remaining Basis Risk
      Carry Forward Amounts;

            (viii)  concurrently, to the Certificates, pro rata by need, any
      remaining Basis Risk Carry Forward Amounts;

            (ix)    sequentially to 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, in that order, any remaining Unreimbursed Realized Loss
      Amounts;

            (x)     to the Swap Counterparty, any Defaulted Swap Termination
      Payment, other than a Senior Defaulted Swap Termination Payment, owed to
      the Swap Counterparty for that Distribution Date; and;

            (xi)    all remaining amounts to the holder of the Class OC
      Certificates.

      In the event that a replacement Swap Agreement is entered into for the
benefit of the Certificates following the occurrence of an additional
termination event resulting from a ratings downgrade of the Swap Counterparty
(or its guarantor), and the Supplemental Interest Trust for the benefit of the
Certificates is entitled to receive a payment from a replacement Swap
Counterparty (or its guarantor), the Securities Administrator will direct the
replacement Swap Counterparty (or its guarantor) to make such payment to the
Swap Account. Any Senior Defaulted Swap Termination Payment will be made from
the Swap Account to the Swap Counterparty (or its guarantor) immediately upon
receipt of such payment, regardless of whether the date of receipt is a
Distribution Date. If any Replacement Swap Counterparty Payment is made to an
account other than the Swap Account, then, any Senior Defaulted Swap Termination
Payment will be paid to the Swap Counterparty (or its guarantor) immediately
upon receipt of such Replacement Swap Counterparty Payment, regardless of
whether the date of receipt is a Distribution Date. The Swap Counterparty (or
its guarantor) will have first priority to any Replacement Swap Counterparty
Payment over the payment by the Supplemental Interest Trust to the
Certificateholders, the master servicer, any servicer, the securities
administrator, the trustee, any custodian or any other person.

      In the event that the Supplemental Interest Trust, for the benefit of the
Certificates, receives a Swap Termination Payment, and a successor Swap
Counterparty (or its guarantor) cannot be obtained, then the Securities
Administrator will be required to deposit any Swap Termination Payment into a
reserve account that is a sub-account of the Swap Account. On each subsequent
Distribution Date (so long as funds are available in such reserve account), the
Securities Administrator will be required to withdraw from the reserve account
and deposit into the Swap Account an amount equal to the amount of any Net Swap
Receipt due the Supplemental Interest Trust (calculated in accordance with the
terms of the original Swap Agreement) and treat such amount as a Net Swap
Receipt for purposes of determining the distributions from the Swap Account. The
remaining amount in the reserve account will remain in that account and not
treated as a Swap Termination Payment for purposes of determining the
distributions from the Swap Account until the final Swap Termination Date.


                                      S-83



THE SWAP AGREEMENT

      On the closing date, the Issuing Entity will establish a separate trust
(the "SUPPLEMENTAL INTEREST TRUST"), which will enter into an interest rate swap
transaction with Morgan Stanley Capital Services, (the "SWAP COUNTERPARTY"), as
evidenced by a confirmation between the Supplemental Interest Trust and the Swap
Counter Counterparty (the "SWAP AGREEMENT"). The payment obligations of the Swap
Counterparty will be fully and unconditionally guaranteed by Morgan Stanley. As
part of the interest rate swap transaction, on the Closing Date, the
Supplemental Interest Trust and the Swap Counterparty will enter into an ISDA
Master Agreement. Under the Swap Agreement, with respect to the each
Distribution Date to and including the Distribution Date in June 2011 (the "SWAP
TERMINATION DATE"), the Supplemental Interest Trust will pay to the Swap
Counterparty fixed payments at a rate of 5.54% per annum, determined on a
"30/360" basis (or, in the case of the first Distribution Date, the number of
days in the period from the closing date to the day immediately preceding the
first Distribution Date, determined on a "30/360" basis), and the Swap
Counterparty will pay to the Supplemental Interest Trust, floating payments at a
rate of one-month LIBOR (as determined pursuant to the Swap Agreement),
determined on an "actual/360" basis (or, in the case of the first Distribution
Date, the number of days in the period from the closing date to the day
immediately preceding the first Distribution Date, determined on an "actual/360"
basis), in each case calculated on the product of the scheduled notional amount
and the multiplier for that Distribution Date, each as set forth on Annex II to
this prospectus supplement. On each Distribution Date prior to the Swap
Termination Date, to the extent that the fixed payment payable by the
Supplemental Interest Trust on a Distribution Date exceeds the floating payment
payable by the Swap Counterparty on that Distribution Date, amounts otherwise
available to the Certificateholders will be applied on or prior to such
Distribution Date to make a net payment to the Swap Counterparty (each, a "NET
SWAP PAYMENT"). Conversely, on each Distribution Date prior to the Swap
Termination Date, to the extent that the floating payment payable by the Swap
Counterparty on that Distribution Date exceeds the fixed payment payable by the
Supplemental Interest Trust on a Distribution Date, the Swap Counterparty will
owe a net payment to the Supplemental Interest Trust on or prior to such
Distribution Date (each, a "NET SWAP RECEIPT").

      All payments due to the Swap Counterparty under the Swap Agreement shall
be paid from the Available Distribution Amount on each applicable Distribution
Date in accordance with the priority of payments described above. Any Swap
Termination Payment other than a Defaulted Swap Termination Payment due to the
Swap Counterparty shall be paid on a senior basis on each applicable
Distribution Date in accordance with the priority of payments and any Defaulted
Swap Termination Payment owed by the Supplemental Interest Trust to the Swap
Counterparty shall be paid by the Supplemental Interest Trust on a subordinated
basis. However, to the extent any payments are received by the Supplemental
Interest Trust as a result of entering into replacement transaction(s) following
a Downgrade Terminating Event (as defined below), the Swap Counterparty that is
being replaced shall have first priority to those payments over the
Certificateholders, the master servicer, the securities administrator, the
servicers, the custodians and the trustee (which payments are to be deposited in
the Swap Account), and the Supplemental Interest Trust shall pay from the Swap
Account to the Swap Counterparty the lesser of (x) the amount so received and
(y) any Swap Termination Payment owed to the Swap Counterparty (to the extent
not already paid by the Supplemental Interest Trust) that is being replaced
immediately upon receipt.

      A "SWAP TERMINATION PAYMENT" is a termination payment required to be made
by either the Supplemental Interest Trust or the Swap Counterparty pursuant to
the Swap Agreement as a result of termination of the Swap Agreement.

      The Swap Agreement can be terminated upon an event of default under that
agreement or an early termination event under that agreement. Events of default
under the Swap Agreement include, among other things, the following:

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

      o   certain bankruptcy and insolvency events, and


                                      S-84



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

      Early termination events under the Swap Agreement include, among other
things:

      o   illegality (which generally relates to changes in law causing it to
          become unlawful for either party (or its guarantor, if applicable) to
          perform its obligations under the Swap Agreement or guaranty, as
          applicable),

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

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

      o   upon the irrevocable direction to dissolve or otherwise terminate the
          Issuing Entity following which all assets of the Issuing Entity will
          be liquidated and the proceeds of such liquidation will be distributed
          to certificateholders,

      o   upon the exercise of the optional termination of the Issuing Entity by
          the master servicer or a successful auction as described under
          "--Auction and Optional Termination of the Certificates" below, and

      o   the pooling and servicing agreement is amended without the consent of
          the Swap Counterparty and such amendment materially and adversely
          affects the rights or interests of the Swap Counterparty.

      "DEFAULTED SWAP TERMINATION PAYMENT" means any termination payment
required to be made by the Supplemental Interest Trust to the Swap Counterparty
pursuant to the Swap Agreement as a result of an event of default under the Swap
Agreement with respect to which the Swap Counterparty is the defaulting party or
a termination event under that agreement (other than illegality or a tax event
of the Swap Counterparty) with respect to which the Swap Counterparty is the
sole affected party.

      In addition to the termination events specified above, it shall be an
additional termination event under the Swap Agreement (such event, a "DOWNGRADE
TERMINATING EVENT") if (x) any of the rating agencies downgrades the Swap
Counterparty (or its guarantor) below the Required Swap Counterparty Rating or
Moody's withdraws its ratings of the Swap Counterparty (or its guarantor) and
(y) at least one of the following events has not occurred (except to the extent
otherwise approved by the rating agencies):

            (1) within the time period specified in the Swap Agreement with
      respect to such downgrade, the Swap Counterparty (or its guarantor) shall
      transfer the Swap Agreement, in whole, but not in part, to a counterparty
      that satisfies the Required Swap Counterparty Rating, subject to the
      satisfaction of the Rating Agency Condition;

            (2) within the time period specified in the Swap Agreement with
      respect to such downgrade, the Swap Counterparty (or its guarantor) shall
      collateralize its exposure to the Issuing Entity pursuant to an ISDA
      Credit Support Annex, subject to the satisfaction of the Rating Agency
      Condition; provided that such ISDA Credit Support Annex shall be made a
      credit support document for the Swap Counterparty (or its guarantor)
      pursuant to an amendment to the Swap Agreement;

            (3) within the time period specified in the Swap Agreement with
      respect to such downgrade, the payment obligations of the Swap
      Counterparty (or its guarantor) under the Swap Agreement shall be


                                      S-85



      guaranteed by a person or entity that satisfies the Required Swap
      Counterparty Rating, subject to the satisfaction of the Rating Agency
      Condition; or

            (4) within the time period specified in the Swap Agreement with
      respect to such downgrade, the Swap Counterparty (or its guarantor) shall
      take such other steps, if any, to enable the Issuing Entity to satisfy the
      Rating Agency Condition.

      "REQUIRED SWAP COUNTERPARTY RATING" means, with respect to a counterparty
or entity guaranteeing the obligations of such counterparty, (x) either (i) if
such counterparty or entity has only a long-term rating by Moody's, a long-term
senior, unsecured debt obligation rating, credit rating or other similar rating
(as the case may be, the "LONG-TERM RATING") of at least "Aa3" by Moody's and if
rated "Aa3" by Moody's is not on negative credit watch by Moody's or (ii) if
such counterparty or entity has a Long-Term Rating and a short-term rating by
Moody's, a Long-Term Rating of at least "A1" by Moody's and a short-term rating
of "P-1" by Moody's and, in each case, such rating is not on negative credit
watch by Moody's or (y) (i) a short-term rating of at least "A-1" by S&P or (ii)
if such counterparty or entity does not have a short-term rating by S&P, a
Long-Term Rating of at least "A+" by S&P. It shall also be an additional
termination event under the Swap Agreement if the Swap Counterparty (or its
guarantor) has its rating by S&P withdrawn, has a rating of less than "BBB-" or
"A-3", if applicable, by S&P or has a rating of less than or equal to "A3" or
"P-2", if applicable, by Moody's, and within the time period specified in the
Swap Agreement, the Swap Counterparty (or its guarantor), while collateralizing
its exposure to the Supplemental Interest Trust, either (A) fails to transfer
the Swap Agreement at its sole cost and expense, in whole, but not in part, to a
replacement counterparty that satisfies the Required Swap Counterparty Rating,
subject to satisfaction of the Rating Agency Condition or (B) fails to obtain a
guaranty of, or a contingent agreement of, another person that satisfies the
Required Swap Counterparty Rating, subject to satisfaction of the Rating Agency
Condition (a "SUBSTITUTION EVENT").

      Each Swap Agreement shall provide that the Swap Counterparty may, at its
option, upon the request of the Depositor, (A) deliver to the Issuing Entity the
financial information, if any, required to be provided by the Issuing Entity
under Item 1115(b) of Reg AB, or (B) assign its rights and obligations under the
Swap Agreements to a substitute counterparty, which may be an affiliate of the
Swap Counterparty, and which agrees to provide such financial information as to
itself. For purposes of the preceding sentence, any substitute counterparty (or
any entity providing a guaranty in connection with the substitute counterparty's
obligations under the related swap agreement) shall have the same credit rating
from each Rating Agency as the resigning counterparty (or any entity providing a
guaranty in connection with the substitute counterparty's obligations under the
related swap agreement) or shall have obtained from each Rating Agency a
confirmation that such assignment would not cause it to reduce, qualify or
withdraw its rating of the Certificates. The Swap Counterparty shall not be
required to take any of the above-described actions and any failure of the Swap
Counterparty to take any such actions shall not constitute an Event of Default
under the Swap Agreement.

      If the Supplemental Interest Trust is unable to or, if applicable, chooses
not to obtain a substitute Swap Agreement in the event that the Swap Agreement
is terminated, interest distributable on the certificates will be paid from
amounts received on the mortgage loans without the benefit of an Swap Agreement
or a substitute Swap Agreement.

      On or after the closing date and so long as the Rating Agency Condition
has been satisfied, (i) the Supplemental Interest Trust may, with the consent of
the Swap Counterparty, assign or transfer all or a portion of the Swap
Agreement, (ii) the Swap Counterparty may assign its obligations under the Swap
Agreement to any institution, (iii) the Swap Agreement may be amended and/or
(iv) the Swap Agreement may be terminated or replaced.

      The Swap Agreement is scheduled to terminate by its terms following the
Distribution Date in June 2011 and upon termination of the Swap Agreement no
further amounts will be paid to the Swap Counterparty by the Supplemental
Interest Trust and no further amounts will be paid to the Supplemental Interest
Trust by the Swap Counterparty.


                                      S-86



      The "SIGNIFICANCE PERCENTAGE" of the Swap Agreement will be less than 10%
as of the Closing Date (as defined below). The Significance Percentage is
calculated by reference to the "SIGNIFICANCE ESTIMATE" of the Swap Agreement
which is determined based on a reasonable good faith estimate of maximum
probable exposure represented by the Swap Agreement made in substantially the
same manner as that used in the sponsor's internal risk management process in
respect of similar instruments. The "Significance Percentage" is the percentage
that the amount of the significance estimate represents of the aggregate Stated
Principal Balance of the Mortgage Loans.

DESCRIPTION OF THE SWAP COUNTERPARTY

      The interest rate swap agreement will be provided by Morgan Stanley
Capital Services Inc. ("MSCS" or the "SWAP COUNTERPARTY"), a Delaware
corporation formed in 1985 or upon the occurrence of certain events, a
replacement counterparty that satisfies certain credit criteria (together with
MSCS, the "SWAP COUNTERPARTY"). See "Description of the Certificates--The Swap
Agreement" in this prospectus supplement. Morgan Stanley Capital Services Inc.
is an affiliate, through common parent ownership, of the sponsor, the depositor
and Morgan Stanley & Co. Incorporated, the underwriter, and is a wholly-owned,
unregulated special purpose subsidiary of Morgan Stanley (NYSE:MS). The
principal executive offices of Morgan Stanley Capital Services Inc. are located
at 1585 Broadway, New York, New York 10036, telephone number (212) 761-4000.

      Morgan Stanley Capital Services Inc. conducts business in the
over-the-counter derivatives market, writing a variety of derivative
instruments, including interest rate swaps, currency swaps, credit default swaps
and interest rate options with institutional clients. The payment obligations of
Morgan Stanley Capital Services Inc. under its derivative instruments are 100%
guaranteed by Morgan Stanley. As of the date hereof, Morgan Stanley has a
long-term debt rating of "Aa3" by Moody's, "A+" by S&P and "AA-" by Fitch and a
short-term debt rating of "P-1" by Moody's, "A-1" by S&P and "F1+" by Fitch.

SUBORDINATION AND ALLOCATION OF LOSSES ON THE CERTIFICATES

      Realized Losses on the Mortgage Loans for any Distribution Date will

            first, cause a reduction in Net Monthly Excess Cashflow for the
      Mortgage Loans for that Distribution Date and

            second, cause a reduction in the Overcollateralized Amount for that
      Distribution Date, until it is reduced to zero.

To the extent that Realized Losses on a Distribution Date cause the aggregate
Class Principal Balance of the Certificates (other than the Class A-R and Class
P Certificates), after taking into account all distributions on such
Distribution Date (including, for this purpose, distributions from the Swap
Account) to exceed the aggregate Stated Principal Balance of the Mortgage Loans
as of the last day of the related Due Period, such excess will be allocated
sequentially, to the Class B-3, Class B-2, Class B-1, Class M-6, Class M-5,
Class M-4, Class M-3, Class M-2 and Class M-1 Certificates, in that order, in
each case to reduce the Class Principal Balance thereof until it has been
reduced to zero.

      The Pooling and Servicing Agreement does not permit the allocation of
Realized Losses on the Mortgage Loans to the Senior Certificates or to the Class
P Certificates. Investors in the Class A-1, Class A-2, Class A-3, Class A-4,
Class A-5 and Class A-6 Certificates should note that although Realized Losses
cannot be allocated to the Senior Certificates, under certain loss scenarios
there will not be enough principal and interest on the Mortgage Loans to pay the
Class A-1, Class A-2, Class A-3, Class A-4, Class A-5 and Class A-6 Certificates
all interest and principal amounts to which they are then entitled.

      Once Realized Losses have been allocated to a Class of Subordinated
Certificates, such amounts with respect to these Certificates will no longer
accrue interest nor, except as provided in the following paragraph, will such
amounts be reinstated thereafter. Any allocation of a Realized Loss to a
Subordinated Certificate will be made by reducing the Class Principal Balance of
that Subordinated Certificate by the amount so allocated as of such Distribution
Date after all distributions on such Distribution Date have been made.
Notwithstanding anything to the


                                      S-87



contrary described in this prospectus supplement, in no event will the
Certificate Principal Balance of any Subordinated Certificate be reduced more
than once in respect of any particular amount both (i) allocable to the
Subordinated Certificate in respect of Realized Losses and (ii) payable as
principal to the holder of the Certificate from Net Monthly Excess Cashflow.

      Notwithstanding the foregoing, the Pooling and Servicing Agreement will
provide that the Class Principal Balance of a Class of Subordinated Certificates
that has 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 Master Servicer or
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 on any Distribution Date in the same manner as
prepayments received in the related Prepayment Period. In addition, the Class
Principal Balance of each Class of Subordinated 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 to the extent that (i) the related
Realized Loss was allocated to any Class of Subordinated Certificates and (ii)
the aggregate Stated Principal Balance of the Mortgage Loans as of immediately
preceding Due Date (after giving effect to unscheduled receipts of principal in
the Prepayment Period related to that prior Due Date) exceeds the aggregate
Class Principal Balance of the Senior Certificates immediately prior to that
Distribution Date. However, the Class Principal Balance of each such Class of
Subordinated 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 Subordinated 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 Subordinated
Certificates was previously reduced to zero. Accordingly, each Class of
Subordinated Certificates will be considered to remain outstanding until the
termination of the related trust.

      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.

RESIDUAL CERTIFICATES

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

REPORTS TO CERTIFICATEHOLDERS

      On each Distribution Date, the Securities Administrator will make
available to the Trustee, the Depositor, each Certificateholder, the Swap
Counterparty 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, liquidation proceeds 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;


                                      S-88



      o   the amount of any unpaid Interest Shortfall, both distributed and
          remaining unpaid with respect to each Class of Certificates, and with
          respect to the Offered Certificates, the amount paid under the Swap
          Agreement;

      o   the Class Principal Balance of each Class of Certificates after giving
          effect to the distribution of principal on that Distribution Date;

      o   if the distribution to the holders of such class of certificates is
          less than the full amount that would be distributable to such holders
          if there were sufficient funds available therefor, the amount of the
          shortfall and the allocation of the shortfall as between principal and
          interest, to the extent not otherwise reported;

      o   the aggregate Stated Principal Balance of the Mortgage Loans at the
          end of the related Prepayment Period, and the applicable Weighted
          Average Net Mortgage Rate and weighted average remaining term to
          maturity of the Mortgage Pool at the beginning of the related Due
          Period;

      o   the amount of the Servicing Fee paid to or retained by the Master
          Servicer (as successor 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 that
          were (A) delinquent (exclusive of Mortgage Loans in foreclosure) using
          the MBA Method (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, principal balance and market value (if available) 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;

      o   the Class Principal Balance of each Class of Certificates after giving
          effect to the distribution of principal on the Distribution Date;

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

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

      o   the amount thereof allocable to interest, any Unpaid Interest Amount
          included in such distribution and any remaining Unpaid Interest Amount
          after giving effect to such distribution, any Basis Risk Carry Forward
          Amount for such Distribution Date and the amount of all Basis Risk
          Carry Forward Amount covered by withdrawals from the Swap Account and
          the Supplemental Interest Trust on such Distribution Date;

      o   if the distribution to the Holders of such Class of Certificates is
          less than the full amount that would be distributable to such Holders
          if there were sufficient funds available therefor, the amount of the
          shortfall and the allocation thereof as between principal and
          interest, including any Basis Risk Carry Forward Amount not covered by
          amounts in the Swap Account and the Supplemental Interest Trust;

      o   whether a Trigger Event has occurred and is continuing (including the
          calculation demonstrating the existence of the Trigger Event);


                                      S-89



      o   the amount of any Net Monthly Excess Cash Flow on such Distribution
          Date and the allocation thereof to the Certificateholders with respect
          to Unpaid Interest Amounts;

      o   the amount distributed on the Class OC Certificates and the OC Target
          Amount;

      o   the amount of any Subsequent Recoveries for such Distribution Date;
          and

      o   the Record Date for 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.

      The Securities Administrator will make available on its website statements
to the certificateholders containing information with respect to principal and
interest payments and the Issuing Entity, as is described above. Copies of these
statements will be filed with the SEC through its EDGAR system located at
"http://www.sec.gov" under the name of the Issuing Entity as an exhibit to the
monthly distribution reports on Form 10-D for the Certificates for so long as
that Issuing Entity is subject to the reporting requirement of the Securities
Exchange Act of 1934, as amended. In addition, each Servicer will be required to
furnish to the Master Servicer or the Depositor, as applicable, the compliance
statements, Assessments of Compliance and Attestation Reports detailed under
"Servicing of the Mortgage Loans--Evidence as to Compliance." Copies of these
statements and reports will be filed with the SEC under the name of the related
Issuing Entity as an exhibit to such Issuing Entity's annual statement on Form
10-K for the related series of Certificates.

      In addition, the Depositor will cause to be filed, on behalf of the
Issuing Entity, the reports required under the Securities Act and under Section
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934. These reports
include (but are not limited to):

      o   Reports on Form 8-K (Current Report), following the issuance of the
          certificates of the Issuing Entity, including as Exhibits to the Form
          8-K the agreements described in this prospectus supplement;

      o   Reports on Form 8-K (Current Report), following the occurrence of
          events specified in Form 8-K requiring disclosure, which are required
          to be filed within the time-frame specified in Form 8-K related to the
          type of event;

      o   Reports on Form 10-D (Asset-Backed Issuer Distribution Report),
          containing the distribution and pool performance information required
          on Form 10-D, which are required to be filed 15 days following each
          Distribution Date; and

      o   Report on Form 10-K (Annual Report), containing the items specified in
          Form 10-K with respect to a fiscal year and filing or furnishing, as
          appropriate, the required exhibits.


                                      S-90



      Neither the Depositor nor the Master Servicer intends to file with the SEC
any reports required under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
following completion of the reporting period required by Rule 15d-1 or
Regulation 15D under the Securities Exchange Act of 1934. Unless specifically
stated in the report, the reports and any information included in the report
will neither be examined nor reported on by an independent public accountant.
The Issuing Entity will have a separate file number assigned by the SEC, which
will be available after the Closing Date, and all of the above filings will be
made under that file number.

LAST SCHEDULED DISTRIBUTION DATE

      The "LAST SCHEDULED DISTRIBUTION DATE" for the Certificates is the
Distribution Date in August 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.

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":


                                      S-91



      o     The Mortgage Pool consists of 194 Mortgage Loans with the following
            characteristics:



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

6 Month LIBOR       199,933.86   7.50000     7.12500     360*        359       6.00000    2.00000     2.25000   13.50000    2.75000
6 Month LIBOR       503,833.32   7.50000     7.12500     360*        359       6.00000    2.00000     2.25000   13.50000    2.25000
6 Month LIBOR     1,701,397.35   8.02353     7.64853     360*        357       3.00000    1.00000     5.39569   14.02353    6.29338
6 Month LIBOR       281,075.07   8.25000     7.87500     360*        359       2.00000    2.00000     5.00000   14.25000    8.25000
6 Month LIBOR       155,907.04   7.87500     7.50000     360*        358       2.00000    2.00000     5.00000   13.87500    7.87500
6 Month LIBOR       548,293.41   6.25000     5.87500     360*        355       3.00000    1.00000     5.75000   12.25000    5.75000
6 Month LIBOR       186,009.08   7.87500     7.50000     360*        358       6.00000    2.00000     2.75000   13.87500    2.75000
1 Year LIBOR        965,429.07   8.09588     7.72088     360         358       6.00000    2.00000     2.52032   14.09588    2.52032
1 Year LIBOR        539,326.38   8.37500     8.00000     360         358       6.00000    2.00000     2.75000   14.37500    2.75000
1 Year LIBOR      2,090,086.57   7.81687     7.44187     360         357       6.00000    2.00000     2.75000   13.81687    2.75000
1 Year LIBOR        148,414.62   8.37500     8.00000     360         358       6.00000    2.00000     2.75000   14.37500    2.75000
1 Year LIBOR        500,000.00   7.75000     7.37500     360         359       5.00000    2.00000     2.25000   12.75000    2.75000
1 Year LIBOR        156,800.00   7.87500     7.50000     360         356       5.00000    1.00000     2.25000   12.87500    2.25000
1 Year LIBOR        346,814.00   8.12500     7.75000     360         356       6.00000    2.00000     2.75000   14.12500    2.75000
1 Year LIBOR        246,400.00   7.25000     6.87500     360         357       6.00000    2.00000     2.25000   13.25000    2.25000
1 Year LIBOR        273,993.03   7.87500     7.50000     360         357       6.00000    2.00000     2.25000   13.87500    2.25000
1 Year LIBOR        962,920.00   7.63096     7.25596     360         358       6.00000    2.00000     2.75000   13.63096    2.75000
6 Month LIBOR       481,524.56   7.75558     7.38058     360         355       6.00000    1.20893     2.64553   13.75558    2.64553
6 Month LIBOR       539,326.38   8.37500     8.00000     360         358       6.00000    2.00000     2.25000   14.37500    2.37500
6 Month LIBOR       288,701.45   7.39033     7.01533     360         358       6.00000    2.00000     2.25000   13.39033    2.25000
6 Month LIBOR       312,000.00   8.75000     8.37500     360         358       5.00000    1.00000     2.25000   13.75000    2.25000
6 Month LIBOR    10,537,169.38   7.90889     7.53389     360         359       6.00000    1.97457     2.28246   13.90889    2.30355
6 Month LIBOR     2,366,000.00   7.66081     7.28581     360         359       6.00000    2.00000     2.25000   13.66081    2.25000
6 Month LIBOR       608,300.00   8.00000     7.62500     360         359       6.00000    2.00000     2.25000   14.00000    2.25000
6 Month LIBOR     2,751,025.00   7.68066     7.30566     360         359       6.00000    2.00000     2.65912   13.68066    3.57384
6 Month LIBOR       475,000.00   8.25000     7.87500     360         359       6.00000    2.00000     2.25000   14.25000    2.25000
6 Month LIBOR     2,494,350.00   7.54983     7.17483     360         359       6.00000    2.00000     2.25000   13.54983    2.25000
6 Month LIBOR     1,323,648.84   7.67671     7.30171     360         358       2.00000    2.00000     5.00000   13.67671    7.63146
6 Month LIBOR       380,985.47   7.31097     6.93597     360         359       2.00000    2.00000     5.00000   13.31097    6.14024
6 Month LIBOR       322,889.37   7.84757     7.47257     360         358       2.00000    2.00000     5.00000   13.84757    6.84601
6 Month LIBOR       563,049.34   8.90000     8.52500     360         357       3.00000    1.00000     6.65000   14.90000    6.65000
6 Month LIBOR     1,157,642.06   7.74411     7.36911     360         357       3.00000    1.00000     4.91050   13.74411    5.48637
6 Month LIBOR       237,761.78   7.82364     7.44864     360         358       6.00000    1.00000     3.45800   13.82364    3.45800
6 Month LIBOR       450,658.42   7.12850     6.75350     360         356       6.00000    1.00000     3.32854   13.12850    3.32854
6 Month LIBOR     2,962,692.85   7.30433     6.92933     360         356       2.00000    2.00000     5.00000   13.30433    7.30433
6 Month LIBOR     1,449,199.83   7.79927     7.42427     360         358       2.00000    2.00000     4.25476   13.79927    7.79927
6 Month LIBOR     1,277,300.00   7.86165     7.48665     360         358       3.00000    1.00000     5.93889   13.86165    5.93889
6 Month LIBOR       294,000.00   7.99000     7.61500     360         357       3.00000    1.00000     7.49000   13.99000    7.99000
6 Month LIBOR     2,439,776.97   7.55408     7.17908     360         357       3.00000    1.00000     7.32406   13.55408    7.41390
6 Month LIBOR       869,000.00   7.87500     7.50000     360         356       5.00000    1.00000     4.00000   12.87500    4.00000
6 Month LIBOR       336,000.00   8.15000     7.77500     360         357       6.00000    1.00000     8.15000   14.15000    8.15000
6 Month LIBOR     2,215,920.00   7.01013     6.63513     360         358       2.00000    2.00000     5.00000   13.01013    6.70551
6 Month LIBOR     1,921,550.00   7.09334     6.71834     360         358       2.00000    2.00000     5.00000   13.09334    6.40290
6 Month LIBOR     2,429,049.37   6.29536     5.92036     360         351       3.00000    1.00000     2.86234   12.29536    2.86234
6 Month LIBOR       201,000.00   7.87500     7.50000     360         359       3.00000    1.00000     3.25000   12.87500    3.25000
6 Month LIBOR       972,600.00   6.37500     6.00000     360         358       3.00000    1.00000     2.25000   12.37500    2.25000
6 Month LIBOR     7,851,300.00   7.99975     7.62475     360         357       3.00000    1.00000     5.25526   13.89508    5.25526


                                RATE        REMAINING
                 MONTHS TO      RESET     INTEREST-ONLY
                 NEXT RATE    FREQUENCY      PERIOD
    INDEX        ADJUSTMENT   (MONTHS)      (MONTHS)
-------------    ----------   ---------   -------------

6 Month LIBOR       119           6            N/A
6 Month LIBOR       119           6            N/A
6 Month LIBOR        21           6            N/A
6 Month LIBOR        35           6            N/A
6 Month LIBOR        34           6            N/A
6 Month LIBOR        31           6            N/A
6 Month LIBOR        58           6            N/A
1 Year LIBOR        118          12            N/A
1 Year LIBOR        118          12            N/A
1 Year LIBOR        117          12            N/A
1 Year LIBOR        118          12            N/A
1 Year LIBOR        119          12            119
1 Year LIBOR        116          12            116
1 Year LIBOR        116          12            116
1 Year LIBOR        117          12            117
1 Year LIBOR        117          12            117
1 Year LIBOR        118          12            118
6 Month LIBOR       115           6            N/A
6 Month LIBOR       118           6            N/A
6 Month LIBOR       118           6            N/A
6 Month LIBOR       118           6            118
6 Month LIBOR       119           6            119
6 Month LIBOR       119           6            119
6 Month LIBOR       119           6            119
6 Month LIBOR       119           6            119
6 Month LIBOR       119           6            119
6 Month LIBOR       119           6            119
6 Month LIBOR        22           6            N/A
6 Month LIBOR        23           6            N/A
6 Month LIBOR        22           6            N/A
6 Month LIBOR        21           6            N/A
6 Month LIBOR        21           6            N/A
6 Month LIBOR        22           6            N/A
6 Month LIBOR        20           6            N/A
6 Month LIBOR        20           6             56
6 Month LIBOR        22           6             58
6 Month LIBOR        22           6             58
6 Month LIBOR        21           6             57
6 Month LIBOR        21           6             57
6 Month LIBOR        20           6             56
6 Month LIBOR        21           6             57
6 Month LIBOR        22           6            118
6 Month LIBOR        22           6            118
6 Month LIBOR        15           6            111
6 Month LIBOR        23           6            119
6 Month LIBOR        22           6            118
6 Month LIBOR        21           6            117



                                      S-92





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

6 Month LIBOR      349,999.99    7.37500     7.00000     360         358       6.00000    1.00000     3.50000   13.37500    3.50000
6 Month LIBOR      332,000.00    8.20000     7.82500     360         357       6.00000    1.00000     5.90000   14.20000    5.90000
6 Month LIBOR      264,000.00    7.55000     7.17500     360         358       6.00000    1.00000     5.60000   13.55000    5.60000
6 Month LIBOR      315,200.00    8.87500     8.50000     360         358       6.00000    1.00000     2.75000   14.87500    2.75000
1 Year LIBOR       399,201.82    7.12500     6.75000     360         358       2.00000    2.00000     2.25000   13.12500    2.25000
1 Year LIBOR     1,816,364.84    6.73844     6.36344     360         357       2.00000    2.00000     2.25000   12.73844    2.25000
1 Year LIBOR        55,832.04    8.50000     8.12500     360         358       6.00000    2.00000     2.25000   14.50000    2.50000
1 Year LIBOR       739,175.00    5.55650     5.30650     360         347       2.00000    2.00000     2.55468   11.55650    2.55468
1 Year LIBOR       737,600.00    5.74051     5.36551     360         345       6.00000    2.00000     2.25000   11.74051    2.25000
1 Year LIBOR       744,200.00    6.97605     6.60105     360         358       2.00000    2.00000     2.25000   12.97605    2.25000
1 Year LIBOR     1,302,400.00    6.84765     6.47265     360         358       2.00000    2.00000     2.25000   12.84765    2.25000
1 Year LIBOR       219,997.82    7.15000     6.77500     360         357       2.00000    2.00000     2.25000   13.15000    2.25000
1 Year LIBOR       846,196.00    6.50152     6.12652     360         358       5.00000    2.00000     2.25000   11.50152    2.25000
1 Year LIBOR     2,595,600.00    7.30457     6.92957     360         358       6.00000    2.00000     2.25000   13.30457    2.88577
6 Month LIBOR    3,216,495.66    7.02717     6.65217     360         358       2.00000    2.00000     5.00000   13.02717    6.47780
6 Month LIBOR      415,340.44    7.62500     7.25000     360         357       2.00000    2.00000     5.00000   13.62500    7.62500
6 Month LIBOR      955,138.42    7.88467     7.50967     360         356       2.00000    2.00000     5.00000   13.88467    7.56004
6 Month LIBOR      273,989.82    8.42500     8.05000     360         357       3.00000    1.00000     8.42500   14.42500    8.42500
6 Month LIBOR    1,278,560.88    7.61950     7.24450     360         357       3.00000    1.00000     5.07299   13.61950    5.28621
6 Month LIBOR    1,153,839.88    7.22962     6.85462     360         356       6.00000    1.08920     2.95070   13.22962    3.17370
6 Month LIBOR      500,821.68    7.62500     7.25000     360         358       6.00000    1.00000     4.20549   13.62500    4.20549
6 Month LIBOR    1,273,992.67    7.99968     7.62468     360         358       6.00000    1.66640     2.98161   13.99968    3.31537
6 Month LIBOR      785,789.96    6.58793     6.21293     360         356       2.00000    1.00000     2.25000   12.58793    2.25000
6 Month LIBOR      572,398.84    6.90168     6.52668     360         356       2.00000    2.00000     5.88490   12.90168    5.88490
6 Month LIBOR      559,200.00    7.10000     6.72500     360         357       3.00000    1.00000     6.60000   13.10000    7.10000
6 Month LIBOR      496,000.00    6.75000     6.37500     360         354       3.00000    1.00000     6.25000   12.75000    6.75000
6 Month LIBOR      622,075.00    6.42964     6.05464     360         352       6.00000    2.00000     2.25000   12.42964    2.25000
6 Month LIBOR    3,247,662.40    7.31328     6.93828     360         356       2.00000    2.00000     5.00000   13.31328    7.31328
6 Month LIBOR    2,500,037.64    7.57126     7.19626     360         355       2.00000    2.00000     5.00000   13.57126    7.57126
6 Month LIBOR      663,120.00    8.72497     8.34997     360         357       3.00000    1.00000     8.72497   14.72497    8.72497
6 Month LIBOR    2,529,100.00    7.54674     7.17174     360         357       3.00000    1.00000     7.39886   13.54674    7.54674
6 Month LIBOR    3,832,640.00    7.32410     6.94910     360         358       2.00000    2.00000     5.00000   13.32410    6.19330
6 Month LIBOR      213,972.00    6.25000     5.87500     360         358       2.00000    1.00000     3.25000   12.25000    3.25000
6 Month LIBOR      350,000.00    7.87500     7.50000     360         360       2.00000    2.00000     5.00000   13.87500    7.87500
6 Month LIBOR      428,800.00    6.37500     6.00000     360         358       2.00000    2.00000     5.00000   12.37500    6.37500
6 Month LIBOR       89,200.00    7.75000     7.37500     360         359       2.00000    2.00000     5.00000   13.75000    7.75000
6 Month LIBOR    4,084,927.00    6.91339     6.53839     360         358       2.00000    1.95643     4.40905   12.91339    5.99802
6 Month LIBOR    2,563,851.65    6.77204     6.39704     360         353       3.00000    1.00000     3.22704   11.93741    3.22704
6 Month LIBOR      677,000.00    7.05779     6.68279     360         358       3.00000    1.00000     2.75000   12.60403    2.75000
6 Month LIBOR    6,083,150.00    6.67349     6.29849     360         358       3.00000    1.00000     2.51838   12.56423    2.95463
6 Month LIBOR    5,004,907.83    6.80718     6.43218     360         354       6.00000    1.85754     2.54156   12.80718    2.74187
6 Month LIBOR      647,000.00    6.37500     6.00000     360         358       6.00000    2.00000     2.25000   12.37500    2.25000
6 Month LIBOR    1,994,223.09    6.77028     6.39528     360         358       6.00000    1.77836     2.74052   12.77028    2.74052
1 Year LIBOR     1,010,837.34    7.35704     7.10704     360         358       5.00000    2.00000     2.25000   12.35704    2.25000
1 Year LIBOR     4,498,457.50    7.36760     6.99260     360         358       5.00000    2.00000     2.28164   12.36760    2.43424
1 Year LIBOR     1,897,147.62    7.25735     6.88235     360         357       5.00000    2.00000     2.25000   12.25735    2.25000
1 Year LIBOR       337,941.24    7.35187     6.97687     360         359       5.00000    1.00000     3.25000   12.35187    3.25000
1 Year LIBOR       221,206.36    7.75000     7.37500     360         355       5.00000    2.00000     2.25000   12.75000    2.25000
1 Year LIBOR       188,497.14    7.12500     6.75000     360         358       5.00000    2.00000     3.50000   12.12500    3.50000
1 Year LIBOR     8,697,486.71    7.11125     6.73625     360         358       6.00000    2.00671     2.25000   13.11179    2.28007


                                RATE        REMAINING
                 MONTHS TO      RESET     INTEREST-ONLY
                 NEXT RATE    FREQUENCY      PERIOD
    INDEX        ADJUSTMENT   (MONTHS)      (MONTHS)
-------------    ----------   ---------   -------------

6 Month LIBOR        22           6            118
6 Month LIBOR        21           6            117
6 Month LIBOR        22           6            118
6 Month LIBOR        22           6            118
1 Year LIBOR         34          12            N/A
1 Year LIBOR         33          12            N/A
1 Year LIBOR         34          12            N/A
1 Year LIBOR         23          12             23
1 Year LIBOR         21          12             21
1 Year LIBOR         34          12            118
1 Year LIBOR         34          12            118
1 Year LIBOR         33          12            117
1 Year LIBOR         34          12            118
1 Year LIBOR         34          12            118
6 Month LIBOR        34           6            N/A
6 Month LIBOR        33           6            N/A
6 Month LIBOR        32           6            N/A
6 Month LIBOR        33           6            N/A
6 Month LIBOR        33           6            N/A
6 Month LIBOR        32           6            N/A
6 Month LIBOR        34           6            N/A
6 Month LIBOR        34           6            N/A
6 Month LIBOR        32           6             32
6 Month LIBOR        32           6             32
6 Month LIBOR        33           6             33
6 Month LIBOR        30           6             30
6 Month LIBOR        28           6             28
6 Month LIBOR        32           6             56
6 Month LIBOR        31           6             55
6 Month LIBOR        33           6             57
6 Month LIBOR        33           6             57
6 Month LIBOR        34           6            118
6 Month LIBOR        34           6            118
6 Month LIBOR        36           6            120
6 Month LIBOR        34           6            118
6 Month LIBOR        35           6            119
6 Month LIBOR        34           6            118
6 Month LIBOR        29           6            113
6 Month LIBOR        34           6            118
6 Month LIBOR        34           6            118
6 Month LIBOR        30           6            114
6 Month LIBOR        34           6            118
6 Month LIBOR        34           6            118
1 Year LIBOR         58          12            N/A
1 Year LIBOR         58          12            N/A
1 Year LIBOR         57          12            N/A
1 Year LIBOR         59          12            N/A
1 Year LIBOR         55          12            N/A
1 Year LIBOR         58          12            N/A
1 Year LIBOR         58          12            N/A



                                      S-93





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

1 Year LIBOR      2,469,418.10   6.86413     6.48913     360         358       6.00000    2.00000     2.25000   12.86413    2.25000
1 Year LIBOR      4,395,950.00   7.00630     6.63130     360         359       5.00000    2.00000     2.25000   12.00630    2.25000
1 Year LIBOR      3,631,741.95   7.84156     7.46656     360         359       6.00000    2.00000     2.25000   13.84156    2.31058
1 Year LIBOR         87,291.00   7.37500     7.00000     360         355       6.00000    2.00000     3.50000   13.37500    3.50000
1 Year CMT          211,446.96   7.50000     7.12500     360         351       5.00000    2.00000     2.75000   13.50000    2.75000
1 Year LIBOR     15,169,143.31   7.33158     7.08158     360         358       5.00000    2.00000     2.25000   12.33158    2.25000
1 Year LIBOR      9,966,240.00   7.27914     6.90414     360         358       5.00000    1.80429     2.65052   12.27914    2.65052
1 Year LIBOR      1,414,425.00   7.21385     6.83885     360         359       5.00000    2.00000     2.25000   12.21385    2.50304
1 Year LIBOR      1,318,960.00   7.14074     6.76574     360         359       5.00000    1.00000     3.25000   12.23551    3.25000
1 Year LIBOR      2,454,151.00   7.32979     6.95479     360         359       5.00000    1.00000     3.25000   12.32979    3.25000
1 Year LIBOR        204,000.00   7.12500     6.75000     360         359       5.00000    1.00000     3.25000   12.12500    3.25000
1 Year LIBOR        600,000.00   6.84167     6.46667     360         359       5.00000    1.00000     3.25000   11.84167    3.25000
1 Year LIBOR        875,991.92   7.42158     7.04658     360         358       5.00000    1.42466     3.14269   12.42158    3.16404
1 Year LIBOR      2,421,707.67   5.93105     5.55605     360         358       5.00000    2.00000     2.25000   10.93105    2.25000
1 Year LIBOR        400,000.00   6.50000     6.12500     360         358       5.75000    2.00000     2.25000   12.25000    2.25000
1 Year LIBOR     67,455,240.90   6.96990     6.59490     360         358       6.00000    2.00000     2.25178   12.97118    2.25408
1 Year LIBOR        276,000.00   7.00000     6.62500     360         355       6.00000    2.00000     2.25000   13.00000    2.25000
1 Year LIBOR        786,400.00   7.12500     6.75000     360         359       6.00000    2.00000     2.25000   13.12500    2.25000
1 Year LIBOR     21,123,685.95   6.84802     6.47302     360         358       6.00000    2.00000     2.25000   12.84802    2.25000
1 Year LIBOR        389,600.00   6.37500     6.00000     360         358       7.00000    2.00000     2.25000   12.37500    2.25000
6 Month LIBOR     4,325,062.31   7.74486     7.36986     360         359       5.00000    1.00000     2.92344   12.74486    2.97409
6 Month LIBOR       208,726.93   8.14953     7.77453     360         358       5.00000    1.00000     3.59573   13.14953    3.59573
6 Month LIBOR     2,063,394.83   7.20260     6.82760     360         359       5.00000    1.00000     2.25000   12.20260    2.28065
6 Month LIBOR       919,118.11   5.74911     5.37411     360         359       5.00000    1.00000     2.86953   10.74911    2.86953
6 Month LIBOR     1,705,148.19   7.17031     6.79531     360         359       5.00000    1.00000     2.32865   12.17031    2.32865
6 Month LIBOR       224,540.08   5.87500     5.50000     360         358       5.00000    1.00000     3.25000   10.87500    3.25000
6 Month LIBOR    15,242,210.37   7.36649     6.99149     360         358       6.00000    1.54535     2.83533   13.36649    3.35620
6 Month LIBOR     1,098,272.81   8.10680     7.73180     360         358       6.00000    2.00000     3.35877   14.10680    3.35877
6 Month LIBOR       151,329.31   7.62500     7.25000     360         354       6.00000    2.00000     3.50000   13.62500    3.50000
6 Month LIBOR     2,814,204.26   7.37291     6.99791     360         358       6.00000    1.14363     2.91899   13.37291    2.91899
6 Month LIBOR       156,686.51   7.62500     7.25000     360         359       6.00000    2.00000     4.00000   13.62500    4.00000
6 Month LIBOR       381,879.72   7.34928     6.97428     360         358       6.00000    2.00000     4.00000   13.34928    4.00000
6 Month LIBOR       115,733.58   7.37500     7.00000     360         357       6.00000    2.00000     4.00000   13.37500    4.00000
6 Month LIBOR     1,858,433.83   6.73237     6.35737     360         357       6.00000    1.79814     2.78286   12.73237    4.29739
6 Month LIBOR       682,667.50   7.98217     7.60717     360         358       6.00000    2.00000     4.00000   13.98217    4.00000
6 Month LIBOR        62,253.77   7.50000     7.12500     360         359       6.00000    1.00000     2.75000   13.50000    2.75000
6 Month LIBOR       358,979.19   6.50000     6.12500     360         359       6.00000    1.00000     2.75000   12.50000    2.75000
6 Month LIBOR     6,586,926.78   7.32582     6.95082     360         358       6.00000    1.59276     3.01246   13.32582    3.53526
6 Month LIBOR       179,840.99   8.50000     8.12500     360         359       6.00000    2.00000     4.00000   14.50000    4.00000
6 Month LIBOR       157,480.07   7.37500     7.00000     360         359       6.00000    1.00000     2.75000   13.37500    2.75000
6 Month LIBOR       227,822.13   7.25000     6.87500     360         359       6.00000    1.00000     2.75000   13.25000    2.75000
6 Month LIBOR     1,233,554.39   7.21435     6.83935     360         358       6.00000    1.14121     2.82061   13.21435    2.82061
6 Month LIBOR     4,048,924.84   7.18945     6.93945     360         358       5.00000    1.00000     2.25000   12.18945    2.25000
6 Month LIBOR     5,075,290.00   7.76693     7.39193     360         359       5.00000    1.00000     2.25000   12.76693    2.51585
6 Month LIBOR     7,006,400.00   7.80907     7.43407     360         359       5.00000    1.00000     2.25742   12.80907    2.32057
6 Month LIBOR    18,591,344.91   7.76372     7.38872     360         358       6.00000    2.00000     3.26723   13.76372    3.26723
6 Month LIBOR       544,000.00   9.25000     8.87500     360         358       6.00000    2.00000     4.00000   15.25000    4.00000
6 Month LIBOR       131,150.00   7.93080     7.55580     360         359       6.00000    2.00000     4.00000   13.93080    4.00000
6 Month LIBOR       607,200.00   7.82378     7.44878     360         359       6.00000    2.00000     4.00000   13.82378    4.00000
6 Month LIBOR     1,551,900.00   7.69267     7.31767     360         359       6.00000    2.00000     4.00000   13.69267    4.00000


                                RATE        REMAINING
                 MONTHS TO      RESET     INTEREST-ONLY
                 NEXT RATE    FREQUENCY      PERIOD
    INDEX        ADJUSTMENT   (MONTHS)      (MONTHS)
-------------    ----------   ---------   -------------

1 Year LIBOR         58          12            N/A
1 Year LIBOR         59          12             59
1 Year LIBOR         59          12             59
1 Year LIBOR         55          12             55
1 Year CMT           51          12             51
1 Year LIBOR         58          12            118
1 Year LIBOR         58          12            118
1 Year LIBOR         59          12            119
1 Year LIBOR         59          12            119
1 Year LIBOR         59          12            119
1 Year LIBOR         59          12            119
1 Year LIBOR         59          12            119
1 Year LIBOR         58          12            118
1 Year LIBOR         58          12            118
1 Year LIBOR         58          12            118
1 Year LIBOR         58          12            118
1 Year LIBOR         55          12            115
1 Year LIBOR         59          12            119
1 Year LIBOR         58          12            118
1 Year LIBOR         58          12            118
6 Month LIBOR        59           6            N/A
6 Month LIBOR        58           6            N/A
6 Month LIBOR        59           6            N/A
6 Month LIBOR        59           6            N/A
6 Month LIBOR        59           6            N/A
6 Month LIBOR        58           6            N/A
6 Month LIBOR        58           6            N/A
6 Month LIBOR        58           6            N/A
6 Month LIBOR        54           6            N/A
6 Month LIBOR        58           6            N/A
6 Month LIBOR        59           6            N/A
6 Month LIBOR        58           6            N/A
6 Month LIBOR        57           6            N/A
6 Month LIBOR        57           6            N/A
6 Month LIBOR        58           6            N/A
6 Month LIBOR        59           6            N/A
6 Month LIBOR        59           6            N/A
6 Month LIBOR        58           6            N/A
6 Month LIBOR        59           6            N/A
6 Month LIBOR        59           6            N/A
6 Month LIBOR        59           6            N/A
6 Month LIBOR        58           6            N/A
6 Month LIBOR        58           6             58
6 Month LIBOR        59           6             59
6 Month LIBOR        59           6             59
6 Month LIBOR        58           6             58
6 Month LIBOR        58           6             58
6 Month LIBOR        59           6             59
6 Month LIBOR        59           6             59
6 Month LIBOR        59           6             59



                                      S-94





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

6 Month LIBOR     8,880,400.00   7.91210     7.53710     360         358       6.00000    2.00000     4.00000   13.91210    4.00000
6 Month LIBOR       799,000.00   7.34316     6.96816     360         359       6.00000    2.00000     4.00000   13.34316    4.00000
6 Month LIBOR       212,000.00   7.87500     7.50000     360         357       6.00000    2.00000     4.00000   13.87500    4.00000
6 Month LIBOR     1,804,300.00   8.01377     7.63877     360         358       6.00000    2.00000     4.00000   14.01377    4.00000
6 Month LIBOR       553,800.00   7.31514     6.94014     360         357       6.00000    2.00000     2.34588   13.31514    2.34588
6 Month LIBOR       807,200.00   7.14383     6.76883     360         359       3.00000    1.00000     2.93756   13.14383    2.93756
6 Month LIBOR       146,400.00   7.37500     7.00000     360         358       4.37500    1.00000     3.25000   11.75000    3.25000
6 Month LIBOR       645,000.00   8.25000     7.87500     360         358       4.87500    1.00000     4.50000   13.12500    4.50000
6 Month LIBOR     2,271,138.44   7.20915     6.95915     360         354       5.00000    2.00000     2.25000   12.20915    2.25000
6 Month LIBOR    25,152,466.19   7.68277     7.30777     360         358       5.00000    1.03850     3.25806   12.70265    3.57876
6 Month LIBOR       286,300.00   7.87500     7.50000     360         359       5.00000    1.00000     5.00000   12.87500    5.00000
6 Month LIBOR     7,287,290.00   8.08537     7.71037     360         358       5.00000    1.00000     2.28552   13.08537    2.57868
6 Month LIBOR       535,916.88   7.17353     6.79853     360         359       5.00000    1.00000     4.05983   12.17353    4.05983
6 Month LIBOR     6,301,098.15   7.82955     7.45455     360         358       5.00000    1.00000     3.02338   12.82955    3.17799
6 Month LIBOR     8,249,348.96   7.27593     6.90093     360         358       5.00000    1.00000     3.84316   12.27593    3.84937
6 Month LIBOR       104,000.00   7.50000     7.12500     360         358       5.00000    1.00000     2.25000   12.50000    2.25000
6 Month LIBOR       220,000.00   8.00000     7.62500     360         358       5.00000    1.00000     4.37500   13.00000    4.37500
6 Month LIBOR       129,600.00   7.25000     6.87500     360         358       5.00000    1.00000     2.25000   12.25000    2.25000
6 Month LIBOR       229,600.00   7.51611     7.14111     360         358       5.00000    1.00000     3.23693   12.51611    3.23693
6 Month LIBOR       842,575.00   7.72136     7.34636     360         356       5.00000    1.00000     2.46458   12.72136    3.32290
6 Month LIBOR    29,508,471.57   7.62664     7.25164     360         358       5.00000    1.00000     2.79240   12.62664    2.99921
6 Month LIBOR       628,148.04   7.36996     6.99496     360         358       5.00000    1.00000     3.73308   12.36996    3.73308
6 Month LIBOR    76,114,591.95   7.38209     7.00709     360         358       6.00000    1.55138     2.79745   13.38209    3.41409
6 Month LIBOR    10,817,400.00   7.32982     6.95482     360         358       6.00000    1.96595     2.52132   13.32982    2.52132
6 Month LIBOR       360,000.00   8.50000     8.12500     360         358       6.00000    2.00000     2.75000   14.50000    8.50000
6 Month LIBOR    18,753,386.35   7.41430     7.03930     360         358       6.00000    1.25166     2.70077   13.41430    2.70077
6 Month LIBOR    15,785,904.47   6.89658     6.52158     360         358       6.00000    1.33922     3.00739   12.89658    3.17817
6 Month LIBOR       208,000.00   7.12500     6.75000     360         359       6.00000    1.00000     2.75000   13.12500    2.75000
6 Month LIBOR       964,400.00   7.40803     7.03303     360         359       6.00000    1.00000     2.75000   13.40803    2.75000
6 Month LIBOR    71,685,922.31   7.25946     6.88446     360         358       6.00000    1.79623     2.68616   13.25779    3.30575
6 Month LIBOR       268,000.00   6.87500     6.50000     360         358       6.00000    2.00000     3.62500   12.87500    3.62500
6 Month LIBOR       423,920.00   7.44461     7.06961     360         359       6.00000    1.00000     2.75000   13.44461    2.75000
6 Month LIBOR     6,967,705.98   6.75131     6.37631     360         358       6.00000    1.36363     3.02683   12.75131    3.02683
6 Month LIBOR       417,000.00   7.37500     7.00000     360         358       6.37500    2.00000     2.75000   13.37500    2.75000
1 Year LIBOR        233,283.31   7.97091     7.59591     360         358       6.00000    2.00000     2.25000   13.97091    2.25000
1 Year LIBOR        477,350.00   7.58266     7.20766     360         359       6.00000    2.00000     2.25000   13.58266    2.25000
1 Year LIBOR        219,867.10   7.25000     7.00000     360         358       5.00000    2.00000     2.25000   12.25000    2.25000
1 Year LIBOR        534,560.00   7.38368     7.00868     360         358       5.00000    2.00000     2.25000   12.38368    2.38368
1 Year LIBOR         68,800.00   7.75000     7.37500     360         358       6.00000    2.00000     2.25000   13.75000    2.25000
6 Month LIBOR       418,333.05   7.98067     7.60567     360         358       6.00000    2.00000     2.25000   13.98067    2.25000
6 Month LIBOR     1,003,468.94   7.38557     7.01057     360         358       6.00000    2.00000     2.25000   13.38557    2.25000
6 Month LIBOR       358,550.00   7.27738     6.90238     360         358       6.00000    2.00000     2.25000   13.27738    2.25000
6 Month LIBOR       164,190.00   7.25000     6.87500     360         357       6.00000    2.00000     2.25000   13.25000    2.25000
1 Month LIBOR       187,706.18   8.87500     8.50000     360         354      Uncapped   Uncapped     4.00000   12.00000    4.00000
1 Month LIBOR       680,000.00   7.75000     7.37500     360         357       1.00000    1.00000     2.25000   13.75000    2.25000
6 Month LIBOR       204,000.00   6.50000     6.12500     360         358       1.00000    1.00000     2.25000   12.50000    2.25000
1 Year LIBOR        449,999.88   6.37500     6.00000     360         358       2.00000    2.00000     2.25000   12.37500    2.25000


                                RATE        REMAINING
                 MONTHS TO      RESET     INTEREST-ONLY
                 NEXT RATE    FREQUENCY      PERIOD
    INDEX        ADJUSTMENT   (MONTHS)      (MONTHS)
-------------    ----------   ---------   -------------

6 Month LIBOR        58           6             58
6 Month LIBOR        59           6             59
6 Month LIBOR        57           6             57
6 Month LIBOR        58           6             58
6 Month LIBOR        57           6             57
6 Month LIBOR        59           6            119
6 Month LIBOR        58           6            118
6 Month LIBOR        58           6            118
6 Month LIBOR        54           6            114
6 Month LIBOR        58           6            118
6 Month LIBOR        59           6            119
6 Month LIBOR        58           6            118
6 Month LIBOR        59           6            119
6 Month LIBOR        58           6            118
6 Month LIBOR        58           6            118
6 Month LIBOR        58           6            118
6 Month LIBOR        58           6            118
6 Month LIBOR        58           6            118
6 Month LIBOR        58           6            118
6 Month LIBOR        56           6            116
6 Month LIBOR        58           6            118
6 Month LIBOR        58           6            118
6 Month LIBOR        58           6            118
6 Month LIBOR        58           6            118
6 Month LIBOR        58           6            118
6 Month LIBOR        58           6            118
6 Month LIBOR        58           6            118
6 Month LIBOR        59           6            119
6 Month LIBOR        59           6            119
6 Month LIBOR        58           6            118
6 Month LIBOR        58           6            118
6 Month LIBOR        59           6            119
6 Month LIBOR        58           6            118
6 Month LIBOR        58           6            118
1 Year LIBOR         82          12            N/A
1 Year LIBOR         83          12             83
1 Year LIBOR         82          12            118
1 Year LIBOR         82          12            118
1 Year LIBOR         82          12            118
6 Month LIBOR        82           6            N/A
6 Month LIBOR        82           6            N/A
6 Month LIBOR        82           6             82
6 Month LIBOR        81           6            117
1 Month LIBOR         1           1            114
1 Month LIBOR         1           1            117
6 Month LIBOR         4           6            118
1 Year LIBOR         10          12             10


* Balloon Loan with original amortization of 480 months.


                                      S-95



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

      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 (in the case of a balloon loan, the remaining amortization
          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 the case of a balloon loan,
          the remaining amortization 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 of each Class of Certificates is
          as set forth on page v 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 July 31, 2006,

      o   none of the Depositor, 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 5.394%, 5.558%, 5.620% and
          5.187%, respectively,

      o   except as otherwise specifically set forth in the decrement tables
          below, the Master Servicer does not exercise its option to repurchase
          the Mortgage Loans as described under "--Auction and Optional
          Termination of the Certificates," and a successful auction of the
          Mortgage Loans does not occur,

      o   no Class of Certificates becomes a Restricted Class,

      o   the Mortgage Rate on each 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   the Overcollateralization Target Amount is initially as specified in
          this prospectus supplement and thereafter decreases in accordance with
          the provisions in this prospectus supplement,

      o   no Swap Termination Payments are paid or received by the Issuing
          Entity,


                                      S-96



      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 respective initial Class Principal Balances of the Class A-R and
          Class P Certificates are $0.

      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 Mortgage Loans 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. 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.

      While it is assumed that each of the Mortgage Loans prepays at the
specified percentages of CPR, 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 or on behalf of the Trustee and characteristics of
the mortgage loans used in preparing the tables.

DEPOSITOR'S OPTION TO PURCHASE BREACHED MORTGAGE LOANS

      Subject to the terms of the Pooling and Servicing Agreement, the Depositor
has the option, but is not obligated, to purchase from the Issuing Entity any
Breached Mortgage Loan at the Purchase Price; provided that the entity from
which the Seller purchased the Mortgage Loan has both (a) agreed to purchase the
Mortgage Loan from the Depositor and (b) has represented to the Seller that it
has the ability to purchase such Mortgage Loan from the Depositor, as soon as is
practicable thereafter at the Purchase Price.

      For the purposes of this section, the "PURCHASE PRICE" shall be 100% of
the unpaid principal balance of such Mortgage Loan, plus all related accrued and
unpaid interest, and the amount of any unreimbursed Servicing Advances made by
the Servicers or the Master Servicer related to the Mortgage Loan, and a
"BREACHED MORTGAGE LOAN" is a Mortgage Loan (a) (i) on which the first payment
was not made or (ii) that has been delinquent one or two times in the six months
following the Cut-off Date and (b) as to which the Seller obtained a
representation or warranty that no condition set forth in (a)(i) or, for the
same or other period time specified in such representation or warranty (a)(ii),
exists.

AUCTION AND OPTIONAL TERMINATION OF THE CERTIFICATES

      Auction and Optional Termination. 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 Issuing
Entity 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 assets of the Issuing Entity (collectively, the
"ASSETS"), and one of those bids is at least equal to the Minimum Auction Price,
the Auction Administrator shall sell the 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 purchase 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


                                      S-97



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 assets of
the Issuing Entity and all other property in the assets of the Issuing Entity
being purchased, (c) any unreimbursed servicing advances related to the Mortgage
Loans, (d) any expenses incurred by the Auction Administrator relating to the
Auction process and (e) any Swap Termination Payment owed to the Swap
Counterparty.

      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 Assets for a price equal to the sum of (a)
100% of the aggregate Stated Principal Balance of the Mortgage Loans, plus
accrued interest thereon, (b) the fair market value of any related REO Property,
(c) any unreimbursed servicing advances related to the Mortgage Loans and (d)
any Swap Termination Payment owed to the Swap Counterparty.

VOTING RIGHTS

      Voting rights will be allocated among the classes of Certificates in
proportion to their respective Class Principal Balances, 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 Class OC Certificates will be allocated 1% of the voting
rights.

      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, and the denominator of which is the applicable Class
Principal Balance.

AMENDMENT

      The Pooling and Servicing Agreement may be amended by the parties thereto,
without the consent of any of the holders of certificates issued by the Issuing
Entity under the Pooling and Servicing Agreement:

      o   to cure any ambiguity;

      o   to conform the Pooling and Servicing Agreement to the prospectus and
          this prospectus supplement provided to investors in connection with
          the initial offering of the certificates;

      o   to correct, modify or supplement any provision in the Pooling and
          Servicing Agreement which may be inconsistent with any other provision
          in the Pooling and Servicing Agreement;

      o   to make any other provisions with respect to matters or questions
          arising under the Pooling and Servicing 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 Pooling and Servicing Agreement.

      The Pooling and Servicing Agreement may also be amended by the Depositor,
the Master Servicer, the Securities Administrator and the Trustee, with the
consent of the holders of certificates affected thereby evidencing


                                      S-98



not less than 66 2/3% of the voting rights, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
the Pooling and Servicing Agreement or of modifying in any manner the rights of
the certificateholders; provided, however, that no such amendment may:

      o   reduce in any manner the amount of, or delay the timing of, payments
          received on Mortgage Loans which are required to be distributed on any
          certificate, without the consent of that certificateholder; or

      o   reduce the aforesaid percentages of certificateholders of which are
          required to consent to any such amendment.

      However, the Trustee will not consent to any amendment of the Pooling and
Servicing 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
Issuing Entity or cause the Issuing Entity to fail to qualify as a REMIC at any
time that the certificates are outstanding.

      Notwithstanding the foregoing, any amendment to Pooling and Servicing
Agreement shall require the prior written consent of the Swap Counterparty if
such amendment materially and adversely affects the rights or interests of the
Swap Counterparty.

CERTAIN MATTERS REGARDING THE DEPOSITOR, THE MASTER SERVICER, THE SECURITIES
ADMINISTRATOR, THE SERVICERS, THE CUSTODIANS AND THE TRUSTEE

      The Pooling and Servicing Agreement provides that none of the Depositor,
the Master Servicer, the Securities Administrator or the Trustee, or any of
their respective directors, officers, employees or agents will be under any
liability to the Certificateholders for any action taken, or for refraining from
the taking of any action, in good faith pursuant to the Pooling and Servicing
Agreement, or for errors in judgment. The underlying servicing agreements as
modified by the Assignment Agreements may provide that none of the Servicers or
any of their respective directors, officers, employees or agents will be under
any liability to the Certificateholders for any action taken, or for refraining
from the taking of any action, in good faith pursuant to those agreements, or
for errors in judgment. The custody agreements may provide that neither the
custodians nor any of their respective directors, officers, employees or agents
will be under any liability to the certificateholders for any action taken, or
for refraining from the taking of any action, in good faith pursuant to those
agreements, or for errors in judgment. However, none of the Depositor, the
Servicers, the Master Servicer, the Securities Administrator, any custodian or
the Trustee will be protected against liability arising from any breach of
representations or warranties made by it or from any liability which may be
imposed by reason of their willful misfeasance, bad faith or negligence (or
gross negligence, to the extent specified by the related agreement) in the
performance of its duties or by reason of its reckless disregard of obligations
and duties under the related agreement.

      The Depositor, the Servicers, the Master Servicer, the Securities
Administrator, any custodian or the Trustee and their respective directors,
officers, employees or agents will be indemnified by the Issuing Entity and held
harmless against any loss, liability or expense incurred in connection with,
among other things, the performance of their respective duties pursuant to the
related agreement or the certificates, other than any loss, liability or expense
incurred by reason of their willful misfeasance, bad faith or negligence (or
gross negligence, to the extent specified by the related agreement) in the
performance of their respective duties or by reason of any reckless disregard of
their respective obligations and duties.

      None of the Depositor, the Servicers, the Master Servicer, the Securities
Administrator, any custodian nor the Trustee is obligated to appear in,
prosecute or defend any legal action that is not incidental to their respective
duties which may involve it in any expense or liability, provided that, in
accordance with the related agreement. The Depositor, the Servicers, the Master
Servicer, the Securities Administrator, any custodian or the Trustee, as
applicable, may undertake any action any of them deem necessary or desirable in
respect of their respective rights and duties, as set forth in the related
agreement. In the event that the Depositor, the Servicers, the Master Servicer,
the Securities Administrator, any custodian or the Trustee undertakes any such
action, the legal expenses and costs of such action and any resulting liability
will be expenses, costs and liabilities of the Issuing Entity, and the
Depositor, the Servicers, the Master Servicer, the Securities Administrator, any
custodian or the Trustee, as


                                      S-99



applicable, will be entitled to be reimbursed for such expenses, costs and
liabilities out of the Assets of the Issuing Entity.

                   YIELD, PREPAYMENT AND WEIGHTED AVERAGE LIFE

GENERAL

      The effective yield to the holders of each Class of Certificates will be
affected primarily by the following factors:

      o   The rate and timing of principal payments on the Mortgage Loans,
          including prepayments, defaults and liquidations, and repurchases due
          to breaches of representations and warranties;

      o   The allocation of principal payments among the various Classes of
          Certificates;

      o   The rate and timing of realized losses and interest shortfalls on the
          Mortgage Loans;

      o   The pass-through rate on that Class of Certificates;

      o   any delay between the end of the accrual period for that Class of
          Certificates and the related Distribution Date; and

      o   the purchase price paid for that Class of Certificates.

      For additional considerations relating to the yields on the Offered
Certificates, see "Yield Considerations" in the accompanying prospectus.

PREPAYMENT CONSIDERATIONS AND RISKS

      The rate of principal payments on any Class of Certificates, the aggregate
amount of distributions on that class and the yield to maturity of that class
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 related seller or the sponsor or purchases
by the Master Servicer. Except as described in this prospectus supplement, the
Mortgage Loans may be prepaid by the borrowers at any time without a prepayment
charge. Any Mortgage Loans that provide for prepayment charges may demonstrate a
lower rate of principal prepayments than Mortgage Loans that do not provide for
prepayment charges. The holders of the Class P Certificates are entitled to
receive the prepayment charges received on the Mortgage Loans and those amounts
will not be available for distribution on the other Classes of Certificates. In
addition, as described in "Description of the Mortgage Loans," approximately
86.79% of the Mortgage Loans, by aggregate Stated Principal Balance of the
Mortgage Loans owned by the Issuing Entity as of the Cut-off Date, do not
provide for any payments of principal for an extended period following their
origination. These interest only loans may involve a greater degree of risk
because, if the related borrower defaults, the outstanding principal balance of
the Mortgage Loans will be higher than for amortizing Mortgage Loans. During
their interest only periods, these 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 the interest only loans as the related borrowers
seek to avoid increases in their respective monthly mortgage payment. The
Mortgage Loans will be subject to the "due-on-sale" provisions included therein.
In addition, certain of the 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 certificates of principal amounts which would otherwise
be distributed over the remaining terms of these Mortgage


                                      S-100



Loans. This includes any optional repurchase by the related seller of a
defaulted Mortgage Loan and any optional purchase or auction of the remaining
Mortgage Loans in connection with the dissolution of the Issuing Entity, in each
case as described in this prospectus supplement. Since the rate of payment of
principal of the Mortgage Loans held by the issuing entity will depend on future
events and a variety of factors, no assurance can be given as to the rate of
payment of principal of the Mortgage Loans or the rate of principal prepayments.
The extent to which the yield to maturity of a Class of Certificates may vary
from the anticipated yield will depend upon the degree to which the certificate
is purchased at a discount or premium, and the degree to which the timing of
payments thereon is sensitive to prepayments, liquidations and purchases of the
Mortgage Loans. Further, an investor should consider the risk that, if
purchasing any certificate at a discount, a slower than anticipated rate of
principal payments (including prepayments) on the Mortgage Loans could result in
an actual yield to the investor that is lower than the anticipated yield and, in
the case of any certificate purchased at a premium, a faster than anticipated
rate of principal payments on the certificates could result in an actual yield
to the investor that is lower than the anticipated yield. In addition, certain
Classes of Certificates are structured to receive distributions before or after
other Classes of Certificates or have specific principal payment windows. As a
result, some Classes of Certificates, especially Senior Certificates, may
receive all or a disproportionately larger amount of principal on the Mortgage
Loans, while other Classes of Certificates, especially the Subordinated
Certificates, may receive no or a disproportionately smaller amount of principal
on the Mortgage Loans for certain periods following the closing date.

      The rate of principal payments (including prepayments) on pools of
mortgage loans may vary significantly over time and may be influenced by a
variety of economic, geographic, social and other factors, including changes in
borrowers' housing needs, job transfers, unemployment, borrowers' net equity in
the mortgaged properties, servicing decisions, as well as the characteristics of
the mortgage loans included in the mortgage pool. In general, if prevailing
interest rates were to fall significantly below the mortgage rates on the
Mortgage Loans, the Mortgage Loans could be subject to higher prepayment rates
than if prevailing interest rates were to remain at or above the mortgage rates
on the Mortgage Loans. Conversely, if prevailing interest rates were to rise
significantly, the rate of prepayments on the Mortgage Loans would generally be
expected to decrease. No assurances can be given as to the rate of prepayments
on the Mortgage Loans in stable or changing interest rate environments. With
respect to mortgage loans that are balloon loans, those balloon loans involve a
greater degree of risk than fully amortizing mortgage loans because typically
the borrower must be able to refinance the loan or sell the property to make the
balloon payment at maturity. The ability of the borrower to do this will depend
on such factors as mortgage rates at the time of the sale or refinancing, the
borrower's equity in the property, the relative strengths of the local housing
market, the financial condition of the borrower and tax laws.

      The Mortgage Loans are adjustable rate mortgage loans which are subject to
initial fixed rate periods of up to 10 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 borrowers to refinance
their adjustable rate mortgage loans to a lower fixed interest rate. Prepayments
on adjustable rate mortgage loans that feature initial fixed rate periods may
differ as they approach their respective first adjustment dates. No assurance
can be given as to the level of prepayment that the adjustable rate mortgage
loans will experience.

      The timing of changes in the rate of prepayments on the Mortgage Loans
held by any issuing entity 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.

OVERCOLLATERALIZATION

      To the extent that excess interest on the Mortgage Loans and Net Swap
Receipts are used to make distributions of principal to create, maintain or
restore the required level of overcollateralization, principal distributions
will be made to the Certificates in excess of the principal payments received.
Net Monthly Excess


                                      S-101



Cashflow generally is a function of the excess of interest collected or advanced
on the Mortgage Loans over the amount required to pay interest on the
Certificates and expenses at the Expense Fee Rate, as well as Net Swap Payments
to the Swap Counterparty. The Mortgage Loans with higher net mortgage rates will
contribute more interest to the Net Monthly Excess Cashflow. The Mortgage Loans
with higher net mortgage rates may prepay faster than mortgage loans with
relatively lower net interest rates in response to a given change in market
interest rates. Any disproportionate prepayments of Mortgage Loans with higher
net interest rates may adversely affect the amount of Net Monthly Excess
Cashflow available to make accelerated payments of principal of the
Certificates.

      Any Net Swap payment payable to the Swap Counterparty under the terms of
the swap agreement will reduce amounts available for distribution to the
Certificate and may reduce the Pass-Through Rates on the Certificates. If the
rate of prepayments on the Mortgage Loans is faster than anticipated, the
scheduled notional amount on which payments due under the swap agreement are
calculated may exceed the aggregate Stated Principal Balance of the Mortgage
Loans, thereby increasing the relative proportion of interest collections on the
Loans that must be applied to make Net Swap Payments to the Swap Counterparty.
The combination of a rapid rate of prepayment and low prevailing interest rates
could adversely affect the yields on the Certificates.

      This acceleration of principal distributions on the Certificates may
affect the yield thereon in a similar manner as a principal prepayment on the
Mortgage Loans as described above under "--Prepayment Considerations and Risks."

INTEREST SHORTFALLS AND REALIZED LOSSES

      When a principal prepayment in full is made on a mortgage loan, the
related mortgagor is charged interest only for the period from the due date of
the preceding monthly payment up to the date of the principal prepayment,
instead of for a full month. When a partial principal prepayment is made on a
mortgage loan, the mortgagor is not charged interest on the amount of the
principal prepayment for the related prepayment period. In addition, the
application of the Relief Act or similar state law to any mortgage loan will
adversely affect, for an indeterminate period of time, the ability of the
related servicer to collect full amounts of interest on the mortgage loan. See
"Legal Aspects of Mortgage Loans--Servicemembers' Civil Relief Act" in the
accompanying prospectus. Any interest shortfalls resulting from a principal
prepayment in full or in part are required to be paid by the related Servicer
and, in certain cases, the Master Servicer, but only to the extent that such
amount does not exceed the aggregate of the related servicing fee and master
servicing compensation payable in the related Due Period. Neither the Master
Servicer nor any Servicer is obligated to fund interest shortfalls resulting
from the application of the Relief Act or any similar state law. See "Servicing
of the Mortgage Loans--Servicing Compensation and Payment of Expenses; Master
Servicing Compensation; Administrative Fees" in this prospectus supplement and
"Legal Aspects of Mortgage Loans--Servicemembers' Civil Relief Act" in the
accompanying prospectus. Accordingly, the effect of (1) any principal
prepayments on the Mortgage Loans, to the extent that any resulting interest
shortfall due to such principal prepayments exceeds any compensating interest or
(2) any shortfalls resulting from the application of the Relief Act or similar
state law, will be to reduce the aggregate amount of interest collected that is
available for distribution to holders of the Classes of Certificates and will be
allocated as provided herein.

      The yields to maturity and the aggregate amount of distributions on the
Certificates will be affected by the timing of mortgagor defaults on the
Mortgage Loans resulting in Realized Losses. The timing of Realized Losses on
the Mortgage Loans and the allocation of Realized Losses to the Certificates
could significantly affect the yield to an investor in those. In addition,
Realized Losses on the Mortgage Loans may affect the market value of the Classes
of Certificates, even if these losses are not allocated to those Classes of
Certificates. If the amount of overcollateralization is been reduced to zero and
there is a Realized Loss on a Mortgage Loan or, the yield to maturity on the
Classes of Certificates then outstanding with the lowest payment priority will
be extremely sensitive to these losses and the timing of those losses because
the entire amount of any losses will be allocated to that Class of Certificates
until its Class Principal Balance is reduced to zero. Furthermore, because
principal distributions are paid to some Classes of Certificates before other
classes, holders of classes having a later priority of payment bear a greater
risk of losses than holders of classes having an earlier priority for
distribution of principal.


                                      S-102



PASS-THROUGH RATES

      The yields to maturity on the Classes of Certificates will be affected by
their respective Pass-Through Rates. The Certificates may have their respective
Pass-Through Rates limited by the Net WAC Cap. Thus, the yields to investors in
the Certificates will be sensitive to fluctuations in the level of one-month
LIBOR and may be adversely affected by the application of the Net WAC Cap,
thereby limiting their pass-through rates. If on any Distribution Date the
application of the related Net WAC to a Class of Certificates results in an
interest payment lower than one-month LIBOR plus the related margin, the value
of that Class of Certificates may be temporarily or permanently reduced.

      The rate of prepayment of the Mortgage Loans may affect the Pass-Through
Rates on the Certificates. Prepayments of mortgage loans with mortgage rates may
reduce or limit the Pass-Through Rate on the Classes of 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. Net Monthly Excess Cashflow generally is a function of the
excess of interest collected or advanced on the Mortgage Loans over the interest
required to pay interest on the Certificates and expenses related to the
Mortgage Loans, as well as Net Swap Payments to the Swap Counterparty. The
Mortgage Loans with higher net interest rates will contribute more interest to
the Net Monthly Excess Cashflow. Any disproportionate prepayments of Mortgage
Loans with higher net interest rates may adversely affect the amount of Net
Monthly Excess Cashflow available to make accelerated payments of principal of
the Certificates. In addition, if prepayments on the Mortgage Loans occur at a
rate slower than anticipated, the Swap Agreement may not provide sufficient
funds to cover the shortfalls for which it was intended.

      Investors in the certificates should be aware that all of the Mortgage
Loans may have adjustable interest rates. Although the mortgage rates on
adjustable rate mortgage loans are subject to adjustment, those mortgage rates
will generally adjust less frequently than the pass-through rates on the
Certificates and will adjust by reference to the applicable mortgage index.
Changes in one-month LIBOR may not correlate with changes in the applicable
mortgage index and also may not correlate with prevailing interest rates. It is
possible that an increased level of one-month LIBOR could occur simultaneously
with a lower level of prevailing interest rates which would be expected to
result in faster prepayments, thereby reducing the weighted average lives of the
Certificates. The mortgage rate applicable to all or a portion of the adjustable
rate mortgage loans and any adjustment date will be based on the mortgage index
value most recently announced generally as of a date 45 days prior to that
adjustment date. Thus, if the related mortgage index value with respect to an
adjustable rate mortgage loan rises, the lag in time before the corresponding
mortgage rate increases will, all other things being equal, slow the upward
adjustment of any applicable net rate cap. In addition, certain of the
adjustable rate mortgage loans may have mortgage rates that will not adjust for
a substantial period of time after origination. In a rising interest rate
environment, the Certificates may receive interest at the related Net WAC Cap
for a protracted period of time. In addition, in this situation, investors in
the Certificates should be aware that there may be little or no excess interest
to cover losses and to create, maintain or restore overcollateralization.

      To the extent that a Class of Certificates receives distributions of
interest at a Pass-Through Rate equal to the related Net WAC Cap, the difference
between the related Net WAC Cap and plus the related margin will create a
shortfall that will carry forward with interest thereon. This shortfall will
only be payable from Net Monthly Excess Cashflow and Net Swap Receipts, which
may be limited. These shortfalls may remain unpaid on the optional termination
date and final distribution date.

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 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 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" above and "Yield Considerations" in the accompanying prospectus.


                                      S-103



      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 Distributions on the Certificates" 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,
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 percentages of CPR, see the Decrement Tables under the next
heading.

DECREMENT TABLES

      The following tables indicate the percentages of the initial Class
Principal Balances of the Classes of Offered Certificates (other than the Class
A-R Certificates) that would be outstanding after each of the dates shown at
various percentages of CPR and the corresponding weighted average lives of the
Classes. The tables have been prepared on the basis of the structuring
assumptions. It is not likely that the Mortgage Loans will have the precise
characteristics described in this prospectus supplement or all of the Mortgage
Loans will prepay at the percentages of CPR 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
percentages of CPR, 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-104



             PERCENT OF INITIAL CLASS PRINCIPAL BALANCES OUTSTANDING



                                                       CLASS A-1                                          CLASS A-2
                                      --------------------------------------------        ------------------------------------------
                                                   PERCENTAGE OF CPR                                  PERCENTAGE OF CPR
                                      --------------------------------------------        ------------------------------------------
DISTRIBUTION DATE                       0%        15%       30%      45%      60%           0%       15%      30%      45%      60%
-----------------                     ------    ------    ------   ------   ------        ------   ------   ------   ------   ------

Initial.............................    100       100       100      100      100           100      100      100      100      100
July 2007...........................    100        84        68       52       35           100       82       64       46       28
July 2008...........................    100        70        45       25       10           100       66       38       16        0
July 2009...........................    100        58        29       10        0           100       53       21        0        0
July 2010...........................     99        48        22        8        0            99       42       13        0        0
July 2011...........................     99        41        15        5        0            99       34        5        0        0
July 2012...........................     99        34        11        3        0            99       27        0        0        0
July 2013...........................     99        29         8        1        0            98       21        0        0        0
July 2014...........................     98        25         5        1        0            98       16        0        0        0
July 2015...........................     98        21         4        *        0            98       11        0        0        0
July 2016...........................     97        18         3        0        0            97        8        0        0        0
July 2017...........................     95        15         2        0        0            94        4        0        0        0
July 2018...........................     93        12         1        0        0            92        2        0        0        0
July 2019...........................     90        10         1        0        0            89        0        0        0        0
July 2020...........................     87         8         *        0        0            86        0        0        0        0
July 2021...........................     84         7         *        0        0            83        0        0        0        0
July 2022...........................     81         6         0        0        0            79        0        0        0        0
July 2023...........................     78         5         0        0        0            75        0        0        0        0
July 2024...........................     74         4         0        0        0            71        0        0        0        0
July 2025...........................     70         3         0        0        0            66        0        0        0        0
July 2026...........................     65         2         0        0        0            61        0        0        0        0
July 2027...........................     60         2         0        0        0            55        0        0        0        0
July 2028...........................     55         1         0        0        0            49        0        0        0        0
July 2029...........................     49         1         0        0        0            43        0        0        0        0
July 2030...........................     43         1         0        0        0            36        0        0        0        0
July 2031...........................     37         *         0        0        0            30        0        0        0        0
July 2032...........................     31         *         0        0        0            22        0        0        0        0
July 2033...........................     24         0         0        0        0            15        0        0        0        0
July 2034...........................     16         0         0        0        0             6        0        0        0        0
July 2035...........................      8         0         0        0        0             0        0        0        0        0
July 2036...........................      0         0         0        0        0             0        0        0        0        0
Weighted Average Life to maturity
   (in years)**.....................  21.81      5.57      2.63     1.53     0.90         20.90     4.16     1.91     1.09     0.72
Weighted Average Life to first
   Optional Termination Date (in
   years)**.........................  21.76      5.16      2.40     1.39     0.89         20.90     4.16     1.91     1.09     0.72




                                                       CLASS A-3                                          CLASS A-4
                                      --------------------------------------------        ------------------------------------------
                                                   PERCENTAGE OF CPR                                  PERCENTAGE OF CPR
                                      --------------------------------------------        ------------------------------------------
DISTRIBUTION DATE                       0%        15%       30%      45%      60%           0%       15%      30%      45%      60%
-----------------                     ------    ------    ------   ------   ------        ------   ------   ------   ------   ------

Initial.............................    100       100       100      100      100           100      100      100      100      100
July 2007...........................    100        70        40       11        0           100      100      100      100       71
July 2008...........................     99        45         0        0        0           100      100       98       40        0
July 2009...........................     99        23         0        0        0           100      100       53        0        0
July 2010...........................     99         5         0        0        0           100      100       32        0        0
July 2011...........................     99         0         0        0        0           100       86       13        0        0
July 2012...........................     98         0         0        0        0           100       68        0        0        0
July 2013...........................     97         0         0        0        0           100       53        0        0        0
July 2014...........................     97         0         0        0        0           100       40        0        0        0
July 2015...........................     96         0         0        0        0           100       29        0        0        0
July 2016...........................     95         0         0        0        0           100       20        0        0        0
July 2017...........................     91         0         0        0        0           100       11        0        0        0
July 2018...........................     86         0         0        0        0           100        4        0        0        0
July 2019...........................     82         0         0        0        0           100        0        0        0        0
July 2020...........................     77         0         0        0        0           100        0        0        0        0
July 2021...........................     71         0         0        0        0           100        0        0        0        0
July 2022...........................     65         0         0        0        0           100        0        0        0        0
July 2023...........................     59         0         0        0        0           100        0        0        0        0
July 2024...........................     52         0         0        0        0           100        0        0        0        0
July 2025...........................     44         0         0        0        0           100        0        0        0        0
July 2026...........................     36         0         0        0        0           100        0        0        0        0
July 2027...........................     27         0         0        0        0           100        0        0        0        0
July 2028...........................     17         0         0        0        0           100        0        0        0        0
July 2029...........................      6         0         0        0        0           100        0        0        0        0
July 2030...........................      0         0         0        0        0            93        0        0        0        0
July 2031...........................      0         0         0        0        0            76        0        0        0        0
July 2032...........................      0         0         0        0        0            57        0        0        0        0
July 2033...........................      0         0         0        0        0            37        0        0        0        0
July 2034...........................      0         0         0        0        0            15        0        0        0        0
July 2035...........................      0         0         0        0        0             0        0        0        0        0
July 2036...........................      0         0         0        0        0             0        0        0        0        0
Weighted Average Life to maturity
   (in years)**.....................  17.44      1.93      0.90     0.55     0.37         26.31     7.65     3.50     1.94     1.27
Weighted Average Life to first
   Optional Termination Date (in
   years)**.........................  17.44      1.93      0.90     0.55     0.37         26.31     7.65     3.50     1.94     1.27


___________________
*     Indicates greater than zero but less than 0.50%

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


                                      S-105



             PERCENT OF INITIAL CLASS PRINCIPAL BALANCES OUTSTANDING



                                                       CLASS A-5                                          CLASS A-6
                                      --------------------------------------------        ------------------------------------------
                                                   PERCENTAGE OF CPR                                  PERCENTAGE OF CPR
                                      --------------------------------------------        ------------------------------------------
DISTRIBUTION DATE                       0%        15%       30%      45%      60%           0%       15%      30%      45%      60%
-----------------                     ------    ------    ------   ------   ------        ------   ------   ------   ------   ------

Initial.............................    100       100       100      100      100           100      100      100      100      100
July 2007...........................    100       100       100      100      100           100       84       68       52       35
July 2008...........................    100       100       100      100       89           100       70       45       25       10
July 2009...........................    100       100       100       95        0           100       58       29       10        0
July 2010...........................    100       100       100       78        0            99       48       22        8        0
July 2011...........................    100       100       100       43        0            99       41       15        5        0
July 2012...........................    100       100       100       24        0            99       34       11        3        0
July 2013...........................    100       100        70       12        0            99       29        8        1        0
July 2014...........................    100       100        49        5        0            98       25        5        1        0
July 2015...........................    100       100        34        1        0            98       21        4        *        0
July 2016...........................    100       100        24        0        0            97       18        3        0        0
July 2017...........................    100       100        15        0        0            95       15        2        0        0
July 2018...........................    100       100         9        0        0            93       12        1        0        0
July 2019...........................    100        94         5        0        0            90       10        1        0        0
July 2020...........................    100        78         2        0        0            87        8        *        0        0
July 2021...........................    100        64         1        0        0            84        7        *        0        0
July 2022...........................    100        53         0        0        0            81        6        0        0        0
July 2023...........................    100        43         0        0        0            78        5        0        0        0
July 2024...........................    100        35         0        0        0            74        4        0        0        0
July 2025...........................    100        28         0        0        0            70        3        0        0        0
July 2026...........................    100        22         0        0        0            65        2        0        0        0
July 2027...........................    100        17         0        0        0            60        2        0        0        0
July 2028...........................    100        13         0        0        0            55        1        0        0        0
July 2029...........................    100         9         0        0        0            49        1        0        0        0
July 2030...........................    100         6         0        0        0            43        1        0        0        0
July 2031...........................    100         3         0        0        0            37        *        0        0        0
July 2032...........................    100         1         0        0        0            31        *        0        0        0
July 2033...........................    100         0         0        0        0            24        0        0        0        0
July 2034...........................    100         0         0        0        0            16        0        0        0        0
July 2035...........................     72         0         0        0        0             8        0        0        0        0
July 2036...........................      0         0         0        0        0             0        0        0        0        0
Weighted Average Life to maturity
   (in years)**.....................  29.28     17.20      8.59     5.14     2.37         21.81     5.57     2.63     1.53     0.90
Weighted Average Life to first
   Optional Termination Date (in
   years)**.........................  28.81     13.43      6.45     3.85     2.32         21.76     5.16     2.40     1.39     0.89




                                                       CLASS M-1                                          CLASS M-2
                                      --------------------------------------------        ------------------------------------------
                                                   PERCENTAGE OF CPR                                  PERCENTAGE OF CPR
                                      --------------------------------------------        ------------------------------------------
DISTRIBUTION DATE                       0%        15%       30%      45%      60%           0%       15%      30%      45%      60%
-----------------                     ------    ------    ------   ------   ------        ------   ------   ------   ------   ------

Initial.............................    100       100       100      100      100           100      100      100      100      100
July 2007...........................    100       100       100      100      100           100      100      100      100      100
July 2008...........................    100       100       100      100      100           100      100      100      100      100
July 2009...........................    100       100       100      100       86           100      100      100      100      100
July 2010...........................    100       100        48       18       86           100      100       48       18       89
July 2011...........................    100        88        33       10       53           100       88       33       10        0
July 2012...........................    100        75        23        3        4           100       75       23        0        0
July 2013...........................    100        63        16        0        0           100       63       16        0        0
July 2014...........................    100        54        11        0        0           100       54       11        0        0
July 2015...........................    100        45         8        0        0           100       45        8        0        0
July 2016...........................    100        38         3        0        0           100       38        0        0        0
July 2017...........................    100        32         0        0        0           100       32        0        0        0
July 2018...........................    100        26         0        0        0           100       27        0        0        0
July 2019...........................    100        22         0        0        0           100       22        0        0        0
July 2020...........................    100        18         0        0        0           100       18        0        0        0
July 2021...........................    100        15         0        0        0           100       15        0        0        0
July 2022...........................    100        12         0        0        0           100       12        0        0        0
July 2023...........................    100        10         0        0        0           100       10        0        0        0
July 2024...........................    100         8         0        0        0           100        8        0        0        0
July 2025...........................    100         7         0        0        0           100        2        0        0        0
July 2026...........................    100         2         0        0        0           100        0        0        0        0
July 2027...........................    100         0         0        0        0           100        0        0        0        0
July 2028...........................    100         0         0        0        0           100        0        0        0        0
July 2029...........................    100         0         0        0        0           100        0        0        0        0
July 2030...........................     93         0         0        0        0            93        0        0        0        0
July 2031...........................     81         0         0        0        0            81        0        0        0        0
July 2032...........................     67         0         0        0        0            67        0        0        0        0
July 2033...........................     51         0         0        0        0            51        0        0        0        0
July 2034...........................     35         0         0        0        0            35        0        0        0        0
July 2035...........................     17         0         0        0        0            17        0        0        0        0
July 2036...........................      0         0         0        0        0             0        0        0        0        0
Weighted Average Life to maturity
   (in years)**.....................  26.96      9.68      4.85     3.91     4.93         26.96     9.62     4.79     3.78     4.28
Weighted Average Life to first
   Optional Termination Date (in
   years)**.........................  26.86      8.95      4.45     3.68     2.57         26.86     8.95     4.43     3.57     2.57


___________________
*     Indicates greater than zero but less than 0.50%

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


                                      S-106



             PERCENT OF INITIAL CLASS PRINCIPAL BALANCES OUTSTANDING



                                                       CLASS M-3                                          CLASS M-4
                                      --------------------------------------------        ------------------------------------------
                                                   PERCENTAGE OF CPR                                  PERCENTAGE OF CPR
                                      --------------------------------------------        ------------------------------------------
DISTRIBUTION DATE                       0%        15%       30%      45%      60%           0%       15%      30%      45%      60%
-----------------                     ------    ------    ------   ------   ------        ------   ------   ------   ------   ------

Initial.............................    100       100       100      100      100           100      100      100      100      100
July 2007...........................    100       100       100      100      100           100      100      100      100      100
July 2008...........................    100       100       100      100      100           100      100      100      100      100
July 2009...........................    100       100       100      100      100           100      100      100      100      100
July 2010...........................    100       100        48       18        0           100      100       48       18        0
July 2011...........................    100        88        33       10        0           100       88       33        5        0
July 2012...........................    100        75        23        0        0           100       75       23        0        0
July 2013...........................    100        63        16        0        0           100       63       16        0        0
July 2014...........................    100        54        11        0        0           100       54       11        0        0
July 2015...........................    100        45         1        0        0           100       45        0        0        0
July 2016...........................    100        38         0        0        0           100       38        0        0        0
July 2017...........................    100        32         0        0        0           100       32        0        0        0
July 2018...........................    100        26         0        0        0           100       27        0        0        0
July 2019...........................    100        22         0        0        0           100       22        0        0        0
July 2020...........................    100        18         0        0        0           100       18        0        0        0
July 2021...........................    100        15         0        0        0           100       15        0        0        0
July 2022...........................    100        12         0        0        0           100       12        0        0        0
July 2023...........................    100        10         0        0        0           100        5        0        0        0
July 2024...........................    100         3         0        0        0           100        0        0        0        0
July 2025...........................    100         0         0        0        0           100        0        0        0        0
July 2026...........................    100         0         0        0        0           100        0        0        0        0
July 2027...........................    100         0         0        0        0           100        0        0        0        0
July 2028...........................    100         0         0        0        0           100        0        0        0        0
July 2029...........................    100         0         0        0        0           100        0        0        0        0
July 2030...........................     93         0         0        0        0            93        0        0        0        0
July 2031...........................     81         0         0        0        0            81        0        0        0        0
July 2032...........................     67         0         0        0        0            67        0        0        0        0
July 2033...........................     51         0         0        0        0            51        0        0        0        0
July 2034...........................     35         0         0        0        0            35        0        0        0        0
July 2035...........................     17         0         0        0        0            17        0        0        0        0
July 2036...........................      0         0         0        0        0             0        0        0        0        0
Weighted Average Life to maturity
   (in years)**.....................  26.95      9.55      4.74     3.68     3.83         26.94     9.47     4.69     3.61     3.61
Weighted Average Life to first
   Optional Termination Date (in
   years)**.........................  26.86      8.95      4.42     3.49     2.57         26.86     8.95     4.42     3.45     2.57




                                                       CLASS M-5                                          CLASS M-6
                                      --------------------------------------------        ------------------------------------------
                                                   PERCENTAGE OF CPR                                  PERCENTAGE OF CPR
                                      --------------------------------------------        ------------------------------------------
DISTRIBUTION DATE                       0%        15%       30%      45%      60%           0%       15%      30%      45%      60%
-----------------                     ------    ------    ------   ------   ------        ------   ------   ------   ------   ------

Initial.............................    100       100       100      100      100           100      100      100      100      100
July 2007...........................    100       100       100      100      100           100      100      100      100      100
July 2008...........................    100       100       100      100      100           100      100      100      100      100
July 2009...........................    100       100       100      100      100           100      100      100      100      100
July 2010...........................    100       100        48       18        0           100      100       48       18        0
July 2011...........................    100        88        33        0        0           100       88       33        0        0
July 2012...........................    100        75        23        0        0           100       75       23        0        0
July 2013...........................    100        63        16        0        0           100       63       16        0        0
July 2014...........................    100        54         2        0        0           100       54        0        0        0
July 2015...........................    100        45         0        0        0           100       45        0        0        0
July 2016...........................    100        38         0        0        0           100       38        0        0        0
July 2017...........................    100        32         0        0        0           100       32        0        0        0
July 2018...........................    100        26         0        0        0           100       26        0        0        0
July 2019...........................    100        22         0        0        0           100       22        0        0        0
July 2020...........................    100        18         0        0        0           100       18        0        0        0
July 2021...........................    100        15         0        0        0           100       10        0        0        0
July 2022...........................    100         7         0        0        0           100        0        0        0        0
July 2023...........................    100         0         0        0        0           100        0        0        0        0
July 2024...........................    100         0         0        0        0           100        0        0        0        0
July 2025...........................    100         0         0        0        0           100        0        0        0        0
July 2026...........................    100         0         0        0        0           100        0        0        0        0
July 2027...........................    100         0         0        0        0           100        0        0        0        0
July 2028...........................    100         0         0        0        0           100        0        0        0        0
July 2029...........................    100         0         0        0        0           100        0        0        0        0
July 2030...........................     93         0         0        0        0            93        0        0        0        0
July 2031...........................     81         0         0        0        0            81        0        0        0        0
July 2032...........................     67         0         0        0        0            67        0        0        0        0
July 2033...........................     51         0         0        0        0            51        0        0        0        0
July 2034...........................     35         0         0        0        0            35        0        0        0        0
July 2035...........................     17         0         0        0        0            17        0        0        0        0
July 2036...........................      0         0         0        0        0             0        0        0        0        0
Weighted Average Life to maturity
   (in years)**.....................  26.93      9.36      4.62     3.52     3.45         26.91     9.24     4.54     3.47     3.33
Weighted Average Life to first
   Optional Termination Date (in
   years)**.........................  26.86      8.95      4.41     3.40     2.57         26.86     8.95     4.40     3.39     2.57


___________________
*     Indicates greater than zero but less than 0.50%

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


                                      S-107



             PERCENT OF INITIAL CLASS PRINCIPAL BALANCES OUTSTANDING



                                                       CLASS B-1                                          CLASS B-2
                                      --------------------------------------------        ------------------------------------------
                                                   PERCENTAGE OF CPR                                  PERCENTAGE OF CPR
                                      --------------------------------------------        ------------------------------------------
DISTRIBUTION DATE                       0%        15%       30%      45%      60%           0%       15%      30%      45%      60%
-----------------                     ------    ------    ------   ------   ------        ------   ------   ------   ------   ------

Initial.............................    100       100       100      100      100           100      100      100      100      100
July 2007...........................    100       100       100      100      100           100      100      100      100      100
July 2008...........................    100       100       100      100      100           100      100      100      100      100
July 2009...........................    100       100       100      100      100           100      100      100      100      100
July 2010...........................    100       100        48       13        0           100      100       48        0        0
July 2011...........................    100        88        33        0        0           100       88       33        0        0
July 2012...........................    100        75        23        0        0           100       75       20        0        0
July 2013...........................    100        63         2        0        0           100       63        0        0        0
July 2014...........................    100        54         0        0        0           100       54        0        0        0
July 2015...........................    100        45         0        0        0           100       45        0        0        0
July 2016...........................    100        38         0        0        0           100       38        0        0        0
July 2017...........................    100        32         0        0        0           100       32        0        0        0
July 2018...........................    100        27         0        0        0           100       26        0        0        0
July 2019...........................    100        22         0        0        0           100       13        0        0        0
July 2020...........................    100        12         0        0        0           100        0        0        0        0
July 2021...........................    100         0         0        0        0           100        0        0        0        0
July 2022...........................    100         0         0        0        0           100        0        0        0        0
July 2023...........................    100         0         0        0        0           100        0        0        0        0
July 2024...........................    100         0         0        0        0           100        0        0        0        0
July 2025...........................    100         0         0        0        0           100        0        0        0        0
July 2026...........................    100         0         0        0        0           100        0        0        0        0
July 2027...........................    100         0         0        0        0           100        0        0        0        0
July 2028...........................    100         0         0        0        0           100        0        0        0        0
July 2029...........................    100         0         0        0        0           100        0        0        0        0
July 2030...........................     93         0         0        0        0            93        0        0        0        0
July 2031...........................     81         0         0        0        0            81        0        0        0        0
July 2032...........................     67         0         0        0        0            67        0        0        0        0
July 2033...........................     51         0         0        0        0            51        0        0        0        0
July 2034...........................     35         0         0        0        0            35        0        0        0        0
July 2035...........................      4         0         0        0        0             0        0        0        0        0
July 2036...........................      0         0         0        0        0             0        0        0        0        0
Weighted Average Life to maturity
   (in years)**.....................  26.89      9.09      4.46     3.37     3.24         26.85     8.88     4.34     3.30     3.16
Weighted Average Life to first
   Optional Termination Date (in
   years)**.........................  26.86      8.96      4.40     3.34     2.57         26.84     8.87     4.34     3.30     2.57




                                                       CLASS B-3
                                      --------------------------------------------
                                                   PERCENTAGE OF CPR
                                      --------------------------------------------
DISTRIBUTION DATE                       0%        15%       30%      45%      60%
-----------------                     ------    ------    ------   ------   ------

Initial.............................    100       100       100      100      100
July 2007...........................    100       100       100      100      100
July 2008...........................    100       100       100      100      100
July 2009...........................    100       100       100      100      100
July 2010...........................    100       100        48        0        0
July 2011...........................    100        88        27        0        0
July 2012...........................    100        75         0        0        0
July 2013...........................    100        63         0        0        0
July 2014...........................    100        54         0        0        0
July 2015...........................    100        45         0        0        0
July 2016...........................    100        38         0        0        0
July 2017...........................    100        22         0        0        0
July 2018...........................    100         7         0        0        0
July 2019...........................    100         0         0        0        0
July 2020...........................    100         0         0        0        0
July 2021...........................    100         0         0        0        0
July 2022...........................    100         0         0        0        0
July 2023...........................    100         0         0        0        0
July 2024...........................    100         0         0        0        0
July 2025...........................    100         0         0        0        0
July 2026...........................    100         0         0        0        0
July 2027...........................    100         0         0        0        0
July 2028...........................    100         0         0        0        0
July 2029...........................    100         0         0        0        0
July 2030...........................     93         0         0        0        0
July 2031...........................     81         0         0        0        0
July 2032...........................     67         0         0        0        0
July 2033...........................     51         0         0        0        0
July 2034...........................     31         0         0        0        0
July 2035...........................      0         0         0        0        0
July 2036...........................      0         0         0        0        0
Weighted Average Life to maturity
   (in years)**.....................  26.73      8.45      4.12     3.16     3.09
Weighted Average Life to first
   Optional Termination Date (in
   years)**.........................  26.73      8.45      4.12     3.16     2.57


___________________
*     Indicates greater than zero but less than 0.50%

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


                                      S-108



HYPOTHETICAL AVAILABLE FUNDS AND SUPPLEMENTAL INTEREST RATE CAP TABLE FOR THE
CERTIFICATES

      Assuming that (i) prepayments on the Mortgage Loans occur at 30% CPR, (ii)
no Realized Losses are experienced with respect to the Mortgage Loans, (iii)
commencing with the Distribution Date in August 2006, each Mortgage Index and
One-Month LIBOR remains constant at 20% and (iv) the Certificates accrue
interest on the basis of a 360-day year and the actual numbers of days that
elapsed in the related interest accrual period, the following table indicates
the per annum rate for each Class of Offered Certificates based upon the total
amount of interest paid to such Classes of Certificates, including all Interest
Distribution Amounts, Interest Carry Forward Amounts, Basis Risk Carry Forward
Amounts (the "SUPPLEMENTAL INTEREST RATE CAP") that would result for the
indicated Distribution Dates under an assumed hypothetical scenario. It is
highly unlikely, however, that prepayments on the Mortgage Loans will occur at a
constant rate of 30% CPR or at any other constant percentage. There is no
assurance, therefore, of whether or to what extent the actual interest rates on
the Mortgage Loans on any Distribution Date will conform to the corresponding
rate set forth for that Distribution Date in the following table.



                                         SCHEDULE OF AVAILABLE FUNDS AND
                              SUPPLEMENTAL INTEREST RATE CAP RATES (CASH CAP)(1)(2)
      -------------------------------------------------------------------------------------------------------

         DISTRIBUTION        CLASS A-1     CLASS A-2     CLASS A-3      CLASS A-4     CLASS A-5     CLASS A-6
             DATES            CAP (%)       CAP (%)       CAP (%)        CAP (%)       CAP (%)       CAP (%)
      -------------------    ---------     ---------     ---------      ---------     ---------     ---------

      August 25, 2006          20.17         20.15         20.09          20.16         20.26         20.24
      September 25, 2006       20.17         20.15         20.09          20.16         20.26         20.24
      October 25, 2006         20.17         20.15         20.09          20.16         20.26         20.24
      November 25, 2006        20.17         20.15         20.09          20.16         20.26         20.24
      December 25, 2006        20.17         20.15         20.09          20.16         20.26         20.24
      January 25, 2007         20.02         20.02         20.02          20.02         20.02         20.02
      February 25, 2007        19.76         19.76         19.76          19.76         19.76         19.76
      March 25, 2007           19.73         19.73         19.73          19.73         19.73         19.73
      April 25, 2007           19.24         19.24         19.24          19.24         19.24         19.24
      May 25, 2007             19.07         19.07         19.07          19.07         19.07         19.07
      June 25, 2007            18.75         18.75         18.75          18.75         18.75         18.75
      July 25, 2007            18.60         18.60         18.60          18.60         18.60         18.60
      August 25, 2007          18.28         18.28         18.28          18.28         18.28         18.28
      September 25, 2007       18.05         18.05         18.05          18.05         18.05         18.05
      October 25, 2007         17.92         17.92         17.92          17.92         17.92         17.92
      November 25, 2007        17.58         17.58         17.58          17.58         17.58         17.58
      December 25, 2007        17.46         17.46         17.46          17.46         17.46         17.46
      January 25, 2008         17.15         17.15         17.15          17.15         17.15         17.15
      February 25, 2008        16.94         16.94         16.94          16.94         16.94         16.94
      March 25, 2008           16.97         16.97         16.97          16.97         16.97         16.97
      April 25, 2008           16.49         16.49         16.49          16.49         16.49         16.49
      May 25, 2008             16.27         16.27         16.27          16.27         16.27         16.27
      June 25, 2008            15.85         15.85         15.85          15.85         15.85         15.85
      July 25, 2008            15.79         15.79         15.79          15.79         15.79         15.79
      August 25, 2008          15.48         15.48          N/A           15.48         15.48         15.48
      September 25, 2008       15.31         15.31          N/A           15.31         15.31         15.31
      October 25, 2008         15.29         15.29          N/A           15.29         15.29         15.29
      November 25, 2008        15.01         15.01          N/A           15.01         15.01         15.01
      December 25, 2008        15.02         15.02          N/A           15.02         15.02         15.02
      January 25, 2009         14.70         14.70          N/A           14.70         14.70         14.70
      February 25, 2009        14.52         14.52          N/A           14.52         14.52         14.52
      March 25, 2009           14.84         14.84          N/A           14.84         14.84         14.84
      April 25, 2009           14.15         14.15          N/A           14.15         14.15         14.15
      May 25, 2009             14.14         14.14          N/A           14.14         14.14         14.14
      June 25, 2009            13.67         13.67          N/A           13.67         13.67         13.67
      July 25, 2009            13.73         13.73          N/A           13.73         13.73         13.73
      August 25, 2009          27.13         27.13          N/A           27.13         27.13         27.13
      September 25, 2009       14.22         14.22          N/A           14.22         14.22         14.22
      October 25, 2009         14.29         14.29          N/A           14.29         14.29         14.29
      November 25, 2009        13.97         13.97          N/A           13.97         13.97         13.97
      December 25, 2009        14.11         14.11          N/A           14.11         14.11         14.11
      January 25, 2010         13.78         13.78          N/A           13.78         13.78         13.78
      February 25, 2010        13.67         13.67          N/A           13.67         13.67         13.67
      March 25, 2010           14.25         14.25          N/A           14.25         14.25         14.25
      April 25, 2010           13.46         13.46          N/A           13.46         13.46         13.46
      May 25, 2010             13.58         13.58          N/A           13.58         13.58         13.58
      June 25, 2010            13.31         13.31          N/A           13.31         13.31         13.31
      July 25, 2010            13.43         13.43          N/A           13.43         13.43         13.43
      August 25, 2010          13.10         13.10          N/A           13.10         13.10         13.10
      September 25, 2010       13.00         13.00          N/A           13.00         13.00         13.00
      October 25, 2010         13.12         13.12          N/A           13.12         13.12         13.12
      November 25, 2010        12.81         12.81          N/A           12.81         12.81         12.81



                                      S-109





                                         SCHEDULE OF AVAILABLE FUNDS AND
                              SUPPLEMENTAL INTEREST RATE CAP RATES (CASH CAP)(1)(2)
      -------------------------------------------------------------------------------------------------------

         DISTRIBUTION        CLASS A-1     CLASS A-2     CLASS A-3      CLASS A-4     CLASS A-5     CLASS A-6
             DATES            CAP (%)       CAP (%)       CAP (%)        CAP (%)       CAP (%)       CAP (%)
      -------------------    ---------     ---------     ---------      ---------     ---------     ---------

      December 25, 2010        12.95         12.95          N/A           12.95         12.95         12.95
      January 25, 2011         12.62         12.62          N/A           12.62         12.62         12.62
      February 25, 2011        12.52         12.52          N/A           12.52         12.52         12.52
      March 25, 2011           13.18         13.18          N/A           13.18         13.18         13.18
      April 25, 2011           12.11         12.11          N/A           12.11         12.11         12.11
      May 25, 2011             11.72         11.72          N/A           11.72         11.72         11.72
      June 25, 2011            12.19         12.19          N/A           12.19         12.19         12.19
      July 25, 2011            12.72         12.72          N/A           12.72         12.72         12.72
      August 25, 2011          12.32         12.32          N/A           12.32         12.32         12.32
      September 25, 2011       12.33         12.33          N/A           12.33         12.33         12.33
      October 25, 2011         12.75         12.75          N/A           12.75         12.75         12.75
      November 25, 2011        12.35         12.35          N/A           12.35         12.35         12.35
      December 25, 2011        12.77         12.77          N/A           12.77         12.77         12.77
      January 25, 2012         12.37         12.37          N/A           12.37         12.37         12.37
      February 25, 2012        12.38         12.38          N/A           12.38         12.38         12.38
      March 25, 2012           13.24         13.24          N/A           13.24         13.24         13.24
      April 25, 2012           12.40         12.40          N/A           12.40         12.40         12.40
      May 25, 2012             12.82         12.82          N/A           12.82         12.82         12.82
      June 25, 2012            12.42         12.42          N/A           12.42         12.42         12.42
      July 25, 2012            12.85         12.85          N/A           12.85         12.85         12.85
      August 25, 2012          12.45         12.45          N/A           12.45         12.45         12.45
      September 25, 2012       12.46          N/A           N/A            N/A          12.46         12.46
      October 25, 2012         12.89          N/A           N/A            N/A          12.89         12.89
      November 25, 2012        12.49          N/A           N/A            N/A          12.49         12.49
      December 25, 2012        12.92          N/A           N/A            N/A          12.92         12.92
      January 25, 2013         12.52          N/A           N/A            N/A          12.52         12.52
      February 25, 2013        12.53          N/A           N/A            N/A          12.53         12.53
      March 25, 2013           13.89          N/A           N/A            N/A          13.89         13.89
      April 25, 2013           12.56          N/A           N/A            N/A          12.56         12.56
      May 25, 2013             13.00          N/A           N/A            N/A          13.00         13.00
      June 25, 2013            12.62          N/A           N/A            N/A          12.62         12.62
      July 25, 2013            13.06          N/A           N/A            N/A          13.06         13.06
      August 25, 2013          12.66          N/A           N/A            N/A          12.66         12.66
      September 25, 2013       12.68          N/A           N/A            N/A          12.68         12.68
      October 25, 2013         13.12          N/A           N/A            N/A          13.12         13.12
      November 25, 2013        12.72          N/A           N/A            N/A          12.72         12.72
      December 25, 2013        13.16          N/A           N/A            N/A          13.16         13.16
      January 25, 2014         12.76          N/A           N/A            N/A          12.76         12.76
      February 25, 2014        12.78          N/A           N/A            N/A          12.78         12.78
      March 25, 2014           14.17          N/A           N/A            N/A          14.17         14.17
      April 25, 2014           12.82          N/A           N/A            N/A          12.82         12.82
      May 25, 2014             13.27          N/A           N/A            N/A          13.27         13.27
      June 25, 2014            12.87          N/A           N/A            N/A          12.87         12.87
      July 25, 2014            13.32          N/A           N/A            N/A          13.32         13.32
      August 25, 2014          12.92          N/A           N/A            N/A          12.92         12.92
      September 25, 2014       12.95          N/A           N/A            N/A          12.95         12.95
      October 25, 2014         13.41          N/A           N/A            N/A          13.41         13.41
      November 25, 2014        13.00          N/A           N/A            N/A          13.00         13.00
      December 25, 2014        13.46          N/A           N/A            N/A          13.46         13.46
      January 25, 2015         13.06          N/A           N/A            N/A          13.06         13.06
      February 25, 2015        13.09          N/A           N/A            N/A          13.09         13.09
      March 25, 2015           14.53          N/A           N/A            N/A          14.53         14.53
      April 25, 2015           13.15          N/A           N/A            N/A          13.15         13.15
      May 25, 2015             13.63          N/A           N/A            N/A          13.63         13.63
      June 25, 2015            13.22          N/A           N/A            N/A          13.22         13.22
      July 25, 2015            13.70          N/A           N/A            N/A          13.70         13.70
      August 25, 2015          13.29          N/A           N/A            N/A          13.29         13.29
      September 25, 2015       13.33          N/A           N/A            N/A          13.33         13.33
      October 25, 2015         13.81          N/A           N/A            N/A          13.81         13.81
      November 25, 2015        13.41          N/A           N/A            N/A          13.41         13.41
      December 25, 2015        13.90          N/A           N/A            N/A          13.90         13.90
      January 25, 2016         13.49          N/A           N/A            N/A          13.49         13.49
      February 25, 2016        13.54          N/A           N/A            N/A          13.54         13.54
      March 25, 2016           14.52          N/A           N/A            N/A          14.52         14.52
      April 25, 2016           13.64          N/A           N/A            N/A          13.64         13.64
      May 25, 2016             14.16          N/A           N/A            N/A          14.16         14.16
      June 25, 2016            13.79          N/A           N/A            N/A          13.79         13.79
      July 25, 2016            14.52          N/A           N/A            N/A          14.52         14.52
      August 25, 2016          14.11          N/A           N/A            N/A          14.11         14.11
      September 25, 2016       14.16          N/A           N/A            N/A          14.16         14.16
      October 25, 2016         14.70          N/A           N/A            N/A          14.70         14.70
      November 25, 2016        14.28          N/A           N/A            N/A          14.28         14.28
      December 25, 2016        14.83          N/A           N/A            N/A          14.83         14.83
      January 25, 2017         14.42          N/A           N/A            N/A          14.42         14.42
      February 25, 2017        14.50          N/A           N/A            N/A          14.50         14.50
      March 25, 2017           16.14          N/A           N/A            N/A          16.14         16.14
      April 25, 2017           14.67          N/A           N/A            N/A          14.67         14.67



                                      S-110





                                         SCHEDULE OF AVAILABLE FUNDS AND
                              SUPPLEMENTAL INTEREST RATE CAP RATES (CASH CAP)(1)(2)
      -------------------------------------------------------------------------------------------------------

         DISTRIBUTION        CLASS A-1     CLASS A-2     CLASS A-3      CLASS A-4     CLASS A-5     CLASS A-6
             DATES            CAP (%)       CAP (%)       CAP (%)        CAP (%)       CAP (%)       CAP (%)
      -------------------    ---------     ---------     ---------      ---------     ---------     ---------

      May 25, 2017             15.25          N/A           N/A            N/A          15.25         15.25
      June 25, 2017            14.85          N/A           N/A            N/A          14.85         14.85
      July 25, 2017            15.44          N/A           N/A            N/A          15.44         15.44
      August 25, 2017          15.04          N/A           N/A            N/A          15.04         15.04
      September 25, 2017       15.15          N/A           N/A            N/A          15.15         15.15
      October 25, 2017         15.77          N/A           N/A            N/A          15.77         15.77
      November 25, 2017        15.38          N/A           N/A            N/A          15.38         15.38
      December 25, 2017        16.01          N/A           N/A            N/A          16.01         16.01
      January 25, 2018         15.62          N/A           N/A            N/A          15.62         15.62
      February 25, 2018        15.76          N/A           N/A            N/A          15.76         15.76
      March 25, 2018           17.60          N/A           N/A            N/A          17.60         17.60
      April 25, 2018           16.04          N/A           N/A            N/A          16.04         16.04
      May 25, 2018             16.74          N/A           N/A            N/A          16.74         16.74
      June 25, 2018            16.36          N/A           N/A            N/A          16.36         16.36
      July 25, 2018            17.08          N/A           N/A            N/A          17.08         17.08
      August 25, 2018          16.71          N/A           N/A            N/A          16.71         16.71
      September 25, 2018       16.90          N/A           N/A            N/A          16.90         16.90
      October 25, 2018         17.67          N/A           N/A            N/A          17.67         17.67
      November 25, 2018        17.32          N/A           N/A            N/A          17.32         17.32
      December 25, 2018        18.13          N/A           N/A            N/A          18.13         18.13
      January 25, 2019         17.78          N/A           N/A            N/A          17.78         17.78
      February 25, 2019        18.03          N/A           N/A            N/A          18.03         18.03
      March 25, 2019           20.26          N/A           N/A            N/A          20.26         20.26
      April 25, 2019           18.59          N/A           N/A            N/A          18.59         18.59
      May 25, 2019             19.52          N/A           N/A            N/A          19.52         19.52
      June 25, 2019            19.21          N/A           N/A            N/A          19.21         19.21
      July 25, 2019            20.21          N/A           N/A            N/A          20.21         20.21
      August 25, 2019          19.93          N/A           N/A            N/A          19.93         19.93
      September 25, 2019       20.33          N/A           N/A            N/A          20.33         20.33
      October 25, 2019         21.45          N/A           N/A            N/A          21.45         21.45
      November 25, 2019        21.22          N/A           N/A            N/A          21.22         21.22
      December 25, 2019        22.44          N/A           N/A            N/A          22.44         22.44
      January 25, 2020         22.26          N/A           N/A            N/A          22.26         22.26
      February 25, 2020        22.84          N/A           N/A            N/A          22.84         22.84
      March 25, 2020           25.10          N/A           N/A            N/A          25.10         25.10
      April 25, 2020           24.18          N/A           N/A            N/A          24.18         24.18
      May 25, 2020             25.77          N/A           N/A            N/A          25.77         25.77
      June 25, 2020            25.78          N/A           N/A            N/A          25.78         25.78
      July 25, 2020            27.60          N/A           N/A            N/A          27.60         27.60
      August 25, 2020          27.74          N/A           N/A            N/A          27.74         27.74
      September 25, 2020       28.90          N/A           N/A            N/A          28.90         28.90
      October 25, 2020         31.20          N/A           N/A            N/A          31.20         31.20
      November 25, 2020        31.66          N/A           N/A            N/A          31.66         31.66
      December 25, 2020        34.44          N/A           N/A            N/A          34.44         34.44
      January 25, 2021         35.25          N/A           N/A            N/A          35.25         35.25
      February 25, 2021        37.48          N/A           N/A            N/A          37.48         37.48
      March 25, 2021           44.40          N/A           N/A            N/A          44.40         44.40
      April 25, 2021           43.23          N/A           N/A            N/A          43.23         43.23
      May 25, 2021             48.57          N/A           N/A            N/A          48.57         48.57
      June 25, 2021            51.67          N/A           N/A            N/A          51.67         51.67
      July 25, 2021            59.49          N/A           N/A            N/A          59.49         59.49
      August 25, 2021          65.26          N/A           N/A            N/A          65.26         65.26
      September 25, 2021       75.72          N/A           N/A            N/A          75.72         75.72
      October 25, 2021         93.75          N/A           N/A            N/A          93.75         93.75
      November 25, 2021       114.09          N/A           N/A            N/A         114.09        114.09
      December 25, 2021       160.60          N/A           N/A            N/A         160.60        160.60
      January 25, 2022        248.38          N/A           N/A            N/A         248.38        248.38
      February 25, 2022         (3)           N/A           N/A            N/A           (3)           (3)


___________________
(1)   Annualized interest rate based on total interest paid to the applicable
      class of certificates including Accrued Certificate Interest, Unpaid
      Interest Amounts and Basis Risk Carry Forward Amounts divided by the
      current Class Principal Balance.

(2)   Assumes 30% CPR, no losses, commencing in August 2006, each Mortgage Index
      and One-Month LIBOR is 20% and that the optional clean-up call is not
      exercised and no successful auction occurs.

(3)   For the Interest Accrual Period related to this Distribution Date, the
      Supplemental Interest Rate Cap Rate would exceed 1,000%.


                                      S-111





      -------------------------------------------------------------------------------------------------------
                                          SCHEDULE OF AVAILABLE FUNDS AND
                               SUPPLEMENTAL INTEREST RATE CAP RATES (CASH CAP)(1)(2)
      -------------------------------------------------------------------------------------------------------

         DISTRIBUTION        CLASS M-1     CLASS M-2     CLASS M-3      CLASS M-4     CLASS M-5     CLASS M-6
             DATES            CAP (%)       CAP (%)       CAP (%)        CAP (%)       CAP (%)       CAP (%)
      -------------------    ---------     ---------     ---------      ---------     ---------     ---------

      August 25, 2006          20.30         20.32         20.34          20.40         20.42         20.50
      September 25, 2006       20.30         20.32         20.34          20.40         20.42         20.50
      October 25, 2006         20.30         20.32         20.34          20.40         20.42         20.50
      November 25, 2006        20.30         20.32         20.34          20.40         20.42         20.50
      December 25, 2006        20.30         20.32         20.34          20.40         20.42         20.50
      January 25, 2007         19.94         19.94         19.94          19.94         19.94         19.94
      February 25, 2007        19.67         19.67         19.67          19.67         19.67         19.67
      March 25, 2007           19.64         19.64         19.64          19.64         19.64         19.64
      April 25, 2007           19.15         19.15         19.15          19.15         19.15         19.15
      May 25, 2007             18.98         18.98         18.98          18.98         18.98         18.98
      June 25, 2007            18.66         18.66         18.66          18.66         18.66         18.66
      July 25, 2007            18.50         18.50         18.50          18.50         18.50         18.50
      August 25, 2007          18.18         18.18         18.18          18.18         18.18         18.18
      September 25, 2007       17.95         17.95         17.95          17.95         17.95         17.95
      October 25, 2007         17.81         17.81         17.81          17.81         17.81         17.81
      November 25, 2007        17.46         17.46         17.46          17.46         17.46         17.46
      December 25, 2007        17.34         17.34         17.34          17.34         17.34         17.34
      January 25, 2008         17.03         17.03         17.03          17.03         17.03         17.03
      February 25, 2008        16.82         16.82         16.82          16.82         16.82         16.82
      March 25, 2008           16.83         16.83         16.83          16.83         16.83         16.83
      April 25, 2008           16.36         16.36         16.36          16.36         16.36         16.36
      May 25, 2008             16.13         16.13         16.13          16.13         16.13         16.13
      June 25, 2008            15.71         15.71         15.71          15.71         15.71         15.71
      July 25, 2008            15.63         15.63         15.63          15.63         15.63         15.63
      August 25, 2008          15.33         15.33         15.33          15.33         15.33         15.33
      September 25, 2008       15.15         15.15         15.15          15.15         15.15         15.15
      October 25, 2008         15.12         15.12         15.12          15.12         15.12         15.12
      November 25, 2008        14.84         14.84         14.84          14.84         14.84         14.84
      December 25, 2008        14.83         14.83         14.83          14.83         14.83         14.83
      January 25, 2009         14.51         14.51         14.51          14.51         14.51         14.51
      February 25, 2009        14.32         14.32         14.32          14.32         14.32         14.32
      March 25, 2009           14.61         14.61         14.61          14.61         14.61         14.61
      April 25, 2009           13.94         13.94         13.94          13.94         13.94         13.94
      May 25, 2009             13.91         13.91         13.91          13.91         13.91         13.91
      June 25, 2009            13.44         13.44         13.44          13.44         13.44         13.44
      July 25, 2009            13.47         13.47         13.47          13.47         13.47         13.47
      August 25, 2009          13.17         13.17         13.17          13.17         13.17         13.17
      September 25, 2009       13.26         13.26         13.26          13.26         13.26         13.26
      October 25, 2009         13.32         13.32         13.32          13.32         13.32         13.32
      November 25, 2009        13.05         13.05         13.05          13.05         13.05         13.05
      December 25, 2009        13.16         13.16         13.16          13.16         13.16         13.16
      January 25, 2010         12.86         12.86         12.86          12.86         12.86         12.86
      February 25, 2010        12.75         12.75         12.75          12.75         12.75         12.75
      March 25, 2010           13.23         13.23         13.23          13.23         13.23         13.23
      April 25, 2010           12.54         12.54         12.54          12.54         12.54         12.54
      May 25, 2010             12.63         12.63         12.63          12.63         12.63         12.63
      June 25, 2010            12.39         12.39         12.39          12.39         12.39         12.39
      July 25, 2010            12.48         12.48         12.48          12.48         12.48         12.48
      August 25, 2010          12.18         12.18         12.18          12.18         12.18         12.18
      September 25, 2010       12.08         12.08         12.08          12.08         12.08         12.08
      October 25, 2010         12.17         12.17         12.17          12.17         12.17         12.17
      November 25, 2010        11.88         11.88         11.88          11.88         11.88         11.88
      December 25, 2010        11.99         11.99         11.99          11.99         11.99         11.99
      January 25, 2011         11.70         11.70         11.70          11.70         11.70         11.70
      February 25, 2011        11.60         11.60         11.60          11.60         11.60         11.60
      March 25, 2011           12.16         12.16         12.16          12.16         12.16         12.16
      April 25, 2011           11.42         11.42         11.42          11.42         11.42         11.42
      May 25, 2011             11.54         11.54         11.54          11.54         11.54         11.54
      June 25, 2011            11.93         11.93         11.93          11.93         11.93         11.93
      July 25, 2011            12.42         12.42         12.42          12.42         12.42         12.42
      August 25, 2011          12.02         12.02         12.02          12.02         12.02         12.02
      September 25, 2011       12.02         12.02         12.02          12.02         12.02         12.02
      October 25, 2011         12.42         12.42         12.42          12.42         12.42         12.42
      November 25, 2011        12.02         12.02         12.02          12.02         12.02         12.02
      December 25, 2011        12.43         12.43         12.43          12.43         12.43         12.43
      January 25, 2012         12.03         12.03         12.03          12.03         12.03         12.03
      February 25, 2012        12.03         12.03         12.03          12.03         12.03         12.03
      March 25, 2012           12.86         12.86         12.86          12.86         12.86         12.86
      April 25, 2012           12.03         12.03         12.03          12.03         12.03         12.03
      May 25, 2012             12.43         12.43         12.43          12.43         12.43         12.43
      June 25, 2012            12.03         12.03         12.03          12.03         12.03         12.03
      July 25, 2012            12.43         12.43         12.43          12.43         12.43         12.43
      August 25, 2012          12.03         12.03         12.03          12.03         12.03         12.03
      September 25, 2012       12.03         12.03         12.03          12.03         12.03         12.03
      October 25, 2012         12.43         12.43         12.43          12.43         12.43         12.43



                                      S-112





      -------------------------------------------------------------------------------------------------------
                                          SCHEDULE OF AVAILABLE FUNDS AND
                               SUPPLEMENTAL INTEREST RATE CAP RATES (CASH CAP)(1)(2)
      -------------------------------------------------------------------------------------------------------

         DISTRIBUTION        CLASS M-1     CLASS M-2     CLASS M-3      CLASS M-4     CLASS M-5     CLASS M-6
             DATES            CAP (%)       CAP (%)       CAP (%)        CAP (%)       CAP (%)       CAP (%)
      -------------------    ---------     ---------     ---------      ---------     ---------     ---------

      November 25, 2012        12.03         12.03         12.03          12.03         12.03         12.03
      December 25, 2012        12.43         12.43         12.43          12.43         12.43         12.43
      January 25, 2013         12.03         12.03         12.03          12.03         12.03         12.03
      February 25, 2013        12.03         12.03         12.03          12.03         12.03         12.03
      March 25, 2013           13.32         13.32         13.32          13.32         13.32         13.32
      April 25, 2013           12.03         12.03         12.03          12.03         12.03         12.03
      May 25, 2013             12.43         12.43         12.43          12.43         12.43         12.43
      June 25, 2013            12.05         12.05         12.05          12.05         12.05         12.05
      July 25, 2013            12.46         12.46         12.46          12.46         12.46         12.46
      August 25, 2013          12.06         12.06         12.06          12.06         12.06         12.06
      September 25, 2013       12.06         12.06         12.06          12.06         12.06         12.06
      October 25, 2013         12.46         12.46         12.46          12.46         12.46         12.46
      November 25, 2013        12.06         12.06         12.06          12.06         12.06         12.06
      December 25, 2013        12.46         12.46         12.46          12.46         12.46         12.46
      January 25, 2014         12.06         12.06         12.06          12.06         12.06         12.06
      February 25, 2014        12.06         12.06         12.06          12.06         12.06         12.06
      March 25, 2014           13.35         13.35         13.35          13.35         13.35          N/A
      April 25, 2014           12.06         12.06         12.06          12.06         12.06          N/A
      May 25, 2014             12.46         12.46         12.46          12.46         12.46          N/A
      June 25, 2014            12.06         12.06         12.06          12.06         12.06          N/A
      July 25, 2014            12.46         12.46         12.46          12.46         12.46          N/A
      August 25, 2014          12.06         12.06         12.06          12.06         12.06          N/A
      September 25, 2014       12.06         12.06         12.06          12.06         12.06          N/A
      October 25, 2014         12.46         12.46         12.46          12.46          N/A           N/A
      November 25, 2014        12.06         12.06         12.06          12.06          N/A           N/A
      December 25, 2014        12.46         12.46         12.46          12.46          N/A           N/A
      January 25, 2015         12.06         12.06         12.06          12.06          N/A           N/A
      February 25, 2015        12.06         12.06         12.06          12.06          N/A           N/A
      March 25, 2015           13.35         13.35         13.35          13.35          N/A           N/A
      April 25, 2015           12.06         12.06         12.06           N/A           N/A           N/A
      May 25, 2015             12.46         12.46         12.46           N/A           N/A           N/A
      June 25, 2015            12.06         12.06         12.06           N/A           N/A           N/A
      July 25, 2015            12.46         12.46         12.46           N/A           N/A           N/A
      August 25, 2015          12.06         12.06         12.06           N/A           N/A           N/A
      September 25, 2015       12.06         12.06         12.06           N/A           N/A           N/A
      October 25, 2015         12.46         12.46          N/A            N/A           N/A           N/A
      November 25, 2015        12.06         12.06          N/A            N/A           N/A           N/A
      December 25, 2015        12.46         12.46          N/A            N/A           N/A           N/A
      January 25, 2016         12.06         12.06          N/A            N/A           N/A           N/A
      February 25, 2016        12.06         12.06          N/A            N/A           N/A           N/A
      March 25, 2016           12.89         12.89          N/A            N/A           N/A           N/A
      April 25, 2016           12.07         12.07          N/A            N/A           N/A           N/A
      May 25, 2016             12.49         12.49          N/A            N/A           N/A           N/A
      June 25, 2016            12.12          N/A           N/A            N/A           N/A           N/A
      August 25, 2016          12.30          N/A           N/A            N/A           N/A           N/A
      September 25, 2016       12.30          N/A           N/A            N/A           N/A           N/A
      September 25, 2016       12.30          N/A           N/A            N/A           N/A           N/A
      October 25, 2016         12.71          N/A           N/A            N/A           N/A           N/A
      November 25, 2016        12.30          N/A           N/A            N/A           N/A           N/A


___________________
(1)   Annualized interest rate based on total interest paid to the applicable
      class of certificates including Accrued Certificate Interest, Unpaid
      Interest Amounts and Basis Risk Carry Forward Amounts divided by the
      current Class Principal Balance.

(2)   Assumes 30% CPR, no losses, commencing in August 2006, each Mortgage Index
      and One-Month LIBOR is 20% and that the optional clean-up call is not
      exercised and no successful auction occurs.


                                      S-113



         ----------------------------------------------------------------
                          SCHEDULE OF AVAILABLE FUNDS AND
               SUPPLEMENTAL INTEREST RATE CAP RATES (CASH CAP)(1)(2)
         ----------------------------------------------------------------

            DISTRIBUTION         CLASS B-1      CLASS B-2       CLASS B-3
                DATES             CAP (%)        CAP (%)         CAP (%)
         --------------------    ---------      ---------       ---------

         August 25, 2006           21.00          21.20           22.20
         September 25, 2006        21.00          21.20           22.20
         October 25, 2006          21.00          21.20           22.20
         November 25, 2006         21.00          21.20           22.20
         December 25, 2006         21.00          21.20           22.20
         January 25, 2007          19.94          19.94           19.94
         February 25, 2007         19.67          19.67           19.67
         March 25, 2007            19.64          19.64           19.64
         April 25, 2007            19.15          19.15           19.15
         May 25, 2007              18.98          18.98           18.98
         June 25, 2007             18.66          18.66           18.66
         July 25, 2007             18.50          18.50           18.50
         August 25, 2007           18.18          18.18           18.18
         September 25, 2007        17.95          17.95           17.95
         October 25, 2007          17.81          17.81           17.81
         November 25, 2007         17.46          17.46           17.46
         December 25, 2007         17.34          17.34           17.34
         January 25, 2008          17.03          17.03           17.03
         February 25, 2008         16.82          16.82           16.82
         March 25, 2008            16.83          16.83           16.83
         April 25, 2008            16.36          16.36           16.36
         May 25, 2008              16.13          16.13           16.13
         June 25, 2008             15.71          15.71           15.71
         July 25, 2008             15.63          15.63           15.63
         August 25, 2008           15.33          15.33           15.33
         September 25, 2008        15.15          15.15           15.15
         October 25, 2008          15.12          15.12           15.12
         November 25, 2008         14.84          14.84           14.84
         December 25, 2008         14.83          14.83           14.83
         January 25, 2009          14.51          14.51           14.51
         February 25, 2009         14.32          14.32           14.32
         March 25, 2009            14.61          14.61           14.61
         April 25, 2009            13.94          13.94           13.94
         May 25, 2009              13.91          13.91           13.91
         June 25, 2009             13.44          13.44           13.44
         July 25, 2009             13.47          13.47           13.47
         August 25, 2009           13.17          13.17           13.17
         September 25, 2009        13.26          13.26           13.26
         October 25, 2009          13.32          13.32           13.32
         November 25, 2009         13.05          13.05           13.05
         December 25, 2009         13.16          13.16           13.16
         January 25, 2010          12.86          12.86           12.86
         February 25, 2010         12.75          12.75           12.75
         March 25, 2010            13.23          13.23           13.23
         April 25, 2010            12.54          12.54           12.54
         May 25, 2010              12.63          12.63           12.63
         June 25, 2010             12.39          12.39           12.39
         July 25, 2010             12.48          12.48           12.48
         August 25, 2010           12.18          12.18           12.18
         September 25, 2010        12.08          12.08           12.08
         October 25, 2010          12.17          12.17           12.17
         November 25, 2010         11.88          11.88           11.88
         December 25, 2010         11.99          11.99           11.99
         January 25, 2011          11.70          11.70           11.70
         February 25, 2011         11.60          11.60           11.60
         March 25, 2011            12.16          12.16           12.16
         April 25, 2011            11.42          11.42           11.42
         May 25, 2011              11.54          11.54           11.54
         June 25, 2011             11.93          11.93           11.93
         July 25, 2011             12.42          12.42           12.42
         August 25, 2011           12.02          12.02           12.02
         September 25, 2011        12.02          12.02           12.02
         October 25, 2011          12.42          12.42           12.42
         November 25, 2011         12.02          12.02           12.02
         December 25, 2011         12.43          12.43           12.43
         January 25, 2012          12.03          12.03           12.03
         February 25, 2012         12.03          12.03           12.03
         March 25, 2012            12.86          12.86           12.86
         April 25, 2012            12.03          12.03           12.03
         May 25, 2012              12.43          12.43           12.43
         June 25, 2012             12.03          12.03           12.03
         July 25, 2012             12.43          12.43            N/A
         August 25, 2012           12.03          12.03            N/A
         September 25, 2012        12.03          12.03            N/A
         October 25, 2012          12.43          12.43            N/A


                                      S-114



         ----------------------------------------------------------------
                          SCHEDULE OF AVAILABLE FUNDS AND
               SUPPLEMENTAL INTEREST RATE CAP RATES (CASH CAP)(1)(2)
         ----------------------------------------------------------------

            DISTRIBUTION         CLASS B-1      CLASS B-2       CLASS B-3
                DATES             CAP (%)        CAP (%)         CAP (%)
         --------------------    ---------      ---------       ---------

         November 25, 2012         12.03          12.03            N/A
         December 25, 2012         12.43          12.43            N/A
         January 25, 2013          12.03          12.03            N/A
         February 25, 2013         12.03          12.03            N/A
         March 25, 2013            13.32           N/A             N/A
         April 25, 2013            12.03           N/A             N/A
         May 25, 2013              12.43           N/A             N/A
         June 25, 2013             12.05           N/A             N/A
         July 25, 2013             12.46           N/A             N/A
         August 25, 2013           12.06           N/A             N/A

___________________
(1)   Annualized interest rate based on total interest paid to the applicable
      class of certificates including Accrued Certificate Interest, Unpaid
      Interest Amounts and Basis Risk Carry Forward Amounts divided by the
      current Class Principal Balance.

(2)   Assumes 30% CPR, no losses, commencing in August 2006, each Mortgage Index
      and One-Month LIBOR is 20% and that the optional clean-up call is not
      exercised and no successful auction occurs.

                                 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 Issuing Entity (exclusive of the Swap
Agreement and the assets held in the Swap Account) will consist of one or more
REMICs in a tiered structure. The highest REMIC will be referred to as the
"Master REMIC", and each REMIC below the Master REMIC (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 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 Offered 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
Offered Certificates will represent a beneficial interest in the right to
receive payments of Basis Risk Carry Forward Amounts.

      Upon the issuance of the Certificates, Sidley Austin LLP ("TAX COUNSEL"),
will deliver its opinion concluding, assuming compliance with the Pooling and
Servicing Agreement, for federal income tax purposes, that each REMIC created
under the Pooling and Servicing Agreement will qualify as a REMIC within the
meaning of Section 860D of the Internal Revenue Code of 1986, as amended (the
"CODE"), and that the Regular Certificates will represent regular interests in a
REMIC. Moreover, Tax Counsel will deliver an opinion concluding that any rights
of the holders of the Offered Certificates to receive Basis Risk Carry Forward
Amounts 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 term "CAP CONTRACT" refers to the rights of the holders
of the Offered Certificates to receive payments of Basis Risk Carry Forward
Amounts calculated for this purpose by treating the definition of the Net WAC
Cap as excluding any Swap Termination Payments and by adjusting the Net Swap


                                      S-115



Payments (included as part of such definition) on each Distribution Date to the
amount that would have been paid had the notional amount in respect of the Swap
Agreement been limited to the principal balance of the Mortgage Loans (the
"REMIC Cap").

TAXATION OF REGULAR CERTIFICATES

      The following discussion assumes that the rights of the holders of the
Offered Certificates under the Cap Contract 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 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 such
certificateholders and different withholding tax consequences on payments of
Basis Risk Carry Forward Amounts to holders of the Offered Certificates who are
non U.S. Persons. Prospective investors in the Offered Certificates should
consult their tax advisors regarding their appropriate tax treatment.

      A holder of an Offered Certificate must allocate the purchase price for
such Certificate between two components--the REMIC Regular Interest component
and the Cap Contract component. The Cap Contract component should further be
viewed as deemed obligations of the Swap Counterparty and the certificateholders
of the Class OC Certificates. For information reporting purposes, it will be
assumed in accordance with the Pooling and Servicing Agreement that, with
respect to any Offered Certificate, the Cap Contract component will have an
insubstantial value relative to the value of the Regular Interest component. The
IRS could, however, argue that the Cap Contract component has a greater value,
and if that argument were to be sustained, the Regular Interest component of the
Offered 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-Taxation of Owners of REMIC Regular Certificates--Original
Issue Discount and Premium" in the accompanying prospectus.

      Upon the sale, exchange, or other disposition of an Offered Certificate,
the holder must allocate the amount realized between the two components of the
certificate (that is, the Regular Interest component and the Cap Contract
component) 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 the 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.

      As stated above, a portion of the purchase price paid by a holder to
acquire an Offered Certificate will be attributable to the Cap Contract
component of such certificate. The portion of the overall purchase price
attributable to the 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, 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 the Cap Contract component of such a certificate.


                                      S-116



      Any payments received by a holder of an Offered Certificate of Basis Risk
Carry Forward Amounts will be treated as periodic payments on an interest rate
cap agreement. To the extent the sum of such periodic payments for any year
exceeds that year's amortized price of the Cap Contract component, such excess
is ordinary income to a holder of an Offered Certificate. 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 an Offered
Certificate. 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.

      In addition, any amounts payable on a Regular Interest component of an
Offered Certificate in excess of the amount of payments on the Offered
Certificates to which it relates as a result of certain Swap Termination
Payments, any excess of the REMIC Cap over the Net WAC Cap, or otherwise will be
treated as having been received by the beneficial owners of such Certificates
and then paid by such owners to the Supplemental Interest Trust pursuant to the
Swap Agreement. Such excess may be treated as a payment on a notional principal
contract that is made by the beneficial owner during the applicable taxable year
and that is taken into account in determining the beneficial owner's net income
or net deduction with respect to the Cap Contract for such taxable year.
Although not clear, net income or a net deduction with respect to the Cap
Contract should be treated as ordinary income or as an ordinary deduction
subject to the limitations outlined above. Alternatively, such payments by
beneficial owners of the Offered Certificates may be treated as a guarantee of
the obligation of the holder of the Class OC certificates to make payments under
the interest rate swap agreement.

      Income on the Regular Interest component of the Offered 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.

      Certain Classes of Offered Certificates may be treated for federal income
tax purposes as having been issued with an amount of Original Issue Discount
("OID"). For purposes of determining the amount and rate of accrual of OID and
market discount, the Issuing Entity intends to assume that there will be
prepayments on the Mortgage Loans at a rate equal to 30% CPR, in the case of the
Mortgage Loans (the "PREPAYMENT ASSUMPTION"). 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--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-Taxation of Owners of REMIC 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. 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 Issuing Entity will be so treated, and income on the
Regular Interest component of the Offered 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 Issuing Entity will be so treated. The Regular Interest
component of the Offered Certificates and the other classes of Regular
Certificates will represent qualified


                                      S-117



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 an
Offered 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.

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--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--Taxation of Owners of REMIC Residual
Certificates" in the accompanying prospectus. Specifically, prospective holders
of Class A-R Certificates should 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--Taxation of Owners of REMIC Residual
Certificates--Market-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 --Taxation of Owners of REMIC Regular Certificates
--Effects of Defaults and Delinquencies" 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 encouraged to consult their own advisors
regarding the federal, state, local or foreign tax consequences of purchasing,
owning or disposing of the certificates.

                                  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


                                      S-118



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.

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 Issuing Entity
    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.


                                      S-119



      The Issuing Entity 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 Assets of the
    Issuing Entity 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 held by the Issuing
    Entity;

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, the Underwriter, any obligor with respect to Mortgage
Loans included in the Assets of the Issuing Entity constituting more than 5% of
the aggregate unamortized principal balance of the Assets of the Issuing Entity,
a provider of credit enhancement to the Issuing Entity, a counterparty to an
eligible swap agreement held by the Issuing Entity 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 except as provided below with respect to the Swap
Agreement, all conditions of the Exemption other than those within the control
of the investors will be met.

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

      Accordingly, as long as the Swap Agreement and the Supplement Interest
Trust are in effect, no Plan or other person using the plan assets may acquire
or hold any interest in a Certificate unless, in addition to satisfying the
requirements of the Exemption, such acquisition or holding is eligible for the
exemptive relief available under Department of Labor Prohibited Transaction
Class Exemption ("PTCE") 84-14 (for transactions by independent "qualified
professional asset managers"), PTCE 91-38 (for transactions by bank collective
investment funds), PTCE 90-1 (for transactions by insurance company pooled
separate accounts), PTCE 95-60 (for transactions by insurance company general
accounts) or PTCE 96-23 (for transactions effected by "in-house asset manager")
or a similar


                                      S-120



exemption (collectively, the "INVESTOR-BASED EXEMPTIONS"). It should be noted,
however, that even if the conditions specified in one or more of the
Investor-Based Exemptions are met, the scope of relief provided by the
Investor-Based Exemptions may not necessarily cover all acts that might be
construed as prohibited transactions. Plan fiduciaries should consult their
legal counsel concerning these issues. As long as the Swap Agreement and the
Supplemental Interest Trust are in effect, each beneficial owner of a
Certificate, or any interest in a Certificate, will be deemed to have
represented that either (i) it is not a Plan or person using Plan assets, or
(ii) the acquisition and holding of the Certificate are eligible for the
exemptive relief available under at least one of the Investor-Based Exemptions.

      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 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. Assets of a Plan or individual
retirement account should not be invested in the Certificates unless it is clear
that the assets of the trust fund will not be plan assets or unless it is clear
that the Exemption and, as long as the Swap Agreement and Supplemental Interest
Trust are in effect, one or more of the Investor-Based Exemptions will apply and
exempt all potential prohibited transactions 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 Issuing Entity or the Underwriter of the certificates that
this investment meets all relevant legal requirements with respect to
investments


                                      S-121



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
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 Sponsor,
MSCC and the Swap Counterparty.

                                  LEGAL MATTERS

      The validity of the Certificates will be passed upon for the Depositor by
Sidley Austin LLP, New York, New York. Certain tax matters will be passed upon
for the Depositor by Sidley Austin LLP. Sidley Austin 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 v of this prospectus supplement by
Standard & 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
Certificateholders under the agreements pursuant to which such certificates are
issued. The ratings do not address Prepayment Interest Shortfalls, Basis Risk
Shortfalls or Relief Act Interest Shortfalls. The rating assigned to the Class
A-R Certificates only addresses the return of its Class Principal Balance. The
ratings of the 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


                                      S-122



other rating agency to the Offered Certificates could be lower than the
respective ratings assigned by the Rating Agencies.

      The Depositor has requested that S&P and Moody's maintain ongoing
surveillance of the ratings assigned to the offered certificates in accordance
with their respective policies, but we cannot assure you that either S&P or
Moody's will continue their surveillance of the ratings assigned to the offered
certificates.


                                      S-123



                          INDEX OF CERTAIN DEFINITIONS

10/1 Mortgage Loan..........................................................S-30
10/6 Month Mortgage Loan....................................................S-31
2/6 Month Mortgage Loan.....................................................S-30
3/1 Mortgage Loan...........................................................S-30
3/6 Month Mortgage Loan.....................................................S-31
5/1 Mortgage Loan...........................................................S-30
5/6 Month Mortgage Loan.....................................................S-31
7/1 Mortgage Loan...........................................................S-30
7/6 Month Mortgage Loan.....................................................S-31
Adjustable-Rate Mortgage Loans..............................................S-28
Adjustment Date.............................................................S-29
Aggregate Cut-off Date Pool Principal Balance...............................S-27
Assets......................................................................S-97
Assignment Agreements.......................................................S-29
Auction Purchaser...........................................................S-97
Available Distribution Amount...............................................S-68
Basic Principal Distribution Amount.........................................S-69
Basis Risk Carry Forward Amount.............................................S-69
book-entry certificates.....................................................S-62
Breached Mortgage Loan......................................................S-97
Business Day................................................................S-61
Cap Contract...............................................................S-115
Certificateholder...........................................................S-61
Certificates................................................................S-60
Class A Certificates........................................................S-60
Class A Interest Distribution Amount........................................S-69
Class A Principal Distribution Amount.......................................S-70
Class B Certificates........................................................S-60
Class B-1 Principal Distribution Amount.....................................S-72
Class B-2 Principal Distribution Amount.....................................S-72
Class B-3 Principal Distribution Amount.....................................S-73
Class M Certificates........................................................S-60
Class M Senior Certificates.................................................S-60
Class M-1 Principal Distribution Amount.....................................S-70
Class M-2 Principal Distribution Amount.....................................S-70
Class M-3 Principal Distribution Amount.....................................S-70
Class M-4 Principal Distribution Amount.....................................S-71
Class M-5 Principal Distribution Amount.....................................S-71
Class M-6 Principal Distribution Amount.....................................S-72
Class P Certificates........................................................S-59
Class P Distribution Amount.................................................S-73
Class Principal Balance.....................................................S-60
Closing Date................................................................S-58
Code.......................................................................S-115
Compensating Interest.......................................................S-22
CPR.........................................................................S-97
Custodial Account...........................................................S-65
Custodian...................................................................S-58
Custodians..................................................................S-58
Cut-off Date................................................................S-27
Debt Service Reduction......................................................S-74
Defaulted Swap Termination Payment....................................S-73, S-85
Defective Mortgage Loan.....................................................S-39
Deficient Valuation.........................................................S-74
Deleted Mortgage Loan.......................................................S-40
Depositor...................................................................S-39
Determination Date..........................................................S-50
Distribution Account........................................................S-65
Distribution Date...........................................................S-61
Downgrade Terminating Event.................................................S-85
DTC....................................................................S-62, I-1
Due Date..............................................................S-29, S-68
Due Period..................................................................S-68
ERISA......................................................................S-118
excess interest.............................................................S-22
Excess Subordinated Amount..................................................S-74
Exemption..................................................................S-119
Expense Fee Rate............................................................S-49
Extra Principal Distribution Amount.........................................S-74
FNBN........................................................................S-28
FNBN Mortgage Loans.........................................................S-28
Global Securities............................................................I-1
GMAC..................................................................S-29, S-42
GMAC Serviced Mortgage Loan.................................................S-47
GMACM.......................................................................S-42
Gross Margin................................................................S-30
Hemisphere..................................................................S-29
Hemisphere Serviced Mortgage Loan...........................................S-47
Initial Periodic Rate Cap...................................................S-30
Interest Accrual Period.....................................................S-74
Interest Carry Forward Amount...............................................S-74
Interest Distribution Amount................................................S-75
Interest Only Loans.........................................................S-29
Interest Remittance Amount..................................................S-75
Investor-Based Exemptions..................................................S-121
Issuing Entity..............................................................S-27
Last Scheduled Distribution Date............................................S-91
LIBOR.......................................................................S-64
LIBOR Business Day..........................................................S-64
Limited Purpose Surety Bond.................................................S-28
Liquidated Loan.............................................................S-75
Liquidation Proceeds........................................................S-75
Loan-to-Value Ratio.........................................................S-31
Long-Term Rating............................................................S-86
Master Servicer.......................................................S-29, S-39
Master Servicer Default.....................................................S-51
Maximum Mortgage Rate.......................................................S-30
Minimum Auction Price.......................................................S-98
Minimum Mortgage Rate.......................................................S-30
Monthly Advance.............................................................S-50
Moody's....................................................................S-122
Mortgage....................................................................S-39


                                      S-124



Mortgage File...............................................................S-39
Mortgage Index..............................................................S-30
Mortgage Loan Auction Price.................................................S-97
Mortgage Loan Purchase Agreement............................................S-29
Mortgage Loans..............................................................S-27
Mortgage Note...............................................................S-39
Mortgage Pool...............................................................S-27
Mortgage Rate...............................................................S-29
Mortgaged Property..........................................................S-27
MSCS........................................................................S-87
MSMC......................................................S-27, S-41, S-53, S-56
MSMC Mortgage Loans.........................................................S-28
Net Monthly Excess Cashflow.................................................S-75
Net Mortgage Rate.....................................................S-49, S-75
net prepayment interest shortfalls..........................................S-50
net swap payment............................................................S-10
Net Swap Payment............................................................S-84
net swap receipt............................................................S-10
Net Swap Receipt............................................................S-84
Net WAC Cap.......................................................vi, S-18, S-75
Offered Certificates........................................................S-60
OID.................................................................S-116, S-117
One-Month LIBOR Index.......................................................S-30
One-Year CMT Index..........................................................S-30
One-Year LIBOR Index........................................................S-30
Optional Termination Date...............................................vi, S-97
Originator..................................................................S-28
Other Mortgage Loans........................................................S-28
overcollateralization.......................................................S-22
Overcollateralization Increase Amount.......................................S-75
Overcollateralization Target Amount.........................................S-75
Overcollateralized Amount...................................................S-75
Pass-Through Rate...........................................................S-76
Percentage Interest.........................................................S-98
Plans......................................................................S-118
Pooling and Servicing Agreement.............................................S-39
Prepayment Assumption......................................................S-117
Prepayment Interest Shortfall...............................................S-76
Prepayment Period...........................................................S-68
Principal Distribution Amount...............................................S-74
Principal Remittance Amount.................................................S-74
Privately Offered Certificates..............................................S-60
Prospectus Directive..........................................................iv
PTCE................................................................S-120, S-121
Purchase Price..............................................................S-97
Rating Agencies............................................................S-122
Realized Loss...............................................................S-76
Record Date.................................................................S-61
Reference Bank Rate.........................................................S-64
Reg AB......................................................................S-51
Regular Certificates.......................................................S-115
Relevant Implementation Date.................................................iii
Relevant Member State........................................................iii
Relief Act Interest Shortfall...............................................S-76
Replacement Mortgage Loan...................................................S-40
Replacement Swap Counterparty Payment.......................................S-76
Required Swap Counterparty Rating...........................................S-86
ResCap......................................................................S-42
Residual Certificates.......................................................S-60
restricted group...........................................................S-119
S&P........................................................................S-122
Securities Administrator....................................................S-39
Seller......................................................................S-39
Senior Certificates...................................................S-58, S-60
Senior Defaulted Swap Termination Payment...................................S-76
Senior Enhancement Percentage...............................................S-76
Sequential Trigger Event....................................................S-81
Servicer Remittance Date..............................................S-45, S-49
Significance Estimate.......................................................S-87
Significance Percentage.....................................................S-87
Six-Month LIBOR Index.......................................................S-30
Sponsor.....................................................................S-41
Sponsor Servicing Rights Mortgage Loans.....................................S-42
Stated Principal Balance....................................................S-76
Stepdown Date...............................................................S-76
structuring assumptions.....................................................S-91
Subordinate Certificates....................................................S-59
Subordinated Certificates...................................................S-60
Subordinated Interest Distribution Amount...................................S-77
Subsequent Periodic Rate Cap................................................S-30
Subsequent Recoveries.......................................................S-77
Substitution Adjustment Amount..............................................S-40
Substitution Event..........................................................S-86
Supplemental Interest Rate Cap.............................................S-109
Supplemental Interest Trust...........................................S-82, S-84
Swap Account................................................................S-82
Swap Agreement..............................................................S-84
Swap Counterparty.....................................................S-84, S-87
Swap Payment Allocation.....................................................S-77
Swap Payment Rate...........................................................S-77
Swap Termination Date.......................................................S-84
Swap Termination Payment....................................................S-84
Tax Counsel................................................................S-115
Telerate Screen Page 3750...................................................S-64
Three Month Rolling Average.................................................S-77
Trigger Event...............................................................S-77
Trustee.....................................................................S-39
U.S. Person..................................................................I-3
underlying mortgage loan purchase agreement.................................S-29
underlying servicing agreement..............................................S-29
Underwriter................................................................S-122
Unpaid Interest Shortfall Amount............................................S-77
Unpaid Realized Loss Amount.................................................S-78
Wachovia....................................................................S-29
Wachovia Serviced Mortgage Loan.............................................S-47
Weighted Average Net Mortgage Rate..........................................S-49
Wells Fargo.....................................................S-29, S-39, S-57


                                      S-125




                      [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
                             SWAP AGREEMENT SCHEDULE

                                             NOTIONAL
      DISTRIBUTION DATES                    BALANCE ($)          MULTIPLIER
      ---------------------------------    -------------         ----------
      August 25, 2006..................    64,450,229.39           10.00
      September 25, 2006...............    61,281,770.89           10.00
      October 25, 2006.................    58,267,486.27           10.00
      November 25, 2006................    55,399,947.00           10.00
      December 25, 2006................    52,672,010.51           10.00
      January 25, 2007.................    50,076,881.85           10.00
      February 25, 2007................    47,608,096.72           10.00
      March 25, 2007...................    45,259,505.42           10.00
      April 25, 2007...................    43,025,257.52           10.00
      May 25, 2007.....................    40,899,787.31           10.00
      June 25, 2007....................    38,877,799.93           10.00
      July 25, 2007....................    36,954,258.22           10.00
      August 25, 2007..................    35,124,370.16           10.00
      September 25, 2007...............    33,383,576.93           10.00
      October 25, 2007.................    31,727,541.59           10.00
      November 25, 2007................    30,037,087.46           10.00
      December 25, 2007................    28,543,982.47           10.00
      January 25, 2008.................    27,123,578.66           10.00
      February 25, 2008................    25,772,336.92           10.00
      March 25, 2008...................    24,486,890.42           10.00
      April 25, 2008...................    23,106,217.48           10.00
      May 25, 2008.....................    21,410,500.21           10.00
      June 25, 2008....................    19,982,608.17           10.00
      July 25, 2008....................    18,937,338.60           10.00
      August 25, 2008..................    17,984,749.83           10.00
      September 25, 2008...............    17,078,547.54           10.00
      October 25, 2008.................    16,216,473.49           10.00
      November 25, 2008................    15,396,379.32           10.00
      December 25, 2008................    14,600,803.46           10.00
      January 25, 2009.................    13,798,930.98           10.00
      February 25, 2009................    12,973,150.49           10.00
      March 25, 2009...................    12,246,106.66           10.00
      April 25, 2009...................    11,484,139.18           10.00
      May 25, 2009.....................    10,746,797.77           10.00
      June 25, 2009....................     9,662,101.81           10.00
      July 25, 2009....................     9,154,872.23           10.00
      August 25, 2009..................     8,672,943.30           10.00
      September 25, 2009...............     8,611,637.34           10.00
      October 25, 2009.................     8,181,040.69           10.00
      November 25, 2009................     7,771,412.79           10.00
      December 25, 2009................     7,381,732.77           10.00
      January 25, 2010.................     7,011,029.46           10.00
      February 25, 2010................     6,658,378.95           10.00
      March 25, 2010...................     6,322,902.32           10.00
      April 25, 2010...................     6,003,763.42           10.00
      May 25, 2010.....................     5,700,166.79           10.00
      June 25, 2010....................     5,411,355.71           10.00
      July 25, 2010....................     5,136,610.28           10.00
      August 25, 2010..................     4,875,245.67           10.00
      September 25, 2010...............     4,626,610.35           10.00
      October 25, 2010.................     4,390,084.53           10.00
      November 25, 2010................     4,163,412.32           10.00
      December 25, 2010................     3,949,446.31           10.00
      January 25, 2011.................     3,745,901.69           10.00
      February 25, 2011................     3,535,881.24           10.00
      March 25, 2011...................     3,348,774.29           10.00
      April 25, 2011...................     3,169,311.35           10.00
      May 25, 2011.....................     2,977,938.86           10.00
      June 25, 2011....................       183,440.69           10.00
      July 25, 2011
        and thereafter.................             0.00            0.00


                                      II-1




                      [THIS PAGE INTENTIONALLY LEFT BLANK]

PROSPECTUS

                          MORGAN STANLEY CAPITAL I INC.
                                    DEPOSITOR

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

                                   ----------

      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 6 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 March 14, 2006




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

      The information in this prospectus is not complete and may be changed. We
may not sell these securities until the registration statement filed with the
SEC is effective. This prospectus is not an offer to sell securities and it is
not soliciting an offer to buy securities in any state where the offer or sale
is not permitted.

      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.

      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, New York, New York 10036, and Morgan Stanley Capital I Inc.'s
telephone number is (212) 761-4000.





                                TABLE OF CONTENTS

                                                                           PAGE
                                                                           ----
SUMMARY OF PROSPECTUS........................................................ 1
RISK FACTORS................................................................. 6
DESCRIPTION OF THE TRUST FUNDS.............................................. 29
  Assets.................................................................... 29
  Mortgage Loans............................................................ 29
  Mortgage-Backed Securities................................................ 31
  Government Securities..................................................... 32
  Accounts.................................................................. 33
  Credit Support............................................................ 33
  Cash Flow Agreements and Derivatives...................................... 33
USE OF PROCEEDS............................................................. 35
YIELD CONSIDERATIONS........................................................ 35
  General................................................................... 35
  Pass-Through Rate......................................................... 35
  Timing of Payment of Interest............................................. 35
  Payments of Principal; Prepayments........................................ 36
  Prepayments, Maturity and Weighted Average Life........................... 37
  Other Factors Affecting Weighted Average Life............................. 38
THE DEPOSITOR............................................................... 39
THE SPONSOR................................................................. 40
STATIC POOL INFORMATION..................................................... 40
ISSUING ENTITY.............................................................. 40
DESCRIPTION OF THE CERTIFICATES............................................. 40
  General................................................................... 40
  Categories of Classes of Certificates..................................... 41
  Indices Applicable to Floating Rate and Inverse Floating Rate Classes..... 43
  LIBOR..................................................................... 43
  COFI ..................................................................... 44
  Treasury Index............................................................ 46
  Prime Rate................................................................ 46
  Distributions............................................................. 46
  Available Distribution Amount............................................. 47
  Distributions of Interest on the Certificates............................. 47
  Distributions of Principal of the Certificates............................ 48
  Components................................................................ 48
  Distributions on the Certificates of Prepayment Premiums.................. 48
  Allocation of Losses and Shortfalls....................................... 48
  Advances in Respect of Delinquencies...................................... 49
  Reports to Certificateholders............................................. 49
  Termination............................................................... 52
  Book-Entry Registration and Definitive Certificates....................... 52
DESCRIPTION OF THE AGREEMENTS............................................... 56
  Assignment of Assets; Repurchases......................................... 56
  Representations and Warranties; Repurchases............................... 58
  Certificate Account and Other Collection Accounts......................... 59
  Pre-Funding Account....................................................... 62
  Collection and Other Servicing Procedures................................. 63
  Subservicers.............................................................. 64
  Realization Upon Defaulted Mortgage Loans................................. 64
  Hazard Insurance Policies................................................. 66
  Fidelity Bonds and Errors and Omissions Insurance......................... 68
  Due-on-Sale Provisions.................................................... 68
  Retained Interest; Servicing Compensation and Payment of Expenses......... 68
  Evidence as to Compliance................................................. 69


                                        i



  Matters Regarding a Master Servicer and the Depositor..................... 69
  Events of Default......................................................... 71
  Rights Upon Event of Default.............................................. 71
  Amendment................................................................. 72
  The Trustee............................................................... 73
  Duties of the Trustee..................................................... 73
  Matters Regarding the Trustee............................................. 73
  Resignation and Removal of the Trustee.................................... 74
DESCRIPTION OF CREDIT SUPPORT............................................... 74
  General................................................................... 74
  Subordinate Certificates.................................................. 75
  Cross-Support Provisions.................................................. 75
  Insurance or Guarantees for the Mortgage Loans............................ 75
  Letter of Credit.......................................................... 75
  Insurance Policies and Surety Bonds....................................... 76
  Reserve Funds............................................................. 76
  Derivative Products....................................................... 76
  Credit Support for Mortgage-Backed Securities............................. 76
LEGAL ASPECTS OF MORTGAGE LOANS............................................. 77
  General................................................................... 77
  Types of Mortgage Instruments............................................. 77
  Interest in Real Property................................................. 78
  Cooperative Loans......................................................... 78
  Foreclosure............................................................... 79
  Junior Mortgages.......................................................... 83
  Anti-Deficiency Legislation and Other Limitations on Lenders.............. 83
  Environmental Legislation................................................. 84
  Due-on-Sale Clauses....................................................... 84
  Prepayment Charges........................................................ 85
  Subordinate Financing..................................................... 85
  Applicability of Usury Laws............................................... 85
  Alternative Mortgage Instruments.......................................... 86
  Servicemembers' Civil Relief Act.......................................... 87
  Forfeiture for Drug, RICO and Money Laundering Violations................. 87
FEDERAL INCOME TAX CONSEQUENCES............................................. 88
  General................................................................... 88
  Grantor Trust Funds....................................................... 88
  a.  Single Class of Grantor Trust Certificates............................ 88
  b.  Multiple Classes of Grantor Trust Certificates........................ 92
  c.  Sale or Exchange of a Grantor Trust Certificate....................... 95
  d.  Non-U.S. Persons...................................................... 96
  e.  Information Reporting and Backup Withholding.......................... 96
  REMICS.................................................................... 97
  a.  Taxation of Owners of REMIC Regular Certificates...................... 99
  b.  Taxation of Owners of REMIC Residual Certificates.................... 108
  Prohibited Transactions and Other Taxes.................................. 112
  Liquidation and Termination.............................................. 113
  Administrative Matters................................................... 113
  Tax-Exempt Investors..................................................... 113
  Residual Certificate Payments--Non-U.S. Persons.......................... 114
  Tax Related Restrictions on Transfers of REMIC Residual Certificates..... 114
  Reportable Transactions.................................................. 117
STATE TAX CONSIDERATIONS................................................... 117
ERISA CONSIDERATIONS....................................................... 117
  General.................................................................. 117
  Prohibited Transactions.................................................. 117
  Review by Plan Fiduciaries............................................... 121
LEGAL INVESTMENT........................................................... 121
PLAN OF DISTRIBUTION....................................................... 123
LEGAL MATTERS.............................................................. 124
FINANCIAL INFORMATION...................................................... 124
RATING..................................................................... 124


                                       ii



INCORPORATION OF INFORMATION BY REFERENCE.................................. 125
GLOSSARY OF TERMS.......................................................... 126


                                       iii



                     [THIS PAGE INTENTIONALLY LEFT BLANK.]




                              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


Issuing Entity............................  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.

Sponsor and Seller........................  Unless otherwise specified in the related prospectus supplement,
                                            Morgan Stanley Mortgage Capital Inc., a New York corporation,
                                            will be the sponsor and a seller into the each trust. Morgan
                                            Stanley Mortgage Capital Inc. is an affiliate of the depositor
                                            and its address is 1585 Broadway, New York, New York 10020.
                                            See "The Sponsor" in this Prospectus.

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



                                        1





                                            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.

                                                 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 swap or exchange agreements;

                                            o     interest rate cap, collar or floor contracts;

                                            o     currency exchange contracts; or

                                            o     other interest rate or currency agreements.

                                              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.



                                        2





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 the following types of
                                            credit enhancement:

                                            o     limited guarantee

                                            o     financial guaranty insurance policy

                                            o     surety bond

                                            o     letter of credit

                                            o     mortgage pool insurance policy

                                            o     reserve fund

                                            o     cross-support

                                            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



                                        3





                                            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 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



                                        4





                                            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:

                                            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.



                                        5



                                  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 certificates 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
                                            certificates. 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 certificates.
                                            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



                                        6





                                            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.



                                        7





                                            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.



                                        8





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.

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
                                            related 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.



                                        9





                                            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 in the related aggregate loan group.

                                            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.

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 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.

                                            Each rating agency rating the certificates of any series may
                                            change or withdraw its initial ratings at any time in the future
                                            if, in its judgment, circumstances warrant a change. If your
                                            certificates have the benefit of a surety bond, such as a note
                                            or certificate insurance policy, the ratings of the certificates
                                            will depend primarily on the creditworthiness of the insurer as
                                            the provider of the bond or policy relating to the
                                            certificates. In that event, any reduction in the insurer's
                                            financial strength and claims-paying ability ratings could
                                            result in a reduction of the ratings on the certificates. In
                                            all cases, no person is obligated to maintain the ratings at
                                            their initial levels. If a rating agency qualifies, reduces or



                                       10





                                            withdraws its rating on one or more classes of the certificates,
                                            the liquidity and market value of the affected certificates is
                                            likely to be reduced.

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 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.



                                       11





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 weighted average lives of, and the yields to maturity on,
                                            subordinate certificates will be progressively more sensitive to
                                            the rate and timing of borrower defaults and the severity of
                                            ensuing losses on the loans. If the actual rate and severity of
                                            losses on the loans is higher than those assumed by an investor
                                            in such certificates, the actual yield to maturity of such
                                            certificates may be lower than the yield anticipated by such
                                            holder based on such assumption. The timing of losses on the
                                            loans will also affect an investor's actual yield to maturity,
                                            even if the rate of defaults and severity of losses over the
                                            life of the loans are consistent with an investor's
                                            expectations. In general, the earlier a loss occurs, the
                                            greater the effect on an investor's yield to maturity. If so
                                            specified in the related prospectus supplement, realized losses
                                            on the loans, to the extent they exceed the amount of any
                                            overcollateralization following distributions of principal on
                                            the related distribution date, will reduce the aggregate
                                            principal balance of the subordinate certificates in inverse
                                            order of severity. Once a realized loss is allocated to
                                            security, no principal or interest will be distributable with
                                            respect to such written down amount, except to such extent and
                                            in such priority as may be specified in the related prospectus
                                            supplement in the event of any subsequent recoveries received on
                                            liquidated loans after they are liquidated.

                                            In addition, to the extent subordinate certificates are issued
                                            in the multiple classes, as described in the related prospectus
                                            supplement, the yield of such classes may be particularly
                                            sensitive to changes in the rates of prepayments of the loans.
                                            Distributions of principal will be made to the holders of such
                                            certificates according to the priorities described in the
                                            related prospectus supplement and the yield to maturity on such
                                            classes of certificates will be sensitive to the rates of
                                            prepayment on the loans experienced both before and after the
                                            commencement of principal distributions on such classes. The
                                            yield to maturity on such classes of certificates will also be
                                            extremely sensitive to losses due to defaults on the loans (and
                                            the timing of those losses), to the extent such losses are not
                                            covered by excess interest, overcollateralization, more
                                            subordinate certificates or other credit enhancement.
                                            Furthermore, as described in the related prospectus supplement,
                                            the timing of receipt of principal and interest by such
                                            certificates may be adversely affected by losses even if such
                                            classes of certificates do not ultimately bear such loss.

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



                                       12





                                            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.

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



                                       13





                                            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.

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
                                            certificates of the related series depend in part on payments to
                                            be received under such a cash flow agreement, the ability



                                       14





                                            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 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 certificates with adjustable
                                                  interest rates that are subject to cap based on weighted
                                                  average net-mortgage rates are more likely to be limited.



                                       15





                                            o     To the extent specified in the related prospectus
                                                  supplement, if the interest rates on certificates 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 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,



                                       16





                                                  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
                                                  certificates.

                                            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 certificates 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
                                            certificates 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.



                                       17





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, 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 certificates 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.



                                       18





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 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 certificates. 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 for a specified period after origination
                                                  require the borrower to only make interest payments.
                                                  During the interest-only period there will be no scheduled
                                                  reduction in the principal balance of these loans and at
                                                  the end of the period the scheduled monthly payment on
                                                  these loans will increase. This increases the likelihood
                                                  of default and the potential severity of loss associated
                                                  with the 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



                                       19





                                                  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.

                                            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 certificates.

INCREASED USE OF NEW MORTGAGE LOAN
  PRODUCTS BY BORROWERS MAY RESULT
  IN DECLINE IN REAL ESTATE
  VALUES GENERALLY                          In recent years, borrowers have increasingly financed their
                                            homes with new mortgage loan products, which in many cases have
                                            allowed them to purchase homes that they might otherwise have
                                            been unable to afford. Many of these new products feature low
                                            monthly payments during the initial years of the loan that can
                                            increase (in some cases, significantly) over the loan term.
                                            There is little historical data with respect to these new
                                            mortgage loan products. Consequently, as borrowers face
                                            potentially higher monthly payments for the remaining terms of
                                            their loans, it is possible that, combined with other economic
                                            conditions such as increasing interest rates and deterioration
                                            of home values, borrower delinquencies and defaults could exceed
                                            anticipated levels. In that event, the certificates, and your
                                            investment in the certificates, may not perform as you
                                            anticipate.

GEOGRAPHIC CONCENTRATION OF THE
   LOANS MAY INCREASE THE RISK
   OF LOSS                                  The loans underlying a series of certificates may be
                                            concentrated in certain regions, states or zip codes. This
                                            concentration may present risks of losses on the related
                                            certificates that are greater than those generally present for
                                            similar asset-backed securities without such concentration.
                                            Certain geographic regions of the United States from time to
                                            time will experience weaker regional economic conditions and
                                            housing markets than the nation generally and this weakness may
                                            result in losses on the related loans being higher than those in
                                            the nation generally. In addition, particular areas may be
                                            directly or indirectly affected by natural disasters or civil
                                            disturbances such as earthquakes, hurricanes, floods, eruptions,
                                            riots, industrial accidents or terrorism. Loans in areas
                                            adversely affected by these factors will experience higher rates
                                            of loss and delinquency than loans generally. The related
                                            prospectus supplement will contain information regarding the
                                            geographic concentration of the loans.



                                       20





THE LOANS MAY BE SUBJECT TO NEGATIVE
  AMORTIZATION, WHICH MAY AFFECT
  YOUR YIELD AND RESULT IN INCREASED
  DELINQUENCIES AND LOSSES                  The trust may include mortgage loans that are negative
                                            amortization loans. Generally, the interest rates on negative
                                            amortization loans adjust monthly but their monthly payments and
                                            amortization schedules adjust based on a different schedule
                                            (e.g., annually). In addition, in many cases, the amount by
                                            which a monthly payment may be adjusted on an adjustment date
                                            may be limited and may not be sufficient to amortize fully the
                                            unpaid principal balance of a mortgage loan over its remaining
                                            term to maturity. In addition, the initial interest rates on
                                            negative amortization loans may be lower than the sum of the
                                            indices applicable at origination and the related margins.
                                            During a period of rising interest rates, as well as prior to
                                            the applicable adjustment to the monthly payment, the amount of
                                            interest accruing on the principal balance of these mortgage
                                            loans may exceed the amount of the minimum monthly payment. As
                                            a result, a portion of the accrued interest on negatively
                                            amortizing loans may become deferred interest, which will be
                                            added to their principal balances and will also bear interest at
                                            the applicable interest rates. The amount of any deferred
                                            interest accrued on a mortgage loan during a due period will
                                            reduce the amount of interest available to be distributed on the
                                            related certificates on the related distribution date.

                                            If the interest rates on negative amortization loans decrease
                                            prior to an adjustment in the monthly payment, a larger portion
                                            of the monthly payment will be applied to the unpaid principal
                                            balance of the mortgage loan, which may cause the related
                                            classes of certificates to amortize more quickly. Conversely, if
                                            the interest rates on negative amortization loans increase prior
                                            to an adjustment in the monthly payment, a smaller portion of
                                            the monthly payment will be applied to the unpaid principal
                                            balance of the mortgage loan, which may cause the related
                                            classes of certificates to amortize more slowly.

                                            In addition, as the principal balance of a negative amortization
                                            loan will increase by the amount of deferred interest allocated
                                            to such loan, the increasing principal balance of a negative
                                            amortization loan may approach or exceed the value of the
                                            related mortgaged property, thus increasing the likelihood of
                                            defaults as well as the amount of any loss experienced with
                                            respect to any such negative amortization that is required to be
                                            liquidated. Furthermore, each negative amortization loan will
                                            generally provide for the payment of any remaining unamortized
                                            principal balance (due to the addition of deferred interest, if
                                            any, to the principal balance of the loan) in a single payment
                                            at the maturity of such loan. Because the related mortgagors may
                                            be required to make a larger single payment upon maturity, it is
                                            possible that the default risk associated with negative
                                            amortization loans is greater than associated with fully
                                            amortizing mortgage loans.

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



                                       21





                                            principal during this period. As a result, no principal
                                            payments will be made on the certificates 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
                                            certificates 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.

THE COLLATERAL SECURING COOPERATIVE
  LOANS MAY BE MORE LIKELY TO
  DIMINISH IN VALUE                         Certain of the mortgage loans may be cooperative loans. A
                                            cooperative (1) owns all the real property that comprises the
                                            project, including the land and the apartment building comprised
                                            of separate dwelling units and common areas or (2) leases the
                                            land generally by a long term ground lease and owns the
                                            apartment building. The cooperative is directly responsible for
                                            project management and, in most cases, payment of real estate
                                            taxes and hazard and liability insurance. If there is a blanket
                                            mortgage on the property and/or underlying land, as is generally
                                            the case, the cooperative, as project mortgagor, is also
                                            responsible for meeting these mortgage obligations. Ordinarily,
                                            the cooperative incurs a blanket mortgage in connection with the
                                            construction or purchase of the cooperative's apartment
                                            building. The interest of the occupants under proprietary
                                            leases or occupancy agreements to which the cooperative is a
                                            party are generally subordinate to the interest of the holder of
                                            the blanket mortgage in that building. If the cooperative is
                                            unable to meet the payment obligations arising under its blanket
                                            mortgage, the mortgagee holding the blanket mortgage could
                                            foreclose on that mortgage and terminate all subordinate
                                            proprietary leases and occupancy agreements. In addition, the
                                            blanket mortgage on a cooperative may provide financing in the
                                            form of a mortgage that does not fully amortize with a
                                            significant portion of principal being due in one lump sum at
                                            final maturity. The inability of the cooperative to refinance
                                            this mortgage and its consequent inability to make such final
                                            payment could lead to foreclosure by the mortgagee providing the
                                            financing. A foreclosure in either event by the holder of the
                                            blanket mortgage could eliminate or significantly diminish the
                                            value of any collateral held by the lender who financed the
                                            purchase by an individual tenant stockholder of cooperative
                                            shares or, in the case of a trust fund including cooperative
                                            loans, the collateral securing the cooperative loans.



                                       22





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.

                                            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



                                       23





                                            such breach or repurchase or replace the affected mortgage loan,
                                            in the manner and to the extent described in the related
                                            prospectus supplement.

HIGH LOAN-TO-VALUE RATIOS INCREASE
  RISK OF LOSS                              Loans with higher loan-to-value ratios may present a greater
                                            risk of loss than loans with loan-to-value ratios of 80.00% or
                                            below. The related prospectus supplement will identify the
                                            extent to which loans in the trust have high loan-to-value
                                            ratios. Additionally, the determination of the value of a
                                            mortgaged property used in the calculation of the loan-to-value
                                            ratios or combined loan-to-value ratios of the loans may differ
                                            from the appraised value of such mortgaged properties or the
                                            actual value of such mortgaged properties.

HIGH BALANCE MORTGAGE LOANS MAY
  POSE SPECIAL RISKS                        The prospectus supplement for a series of certificates will
                                            specify the stated principal balances of the mortgage loans in
                                            that trust fund as of the cut-off date. Certain of these
                                            mortgage loans may have 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 related loan group and the
                                            pool of mortgage loans as a whole.

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 taxes, hazard insurance and maintenance and
                                            preservation expenses may reduce the portion of liquidation
                                            proceeds payable on the certificates. 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 or any seller,
                                            including the sponsor of each securitization, 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,



                                       24





                                            o     in the event of a bankruptcy filing by the depositor, the
                                                  loans backing your series of certificates 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 from the
                                            sponsor, that in turn will acquire the trust assets, either
                                            directly or through affiliates, from originators. Each seller
                                            (which may include the sponsor) 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.

THE LOAN SELLER OR OTHER RESPONSIBLE
  PARTIES MAY NOT BE ABLE TO
  REPURCHASE DEFECTIVE LOANS                Each loan seller or another responsible party identified in the
                                            prospectus supplement 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.



                                       25





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.

FAILURE OF SERVICERS AND/OR MASTER
  SERVICER TO PERFORM MAY ADVERSELY
  AFFECT DISTRIBUTIONS ON CERTIFICATES      The amount and timing of distributions on the certificates in a
                                            series generally will be dependent on the related 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 free writing
                                            prospectus. 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 related mortgage loans. As a result, shortfalls in the
                                            distributions due on your certificates could occur.

THE SERVICING FEE MAY BE INSUFFICIENT
  TO ENGAGE REPLACEMENT SERVICERS
  OR MASTER SERVICER                        The prospectus supplement will specify the servicing fee and
                                            master servicing fee payable by the related trust. In the event
                                            it becomes necessary to replace a servicer or master servicer,
                                            no assurance can be made that the servicing fee or master
                                            servicing fee, as applicable, will be sufficient to attract
                                            replacement servicers or a replacement master servicer to accept
                                            an appointment for the related trust. In addition, to the
                                            extent the loans of any series have amortized significantly at
                                            the time that a replacement servicer or a replacement master
                                            servicer is sought, the aggregate fee that would be payable to
                                            any such replacement may not be sufficient to attract a
                                            replacement to accept an appointment for the trust.

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.



                                       26





                                            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.

RIGHTS OF BENEFICIAL OWNERS MAY BE
  LIMITED BY BOOK-ENTRY SYSTEM              If you are a purchaser of a book-entry certificate, your
                                            ownership of that certificate will be registered electronically
                                            with DTC. The lack of physical certificates could:

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

                                            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 free writing
                                            prospectus.

RISKS RELATED TO THE CLASS A-R
  CERTIFICATES                              If you purchase the Class A-R Certificates of a series, as
                                            holder you must include the taxable income or loss of each REMIC
                                            created by the related 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



                                       27





                                            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 securities
                                            administrator 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 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 free writing
                                            prospectus 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 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 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 should 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.



                                       28



                         DESCRIPTION OF THE TRUST FUNDS

      Capitalized terms are defined in the "Glossary of Terms" beginning on page
126.

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 trust fund assets will be acquired by the depositor, either
directly or through affiliates, from the sponsor. The sellers may be affiliates
of the sponsor, may be an affiliate of the depositor and may have acquired the
mortgage loans from other sellers. If so specified in the related prospectus
supplement, the sponsor or other sellers may be originators of some or all of
the loans.

      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


                                       29



          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.

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.


                                       30



      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. In
any securitization where private mortgage-backed securities are included in a
trust fund, the offering of the private mortgage-backed securities will be
registered if required in accordance with Rule 190(b) under the Securities Act
of 1933.

      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;


                                       31



          o   the original and remaining term to stated maturity of the
              mortgage-backed securities, if applicable;

          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 issuing entity, any master servicer, any servicer affiliated
              with the applicable sponsor, any servicer that services at least
              10% of the mortgage loans underlying the related certificates, any
              other material servicer that is responsible for performing an
              aspect of the servicing on which the certificates would be
              materially dependent 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;


                                       32



          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.

      Government securities will consist of securities guaranteed by the
Government National Mortgage Association, Federal National Mortgage Association
or Federal Home Loan Mortgage Corporation.

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 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 AND DERIVATIVES

      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, floor or collar agreements,

          o   currency swap agreements and currency exchange agreements,

          o   interest rate swap agreements,

          o   other interest rate or currency 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. 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, or

          o   a combination of the foregoing.


                                       33



              In addition, the related prospectus supplement will provide
              information with respect to the obligor under any cash flow
              agreement.


                                       34



                                 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.


                                       35



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


                                       36



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


                                       37



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


                                       38



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, 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.

      The depositor has been engaged since its incorporation in the
securitization of loans and other asset types included within the description of
the trust fund assets in this prospectus. The depositor is engaged in the
business of acting as depositor of trusts that issue series of certificates that
represent interests in, the assets of the trust. The depositor acquires assets
specifically for inclusion in a securitization from the sellers in privately
negotiated transactions.

      The certificate of incorporation of the depositor limits its activities to
those necessary or convenient to carry out its securitization activities. The
depositor will have limited obligations with respect to a series of
certificates. The


                                       39



depositor will obtain representations and warranties from the sponsor or other
sellers or originators regarding the loans or other trust fund assets. The
depositor will also assign to the trustee for the related series the depositor's
rights with respect to those representations and warranties. In addition, after
the issuance of a series of certificates, the depositor may have limited
obligations with respect to that series which may include making filings
necessary to maintain the perfected status of a trustee's securities interest or
lien on the related assets, appointing a successor master servicer, securities
administrator or other transaction participant that resigns or is otherwise
removed and preparation of reports filed under the Exchange Act.

      Neither the depositor nor any of the depositor's affiliates will insure or
guarantee distributions on the certificates of any series.

                                   THE SPONSOR

      The prospectus supplement for each series of certificates will identify
the sponsor for the related series.

                             STATIC POOL INFORMATION

      The prospectus supplement for each series of certificates will identify
where you can obtain static pool information concerning the Sponsor's prior
residential mortgage loan securitizations of prime and alt-a mortgage loans
secured by first- [or second-] lien mortgages or deeds of trust in residential
real properties.

                                 ISSUING ENTITY

      The issuing entity for each series of certificates will be a trust formed
for the purpose of issuing that series of certificates. The trust will be a
common law trust and will be more fully described in the related prospectus
supplement.

                         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;


                                       40



          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.



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



                                       41





                                            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 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.



                                       42





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 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.


                                       43



     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.

      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,


                                       44



          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
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.


                                       45



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 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:


                                       46



          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 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


                                       47



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.

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


                                       48



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.

      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;


                                       49



      (2) the amount of the distribution to holders of certificates of that
class allocable to accrued certificate interest, including any shortfalls in the
payment of interest due on the certificates or any interest that is accrued but
is not then payable or has been carried forward because of any cap on the amount
of interest that is currently payable;

      (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;

      (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:


                                       50



          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

          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


                                       51



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."

      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


                                       52



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 issuing entity 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.

      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


                                       53



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 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


                                       54



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.

      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.


                                       55



                          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, 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 depositor will have acquired the trust assets
directly or through one or more entities, from one or more sellers identified in
the prospectus supplement, one of which shall be identified as the sponsor of
the securitization 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.


                                       56



      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:

          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.


                                       57



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. or the
sponsor, 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.


                                       58



      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.


                                       59



      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.


                                       60



      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";


                                       61



      (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.

PRE-FUNDING ACCOUNT

      If so provided in the related prospectus supplement, a funding period will
be established for the related series of securities and the master servicer will
establish and maintain a pre-funding account. Any pre-funding account for a
trust fund will be maintained in the name of the related trustee, and will be
the account into which the depositor or the seller will deposit cash from the
proceeds of the issuance of the related securities in an amount equal to the
pre-funded amount on the related closing date. The pre-funded amount will not
exceed 25% of the initial aggregate principal amount of the certificates and/or
notes of the related series. Any funding period for a trust fund will begin on
the related closing date and will end on the date specified in the related
prospectus supplement, which in no event will be later than the date that is one
year after the related closing date.

      The pre-funding account will be designed solely to hold funds to be
applied by the related trustee during the funding period to pay to the depositor
or the seller the purchase price for loans deposited into the trust fund
subsequent to the related closing date. The purchase of these subsequent loans
will be the sole use for which amounts on deposit in the pre-funding account may
be used during the funding period. Monies on deposit in the pre-funding account
will not be available to cover losses on or in respect of the related loans.
Each subsequent loan that is purchased by the related trustee will be required
to be underwritten in accordance with the eligibility criteria set forth in the
related agreement and in the related prospectus supplement. The eligibility
criteria will be determined in consultation with the applicable rating agency or
rating agencies prior to the issuance of the related series of securities and
are designed to ensure that if subsequent loans were included as part of the
initial loans, the credit quality of the assets would be consistent with the
initial rating or ratings of the securities of that series. The depositor or the
seller will certify to the trustee that all conditions precedent to the transfer
of the subsequent loans to the trust fund, including, among other things, the
satisfaction of the related eligibility criteria, have been satisfied. It is a


                                       62



condition precedent to the transfer of any subsequent loans to the trust fund
that the applicable rating agency or rating agencies, after receiving prior
notice of the proposed transfer of the subsequent loans to the trust fund, will
not have advised the depositor, the seller or the related trustee that the
conveyance of the subsequent loans to the trust fund will result in a
qualification, modification or withdrawal of their current rating of any
securities of that series. Upon the purchase by the trustee of a subsequent
loan, that subsequent loan will be included in the related trust fund assets.
Monies on deposit in the pre-funding account may be invested in permitted
investments under the circumstances and in the manner described in the related
agreement. Earnings on investment of funds in the pre-funding account will be
deposited into the related security account or any other trust account as is
specified in the related prospectus supplement or released to the depositor, the
seller or the master servicer or any other party and in the manner specified in
the related prospectus supplement. Losses on the investment of funds in the
pre-funding account will be charged against the funds on deposit in the
pre-funding account unless otherwise specified in the related prospectus
supplement.

      For any series of securities for which a pre-funding account is
established, the amount deposited in the pre-funding account on the closing date
of the series will equal the depositor's estimate of the principal amount of
loans it expects the related seller to convey for deposit into the trust fund
during the funding period. However, there will be no assurance that the seller
will in fact be able to convey that amount of loans for deposit into the trust
fund prior to the date set for the funding period to end. Any amounts remaining
in the pre-funding account at the end of the funding period will be distributed
to the related securityholders in the manner and priority specified in the
related prospectus supplement, as a prepayment of principal of the related
securities. Therefore, any inability of the seller to convey a sufficient
principal amount of loans and the resulting prepayment of principal could cause
the overall rate of prepayments on the related securities to be higher than you
may have anticipated when you made your investment decision. See "Yield and
Prepayment Considerations."

      The depositor will include information regarding the additional subsequent
loans in a Current Report on Form 8-K, to be filed after the end of the funding
period, to the extent that the information, individually or in the aggregate, is
material.

      In addition, if so provided in the related prospectus supplement, the
master servicer will establish and maintain, in the name of the trustee on
behalf of the related securityholders, a capitalized account into which the
depositor will deposit cash from the proceeds of the issuance of the related
securities in an amount necessary to cover shortfalls in interest on the related
series of securities that may arise as a result of a portion of the assets of
the trust fund not being invested in loans and the utilization of the
pre-funding account as described above. The capitalized interest account shall
be maintained with the trustee for the related series of securities and is
designed solely to cover the above-mentioned interest shortfalls. Monies on
deposit in the capitalized interest account will not be available to cover
losses on or in respect of the related loans. Amounts on deposit in the
capitalized interest account will be distributed to securityholders on the
distribution dates occurring in the funding period to cover any shortfalls in
interest on the related series of securities as described in the related
prospectus supplement. Monies on deposit in the capitalized interest account may
be invested in permitted investments under the circumstances and in the manner
described in the related agreement. Earnings on and investment of funds in the
capitalized interest account will be deposited into the related security account
or any other trust account as specified in the related prospectus supplement or
released to the depositor or the master servicer or any other party and in the
manner specified in the related prospectus supplement. Losses on the investment
of funds in the capitalized interest account will be charged against the funds
on deposit in the capitalized interest account unless otherwise specified in the
related prospectus supplement. To the extent that the entire amount on deposit
in the capitalized interest account has not been applied to cover shortfalls in
interest on the related series of securities by the end of the funding period,
any amounts remaining in the capitalized interest account will be paid to the
depositor or the seller as specified in the related prospectus supplement.

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.


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      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:

          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;


                                       64



          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.

      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:


                                       65



          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

          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


                                       66



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 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


                                       67



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.

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.


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EVIDENCE AS TO COMPLIANCE

      The master servicer will be required to deliver to the depositor and the
trustee by not later than March 15th of each year, starting in the year
following the year of issuance of the related series of securities, an officer's
certificate stating that:

          o   a review of the activities of the master servicer during the
          preceding calendar year and of performance under the pooling and
          servicing agreement has been made under such officer's supervision;
          and

          o   to the best of such officer's knowledge, based on such review, the
          master servicer has fulfilled all of its obligations under the pooling
          and servicing agreement for such year, or, if there has been a default
          in the fulfillment of any such obligation, specifying each such
          default known to such officer and the nature and status of such
          default, including the steps being taken by the master servicer to
          remedy such default.

      In addition, on or prior to March 15th of each year, commencing with the
year following the year of issuance of the related series of securities , the
master servicer will be required to deliver to the depositor an Assessment of
Compliance that contains the following:

          o   a statement of the master servicer's responsibility for assessing
          compliance with the servicing criteria applicable to it;

          o   a statement that the master servicer used the criteria in Item
          1122(d) of Regulation AB (17 CFR 229.1122) to assess compliance with
          the applicable servicing criteria;

          o   the master servicer's assessment of compliance with the applicable
          servicing criteria during and as of the end of the prior calendar
          month, setting forth any material instance of noncompliance identified
          by the master servicer; and

          o   a statement that a registered public accounting firm has issued
          an attestation report on the master servicer's assessment of
          compliance with the applicable servicing criteria during and as of
          the end of the prior calendar month.

      The master servicer will also be required to simultaneously deliver an
attestation report of a registered public accounting firm, prepared in
accordance with the standards for attestation engagements issued or adopted by
the Public Company Accounting Oversight Board, that expresses an opinion, or
states that an opinion cannot be expressed, concerning the master servicer's
assessment of compliance with the applicable servicing criteria.

      In addition, the related prospectus supplement will identify each other
party performing a servicing function that will be required to provide either or
both of the above evidences of compliance. You will be able to obtain copies of
these statements and reports without charge upon written request to the trustee
at the address provided in the prospectus supplement.

MATTERS REGARDING A MASTER SERVICER AND THE DEPOSITOR

      For each series of certificates, the servicing of the related loans may be
provided, as specified in the prospectus supplement, either by the master
servicer directly, by one or more servicers under supervision by the master
servicer, or by a single servicer that is a party to the applicable agreement
for the series and services the loans directly or through one or more
subservicers. 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. In general,
descriptions of the rights and obligations of a master servicer in this
prospectus will also be applicable to any servicer.


                                       69



      If the master servicer services the loans through servicers, the master
servicer may or may not, as specified in the prospectus supplement, be
ultimately responsible for the performance of all servicing activities,
including those performed by the servicers, notwithstanding its delegation of
certain responsibilities to the servicers.

      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.

      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.

      In general, the only obligations of the depositor with respect to a series
of certificates will be to obtain representations and warranties from the
sponsor, the sellers and/or the originators regarding the assets to the
depositor for inclusion in the related trust fund. The depositor will also
establish the trust fund for each series of certificates and will assign to the
trustee for the related series the assets to be included in the related trust
fund and the depositor's


                                       70



rights with respect to those representations and warranties. The only ongoing
responsibilities of the depositor with respect to any series of certificates
will be, if necessary, to assure that it has fully transferred to the trust fund
its rights in the assets of the trust fund. The depositor will have no ongoing
servicing, administrative or enforcement obligations with respect to any trust
fund.

      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 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


                                       71



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:

          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;


                                       72



          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 obligations or duties, or as may arise
              from a breach of any representation, warranty or covenant of the
              trustee made in the related Agreement.


                                       73



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 and/or spread accounts, or any combination of the foregoing.
In addition, derivatives in the form of interest rate swap agreements, interest
rate caps, floors and collars, currency swap agreements, currency exchange
agreements or any combination of the foregoing may be used by the related trust
fund to alter the payment characteristics of the loans or other trust fund
assets. Credit support and derivatives will not provide protection against all
risks of loss or interest rate or currency movements, as applicable, and will
not guarantee repayment of the entire principal balance of the securities and
interest on those securities. If losses or other shortfalls occur which exceed
the amount covered by credit support or such derivatives or which are not
covered by the credit enhancement or such derivatives, securityholders will bear
their allocable share of any deficiencies.

      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.

      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:


                                       74



          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.


                                       75



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.

DERIVATIVE PRODUCTS

      If specified in the related prospectus supplement, a trust fund may
acquire the benefit of derivative products consisting of the agreements
described under "Description of the Trust Funds-Cash Flow Agreements and
Derivatives". For any series that includes derivative products, the particular
derivatives may provide support only to certain specified classes of securities
and will be subject to limitations and conditions, all of which will be
described in the prospectus supplement.

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.


                                       76



                         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


                                       77



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


                                       78



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


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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


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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


                                       81



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


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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


                                       83



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


                                       84



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


                                       85



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.


                                       86



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.


                                       87



                         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 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 LLP or Cadwalader,
Wickersham & Taft LLP or Latham & Watkins LLP will deliver its opinion that the
trust fund will not be classified as a publicly traded partnership, a taxable
mortgage pool or 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.


                                       88



      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


                                       89



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


                                       90



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. 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 an
election to amortize bond premium with respect to all debt


                                       91



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


                                       92



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 this 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


                                       93



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.


                                       94



      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


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          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. 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


                                       96



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.

      On January 23, 2006, the IRS issued final regulations effective January 1,
2007, affecting the information reporting obligations of trustees of
"widely-held mortgage trusts" (that is, any grantor trust in which any interests
are held by "middlemen", and whose assets are mortgages or regular interests in
a REMIC, amounts received thereon and reasonably required reserve funds) and of
"middlemen" (a term that includes, among other things, a custodian of a person's
account, a nominee and a broker holding an interest for a customer in a street
name).

      Under the final regulations, the trustee would be required to report to
the IRS with respect to each beneficial owner of a grantor trust fractional
interest certificate who is not an "exempt recipient" (a term that includes
corporations, trusts, securities dealers, middlemen and certain other
non-individuals) and do not hold such certificates through a middleman, the
gross income of the trust and, if any trust assets were disposed of, the portion
of the gross proceeds relating to the trust assets that are allocable to such
beneficial owner. The same requirements would be imposed on middlemen holding on
behalf of beneficial owners of grantor trust fractional interest certificates.

      The final regulations will also require that the trustee make available
information regarding interest income and information necessary to compute any
original issue discount to (i) exempt recipients (including middlemen) and
non-calendar year taxpayers, upon request, in accordance with the requirements
of the final regulations and (ii) beneficial owners of grantor trust fractional
interest certificates who do not hold such certificates through a middleman. The
information must be provided to parties specified in part (i) by the later of
thirty days after the end of the first quarter for which the information was
requested or two weeks after the receipt of the request. The information must be
provided to parties specified in part (ii) at a time no later than March 15 of
the following tax year.

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


                                       97



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 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:

          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 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.


                                       98



      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 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


                                       99



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
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.


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      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:

          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.


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      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;

          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


                                       102



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.

      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


                                       103



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.

      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


                                       104



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.

      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


                                       105



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 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.


                                       106



      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.

      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.


                                       107



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 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


                                       108



          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 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.


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      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 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


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          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
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


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"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 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:


                                       112



          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.

      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.


                                       113



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 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


                                       114



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
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


                                       115



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 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.


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      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 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


                                       117



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.

      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;


                                       118



          (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

          (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.


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          (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.

          (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


                                       120



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 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,


                                       121



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. ss. 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. ss. 1.5 concerning "safety and soundness" and retention of credit
information), certain "Type IV securities," defined in 12 C.F.R. ss. 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 "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. ss. 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. ss. 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. ss. 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.


                                       122



      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 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.

      As to any offering of securities, in addition to the plan of distribution
as described in the prospectus supplement and this prospectus, the distribution
of any class of the offered securities may be effected through one or more
resecuritization transactions, in accordance with Rule 190(b) under the
Securities Act of 1933.

      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


                                       123



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.

                                  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 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.


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                    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, New York, New York
10036, Attention: Steven S. Stern, 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.

      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, 100 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.


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                                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.


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      "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.


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      "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.


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      "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.


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