Filed Pursuant to Rule 424(b)5
                                                Registration File No: 333-112231

PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED JUNE 18, 2004)

                           $554,163,000 (APPROXIMATE)

                     MERRILL LYNCH MORTGAGE INVESTORS TRUST
                               MLMI SERIES 2005-A1
                       MORTGAGE PASS-THROUGH CERTIFICATES

                             WELLS FARGO BANK, N.A.
                                 MASTER SERVICER

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

--------------------------------------------------------------------------------
Consider carefully the risk factors beginning on page S-8 of this prospectus
supplement and Page 1 of the attached Prospectus.

The certificates will represent interests in a trust fund only and will not
represent an interest in, or an obligation of, the originators, the seller or
the depositor or any of their respective affiliates.
--------------------------------------------------------------------------------

Merrill Lynch Mortgage Investors Trust Series MLMI 2005-A1 will issue:

o    Four classes of senior certificates; and

o    Six classes of subordinate certificates and two classes of residual
     certificates.

     This prospectus supplement and the accompanying prospectus relate only to
the offering of certificates listed in the table on page S-1 under "Summary of
Prospectus Supplement--Offered Certificates" and not to the other classes of
certificates that will be issued by the trust fund as described in this
prospectus supplement.

     The assets of the trust fund will primarily consist of three groups of
conventional, adjustable rate, fully amortizing mortgage loans secured by first
liens on one- to four-family residential properties, generally all of which have
original terms to maturity of 30 years or less, and which have the additional
characteristics described in "Description of the Mortgage Pool" in this
prospectus supplement. The mortgage loans have adjustable interest rates after
an initial fixed rate period of three, five and seven years.

     The certificates offered by this prospectus supplement will be purchased by
Merrill Lynch, Pierce, Fenner & Smith Incorporated, as underwriter, from Merrill
Lynch Mortgage Investors, Inc., as depositor, and are being offered by the
underwriter from time to time for sale to the public in negotiated transactions
or otherwise at varying prices to be determined at the time of sale. The
underwriter has the right to reject any order. Proceeds to Merrill Lynch
Mortgage Investors, Inc. from the sale of these certificates will be
approximately 99.72% of their initial principal balance before deducting
expenses.

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

     On or about January 31, 2005, delivery of the certificates offered by this
prospectus supplement will be made through the book-entry facilities of The
Depository Trust Company, Clearstream Banking, societe anonyme and the Euroclear
System.

                            MERRILL LYNCH & CO. INC.
                                January 21, 2005



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

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

     IF THE TERMS OF YOUR CERTIFICATES AND ANY OTHER INFORMATION CONTAINED
HEREIN VARY BETWEEN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS,
YOU SHOULD RELY ON THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT.

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

     You can find a listing of the pages where capitalized terms used in this
prospectus supplement are defined under "Index of Defined Terms" beginning on
page S-103 in this prospectus supplement.

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

                       WHERE YOU CAN FIND MORE INFORMATION

     Federal securities law requires the filing of certain information with the
Securities and Exchange Commission (the "SEC"), including annual, quarterly and
special reports, proxy statements and other information. You can read and copy
these documents at the public reference facility maintained by the SEC at
Judiciary Plaza, 450 Fifth Street, NW, Room 1024, Washington, DC 20549. You can
also copy and inspect such reports, proxy statements and other information at
the following regional offices of the SEC:

             Woolworth Building             Chicago Regional Office
             233 Broadway                   Citicorp Center
             New York, New York  10279      500 West Madison Street, Suite 1400
                                            Chicago, Illinois  60661

     Please call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms. SEC filings are also available to the public on the SEC's web
site at http://www.sec.gov. The SEC allows us to "incorporate by reference" the
information we file with it, which means that we can disclose important
information to you by referring you to those documents. The information that we
incorporate by reference is considered to be part of this prospectus supplement,
and later information that we file with the SEC will automatically update and
supersede this information.

     This prospectus supplement and the accompanying prospectus are part of a
registration statement filed by the depositor with the SEC (Registration No.
333-112231). You may request a free copy of any of the above filings by writing
or calling:

                                       ii



                     MERRILL LYNCH MORTGAGE INVESTORS, INC.
                                250 VESEY STREET
                     FOUR WORLD FINANCIAL CENTER, 10TH FLOOR
                            NEW YORK, NEW YORK 10080
                                 (212) 449-0357

     You should rely only on the information provided in this prospectus
supplement or the accompanying prospectus or incorporated by reference herein.
We have not authorized anyone else to provide you with different information.
You should not assume that the information in this prospectus supplement or the
accompanying prospectus is accurate as of any date other than the date on the
cover page of this prospectus supplement or the accompanying prospectus or that
the information incorporated by reference herein is accurate as of any date
other than the date stated therein.

                                      iii




                                TABLE OF CONTENTS
                                       iv



RISK FACTORS...............................................S-8
   Prepayments Are Unpredictable and Affect Yield..........S-8
   Mortgage Loans with Interest-Only Payments..............S-9
   Limited Cross-Collateralization Between the
   Loan Groups.............................................S-9
   Limited Recourse.......................................S-10
   Potential Inadequacy of Credit Enhancement.............S-10
   Cash Flow Considerations and Risks.....................S-11
   Concentration of Mortgage Loans Could
   Adversely Affect Your Investment.......................S-11
   Ability to Resell Securities May Be Limited............S-11
   Consequences of Owning Book-Entry Securities...........S-12
   Delinquencies May Adversely Affect
   Investment.............................................S-12
   You Could Be Adversely Affected by Violations
   of Consumer Protection Laws............................S-12
   Bankruptcy and Insolvency Risks........................S-12
   Terrorist Attacks and Military Action..................S-13
DESCRIPTION OF THE MORTGAGE POOL..........................S-14
   General................................................S-14
   Tabular Characteristics of the Mortgage Pool...........S-17
   Tabular Characteristics of the Group II Mortgage
   Loans. ................................................S-31
   Tabular Characteristics of the Group III Mortgage
   Loans .................................................S-39
   The Indices............................................S-44
   Assignment of the Mortgage Loans.......................S-44
   The Originators........................................S-46
   Underwriting Guidelines................................S-47
DESCRIPTION OF THE CERTIFICATES...........................S-53
   General................................................S-53
   Book-Entry Certificates................................S-54
   Available Funds........................................S-59
   Distributions on the Certificates......................S-59
   Distributions of Interest..............................S-61
   Principal Distributions on the Senior Certificates.....S-63
   Principal Distributions on the SubordinaS-te
   Certificates...........................................S-66
   Allocation of Losses; Subordination....................S-68
   Final Scheduled Distribution Date......................S-71
   Optional Clean-Up Call of the Certificates.............S-71
   The Trustee............................................S-72
   Voting Rights..........................................S-72
SERVICING OF THE MORTGAGE LOANS...........................S-72
   General................................................S-72
   The Servicers..........................................S-72
   Servicing and Collection Procedures....................S-78
   Hazard Insurance.......................................S-79
   Realization Upon Defaulted Mortgage Loans..............S-80
   Servicing Compensation and Payment of
   Expenses...............................................S-80
   Protected Accounts.....................................S-81
   The Master Servicer Collection Account.................S-81
   Distribution Account...................................S-82
   Events of Default......................................S-82
   Monthly Advances.......................................S-83
YIELD ON THE CERTIFICATES.................................S-83
   Certain Shortfalls in Collections of Interest..........S-83
   General Prepayment Considerations......................S-84
   The Subordinate Certificates...........................S-85
   Weighted Average Lives.................................S-86
POOLING AND SERVICING AGREEMENT...........................S-96
   General................................................S-96
   The Securities Administrator...........................S-96
USE OF PROCEEDS...........................................S-97
FEDERAL INCOME TAX CONSEQUENCES...........................S-97
   General................................................S-97
   Taxation of Regular Interests..........................S-97
legal investment..........................................S-99
ERISA MATTERS.............................................S-99
METHOD OF DISTRIBUTION...................................S-101
LEGAL MATTERS............................................S-102
RATINGS..................................................S-102
INDEX OF DEFINED TERMS...................................S-103
ANNEX I GLOBAL CLEARANCE, SETTLEMENT
AND TAX DOCUMENTATION PROCEDURES...........................A-1
   Initial Settlement......................................A-1
   Secondary Market Trading................................A-1
   Certain U.S. Federal Income Tax Documentation
   Requirements............................................A-3

                                       iv




                        SUMMARY OF PROSPECTUS SUPPLEMENT

     This summary highlights selected information from this prospectus
supplement and does not contain all the information that you need to consider in
making your investment decision. Please read this entire prospectus supplement
and the accompanying prospectus carefully for additional information about the
offered certificates.


                              OFFERED CERTIFICATES

Merrill Lynch Mortgage Investors Trust Series MLMI 2005-A1 Mortgage Pass-Through
Certificates consist of the classes of certificates listed in the table below,
together with the Class B-1, Class B-2, Class B-3, Class R-I and Class R-II
Certificates. Only the classes of certificates listed in the table below are
being offered by this prospectus supplement:

              INITIAL CLASS           INTEREST
CLASS       CERTIFICATE BALANCE (1)     RATE        DESIGNATION       CUSIP
I-A            $ 142,530,000            (2)           Senior        59020U QC 2
II-A-1         $ 348,667,000            (3)        Super Senior     59020U QD 0
II-A-2         $  12,646,000            (3)       Senior Support    59020U QP 3
III-A          $  35,782,000            (4)           Senior        59020U QE 8
M-1            $   7,828,000            (5)         Subordinate     59020U QF 5
M-2            $   4,753,000            (5)         Subordinate     59020U QG 3
M-3            $   1,957,000            (5)         Subordinate     59020U QH 1

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

(1)  These balances are approximate and are subject to an increase or decrease
     of up to 5%, as described in this prospectus supplement.

(2)  Interest will accrue on the Class I-A Certificates based upon the weighted
     average of the net mortgage rates on the Group I mortgage loans as
     described in this prospectus supplement.

(3)  Interest will accrue on the Class II-A-1 Certificates and Class II-A-2
     Certificates based upon the weighted average of the net mortgage rates on
     the Group II mortgage loans as described in this prospectus supplement.

(4)  Interest will accrue on the Class III-A Certificates based upon the
     weighted average of the net mortgage rates on the Group III mortgage loans
     as described in this prospectus supplement.

(5)  Interest will accrue on the Class M-1, Class M-2 and Class M-3 Certificates
     based upon the weighted average of the net mortgage rates of each loan
     group, weighted in proportion to the results of subtracting from the
     aggregate stated principal balance of the mortgage loans of each loan
     group, the aggregate class certificate balance of the related senior
     certificates.


The certificates offered by this prospectus supplement will be issued in
book-entry form and in the minimum denominations (or multiples thereof) set
forth under "Description of the Certificates--General" in this prospectus
supplement.

The certificates represent ownership interests in a trust fund that will consist
primarily of three separate groups of mortgage loans. In addition to the classes
of certificates listed above, the trust fund will also issue the following five
classes of certificates that are not offered hereby: Class R-I, Class R-II,
Class B-1, Class B-2 and Class B-3 Certificates.

Generally, with certain limited exceptions discussed under the heading "Limited
Cross-Collateralization" below, distributions to the Class I-A Certificates will
be solely derived from collections on the Group I mortgage loans, distributions
to the Class II-A-1 Certificates and

                                      S-1



Class II-A-2 Certificates will be solely derived from collections on the Group
II mortgage loans and distributions to the Class III-A Certificates will be
solely derived from collections on the Group III mortgage loans. Aggregate
collections from all three groups of mortgage loans will be available to make
distributions on the subordinate certificates.

                                    THE TRUST

Merrill Lynch Mortgage Investors Trust Series MLMI 2005-A1 will be formed
pursuant to a pooling and servicing agreement among Merrill Lynch Mortgage
Investors, Inc., as depositor, Wells Fargo Bank, N.A., as master servicer and
securities administrator, and Wachovia Bank, National Association, as trustee.
The certificates solely represent beneficial ownership interests in the trust
fund created under the pooling and servicing agreement and not an interest in,
or the obligation of, the depositor or any other person.

                                   THE TRUSTEE

Wachovia Bank, National Association, a national banking association, will act as
trustee of the trust under the pooling and servicing agreement.

                                 THE ORIGINATORS

The mortgage loans were originated or acquired by National City Mortgage Co.,
Washington Mutual Bank, FA, First Republic Bank, ABN AMRO Mortgage Group, Inc.
or Countrywide Home Loans, Inc. as described under "Description of the Mortgage
Pool--The Originators" in this prospectus supplement.

We refer you to "Description of the Mortgage Pool--Underwriting Guidelines" in
this prospectus supplement for more information.

                                   THE SELLER

On the closing date, each originator will sell all of its respective interest in
the mortgage loans owned by it to Merrill Lynch Mortgage Lending, Inc., which
will immediately sell the mortgage loans to the depositor.

                                  THE DEPOSITOR

On the closing date, Merrill Lynch Mortgage Investors, Inc., a Delaware
corporation, will pledge all of its interest in the mortgage loans to the
trustee for the benefit of the certificateholders.

                               THE MASTER SERVICER

Wells Fargo Bank, N.A. will act as master servicer with respect to the mortgage
loans. The master servicer must advance delinquent payments of principal and
interest on the mortgage loans in the event that the servicer is required to and
fails to do so, subject to certain limitations.

We refer you to "Servicing of the Mortgage Loans--Monthly Advances" in this
prospectus supplement and "Description of the Securities--Advances in Respect of
Delinquencies" in the Prospectus.

                                  THE SERVICERS

Each of the mortgage loans from each originator will be serviced in accordance
with its respective servicing agreement. Each servicing agreement will be
assigned to the Depositor pursuant to its respective assignment, assumption and
recognition agreement to be executed on the Closing Date. The Depositor will
assign its interest in the servicing agreements to the trust fund pursuant to
the pooling and servicing agreement.

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

                          THE SECURITIES ADMINISTRATOR

Wells Fargo Bank, N.A., a national banking association.

                                  CUT-OFF DATE

January 1, 2005.

                                      S-2



                                DISTRIBUTION DATE

The 25th day of each month or, if such day is not a business day, the next
business day thereafter, commencing in February 2005. Distributions on each
distribution date will be made to certificateholders of record as of the related
record date, except that the final distribution on the certificates will be made
only upon presentment and surrender of the certificates at the corporate trust
office of the trustee.

                                   RECORD DATE

With respect to the certificates, the record date will be the last business day
of the month preceding the month of a distribution date (or the closing date, in
the case of the first distribution date).

                            DISTRIBUTIONS OF INTEREST

On each distribution date, to the extent funds are available from the related
loan group (or all three groups in the aggregate in the case of the subordinate
classes), each class of offered certificates will, subject to the limitations
described in the two succeeding paragraphs, be entitled to receive accrued and
unpaid interest determined on the basis of the outstanding class certificate
balance of such class immediately prior to such distribution date, the
applicable certificate interest rate for the applicable accrual period.

For each distribution date, the accrual period applicable to the certificates
will be the calendar month prior to the month in which such distribution date
occurs. Interest on all classes of certificates for all accrual periods will be
calculated and payable on the basis of a 360-day year consisting of twelve
30-day months.

Interest payments will be allocated among certificateholders of a class of
certificates on a pro rata basis.

We refer you to "Description of the Certificates--Distributions of Interest" in
this prospectus supplement for more information.

                           DISTRIBUTIONS OF PRINCIPAL

The amount of principal distributable on the offered certificates on any
distribution date will be determined by (1) formulas that allocate portions of
principal payments received on the mortgage loans among the different classes of
certificates and (2) the amount of funds actually received on the mortgage loans
and available to make distributions on the certificates. Funds actually received
on the mortgage loans may consist of scheduled payments and unscheduled payments
resulting from prepayments by borrowers, liquidation of defaulted mortgage loans
or repurchases of mortgage loans under the circumstances described in this
prospectus supplement.

Generally, the Class I-A, Class II-A-1, Class II-A-2 and Class III-A
Certificates will receive principal payments on each distribution date in an
amount equal to the "Senior Principal Distribution Amount" based on principal
collections from the related loan group for the related due period. Generally,
unless certain performance triggers are satisfied, the Class M-1, Class M-2 and
Class M-3 Certificates and the other subordinate certificates will not receive
principal prepayments until the distribution date in February 2012. From and
after that distribution date, provided that certain tests are met, the Class
M-1, Class M-2 and Class M-3 Certificates and the other subordinate certificates
will receive principal prepayments in an amount equal to their allocable share
of the "Subordinate Principal Distribution Amount" based on collections of
principal from all three loan groups for the related due period.

We refer you to "Description of the Certificates--Principal Distributions on the
Senior Certificates" in this prospectus supplement and "Description of the
Securities--Distributions of Principal of the Securities" in the accompanying
prospectus for more information.

                        FINAL SCHEDULED DISTRIBUTION DATE

The final scheduled distribution date for the offered certificates is the
distribution date in

                                      S-3



December 2034, which is the distribution date in the month after the scheduled
maturity date for the latest maturing mortgage loan.

                            PRIORITY OF DISTRIBUTIONS

To the extent of available funds, distributions on the certificates will be made
on each distribution date from available principal and interest collections
received in the related due period from the related loan group (in the case of
the senior certificates) and from all three loan groups in the aggregate (in the
case of the subordinate certificates) and other available funds, in the
following order of priority.

1. From the related loan group to accrued and unpaid interest at the related
certificate interest rate on the Class I-A, Class II-A-1, Class II-A-2 and Class
III-A Certificates.

2. Concurrently, to the senior certificates from principal collections received
in the related due period from the related loan group as follows:

a) to principal of the Class I-A Certificates, until the aggregate principal
balance of such class has been reduced to zero;

b) to principal of the Class II-A-1 Certificates and Class II-A-2 Certificates,
pro rata, in each case until the aggregate principal balances of such classes
have been reduced to zero; and

c) to principal of the Class III-A Certificates, until the aggregate principal
balance of such class has been reduced to zero.

3. From aggregate interest and principal collections received in the related due
period from the loan groups (after giving effect to distributions in 1 and 2
above), first, to accrued and unpaid interest on the Class M-1, Class M-2 and
Class M-3 Certificates, sequentially, in that order and second, to principal of
the Class M-1, Class M-2 and Class M-3 Certificates, sequentially, in that
order.

4. From aggregate interest and principal collections received in the related due
period from the loan groups (after giving effect to distributions in 1 through 3
above), to accrued and unpaid interest on, and principal of, the Class B-1,
Class B-2, and Class B-3 Certificates, sequentially, in that order.

5. To the Class R-I Certificates and Class R-II Certificates, any remaining
amount.

We refer you to "Description of the Certificates--Distributions on the
Certificates" and "--Allocation of Losses; Subordination" in this prospectus
supplement for more information.

                         LIMITED CROSS-COLLATERALIZATION

In certain very limited circumstances relating to a group's experiencing either
rapid prepayments or disproportionately high realized losses, principal and
interest collected from one of the other groups may be applied to pay principal
or interest, or both, to the senior certificates of the group experiencing such
conditions.

We refer you to "Risk Factors --Limited Cross-Collateralization Between Loan
Groups" and "Description of the Certificates--Distributions on the Certificates"
in this prospectus supplement for more information.

                             OPTIONAL CLEAN-UP CALL

On any distribution date on or after the distribution date on which the
aggregate outstanding principal balance of the mortgage loans is equal to 10% or
less of the aggregate principal balance of the mortgage loans as of the cut-off
date, the master servicer will have the option to purchase all of the mortgage
loans and apply the proceeds to redeem the certificates at a price equal to 100%
of the unpaid principal balance of the certificates, plus accrued and unpaid
interest thereon.

We refer you to "Description of the Certificates--Optional Clean-Up Call of the
Certificates" in this prospectus supplement for more information.

                                      S-4



                               CREDIT ENHANCEMENT

Subordination. The subordinate certificates will provide credit enhancement for
the senior certificates. In addition, the Class M-1 Certificates will have a
payment priority over the Class M-2, Class M-3, Class B-1, Class B-2 and Class
B-3 Certificates; the Class M-2 Certificates will have a payment priority over
the Class M-3, Class B-1, Class B-2 and Class B-3 Certificates; and the Class
M-3 Certificates will have a payment priority over the Class B-1, Class B-2 and
Class B-3 Certificates.

If the mortgage loans in a group experience losses, then the principal amount of
the subordinate class of certificates that is lowest in seniority and still
outstanding will be reduced by the amount of those losses until the total
outstanding principal balance of such class equals zero.

If a loss has been allocated to reduce the principal amount of your class of
certificates, you will receive no payment in respect of that reduction. If the
applicable subordination of the subordinate certificates is insufficient to
absorb losses in a loan group, then the related senior certificates will be
allocated such losses and may never receive all of their principal payments;
provided, however, that any portion of any realized loss that would otherwise be
allocated to the Class II-A-1 Certificates will instead be allocated first to
the Class II-A-2 Certificates until the class certificate balance thereof has
been reduced to zero, as described in this prospectus supplement.

We refer you to "Description of the Certificates--Priority of Distributions" and
"--Allocation of Realized Losses" in this prospectus supplement for more
information.

                               THE MORTGAGE LOANS

Statistical Information. The statistical information on the mortgage loans
presented in this prospectus supplement is based on the principal balance of
such mortgage loans as of the cut-off date. Such information does not take into
account defaults, delinquencies and prepayments that may have occurred with
respect to the mortgage loans since such date. As a result, the statistical
distribution of the characteristics in the final mortgage pool as of the closing
date will vary from the statistical distribution of such characteristics as
presented in this prospectus supplement, although such variance will not be
material.

General. On the cut-off date, the assets of the trust fund consisted of 1,258
mortgage loans with a total principal balance of approximately $559,198,793. The
mortgage loans consist of adjustable rate, conventional, fully amortizing, first
lien residential mortgage loans, all of which have an original term to stated
maturity of 30 years.

Group I Characteristics. As of the cut-off date, Group I consisted of 345
mortgage loans having a total principal balance of approximately $147,700,356
(or approximately 26.41% of the aggregate cut-off date balance of the mortgage
loans). The mortgage interest rates of the Group I mortgage loans adjust based
on the one-year LIBOR index or one-year U.S. Treasury index.

Group II Characteristics. As of the cut-off date, Group II consisted of 829
mortgage loans having a total principal balance of approximately $374,417,733
(or approximately 66.96% of the aggregate cut-off date balance of the mortgage
loans). The mortgage interest rates of the Group II mortgage loans adjust based
on the one-month LIBOR index, one-year LIBOR index or one-year U.S. Treasury
index.

Group III Characteristics. As of the cut-off date, Group III consisted of 84
mortgage loans having a total principal balance of approximately $37,080,703 (or
approximately 6.63% of the aggregate cut-off date balance of the mortgage
loans). The mortgage interest rates of the Group III mortgage loans adjust based
on the one-year LIBOR index or one-year U.S. Treasury index.

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

                                      S-5



Summary of Statistical Data. The following table summarizes the characteristics
of the mortgage loans in the aggregate and by group as of the cut-off date.
Tabular information concerning the characteristics of the mortgage loans in each
loan group as of the cut-off date can be found at "Description of the Mortgage
Pool--Tabular Characteristics of the Mortgage Loans" in this prospectus
supplement.

Aggregate Outstanding Principal:...
Balance:...........................       $559,198,793
Group I:...........................       $147,700,356
Group II:..........................       $374,417,733
Group III:.........................        $37,080,703

Aggregate Number of Mortgage Loans:              1,258
Group I:...........................                345
Group II:..........................                829
Group III:.........................                 84

Aggregate Average Current Balance:.           $444,514
Group I:...........................           $428,117
Group II:..........................           $451,650
Group III:.........................           $441,437

Aggregate Weighted Average Mortgage
Interest Rate:.....................             4.900%
Group I:...........................             4.628%
Group II:..........................             4.945%
Group III:.........................             5.532%

Aggregate Weighted Average Gross
Margin:............................             2.445%
Group I:...........................             2.538%
Group II:..........................             2.427%
Group III:.........................             2.253%

Aggregate Weighted Average Original
Term to Maturity (months):.........                360
Group I:...........................                360
Group II:..........................                360
Group III:.........................                360

Aggregate Weighted Average Remaining
Term to Maturity (months):.........               354
Group I:...........................               354
Group II:..........................               354
Group III:.........................               354

                         SERVICING OF THE MORTGAGE LOANS

Each servicer is generally obligated to make monthly advances of cash to the
master servicer (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 mortgage loans on the immediately
preceding determination date. Each servicer will be entitled to reimburse itself
for any such advances from future payments and collections (including insurance
or liquidation proceeds) with respect to the mortgage loans. However, if a
servicer makes advances which are nonrecoverable from future payments and
collections on the related mortgage loan, such servicer will be entitled to
reimbursement for such advances prior to any distributions to
certificateholders. In the event that a servicer fails to remit any required
advance in the amount of time specified by the related servicing agreement, the
master servicer is obligated to advance such amounts to the extent provided in
the agreement.

Each servicer will also make interest payments to the master servicer to
compensate in part for any shortfall in interest payments on the certificates
which results from a mortgagor prepaying a mortgage loan in full. In addition,
some servicers may be required to make interest payments to the master servicer
to compensate in part for shortfalls in interest payments on the certificates
which result from a mortgagor prepaying a mortgage loan in part. However, the
amount of such payments will generally not exceed the servicing fees payable to
the servicer for the related due period. The master servicer will be obligated
to make such interest payments in the event that the related servicer is
required to and fails to do so.

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

                         FEDERAL INCOME TAX CONSEQUENCES

The trustee will elect to treat all or a part of the assets of the trust fund as
comprising two REMICs in a tiered structure for federal income tax purposes.
Each of the certificates, other than the Class R-I Certificates and Class R-II
Certificates, will represent ownership of one or more "regular interests" in
REMIC II. The Class R-I Certificates will represent the sole class of "residual
interest" in REMIC I and the Class R-II Certificates will represent the sole
class of "residual interest" in REMIC II.

                                      S-6



We refer you to "Federal Income Tax Consequences" in this prospectus supplement
and in the prospectus for more information.

                                  ERISA MATTERS

Subject to important considerations described under "ERISA Matters" in this
prospectus supplement and under "ERISA Considerations" in the accompanying
prospectus, the offered certificates will be eligible for purchase by persons
investing assets of employee benefit plans or individual retirement accounts.

We refer you to "ERISA Matters" in this prospectus supplement and "ERISA
Considerations" in the accompanying prospectus for more information.

                                LEGAL INVESTMENT

Generally, the Class I-A, Class II-A-1, Class II-A-2, Class III-A and Class M-1
Certificates will constitute "mortgage related securities" for purposes of the
Secondary Mortgage Market Enhancement Act of 1984.

There are other restrictions on the ability of certain types of investors to
purchase the certificates that prospective investors should consider.

We refer you to "Legal Investment" in the prospectus for more information.

                           RATING OF THE CERTIFICATES

The certificates offered by this prospectus supplement will initially have the
following ratings from Fitch Ratings and Standard & Poor's, a division of The
McGraw-Hill Companies, Inc.

    CLASS      FITCH RATING     S&P RATING
     I-A            AAA            AAA
   II-A-1           AAA            AAA
   II-A-2           AAA            AAA
    III-A           AAA            AAA
     M-1            AA              AA
     M-2             A              A
     M-3            BBB            BBB


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

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

We refer you to "Ratings" in this prospectus supplement for a more complete
discussion of the certificate ratings.

                                      S-7



                                  RISK FACTORS

     Investors should consider the following factors in connection with the
purchase of certificates. You should also consider the risk factors described in
the accompanying prospectus. All statistical information referred to in this
section is based on the loan groups as constituted on the cut-off date.

PREPAYMENTS ARE UNPREDICTABLE AND AFFECT YIELD

     The rate of principal distributions on the certificates will be directly
related to the rate of principal payments on the mortgage loans in the related
loan group, in the case of the senior certificates, or the combined loan groups,
in the case of the subordinate certificates. 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 the servicers; and

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

     In addition to the rate of principal payments on the mortgage loans, the
yield to maturity of the certificates will also be affected by the exercise of
the optional redemption rights.

     Approximately 87.51% of the mortgage loans may be prepaid in whole or in
part at any time without payment of a prepayment penalty. The rate of principal
payments on mortgage loans is influenced by a wide variety of economic,
geographic, social and other factors, including general economic conditions, the
level of prevailing interest rates, the availability of alternative financing
and homeowner maturity. For example, if interest rates for similar loans fall
below the interest rates on the mortgage loans, the rate of prepayment would
generally be expected to increase. Conversely, if interest rates on similar
loans rise above the interest rates on the mortgage loans, the rate of
prepayment would generally be expected to decrease. We cannot predict the rate
at which borrowers will repay their mortgage loans. Please consider the
following:

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

     o   If you are purchasing any offered certificate at a premium, your yield
         may be lower than expected if principal payments on the related
         mortgage loans occur at a faster rate than you expected, and you could
         lose your initial investment;

     o   If the rate of default and the amount of losses on the related 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

                                      S-8



         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 will have the effect of accelerating the rate of principal
         payments to holders of the classes of senior certificates relative to
         the classes of subordinate certificates.

     We refer you to "Yield on the Certificates" and "Description of the
Certificates--Principal Distributions on the Senior Certificates" in this
prospectus supplement for a description of the factors that may influence the
rate and timing of prepayments on the mortgage loans.

MORTGAGE LOANS WITH INTEREST-ONLY PAYMENTS

     Approximately 37.49%, 81.33% and 62.51% of the Group I, Group II and Group
III Mortgage Loans, respectively, provide for payment of interest at the related
mortgage rate, but no scheduled payment of principal, for a period of three,
five, seven or ten years, following the origination of the related mortgage
loans. Following the applicable interest-only period, the monthly payment with
respect to the mortgage loans will be increased to an amount sufficient to
amortize the principal balance of the mortgage loan over its remaining term, and
to pay interest at the related mortgage interest rate.

     Such interest-only mortgage loans will, absent other considerations, result
in longer weighted average lives of the certificates when compared to
certificates backed by fully amortizing mortgage loans. If you purchase a
certificate at a discount, you should consider that the extension of its
weighted average life could result in a lower yield than would be the case if
such mortgage loans provided for payment of principal and interest on every
distribution date. In addition, a borrower may view the absence of any
obligation to make a payment of principal during the first three, five, seven or
ten years of the term of the mortgage loan as a disincentive to prepayment.

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

     We refer you to "Description of the Mortgage Pool" in this prospectus
supplement.

LIMITED CROSS-COLLATERALIZATION BETWEEN THE LOAN GROUPS

     With limited exceptions described in "Description of the
Certificates--Distributions on the Certificates" in this prospectus supplement,
interest and principal on the senior certificates will solely be payable out of
amounts collected in respect of the mortgage loans in the related loan group. In
the case of the senior certificates, the loan groups will generally not be
"cross-collateralized"--interest and principal collections received from the
mortgage loans in a group will only be available for distribution to the related
certificates and not to the unrelated senior certificates. For example,
collections from Group I will generally only be available to make distributions
to the Class I-A Certificates, but not to the Class II-A-1, Class II-A-2 or
Class III-A Certificates. On the other hand, the applicable subordinate
percentage of collections from each loan group will be available to make
distributions to the subordinate certificates.

     Because the subordinate certificates represent interests in all three loan
groups, the class certificate balance of the subordinate certificates could be
reduced to zero as a result of realized losses on the mortgage loans in any of
the groups. Therefore, the allocation of realized losses on the mortgage loans
in any one group to the subordinate certificates will reduce the subordination
provided by the subordinate certificates to all of the senior certificates,
including the senior certificates related to the loan groups that


                                      S-9


did not suffer any losses. This will increase the likelihood that future
realized losses may be allocated to the senior certificates related to the loan
groups that did not suffer those previous losses.

     We refer you to "Description of the Certificates--Distributions on the
Certificates" in this prospectus supplement.

LIMITED RECOURSE

     Neither the certificates nor the assets of the trust fund will be
guaranteed by the depositor, any originator, the seller, the master servicer,
the securities administrator, any servicer, the trustee or any of their
respective affiliates or insured by any governmental agency. Consequently, if
collections on the mortgage loans are insufficient to make all payments required
on the certificates and the protection against losses provided by subordination
is exhausted, you may incur a loss on your investment.

POTENTIAL INADEQUACY OF CREDIT ENHANCEMENT

     The certificates are not insured by any financial guaranty insurance
policy. The subordination and loss allocation features described in this
prospectus supplement are intended to enhance the likelihood that holders of
more senior classes of certificates will receive regular payments of interest
and principal, but are limited in nature and may be insufficient to cover all
losses on the mortgage loans.

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

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

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

     o   after the total class certificate balance of the subordinate
         certificates has been reduced to zero, losses realized on the mortgage
         loans in a loan group will reduce the class certificate balances of the
         related senior certificates; provided, however, that any portion of any
         Realized Loss that would otherwise be allocated to the Class II-A-1
         Certificates will instead be allocated first to the Class II-A-2
         Certificates until the class certificate balance thereof has been
         reduced to zero.

     Until the distribution date in February 2012, all principal prepayments on
the mortgage loans will be distributed to the related senior certificates
entitled to principal unless either (a) if such distribution date occurs on or
after February 2008, and the amount of subordination provided by the subordinate

                                      S-10


certificates to the senior certificates is at least twice the amount as of the
cut-off date, and certain loss and delinquency tests are satisfied, or (b) the
principal balance of such senior certificates has been reduced to zero. As a
result, your subordinate certificate will be outstanding longer than would be
the case if principal were distributed on a proportionate basis among the senior
certificates and the subordinate certificates. Because your subordinate
certificate is outstanding longer, there is a greater period of time during
which losses on the mortgage loans will affect your subordinate certificate.
Therefore the risk that you will lose all or part of the money you paid for the
certificate also increases.

     We refer you to "Description of the Certificates--Distributions on the
Certificates" and "--Allocation of Losses; Subordination" in this prospectus
supplement.

CASH FLOW CONSIDERATIONS AND RISKS

     The related mortgage loans, the related mortgaged property and other assets
of the trust fund are the sole source of payments on the certificates. Even if
the mortgaged properties provide adequate security for the mortgage loans, you
could encounter substantial delays in connection with the liquidation of
mortgage loans that are delinquent. This could result in shortfalls in payments
on the certificates if the credit enhancement provided by subordination is
insufficient. Further, liquidation expenses, such as legal fees, real estate
taxes and maintenance and preservation expenses, will reduce the security for
the related mortgage loans and could thereby reduce the proceeds payable to
certificateholders. If any of the mortgaged properties fail to provide adequate
security for the related mortgage loans, certificateholders could experience a
loss if the credit enhancement created by the subordination has been exhausted.

CONCENTRATION OF MORTGAGE LOANS COULD ADVERSELY AFFECT YOUR INVESTMENT

     Mortgaged Properties located in the state of California secure
approximately 48.00%, 52.35% and 24.16% of the Group I, Group II and Group III
mortgage loans, respectively, and 49.33% in the aggregate, in each case by
aggregate principal balance as of the Cut-off Date. Mortgaged Properties located
in the state of Virginia secure approximately 4.35%, 9.72% and 13.16% of the
Group I, Group II and Group III mortgage loans, respectively, and 8.53% in the
aggregate, in each case by aggregate principal balance as of the Cut-off Date.
Mortgaged Properties located in the state of Maryland secure approximately
2.96%, 6.48% and 10.19% of the Group I, Group II and Group III mortgage loans,
respectively, and 5.80% in the aggregate, in each case by aggregate principal
balance as of the Cut-off Date. Consequently, losses and prepayments on the
mortgage loans in a particular group and the resultant payments on the related
certificates may be affected significantly by changes in the housing markets and
the regional economies in these states and by the occurrence of natural
disasters, such as earthquakes, hurricanes, tornadoes, mud slides, fires and
floods, in these states.

     The depositor has no way of determining the occurrence or extent of any
such damage or destruction to the related mortgaged properties, which if not
covered by standard hazard insurance policies could result in realized losses.
To the extent any such damage or destruction to the mortgaged properties is
covered by insurance proceeds, any such proceeds used to prepay the related
underlying mortgage loan would result in accelerated payments of principal on
the offered certificates which may reduce the weighted average lives of the
offered certificates and could reduce their yield to the extent they are
purchased at a premium.

     We refer you to "Description of the Mortgage Pool--Tabular Characteristics
of the Mortgage Loans" in this prospectus supplement.

ABILITY TO RESELL SECURITIES MAY BE LIMITED

     There is currently no market for any of the certificates and the
underwriter is not required to assist investors in resales of the offered
certificates, although they may do so. We cannot assure you that


                                      S-11


a secondary market will develop, or if it does develop, that it will continue to
exist for the term of the certificates. Consequently, you may not be able to
sell your certificates readily or at prices that will enable you to realize your
desired yield. The market values of the certificates are likely to fluctuate;
these fluctuations may be significant and could result in significant losses to
you.

     The secondary market for mortgage pass-through certificates has experienced
periods of illiquidity and can be expected to do so in the future. Illiquidity
can have a severe adverse effect on the prices of certificates that are
especially sensitive to prepayment, credit or interest rate risk, or that have
been structured to meet the investment requirements of limited categories of
investors.

CONSEQUENCES OF OWNING BOOK-ENTRY SECURITIES

     Limit on Liquidity of Securities. Issuance of the certificates in
book-entry form may reduce their liquidity in the secondary trading market
because investors may be unwilling to purchase certificates for which they
cannot obtain physical certificates.

     Limit on Ability to Transfer or Pledge. Since transactions in the
book-entry certificates can be effected only through The Depository Trust
Company, participating organizations, indirect participants and certain banks,
your ability to transfer or pledge a book-entry certificate to persons or
entities that do not participate in The Depository Trust Company system or
otherwise to take actions in respect of such certificates, may be limited due to
lack of physical certificates.

     Delays in Payments. You may experience some delay in the receipt of
payments on book-entry certificates because the payment will be forwarded by the
Trustee to The Depository Trust Company for The Depository Trust Company to
credit the accounts of its participants, which will thereafter credit them to
your account either directly or indirectly through indirect participants, as
applicable.

DELINQUENCIES MAY ADVERSELY AFFECT INVESTMENT

     The mortgage loans were either originated or acquired generally in
accordance with the underwriting guidelines described in this prospectus
supplement. We cannot assure you that the values of the mortgaged properties
have remained or will remain at levels in effect on the date of origination of
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, federal, state and local 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 related servicer 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
servicer to damages and administrative enforcement.

     We refer you to "Certain Legal Aspects of the Mortgage Loans" in the
accompanying prospectus.

BANKRUPTCY AND INSOLVENCY RISKS

     It is believed that the transfer of the mortgage loans from the seller to
the depositor will be treated as a sale rather than a secured financing for
purposes of state law. Counsel for the seller will render an opinion on the
closing date that in the event of the bankruptcy of the seller, the mortgage
loans and other assets of the trust fund would not be considered part of the
seller's bankruptcy estate and, thus, would not be available to its creditors.
On the other hand, a bankruptcy trustee or one of the creditors of the seller

                                      S-12


might challenge this conclusion and argue that the transfer of the mortgage
loans should be characterized as a pledge of assets in a secured borrowing
rather than as a sale. Such an attempt, even if unsuccessful, might result in
delays in distributions on the certificates.

TERRORIST ATTACKS AND MILITARY ACTION

     The Servicemembers Civil Relief Act, formerly known as the Soldiers' and
Sailors' Civil Relief Act of 1940 ("Relief Act") and comparable state
legislation provide relief to mortgagors who enter active military service and
to mortgagors in reserve status who are called to active duty after the
origination of their mortgage loans. Certain state laws provide relief similar
to that of the Relief Act and may permit the mortgagor to delay or forego
certain interest and principal payments. The response of the United States to
the terrorist attacks on September 11, 2001 and to the current situation in Iraq
has involved military operations that have placed a substantial number of
citizens on active duty status, including persons in reserve status or in the
National Guard who have been called or will be called to active duty. 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. The Relief Act provides
generally that a mortgagor who is covered by the Relief Act may not be charged
interest on a mortgage loan in excess of 6% per annum during the period of the
mortgagor's active duty. These shortfalls are not required to be paid by the
mortgagor at any future time. The related servicer is not required to advance
these shortfalls as delinquent payments and such shortfalls are not covered by
any form of credit enhancement on the certificates. Shortfalls on the mortgage
loans due to the application of the Relief Act or similar state legislation or
regulations will reduce the amount of collections available for distribution on
the certificates.

     The Relief Act also limits the ability of the servicers to foreclose on a
mortgage loan during the mortgagor's period of active duty and, in some cases,
during an additional three-month period thereafter. As a result, there may be
delays in payment and increased losses on the mortgage loans. Those delays and
increased losses will be borne primarily by the outstanding class of
certificates with the lowest payment priority.

     The seller does not know how many mortgage loans have been or may be
affected by the application of the Relief Act or any similar state legislation.

     We refer you to "Certain Legal Aspects of Mortgage Loans--Relief Act" in
the accompanying prospectus.

                                      S-13


                        DESCRIPTION OF THE MORTGAGE POOL

GENERAL

     The following is a summary description of the Mortgage Loans in the Loan
Groups as of January 1, 2005 (the "Cut-off Date"). The information presented in
this prospectus supplement does not take into account any Mortgage Loans that
have been or may be prepaid in full or have been or may be removed because of
incomplete documentation or otherwise from 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 Loan Groups as of the
Closing Date.

     Whenever reference is made in this prospectus supplement to a percentage of
some or all of the Mortgage Loans or some or all of a Loan Group, such
percentage is determined on the basis of the Stated Principal Balance of the
Mortgage Loans in the aggregate or of a particular Loan Group as of the Cut-off
Date.

     As of the Cut-off Date, the assets of the Trust Fund consisted of three
groups ("Group I," "Group II," and "Group III" respectively, and each, a "Loan
Group") of 1,258 conventional, adjustable rate mortgage loans (the "Mortgage
Loans") secured by first liens on one- to four-family residential properties,
including condominiums and co-op loans (each, a "Mortgaged Property"), all of
which have original terms to maturity of 30 years or less, having an aggregate
Stated Principal Balance as of the Cut-off Date of approximately $559,198,793
(the "Aggregate Cut-off Date Balance"). Approximately 68.50% of the Mortgage
Loans provide for payment of interest at the related Mortgage Rate, but no
payment of principal, for a period of three, five, seven or ten years following
the origination of the related Mortgage Loan. Following the three, five, seven
or ten-year interest-only period, the Scheduled Payment with respect to each
such Mortgage Loan will be increased to an amount sufficient to amortize the
principal balance of such Mortgage Loan over its remaining term, and to pay
interest at the related Mortgage Rate.

     As described herein at "Description of the Certificates--General," the
Mortgage Loans have been segregated into Group I, Group II and Group III for the
purpose of allocating distributions among the Senior Certificates. Each Loan
Group has the characteristics described below.

     Group I consists of 345 Mortgage Loans (the "Group I Mortgage Loans")
having a Cut-off Date balance of approximately $147,700,356 (approximately
26.41% of the Aggregate Cut-off Date Balance). Approximately 42.30% of the Group
I Mortgage Loans are one-year LIBOR indexed and approximately 57.70% of the
Group I Mortgage Loans are one-year U.S. Treasury indexed. As of the Cut-off
Date, with respect to the Mortgage Loans in Group I, the weighted average
Mortgage Rate was approximately 4.628% per annum, the weighted average margin
was approximately 2.538% per annum, the weighted average remaining term to
maturity was approximately 354 months, and the weighted average interest-only
remaining term was approximately 32 months.

     Group II consists of 829 Mortgage Loans (the "Group II Mortgage Loans")
having a Cut-off Date balance of approximately $374,417,733 (approximately
66.96% of the Aggregate Cut-off Date Balance). Approximately 0.74% of the Group
II Mortgage Loans are one-month LIBOR indexed, approximately 51.72% of the Group
II Mortgage Loans are one-year LIBOR indexed and approximately 47.54% of the
Group II Mortgage Loans are one-year U.S. Treasury indexed. As of the Cut-off
Date, with respect to the Mortgage Loans in Group II, the weighted average
Mortgage Rate was approximately 4.945% per annum, the weighted average margin
was approximately 2.427% per annum, the weighted average remaining term to
maturity was approximately 354 months, and the weighted average interest-only
remaining term was approximately 70 months.

                                      S-14


     Group III consists of 84 Mortgage Loans (the "Group III Mortgage Loans")
having a Cut-off Date balance of approximately $37,080,703 (approximately 6.63%
of the Aggregate Cut-off Date Balance). Approximately 99.41% of the Group III
Mortgage Loans are one-year LIBOR indexed and approximately 0.59% of the Group
III Mortgage Loans are one-year Treasury indexed. As of the Cut-off Date, with
respect to the Mortgage Loans in Group III, the weighted average Mortgage Rate
was approximately 5.532% per annum, the weighted average margin was
approximately 2.253% per annum, the weighted average remaining term to maturity
was approximately 354 months, and the weighted average interest-only remaining
term was approximately 79 months.

     The Mortgage Loans are secured by mortgages or deeds of trust or other
similar security instruments creating first liens on one- to four-family
residential properties consisting of detached or semi-detached one- to
four-family dwelling units, individual condominium and cooperative units and
individual units in planned unit developments. On the Closing Date, the Mortgage
Loans to be included in the Loan Group will be acquired by the Depositor from
Merrill Lynch Mortgage Lending, Inc. (the "Seller"), an affiliate of the
Depositor. Approximately 41.87% the Group I Mortgage Loans, approximately 51.43%
of the Group II Mortgage Loans and approximately 98.50% of the Group III
Mortgage Loans, and approximately 52.03% of the Mortgage Loans in the aggregate,
were previously acquired by the Seller from National City Mortgage Co.
("National City"). None of the Group I Mortgage Loans, approximately 24.40% of
the Group II Mortgage Loans and none of the Group III Mortgage Loans, and
approximately 16.33% of the Mortgage Loans in the aggregate, were previously
acquired by the Seller from First Republic Bank ("First Republic"). None of the
Group I Mortgage Loans, approximately 24.17% of the Group II Mortgage Loans and
none of the Group III Mortgage Loans, and approximately 16.18% of the Mortgage
Loans in the aggregate, were previously acquired by the Seller from Washington
Mutual Bank, FA ("Washington Mutual"). Approximately 57.34% the Group I Mortgage
Loans, none of the Group II Mortgage Loans and none of the Group III Mortgage
Loans, and approximately 15.15% of the Mortgage Loans in the aggregate, were
previously acquired by the Seller from ABN AMRO Mortgage Group, Inc. ("ABN
AMRO"). Approximately 0.78% of the Group I Mortgage Loans, none of the Group II
Mortgage Loans and approximately 1.50% of the Group III Mortgage Loans, and
approximately 0.31% of the Mortgage Loans in the aggregate, were previously
acquired by the Seller from Countrywide Home Loans Inc. ("Countrywide"). We
refer you to "--Underwriting Guidelines" in this prospectus supplement. The
rights with respect to the representations and warranties made by the Seller
with respect to the Mortgage Loans will be assigned to the Trust Fund.

     Substantially all of the Mortgage Loans have scheduled monthly payments due
on the first day of the month (with respect to each Mortgage Loan, a "Due
Date"). All of the Mortgage Loans are assumable upon transfer or sale of the
Mortgaged Property.

     After an initial fixed rate period of three, five or seven years (the
"Initial Period"), each Group I Mortgage Loan, Group II Mortgage Loan or Group
III Mortgage Loan, respectively, provides for annual adjustment to the interest
rate specified in the mortgage note for the related Mortgage Loan (the "Mortgage
Rate") and for corresponding adjustments to the monthly payment amount due
thereon, in each case on each adjustment date applicable thereto (each such
date, an "Adjustment Date"). On each Adjustment Date, the Mortgage Rate thereon
will be adjusted to equal the sum, rounded to the nearest multiple of 0.125%, of
the related index (the "Index") and a fixed percentage amount (the "Gross
Margin"); provided, however, that the Mortgage Rate on each such Mortgage Loan
generally will not increase or decrease by more than 2.00% per annum on any
related Adjustment Date other than on the first Adjustment Date (the "Periodic
Rate Cap") and will not exceed a specified maximum Mortgage Rate over the life
of such Mortgage Loan (the "Maximum Mortgage Rate") or be less than a specified
minimum Mortgage Rate over the life of such Mortgage Loan (the "Minimum Mortgage
Rate"). Effective with the first monthly payment due on each Adjustable Rate
Mortgage Loan after each related Adjustment Date, the monthly payment amount
will be adjusted to an amount that will amortize fully the outstanding principal
balance of the related Mortgage Loan over its remaining term, and pay interest
at the Mortgage Rate as so adjusted.

                                      S-15


     Approximately 8.89% of the Mortgage Loans were originated as stated income
loans. We refer you to "--Underwriting Guidelines" below.

     Approximately 1.21% of the Mortgage Loans permit the related mortgagor to
convert the adjustable Mortgage Rate thereon to a fixed Mortgage Rate.

     Substantially all of the Mortgage Loans with an original Loan-to-Value
Ratio greater than 80.00% are covered by a primary mortgage insurance policy.
Certain general information with respect to the Mortgage Loans is set forth
below. Prior to the Closing Date, Mortgage Loans may be removed from the Trust
Fund and other mortgage loans may be substituted therefor. The Depositor
believes that the information set forth herein with respect to the Mortgage
Loans as presently constituted is representative of the characteristics of the
Mortgage Loans as they will be constituted at the Closing Date, although the
numerical data and certain other characteristics of the Mortgage Loans described
herein may vary within a range of plus or minus 10%.

     The Mortgage Loans were originated from October 2002 through October 2004.
No more than approximately 1.07% of the Mortgage Loans are secured by Mortgaged
Properties located in any one zip code area. The latest stated maturity date of
any Mortgage Loan is in November 2034.

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

     As of the Cut-off Date, the weighted average Mortgage Rate of the Mortgage
Loans was approximately 4.900% per annum, the weighted average margin was
approximately 2.445% per annum, the weighted average remaining term to maturity
was approximately 354 months, and the weighted average interest-only remaining
term was approximately 65 months.

     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" table 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 creditworthiness. Credit scores are generated by models developed by
a third party which analyzed data on consumers in order to establish patterns
which are believed to be indicative of the borrower's probability of default.
The credit score is based on a borrower's historical credit data, including,
among other things, payment history, delinquencies on accounts, levels of
outstanding indebtedness, length of credit history, types of credit, and
bankruptcy experience. Credit scores range from approximately 250 to
approximately 900, with higher scores indicating an individual with a more
favorable credit history compared to an individual with a lower score. However,
a credit score purports only to be a measurement of the relative degree of risk
a borrower represents to a lender, i.e., that a borrower with a higher score is
statistically expected to be less likely to default in payment than a borrower
with a lower score. In addition, it should be noted that credit scores were
developed to indicate a level of default probability over a two-year period
which does not correspond to the life of a mortgage loan. Furthermore, credit
scores were not developed specifically for use in connection with mortgage
loans, but for consumer loans in general. Therefore, a credit score does not
take into consideration the effect of mortgage loan characteristics (which may
differ from consumer

                                      S-16


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 POOL

     The Mortgage Loans had the following approximate aggregate characteristics
as of the Cut-off Date.




     Number of Mortgage Loans...........................................                1,258
     Total Stated Principal Balance.....................................         $559,198,793
     Mortgage Rates:
           Weighted Average.............................................               4.900%
           Range........................................................     2.750% to 6.500%
     Weighted Average Remaining Term to Maturity (in months)............                  354




     The Stated Principal Balances of the Mortgage Loans ranged from
approximately $24,657 to approximately $2,000,000. The Mortgage Loans had an
average Stated Principal Balance of approximately $444,514.

     The weighted average Loan-to-Value Ratio at origination of the Mortgage
Loans was approximately 70.76%, and no Mortgage Loan had a Loan-to-Value Ratio
at origination exceeding 95.00%.

     No more than approximately 1.07% of the Mortgage Loans are secured by
Mortgaged Properties located in any one zip code area.

     The following information sets forth in tabular format certain
characteristics, as of the Cut-off Date, as to the Mortgage Loans. Other than
with respect to rates of interest, percentages (approximate) are based on the
Stated Principal Balance of the Mortgage Loans as of the Cut-off Date. The sum
of the columns may not equal the total indicated due to rounding.





                                      S-17




                    CUT-OFF DATE STATED PRINCIPAL BALANCE(1)



                                                                                             PERCENT OF AGGREGATE
RANGE OF CUT-OFF DATE STATED PRINCIPAL              NUMBER OF        AGGREGATE PRINCIPAL       PRINCIPAL BALANCE
BALANCES ($)                                     MORTGAGE LOANS      BALANCE OUTSTANDING          OUTSTANDING
-------------------------------------------      --------------   -------------------------   --------------------

0.01 to 100,000.00.........................               11        $        960,156.59               0.17%
100,000.01 to 200,000.00...................              154              24,420,064.66               4.37
200,000.01 to 300,000.00...................              163              41,040,262.70               7.34
300,000.01 to 400,000.00...................              318             114,483,217.96              20.47
400,000.01 to 500,000.00...................              246             110,870,955.78              19.83
500,000.01 to 600,000.00...................              160              88,298,852.89              15.79
600,000.01 to 700,000.00...................               71              46,043,811.40               8.23
700,000.01 to 800,000.00...................               38              28,464,686.77               5.09
800,000.01 to 900,000.00...................               26              22,209,498.66               3.97
900,000.01 to 1,000,000.00.................               34              33,061,118.93               5.91
1,000,000.01 to 1,100,000.00...............               14              15,028,000.01               2.69
1,100,000.01 to 1,200,000.00...............                2               2,353,000.00               0.42
1,200,000.01 to 1,300,000.00...............                5               6,294,775.74               1.13
1,300,000.01 to 1,400,000.00...............                4               5,400,426.19               0.97
1,400,000.01 to 1,500,000.00...............                5               7,293,383.99               1.30
1,500,000.01 to 2,000,000.00...............                7              12,976,580.42               2.32
                                                   ---------        -------------------         ----------
    TOTAL:.................................            1,258        $    559,198,792.69             100.00%
                                                   =========        ===================         ==========


---------------
(1)  As of the Cut-off Date, the average Stated Principal Balance of the
     Mortgage Loans was approximately $444,514.


                            CURRENT MORTGAGE RATES(1)



                                                                                             PERCENT OF AGGREGATE
                                                    NUMBER OF        AGGREGATE PRINCIPAL       PRINCIPAL BALANCE
RANGE OF CURRENT MORTGAGE RATES (%)              MORTGAGE LOANS      BALANCE OUTSTANDING          OUTSTANDING
------------------------------------------       --------------   -------------------------   --------------------

2.501 to 2.750............................                 2        $      1,002,846.59               0.18%
3.251 to 3.500............................                 4               2,519,064.56               0.45
3.501 to 3.750............................                33              19,729,462.93               3.53
3.751 to 4.000............................                62              42,811,297.01               7.66
4.001 to 4.250............................                78              51,136,354.74               9.14
4.251 to 4.500............................               116              62,160,887.23              11.12
4.501 to 4.750............................               129              64,392,398.86              11.52
4.751 to 5.000............................               158              68,536,587.76              12.26
5.001 to 5.250............................               178              73,970,114.53              13.23
5.251 to 5.500............................               250              89,217,594.91              15.95
5.501 to 5.750............................               151              52,105,329.52               9.32
5.751 to 6.000............................                72              23,946,322.06               4.28
6.001 to 6.250............................                21               6,614,557.65               1.18
6.251 to 6.500............................                 4               1,055,974.34               0.19
                                                   ---------        -------------------         ----------
    TOTAL:.................................            1,258        $    559,198,792.69             100.00%
                                                   =========        ===================         ==========


---------------
(1)  As of the Cut-off Date, the weighted average current Mortgage Rate of the
     Mortgage Loans was approximately 4.900% per annum.


                                      S-18

                               REMAINING TERMS(1)




                                                                                             PERCENT OF AGGREGATE
                                                    NUMBER OF        AGGREGATE PRINCIPAL       PRINCIPAL BALANCE
REMAINING TERMS (MONTHS)                         MORTGAGE LOANS      BALANCE OUTSTANDING          OUTSTANDING
------------------------------------------       --------------   -------------------------   --------------------

169 to 180................................                 1        $        233,923.49               0.04%
325 to 336................................                 3               1,623,060.38               0.29
337 to 348................................                41              25,573,982.35               4.57
349 to 360................................             1,213             531,767,826.47              95.09
                                                   ---------        -------------------         ----------
    TOTAL:.................................            1,258        $    559,198,792.69             100.00%
                                                   =========        ===================         ==========


---------------
(1)  As of the Cut-off Date, the weighted average "Remaining term" of the
     Mortgage Loans was approximately 354 months.


                        ORIGINAL LOAN-TO-VALUE RATIOS(1)



                                                                                             PERCENT OF AGGREGATE
                                                    NUMBER OF        AGGREGATE PRINCIPAL       PRINCIPAL BALANCE
RANGE OF ORIGINAL LOAN-TO-VALUE RATIOS (%)       MORTGAGE LOANS      BALANCE OUTSTANDING          OUTSTANDING
------------------------------------------       --------------   -------------------------   --------------------

10.01 to 20.00............................                 2        $        267,999.99               0.05%
20.01 to 30.00............................                15               5,972,717.27               1.07
30.01 to 40.00............................                19              11,948,400.91               2.14
40.01 to 50.00............................                59              30,248,504.57               5.41
50.01 to 60.00............................               118              53,794,793.98               9.62
60.01 to 70.00............................               217             112,691,841.55              20.15
70.01 to 75.00............................               154              82,682,459.71              14.79
75.01 to 80.00............................               624             247,486,468.84              44.26
80.01 to 85.00............................                 4               1,651,417.07               0.30
85.01 to 90.00............................                27               7,992,648.06               1.43
90.01 to 95.00............................                19               4,461,540.74               0.80
                                                   ---------        -------------------         ----------
    TOTAL:.................................            1,258        $    559,198,792.69             100.00%
                                                   =========        ===================         ==========

---------------
(1)  The original Loan-to-Value Ratio for any Mortgage Loan is calculated as (i)
     the original loan amount by (ii) the appraised value of the Mortgage
     Property at origination, or if the loan is a purchase, the lesser of the
     appraised value and the purchase price of the Mortgaged Property.

     As of the Cut-off Date, the weighted average Loan-to-Value Ratio at
     origination of the Mortgage Loans was approximately 70.76%. No Mortgage
     Loan had a Loan-to-Value Ratio at origination greater than 95.00% or less
     than 12.89%.


                                      S-19



                                 CREDIT SCORE(1)



                                                                                            PERCENT OF AGGREGATE
                                                   NUMBER OF        AGGREGATE PRINCIPAL       PRINCIPAL BALANCE
RANGE OF CREDIT SCORES                          MORTGAGE LOANS      BALANCE OUTSTANDING          OUTSTANDING
------------------------------------------      --------------   -------------------------  -------------------

Not Available.............................                 1        $        357,993.27               0.06%
601 to 625................................                 2                 799,381.24               0.14
626 to 650................................                35              14,129,601.83               2.53
651 to 675................................                90              37,816,303.97               6.76
676 to 700................................               145              62,459,409.25              11.17
701 to 725................................               194              85,655,878.63              15.32
726 to 750................................               228             106,075,303.44              18.97
751 to 775................................               303             135,972,468.16              24.32
776 to 800................................               218              95,505,276.95              17.08
801 to 825................................                38              18,752,388.64               3.35
826 to 850................................                 4               1,674,787.31               0.30
                                                   ---------        -------------------         ----------
    TOTAL:................................             1,258        $    559,198,792.69             100.00%
                                                   =========        ===================         ==========


---------------
(1)  As of the Cut-off Date, the weighted average "Credit Score" of the Mortgage
     Loans was approximately 738.

     We refer you to discussion above under "--General."


                                      S-20



                 GEOGRAPHIC DISTRIBUTION OF MORTGAGED PROPERTIES



                                                                                             PERCENT OF AGGREGATE
                                                    NUMBER OF        AGGREGATE PRINCIPAL       PRINCIPAL BALANCE
GEOGRAPHIC AREA                                  MORTGAGE LOANS      BALANCE OUTSTANDING          OUTSTANDING
------------------------------------------       --------------   -------------------------   --------------------

Alabama...................................                 7          $      2,898,203.28            0.52%
Arizona...................................                39                12,806,439.92            2.29
California................................               534               275,871,677.08           49.33
Colorado..................................                24                 8,383,432.17            1.50
Connecticut...............................                 9                 4,416,192.60            0.79
Delaware..................................                 3                   707,780.39            0.13
District of Columbia......................                20                 8,446,214.23            1.51
Florida...................................                37                13,267,167.78            2.37
Georgia...................................                38                13,619,313.99            2.44
Hawaii....................................                 8                 2,692,953.69            0.48
Idaho.....................................                 1                   147,786.87            0.03
Illinois..................................                56                27,722,118.32            4.96
Indiana...................................                 1                   223,900.00            0.04
Iowa......................................                 2                   258,093.17            0.05
Kansas....................................                 2                   516,805.00            0.09
Maryland..................................                93                32,426,317.07            5.80
Massachusetts.............................                17                 6,709,977.39            1.20
Michigan..................................                17                 8,336,881.22            1.49
Minnesota.................................                10                 3,163,741.42            0.57
Missouri..................................                 8                 3,856,229.38            0.69
Montana...................................                 1                   677,607.00            0.12
Nevada....................................                22                 7,023,382.56            1.26
New Hampshire.............................                 2                   600,000.00            0.11
New Jersey................................                28                12,275,395.43            2.20
New Mexico................................                 4                 1,421,398.96            0.25
New York..................................                19                15,750,373.92            2.82
North Carolina............................                20                 7,268,095.23            1.30
Ohio......................................                 8                 3,645,092.47            0.65
Oregon....................................                 9                 2,592,110.44            0.46
Pennsylvania..............................                 7                 3,725,562.80            0.67
South Carolina............................                 7                 2,506,088.33            0.45
Tennessee.................................                 5                 1,596,708.84            0.29
Texas.....................................                40                14,759,083.15            2.64
Utah......................................                 3                 1,301,093.45            0.23
Virginia..................................               132                47,689,546.97            8.53
Washington................................                20                 8,168,217.70            1.46
West Virginia.............................                 2                   908,952.80            0.16
Wisconsin.................................                 3                   818,857.67            0.15
                                                   ---------          -------------------      ----------
    TOTAL:................................             1,258          $    559,198,792.69          100.00%
                                                   =========          ===================      ==========



                                      S-21


                                OCCUPANCY TYPE(1)



                                                                                              PERCENT OF AGGREGATE
                                                     NUMBER OF        AGGREGATE PRINCIPAL       PRINCIPAL BALANCE
OCCUPANCY TYPE                                    MORTGAGE LOANS      BALANCE OUTSTANDING          OUTSTANDING
------------------------------------------        --------------   -------------------------   --------------------

Primary...................................             1,152          $    516,230,169.42              92.32%
Second Home...............................                96                37,476,481.61               6.70
Investment................................                10                 5,492,141.66               0.98
                                                   ---------          -------------------         ----------
    TOTAL:................................             1,258          $    559,198,792.69             100.00%
                                                   =========          ===================         ==========


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

                                  PROPERTY TYPE


                                                                                              PERCENT OF AGGREGATE
                                                     NUMBER OF        AGGREGATE PRINCIPAL       PRINCIPAL BALANCE
PROPERTY TYPE                                     MORTGAGE LOANS      BALANCE OUTSTANDING          OUTSTANDING
------------------------------------------        --------------   -------------------------   --------------------

Single Family.............................               725          $    341,985,803.77              61.16%
Planned Unit Development..................               328               134,693,578.56              24.09
Condominium...............................               182                67,174,905.34              12.01
Two- to Four-Family.......................                12                 8,204,339.88               1.47
Cooperative...............................                 9                 6,497,887.11               1.16
Townhouse.................................                 2                   642,278.03               0.11
                                                   ---------          -------------------         ----------
    TOTAL:................................             1,258          $    559,198,792.69             100.00%
                                                   =========          ===================         ==========


                                  LOAN PURPOSE



                                                                                              PERCENT OF AGGREGATE
                                                     NUMBER OF        AGGREGATE PRINCIPAL       PRINCIPAL BALANCE
LOAN PURPOSE                                      MORTGAGE LOANS      BALANCE OUTSTANDING          OUTSTANDING
--------------------------------------------      --------------   -------------------------   --------------------

Purchase....................................             779          $    340,293,337.87              60.85%
Refinance - Rate Term.......................             235               116,124,711.81              20.77
Refinance - Cash-out........................             244               102,780,743.01              18.38
                                                   ---------          -------------------         ----------
    TOTAL:..................................           1,258          $    559,198,792.69             100.00%
                                                   =========          ===================         ==========


                               LOAN DOCUMENTATION



                                                                                              PERCENT OF AGGREGATE
                                                     NUMBER OF        AGGREGATE PRINCIPAL       PRINCIPAL BALANCE
DOCUMENTATION                                     MORTGAGE LOANS      BALANCE OUTSTANDING          OUTSTANDING
---------------------------------------------     --------------   -------------------------   --------------------

Full Alternative Documentation...............             828         $    325,959,103.88              58.29%
Full Documentation...........................             186              125,885,413.55              22.51
Stated Income/Verified Assets................             143               49,690,273.16               8.89
Verbal Verification of Employment............              69               39,857,371.04               7.13
Low Documentation............................              19                9,460,149.71               1.69
Streamlined Documentation....................              11                7,450,778.28               1.33
Reduced Documentation........................               1                  555,000.00               0.10
Preferred Documentation......................               1                  340,703.07               0.06
                                                    ---------         -------------------         ----------
    TOTAL:...................................           1,258         $    559,198,792.69             100.00%
                                                    =========         ===================         ==========



                                      S-22


                                    MARGIN(1)



                                                                                              PERCENT OF AGGREGATE
                                                     NUMBER OF        AGGREGATE PRINCIPAL       PRINCIPAL BALANCE
MARGIN (%)                                        MORTGAGE LOANS      BALANCE OUTSTANDING          OUTSTANDING
--------------------------------------------      --------------   -------------------------   --------------------

1.925.......................................               1          $      1,000,000.00               0.18%
1.950.......................................               1                   316,000.00               0.06
2.240.......................................               1                   500,000.00               0.09
2.250.......................................             814               293,481,436.77              52.48
2.500.......................................             116                89,383,173.11              15.98
2.550.......................................               1                   145,600.00               0.03
2.750.......................................             324               174,372,582.81              31.18
                                                   ---------          -------------------         ----------
    TOTAL:..................................           1,258          $    559,198,792.69             100.00%
                                                   =========          ===================         ==========

-------------
(1)  As of the Cut-off Date, the weighted average margin of the Mortgage Loans
     was approximately 2.445%.


                            MAXIMUM MORTGAGE RATE(1)



                                                                                              PERCENT OF AGGREGATE
                                                     NUMBER OF        AGGREGATE PRINCIPAL       PRINCIPAL BALANCE
RANGE OF MAXIMUM MORTGAGE RATE (%)                MORTGAGE LOANS      BALANCE OUTSTANDING          OUTSTANDING
--------------------------------------------      --------------   -------------------------   --------------------

8.501 to 8.750..............................               3          $      2,210,346.59               0.40%
8.751 to 9.000..............................               3                 3,571,703.08               0.64
9.001 to 9.250..............................               8                 6,181,733.63               1.11
9.251 to 9.500..............................              43                24,615,987.60               4.40
9.501 to 9.750..............................             110                60,892,744.93              10.89
9.751 to 10.000.............................             150                80,309,645.66              14.36
10.001 to 10.250............................             193                97,353,744.69              17.41
10.251 to 10.500............................             289               115,773,362.82              20.70
10.501 to 10.750............................             197                72,948,577.73              13.05
10.751 to 11.000............................             134                47,882,174.86               8.56
11.001 to 11.250............................              75                28,039,948.60               5.01
11.251 to 11.500............................              39                12,903,704.59               2.31
11.501 to 11.750............................               6                 1,628,368.65               0.29
11.751 to 12.000............................               4                 2,110,149.26               0.38
12.751 to 13.000............................               4                 2,776,600.00               0.50
                                                   ---------          -------------------         ----------
    TOTAL:..................................           1,258          $    559,198,792.69             100.00%
                                                   =========          ===================         ==========

---------------
(1)  As of the Cut-off Date, the weighted average maximum Mortgage Rate of the
     Mortgage Loans was approximately 10.328% per annum and ranged from 8.750%
     per annum to 12.950% per annum.




                                      S-23



                          NEXT RATE ADJUSTMENT DATE(1)



                                                                                              PERCENT OF AGGREGATE
                                                     NUMBER OF        AGGREGATE PRINCIPAL       PRINCIPAL BALANCE
NEXT RATE ADJUSTMENT DATE                         MORTGAGE LOANS      BALANCE OUTSTANDING          OUTSTANDING
--------------------------------------------      --------------   -------------------------   --------------------

November 2005...............................               1          $        343,060.38               0.06%
November 2006...............................               1                   955,547.35               0.17
December 2006...............................               1                   456,152.38               0.08
January 2007................................               1                   519,674.44               0.09
February 2007...............................               2                   760,703.07               0.14
March 2007..................................               1                   394,037.72               0.07
April 2007..................................               3                 1,152,605.59               0.21
May 2007....................................              24                11,867,808.88               2.12
June 2007...................................              40                20,240,002.86               3.62
July 2007...................................              50                25,361,683.92               4.54
August 2007.................................              50                25,019,998.99               4.47
September 2007..............................             171                60,629,080.59              10.84
December 2007...............................               1                   620,000.00               0.11
January 2008................................               1                   660,000.00               0.12
July 2008...................................               2                 2,585,000.00               0.46
August 2008.................................               1                   938,000.00               0.17
September 2008..............................               2                 1,600,000.00               0.29
October 2008................................               2                 2,285,000.00               0.41
November 2008...............................               3                 1,802,019.02               0.32
December 2008...............................               4                 3,250,000.00               0.58
January 2009................................               4                 3,237,000.00               0.58
February 2009...............................               2                   850,000.00               0.15
March 2009..................................              22                18,736,782.74               3.35
April 2009..................................              81                56,833,407.16              10.16
May 2009....................................               6                 2,128,531.55               0.38
June 2009...................................               1                   365,958.09               0.07
July 2009...................................             233                82,918,248.99              14.83
August 2009.................................             111                38,831,230.32               6.94
September 2009..............................             197                69,618,711.54              12.45
October 2009................................              38                20,540,744.95               3.67
November 2009...............................             118                66,617,098.75              11.91
October 2010................................               1                   576,782.40               0.10
November 2010...............................               2                   571,847.98               0.10
December 2010...............................              17                 6,796,958.78               1.22
March 2011..................................               1                   432,300.64               0.08
April 2011..................................               1                   555,000.00               0.10
August 2011.................................               6                 2,857,669.45               0.51
September 2011..............................              56                25,290,144.16               4.52
                                                   ---------          -------------------         ----------
    TOTAL:..................................           1,258          $    559,198,792.69             100.00%
                                                   =========          ===================         ==========

---------------
(1)  As of the Cut-off Date, the weighted average months to the next adjustment
     date of the Mortgage Loans was approximately 50.



                                      S-24


TABULAR CHARACTERISTICS OF THE GROUP I MORTGAGE LOANS

     The Group I Mortgage Loans had the following approximate aggregate
characteristics as of the Cut-off Date.





    Number of Group I Mortgage Loans.....................................                  345
    Total Stated Principal Balance.......................................         $147,700,356
    Mortgage Rates:
       Weighted Average..................................................               4.628%
       Range.............................................................     2.750% to 6.000%
    Weighted Average Remaining Term to Maturity (in months)..............                  354



     The Stated Principal Balances of the Group I Mortgage Loans ranged from
approximately $24,657 to approximately $1,423,884. The Group I Mortgage Loans
had an average Stated Principal Balance of approximately $428,117.

     The weighted average Loan-to-Value Ratio at origination of the Group I
Mortgage Loans was approximately 72.10%, and no Group I Mortgage Loan had a
Loan-to-Value Ratio at origination exceeding 95.00%.

     No more than approximately 1.63% of the Group I Mortgage Loans are secured
by Mortgaged Properties located in any one zip code area.

     The following information sets forth in tabular format certain
characteristics, as of the Cut-off Date, as to the Group I Mortgage Loans. Other
than with respect to rates of interest, percentages (approximate) are based on
the Stated Principal Balance of the Group I Mortgage Loans as of the Cut-off
Date. The sum of the columns may not equal the total indicated due to rounding.

     CUT-OFF DATE STATED PRINCIPAL BALANCE OF THE GROUP I MORTGAGE LOANS(1)



                                                                                              PERCENT OF AGGREGATE
RANGE OF CUT-OFF DATE STATED PRINCIPAL               NUMBER OF        AGGREGATE PRINCIPAL       PRINCIPAL BALANCE
BALANCES ($)                                      MORTGAGE LOANS      BALANCE OUTSTANDING          OUTSTANDING
--------------------------------------------      --------------   -------------------------   --------------------

0.01 to 100,000.00..........................               3          $        197,074.74               0.13%
100,000.01 to 200,000.00....................              34                 5,347,596.79               3.62
200,000.01 to 300,000.00....................              36                 9,177,263.44               6.21
300,000.01 to 400,000.00....................             104                37,710,721.18              25.53
400,000.01 to 500,000.00....................              78                34,754,589.63              23.53
500,000.01 to 600,000.00....................              49                26,898,852.67              18.21
600,000.01 to 700,000.00....................              14                 9,010,910.92               6.10
700,000.01 to 800,000.00....................              11                 8,275,700.05               5.60
800,000.01 to 900,000.00....................               3                 2,524,634.72               1.71
900,000.01 to 1,000,000.00..................              10                 9,762,997.25               6.61
1,200,000.01 to 1,300,000.00................               1                 1,243,954.60               0.84
1,300,000.01 to 1,400,000.00................               1                 1,372,176.19               0.93
1,400,000.01 to 1,500,000.00................               1                 1,423,883.99               0.96
                                                   ---------          -------------------         ----------
    TOTAL:..................................             345          $    147,700,356.17             100.00%
                                                   =========          ===================         ==========


---------------
 (1) As of the Cut-off Date, the average Stated Principal Balance of the
     Mortgage Loans in Group I was approximately $428,117. No Group I Mortgage
     Loan had a principal balance as of the Cut-off Date greater than $1,423,884
     or less than $24,657.


                                      S-25


             CURRENT MORTGAGE RATES OF THE GROUP I MORTGAGE LOANS(1)



                                                                                              PERCENT OF AGGREGATE
RANGE OF CURRENT                                     NUMBER OF        AGGREGATE PRINCIPAL       PRINCIPAL BALANCE
MORTGAGE RATES (%)                                MORTGAGE LOANS      BALANCE OUTSTANDING          OUTSTANDING
--------------------------------------------      --------------   -------------------------   --------------------

2.501 to 2.750..............................               2          $      1,002,846.59               0.68%
3.251 to 3.500..............................               3                 1,554,064.56               1.05
3.501 to 3.750..............................              24                12,308,382.51               8.33
3.751 to 4.000..............................              30                15,954,270.64              10.80
4.001 to 4.250..............................              35                18,112,511.20              12.26
4.251 to 4.500..............................              36                14,033,488.67               9.50
4.501 to 4.750..............................              51                22,021,616.86              14.91
4.751 to 5.000..............................              65                25,701,536.03              17.40
5.001 to 5.250..............................              54                21,425,390.95              14.51
5.251 to 5.500..............................              35                11,847,730.25               8.02
5.501 to 5.750..............................               6                 1,628,368.65               1.10
5.751 to 6.000..............................               4                 2,110,149.26               1.43
                                                   ---------          -------------------         ----------
    TOTAL:..................................             345          $    147,700,356.17             100.00%
                                                   =========          ===================         ==========

---------------
(1)  As of the Cut-off Date, the weighted average current Mortgage Rate of the
     Mortgage Loans in Group I was approximately 4.628% per annum and ranged
     from 2.750% per annum to 6.000% per annum.

                REMAINING TERMS OF THE GROUP I MORTGAGE LOANS(1)



                                                                                              PERCENT OF AGGREGATE
                                                     NUMBER OF        AGGREGATE PRINCIPAL       PRINCIPAL BALANCE
REMAINING TERMS (MONTHS)                          MORTGAGE LOANS      BALANCE OUTSTANDING          OUTSTANDING
--------------------------------------------      --------------   -------------------------   --------------------

325 to 336..................................               1          $        343,060.38               0.23%
337 to 348..................................               3                 1,931,374.17               1.31
349 to 360..................................             341               145,425,921.62              98.46
                                                   ---------          -------------------         ----------
    TOTAL:..................................             345          $    147,700,356.17             100.00%
                                                   =========          ===================         ==========

---------------
(1)  As of the Cut-off Date, the weighted average "Remaining term" of the
     Mortgage Loans in Group I was approximately 354 months.



                                      S-26




         ORIGINAL LOAN-TO-VALUE RATIOS OF THE GROUP I MORTGAGE LOANS(1)



                                                                                              PERCENT OF AGGREGATE
RANGE OF ORIGINAL                                    NUMBER OF        AGGREGATE PRINCIPAL       PRINCIPAL BALANCE
LOAN-TO-VALUE RATIOS (%)                          MORTGAGE LOANS      BALANCE OUTSTANDING          OUTSTANDING
--------------------------------------------      --------------   -------------------------   --------------------

20.01 to 30.00..............................               1          $        127,000.00               0.09%
30.01 to 40.00..............................               2                   701,163.65               0.47
40.01 to 50.00..............................              18                 7,131,766.18               4.83
50.01 to 60.00..............................              31                14,418,137.74               9.76
60.01 to 70.00..............................              65                32,299,092.93              21.87
70.01 to 75.00..............................              42                20,842,495.81              14.11
75.01 to 80.00..............................             165                65,376,811.78              44.26
80.01 to 85.00..............................               2                   840,390.49               0.57
85.01 to 90.00..............................              15                 5,003,667.20               3.39
90.01 to 95.00..............................               4                   959,830.39               0.65
                                                   ---------          -------------------         ----------
    TOTAL:..................................             345          $    147,700,356.17             100.00%
                                                   =========          ===================         ==========

---------------
(1)  The original Loan-to-Value Ratio for any Mortgage Loan is calculated as (i)
     the original loan amount by (ii) the appraised value of the Mortgage
     Property at origination, or if the loan is a purchase, the lesser of the
     appraised value and the purchase price of the Mortgaged Property.

     As of the Cut-off Date, the weighted average Loan-to-Value Ratio at
     origination of the Group I Mortgage Loans was approximately 72.10%. No
     Group I Mortgage Loan had a Loan-to-Value Ratio at origination greater than
     95.00% or less than 25.40%.

                 CREDIT SCORE FOR THE GROUP I MORTGAGE LOANS(1)




                                                                                              PERCENT OF AGGREGATE
                                                     NUMBER OF        AGGREGATE PRINCIPAL       PRINCIPAL BALANCE
RANGE OF CREDIT SCORES                            MORTGAGE LOANS      BALANCE OUTSTANDING          OUTSTANDING
--------------------------------------------      --------------   -------------------------   --------------------

Not Available...............................               1          $        357,993.27               0.24%
601 to 625..................................               1                   250,400.00               0.17
626 to 650..................................              14                 5,145,270.79               3.48
651 to 675..................................              36                15,274,106.85              10.34
676 to 700..................................              47                19,343,815.19              13.10
701 to 725..................................              62                27,365,406.81              18.53
726 to 750..................................              49                22,328,159.35              15.12
751 to 775..................................              76                32,760,892.16              22.18
776 to 800..................................              52                21,358,417.47              14.46
801 to 825..................................               7                 3,515,894.28               2.38
                                                   ---------          -------------------         ----------
    TOTAL:..................................             345          $    147,700,356.17             100.00%
                                                   =========          ===================         ==========

---------------
(1)  As of the Cut-off Date, the weighted average "Credit Score" of the Mortgage
     Loans in Group I was approximately 730.

     We refer you to discussion above under "--General."


                                      S-27




           GEOGRAPHIC DISTRIBUTION OF THE GROUP I MORTGAGED PROPERTIES




                                                                                              PERCENT OF AGGREGATE
                                                     NUMBER OF        AGGREGATE PRINCIPAL       PRINCIPAL BALANCE
GEOGRAPHIC AREA                                   MORTGAGE LOANS      BALANCE OUTSTANDING          OUTSTANDING
--------------------------------------------      --------------   -------------------------   --------------------

Alabama.....................................               5          $      1,849,996.08               1.25%
Arizona.....................................              12                 6,298,147.46               4.26
California..................................             162                70,892,596.46              48.00
Colorado....................................               1                   335,999.80               0.23
Connecticut.................................               2                   599,923.44               0.41
Delaware....................................               1                   149,309.12               0.10
District of Columbia........................               2                   673,180.33               0.46
Florida.....................................              19                 7,521,339.95               5.09
Georgia.....................................              12                 4,639,445.31               3.14
Hawaii......................................               1                   183,349.27               0.12
Illinois....................................              26                14,727,783.46               9.97
Iowa........................................               1                   122,500.00               0.08
Kansas......................................               1                   123,405.00               0.08
Maryland....................................              12                 4,373,435.17               2.96
Massachusetts...............................               2                   405,725.27               0.27
Michigan....................................               7                 3,082,834.78               2.09
Minnesota...................................               4                 1,260,595.61               0.85
Missouri....................................               5                 2,546,825.71               1.72
Nevada......................................               6                 3,009,982.79               2.04
New Hampshire...............................               1                   200,000.00               0.14
New Jersey..................................               4                 1,640,986.59               1.11
New Mexico..................................               1                   631,131.87               0.43
New York....................................               2                 1,120,369.58               0.76
North Carolina..............................              10                 3,635,125.35               2.46
Ohio........................................               1                    24,657.30               0.02
Oregon......................................               3                 1,090,444.60               0.74
Pennsylvania................................               3                 1,706,839.69               1.16
South Carolina..............................               3                 1,141,571.16               0.77
Tennessee...................................               3                   761,260.49               0.52
Texas.......................................              10                 3,731,882.24               2.53
Utah........................................               1                   549,093.45               0.37
Virginia....................................              18                 6,429,837.56               4.35
Washington..................................               2                 1,558,926.37               1.06
West Virginia...............................               1                   332,170.40               0.22
Wisconsin...................................               1                   349,684.51               0.24
                                                   ---------          -------------------         ----------
    TOTAL:..................................             345          $    147,700,356.17             100.00%
                                                   =========          ===================         ==========




                                      S-28



                OCCUPANCY TYPES OF THE GROUP I MORTGAGE LOANS(1)




                                                                                              PERCENT OF AGGREGATE
                                                     NUMBER OF        AGGREGATE PRINCIPAL       PRINCIPAL BALANCE
OCCUPANCY TYPE                                    MORTGAGE LOANS      BALANCE OUTSTANDING          OUTSTANDING
--------------------------------------------      --------------   -------------------------   --------------------

Primary.....................................             307          $    133,324,368.89              90.27%
Second Home.................................              38                14,375,987.28               9.73
                                                   ---------          -------------------         ----------
    TOTAL:..................................             345          $    147,700,356.17             100.00%
                                                   =========          ===================         ==========

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

                  PROPERTY TYPES OF THE GROUP I MORTGAGE LOANS



                                                                                              PERCENT OF AGGREGATE
                                                     NUMBER OF        AGGREGATE PRINCIPAL       PRINCIPAL BALANCE
PROPERTY TYPE                                     MORTGAGE LOANS      BALANCE OUTSTANDING          OUTSTANDING
--------------------------------------------      --------------   -------------------------   --------------------

Single Family Residence.....................             198          $     84,044,344.47              56.90%
Planned Unit Development....................              97                47,371,298.42              32.07
Condominium.................................              49                15,952,435.25              10.80
Townhouse...................................               1                   332,278.03               0.22
                                                   ---------          -------------------         ----------
    TOTAL:..................................             345          $    147,700,356.17             100.00%
                                                   =========          ===================         ==========


                   LOAN PURPOSE OF THE GROUP I MORTGAGE LOANS



                                                                                              PERCENT OF AGGREGATE
                                                     NUMBER OF        AGGREGATE PRINCIPAL       PRINCIPAL BALANCE
LOAN PURPOSE                                      MORTGAGE LOANS      BALANCE OUTSTANDING          OUTSTANDING
--------------------------------------------      --------------   -------------------------   --------------------

Purchase....................................             185          $     78,384,235.80              53.07%
Refinance - Rate Term.......................              79                35,684,970.86              24.16
Refinance - Cashout.........................              81                33,631,149.51              22.77
                                                   ---------          -------------------         ----------
    TOTAL:..................................             345          $    147,700,356.17             100.00%
                                                   =========          ===================         ==========


                LOAN DOCUMENTATION FOR THE GROUP I MORTGAGE LOANS



                                                                                              PERCENT OF AGGREGATE
                                                     NUMBER OF        AGGREGATE PRINCIPAL       PRINCIPAL BALANCE
DOCUMENTATION                                     MORTGAGE LOANS      BALANCE OUTSTANDING          OUTSTANDING
--------------------------------------------      --------------   -------------------------   --------------------

Full Alternative Documentation...............             296         $    129,893,718.60             87.94%
Stated Income/Verified Assets................              46               16,650,175.51             11.27
Full Documentation...........................               2                  815,758.99              0.55
Preferred Documentation......................               1                  340,703.07              0.23
                                                    ---------         -------------------        ----------
    TOTAL:...................................             345         $    147,700,356.17            100.00%
                                                    =========         ===================        ==========


                    MARGIN FOR THE GROUP I MORTGAGE LOANS(1)




                                                                                              PERCENT OF AGGREGATE
                                                     NUMBER OF        AGGREGATE PRINCIPAL       PRINCIPAL BALANCE
MARGIN (%)                                        MORTGAGE LOANS      BALANCE OUTSTANDING          OUTSTANDING
--------------------------------------------      --------------   -------------------------   --------------------

2.250.......................................             181          $     62,484,023.63              42.30%
2.750.......................................             164                85,216,332.54              57.70
                                                   ---------          -------------------         ----------
    TOTAL:..................................             345          $    147,700,356.17             100.00%
                                                   =========          ===================         ==========

-------------
(1)  As of the Cut-off Date, the weighted average margin of the Mortgage Loans
     in Group I was approximately 2.538%.


                                      S-29


             MAXIMUM MORTGAGE RATES OF THE GROUP I MORTGAGE LOANS(1)



                                                                                              PERCENT OF AGGREGATE
                                                     NUMBER OF        AGGREGATE PRINCIPAL       PRINCIPAL BALANCE
RANGE OF MAXIMUM MORTGAGE RATE (%)                MORTGAGE LOANS      BALANCE OUTSTANDING          OUTSTANDING
--------------------------------------------      --------------   -------------------------   --------------------

8.501 to 8.750..............................               2          $      1,002,846.59               0.68%
9.251 to 9.500..............................               3                 1,554,064.56               1.05
9.501 to 9.750..............................              24                12,308,382.51               8.33
9.751 to 10.000.............................              30                15,954,270.64              10.80
10.001 to 10.250............................              35                18,112,511.20              12.26
10.251 to 10.500............................              36                14,033,488.67               9.50
10.501 to 10.750............................              51                22,021,616.86              14.91
10.751 to 11.000............................              65                25,701,536.03              17.40
11.001 to 11.250............................              54                21,425,390.95              14.51
11.251 to 11.500............................              35                11,847,730.25               8.02
11.501 to 11.750............................               6                 1,628,368.65               1.10
11.751 to 12.000............................               4                 2,110,149.26               1.43
                                                   ---------          -------------------         ----------
    TOTAL:..................................             345          $    147,700,356.17             100.00%
                                                   =========          ===================         ==========

---------------
(1)  As of the Cut-off Date, the weighted average maximum Mortgage Rate of the
     Mortgage Loans in Group I was approximately 10.628% per annum and ranged
     from 8.750% per annum to 12.000% per annum.

           NEXT RATE ADJUSTMENT DATE OF THE GROUP I MORTGAGE LOANS(1)



                                                                                              PERCENT OF AGGREGATE
                                                     NUMBER OF        AGGREGATE PRINCIPAL       PRINCIPAL BALANCE
NEXT RATE ADJUSTMENT DATE                         MORTGAGE LOANS      BALANCE OUTSTANDING          OUTSTANDING
--------------------------------------------      --------------   -------------------------   --------------------

November 2005...............................               1          $        343,060.38               0.23%
November 2006...............................               1                   955,547.35               0.65
December 2006...............................               1                   456,152.38               0.31
January 2007................................               1                   519,674.44               0.35
February 2007...............................               2                   760,703.07               0.52
March 2007..................................               1                   394,037.72               0.27
April 2007..................................               3                 1,152,605.59               0.78
May 2007....................................              24                11,867,808.88               8.04
June 2007...................................              40                20,240,002.86              13.70
July 2007...................................              50                25,361,683.92              17.17
August 2007.................................              50                25,019,998.99              16.94
September 2007..............................             171                60,629,080.59              41.05
                                                   ---------          -------------------         ----------
    TOTAL:.................................              345          $    147,700,356.17             100.00%
                                                   =========          ===================         ==========

-----------------
(1)  As of the Cut-off Date, the weighted average months to the next adjustment
     date of the Mortgage Loans in Group I was approximately 30.


                                      S-30



TABULAR CHARACTERISTICS OF THE GROUP II MORTGAGE LOANS

         The Group II Mortgage Loans had the following approximate aggregate
characteristics as of the Cut-off Date.





    Number of Group II Mortgage Loans....................................                   829
    Total Stated Principal Balance.......................................          $374,417,733
    Mortgage Rates:
       Weighted Average..................................................                4.945%
       Range.............................................................      3.400% to 6.500%
    Weighted Average Remaining Term to Maturity (in months)..............                   354



         The Stated Principal Balances of the Group II Mortgage Loans ranged
from approximately $89,726 to approximately $2,000,000. The Group II Mortgage
Loans had an average Stated Principal Balance of approximately $451,650.

         The weighted average Loan-to-Value Ratio at origination of the Group II
Mortgage Loans was approximately 69.93%, and no Group II Mortgage Loan had a
Loan-to-Value Ratio at origination exceeding 95.00%.

         No more than approximately 1.61% of the Group II Mortgage Loans are
secured by Mortgaged Properties located in any one zip code area.

         The following information sets forth in tabular format certain
characteristics, as of the Cut-off Date, as to the Group II Mortgage Loans.
Other than with respect to rates of interest, percentages (approximate) are
based on the Stated Principal Balance of the Group II Mortgage Loans as of the
Cut-off Date. The sum of the columns may not equal the total indicated due to
rounding.



                                      S-31


     CUT-OFF DATE STATED PRINCIPAL BALANCE OF THE GROUP II MORTGAGE LOANS(1)



                                                                                              PERCENT OF AGGREGATE
RANGE OF CUT-OFF DATE STATED PRINCIPAL               NUMBER OF        AGGREGATE PRINCIPAL       PRINCIPAL BALANCE
BALANCES ($)                                      MORTGAGE LOANS      BALANCE OUTSTANDING          OUTSTANDING
--------------------------------------------      --------------   -------------------------   --------------------

0.01 to 100,000.00..........................               7          $        669,869.26               0.18%
100,000.01 to 200,000.00....................             112                17,818,410.97               4.76
200,000.01 to 300,000.00....................             115                28,806,143.04               7.69
300,000.01 to 400,000.00....................             194                69,535,684.25              18.57
400,000.01 to 500,000.00....................             152                68,891,844.55              18.40
500,000.01 to 600,000.00....................              99                54,586,402.24              14.58
600,000.01 to 700,000.00....................              50                32,588,210.26               8.70
700,000.01 to 800,000.00....................              21                15,687,681.35               4.19
800,000.01 to 900,000.00....................              23                19,684,863.94               5.26
900,000.01 to 1,000,000.00..................              23                22,342,471.68               5.97
1,000,000.01 to 1,100,000.00................              14                15,028,000.01               4.01
1,100,000.01 to 1,200,000.00................               2                 2,353,000.00               0.63
1,200,000.01 to 1,300,000.00................               4                 5,050,821.14               1.35
1,300,000.01 to 1,400,000.00................               3                 4,028,250.00               1.08
1,400,000.01 to 1,500,000.00................               3                 4,369,500.00               1.17
1,500,000.01 to 2,000,000.00................               7                12,976,580.42               3.47
                                                   ---------          -------------------         ----------
    TOTAL:..................................             829          $    374,417,733.11             100.00%
                                                   =========          ===================         ==========

---------------
(1)  As of the Cut-off Date, the average Stated Principal Balance of the
     Mortgage Loans in Group II was approximately $451,650. No Group II Mortgage
     Loan had a principal balance as of the Cut-off Date greater than $2,000,000
     or less than $89,726.

            CURRENT MORTGAGE RATES OF THE GROUP II MORTGAGE LOANS(1)




                                                                                              PERCENT OF AGGREGATE
                                                     NUMBER OF        AGGREGATE PRINCIPAL       PRINCIPAL BALANCE
RANGE OF CURRENT MORTGAGE RATES (%)               MORTGAGE LOANS      BALANCE OUTSTANDING          OUTSTANDING
--------------------------------------------      --------------   -------------------------   --------------------

3.251 to 3.500..............................               1          $        965,000.00               0.26%
3.501 to 3.750..............................               9                 7,421,080.42               1.98
3.751 to 4.000..............................              32                26,857,026.37               7.17
4.001 to 4.250..............................              43                33,023,843.54               8.82
4.251 to 4.500..............................              80                48,127,398.56              12.85
4.501 to 4.750..............................              77                41,812,296.03              11.17
4.751 to 5.000..............................              87                39,654,920.09              10.59
5.001 to 5.250..............................             118                48,144,122.92              12.86
5.251 to 5.500..............................             185                65,803,826.96              17.57
5.501 to 5.750..............................             121                40,320,145.12              10.77
5.751 to 6.000..............................              56                16,810,268.25               4.49
6.001 to 6.250..............................              16                 4,421,830.51               1.18
6.251 to 6.500..............................               4                 1,055,974.34               0.28
                                                   ---------          -------------------         ----------
    TOTAL:..................................             829          $    374,417,733.11             100.00%
                                                   =========          ===================         ==========

---------------
(1)  As of the Cut-off Date, the weighted average current Mortgage Rate of the
     Mortgage Loans in Group II was approximately 4.945% per annum and ranged
     from 3.400% per annum to 6.500% per annum.


                                      S-32


                REMAINING TERMS OF THE GROUP II MORTGAGE LOANS(1)




                                                                                              PERCENT OF AGGREGATE
                                                     NUMBER OF        AGGREGATE PRINCIPAL       PRINCIPAL BALANCE
REMAINING TERMS (MONTHS)                          MORTGAGE LOANS      BALANCE OUTSTANDING          OUTSTANDING
--------------------------------------------      --------------   -------------------------   --------------------

169 to 180..................................               1          $        233,923.49               0.06%
325 to 336..................................               2                 1,280,000.00               0.34
337 to 348..................................              18                15,697,019.02               4.19
349 to 360..................................             808               357,206,790.60              95.40
                                                   ---------          -------------------         ----------
    TOTAL:..................................             829          $    374,417,733.11             100.00%
                                                   =========          ===================         ==========

---------------
(1)  As of the Cut-off Date, the weighted average "Remaining term" of the
     Mortgage Loans in Group II was approximately 354 months.

         ORIGINAL LOAN-TO-VALUE RATIOS OF THE GROUP II MORTGAGE LOANS(1)




                                                                                             PERCENT OF AGGREGATE
                                                    NUMBER OF        AGGREGATE PRINCIPAL       PRINCIPAL BALANCE
RANGE OF ORIGINAL LOAN-TO-VALUE RATIOS (%)       MORTGAGE LOANS      BALANCE OUTSTANDING          OUTSTANDING
--------------------------------------------      --------------   -------------------------   --------------------

10.01 to 20.00..............................               2          $        267,999.99               0.07%
20.01 to 30.00..............................              14                 5,845,717.27               1.56
30.01 to 40.00..............................              16                11,001,241.48               2.94
40.01 to 50.00..............................              39                22,170,103.51               5.92
50.01 to 60.00..............................              79                35,210,373.87               9.40
60.01 to 70.00..............................             141                75,893,835.77              20.27
70.01 to 75.00..............................             105                57,467,547.87              15.35
75.01 to 80.00..............................             407               160,193,103.08              42.78
80.01 to 85.00..............................               2                   811,026.58               0.22
85.01 to 90.00..............................              10                 2,420,745.88               0.65
90.01 to 95.00..............................              14                 3,136,037.81               0.84
                                                   ---------          -------------------         ----------
    TOTAL:..................................             829          $    374,417,733.11             100.00%
                                                   =========          ===================         ==========

---------------
(1)  The original Loan-to-Value Ratio for any Mortgage Loan is calculated as (i)
     the original loan amount by (ii) the appraised value of the Mortgage
     Property at origination, or if the loan is a purchase, the lesser of the
     appraised value and the purchase price of the Mortgaged Property.

     As of the Cut-off Date, the weighted average Loan-to-Value Ratio at
     origination of the Group II Mortgage Loans was approximately 69.93%. No
     Group II Mortgage Loan had a Loan-to-Value Ratio at origination greater
     than 95.00% or less than 12.89%.


                                      S-33


                CREDIT SCORES FOR THE GROUP II MORTGAGE LOANS(1)




                                                                                              PERCENT OF AGGREGATE
                                                     NUMBER OF        AGGREGATE PRINCIPAL       PRINCIPAL BALANCE
RANGE OF CREDIT SCORES                            MORTGAGE LOANS      BALANCE OUTSTANDING          OUTSTANDING
--------------------------------------------      --------------   -------------------------   --------------------

601 to 625..................................               1          $        548,981.24               0.15%
626 to 650..................................              19                 8,252,596.06               2.20
651 to 675..................................              48                19,886,176.89               5.31
676 to 700..................................              91                40,876,427.61              10.92
701 to 725..................................             125                54,569,536.16              14.57
726 to 750..................................             165                76,734,112.04              20.49
751 to 775..................................             202                93,309,232.77              24.92
776 to 800..................................             147                64,734,133.07              17.29
801 to 825..................................              27                13,831,749.96               3.69
826 to 850..................................               4                 1,674,787.31               0.45
                                                   ---------          -------------------         ----------
    TOTAL:..................................             829          $    374,417,733.11             100.00%
                                                   =========          ===================         ==========

---------------
(1)  As of the Cut-off Date, the weighted average "Credit Score" of the Mortgage
     Loans in Group II was approximately 740.

     We refer you to discussion above under "--General."


                                      S-34





 GEOGRAPHIC DISTRIBUTION OF MORTGAGED PROPERTIES OF THE GROUP II MORTGAGE LOANS




                                                                                              PERCENT OF AGGREGATE
                                                     NUMBER OF        AGGREGATE PRINCIPAL       PRINCIPAL BALANCE
GEOGRAPHIC AREA                                   MORTGAGE LOANS      BALANCE OUTSTANDING          OUTSTANDING
--------------------------------------------      --------------   -------------------------   --------------------

Alabama.....................................               2          $      1,048,207.20               0.28%
Arizona.....................................              25                 6,043,567.88               1.61
California..................................             350               196,020,777.70              52.35
Colorado....................................              21                 7,429,432.37               1.98
Connecticut.................................               6                 3,393,099.42               0.91
Delaware....................................               2                   558,471.27               0.15
District of Columbia........................              15                 6,255,920.90               1.67
Florida.....................................              17                 5,304,227.83               1.42
Georgia.....................................              21                 6,416,104.38               1.71
Hawaii......................................               5                 1,699,507.57               0.45
Idaho.......................................               1                   147,786.87               0.04
Illinois....................................              28                11,672,135.13               3.12
Indiana.....................................               1                   223,900.00               0.06
Iowa........................................               1                   135,593.17               0.04
Kansas......................................               1                   393,400.00               0.11
Maryland....................................              72                24,275,712.92               6.48
Massachusetts...............................              14                 5,970,652.12               1.59
Michigan....................................               9                 4,539,171.44               1.21
Minnesota...................................               6                 1,903,145.81               0.51
Missouri....................................               3                 1,309,403.67               0.35
Montana.....................................               1                   677,607.00               0.18
Nevada......................................              16                 4,013,399.77               1.07
New Hampshire...............................               1                   400,000.00               0.11
New Jersey..................................              19                 8,407,414.63               2.25
New Mexico..................................               3                   790,267.09               0.21
New York....................................              17                14,630,004.34               3.91
North Carolina..............................               8                 2,223,935.00               0.59
Ohio........................................               6                 2,864,061.04               0.76
Oregon......................................               4                   934,112.17               0.25
Pennsylvania................................               3                   518,723.11               0.14
South Carolina..............................               4                 1,364,517.17               0.36
Tennessee...................................               2                   835,448.35               0.22
Texas.......................................              23                 7,916,062.96               2.11
Utah........................................               2                   752,000.00               0.20
Virginia....................................             101                36,379,458.45               9.72
Washington..................................              17                 6,501,331.22               1.74
Wisconsin...................................               2                   469,173.16               0.13
                                                   ---------          -------------------         ----------
    TOTAL:..................................             829          $    374,417,733.11             100.00%
                                                   =========          ===================         ==========




                                      S-35



                OCCUPANCY TYPES OF THE GROUP II MORTGAGE LOANS(1)



                                                                                              PERCENT OF AGGREGATE
                                                     NUMBER OF        AGGREGATE PRINCIPAL       PRINCIPAL BALANCE
OCCUPANCY TYPE                                    MORTGAGE LOANS      BALANCE OUTSTANDING          OUTSTANDING
--------------------------------------------      --------------   -------------------------   --------------------

Primary.....................................             763          $    346,600,774.12              92.57%
Second Home.................................              56                22,324,817.33               5.96
Investment..................................              10                 5,492,141.66               1.47
                                                   ---------          -------------------         ----------
    TOTAL:..................................             829          $    374,417,733.11             100.00%
                                                   =========          ===================         ==========

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

                  PROPERTY TYPES OF THE GROUP II MORTGAGE LOANS



                                                                                              PERCENT OF AGGREGATE
                                                     NUMBER OF        AGGREGATE PRINCIPAL       PRINCIPAL BALANCE
PROPERTY TYPE                                     MORTGAGE LOANS      BALANCE OUTSTANDING          OUTSTANDING
--------------------------------------------      --------------   -------------------------   --------------------

Single Family Residence.....................             471          $    231,988,749.57              61.96%
Planned Unit Development....................             208                77,679,794.36              20.75
Condominium.................................             129                50,280,562.19              13.43
Two- to Four-Family.........................              11                 7,660,739.88               2.05
Cooperative.................................               9                 6,497,887.11               1.74
Townhouse...................................               1                   310,000.00               0.08
                                                   ---------          -------------------         ----------
    TOTAL:..................................             829          $    374,417,733.11             100.00%
                                                   =========          ===================         ==========


                   LOAN PURPOSE OF THE GROUP II MORTGAGE LOANS




                                                                                              PERCENT OF AGGREGATE
                                                     NUMBER OF        AGGREGATE PRINCIPAL       PRINCIPAL BALANCE
LOAN PURPOSE                                      MORTGAGE LOANS      BALANCE OUTSTANDING          OUTSTANDING
--------------------------------------------      --------------   -------------------------   --------------------

Purchase....................................             533          $    233,361,612.10              62.33%
Refinance - Rate Term.......................             140                75,144,484.12              20.07
Refinance - Cashout.........................             156                65,911,636.89              17.60
                                                   ---------          -------------------         ----------
    TOTAL:..................................             829          $    374,417,733.11             100.00%
                                                   =========          ===================         ==========


               LOAN DOCUMENTATION FOR THE GROUP II MORTGAGE LOANS



                                                                                              PERCENT OF AGGREGATE
                                                     NUMBER OF        AGGREGATE PRINCIPAL       PRINCIPAL BALANCE
DOCUMENTATION                                     MORTGAGE LOANS      BALANCE OUTSTANDING          OUTSTANDING
--------------------------------------------      --------------   -------------------------   --------------------

Full Alternative Documentation...............             456         $    162,323,491.03              43.35%
Full Documentation...........................             184              125,069,654.56              33.40
Verbal Verification of Employment............              69               39,857,371.04              10.65
Stated Income/Verified Assets................              90               30,256,288.49               8.08
Low Documentation............................              19                9,460,149.71               2.53
Streamlined Documentation....................              11                7,450,778.28               1.99
                                                    ---------         -------------------         ----------
    TOTAL:...................................             829         $    374,417,733.11             100.00%
                                                    =========         ===================         ==========





                                      S-36



                    MARGIN FOR THE GROUP II MORTGAGE LOANS(1)



                                                                                              PERCENT OF AGGREGATE
                                                     NUMBER OF        AGGREGATE PRINCIPAL       PRINCIPAL BALANCE
MARGIN (%)                                        MORTGAGE LOANS      BALANCE OUTSTANDING          OUTSTANDING
--------------------------------------------      --------------   -------------------------   --------------------

1.925.......................................               1          $      1,000,000.00               0.27%
1.950.......................................               1                   316,000.00               0.08
2.240.......................................               1                   500,000.00               0.13
2.250.......................................             550               194,136,313.56              51.85
2.500.......................................             116                89,383,173.11              23.87
2.550.......................................               1                   145,600.00               0.04
2.750.......................................             159                88,936,646.44              23.75
                                                   ---------          -------------------         ----------
     TOTAL:.................................             829          $    374,417,733.11             100.00%
                                                   =========          ===================         ==========

-------------
(1)  As of the Cut-off Date, the weighted average margin of the Mortgage Loans
     in Group II was approximately 2.427%.

             MAXIMUM MORTGAGE RATE OF THE GROUP II MORTGAGE LOANS(1)




                                                                                              PERCENT OF AGGREGATE
                                                     NUMBER OF        AGGREGATE PRINCIPAL       PRINCIPAL BALANCE
RANGE OF MAXIMUM MORTGAGE RATE (%)                MORTGAGE LOANS      BALANCE OUTSTANDING          OUTSTANDING
--------------------------------------------      --------------   -------------------------   --------------------

8.501 to 8.750..............................               1          $      1,207,500.00               0.32%
8.751 to 9.000..............................               3                 3,571,703.08               0.95
9.001 to 9.250..............................               8                 6,181,733.63               1.65
9.251 to 9.500..............................              40                23,061,923.04               6.16
9.501 to 9.750..............................              85                48,025,876.45              12.83
9.751 to 10.000.............................             114                61,175,243.38              16.34
10.001 to 10.250............................             152                74,840,632.83              19.99
10.251 to 10.500............................             223                90,173,836.45              24.08
10.501 to 10.750............................             122                40,770,145.12              10.89
10.751 to 11.000............................              57                17,154,734.28               4.58
11.001 to 11.250............................              16                 4,421,830.51               1.18
11.251 to 11.500............................               4                 1,055,974.34               0.28
12.751 to 13.000............................               4                 2,776,600.00               0.74
                                                   ---------          -------------------         ----------
     TOTAL:.................................             829          $    374,417,733.11             100.00%
                                                   =========          ===================         ==========

---------------
(1)  As of the Cut-off Date, the weighted average maximum Mortgage Rate of the
     Mortgage Loans in Group II was approximately 10.189% per annum and ranged
     from 8.750% per annum to 12.950% per annum.




                                      S-37




           NEXT RATE ADJUSTMENT DATE OF THE GROUP II MORTGAGE LOANS(1)




                                                                                              PERCENT OF AGGREGATE
                                                     NUMBER OF        AGGREGATE PRINCIPAL       PRINCIPAL BALANCE
NEXT RATE ADJUSTMENT DATE                         MORTGAGE LOANS      BALANCE OUTSTANDING          OUTSTANDING
--------------------------------------------      --------------   -------------------------   --------------------

December 2007...............................               1          $        620,000.00               0.17%
January 2008................................               1                   660,000.00               0.18
July 2008...................................               2                 2,585,000.00               0.69
August 2008.................................               1                   938,000.00               0.25
September 2008..............................               2                 1,600,000.00               0.43
October 2008................................               2                 2,285,000.00               0.61
November 2008...............................               3                 1,802,019.02               0.48
December 2008...............................               4                 3,250,000.00               0.87
January 2009................................               4                 3,237,000.00               0.86
February 2009...............................               2                   850,000.00               0.23
March 2009..................................              22                18,736,782.74               5.00
April 2009..................................              81                56,833,407.16              15.18
May 2009....................................               6                 2,128,531.55               0.57
June 2009...................................               1                   365,958.09               0.10
July 2009...................................             233                82,918,248.99              22.15
August 2009.................................             111                38,831,230.32              10.37
September 2009..............................             197                69,618,711.54              18.59
October 2009................................              38                20,540,744.95               5.49
November 2009...............................             118                66,617,098.75              17.79
                                                   ---------          -------------------         ----------
     TOTAL:.................................             829          $    374,417,733.11             100.00%
                                                   =========          ===================         ==========

---------------
(1)  As of the Cut-off Date, the weighted average months to the next adjustment
     date of the Mortgage Loans in Group II was approximately 54.



                                      S-38



TABULAR CHARACTERISTICS OF THE GROUP III MORTGAGE LOANS

     The Group III Mortgage Loans had the following approximate aggregate
characteristics as of the Cut-off Date.





    Number of Group III Mortgage Loans..........................................                     84
    Total Stated Principal Balance..............................................            $37,080,703
    Mortgage Rates:
       Weighted Average.........................................................                 5.532%
       Range....................................................................       4.750% to 6.250%
    Weighted Average Remaining Term to Maturity (in months).....................                    354



     The Stated Principal Balances of the Group III Mortgage Loans ranged from
approximately $93,213 to approximately $1,500,000. The Group III Mortgage Loans
had an average Stated Principal Balance of approximately $441,437.

     The weighted average Loan-to-Value Ratio at origination of the Group III
Mortgage Loans was approximately 73.86%, and no Group III Mortgage Loan had a
Loan-to-Value Ratio at origination exceeding 95.00%.

     No more than approximately 4.05% of the Group III Mortgage Loans are
secured by Mortgaged Properties located in any one zip code area.

     The following information sets forth in tabular format certain
characteristics, as of the Cut-off Date, as to the Group III Mortgage Loans.
Other than with respect to rates of interest, percentages (approximate) are
based on the Stated Principal Balance of the Group III Mortgage Loans as of the
Cut-off Date. The sum of the columns may not equal the total indicated due to
rounding.

    CUT-OFF DATE STATED PRINCIPAL BALANCE OF THE GROUP III MORTGAGE LOANS(1)




                                                                                              PERCENT OF AGGREGATE
RANGE OF CUT-OFF DATE STATED PRINCIPAL               NUMBER OF        AGGREGATE PRINCIPAL       PRINCIPAL BALANCE
BALANCES ($)                                      MORTGAGE LOANS      BALANCE OUTSTANDING          OUTSTANDING
--------------------------------------------      --------------   -------------------------   --------------------

0.01 to 100,000.00..........................               1          $         93,212.59               0.25%
100,000.01 to 200,000.00....................               8                 1,254,056.90               3.38
200,000.01 to 300,000.00....................              12                 3,056,856.22               8.24
300,000.01 to 400,000.00....................              20                 7,236,812.53              19.52
400,000.01 to 500,000.00....................              16                 7,224,521.60              19.48
500,000.01 to 600,000.00....................              12                 6,813,597.98              18.38
600,000.01 to 700,000.00....................               7                 4,444,690.22              11.99
700,000.01 to 800,000.00....................               6                 4,501,305.37              12.14
900,000.01 to 1,000,000.00..................               1                   955,650.00               2.58
1,400,000.01 to 1,500,000.00................               1                 1,500,000.00               4.05
                                                   ---------          -------------------         ----------
    TOTAL:..................................              84          $     37,080,703.41             100.00%
                                                   =========          ===================         ==========

---------------
(1)  As of the Cut-off Date, the average Stated Principal Balance of the
     Mortgage Loans in Group III was approximately $441,437. No Group III
     Mortgage Loan had a principal balance as of the Cut-off Date greater than
     $1,500,000 or less than $93,213.

                                      S-39



            CURRENT MORTGAGE RATES OF THE GROUP III MORTGAGE LOANS(1)




                                                                                              PERCENT OF AGGREGATE
                                                     NUMBER OF        AGGREGATE PRINCIPAL       PRINCIPAL BALANCE
RANGE OF CURRENT MORTGAGE RATES (%)               MORTGAGE LOANS      BALANCE OUTSTANDING          OUTSTANDING
--------------------------------------------      --------------   -------------------------   --------------------

4.501 to 4.750..............................               1          $        558,485.97               1.51%
4.751 to 5.000..............................               6                 3,180,131.64               8.58
5.001 to 5.250..............................               6                 4,400,600.66              11.87
5.251 to 5.500..............................              30                11,566,037.70              31.19
5.501 to 5.750..............................              24                10,156,815.75              27.39
5.751 to 6.000..............................              12                 5,025,904.55              13.55
6.001 to 6.250..............................               5                 2,192,727.14               5.91
                                                   ---------          -------------------         ----------
    TOTAL:..................................              84          $     37,080,703.41             100.00%
                                                   =========          ===================         ==========

---------------
(1)  As of the Cut-off Date, the weighted average current Mortgage Rate of the
     Mortgage Loans in Group III was approximately 5.532% per annum and ranged
     from 4.750% per annum to 6.250% per annum.

               REMAINING TERMS OF THE GROUP III MORTGAGE LOANS(1)




                                                                                              PERCENT OF AGGREGATE
                                                     NUMBER OF        AGGREGATE PRINCIPAL       PRINCIPAL BALANCE
REMAINING TERMS (MONTHS)                          MORTGAGE LOANS      BALANCE OUTSTANDING          OUTSTANDING
--------------------------------------------      --------------   -------------------------   --------------------

337 to 348..................................              20          $      7,945,589.16              21.43%
349 to 360..................................              64                29,135,114.25              78.57
                                                   ---------          -------------------         ----------
    TOTAL:..................................              84          $     37,080,703.41             100.00%
                                                   =========          ===================         ==========

---------------
(1)  As of the Cut-off Date, the weighted average "Remaining term" of the
     Mortgage Loans in Group III was approximately 354 months.

        ORIGINAL LOAN-TO-VALUE RATIOS OF THE GROUP III MORTGAGE LOANS(1)



                                                                                              PERCENT OF AGGREGATE
                                                     NUMBER OF        AGGREGATE PRINCIPAL       PRINCIPAL BALANCE
RANGE OF ORIGINAL LOAN-TO-VALUE RATIOS (%)        MORTGAGE LOANS      BALANCE OUTSTANDING          OUTSTANDING
--------------------------------------------      --------------   -------------------------   --------------------

30.01 to 40.00..............................               1          $        245,995.78               0.66%
40.01 to 50.00..............................               2                   946,634.88               2.55
50.01 to 60.00..............................               8                 4,166,282.37              11.24
60.01 to 70.00..............................              11                 4,498,912.85              12.13
70.01 to 75.00..............................               7                 4,372,416.03              11.79
75.01 to 80.00..............................              52                21,916,553.98              59.11
85.01 to 90.00..............................               2                   568,234.98               1.53
90.01 to 95.00..............................               1                   365,672.54               0.99
                                                   ---------          -------------------         ----------
    TOTAL:..................................              84          $     37,080,703.41             100.00%
                                                   =========          ===================         ==========

---------------
(1)  The original Loan-to-Value Ratio for any Mortgage Loan is calculated as (i)
     the original loan amount by (ii) the appraised value of the Mortgage
     Property at origination, or if the loan is a purchase, the lesser of the
     appraised value and the purchase price of the Mortgaged Property.

     As of the Cut-off Date, the weighted average Loan-to-Value Ratio at
     origination of the Group III Mortgage Loans was approximately 73.86%. No
     Group III Mortgage Loan had a Loan-to-Value Ratio at origination greater
     than 95.00% or less than 37.04%.


                                      S-40





                CREDIT SCORE FOR THE GROUP III MORTGAGE LOANS(1)




                                                                                              PERCENT OF AGGREGATE
                                                     NUMBER OF        AGGREGATE PRINCIPAL       PRINCIPAL BALANCE
RANGE OF CREDIT SCORES                            MORTGAGE LOANS      BALANCE OUTSTANDING          OUTSTANDING
--------------------------------------------      --------------   -------------------------   --------------------

626 to 650..................................               2          $        731,734.98               1.97%
651 to 675..................................               6                 2,656,020.23               7.16
676 to 700..................................               7                 2,239,166.45               6.04
701 to 725..................................               7                 3,720,935.66              10.03
726 to 750..................................              14                 7,013,032.05              18.91
751 to 775..................................              25                 9,902,343.23              26.70
776 to 800..................................              19                 9,412,726.41              25.38
801 to 825..................................               4                 1,404,744.40               3.79
                                                   ---------          -------------------         ----------
    TOTAL:..................................              84          $     37,080,703.41             100.00%
                                                   =========          ===================         ==========

---------------
(1)  As of the Cut-off Date, the weighted average "Credit Score" of the Mortgage
     Loans in Group III was approximately 747.

     We refer you to discussion above under "--General."

 GEOGRAPHIC DISTRIBUTION OF MORTGAGED PROPERTIES OF THE GROUP III MORTGAGE LOANS



                                                                                              PERCENT OF AGGREGATE
                                                     NUMBER OF        AGGREGATE PRINCIPAL       PRINCIPAL BALANCE
GEOGRAPHIC AREA                                   MORTGAGE LOANS      BALANCE OUTSTANDING          OUTSTANDING
--------------------------------------------      --------------   -------------------------   --------------------

Arizona.....................................               2          $        464,724.58               1.25%
California..................................              22                 8,958,302.92              24.16
Colorado....................................               2                   618,000.00               1.67
Connecticut.................................               1                   423,169.74               1.14
District of Columbia........................               3                 1,517,113.00               4.09
Florida.....................................               1                   441,600.00               1.19
Georgia.....................................               5                 2,563,764.30               6.91
Hawaii......................................               2                   810,096.85               2.18
Illinois....................................               2                 1,322,199.73               3.57
Maryland....................................               9                 3,777,168.98              10.19
Massachusetts...............................               1                   333,600.00               0.90
Michigan....................................               1                   714,875.00               1.93
New Jersey..................................               5                 2,226,994.21               6.01
North Carolina..............................               2                 1,409,034.88               3.80
Ohio........................................               1                   756,374.13               2.04
Oregon......................................               2                   567,553.67               1.53
Pennsylvania................................               1                 1,500,000.00               4.05
Texas.......................................               7                 3,111,137.95               8.39
Virginia....................................              13                 4,880,250.96              13.16
Washington..................................               1                   107,960.11               0.29
West Virginia...............................               1                   576,782.40               1.56
                                                   ---------          -------------------         ----------
    TOTAL:..................................              84          $     37,080,703.41             100.00%
                                                   =========          ===================         ==========





                                      S-41




               OCCUPANCY TYPES OF THE GROUP III MORTGAGE LOANS(1)



                                                                                              PERCENT OF AGGREGATE
                                                     NUMBER OF        AGGREGATE PRINCIPAL       PRINCIPAL BALANCE
OCCUPANCY TYPE                                    MORTGAGE LOANS      BALANCE OUTSTANDING          OUTSTANDING
--------------------------------------------      --------------   -------------------------   --------------------

Primary.....................................              82          $     36,305,026.41              97.91%
Second Home.................................               2                   775,677.00               2.09
                                                   ---------          -------------------         ----------
    TOTAL:..................................              84          $     37,080,703.41             100.00%
                                                   =========          ===================         ==========

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

                 PROPERTY TYPES OF THE GROUP III MORTGAGE LOANS



                                                                                              PERCENT OF AGGREGATE
                                                     NUMBER OF        AGGREGATE PRINCIPAL       PRINCIPAL BALANCE
PROPERTY TYPE                                     MORTGAGE LOANS      BALANCE OUTSTANDING          OUTSTANDING
--------------------------------------------      --------------   -------------------------   --------------------

Single Family Residence.....................              56          $     25,952,709.73              69.99%
Planned Unit Development....................              23                 9,642,485.78              26.00
Condominium.................................               4                   941,907.90               2.54
Two-to-Four Family..........................               1                   543,600.00               1.47
                                                   ---------          -------------------         ----------
    TOTAL:..................................              84          $     37,080,703.41             100.00%
                                                   =========          ===================         ==========


                  LOAN PURPOSE OF THE GROUP III MORTGAGE LOANS



                                                                                              PERCENT OF AGGREGATE
                                                     NUMBER OF        AGGREGATE PRINCIPAL       PRINCIPAL BALANCE
LOAN PURPOSE                                      MORTGAGE LOANS      BALANCE OUTSTANDING          OUTSTANDING
--------------------------------------------      --------------   -------------------------   --------------------

Purchase....................................              61          $     28,547,489.97              76.99%
Refinance - Rate Term.......................              16                 5,295,256.83              14.28
Refinance - Cashout.........................               7                 3,237,956.61               8.73
                                                   ---------          -------------------         ----------
    TOTAL:..................................              84          $     37,080,703.41             100.00%
                                                   =========          ===================         ==========


               LOAN DOCUMENTATION FOR THE GROUP III MORTGAGE LOANS




                                                                                              PERCENT OF AGGREGATE
                                                     NUMBER OF        AGGREGATE PRINCIPAL       PRINCIPAL BALANCE
DOCUMENTATION                                     MORTGAGE LOANS      BALANCE OUTSTANDING          OUTSTANDING
--------------------------------------------      --------------   -------------------------   --------------------

Full Alternative Documentation...............              76         $     33,741,894.25              91.00%
Stated Income/Verified Assets................               7                2,783,809.16               7.51
Reduced Documentation........................               1                  555,000.00               1.50
                                                    ---------         -------------------         ----------
    TOTAL:...................................              84         $     37,080,703.41             100.00%
                                                    =========         ===================         ==========


                   MARGIN FOR THE GROUP III MORTGAGE LOANS(1)



                                                                                              PERCENT OF AGGREGATE
                                                     NUMBER OF        AGGREGATE PRINCIPAL       PRINCIPAL BALANCE
MARGIN (%)                                        MORTGAGE LOANS      BALANCE OUTSTANDING          OUTSTANDING
--------------------------------------------      --------------   -------------------------   --------------------

2.250.......................................              83          $     36,861,099.58              99.41%
2.750.......................................               1                   219,603.83               0.59
                                                   ---------          -------------------         ----------
    TOTAL:..................................              84          $     37,080,703.41             100.00%
                                                   =========          ===================         ==========

-------------
(1)  As of the Cut-off Date, the weighted average margin of the Mortgage Loans
     in Group III was approximately 2.253%.




                                      S-42





            MAXIMUM MORTGAGE RATE OF THE GROUP III MORTGAGE LOANS(1)



                                                                                              PERCENT OF AGGREGATE
                                                     NUMBER OF        AGGREGATE PRINCIPAL       PRINCIPAL BALANCE
RANGE OF MAXIMUM MORTGAGE RATE (%)                MORTGAGE LOANS      BALANCE OUTSTANDING          OUTSTANDING
--------------------------------------------      --------------   -------------------------   --------------------

9.501 to 9.750..............................               1          $        558,485.97               1.51%
9.751 to 10.000.............................               6                 3,180,131.64               8.58
10.001 to 10.250............................               6                 4,400,600.66              11.87
10.251 to 10.500............................              30                11,566,037.70              31.19
10.501 to 10.750............................              24                10,156,815.75              27.39
10.751 to 11.000............................              12                 5,025,904.55              13.55
11.001 to 11.250............................               5                 2,192,727.14               5.91
                                                   ---------          -------------------         ----------
    TOTAL:..................................              84          $     37,080,703.41             100.00%
                                                   =========          ===================         ==========

---------------
(1)  As of the Cut-off Date, the weighted average maximum Mortgage Rate of the
     Mortgage Loans in Group III was approximately 10.532% per annum and ranged
     from 9.750% per annum to 11.250% per annum.

          NEXT RATE ADJUSTMENT DATE OF THE GROUP III MORTGAGE LOANS(1)



                                                                                              PERCENT OF AGGREGATE
                                                     NUMBER OF        AGGREGATE PRINCIPAL       PRINCIPAL BALANCE
NEXT RATE ADJUSTMENT DATE                         MORTGAGE LOANS      BALANCE OUTSTANDING          OUTSTANDING
--------------------------------------------      --------------   -------------------------   --------------------

October 2010................................               1          $        576,782.40               1.56%
November 2010...............................               2                   571,847.98               1.54
December 2010...............................              17                 6,796,958.78              18.33
March 2011..................................               1                   432,300.64               1.17
April 2011..................................               1                   555,000.00               1.50
August 2011.................................               6                 2,857,669.45               7.71
September 2011..............................              56                25,290,144.16              68.20
                                                   ---------          -------------------         ----------
    TOTAL:..................................              84          $     37,080,703.41             100.00%
                                                   =========          ===================         ==========

---------------
(1)  As of the Cut-off Date, the weighted average months to the next adjustment
     date of the Mortgage Loans in Group III was approximately 78.



                                      S-43




THE INDICES

     The Mortgage Rate for all of the Mortgage Loans will be adjusted monthly or
annually, as applicable, on the related adjustment date. The index for the
Mortgage Rate borne by each of the Mortgage Loans may be calculated as follows
(in each case, rounded to the nearest one-eighth of one percent):

                  One-Month LIBOR. As of any Adjustment Date, the Index
         applicable to the determination of the Mortgage Rate on approximately
         0.74% of the Group II Mortgage Loans, and 0.50% of the Mortgage Loans
         in the aggregate are adjusted every month to equal the London interbank
         offered rate for one-month United States dollar deposits ("One-Month
         LIBOR") as published in The Wall Street Journal most recently available
         as of twenty-five days preceding such Adjustment Date, as specified in
         the related Mortgage Note.

                  One-Year LIBOR. As of any Adjustment Date, the Index
         applicable to the determination of the Mortgage Rate on approximately
         42.30%, 51.72% and 99.41% of the Group I, Group II and Group III
         Mortgage Loans, respectively, and 52.39% of the Mortgage Loans in the
         aggregate will be the average of the interbank offered rates for
         one-year United States dollar deposits in the London market ("One-Year
         LIBOR") as published in The Wall Street Journal and as most recently
         available forty-five days preceding such Adjustment Date, as specified
         in the related Mortgage Note.

                  In the event that One-Year LIBOR becomes unavailable or
         otherwise unpublished, the Master Servicer will select a comparable
         alternative index over which it has no direct control and which is
         readily verifiable.

                  One-Year U.S. Treasury. As of any Adjustment Date, the Index
         applicable to the determination of the Mortgage Rate on approximately
         57.70%, 47.54% and 0.59% of the Group I, Group II and Group III
         Mortgage Loans and 47.11% of the Mortgage Loans in the aggregate will
         be a per annum rate equal to the weekly average yield on U.S. Treasury
         securities adjusted to a constant maturity of one year as reported by
         the Federal Reserve Board in Statistical Release No. H.15 (519) (the
         "Release") as most recently available as of the date forty-five days
         prior to the adjustment date ("One-Year Treasury"). Those average
         yields reflect the yields for the week prior to that week.

                  In the event that One-Year Treasury becomes unavailable or
         otherwise unpublished, the Master Servicer will select a comparable
         alternative index over which it has no direct control and which is
         readily verifiable.

ASSIGNMENT OF THE MORTGAGE LOANS

     Under the Mortgage Loan Purchase Agreement, Merrill Lynch Mortgage Lending,
Inc. (the "Seller"), will sell the Mortgage Loans to the Depositor. Pursuant to
the Mortgage Loan Purchase Agreement, the Seller will make certain
representations, warranties and covenants relating to, among other things,
certain characteristics of the Mortgage Loans. The Originators will represent
that no Mortgage Loan is subject to the Home Ownership and Equity Protection Act
of 1994 or is a "high cost" or "predatory" loan under any applicable state or
local law applicable to the originator of such Mortgage Loan. In addition, the
Seller will represent that no Mortgage Loan is a High Cost loan or Covered Loan,
as applicable, as such terms are defined in Appendix E of S&P's Glossary For
File Format for LEVELS(R) Version 5.6 Revised. Subject to the limitations
described below, the Seller will be obligated as described herein to repurchase
or substitute a similar mortgage loan for any Mortgage Loan as to which there
exists deficient documentation or as to which there has been an uncured breach
of their respective



                                      S-44


representations or warranties relating to the characteristics of such 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"). We refer you to "Description of the Agreements--Representations
and Warranties; Repurchases" in the accompanying prospectus.

     Pursuant to the Pooling and Servicing Agreement, on the Closing Date, the
Depositor will sell, transfer, assign, set over and otherwise convey without
recourse to the Trust Fund all of its rights to the Mortgage Loans and its
rights under the Mortgage Loan Purchase Agreement (including the right to
enforce the Seller's repurchase obligations). In addition, the Depositor will
assign to the Trust Fund certain of its rights with regards to the Assignment,
Assumption and Recognition Agreements. The obligations of the Seller with
respect to the Certificates are limited to the Seller's obligations to
repurchase 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 (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, the title policy with respect to the related
Mortgaged Property and, if applicable, all recorded intervening assignments of
the Mortgage and any riders or modifications to such Mortgage Note and Mortgage
(except for any such document other than Mortgage Notes not available on the
Closing Date, which will be delivered to the Trustee or its custodian 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 by the applicable seller in the appropriate public office for real
property records, except in states where, in the opinion of counsel, delivered
at the request and at the expense of the Depositor on the Closing Date, such
recording is not required to protect the Trustee's interest in the Mortgage
Loans against the claim of any subsequent transferee or any successor to or
creditor of the Depositor.

     The Trustee or its custodian will review each Mortgage File within 270 days
of the Closing Date (or promptly after the Trustee's or custodian's receipt of
any document permitted to be delivered after the Closing Date) and will hold
such Mortgage Files in trust for the benefit of the Certificateholders. If at
the end of such 270-day period, any document in a Mortgage File is found to be
missing or defective in a material respect and the Seller does not cure such
omission or defect within 90 days after its receipt of notice from the Trustee,
then the Seller is obligated to purchase the related Defective Mortgage Loan
from the Trust Fund at a price equal to the sum of (a) 100% of the Stated
Principal Balance thereof, (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 and (c) any unreimbursed Monthly Advances and servicing
advances not included in clauses (a) and (b) above. Rather than purchase a
Defective Mortgage Loan as provided above, 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 of the REMICs or result in a prohibited transaction tax under the Code.

     Any Replacement Mortgage Loan generally will, on the date of substitution,
as confirmed by a certificate delivered by the Seller to the Trustee, among
other characteristics set forth in the Mortgage Loan Purchase Agreement, (i)
have an outstanding principal balance, after deduction of all Scheduled Payments
due in the month of substitution, not in excess (and not less than 90%) of the
Stated Principal Balance of the Deleted



                                      S-45


Mortgage Loan (the amount of any shortfall to be deposited in the Distribution
Account not later than the succeeding Determination Date and held for
distribution to the Certificateholders on the related Distribution Date), (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 gross margin not less than that of the Deleted Mortgage Loan and,
if Mortgage Loans of a Mortgage Pool equal to 1% or more of the Cut-off Date
balance of such Mortgage Pool have become Deleted Mortgage Loans, not more than
two percentage points more 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) not permit conversion of the
related Mortgage Rate to a permanent fixed Mortgage Rate, (vi) have the same or
higher credit score, (vii) have an initial interest adjustment date no earlier
than five months before (and no later than five months after) the initial
interest adjustment date of the Deleted Mortgage Loan, (viii) be a "qualified
replacement mortgage" within the meaning of Section 860G(a)(4) of the Code and
(ix) comply with all of the representations and warranties set forth in the
Mortgage Loan Purchase 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.

THE ORIGINATORS

     Approximately 41.87%, 51.43% and 98.50% of the Group I, Group II and Group
III Mortgage Loans, respectively, and approximately 52.03% of the Mortgage Loans
in the aggregate, were originated by National City Mortgage Co. ("National
City"). Approximately 24.40% of the Group II Mortgage Loans, and approximately
16.33% of the Mortgage Loans in the aggregate, were originated by First Republic
Bank ("First Republic"). Approximately 24.17% of the Group II Mortgage Loans,
and approximately 16.18% of the Mortgage Loans in the aggregate, were originated
by Washington Mutual Bank, FA ("Washington Mutual"). Approximately 57.34% of the
Group I Mortgage Loans, and approximately 15.15% of the Mortgage Loans in the
aggregate, were originated by ABN AMRO Mortgage Group, Inc. ("ABN AMRO"). The
remainder of the mortgage loans were originated by various originators, none of
which have originated more than 10% of the mortgage loans in the aggregate.

National City Mortgage Co.

     National City Mortgage Co. ("National City"), an Ohio corporation, is a
full-service residential mortgage banking company headquartered in Miamisburg,
Ohio, a southern suburb of Dayton, Ohio. As of December 31, 2003, National City
serviced 1,122,461 loans, totaling $156.2 billion, 90.4% of which are serviced
for secondary market investors. The National City servicing portfolio currently
ranks in the top 10 mortgage companies in the country.

     The predecessor of National City, North Central Mortgage Corporation, was
founded in 1955 as the lending arm of a local building supply firm. In 1981,
Third National Bank & Trust Co. of Dayton acquired North Central Mortgage
Corporation. At that time, the company was servicing approximately $350 million
of mortgage loans. In 1984, Third National Bank & Trust Co., along with North
Central Mortgage Corporation, was acquired by Society Corporation of Cleveland.
This acquisition boosted the servicing portfolio of North Central Mortgage
Corporation to approximately $1 billion.

     In December 1985, Shawmut Bank of Boston purchased North Central Mortgage
Corporation from Society Corporation of Cleveland. The name was then changed to
Shawmut Mortgage Corporation and the servicing portfolio had grown to $1.6
billion.

     In 1989, Shawmut Bank of Boston sold Shawmut Mortgage Corporation to
National City Corporation ("NCC"). The name was changed to National City
Mortgage Co. and the servicing portfolio had grown to 55,000 loans totaling $2.7
billion.

     Since the acquisition by NCC, National City has grown through the
consolidation of the residential mortgage loan servicing of all NCC mortgage
banking and commercial banking affiliates, as well as through direct
originations.



                                      S-46


First Republic Bank

     First Republic Bank ("First Republic") is a commercial bank, specializing
in real estate lending, private banking investment management and trust
services. Its executive offices are located at One Eleven Pine Street, San
Francisco, California 94111. First Republic originates residential mortgage
loans through branch offices in the seven metropolitan areas of San Francisco,
Los Angeles, Orange County, San Diego, Santa Barbara, Las Vegas, and New York.

Washington Mutual Bank, FA

     Washington Mutual Bank, FA ("Washington Mutual") is a federally chartered
savings bank. Washington Mutual's principal executive offices are located at
1201 Third Avenue, Seattle, WA 98101, telephone (206) 461-2000. The primary
mortgage loan servicing office of Washington Mutual is located at 19850 Plummer
Street, Chatsworth, CA 91311. Its telephone number is (818) 715-2278. Washington
Mutual is subject to regulation and examination by the Office of Thrift
Supervision, which is its primary regulator. Washington Mutual's deposit
accounts are insured by the FDIC, primarily through the Savings Association
Insurance Fund. As a result, the FDIC also has some authority to regulate
Washington Mutual.

ABN AMRO Mortgage Group, Inc.

     ABN AMRO Mortgage Group, Inc. ("ABN AMRO"), a Delaware corporation, is a
wholly owned operating subsidiary of Standard Federal Bank National Association,
a subsidiary of LaSalle Bank Corporation. ABN AMRO is engaged primarily in the
mortgage banking business, and as such, originates, purchases and sells, and
services residential mortgage loans. ABN AMRO originates residential mortgage
loans through the branch offices of its affiliated banks, through its e-commerce
internet site, and through a nationwide network of mortgage loan brokers and
correspondents. ABN AMRO's residential mortgage loans are principally
first-lien, conforming and non-conforming, fixed or adjustable rate mortgage
loans. ABN AMRO's principal office is located at 2600 W. Big Beaver Road, Troy,
Michigan 48084.

UNDERWRITING GUIDELINES

     The Mortgage Loans were originated or acquired by the various Originators
in accordance with their respective underwriting standards as set forth below.

National City's Underwriting Standards

     All of the National City loans are "conventional non-conforming mortgage
loans" (i.e., loans that are not insured by the Federal Housing Authority
("FHA") or partially guaranteed by the Veterans Administration ("VA") or which
do not qualify for sale to Fannie Mae or Freddie Mac) and are secured by first
liens on one-to four-family residential properties. These loans typically differ
from those underwritten to the guidelines established by Fannie Mae and Freddie
Mac primarily with respect to the original principal balances, loan-to- value
ratios, borrower income, required documentation, interest rates, and borrower
occupancy of the mortgaged property and/or property types. The National City
loans have been originated by National City and were generally underwritten in
accordance with the standards described herein.

     The National City underwriting standards are applied to evaluate the
prospective borrower's credit standing and repayment ability and the value and
adequacy of the mortgaged property as collateral. These standards are applied in
accordance with the applicable federal and state laws and regulations.
Exceptions to the underwriting standards are permitted where compensating
factors are present.



                                      S-47


     Generally, each mortgagor will have been required to complete an
application designed to provide to the lender pertinent credit information
concerning the mortgagor. The mortgagor will have given information with respect
to its assets, liabilities, income (except as described below), credit history,
employment history and personal information, and will have furnished the lender
with authorization to obtain a credit report which summarizes the mortgagor's
credit history. In the case of two-four unit dwellings, income derived from the
mortgaged property may have been considered for underwriting purposes, in
addition to the income of the mortgagor from other sources.

     With respect to second homes or vacation properties, no income derived from
the property will have been considered for underwriting purposes. With respect
to purchase money or rate/term refinance loans secured by single family
residences, loan-to-value ratios at origination of up to 95% for mortgage loans
with original principal balances of up to $350,000, up to 90% for mortgage loans
secured by two family, and primary residences with original principal balances
of up to $400,000. Mortgage loans with principal balances up to $1,000,000
("super jumbos") are allowed if the loan is secured by the borrower's primary
residence. The loan-to- value ratio for super jumbos generally may not exceed
70%. For cash out refinance loans, the maximum loan-to- value ratio generally is
90% and the maximum "cash out" amount permitted is $200,000. Investment
properties are generally not permitted under the National City underwriting
guidelines.

     For each mortgage loan with a loan-to-value ratio at origination exceeding
80%, a primary mortgage insurance policy insuring a portion of the balance of
the mortgage loan at least equal to the product of the original principal
balance of the mortgage loan and a fraction, the numerator of which is the
excess of the original principal balance of such mortgage loan over 75% of the
lesser of the appraised value and the selling price of the related mortgaged
property and the denominator of which is the original principal balance of the
related mortgage loan plus accrued interest thereon and related foreclosure
expenses is generally required. No such primary mortgage insurance policy will
be required with respect to any such mortgage loan after the date on which the
related loan-to-value ratio decreases to 80% or less or, based upon new
appraisal, the principal balance of such mortgage loan represents 80% or less of
the new appraised value. All of the insurers that have issued primary mortgage
insurance policies with respect to the mortgage loans meet Fannie Mae's or
Freddie Mac's standard or are acceptable to the rating agencies.

     In determining whether a prospective borrower has sufficient monthly income
available (i) to meet the borrower's monthly obligation on their proposed
mortgage loan and (ii) to meet the monthly housing expenses and other financial
obligation on the proposed mortgage loan, National City generally considers,
when required by the applicable documentation program, the ratio of such amounts
to the proposed borrower's acceptable stable monthly gross income. Such ratios
vary depending on a number of underwriting criteria, including loan-to-value
ratios, and are determined on a loan-by-loan basis.

     National City also examines a prospective borrower's credit report.
Generally, each credit report provides a credit score for the borrower. Credit
scores generally range from 350 to 840 and are available from three major credit
bureaus: Experian (formerly TRW Information Systems and Services), Equifax and
Trans Union. If three credit scores are obtained, National City applies the
lower middle score of the borrowers. Credit scores are empirically derived from
historical credit bureau data and represent a numerical weighing of a borrower's
credit characteristics over a two-year period. A credit score is generated
through the statistical analysis of a number of credit-related characteristics
or variables. Common characteristics include number of credit lines (trade
lines), payment history, past delinquencies, severity of delinquencies, current
levels of indebtedness, types of credit and length of credit history. Attributes
are the specific values of each characteristic. A scorecard (the model) is
created with weights or points assigned to each attribute. An individual loan
applicant's credit score is derived by summing together the attribute weights
for that applicant.



                                      S-48


     The National City loans have been underwritten under one of the following
documentation programs: full/alternative documentation and stated income
documentation. Under full/alternative documentation, the prospective borrower's
employment, income and assets are verified through written and telephonic
communications. Under a stated income documentation program, more emphasis is
placed on the value and adequacy of the mortgaged property as collateral, credit
history and other assets of the borrower than on a verified income of the
borrower. Borrower's assets are verified.

     Each National City mortgaged property has been appraised by a qualified
independent appraiser who meets requirements as determined by FNMA and FHLMC.
All appraisals are required to conform to the Uniform Standards of Professional
Appraisal Practice adopted by the Appraisal Standard Board of the Appraisal
Foundation. The requirements of Fannie Mae and Freddie Mac require, among other
things, that the appraiser, or its agent on its behalf, personally inspect the
property inside and out, verify whether the property was in good condition and
verify that construction, if new, had been substantially completed. The
appraisal generally will have been based on prices obtained on recent sales of
comparable properties, determined in accordance with Fannie Mae and Freddie Mac
guidelines. In certain cases 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 may be used.

First Republic

     First Republic's mortgage origination business is a retail lending
operation. The mortgage loans were originated by relationship managers employed
by First Republic generally in accordance with the underwriting criteria
described herein. Although the underwriting policies used in originating
mortgage loans change from time to time, the policies described herein generally
apply to the mortgage loans in all material respects.

     First Republic focuses on originating loans secured by residential mortgage
properties located in specific geographic areas where First Republic has
relationships with clients. First Republic's loans are of sufficient average
size to justify executive management's involvement in many transactions. First
Republic's executive loan committee (which consists of the president, the
executive vice presidents, chief credit officer and senior credit officers)
reviews all loan applications and approves all loan originations. Certain larger
loans and loans to borrowers with significant relationships with First Republic
are approved by First Republic's director's loan committee or First Republic's
board of directors. The majority of all properties are visited by the
originating relationship manager, and, generally, an additional visit is made by
one of the members of the executive loan committee, prior to loan closing.

     First Republic's strategy includes lending to borrowers who are successful
professionals, business executives, or entrepreneurs and who are buying or
refinancing homes in supply-constrained, desirable, metropolitan communities.
Repeat customers or their direct referrals account for the most important source
of the loans originated by First Republic. Many of the borrowers have high
liquidity and a substantial net worth and are not first-time homebuyers.
Additionally, First Republic offers specific loan programs for first-time
homebuyers and borrowers with low- to moderate-incomes. First Republic's
single-family loans are secured by single-family detached homes, condominiums,
cooperative apartments, and two-to-four unit properties.

     First Republic offers a variety of loan products in addition to home
mortgage loans, as well as deposit products, trust services and investment
products. Many of First Republic's customers are users of multiple products,
currently averaging over six products per customer. First Republic believes this
additional interaction with its customers increases the level of financial
information available to First Republic's relationship managers concerning its
customers and hence enhances the underwriting process.

     First Republic requires that its relationship managers be involved, along
with the collections department staff, in the collection activities relating to
any delinquent mortgage loans originated by them.


                                      S-49


Annually, the relationship managers employed by First Republic enter into an
agreement which provides that future origination fees otherwise payable to the
relationship manager may be reduced if any loan originated by the relationship
manager suffers a loss. First Republic believes that these relationship manager
policies contribute to establishing a conservative approach to the underwriting
process.

     The underwriting process is intended to assess both the prospective
borrower's credit standing and the ability to repay, and the value and adequacy
of the mortgaged property as collateral. However, First Republic relies
primarily on the borrower's ability to repay the loan. This includes analyzing
the borrower's cash flow, verified liquidity, credit-standing, employment
history, and overall financial condition. The value of the mortgaged property is
considered as a measure of the extent of its recovery in the event of default.
To determine the adequacy of the property as collateral for a loan, appraisals
are obtained from qualified outside appraisers approved by First Republic. These
appraisers are chosen from a small group of appraisers and their qualifications
are reviewed at least annually.

     First Republic's appraisal requirements satisfy or exceed the guidelines of
Fannie Mae and Freddie Mac and the requirements prescribed in the regulations
corresponding with the Federal Institutions Reform, Recovery and Enforcement Act
of 1989. First Republic's focus on loans secured by a limited number of property
types located in specific geographic areas enables management to maintain a
continually updated knowledge of collateral values in the areas in which First
Republic lends. The appraiser is instructed to inspect the interior and exterior
of the property and to prepare a report that includes a market data analysis
based on the estimated current cost of constructing a similar home. In addition,
the relationship manager and, in most cases, a member of the executive loan
committee performs a drive-by of every property prior to the final lending
decision. Both the outside appraiser's report and the internal employee's
drive-by provide the basis for the final determination of the collateral value.

     Each prospective borrower submits an application package that includes the
applicant's federal income tax returns for at least the last two years
(self-employed individuals are required to submit their personal and business
tax returns for the past three years, as are individuals seeking larger loan
amounts) and information with respect to the applicant's bank and brokerage
accounts, assets, liabilities, income, and employment history. In addition,
First Republic, with the applicant's permission, obtains credit reports from
three credit bureaus, including the applicant's respective credit scores. First
Republic verifies the income, employment and liquid assets of the applicant to
determine the borrower's ability to make timely payment. In all cases, First
Republic obtains the applicant's permission to obtain copies of tax returns
directly from the Internal Revenue Service to verify income information. First
Republic will generally obtain a verification of mortgage and current mortgage
statement for mortgage loans not reported on the credit report. Information
relative to significant adverse credit and legal actions must be explained in
writing by the applicant and must be acceptable to First Republic. The
origination process also requires that adequate title insurance, standard fire
and hazard insurance and, where necessary, flood insurance be obtained and
maintained.

     Once all applicable employment, credit and property information is
received, a determination is made as to whether the prospective borrower has (1)
sufficient income available to meet both housing and total debt obligations and
(2) sufficient post-loan liquidity to carry the debt in the event of any
personal setback or regional economic downturn. The borrower's credit history
and track record for accumulation of assets is another important factor in
deciding the amount of credit to be extended. The amount of the loan may be
limited by these factors, in addition to the established value of the mortgaged
property.

     In some cases, First Republic may exceed its standard maximum loan-to-value
guidelines and extend additional credit to a qualified borrower if compensating
factors exist. In such cases, First Republic may require the borrower to pledge
additional collateral to secure the mortgage loan, including marketable
securities or certificates of deposit acceptable to First Republic. In other
cases, First Republic may require a borrower to secure the mortgage loan with
additional real estate collateral. The value of the



                                      S-50


additional collateral must be such that it brings the total collateral value
within First Republic's standard loan-to-value guidelines. Securities and
certificates of deposit, as additional collateral, are pledged specifically to
secure the borrower's loan, are marked to market daily, and cannot be removed
from the pledge agreement until the loan amount is within First Republic's
conservative, standard loan to value requirements, and only upon First
Republic's executive loan committee's express approval. If the market value of
the additional collateral declines below specified levels, the related borrower
is required to pledge sufficient additional collateral to secure the mortgage
loan or to pay down the mortgage loan balance to an acceptable level.

Washington Mutual

     In this section of the prospectus supplement, "mortgage loan" refers only
to a mortgage loan for which Washington Mutual is the seller.

     The mortgage loans have been originated generally in accordance with the
following underwriting guidelines established by Washington Mutual, subject to
certain exceptions giving consideration to compensating underwriting factors,
except that, some or all of the mortgage loans may have been originated outside
the applicable minimum FICO score. The following is a general summary of the
underwriting guidelines established and generally applied by Washington Mutual.
This summary does not purport to be a complete description of the underwriting
standards of Washington Mutual.

     All one- to four-family residential mortgage loans must meet acceptable
credit, appraisal and underwriting criteria as established by Washington Mutual.
The underwriting guidelines are applied in accordance with applicable state and
federal laws and regulations. The underwriting guidelines are established to set
acceptable criteria regarding credit history, repayment ability, adequacy of
necessary liquidity, and adequacy of the collateral. These guidelines generally
conform to secondary market standards.

     Additional loan-to-value ratio guidelines are established with respect to
individual programs and loan amount ranges.

     Three general sets of underwriting guidelines are applicable: Standard,
which includes all the basic guidelines and is applied to both fixed rate and
adjustable rate mortgage products; Portfolio Feature, which includes some
specific enhanced guidelines such as slightly higher loan-to-value ratios and 40
year terms, and is available only on adjustable rate mortgage products; and
Subprime, which allows for deviations from basic guidelines for credit,
collateral and income stability in return for risk-based pricing premiums.
Documentation guidelines are established and are generally classified as "Full
Documentation," "Low Documentation" and "Streamline Refinance Documentation."
Full Documentation loans may include two years of tax returns for self-employed
applicants, the most recent paystub and two years of W-2 forms for salaried
applicants, and the most recent bank statements for verification of liquidity.
Low Documentation loans require certain loan-to-value ratios, loan amounts and
credit scores to be met and utilize income and assets as stated by the mortgagor
in the loan application. Verification of assets is required in Low Documentation
transactions when compensating factors are used to support the mortgagor's
claimed income. Streamline Refinance Documentation loans utilize the most recent
tax return for self-employed applicants and the most recent mortgagor paystub
for salaried applicants, and also require the mortgagor to have a one year
history of timely mortgage payments.

     All applicants must complete a standard residential loan application that
includes information on income, employment, assets, debts, payments and specific
questions regarding credit history. Credit history is reviewed and independently
confirmed using merged in-file credit reports. Calculations are made to
establish the relationship between fixed expenses and gross monthly income,
which should not exceed established guidelines but are reviewed with respect to
the applicant's overall ability to repay the mortgage loan, including other
income sources, commitment to the property as evidenced by loan-to-



                                      S-51


value ratio, credit history, other liquid resources, ability to accumulate
assets and other compensating factors.

     The adequacy of the collateral is generally determined by an appraisal made
in accordance with pre-established appraisal procedural guidelines. At
origination, all appraisals are required to conform to the Uniform Standards of
Professional Appraisal Practice adopted by the Appraisal Standards Board of the
Appraisal Foundation and are made on forms acceptable to Fannie Mae and/or
Freddie Mac. Appraisers may be staff appraisers employed by Washington Mutual or
independent appraisers selected in accordance with the pre-established appraisal
procedural guidelines. Such guidelines generally require that the appraiser, or
an agent on its behalf, personally inspect the property and verify whether the
property is in good condition and, if the property is new construction, whether
it is substantially completed. The appraisal is usually based upon a market data
analysis of recent sales of comparable properties and, when deemed applicable, a
replacement cost analysis based on the current cost of constructing or
purchasing a similar property. The Streamline Refinance Documentation program
uses the original appraisal and requires, at a minimum, a current drive-by
inspection.

     All mortgage loans are subject to a sampling by Washington Mutual's
internal quality assurance department, which reviews and verifies a statistical
sampling of loans on a regular basis. Adequate title insurance and hazard
insurance is generally required for all loans. From time to time, loan-to-value
ratio exceptions may be made for creditworthy applicants who exhibit strong
compensating factors and well supported collateral valuations.

ABN AMRO

     ABN AMRO's underwriting standards are intended to evaluate the prospective
mortgagor's credit standing and repayment ability, and the value and adequacy of
the proposed mortgaged property as collateral. ABN AMRO expects that each
prospective mortgagor will be required to complete an application which will
include information about the applicant's assets, liabilities, income, credit
history, employment history and other related items, and furnish an
authorization to apply for a credit report which summarizes the mortgagor's
credit history. In order to establish the prospective mortgagor's ability to
make timely payments, ABN AMRO will, unless otherwise waived as described below,
require evidence regarding the mortgagor's employment, income and assets, and of
the amount of deposits made to financial institutions where the mortgagor
maintains demand or savings accounts. ABN AMRO may originate or purchase
mortgage loans which were originated under a limited mortgage documentation
program. However, the mortgagors on these types of loans must have a good credit
history and be financially capable of making a larger cash down payment in a
purchase, or be willing to finance less of the appraised value in a refinancing,
than would otherwise be required by ABN AMRO. Currently, ABN AMRO's underwriting
standards provide that under this type of program, only mortgage loans with
specified loan-to-value ratios will qualify. If the mortgage loan qualifies, ABN
AMRO may waive some of its documentation requirements including eliminating
verification of assets, income and employment for the prospective mortgagor.

     ABN AMRO's underwriting standards generally follow guidelines acceptable to
Fannie Mae and Freddie Mac. In determining the adequacy of the property as
collateral, an independent appraisal is generally made of each property
considered for financing. The appraiser may be required to inspect the property
and verify that it is in good condition and that construction, if new, has been
completed. Alternatively, the appraisal may be conducted by comparing values of
similar properties in an automated system or electronic data base, inspecting
the exterior of the property or another method described in the underwriting
guide. The appraisal is based on the appraiser's judgment of values, giving
appropriate weight to both the market value of comparable homes and the cost of
replacing the property. ABN AMRO expects that the underwriting standards will
require that the underwriters be satisfied that the value of the property being
financed supports the outstanding loan balance, and provides sufficient value to
mitigate the effects of adverse shifts in real estate values.


                                      S-52


                         DESCRIPTION OF THE CERTIFICATES

GENERAL

     On or about January 31, 2005 (the "Closing Date"), the Certificates will be
issued pursuant to a pooling and servicing agreement (the "Pooling and Servicing
Agreement"), dated as of January 1, 2005, between Merrill Lynch Mortgage
Investors, Inc., as depositor (the "Depositor") and Wells Fargo Bank, N.A., as
master servicer (the "Master Servicer") and as securities administrator (the
"Securities Administrator") and Wachovia Bank, National Association, as trustee
(the "Trustee"). 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 by reference.

     The Certificates will consist of the Class I-A, Class II-A-1, Class II-A-2
and Class III-A Certificates (collectively, the "Senior Certificates") and the
Class M-1, Class M-2, Class M-3, Class B-1, Class B-2 and Class B-3 Certificates
(collectively, the "Subordinate Certificates" or the "Subordinate Classes"). The
Class I-A, Class II-A-1, Class II-A-2, Class III-A, Class M-1, Class M-2 and
Class M-3 Certificates are sometimes referred to collectively herein as the
"Offered Certificates." Only the Offered Certificates are offered under this
prospectus supplement. The Class R-I Certificates and Class R-II Certificates
are referred to together as the "Class R Certificates." The Class M-1, Class M-2
and Class M-3 Certificates are referred to collectively as the "Class M
Certificates." The Class B-1, Class B-2 and Class B-3 Certificates are referred
to collectively as the "Class B Certificates", and together with the Class R
Certificates, the "Privately-Offered Certificates." 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 to enhance the description of the Offered Certificates.

     The Offered Certificates will be issued in the initial Class Certificate
Balances set forth in the table under "Summary of the Prospectus
Supplement--Offered Certificates." The Class B-1, Class B-2 and Class B-3
Certificates will be issued in the approximate initial class certificate
balances of $1,957,000, $1,118,000 and $1,960,792, respectively. The initial
Class Certificate Balances of each class may be increased or decreased by up to
5% to the extent that the Stated Principal Balance of the Mortgage Loans is
increased or decreased as described at "Description of the Mortgage Pool."

     The Offered Certificates will be issued in book-entry form, in minimum
denominations in principal amount of $50,000 and integral multiples of $1 in
excess thereof.

     The Certificates represent beneficial ownership interests in a trust fund
(the "Trust Fund"), the assets of which on the Closing Date will consist
primarily of (1) the Mortgage Loans; (2) such assets as from time to time are
identified as deposited in respect of the Mortgage Loans in the Master Servicer
Collection Account and the Distribution Account (we refer you to "Servicing of
the Mortgage Loans--The Master Servicer Collection Account" and "--Distribution
Account" in this prospectus supplement); (3) the Trust Fund's rights under the
underlying mortgage loan purchase agreement and servicing agreement with respect
to the Mortgage Loans; (4) the Trust Fund's rights under the Mortgage Loan
Purchase Agreement, as described above under "Description of the Mortgage
Pool--Assignment of the Mortgage Loans"; (5) property acquired by foreclosure of
the Mortgage Loans or deed in lieu of foreclosure; (6) any applicable insurance
policies; and (7) the proceeds of all of the foregoing.



                                      S-53


     Solely for purposes of determining distributions of interest and principal
on the Senior Certificates, the Senior Certificates have been divided into the
following payment groups (each a "Certificate Group"):

     The Group I Certificates: The Class I-A Certificates are also referred to
herein as the "Group I Certificates." With limited exceptions described under
the heading "--Distributions on the Certificates" below, distributions of
interest and principal on the Group I Certificates will be based solely on
interest and principal received on, or advanced with respect to, the Group I
Mortgage Loans.

     The Group II Certificates: The Class II-A-1 Certificates and Class II-A-2
Certificates are also referred to collectively herein as the "Group II
Certificates." With limited exceptions described under the heading
"--Distributions on the Certificates" below, distributions of interest and
principal on the Group II Certificates will be based solely on interest and
principal received on, or advanced with respect to, the Group II Mortgage Loans.

     The Group III Certificates: The Class III-A Certificates are also referred
to herein as the "Group III Certificates." With limited exceptions described
under the heading "--Distributions on the Certificates" below, distributions of
interest and principal on the Group III Certificates will be based solely on
interest and principal received on, or advanced with respect to, the Group III
Mortgage Loans.

     Distributions of interest and principal on the Subordinate Classes will be
based on interest and principal, as applicable, received on, or advanced with
respect to, the Group I, Group II and Group III Mortgage Loans in the aggregate.

     Distributions on the Certificates will be made by the Trustee on the 25th
day of each month, or if such day is not a Business Day, on the first Business
Day thereafter commencing in February 2005 (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. A "Record Date" with respect to the Offered
Certificates and any Distribution Date is the last Business Day of the month
preceding the month of that Distribution Date.

     Payments on each Distribution Date 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 by wire transfer
in immediately available funds to the account of such Certificateholder at a
bank or other depository institution having appropriate wire transfer
facilities; provided, however, that the final payment in retirement of the
Certificates will be made only upon presentment and surrender of such
Certificates at the Corporate Trust Office of the Trustee.

     We refer you to "Description of the Certificates--Book-Entry Certificates"
below for the method of payment to Beneficial Owners of Book-Entry Certificates.

BOOK-ENTRY CERTIFICATES

     General. The Offered Certificates will be book-entry certificates (each, a
class of "Book-Entry Certificates") issued, maintained and transferred on the
book-entry records of The Depository Trust Company ("DTC") and its Participants
(as defined herein).

     Each class of Book-Entry Certificates will be represented by one or more
global certificates which equal the initial principal balance of such class
registered in the name of the nominee of DTC. The Depositor has been informed by
DTC that DTC's nominee will be Cede & Co. No person acquiring an


                                      S-54


interest in a Book-Entry Certificate (each, a "Beneficial Owner") will be
entitled to receive a physical certificate instrument in registered form
evidencing such person's interest (a "Definitive Certificate"), except as set
forth in the prospectus under "Description of the Securities--Book-Entry
Registration of Securities." Unless and until Definitive Certificates are issued
for the Book-Entry Certificates under the limited circumstances described in the
prospectus, all references to actions by Certificateholders with respect to the
Book-Entry Certificates shall refer to actions taken by DTC upon instructions
from its Participants (as defined below), and all references herein to
distributions, notices, reports and statements to Certificateholders with
respect to the Book-Entry Certificates shall refer to distributions, notices,
reports and statements to DTC or Cede & Co., as the registered holder of the
Book-Entry Certificates, for distribution to Beneficial Owners by DTC in
accordance with DTC procedures. Beneficial Owners are only entitled to exercise
their rights indirectly through Participants in DTC.

     Registration. Beneficial Owners will hold their interests in their Offered
Certificates through DTC in the United States, or, upon request, through
Clearstream Banking, societe anonyme (formerly Cedelbank) (hereafter,
"Clearstream Luxembourg") or the Euroclear System ("Euroclear") in Europe if
they are participants of such systems, or indirectly through organizations which
are participants in such systems. Clearstream Luxembourg and Euroclear will hold
omnibus positions on behalf of their participants through customers' securities
accounts in Clearstream Luxembourg's and Euroclear's names on the books of their
respective depositories which in turn will hold such positions in customers'
securities accounts in the depositories' names on the books of DTC. Citibank,
N.A. will act as depository for Clearstream Luxembourg and JPMorgan Chase Bank
will act as depository for Euroclear (in such capacities, individually the
"Relevant Depository" and collectively, the "European Depositories").

     The Beneficial Owner's ownership interest in a Book-Entry Certificate will
be recorded on the records of the brokerage firm, bank, thrift institution or
other financial intermediary (each, a "Financial Intermediary") that maintains
the Beneficial Owner's account for such purpose. In turn, the Financial
Intermediary's ownership of such Book-Entry Certificate will be recorded on the
records of DTC (or of a participating firm (a "Participant") that acts as agent
for the Financial Intermediary, whose interest will in turn be recorded on the
records of DTC, if the Beneficial Owner's Financial Intermediary is not a DTC
participant and on the records of Clearstream Luxembourg or Euroclear, as
appropriate).

     Beneficial Owners will receive all payments of principal of, and interest
on, the Offered Certificates from the Trustee through DTC and DTC participants.
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 (the "Rules"), DTC is required to
make book-entry transfers among Participants on whose behalf it acts with
respect to the Book-Entry Certificates and is required to receive and transmit
payments of principal of, and interest on, the Book-Entry Certificates.
Participants and indirect participants with whom Beneficial Owners have accounts
with respect to Book-Entry Certificates are similarly required to make
book-entry transfers and receive and transmit such distributions on behalf of
their respective Beneficial Owners. Accordingly, although Beneficial Owners will
not possess physical certificates, the Rules provide a mechanism by which
Beneficial Owners will receive payments and will be able to transfer their
interest.

     Beneficial Owners will not receive or be entitled to receive Definitive
Certificates representing their respective interests in the Book-Entry
Certificates except under the limited circumstances described below. Unless and
until Definitive Certificates are issued, Beneficial Owners who are not
Participants may transfer ownership of Book-Entry Certificates only through
Participants and indirect participants by instructing such Participants and
indirect participants to transfer their interest by book-entry transfer, through
DTC for the account of the purchasers of such Certificates, which account is
maintained with their respective Participants. Under the Rules and in accordance
with DTC's normal procedures, transfer of ownership of Book-Entry Certificates
will be executed through DTC and the accounts of the respective Participants at
DTC will be debited and credited. Similarly, the Participants and indirect
participants will



                                      S-55


make debits or credits, as the case may be, on their records on behalf of the
selling and purchasing Beneficial Owners.

     Because of time zone differences, credits of securities received in
Clearstream Luxembourg or Euroclear as a result of a transaction with a
Participant will be made during subsequent securities settlement processing and
dated the business day following the DTC settlement date. Such credits or any
transactions in such securities settled during such processing will be reported
to the relevant Euroclear or Clearstream Luxembourg Participants on such
business day. Cash received in Clearstream Luxembourg or Euroclear as a result
of sales of securities by or through a Clearstream Luxembourg Participant (as
defined below) or Euroclear Participant (as defined below) to a DTC Participant
will be received with value on the DTC settlement date but will be available in
the relevant Clearstream Luxembourg or Euroclear cash account only as of the
business day following settlement in DTC. For information with respect to tax
documentation procedures relating to the Certificates, refer to "Material
Federal Income Tax Consequences--REMICs--Taxation of Owners of REMIC Regular
Certificates--Non-U.S. Persons" and "--Information Reporting and Backup
Withholding" in the accompanying prospectus and "Global Clearance, Settlement
and Tax Documentation Procedures--Certain U.S. Federal Income Tax Documentation
Requirements" in Annex I hereto.

     Transfers between Participants will occur in accordance with DTC rules.
Transfers between Clearstream Luxembourg Participants and Euroclear Participants
will occur in accordance with their respective rules and operating procedures.

     Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through Clearstream
Luxembourg Participants or Euroclear Participants, on the other, will be
effected in DTC in accordance with the DTC rules on behalf of the relevant
European international clearing system by the Relevant Depository; however, such
cross-market transactions will require delivery of instructions to the relevant
European international clearing system by the counterparty in such system in
accordance with its rules and procedures and within its established deadlines
(European time). The relevant European international clearing system will, if
the transaction meets its settlement requirements, deliver instructions to the
Relevant Depository to take action to effect final settlement on its behalf by
delivering or receiving securities in DTC, and making or receiving payment in
accordance with normal procedures for same day funds settlement applicable to
DTC. Clearstream Luxembourg Participants and Euroclear Participants may not
deliver instructions directly to the European Depositories.

     DTC, which is a New York-chartered limited purpose trust company, performs
services for its participants, some of which (and/or their representatives) own
DTC. In accordance with its normal procedures, DTC is expected to record the
positions held by each DTC participant in the Book-Entry Certificates, whether
held for its own account or as a nominee for another person. In general,
beneficial ownership of Book-Entry Certificates will be subject to the rules,
regulations and procedures governing DTC and DTC participants as in effect from
time to time.

     Clearstream Luxembourg is incorporated under the laws of Luxembourg as a
professional depository. Clearstream Luxembourg holds securities for its
participating organizations ("Clearstream Luxembourg Participants") and
facilitates the clearance and settlement of securities transactions between
Clearstream Luxembourg Participants through electronic book-entry changes in
accounts of Clearstream Luxembourg Participants, thereby eliminating the need
for physical movement of certificates. Transactions may be settled in
Clearstream Luxembourg in any of various currencies, including United States
dollars. Clearstream Luxembourg provides to its Clearstream Luxembourg
Participants, among other things, services for safekeeping, administration,
clearance and settlement of internationally-traded securities and securities
lending and borrowing. Clearstream Luxembourg interfaces with domestic markets
in several countries. As a professional depository, Clearstream Luxembourg is
subject to regulation by the Luxembourg Monetary Institute. Clearstream
Luxembourg Participants are recognized


                                      S-56


financial institutions around the world, including underwriters, securities
brokers and dealers, banks, trust companies, clearing corporations and certain
other organizations. Indirect access to Clearstream Luxembourg is also available
to others, such as banks, brokers, dealers and trust companies that clear
through or maintain a custodial relationship with a Clearstream Luxembourg
Participant, either directly or indirectly.

     Euroclear was created in 1968 to hold securities for its participants
("Euroclear Participants") and to clear and settle transactions between its
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. Euroclear
is owned by Euroclear plc and operated through a license agreement by Euroclear
Bank S.A./N.V., a bank incorporated under the laws of the Kingdom of Belgium
(the "Euroclear Operator").

     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.

     The Euroclear Operator provides Euroclear Participants with, among other
things, safekeeping, administration, clearance and settlement, securities
lending and borrowing and other related services.

     Non-participants of Euroclear may hold and transfer book-entry interests in
securities through accounts with a direct Participant of Euroclear or any other
securities intermediary that holds a book-entry interest in securities through
one or more securities intermediaries standing between such other securities
intermediary and the Euroclear Operator.

     The Euroclear Operator is regulated and examined by the Belgian Banking and
Finance Commission and the National Bank of Belgium.

     Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the Terms and Conditions Governing Use of Euroclear, the related
Operating Procedures of the Euroclear System and applicable Belgian law
(collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within Euroclear, withdrawals of securities and
cash from Euroclear and receipts of payments with respect to securities in
Euroclear. All securities in Euroclear are held on a fungible basis without
attribution of specific certificates to specific securities clearance accounts.
The Euroclear Operator acts under the Terms and Conditions only on behalf of
Euroclear Participants and has no record of or relationship with persons holding
through Euroclear Participants. Payments on the Book-Entry Certificates will be
made on each Distribution Date by the Trustee to DTC. DTC will be responsible
for crediting the amount of such payments to the accounts of the applicable DTC
participants in accordance with DTC's normal procedures. Each DTC participant
will be responsible for disbursing such payment to the Beneficial Owners of the
Book-Entry Certificates that it represents and to each Financial Intermediary
for which it acts as agent. Each such Financial Intermediary will be responsible
for disbursing funds to the 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 Trustee to Cede & Co. Payments with respect to Certificates
held through Clearstream Luxembourg or Euroclear will be credited to the cash
accounts of Clearstream Luxembourg Participants or Euroclear Participants in
accordance with the relevant system's rules and procedures, to the extent
received by the Relevant Depository. Such payments will be subject to tax
reporting and may be subject to withholding in


                                      S-57


accordance with relevant United States tax laws and regulations. We refer you to
"Material Federal Income Tax Consequences--REMICs--Taxation of Owners of REMIC
Regular Certificates--Non-U.S. Persons" and "--Information Reporting and Backup
Withholding" in the accompanying prospectus.

     Because DTC can only act on behalf of Financial Intermediaries, 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 such Book-Entry Certificates, may be limited due to the lack of
physical certificates for such Book-Entry Certificates. In addition, issuance of
the Book-Entry Certificates in book-entry form may reduce the liquidity of such
Certificates in the secondary market since certain potential investors may be
unwilling to purchase certificates for which they cannot obtain physical
certificates.

     Monthly reports will be made available by the Trustee 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 DTC or the Relevant Depository, and to the Financial
Intermediaries to whose DTC accounts the Book-Entry Certificates of such
Beneficial Owners are credited.

     DTC has advised the Securities Administrator and the Trustee that, unless
and until Definitive Certificates are issued, DTC will take any action permitted
to be taken by the holders of the Book-Entry Certificates under the Pooling and
Servicing Agreement only at the direction of one or more Financial
Intermediaries to whose DTC accounts the Book-Entry Certificates are credited,
to the extent that such actions are taken on behalf of Financial Intermediaries
whose holdings include such Book-Entry Certificates. Clearstream Luxembourg or
the Euroclear Operator, as the case may be, will take any other action permitted
to be taken by a Certificateholder under the Pooling and Servicing Agreement on
behalf of a Clearstream Luxembourg Participant or Euroclear Participant only in
accordance with its relevant rules and procedures and subject to the ability of
the Relevant Depository to effect such actions on its behalf through DTC. DTC
may take actions, at the direction of the related Participants, with respect to
some Book-Entry Certificates which conflict with actions taken with respect to
other Certificates.

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

     None of the Seller, the Depositor, the Servicers, the Master Servicer, 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 of DTC, or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests.

     Definitive Certificates will be issued to Beneficial Owners or their
nominees, respectively, rather than to DTC or its nominee, only under the
limited conditions set forth in the accompanying prospectus under "Description
of the Securities--Book-Entry Registration of Securities." Upon the occurrence
of an event described in the penultimate paragraph thereunder, the Trustee is
required to direct DTC to notify Participants that have ownership of Book-Entry
Certificates as indicated on the records of DTC of the availability of
Definitive Certificates for the Book-Entry Certificates. Upon surrender by DTC
of the Definitive Certificates representing the Book-Entry Certificates, and
upon receipt of instruction from DTC for re-registration, the Trustee will
re-issue the Book-Entry Certificates as Definitive Certificates in the
respective principal balances owned by each individual Beneficial Owner and
thereafter the Trustee will recognize the holders of such Definitive
Certificates as certificateholders under the Pooling and Servicing Agreement.



                                      S-58


     For a description of the procedures generally applicable to the Book-Entry
Certificates, we refer you to "Description of the Securities--Book-Entry
Registration and Definitive Securities" in the accompanying prospectus.

AVAILABLE FUNDS

     Distributions of interest and principal on the Certificates will be made on
each Distribution Date from the Available Funds of the related Loan Group (in
the case of the Class I-A, Class II-A-1, Class II-A-2, Class III-A and the Class
R Certificates) and from the Available Funds of all three Loan Groups in the
aggregate (in the case of the Subordinate Certificates) in the order of priority
set forth below at "--Priority of Distributions." The "Available Funds" with
respect to each Loan Group and any Distribution Date, as more fully described in
the Pooling and Servicing Agreement, will generally equal the sum of:

     (1)  the aggregate amount of scheduled payments on the Mortgage Loans in
          the related Loan Group received or advanced during the related Due
          Period; and

     (2)  any unscheduled payments (including any Subsequent Recoveries as
          defined in this Prospectus Supplement) and receipts on the Mortgage
          Loans in the related Loan Group, including Mortgagor prepayments on
          such Mortgage Loans received during the related Prepayment Period;

     minus:

     (1)  amounts reimbursable therefrom to the related Servicer and the Master
          Servicer; and

     (2)  Servicing Fees and the fees and expenses, including indemnity
          payments, of the Master Servicer, the Securities Administrator and the
          Trustee.

     With respect to any Distribution date and the Mortgage Loans, the "Due
Period" is the period commencing on the second day of the month preceding the
month of such Distribution Date and ending on the first day of the month of such
Distribution Date. With respect to any Distribution Date and the Mortgage Loans,
the "Prepayment Period" is the calendar month preceding the month of such
Distribution Date.

DISTRIBUTIONS ON THE CERTIFICATES

     (A) On each Distribution Date, the Group I Available Funds will be
distributed in the following order of priority to the Group I Certificates
except as otherwise noted:

          first, to the Class I-A Certificates, the Accrued Certificate Interest
on the Class I-A Certificates for such Distribution Date. As described below,
Accrued Certificate Interest on the Class I-A Certificates is subject to
reduction in the event of certain interest shortfalls allocable thereto. Any
interest shortfalls shall be allocated to the Class I-A Certificates as
described below;

          second, to the Class I-A Certificates, any Accrued Certificate
Interest thereon remaining undistributed from previous Distribution Dates, to
the extent of remaining Group I Available Funds, any shortfall in available
amounts being allocated to the Class I-A Certificates in proportion to the
amount of such Accrued Certificate Interest remaining undistributed for the
Class I-A Certificates for such Distribution Date; and

          third, to the Class I-A Certificates, in reduction of the Class
Certificate Balance thereof, the Group I Senior Principal Distribution Amount
for such Distribution Date to the extent of remaining Group I Available Funds,
until the Class Certificate Balance of such Class has been reduced to zero;

                                      S-59



     (B) On each Distribution Date, the Group II Available Funds will be
distributed in the following order of priority to the Group II Certificates
except as otherwise noted:

          first, to the Class II-A-1 Certificates and Class II-A-2 Certificates,
pro rata, the Accrued Certificate Interest on each class of Group II
Certificates for such Distribution Date. As described below, Accrued Certificate
Interest on each class of Group II Certificates is subject to reduction in the
event of certain interest shortfalls allocable thereto. Any interest shortfalls
shall be allocated among the Group II Certificates as described below;

          second, to the Class II-A-1 Certificates and Class II-A-2
Certificates, pro rata, any Accrued Certificate Interest thereon remaining
undistributed from previous Distribution Dates, to the extent of remaining Group
II Available Funds, any shortfall in available amounts being allocated to the
Group II Certificates in proportion to the amount of such Accrued Certificate
Interest remaining undistributed for each class of Group II Certificates for
such Distribution Date; and

          third, to the Class II-A-1 Certificates and Class II-A-2 Certificates,
pro rata, in reduction of the Class Certificate Balances thereof, the Group II
Senior Principal Distribution Amount for such Distribution Date to the extent of
remaining Group II Available Funds, until the Class Certificate Balances of such
classes have been reduced to zero;

     (C) On each Distribution Date, the Group III Available Funds will be
distributed in the following order of priority to the Group III Certificates
except as otherwise noted:

          first, to the Class III-A Certificates, the Accrued Certificate
Interest on the Class III-A Certificates for such Distribution Date. As
described below, Accrued Certificate Interest on the Class III-A Certificates is
subject to reduction in the event of certain interest shortfalls allocable
thereto. Any interest shortfalls shall be allocated to the Class III-A
Certificates as described below;

          second, to the Class III-A Certificates, any Accrued Certificate
Interest thereon remaining undistributed from previous Distribution Dates, to
the extent of remaining Group III Available Funds, any shortfall in available
amounts being allocated to the Class III-A Certificates in proportion to the
amount of such Accrued Certificate Interest remaining undistributed for the
Class III-A Certificates for such Distribution Date; and

          third, to the Class III-A Certificates, in reduction of the Class
Certificate Balance thereof, the Group III Senior Principal Distribution Amount
for such Distribution Date to the extent of remaining Group III Available Funds,
until the Class Certificate Balance of such Class has been reduced to zero;

     (D) On each Distribution Date on or prior to the Distribution Date on which
the Class Certificate Balances of the Subordinate Certificates are reduced to
zero (the "Credit Support Depletion Date"), an amount equal to the sum of the
remaining Group I, Group II and Group III Available Funds after the
distributions in clauses (A), (B) and (C) and above and after any distributions
required to be made pursuant to clauses (E) and (F) below, will be distributed
sequentially, in the following order, to the Class M-1, Class M-2, Class M-3,
Class B-1, Class B-2 and Class B-3 Certificates, in each case up to an amount
equal to and in the following order: (a) the Accrued Certificate Interest
thereon for such Distribution Date, (b) any Accrued Certificate Interest thereon
remaining undistributed from previous Distribution Dates and (c) such Class's
Subordinate Principal Distribution Amount for such Distribution Date, in each
case to the extent of the remaining Available Funds.

     (E) On each Distribution Date prior to the Credit Support Depletion Date
but after the reduction of the aggregate Class Certificate Balance of the Senior
Certificates of a Certificate Group to zero, the remaining class or classes of
Senior Certificates in the remaining Certificate Group or Groups, will be
entitled to receive in reduction of their Class Certificate Balances, pro rata
based upon their Class



                                      S-60


Certificate Balances immediately prior to such Distribution Date, in addition to
any principal prepayments related to such remaining Senior Certificates'
respective Loan Group allocated to such Senior Certificates, 100% of the
principal prepayments on any Mortgage Loan in the Loan Group relating to the
fully repaid class or classes of Senior Certificates of the fully repaid
Certificate Group; provided, however, that if both (a) the weighted average
Subordinate Percentage equals or exceeds approximately 7.00% on or after the
Distribution Date in February 2008 and (b) the aggregate Stated Principal
Balance of the Mortgage Loans delinquent 60 days or more, averaged over the last
six months, as a percentage of the aggregate Class Certificate Balance of the
Class M Certificates and Class B Certificates, does not exceed 100%, then the
additional allocation of principal prepayments to the Senior Certificates in
accordance with this clause (E) will not be made and 100% of the principal
prepayments on any Mortgage Loan in the Loan Group relating to the fully repaid
class or classes of Senior Certificates will be allocated to the Subordinate
Certificates.

     (F) If on any Distribution Date on which the aggregate Class Certificate
Balance of any class or classes of Senior Certificates would be greater than the
aggregate Stated Principal Balance of the Mortgage Loans in its related Loan
Group (the amount of such excess, the "Undercollateralized Amount," and any such
class or classes of Senior Certificates, the "Undercollateralized Senior
Certificates") and any Subordinate Certificates are still outstanding in each
case after giving effect to distributions to be made on such Distribution Date,
(i) 100% of amounts otherwise allocable to the Subordinate Certificates in
respect of principal will be distributed to the Undercollateralized Senior
Certificates in reduction of the Class Certificate Balances thereof, until the
aggregate Class Certificate Balance of such class or classes of
Undercollateralized Senior Certificates is equal to the aggregate Stated
Principal Balance of the Mortgage Loans in its related Loan Group, and (ii) the
Accrued Certificate Interest otherwise allocable to the Subordinate Certificates
on such Distribution Date will be reduced, if necessary, and distributed to such
class or classes of Undercollateralized Senior Certificates pursuant to clause
first of clauses (A), (B) or (C) above, as applicable, in an amount equal to the
Accrued Certificate Interest at the Pass-Through Rate for such class or classes
of Undercollateralized Senior Certificates for such Distribution Date on a
balance equal to the related Undercollateralized Amount. Any such reduction in
the Accrued Certificate Interest on the Subordinate Certificates will be
allocated to the Class B-3, Class B-2, Class B-1, Class M-3, Class M-2 and Class
M-1 Certificates, in that order.

     On each Distribution Date, any Available Funds remaining after payment of
interest and principal to the classes of Certificates entitled thereto, as
described above, will be distributed to the Class R-II Certificates; provided
that if on any Distribution Date on and after the Credit Support Depletion Date
there are any Group I, Group II or Group III Available Funds remaining after
payment of interest and principal to a class or classes of Senior Certificates
entitled thereto, such amounts will be distributed to the other classes of
Senior Certificates, pro rata, based upon their Class Certificate Balances,
until all amounts due to all classes of Senior Certificates have been paid in
full, before any amounts are distributed to the Class R-II Certificates. It is
not anticipated that there will be any significant amounts remaining for such
distribution.

DISTRIBUTIONS OF INTEREST

     With respect to any Distribution Date, "Accrued Certificate Interest" will
be equal to in the case of each Class of Offered Certificates, interest accrued
for the related Interest Accrual Period on the Class Certificate Balance of the
Certificates of such Class immediately prior to such Distribution Date at the
related Pass-Through Rate, less interest shortfalls, if any, allocated thereto
for such Distribution Date to the extent not covered with respect to the Senior
Certificates by the Subordination provided by the Class B Certificates and Class
M Certificates and with respect to the Class M Certificates to the extent not
covered by the Subordination provided by the Class B Certificates and any class
or classes of Class M Certificates having a lower payment priority, including in
each case:

                                      S-61


          (i) any Prepayment Interest Shortfall (as defined below) to the extent
not covered by the related Servicer or the Master Servicer as described below;

          (ii) the interest portions of Realized Losses (including Special
Hazard Losses in excess of the Special Hazard Amount ("Excess Special Hazard
Losses"), Fraud Losses in excess of the Fraud Loss Amount ("Excess Fraud
Losses"), Bankruptcy Losses in excess of the Bankruptcy Loss Amount ("Excess
Bankruptcy Losses") and losses occasioned by war, civil insurrection, certain
governmental actions, nuclear reaction and certain other risks ("Extraordinary
Losses") not allocated through Subordination; and (iii) any other interest
shortfalls not covered by Subordination, including interest shortfalls relating
to the Relief Act (as defined in the Prospectus) or similar legislation or
regulations, all allocated as described below.

     Such reductions resulting from clauses (i), (ii) and (iii) above will be
allocated among the holders of all classes of related Certificates in proportion
to the respective amounts of Accrued Certificate Interest which would have been
payable on such Distribution Date absent such reductions. In the case of each
class of Class M Certificates, Accrued Certificate Interest on such Class will
be further reduced by the allocation of the interest portion of certain losses
thereto, if any, as described below under "--Allocation of Losses;
Subordination." Accrued Certificate Interest on each Class of Senior
Certificates will be distributed on a pro rata basis. Accrued Certificate
Interest is calculated on the basis of a 360-day year consisting of twelve
30-day months.

     The "Prepayment Interest Shortfall" for any Distribution Date is equal to
the aggregate shortfall, if any, in collections of interest (adjusted to the
related net mortgage rates on the Mortgage Loans) resulting from Mortgagor
prepayments on the Mortgage Loans during the preceding calendar month. Such
shortfalls will result because interest on prepayments in full is distributed
only to the date of prepayment, and because no interest is distributed on
prepayments in part, as such prepayments in part are applied to reduce the
outstanding principal balance of the related Mortgage Loans as of the Due Date
in the month of prepayment. However, with respect to any Distribution Date, any
Prepayment Interest Shortfalls resulting from partial prepayments or prepayments
in full during the preceding calendar month will be offset by the related
Servicer or, if such Servicer is required to and fails to do so, the Master
Servicer, but only to the extent such Prepayment Interest Shortfalls do not
exceed an amount equal to the Servicing Fees or the compensation payable to the
Master Servicer, as applicable, on the Mortgage Loans for such Distribution
Date. No assurance can be given that the Servicing Fees or master servicing
compensation for any Distribution Date will be sufficient to cover Prepayment
Interest Shortfalls for such Distribution Date. We refer you to "Servicing of
the Mortgage Loans--Servicing Compensation and Payment of Expenses" in this
prospectus supplement.

     If on any Distribution Date the Group I, Group II or Group III Available
Funds is less than Accrued Certificate Interest on the related Senior
Certificates, the shortfall will be allocated among the holders of all classes
of related Senior Certificates in proportion to the respective amounts of
Accrued Certificate Interest. In addition, the amount of any such interest
shortfalls that are covered by Subordination (specifically, interest shortfalls
not described in clauses (i) through (iii) in the third preceding paragraph)
will be unpaid Accrued Certificate Interest and will be distributable to Holders
of the Certificates of such classes entitled to such amounts on subsequent
Distribution Dates, to the extent of available funds after interest
distributions as required herein. Such shortfalls could occur, for example, if
delinquencies on the Mortgage Loans were exceptionally high and were
concentrated in a particular month and Advances by the related Servicer or the
Master Servicer, as the case may be, did not cover the shortfall. Any such
amounts so carried forward will not bear interest. Any interest shortfalls will
not be offset by a reduction in the servicing compensation of the related
Servicer or the master servicing compensation of the Master Servicer or
otherwise, except to the limited extent described in the preceding paragraph
with respect to Prepayment Interest Shortfalls resulting from prepayments.

                                      S-62


     The "Pass-Through Rate" on the Class I-A Certificates for each Distribution
Date will be a per annum rate equal to the weighted average of the Net Mortgage
Rates on the Group I Mortgage Loans. The pass-through rate with respect to the
first Interest Accrual Period is expected to be approximately 4.378% per annum.

     The "Pass-Through Rate" on the Class II-A-1 Certificates and Class II-A-2
Certificates for each Distribution Date will be a per annum rate equal to the
weighted average of the Net Mortgage Rates on the Group II Mortgage Loans. The
pass-through rate with respect to the first Interest Accrual Period is expected
to be approximately 4.665% per annum.

     The "Pass-Through Rate" on the Class III-A Certificates for each
Distribution Date will be a per annum rate equal to the weighted average of the
Net Mortgage Rates on the Group III Mortgage Loans. The pass-through rate with
respect to the first interest accrual period is expected to be approximately
5.282% per annum.

     The "Pass-Through Rate" on each Class of Class M Certificates and Class B
Certificates will equal the weighted average of the Net Mortgage Rates of each
loan group, weighted in proportion to the results of subtracting from the
aggregate Stated Principal Balance of the Mortgage Loans of each Loan Group, the
aggregate Class Certificate Balance of the related Senior Certificates. The
pass-through rate with respect to the first Interest Accrual Period is expected
to be approximately 4.630% per annum.

     The "Net Mortgage Rate" on each Mortgage Loan is equal to the related
Mortgage Rate minus the Servicing Fee Rate.

     The "Interest Accrual Period" for each of the Certificates is the calendar
month preceding the month in which the Distribution Date occurs.

     As described herein, the Accrued Certificate Interest allocable to each
Class of Certificates is based on the Class Certificate Balance thereof. The
"Class Certificate Balance" of any Certificate as of any date of determination
is equal to the initial Class Certificate Balance thereof, reduced by the
aggregate of (a) all amounts allocable to principal previously distributed with
respect to such Certificate and (b) any reductions in the Class Certificate
Balance thereof deemed to have occurred in connection with allocations of
Realized Losses in the manner described herein, provided that, after the Class
Certificate Balances of the Class B Certificates have been reduced to zero, the
Class Certificate Balance of any Certificate of the Class of Class M
Certificates outstanding with the lowest payment priority shall equal the
percentage interest evidenced thereby times the excess, if any, of (a) the then
aggregate Stated Principal Balance of all of the Mortgage Loans over (b) the
then aggregate Class Certificate Balance of all other classes of Certificates
then outstanding.

PRINCIPAL DISTRIBUTIONS ON THE SENIOR CERTIFICATES

     Except as provided below, holders of the Senior Certificates will be
entitled to receive on each Distribution Date, in the priority set forth herein
and to the extent of the portion of the Group I, Group II and Group III
Available Funds remaining after the aggregate amount of Accrued Certificate
Interest to be distributed to the holders of the related Senior Certificates for
such Distribution Date is distributed, a distribution allocable to principal
equal to the sum of the following:

     (i) the product of (A) the then-applicable related Senior Percentage and
(B) the aggregate of the following amounts:

               (1) the principal portion of all scheduled monthly payments on
the Mortgage Loans in the related Loan Group due on the related Due Date,
whether or not received on or prior to the

                                      S-63


related Determination Date, less the principal portion of Debt Service
Reductions, as defined below, which together with other Bankruptcy Losses are in
excess of the Bankruptcy Amount;

               (2) the principal portion of all proceeds of the repurchase of a
Mortgage Loan in the related Loan Group (or, in the case of a substitution,
certain amounts representing a principal adjustment) as required by the
Agreement or the related servicing agreement during the preceding calendar
month; and

               (3) the principal portion of all other unscheduled collections
(including Subsequent Recoveries (as defined below)) received during the
preceding calendar month on the Mortgage Loans in the related Loan Group (other
than full and partial prepayments made by the respective Mortgagors and any
amounts received in connection with a Final Disposition (as defined below) of a
Mortgage Loan described in clause (ii) below), to the extent applied as
recoveries of principal;

     (ii) in connection with the Final Disposition of a Mortgage Loan in the
related Loan Group (x) that occurred in the preceding calendar month and (y)
that did not result in any Excess Special Hazard Losses, Excess Fraud Losses,
Excess Bankruptcy Losses or Extraordinary Losses, an amount equal to the lesser
of (a) the then-applicable related Senior Percentage of the Stated Principal
Balance of such Mortgage Loan and (b) the then-applicable related Senior
Accelerated Distribution Percentage (as defined below) of the related
unscheduled collections, including Insurance Proceeds and Liquidation Proceeds,
to the extent applied as recoveries of principal;

     (iii) the then-applicable related Senior Accelerated Distribution
Percentage of the aggregate of all full and partial prepayments made by the
respective Mortgagors of the Mortgage Loans in the related Loan Group during the
preceding calendar month; and

     (iv) any amounts allocable to principal for any previous Distribution Date
on the Mortgage Loans in the related Loan Group (calculated pursuant to clauses
(i) through (iii) above) that remain undistributed to the extent that any such
amounts are not attributable to Realized Losses which were allocated to the
Class M Certificates or Class B Certificates.

     With respect to any Distribution Date, the sum of the amounts described in
clauses (i) through (iv) of the immediately preceding paragraph to the extent
related to the Group I, Group II and Group III Mortgage Loans is hereinafter
referred to as the "Group I Senior Principal Distribution Amount", "Group II
Senior Principal Distribution Amount" and "Group III Senior Principal
Distribution Amount" (each, a "Senior Principal Distribution Amount"),
respectively.

     A "Final Disposition" of a defaulted Mortgage Loan is deemed to have
occurred upon a determination by the Master Servicer that it has received all
Insurance Proceeds and Liquidation Proceeds and other payments or cash
recoveries which the related Servicer reasonably and in good faith expects to be
finally recoverable with respect to such Mortgage Loan. "Insurance Proceeds" are
amounts paid by the insurer under any insurance policy covering any Mortgage
Loan or mortgaged property other than amounts required to be paid over to the
mortgagor pursuant to law or the related mortgage note or security instrument
and other than amounts used to repair or restore the mortgaged property or to
reimburse insured expenses. "Liquidation Proceeds" means cash received in
connection with the liquidation of a defaulted Mortgage Loan, whether through
trustee's sale, foreclosure sale, Insurance Proceeds, condemnation proceeds or
otherwise.

     "Subsequent Recoveries" means any amount recovered by a Servicer or the
Master Servicer (net of reimbursable expenses) with respect to a Liquidated
Mortgage Loan with respect to which a Realized Loss was incurred after the
liquidation or disposition of such mortgage loan.

                                      S-64


     The "Stated Principal Balance" of any Mortgage Loan as of any date of
determination is equal to the principal balance thereof as of the Cut-off Date,
after application of all scheduled principal payments due on or before the
Cut-off Date, whether or not received, reduced by all amounts allocable to
principal that have been distributed to Certificateholders with respect to such
Mortgage Loan on or before such date, and as further reduced to the extent that
any Realized Loss thereon has been allocated to one or more classes of
Certificates on or before the date of determination.

     The "Group I Senior Percentage", "Group II Senior Percentage" and "Group
III Senior Percentage" (each, a "Senior Percentage") which initially will equal
approximately 96.50%, 96.50% and 96.50%, respectively, and will in no event
exceed 100%, will be recalculated for each Distribution Date to be the
percentage equal to the aggregate Class Certificate Balance of the related
Senior Certificates outstanding immediately prior to such Distribution Date
divided by the aggregate Stated Principal Balance of all of the Mortgage Loans
in the related Loan Group immediately prior to such Distribution Date. The
"Group I Subordinate Percentage", "Group II Subordinate Percentage" and "Group
III Subordinate Percentage" (each, a "Subordinate Percentage") as of any date of
determination is equal to 100% minus the related Senior Percentage as of such
date.

     The "Group I Senior Accelerated Distribution Percentage", "Group II Senior
Accelerated Distribution Percentage" and "Group III Senior Accelerated
Distribution Percentage" (each, a "Senior Accelerated Distribution Percentage")
for any Distribution Date occurring prior to the Distribution Date in February
2012 will equal 100%. The Senior Accelerated Distribution Percentage for any
Distribution Date occurring after the first seven years following the Closing
Date will be as follows:

               (i) for any Distribution Date during the eighth year after the
Closing Date, the related Senior Percentage for such Distribution Date plus 70%
of the related Subordinate Percentage for such Distribution Date;

               (ii) for any Distribution Date during the ninth year after the
Closing Date, the related Senior Percentage for such Distribution Date plus 60%
of the related Subordinate Percentage for such Distribution Date;

               (iii) for any Distribution Date during the tenth year after the
Closing Date, the related Senior Percentage for such Distribution Date plus 40%
of the related Subordinate Percentage for such Distribution Date;

               (iv) for any Distribution Date during the eleventh year after the
Closing Date, the related Senior Percentage for such Distribution Date plus 20%
of the related Subordinate Percentage for such Distribution Date; and

               (v) for any Distribution Date thereafter, the related Senior
Percentage for such Distribution Date.

     If on any such Distribution Date the Group I, Group II and Group III Senior
Percentage exceeds the initial Group I, Group II and Group III Senior
Percentage, respectively, the related Senior Accelerated Distribution Percentage
for such Distribution Date will once again equal 100%.

     Any scheduled reduction to the Group I, Group II and Group III Senior
Accelerated Distribution Percentage described above shall not be made as of any
Distribution Date unless either:

               (a)(i)(X) the outstanding principal balance of Mortgage Loans
delinquent 60 days or more (including for this purpose any such Mortgage Loans
in foreclosure or bankruptcy and such Mortgage Loans with respect to which the
related Mortgaged Property has been acquired by the Trust), averaged over the
last six months, as a percentage of the aggregate outstanding Class Certificate
Balance

                                      S-65


of the Class M Certificates and Class B Certificates, is less than 50% or (Y)
the outstanding principal balance of Mortgage Loans delinquent 60 days or more
averaged over the last six months, as a percentage of the aggregate outstanding
principal balance of all Mortgage Loans averaged over the last six months, does
not exceed 2%, and

               (ii) Realized Losses on the Mortgage Loans to date for such
Distribution Date, if occurring during the eighth, ninth, tenth, eleventh or
twelfth year (or any year thereafter) after the Closing Date, are less than 30%,
35%, 40%, 45% or 50%, respectively, of the sum of the initial Class Certificate
Balances of the Class M Certificates and Class B Certificates; or

               (b)(i) the outstanding principal balance of Mortgage Loans
delinquent 60 days or more (including for this purpose any such Mortgage Loans
in foreclosure or bankruptcy and such Mortgage Loans with respect to which the
related Mortgaged Property has been acquired by the Trust) averaged over the
last six months, as a percentage of the aggregate outstanding principal balance
of all Mortgage Loans averaged over the last six months, does not exceed 4%, and

               (ii) Realized Losses on the Mortgage Loans to date for such
Distribution Date, if occurring during the eighth, ninth, tenth, eleventh or
twelfth year (or any year thereafter) after the Closing Date, are less than 10%,
15%, 20%, 25% or 30%, respectively, of the sum of the initial Class Certificate
Balances of the Class M Certificates and Class B Certificates.

     In addition, on any Distribution Date on or after the Distribution Date
occurring in February 2008, if the current weighted average of the Subordinate
Percentages is equal to or greater than two times the initial weighted average
of the Subordinate Percentages, and (a) the outstanding principal balance of the
Mortgage Loans delinquent 60 days or more (including for this purpose any such
Mortgage Loans in foreclosure or bankruptcy and such Mortgage Loans with respect
to which the related Mortgaged Property has been acquired by the Trust),
averaged over the last six months, as a percentage of the Subordinate Percentage
for that Distribution Date times the aggregate Stated Principal Balance of the
Mortgage Loans, does not exceed 50% and (b) cumulative Realized Losses on the
Mortgage Loans do not exceed 20% of the initial Subordinate Percentage times the
aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date,
then, in each case, the related Senior Accelerated Distribution Percentage for
such Distribution Date will equal the related Senior Percentage (such test, the
"Two-Times Test").

     Notwithstanding the foregoing, upon reduction of the Class Certificate
Balances of the Senior Certificates to zero, the Senior Accelerated Distribution
Percentage will equal 0%.

PRINCIPAL DISTRIBUTIONS ON THE SUBORDINATE CERTIFICATES

     Holders of each Class of the Class M Certificates and Class B Certificates
will be entitled to receive on each Distribution Date, a distribution allocable
to principal in the sum of the following (as determined with respect to each
class of Class M Certificates, or Class B Certificates, the related "Subordinate
Principal Distribution Amount"):

               (i) such Class's pro rata share, based on the Class Certificate
          Balance of each Class of the Class M Certificates and Class B
          Certificates of the following amounts (to the extent not otherwise
          payable to the Senior Certificates):

                                      S-66


                    (1) the principal portion of all scheduled monthly payments
               on the Mortgage Loans due on the related Due Date, whether or not
               received on or prior to the related Determination Date, less the
               principal portion of Debt Service Reductions which together with
               other Bankruptcy Losses are in excess of the Bankruptcy Amount;

                    (2) the principal portion of all proceeds of the repurchase
               of a Mortgage Loan (or, in the case of a substitution, certain
               amounts representing a principal adjustment) as required by the
               Agreement or the related servicing agreement during the preceding
               calendar month; and

                    (3) the principal portion of all other unscheduled
               collections received during the preceding calendar month (other
               than full and partial prepayments made by the respective
               Mortgagors and any amounts received in connection with a Final
               Disposition of a Mortgage Loan described in clause (ii) below),
               to the extent applied as recoveries of principal;

               (ii) such Class's pro rata share, based on the Class Certificate
          Balance of each Class of Class M Certificates and Class B Certificates
          then outstanding, of all amounts received in connection with the Final
          Disposition of a Mortgage Loan (x) that occurred during the preceding
          calendar month and (y) that did not result in any Excess Special
          Hazard Losses, Excess Fraud Losses, Excess Bankruptcy Losses or
          Extraordinary Losses, to the extent applied as recoveries of principal
          and to the extent not otherwise payable to the Senior Certificates;

               (iii) the portion of full and partial Mortgagor prepayments made
          by the respective Mortgagors during the preceding calendar month
          allocable to such Class of Class M Certificates or Class B
          Certificates as described below; and

               (iv) any amounts allocable to principal for any previous
          Distribution Date (calculated pursuant to clauses (i) through (iii)
          above) that remain undistributed to the extent that any such amounts
          are not attributable to Realized Losses which were allocated to any
          Class of Class M Certificates or Class B Certificates with a lower
          payment priority.

     References herein to "payment priority" of the Class M Certificates or
Class B Certificates refer to a payment priority among such classes as follows:
first, to the Class M-1 Certificates; second, to the Class M-2 Certificates;
third, to the Class M-3 Certificates; fourth, to the Class B-1 Certificates;
fifth, to the Class B-2 Certificates; and sixth, to the Class B-3 Certificates.

     As to each Class of Class M Certificates and Class B Certificates, on any
Distribution Date, any Accrued Certificate Interest thereon remaining unpaid
from any previous Distribution Date will be distributable to the extent of
available funds. Notwithstanding the foregoing, if the Class Certificate Balance
of the Class B-3 Certificates has been reduced to zero, on any Distribution
Date, with respect to the Class of Class M Certificates or Class B Certificates
outstanding on such Distribution Date with the lowest payment priority, Accrued
Certificate Interest thereon remaining unpaid from any previous Distribution
Date (except in the limited circumstances provided in the Agreement) will not be
distributable.

     All Mortgagor prepayments not otherwise distributable to the Senior
Certificates will be allocated on a pro rata basis among the Class of Class M
Certificates and Class B Certificates with the highest payment priority then
outstanding and each other Class of Class M Certificates and Class B
Certificates for which certain loss levels established for such Class in the
Agreement have not been exceeded. The related loss level on any Distribution
Date would be satisfied as to any Class M or Class B Certificates, respectively,
only if the sum of the current percentage interests in the Mortgage Pool
evidenced by such Class and each Class, if any, subordinate thereto were at
least equal to the sum of the initial percentage interests in the Mortgage Pool
evidenced by such Class and each Class, if any, subordinate thereto.

     The Class M-1, Class M-2 and Class M-3 Percentages, which initially will
equal approximately 1.40%, 0.85% and 0.35%, respectively, and will in no event
exceed 100%, will each be adjusted for each Distribution Date to be the
percentage equal to the Class Certificate Balance of the related Class of Class

                                      S-67


M Certificates immediately prior to such Distribution Date divided by the
aggregate Stated Principal Balance of all of the Mortgage Loans immediately
prior to such Distribution Date.

     As stated above under "--Principal Distributions on the Senior
Certificates," on each Distribution Date prior to February 2012, each Senior
Accelerated Distribution Percentage will be 100% (unless the Class Certificate
Balances of the related Senior Certificates are reduced to zero before the end
of such period or if the related Two-Times Test is satisfied), and will
thereafter equal 100% whenever the related Senior Percentage exceeds the initial
related Senior Percentage. Furthermore, as set forth herein, each Senior
Accelerated Distribution Percentage will exceed the related Senior Percentage
during the eighth through eleventh years following the Closing Date, unless the
related Two-Times Test is satisfied. Scheduled reductions to each Senior
Accelerated Distribution Percentage are subject to postponement based on the
loss and delinquency experience of the Mortgage Loans. Accordingly, the Class M
Certificates and Class B Certificates will not be entitled to any prepayments
for at least the first seven years after the Closing Date (unless the Class
Certificate Balances of the Senior Certificates have been reduced to zero before
the end of such period or if the related Two-Times Test is satisfied), and may
receive no prepayments or a disproportionately small portion of prepayments
relative to the related Class M Percentage or Class B Percentage during certain
periods thereafter. We refer you to "--Principal Distributions on the Senior
Certificates" in this prospectus supplement.

ALLOCATION OF LOSSES; SUBORDINATION

     The Subordination provided to the Senior Certificates by the Class B
Certificates and Class M Certificates and the Subordination provided to each
Class of Class M Certificates by the Class B Certificates and by any Class of
Class M Certificates subordinate thereto will cover Realized Losses on the
Mortgage Loans that are losses on Liquidated Mortgage Loans, Fraud Losses,
Bankruptcy Losses and Special Hazard Losses (each as defined herein). Any such
Realized Losses which are not Excess Special Hazard Losses, Excess Fraud Losses,
Excess Bankruptcy Losses or Extraordinary Losses will be allocated sequentially
as follows: first, to the Class B-3 Certificates, Class B-2 Certificates and
Class B-1 Certificates; second, to the Class M-3 Certificates; third, to the
Class M-2 Certificates; and fourth, to the Class M-1 Certificates, in each case
until the Class Certificate Balance of such Class of Certificates has been
reduced to zero. Commencing on the Credit Support Depletion Date, such Realized
Losses will be allocated among the Senior Certificates as follows:

          first, if the Realized Loss occurs on a Mortgage Loan in a Loan Group
     where the aggregate Stated Principal Balance of the Mortgage Loans in such
     Loan Group is greater than the aggregate Class Certificate Balance of the
     related Senior Certificates, the Realized Loss will be allocated to any
     Senior Certificates related to a Loan Group where the aggregate Stated
     Principal Balance of the Mortgage Loans in such Loan Group is less than the
     aggregate Class Certificate Balance of the related Senior Certificates (any
     such amount, the "Deficiency Amount"), pro rata, based on the respective
     Deficiency Amount, in each case until the amount by which the aggregate
     Stated Principal Balance of the Mortgage Loans in the Loan Group in which
     the Realized Loss occurs exceeds the aggregate Class Certificate Balance of
     the related Senior Certificates until the Class Certificate Balances of
     such Senior Certificates have been reduced to zero; and

          second, to the Senior Certificates related to the Loan Group in which
     the Realized Loss occurred, until the Class Certificate Balances thereof
     have been reduced to zero.

     Notwithstanding the foregoing, any portion of any Realized Loss that would
otherwise be allocated to the Class II-A-1 Certificates will instead be
allocated first to the Class II-A-2 Certificates until the Class Certificate
Balance thereof has been reduced to zero.

     Any allocation of a Realized Loss (other than a Debt Service Reduction) to
a Certificate will be made by reducing the Class Certificate Balance thereof, in
the case of the principal portion of such

                                      S-68


Realized Loss, in each case until the Class Certificate Balance of such Class
has been reduced to zero, and the Accrued Certificate Interest thereon, in the
case of the interest portion of such Realized Loss, by the amount so allocated
as of the Distribution Date occurring in the month following the calendar month
in which such Realized Loss was incurred. In addition, any such allocation of a
Realized Loss to a Class M Certificate or Class B Certificate may also be made
by operation of the payment priority to the Senior Certificates set forth under
"--Principal Distributions on the Senior Certificates" and any Class of Class M
Certificates or Class B Certificates with a higher payment priority.

     As used herein, "Fraud Losses" means losses sustained on a Liquidated
Mortgage Loan by reason of a default arising from fraud, dishonesty or
misrepresentation. "Liquidated Mortgage Loan" means any defaulted Mortgage Loan
as to which the related Servicer has determined that all amounts it expects to
recover from or on account of such Mortgage Loan have been recovered. As used
herein, "Bankruptcy Losses" means any Debt Service Reductions or Deficient
Valuations. "Debt Service Reduction" means a reduction in the amount of the
monthly payment due to certain bankruptcy proceedings, but does not include any
permanent forgiveness of principal. "Deficient Valuation" means, with respect to
any Mortgage Loan, a valuation of the mortgaged property by a court of competent
jurisdiction in an amount less than the then outstanding indebtedness under the
Mortgage Loan, which valuation results from a proceeding initiated under the
Bankruptcy Code or any other similar state law or other proceeding.

     As used herein, "Subordination" refers to the provisions discussed above
for the sequential allocation of Realized Losses among the various classes, as
well as all provisions effecting such allocations including the priorities for
distribution of cash flows in the amounts described herein.

     Allocations of the principal portion of Debt Service Reductions to the
Class M Certificates and Class B Certificates will result from the priority of
distributions of the Available Funds as described herein, which distributions
shall be made first to the Senior Certificates, second to the Class M
Certificates in the order of their payment priority and third to the Class B
Certificates in the order of their payment priority. An allocation of the
interest portion of a Realized Loss as well as the principal portion of Debt
Service Reductions will not reduce the level of Subordination, as such term is
defined herein, until an amount in respect thereof has been actually disbursed
to the Senior Certificateholders, the Class M Certificateholders or the Class B
Certificateholders, as applicable. The holders of the Offered Certificates will
not be entitled to any additional payments with respect to Realized Losses from
amounts otherwise distributable on any classes of Certificates subordinate
thereto. Accordingly, the Subordination provided to the Senior Certificates and
to each Class of Class M Certificates and Class B Certificates by the respective
Classes of Certificates subordinate thereto with respect to Realized Losses
allocated on any Distribution Date will be effected primarily by increasing the
Senior Percentage, or the respective Class M Percentage, of future distributions
of principal of the remaining Mortgage Loans. Thus, the Senior Certificates will
bear the entire amount of losses that are not allocated to the Class M
Certificates and Class B Certificates, which losses will be allocated among all
Classes of Senior Certificates as described herein.

     Any Excess Special Hazard Losses, Excess Fraud Losses, Excess Bankruptcy
Losses, Extraordinary Losses or other losses on the Mortgage Loans of a type not
covered by Subordination will be allocated on a pro rata basis among the
Certificates (any such Realized Losses so allocated to the Certificates will be
allocated without priority among the various Classes of Certificates). An
allocation of a Realized Loss on a "pro rata basis" among two or more Classes of
Certificates means an allocation to each such Class of Certificates on the basis
of its then outstanding Class Certificate Balance prior to giving effect to
distributions to be made on such Distribution Date in the case of an allocation
of the principal portion of a Realized Loss, or based on the Accrued Certificate
Interest thereon in respect of such Distribution Date in the case of an
allocation of the interest portion of a Realized Loss.

     With respect to any defaulted Mortgage Loan that is finally liquidated,
through foreclosure sale, disposition of the related Mortgaged Property if
acquired on behalf of the Certificateholders by deed in

                                      S-69


lieu of foreclosure, or otherwise, the amount of loss realized, if any, will
equal the portion of the Stated Principal Balance remaining, if any, plus
interest thereon through the last day of the month in which such Mortgage Loan
was finally liquidated, after application of all amounts recovered (net of
amounts reimbursable to the related Servicer or the Master Servicer for Advances
and expenses, including attorneys' fees) towards interest and principal owing on
the Mortgage Loan. Such amount of loss realized and any Special Hazard Losses,
Fraud Losses and Bankruptcy Losses are referred to herein as "Realized Losses."

     In order to maximize the likelihood of distribution in full of interest and
principal on the Senior Certificates, on each Distribution Date, holders of
Senior Certificates have a right to distributions of the related Group Available
Funds that is prior to the rights of the holders of the Class M Certificates and
Class B Certificates, to the extent necessary to pay interest and principal
thereon. Similarly, holders of the Class M Certificates have a right to
distributions of the remaining available funds with respect to the Mortgage
Loans prior to the rights of holders of the Class B Certificates, holders of any
Class of Class M Certificates with a higher payment priority have a right to
distributions of the remaining available funds with respect to the Mortgage
Loans prior to the rights of holders of any Class of Class M Certificates with a
lower payment priority, and holders of any Class of Class B Certificates with a
higher payment priority have a right to distributions of the remaining available
funds prior to the rights of holders of any Class of Class B Certificates with a
lower payment priority.

     The application of each Senior Accelerated Distribution Percentage (when it
exceeds the related Senior Percentage) to determine the related Senior Principal
Distribution Amount will accelerate the amortization of the related Senior
Certificates relative to the actual amortization of the related Mortgage Loans.
To the extent that the Senior Certificates are amortized faster than the related
Mortgage Loans, in the absence of offsetting Realized Losses allocated to the
Class M Certificates and Class B Certificates, the percentage interest evidenced
by such Senior Certificates in the Trust Fund will be decreased (with a
corresponding increase in the interest in the Trust Fund evidenced by the Class
M Certificates and Class B Certificates), thereby increasing, relative to their
respective Class Certificate Balances, the Subordination afforded such Senior
Certificates by the Class M Certificates and Class B Certificates collectively.
In addition, if losses on the Mortgage Loans exceed the amounts described above
under "--Principal Distributions on the Senior Certificates" and unless the
amount of subordination provided to the related group of Senior Certificates is
at least twice the amount as of the Cut-off Date, a greater percentage of full
and partial Mortgagor prepayments will be allocated to the Senior Certificates
than would otherwise be the case, thereby accelerating the amortization of the
Senior Certificates relative to the Class M Certificates and Class B
Certificates.

     The priority of payments (including Mortgagor prepayments) among the Class
M Certificates and Class B Certificates, as described herein, also has the
effect during certain periods, in the absence of losses, of decreasing the
percentage interest evidenced by the Class M Certificates or Class B
Certificates with a higher payment priority, thereby increasing, relative to its
Class Certificate Balance, the Subordination afforded to such Class of the Class
M Certificates by the Class B Certificates and any Class of Class M Certificates
or Class B Certificates with a lower payment priority.

     The aggregate amount of Realized Losses which may be allocated in
connection with Special Hazard Losses (the "Special Hazard Amount") through
Subordination shall initially be equal to approximately $6,010,242. As of any
date of determination following the Cut-off Date, the Special Hazard Amount
shall equal approximately $6,010,242 less the sum of (A) any amounts allocated
through Subordination in respect of Special Hazard Losses and (B) the Adjustment
Amount. The "Adjustment Amount" will be equal to an amount calculated pursuant
to the terms of the Agreement. As used in this prospectus supplement, "Special
Hazard Losses" has the same meaning set forth in the Prospectus, except that
Special Hazard Losses will not include and the Subordination will not cover
Extraordinary Losses, and Special Hazard Losses will not exceed the lesser of
the cost of repair or replacement of the related Mortgaged Properties.

                                      S-70


     The aggregate amount of Realized Losses which may be allocated in
connection with Fraud Losses (the "Fraud Loss Amount") through Subordination
shall initially be equal to approximately $5,591,988. As of any date of
determination after the Cut-off Date, the Fraud Loss Amount shall equal: (X)
prior to the second anniversary of the Cut-off Date, (1) the lesser of (a) the
Fraud Loss Amount as of the Cut-off Date and (b) 1.00% of the aggregate
principal balance of all of the Mortgage Loans as of the Cut-off Date minus (2)
the aggregate amounts allocated through Subordination with respect to Fraud
Losses as of the Cut-off Date up to such date of determination and (Y) from the
third to the fifth anniversary of the Cut-off Date, (1) the lesser of (a) the
Fraud Loss Amount as of the most recent anniversary of the Cut-off Date and (b)
0.50% of the aggregate principal balance of all of the Mortgage Loans as of the
most recent anniversary of the Cut-off Date minus (2) the aggregate amounts
allocated through Subordination with respect to Fraud Losses since the most
recent anniversary of the Cut-off Date up to such date of determination. On and
after the fifth anniversary of the Cut-off Date, the Fraud Loss Amount shall be
zero and Fraud Losses shall not be allocated through Subordination.

     The aggregate amount of Realized Losses which may be allocated in
connection with Bankruptcy Losses (the "Bankruptcy Amount") through
Subordination will initially be equal to $155,949. As of any date of
determination, the Bankruptcy Amount will equal $155,949 less the sum of any
amounts allocated through subordination for such losses up to such date of
determination.

     Notwithstanding the foregoing, the provisions relating to Subordination
will not be applicable in connection with a Bankruptcy Loss so long as the
related Servicer has notified the Master Servicer and the Trustee in writing
that the related Servicer is diligently pursuing any remedies that may exist in
connection with the representations and warranties made regarding the related
Mortgage Loan and either (A) the related Mortgage Loan is not in default with
regard to payments due thereunder or (B) delinquent payments of principal and
interest under the related Mortgage Loan and any premiums on any applicable
hazard insurance policy and any related escrow payments in respect of such
Mortgage Loan are being advanced on a current basis by the Servicer or the
Master Servicer.

FINAL SCHEDULED DISTRIBUTION DATE

     The Final Scheduled Distribution Date of each Class of Offered Certificates
is set forth under "Summary of Prospectus Supplement." The Final Scheduled
Distribution Date is the Distribution Date immediately following the latest
scheduled maturity date for any Mortgage Loan. Since the rate of distributions
in reduction of the Class Certificate Balance of each Class of Offered
Certificates will depend on the rate of payment (including prepayments) of the
related Mortgage Loans, the Class Certificate Balance of any such Class could be
reduced to zero significantly earlier than the Final Scheduled Distribution
Date. The rate of payments on the Mortgage Loans will depend on their particular
characteristics, as well as on prevailing interest rates from time to time and
other economic factors, and no assurance can be given as to the actual payment
experience of the Mortgage Loans.

OPTIONAL CLEAN-UP CALL OF THE CERTIFICATES

     The circumstances under which the obligations created by the Agreement will
terminate in respect of the Certificates are described in "Description of the
Certificates--Termination" in the Prospectus. The Master Servicer will have the
right to purchase all remaining Mortgage Loans and any properties acquired in
respect thereof and thereby effect early retirement of the Certificates on any
Distribution Date following the Due Period during which the aggregate principal
balance of the Mortgage Loans and such properties at the time of purchase is 10%
or less of the aggregate principal balance of the Mortgage Loans as of the
Cut-off Date. In the event the Master Servicer exercises such option, the
purchase price payable in connection therewith generally will be equal to par
plus accrued interest for each Mortgage Loan at the related Mortgage Rate to but
not including the first day of the month in which such repurchase price is
distributed. In the event the Master Servicer exercises such option, the portion
of the purchase price allocable to the each Class of Offered Certificates will
be, to the extent of available

                                      S-71


funds (i) 100% of the then outstanding Class Certificate Balance thereof, plus
(ii) one month's interest on the then outstanding Class Certificate Balance
thereof at the then applicable Pass-Through Rate, plus (iii) any previously
accrued but unpaid interest thereon. In no event will the trust created by the
Agreement continue beyond the expiration of 21 years from the death of the
survivor of the persons named in the Agreement. We refer you to "Description of
the Securities--Termination" in the accompanying Prospectus.

THE TRUSTEE

     Wachovia Bank, National Association will be the Trustee under the Pooling
and Servicing Agreement. The Trustee will be entitled to reimbursement for
certain expenses and other amounts prior to payment of any amounts to
Certificateholders. The Trustee's "Corporate Trust Office" for purposes of
presentment and for transfers and exchanges of the Certificates is located at
401 S. Tryon Street, 12th Floor, NC 1179, Charlotte, North Carolina 28288
(Attention: Merrill Lynch Mortgage Investors Trust Series MLMI 2005-A1) or at
such other addresses as the Trustee may designate from time to time.

VOTING RIGHTS

         Certain actions specified in the Prospectus that may be taken by
holders of Certificates evidencing a specified percentage of all undivided
interests in the Trust Fund may be taken by holders of Certificates entitled in
the aggregate to such percentage of Voting Rights. The percentage of the Voting
Rights allocated among Holders of the Certificates (other than the Class R
Certificates) will be 99.00% and the percentage of the Voting Rights allocated
among Holders of the Class R-I Certificates and Class R-II Certificates will be
0.50% and 0.50%, respectively. The Voting Rights allocated to each Class of
Certificates will be allocated among all Holders of each such Class in
proportion to the outstanding Class Certificate Balance of such Certificates.


                         SERVICING OF THE MORTGAGE LOANS

GENERAL

     Wells Fargo Bank, N.A. ("Wells Fargo" or the "Master Servicer") will act as
the master servicer of the mortgage loans pursuant to the pooling and servicing
agreement, dated as of January 1, 2005 (the "Agreement"), among the depositor,
the master servicer, the securities administrator and the trustee, a form of
which is filed as an exhibit to the Registration Statement. Wells Fargo is a
national banking association, with a master servicing office located at 9062 Old
Annapolis Road, Columbia, Maryland 21045-1951, Attn: Corporate Trust Services -
MLMI 2005-A1. Among other things, Wells Fargo is in the business of master
servicing single family residential mortgage loans secured by properties located
in all 50 states and the District of Columbia.

THE SERVICERS

     National City Mortgage Co. ("National City"), First Republic Bank ("First
Republic"), Washington Mutual Bank, FA ("Washington Mutual"), ABN AMRO Mortgage
Group, Inc. ("ABN AMRO") and Countrywide Servicing ("Countrywide") are each
referred to in this prospectus supplement as a "Servicer."

National City

     The following table sets forth the delinquency and foreclosure experience
of mortgage loans serviced by National City as of the dates indicated. National
City's portfolio of mortgage loans may differ significantly from the mortgage
loans backing the certificates in terms of underwriting standards, interest

                                      S-72


rates, principal balances, geographic distribution, types of properties and
other possibly relevant characteristics. There can be no assurance, and no
representation is made, that the delinquency and foreclosure experience with
respect to the mortgage loans backing the certificates will be similar to that
reflected in the table below, nor is any representation made as to the rate at
which losses may be experienced on liquidation of defaulted mortgage loans. The
actual delinquency experience on the mortgage loans will depend, among other
things, upon the value of the real estate securing such mortgage loans and the
ability of borrowers to make required payments.




                                         AS OF DECEMBER 31, 2001                      AS OF DECEMBER 31, 2002
                                  ---------------------------------------     --------------------------------------
                                                                % BY                                       % BY
                                  NO. OF       PRINCIPAL        PRINCIPAL     NO. OF      PRINCIPAL        PRINCIPAL
                                  LOANS        BALANCE(1)       BALANCE       LOANS       BALANCE(1)       BALANCE
                                  --------     ------------     ---------     -------     ------------     ---------

Current Balance .........          800,450     $ 88,386,490                   964,741     $122,259,694

    30-59 Days ..........           27,124        2,595,840         2.94%      30,784        3,332,311         2.73%
    60-89 Days ..........            6,987          647,455         0.73%       6,606          679,075         0.56%
    90 Days or more .....            5,523          511,766         0.58%       5,212          524,836         0.43%

Delinquency/Bankruptcies             3,364          281,019         0.32%       4,291          406,116         0.33%

Foreclosures Pending ....            6,461          579,921         0.66%       6,816          666,127         0.54%

Total Delinquency .......           49,459     $  4,616,001         5.22%      53,709     $  5,608,464         4.59%
                                    ======     ============         ====       ======     ============         ====

Percent Government.......               27%              24%                       25%              21%





                                        AS OF DECEMBER 31, 2003                    AS OF SEPTEMBER 30, 2004
                                  ---------------------------------------     --------------------------------------
                                                                % BY                                       % BY
                                  NO. OF       PRINCIPAL        PRINCIPAL     NO. OF      PRINCIPAL        PRINCIPAL
                                  LOANS        BALANCE(1)       BALANCE       LOANS       BALANCE(1)       BALANCE
                                  --------     ------------     ---------     -------     ------------     ---------

                                 1,111,388     $155,274,844                 1,121,611     $160,315,449
Current Balance

    30-59 Days ..........           28,364        3,149,088         2.03%      27,049        3,100,384         1.93%
    60-89 Days ..........            5,971          657,961         0.42%       6,157          689,200         0.43%
    90 Days or more .....            4,793          520,683         0.34%       5,699          631,461         0.39%

Delinquency/Bankruptcies             4,445          432,086         0.28%       4,588          458,747         0.29%

Foreclosures Pending ....            7,227          768,913         0.50%       6,251          672,933         0.42%

Total Delinquency .......           50,800       $5,528,731         3.56%      49,744       $5,552,725         3.46%
                                    ======       ==========         ====       ======       ==========         ====

Percent Government.......               23%               19%                       22%           18%


(1) Principal Balance amounts are in thousands.


First Republic

     First Republic is a commercial bank, specializing in real estate lending,
private banking, investment management and trust services. First Republic's
corporate headquarters are located at One Eleven Pine Street, San Francisco, CA
94111.

     As of September 30, 2004, First Republic's total single family loan
servicing portfolio of loans held on its balance sheet and sold to investors
contained loans with an aggregate outstanding principal balance of approximately
$6.434 billion. The loans contained in First Republic's servicing portfolio
include fixed and adjustable rate loans, first and second lien loans and one- to
four-family loans, and therefore performance may differ significantly from the
mortgage loans. There can be no assurance, and no representation is made, that
the delinquency experience with respect to the mortgage loans will be

                                      S-73


similar to that reflected in the table below, nor is any representation made as
to the rate at which losses may be experienced on liquidation of defaulted
mortgage loans.

     First Republic applies its collection policies uniformly to both its
portfolio loans and loans serviced for others. It is First Republic's policy to
discuss each loan with one or more past due payments at a weekly meeting of all
lending personnel. First Republic has polices requiring rapid notification of
delinquency and the prompt initiation of collection actions. First Republic
primarily utilizes relationship managers, the collections department, credit
administration personnel, and senior management in its collection activities in
order to maximize attention and efficiency.

     When a borrower fails to make a required payment on a mortgage loan by the
end of the 10- or 15-day grace period, the relationship manager who originated
the loan is required to establish telephone contact with the borrower. At the
same time, the collections department sends the borrower a "friendly" reminder
that the mortgage payment is past due. If these early contacts do not prompt the
borrower to make the mortgage payment and the loan continues to be delinquent,
then the borrower will receive a "Notice of Intent to Foreclose," generally
within five days of the end of the grace period. During this period, the
relationship manager and collections department maintain regular contact with
the borrower to determine the likelihood of serious delinquent status and to
formulate recommendations on how to proceed. In most cases, delinquencies are
cured promptly. If the mortgage loan is not brought current, a notice of default
is filed 45 to 50 days after the due date (thirty days after the grace period),
and foreclosure proceedings are commenced according to standard servicing
procedures and state law.

     The following table sets forth certain information regarding the
delinquency, foreclosure and loss experience of First Republic with respect to
all the residential mortgage loans originated and serviced by it. The indicated
periods of delinquency are based on the number of days past due on a contractual
basis.



                                                       As of                                      As of
                                                 December 31, 2001                          December 31, 2002
                                      ----------------------------------------     --------------------------------------
                                           Number              Principal                 Number              Principal
                                          of Loans              Balance                 of Loans              Balance
                                      -----------------    -------------------     -----------------   ------------------

Total Portfolio                                  6,535         $4,021,162,813                 7,299       $4,801,207,851
Period of Delinquency
     30 to 59 days                                   1               $162,916                     3           $3,003,286
     60 to 89 days                                   3             $2,847,161                     1             $794,349
     90 days or more                                 0                     $0                     1             $411,825
Total Delinquencies                                  4             $3,010,077                     5           $4,209,460
Total Delinquencies by Percent
     of Total Portfolio                          0.06%                  0.07%                 0.07%                0.09%
Real Estate Owned                                    0                     $0                     0                   $0




                                                       As of                                     As of
                                                 December 31, 2003                         September 30, 2004
                                       --------------------------------------     ---------------- -- ------------------
                                           Number              Principal                 Number              Principal
                                          of Loans              Balance                 of Loans              Balance
                                      -----------------    -------------------     -----------------   ------------------

Total Portfolio                                 7,769          $5,618,042,520               8,505        $6,434,157,847
Period of Delinquency
     30 to 59 days                                  0                      $0                   5            $1,884,006
     60 to 89 days                                  1                $425,000                   0                    $0
     90 days or more                                0                      $0                   0                    $0
Total Delinquencies                                 1                $425,000                   5            $1,884,006
 Total Delinquencies by Percent
     of Total Portfolio                         0.01%                   0.01%               0.06%                 0.03%
 Real Estate Owned                                  0                      $0                   0                    $0



                                      S-74


     The above delinquency, foreclosure and loss statistics represent the recent
experience of First Republic. There can be no assurance, however, that the
delinquency, foreclosure and loss experience on the mortgage loans serviced by
First Republic will be comparable. In addition, the foregoing statistics include
mortgage loans with a variety of payment and other characteristics that may not
correspond to those of the related mortgage loans. Further, the mortgage loans
serviced by First Republic were not chosen from First Republic's portfolio on
the basis of any methodology which could or would make them representative of
the total pool of mortgage loans in First Republic's portfolio. The actual loss
and delinquency experience on the related mortgage loans will depend on, among
other things, the value of the real estate and cooperative shares securing such
mortgage loans and the ability of the borrowers to make required payments. If
First Republic undertakes litigation or retains outside attorneys or
investigators, the costs thereof will be borne by the trust or the certificate
holders. First Republic will not be required to advance funds for the conduct of
such litigation or the hiring of such outside attorneys or investigators if it
reasonably believes that such advances will not be promptly reimbursed.

     The likelihood that borrowers will become delinquent in the payment of
their mortgage loans and the rate of any subsequent foreclosures may be affected
by a number of factors related to borrowers' personal circumstances, including,
for example, unemployment or change in employment (or in the case of
self-employed borrowers or borrowers relying on commission income, fluctuations
in income), marital separation and a borrower's equity in the related mortgaged
property. In addition, delinquency and foreclosure experience may be sensitive
to adverse economic conditions (either nationally or regionally), may exhibit
seasonal variations, and may be influenced by the level of interest rates and
servicing decisions on the applicable mortgage loans. Regional economic
conditions (including declining real estate values) may particularly affect
delinquency and foreclosure experience on mortgage loans to the extent that
mortgaged properties are concentrated in certain geographic areas.

Washington Mutual

     The following table sets forth information concerning single-family
residential ("SFR") loans, which Washington Mutual holds in its own portfolio
and services, as well as SFR nonaccrual loans and foreclosed assets. Assets
considered to be nonperforming include nonaccrual loans and foreclosed assets.
Loans are generally placed on nonaccrual status when they are 90 days or more
past due or when the timely collection of the principal of the loan, in whole or
in part, is not expected. Management's classification of a loan as nonaccrual
does not necessarily indicate that the principal of the loan is uncollectible in
whole or in part.

                                      S-75



                                            SEPTEMBER 30                           DECEMBER 31,
                                            -----------        --------------------------------------------------
                                                2004               2003                2002               2001
                                            -----------        -----------         -----------        -----------

                                            (dollars in        (dollars in         (dollars in        (dollars in
                                             thousands)         thousands)          thousands)         thousands)
Nonaccrual SFR loans (excluding loans
serviced by others) (1)(2)                    417,933             558,093            834,070             759,750

Total  SFR  loans  held  in   portfolio
(excluding loans serviced by others)        101,067,451         86,453,340          70,712,351         65,568,982

Nonaccrual SFR loans as a percentage
of total SFR loans held in portfolio
(excluding loans serviced by others)           0.41%               0.65%              1.18%               1.16%

Foreclosed SFR assets (excluding loans
serviced by others)                           121,691             111,429            112,803             65,269


(1)  Nonaccrual SFR loans exclude nonaccrual SFR loans held for sale.

(2)  Nonaccrual SFR loans exclude foreclosed SFR assets. Foreclosed SFR assets
     are listed separately in the table above.

     The above information represents the nonaccrual and foreclosure statistics
of Washington Mutual as a servicer of SFR loans held in its portfolio (the
"Portfolio"). The nonaccrual and foreclosure statistics of the mortgage loans in
the Portfolio is unlikely to be a meaningful predictor of the performance of the
mortgage loans in the trust. The statistics shown above represent the nonaccrual
and foreclosure statistics of Washington Mutual's portfolio only for the periods
presented whereas the aggregate delinquency and loss experience of the mortgage
loans in the trust will depend on the results obtained over the life of the
trust. In addition, the foregoing statistics include mortgage loans with a
variety of payment and other characteristics that may not correspond to those of
the mortgage loans in the trust.

     The statistics shown above should not be considered as a basis of assessing
the likelihood, amount or severity of losses of the mortgage loans in the trust.
If the residential real estate market should experience an overall decline in
property values, the actual rate of delinquencies, foreclosures and losses could
be higher than those previously experienced by Washington Mutual in its
Portfolio. In addition, adverse economic conditions (which may or may not affect
property values) may affect the timely payment by mortgagors of scheduled
payments of principal and interest on the mortgage loans in the trust, and
accordingly, the actual rates of delinquencies, foreclosures and losses with
respect to the mortgage loans in the trust. The likelihood that mortgagors will
become delinquent in the payment of their mortgage loans may be affected by a
number of factors related to a mortgagor's personal circumstances, including,
for example, unemployment, fluctuations in income and a mortgagor's equity in
the related mortgaged property. The actual delinquency and foreclosure
experience of the mortgage loans in the trust may also be sensitive to the level
of interest rates and influenced by servicing decisions on the applicable
mortgage loans. Regional economic conditions (including declining real estate
values) may particularly affect delinquency and foreclosure experience on such
mortgage loans in the trust to the extent that mortgaged properties are
concentrated in certain geographic areas. Accordingly, the information regarding
the nonaccrual and foreclosure statistics of the Portfolio is not likely to
provide an accurate assessment of the delinquency, default and loss experience
of the mortgage loans in the trust over time.

ABN AMRO

     On June 30, 1999, Standard Federal Bank contributed all of its residential
one- to four-family mortgage loan origination and servicing assets to ABN AMRO,
which was formed to consolidate all of

                                      S-76


the residential one- to four-family mortgage banking operations of Standard
Federal Bank and its affiliates into one entity. Before this contribution, ABN
AMRO did not hold or service any residential one- to four-family mortgage loans
in a loan or servicing portfolio. After this contribution, ABN AMRO began to
originate, directly or indirectly, and service residential one- to four-family
mortgage loans in its loan and servicing portfolio. On October 5, 2001, Standard
Federal Bank was merged with Michigan National Bank and the combined entity was
named Standard Federal Bank National Association. At this time the residential
one- to four-family mortgage loan assets of Michigan National Bank were
consolidated with the assets of Standard Federal Bank and the servicing of these
assets were transferred to ABN AMRO.

     As of December 31, 2004, ABN AMRO provided servicing for approximately
$195.2 billion aggregate principal amount of residential one- to four-unit
mortgage loans.

     The table below summarizes the following delinquency and foreclosure
experience:

     o    as of December 31, 2000, on approximately $11.37 billion, in
          outstanding principal balances on one- to four-family, residential
          loans originated, directly or indirectly, serviced by Standard Federal
          Bank; and

     o    as of December 31, 2001, December 31, 2002, December 31, 2003 and
          December 31, 2004, on approximately $139.1 billion, $178.4 billion,
          $201.8 billion and $195.2 billion, respectively, in outstanding
          principal balances on one- to four-family, residential loans, serviced
          by ABN AMRO (including loans serviced for others), and originated in
          the following manner:

          o    if originated before June 30, 1999, then originated directly or
               indirectly by Standard Federal Bank; or

          o    originated directly or indirectly by Standard Federal Bank
               National Association, or predecessor entities.

    STANDARD FEDERAL BANK NATIONAL ASSOCIATION/ABN AMRO MORTGAGE GROUP, INC.
                       ONE- TO FOUR-UNIT RESIDENTIAL LOANS


                                                               AS OF DECEMBER 31
                                      ---------------------------------------------------------------------
Delinquent loans at Period End(1)        2000(3)       2001(4)       2002(4)       2003(4)       2004(4)
                                         -------       -------       -------       -------       -------

30 to 59 days                             0.69%         0.61%         0.97%         0.42%         0.45%
60 to 89 days                             0.28%         0.24%         0.30%         0.17%         0.17%
90 days and over(2)                       0.93%         1.02%         1.28%         1.48%         0.81%
                                          -----         -----         -----         -----         -----
Total Delinquencies and
Foreclosures(1)                           1.90%         1.87%         2.55%         2.07%         1.43%
                                          =====         =====         =====         =====         =====


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

(1)  With respect to each period indicated in the table above, other than the
     periods ended December 31, 2000 and December 31, 2004, real estate owned
     property is included in the delinquency calculations.

(2)  Includes foreclosures.

(3)  As a percentage of the total dollar amount of loans held and serviced by
     Standard Federal Bank in its loan portfolio and loans held for sale
     portfolio at period end or loans held and serviced by ABN AMRO, as
     applicable.

(4)  As a percentage of the aggregate dollar amount of loans originated by ABN
     AMRO and Standard Federal Bank National Association and serviced by ABN
     AMRO.

                                      S-77


     The above delinquency and foreclosure statistics represent the total
portfolio experience of Standard Federal Bank National Association or ABN AMRO,
as applicable, for the indicated periods. There can be no assurance that the
delinquency and foreclosure experience with respect to the mortgage loans
comprising the mortgage pool will correspond to the delinquency and foreclosure
experience of Standard Federal Bank National Association 's or ABN AMRO's
mortgage portfolio set forth in the foregoing table. Indeed, the statistics
shown above represent the delinquency and foreclosure experience for the total
residential one- to four-unit mortgage portfolios for each of the periods
presented, whereas the aggregate delinquency and foreclosure experience on the
mortgage loans will depend on the results obtained over the life of the mortgage
pool. In addition, the foregoing statistics include mortgage loans with a
variety of payment and other characteristics that may not correspond to those of
the loans.

SERVICING AND COLLECTION PROCEDURES

     The Servicers will use reasonable efforts to ensure that all payments
required under the terms and provisions of the Mortgage Loans are collected, and
shall follow collection procedures comparable to the collection procedures of
prudent mortgage lenders servicing mortgage loans for their own account, to the
extent such procedures shall be consistent with the servicing agreements.
Consistent with the foregoing, the Servicers may in their discretion waive,
modify or vary or permit to be waived, modified or varied, any term of any
Mortgage Loan including, in certain instances, changing the mortgage interest
rate or extending the final maturity.

     If a mortgaged property has been or is about to be conveyed by the
mortgagor and the related Servicer has knowledge thereof, the related Servicer
will accelerate the maturity of the Mortgage Loan, to the extent permitted by
the terms of the related mortgage note and applicable law. If it reasonably
believes that the due-on-sale clause cannot be enforced under applicable law, or
would otherwise potentially impair any recovery under a primary mortgage
insurance policy, if applicable, the related Servicer in some cases with the
prior consent of the Trustee (not to be unreasonably withheld) may enter into an
assumption agreement with the person to whom such property has been or is about
to be conveyed, pursuant to which such person becomes liable under the mortgage
note and the mortgagor, to the extent permitted by applicable law, remains
liable thereon. The related Servicer will retain any fee collected for entering
into assumption agreements as additional servicing compensation. In regard to
circumstances in which the related Servicer may be unable to enforce due-on-sale
clauses, we refer you to "Certain Legal Aspects of Mortgage Loans -- Due-on-Sale
Clauses" in the Prospectus. In connection with any such assumption, the interest
rate borne by the related mortgage note may not be changed.

     The Servicers will establish and maintain, in addition to the protected
accounts described below under "--Protected Accounts," one or more servicing
accounts. Each servicing account and the investment of deposits therein shall
comply with the requirements of the related servicing agreement and shall meet
the requirements of the rating agencies. The Servicers will deposit and retain
therein all collections from the mortgagors for the payment of taxes,
assessments, insurance premiums, or comparable items as agent of the mortgagors
as provided in the related servicing agreement. Withdrawals of amounts from the
servicing accounts may be made only to effect timely payment of taxes,
assessments, insurance premiums, or comparable items, to reimburse the related
Servicer or Master Servicer for any advances made with respect to such items, to
refund to any mortgagors any sums as may be determined to be overages, to pay
interest, if required, to mortgagors on balances in the servicing accounts, to
pay earnings not required to be paid to mortgagors to the Master Servicer or the
related Servicer, or to clear and terminate the servicing accounts at or at any
time after the termination of the related servicing agreement.

     The Servicers will maintain errors and omissions insurance and fidelity
bonds in certain specified amounts to the extent required under the related
servicing agreement.


                                      S-78



HAZARD INSURANCE

     The Servicers will maintain and keep, or cause to be maintained and kept,
with respect to each Mortgage Loan, in full force and effect for each mortgaged
property a hazard insurance policy with extended coverage customary in the area
where the mortgaged property is located in an amount equal to the amounts
required in the related servicing agreement, or in general equal to at least the
lesser of the outstanding principal balance of the Mortgage Loan or the maximum
insurable value of the improvements securing such mortgage loan and containing a
standard mortgagee clause; but no less than the amount necessary to prevent loss
due to the application of any co-insurance provision of the related policy. Any
amounts collected by the related Servicer under any such hazard insurance
policy, other than amounts to be applied to the restoration or repair of the
mortgaged property or amounts released to the mortgagor in accordance with
normal servicing procedures, shall be deposited in a protected account. Any cost
incurred in maintaining any such hazard insurance policy shall not be added to
the amount owing under the Mortgage Loan for the purpose of calculating monthly
distributions to certificateholders, notwithstanding that the terms of the
Mortgage Loan so permit. Such costs shall be recoverable by the related Servicer
out of related late payments by the mortgagor or out of insurance proceeds or
liquidation proceeds or any other amounts in the related protected account. The
right of the related Servicer to reimbursement for such costs incurred will be
prior to the right of the Master Servicer to receive any related insurance
proceeds or liquidation proceeds or any other amounts in the related protected
account.

     In general, the standard form of fire and extended coverage policy covers
physical damage to or destruction of the improvements on the property by fire,
lightning, explosion, smoke, windstorm and hail, riot, strike and civil
commotion, subject to the conditions and exclusions particularized in each
policy. Although the policies relating to the Mortgage Loans will be
underwritten by different insurers and therefore will not contain identical
terms and conditions, the basic terms thereof are dictated by state law. Such
policies typically do not cover any physical damage resulting from the
following: war, revolution, governmental actions, floods and other water-related
causes, earth movement (including earthquakes, landslides and mud flows),
nuclear reactions, wet or dry rot, vermin, rodents, insects or domestic animals,
theft and, in certain cases, vandalism and malicious mischief. The foregoing
list is merely indicative of certain kinds of uninsured risks and is not
intended to be all-inclusive.

     Hazard insurance policies covering properties similar to the mortgaged
properties typically contain a clause which in effect requires the insured at
all times to carry insurance of a specified percentage generally at least 80% 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, such clause provides that the insurer's
liability in the event of partial loss does not exceed the greater of (i) the
replacement cost of the improvements less physical depreciation, or (ii) such
proportion of the loss as the amount of insurance carried bears to the specified
percentage of the full replacement cost of such improvements.

     Since the amount of hazard insurance to be maintained on the improvements
securing the Mortgage Loans may decline as the principal balances owing thereon
decrease, and since residential properties have historically appreciated in
value over time, in the event of partial loss, hazard insurance proceeds may be
insufficient to restore fully the damaged property.

     Where the property securing a Mortgage Loan is located at the time of
origination in a federally designated flood area, the related Servicer will
cause with respect to such Mortgage Loan flood insurance to the extent available
and in accordance with industry practices to be maintained. Such flood insurance
will generally be in an amount equal to the lesser of (i) the outstanding
principal balance of the related Mortgage Loan, (ii) either (a) the minimum
amount required under the terms of coverage to compensate for any damage or loss
on a replacement cost basis, or (b) the maximum insurable value of the
improvements securing such Mortgage Loan, and (iii) the maximum amount of such
insurance available for the related mortgaged property under either the regular
or emergency programs of the National Flood

                                      S-79


Insurance Program, assuming that the area in which such mortgaged property is
located is participating in such program.

     The Servicers, on behalf of the Trustee and certificateholders, will
present claims to the insurer under any applicable hazard insurance policy. As
set forth above, all collections under such policies that are not applied to the
restoration or repair of the related mortgaged property or released to the
mortgagor in accordance with normal servicing procedures are to be deposited in
a protected account. The Servicers are required to deposit in a protected
account the amount of any deductible under a blanket hazard insurance policy, if
applicable.

REALIZATION UPON DEFAULTED MORTGAGE LOANS

     The Servicers will take such action either as such deems to be in the best
interest of the trust, or as is consistent with accepted servicing practices or
in accordance with established practices for other mortgage loans serviced by
the Servicers with respect to defaulted Mortgage Loans and foreclose upon or
otherwise comparably convert the ownership of properties securing defaulted
Mortgage Loans as to which no satisfactory collection arrangements can be made.
To the extent set forth in the related servicing agreement, the related Servicer
will service the property acquired by the trust through foreclosure or
deed-in-lieu of foreclosure in accordance with procedures that the related
Servicer employs and exercises in servicing and administering mortgage loans for
its own account and which are in accordance with accepted mortgage servicing
practices of prudent lending institutions and Fannie Mae guidelines. The related
Servicer will not be required to expend its own moneys with respect to the
restoration or to make servicing advances with respect to such mortgaged
properties unless such entity has determined that (i) such amounts would be
recovered, and (ii) it believes such restoration will increase proceeds to the
trust following the mortgaged property's eventual liquidation.

     Since insurance proceeds received in connection with a mortgage loan cannot
exceed deficiency claims and certain expenses incurred by the related Servicer,
no insurance payments will result in a recovery to certificateholders which
exceeds the principal balance of the defaulted mortgage loan together with
accrued interest thereon at its applicable net mortgage rate.

SERVICING COMPENSATION AND PAYMENT OF EXPENSES

     Each Servicer will be entitled to receive a fee as compensation for its
activities under the related servicing agreement. Each Servicer will be entitled
to a Servicing Fee equal to the product of the Servicing Fee Rate multiplied by
the Stated Principal Balance of each Mortgage Loan serviced by such entity as of
the Due Date in the month preceding the month in which such Distribution Date
occurs. The Servicing Fee Rate will be a fixed rate on each Mortgage Loan,
ranging from 0.250% to 0.375% per annum of the Stated Principal Balance of the
Mortgage Loan. As of the Cut-off Date, the weighted average Servicing Fee Rate
is approximately 0.250%, 0.280% and 0.250% with respect to the Group I, Group II
and Group III Mortgage Loans, respectively, and 0.270% with respect to the
Mortgage Loans in the aggregate. As additional servicing compensation, the
related Servicer is entitled to retain all assumption fees, late payment charges
and other fees and charges (other than prepayment penalties, in certain
instances) to the extent collected from mortgagors, together with any interest
or other income earned on funds held in the protected account and any escrow
accounts. The related Servicer will be obligated to offset any Prepayment
Interest Shortfall resulting from a prepayment in full on any Distribution Date
to the extent of the Servicing Fee for such Distribution Date. In addition,
National City, ABN AMRO and Countrywide will be obligated to offset any
Prepayment Interest Shortfall resulting from a prepayment in part on any
Distribution Date (payments made by the related Servicer in satisfaction of such
obligation, together with the payments made by the related Servicer to offset
shortfalls resulting from prepayments in full, "Compensating Interest") to the
extent of the Servicing Fee for such Distribution Date. The Master Servicer will
be obligated to make such Compensating Interest payments in the event that the
related Servicer is required to and fails to do so. The related Servicer is
obligated to pay

                                      S-80


certain insurance premiums and certain ongoing expenses associated with the
Mortgage Loans serviced by such entity and incurred by the related Servicer in
connection with its responsibilities with respect to the related Mortgage Loans
and is entitled to reimbursement therefor as provided in the related servicing
agreement.

PROTECTED ACCOUNTS

     The Servicers will establish and maintain one or more custodial accounts
(referred to herein as protected accounts) into which they will deposit daily or
at such other time specified in the applicable servicing agreement all
collections of principal and interest on any Mortgage Loans, including principal
prepayments, insurance proceeds, liquidation proceeds, the repurchase price for
any Mortgage Loans repurchased, and advances made from the related Servicer's
own funds, less the applicable Servicing Fee. All protected accounts and amounts
at any time credited thereto shall comply with the requirements of the related
servicing agreement and shall meet the requirements of the rating agencies.

     On the date specified in the applicable servicing agreement, the related
Servicer will withdraw from its protected account amounts on deposit therein and
will remit them to the Master Servicer for deposit in the Master Servicer
Collection Account.

THE MASTER SERVICER COLLECTION ACCOUNT

     The Master Servicer shall establish and maintain in the name of the
Trustee, for the benefit of the certificateholders, an account (the "Master
Servicer Collection Account") into which it will deposit amounts received from
each Servicer and advances (to the extent required to make advances) made from
the Master Servicer's own funds (less the Master Servicer's expenses, as
provided in the Agreement). The Master Servicer Collection Account and amounts
at any time credited thereto shall comply with the requirements of the Agreement
and shall meet the requirements of the rating agencies. The amount at any time
credited to the Master Servicer Collection Account may be invested in the name
of the Trustee in such permitted investments selected by the Master Servicer as
set forth in the Agreement. The Master Servicer shall be entitled to any amounts
earned and will be liable for any losses in permitted investments in the Master
Servicer Collection Account. The Master Servicer will deposit in the Master
Servicer Collection Account, as received, the following amounts:

          (i) Any amounts withdrawn from a protected account or other permitted
     account;

          (ii) Any advance and Compensating Interest payments;

          (iii) Any Insurance Proceeds or Liquidation Proceeds received by the
     Master Servicer which were not deposited in a protected account or other
     permitted account;

          (iv) The repurchase price with respect to any Mortgage Loans
     repurchased and all proceeds of any Mortgage Loans or property acquired in
     connection with the optional termination of the trust;

          (v) Any amounts required to be deposited with respect to losses on
     permitted investments; and

          (vi) Any other amounts received by or on behalf of the Master Servicer
     or the Trustee and required to be deposited in the Master Servicer
     Collection Account pursuant to the Agreement.

                                      S-81


DISTRIBUTION ACCOUNT

     The Trustee shall establish and maintain in the name of the Trustee, for
the benefit of the certificateholders, an account (the "Distribution Account"),
into which on the day prior to each Distribution Date it will deposit all
amounts transferred to it by the Master Servicer from the Master Servicer
Collection Account. All amounts deposited to the Distribution Account shall be
held in the name of the Trustee in trust for the benefit of the
certificateholders in accordance with the terms and provisions of the Agreement.
The amount at any time credited to the Distribution Account may be invested in
the name of the Trustee, in such permitted investments selected by the Master
Servicer as set forth in the Agreement. The Master Servicer will be entitled to
any amounts earned and will be liable for any losses on permitted investments in
the Distribution Account.

     On each Distribution Date, the Trustee will withdraw available funds from
the Distribution Account and make payments to the certificateholders in
accordance with the provisions set forth under "Description of the
Certificates-- Distributions on the Certificates" in this prospectus supplement.
The Trustee and the Securities Administrator will be entitled to compensation
for their services under the Agreement which shall be paid by the Master
Servicer. The Trustee and the Securities Administrator will also be entitled to
be reimbursed for their expenses, costs and liabilities incurred by or
reimbursable to them pursuant to the Agreement prior to the distribution of the
available funds.

EVENTS OF DEFAULT

     "Events of Default" under the Agreement consist of (i) failure by the
Master Servicer to cause to be deposited in the Distribution Account amounts
required to be deposited by the Master Servicer pursuant to the Agreement, and
such failure continues unremedied for three Business Days after the date upon
which written notice of such failure, requiring the same to be remedied, shall
have been given to the Master Servicer, (ii) failure by the Master Servicer to
observe or perform in any material respect any other material covenants and
agreements set forth in the Agreement to be performed by it, and such failure
continues unremedied for 60 days after the date on which written notice of such
failure has been given to the Master Servicer by the Trustee, (iii) the entry
against the Master Servicer of a decree or order by a court or agency or
supervisory authority having jurisdiction in the premises for the appointment of
a conservator, receiver or liquidator in any insolvency, readjustment of debt,
marshaling of assets and liabilities or similar proceedings, or for the winding
up or liquidation of its affairs, and the continuance of any such decree or
order unstayed and in effect for a period of 60 consecutive days, (iv) consent
by the Master Servicer to the appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of debt, marshaling of assets and
liabilities or similar proceedings of or relating to the Master Servicer or
substantially all of its property, or (v) admission by the Master Servicer in
writing of its inability to pay its debts generally as they become due, filing
of a petition to take advantage of any applicable insolvency or reorganization
statute, any assignment for the benefit of its creditors, or voluntary
suspension of payment of its obligations.

     In each and every such case, so long as such Event of Default with respect
to the Master Servicer shall not have been remedied, the Trustee or the holders
of Certificates aggregating ownership of not less than 51% of the Trust may in
each case by notice in writing to the Master Servicer (and to the Trustee if
given by such Certificateholders), with a copy to the Rating Agencies, terminate
all of the rights and obligations (but not the liabilities accruing prior to the
date of termination) of the Master Servicer under the Agreement and in and to
the Mortgage Loans serviced by the Master Servicer and the proceeds thereof.

     Upon the receipt by the Master Servicer of such written notice, all
authority and power of the Master Servicer under the Agreement, whether with
respect to the Certificates, the Mortgage Loans or under any other related
agreements (but only to the extent that such other agreements relate to the
Mortgage Loans) shall, subject to the provisions of the Agreement and to
bankruptcy, insolvency or

                                      S-82


similar laws, if applicable, automatically and without further action pass to
and be vested in the Trustee. Upon the receipt by the Master Servicer of a
notice of termination or an opinion of counsel to the effect that the Master
Servicer is legally unable to act or to delegate its duties to a person which is
legally able to act, the Trustee shall automatically become the successor in all
respects to the Master Servicer in its capacity under the Agreement and the
transactions set forth or provided for therein and shall thereafter be subject
to all the responsibilities, duties, liabilities and limitations on liabilities
relating thereto placed on the Master Servicer by the terms and provisions
thereof; provided, however, that the Trustee (i) shall be under no obligation to
repurchase any Mortgage Loan; and (ii) shall have no obligation whatsoever with
respect to any liability incurred by the prior Master Servicer. As compensation
therefor, the Trustee shall be entitled to all funds relating to the Mortgage
Loans which the Master Servicer would have been entitled to retain if the Master
Servicer had continued to act as such, except for those amounts due the Master
Servicer as reimbursement for advances previously made or expenses previously
incurred. Notwithstanding the above, the Trustee may, if it shall be unwilling
so to act, or shall, if it is legally unable so to act, appoint, or petition a
court of competent jurisdiction to appoint, any established housing and home
finance institution which is a Fannie Mae or Freddie Mac approved servicer as
the successor to the Master Servicer under the Agreement in the assumption of
all or any part of the responsibilities, duties or liabilities of the Master
Servicer under the Agreement. Pending appointment of a successor to the Master
Servicer under the Agreement, the Trustee shall act in such capacity as provided
under the Agreement. In connection with such appointment and assumption, the
Trustee may make such arrangements for the compensation of such successor out of
payments on Mortgage Loans as it and such successor shall agree; provided,
however, that no such compensation shall be in excess of that permitted the
Trustee as provided above, and that such successor shall undertake and assume
the obligations of the Trustee to pay compensation to any third person acting as
an agent or independent contractor in the performance of master servicing
responsibilities under the Agreement. Notwithstanding the foregoing, in the case
of such appointment and assumption, the Trustee will be entitled to
reimbursement for any costs and expenses incurred in connection with the
appointment of such successor master servicer.

MONTHLY ADVANCES

     If the scheduled payment on a Mortgage Loan which was due on a related Due
Date is delinquent other than for certain reasons as set forth in the applicable
servicing agreement as a result of application of the Relief Act, the related
Servicer will remit to the Master Servicer for deposit in the Master Servicer
Collection Account within the number of days prior to the related Distribution
Date set forth in the related servicing agreement an amount equal to such
delinquency, net of the related Servicing Fee Rate except to the extent the
related Servicer determines any such advance to be nonrecoverable from
Liquidation Proceeds, Insurance Proceeds or from future payments on the Mortgage
Loan for which such advance was made. Subject to the foregoing and if specified
in the related servicing agreement, advances will be made by the related
Servicer until the liquidation of the related mortgaged property. Failure by the
related Servicer to remit any required advance, which failure goes unremedied
for the number of days specified in the related servicing agreement would
constitute an event of default under such agreements. Such event of default by
the related Servicer shall then obligate the Master Servicer to advance such
amounts to the Distribution Account to the extent provided in the Agreement. Any
failure of the Master Servicer to make such advances would constitute an event
of default under the Agreement, in which case the Trustee would be required to
make the advance.


                            YIELD ON THE CERTIFICATES

CERTAIN SHORTFALLS IN COLLECTIONS OF INTEREST

     The amount of interest otherwise payable to holders of the Offered
Certificates will be reduced by any interest shortfalls to the extent not
covered by Subordination or the related Servicer or the Master Servicer,
including Prepayment Interest Shortfalls and, in the case of each class of the
Class M

                                      S-83


Certificates and Class B Certificates, the interest portions of Realized Losses
allocated solely to that Class of Certificates. These shortfalls will not be
offset by a reduction in the Servicing Fees payable to the related Servicer and
the compensation payable to the Master Servicer or otherwise, except as
described in this prospectus supplement with respect to some Prepayment Interest
Shortfalls. We refer you to "Yield Considerations" in the Prospectus and
"Description of the Certificates--Distributions of Interest" in this prospectus
supplement for a discussion of the effect of principal prepayments on the
mortgage loans on the yield to maturity of the Offered Certificates and possible
shortfalls in the collection of interest.

     The yield to investors in the Offered Certificates will be affected by
Prepayment Interest Shortfalls allocable thereto in the month preceding any
Distribution Date to the extent that those shortfalls exceed the amount offset
by the related Servicer or the Master Servicer. We refer you to "Description of
the Certificates--Distributions of Interest" in this prospectus supplement. In
addition, the application of the Relief Act to any Mortgage Loan will adversely
affect, for an indeterminate period of time, the ability of the related Servicer
or the Master Servicer to collect full amounts of interest on such Mortgage
Loan. The effect of any shortfalls resulting from the application of the Relief
Act, will be to reduce the aggregate amount of interest collected that is
available for distribution to Certificateholders. We refer you to "Certain Legal
Aspects of the Mortgage Loans--Servicemembers Civil Relief Act" in the
Prospectus.

GENERAL PREPAYMENT CONSIDERATIONS

     The rate of principal payments on the Offered Certificates, the aggregate
amount of distributions on the Offered Certificates and the yield to maturity of
the Offered Certificates will be related to the rate and timing of payments of
principal on the related Mortgage Loans. The rate of principal payments on the
Mortgage Loans will in turn be affected by the amortization schedules of such
Mortgage Loans as the same change to accommodate changes in the Mortgage Rates
and by the rate of principal prepayments thereon (including for this purpose
payments resulting from refinancings, liquidations of the Mortgage Loans due to
defaults, casualties, condemnations and repurchases, whether optional or
required, by the Seller). The Mortgage Loans generally may be prepaid by the
mortgagors at any time. In addition, the Mortgage Loans are assumable in
connection with the conveyance of the related Mortgaged Property by persons who
meet the then current credit standards of the related Servicer for mortgage
loans similar to the Mortgage Loans.

     Prepayments, liquidations and repurchases of the Mortgage Loans will result
in distributions in respect of principal to the Holders of the related Offered
Certificates then entitled to receive such distributions that otherwise would be
distributed over the remaining terms of the Mortgage Loans. We refer you to
"Yield Considerations" in the Prospectus. Since the rate of payment of principal
on the Mortgage Loans will depend on future events and a variety of factors (as
described more fully herein and in the Prospectus under "Yield Considerations"),
no assurance can be given as to such rate or the rate of principal prepayments.
The extent to which the yield to maturity of the Offered Certificates may vary
from the anticipated yield will depend upon the degree to which such
Certificates are purchased at a discount or premium and the degree to which the
timing of payments thereon is sensitive to prepayments on the Mortgage Loans.
Further, in the case of Offered Certificates purchased at a discount, an
investor should consider the risk that a slower than anticipated rate of
principal payments on the Mortgage Loans could result in an actual yield to such
investor that is lower than the anticipated yield and, in the case of Offered
Certificates purchased at a premium, an investor should consider the risk that a
faster than anticipated rate of principal payments could result in an actual
yield to such investor that is lower than the anticipated yield. In general, the
earlier a prepayment of principal on the Mortgage Loans, the greater will be the
effect on the yield to maturity of an investor in the Offered Certificates. As a
result, the effect on an investor's yield of principal payments occurring on the
Mortgage Loans at a rate higher (or lower) than the rate anticipated by the
investor during the period immediately following the issuance of the Offered
Certificates would not be fully offset by a subsequent like reduction (or
increase) in the rate of principal payments.

                                      S-84


     It is highly unlikely that the Mortgage Loans will prepay at any constant
rate until maturity or that all of the Mortgage Loans will prepay at the same
rate. Moreover, the timing of prepayments on the Mortgage Loans may
significantly affect the actual yield to maturity on the Offered Certificates,
even if the average rate of principal payments experienced over time is
consistent with an investor's expectation.

     The rate of payments (including prepayments) on pools of mortgage loans is
influenced by a variety of economic, geographic, social and other factors. If
prevailing mortgage rates fall significantly below the Mortgage Rates on the
Mortgage Loans, the rate of prepayment (and refinancing) would be expected to
increase. Conversely, if prevailing mortgage rates rise significantly above the
Mortgage Rates on the Mortgage Loans, the rate of prepayment on the Mortgage
Loans would be expected to decrease. Other factors affecting prepayment of
mortgage loans include changes in mortgagors' housing needs, job transfers,
unemployment, mortgagors' net equity in the mortgaged properties and servicing
decisions. The existence of the Periodic Rate Cap, Maximum Mortgage Rates and
Minimum Mortgage Rates also may affect the prepayment experience on the Mortgage
Loans. There can be no certainty as to the rate of prepayments on the Mortgage
Loans during any period or over the life of the Certificates. We refer you to
"Yield Considerations" in the accompanying prospectus.

     In general, defaults on mortgage loans are expected to occur with greater
frequency in their early years. In addition, default rates generally are higher
for mortgage loans used to refinance an existing mortgage loan than on mortgage
loans used to purchase a home. In the event of a mortgagor's default on a
Mortgage Loan, there can be no assurance that recourse will be available beyond
the specific Mortgaged Property pledged as security for repayment.

     Some of the Mortgage Loans provide for payment of interest only for an
initial period of three, five, seven or ten years following the origination of
such Mortgage Loan. After this interest-only period, the monthly payment with
respect to each such Mortgage Loan will be increased to an amount sufficient to
fully amortize the principal balance of such Mortgage Loan over the remaining
term and to pay interest at the Mortgage Rate. The failure of such Mortgage
Loans to amortize during the interest-only period may extend the weighted
average lives of the Offered Certificates. In addition, borrowers may view the
absence of any obligation to make a payment of principal during the first three,
five, seven or ten years of the term of the related Mortgage Loan as a
disincentive to prepayment of such Mortgage Loan. To the extent that a
recalculated monthly payment as described above is substantially in excess of a
borrower's previous monthly payment providing solely for the payment of
interest, such loan may be subject to an increased risk of delinquency and loss.

THE SUBORDINATE CERTIFICATES

     The weighted average lives of, and the yields to maturity on, the Class M
Certificates, in increasing order of their numerical Class designations, will be
progressively more sensitive to the rate and timing of mortgagor defaults and
the severity of ensuing losses on the Mortgage Loans. If the actual rate and
severity of losses on the Mortgage Loans is higher than those assumed by a
holder of a Class M Certificate, the actual yield to maturity of such
Certificate may be lower than the yield expected by such Holder based on such
assumption. The timing of losses on the Mortgage Loans will also affect an
investor's actual yield to maturity, even if the rate of defaults and severity
of losses over the life of the Mortgage Pool are consistent with an investor's
expectations. In general, the earlier a loss occurs, the greater the effect on
an investor's yield to maturity. Realized Losses on the Mortgage Loans will
reduce the Class Certificate Balance of the applicable Class of Class M
Certificates (and if the Class M Certificates are no longer outstanding, will
reduce the Class Certificate Balance of the Senior Certificates), without the
receipt of cash attributable to such reduction. As a result of such reductions,
less interest will accrue on such Class of Class M Certificates (or Senior
Certificates) than otherwise would be the case.

                                      S-85


     After the Class Certificate Balances of the Class B Certificates have been
reduced to zero, the yield to maturity on the Class of Class M Certificates then
outstanding with the lowest payment priority will be extremely sensitive to
losses on the Mortgage Loans (and the timing thereof) because the entire amount
of losses that are covered by Subordination will be allocated to such Class of
Class M Certificates. Furthermore, because principal distributions are paid to
certain Classes of Senior Certificates and Class M Certificates before other
Classes, holders of Classes having a later priority of payment bear a greater
risk of losses than holders of Classes having earlier priorities for
distribution of principal.

WEIGHTED AVERAGE LIVES

     Weighted average life refers to the average amount of time that will elapse
from the date of issuance of a security until each dollar of principal of such
security will be repaid to the investor. The weighted average lives of the
Offered Certificates will be influenced by the rate at which principal on the
Mortgage Loans is paid, which may be in the form of scheduled payments or
prepayments (including prepayments of principal by the borrower as well as
amounts received by virtue of condemnation, insurance or foreclosure with
respect to the Mortgage Loans), and the timing thereof.

     Prepayments on mortgage loans are commonly measured relative to a
prepayment standard or model. The model used in this prospectus supplement is
the Constant Prepayment Rate model ("CPR"). The Constant Prepayment Rate model
assumes that the outstanding principal balance of a pool of mortgage loans
prepays at a specified constant annual rate or CPR. In generating monthly cash
flows, this rate is converted to an equivalent constant monthly rate. To assume
25% CPR or any other CPR percentage is to assume that the stated percentage of
the outstanding principal balance of the pool is prepaid over the course of a
year. Neither the prepayment model used herein nor any other prepayment model or
assumption purports to be an historical description of prepayment experience or
a prediction of the anticipated rate of prepayment of any pool of mortgage
loans, including the Mortgage Loans included in the Mortgage Pool.

     The tables following the next paragraph indicate the percentage of the
initial Class Certificate Balance of each Class of Offered Certificates that
would be outstanding after each of the distribution dates shown at various
percentages of CPR and the corresponding weighted average lives. The tables are
based on the following assumptions (the "Modeling Assumptions"): (i) the
Mortgage Pool consists of hypothetical Mortgage Loans with the characteristics
set forth in the table below, (ii) distributions on such Certificates are
received, in cash, on the 25th day of each month, commencing in February 2005,
(iii) the hypothetical Mortgage Loans prepay at the percentages of CPR
indicated, (iv) no defaults or delinquencies occur in the payment by mortgagors
of principal and interest on the hypothetical Mortgage Loans and no shortfalls
due to the application of the Relief Act are incurred, (v) Neither the Seller
nor any other person purchases from the Trust Fund any hypothetical Mortgage
Loan pursuant to any obligation or option under the Agreement or any other
agreement, (vi) scheduled monthly payments on the hypothetical Mortgage Loans
are received on the first day of each month commencing in February 2005, (vii)
prepayments representing payment in full of individual hypothetical Mortgage
Loans are received on the last day of each month commencing in January 2005, and
include 30 days' interest thereon, (viii) the scheduled monthly payment for each
hypothetical Mortgage Loan is calculated based on its principal balance,
Mortgage Rate, original term to maturity and remaining term to maturity such
that the hypothetical Mortgage Loan will amortize in amounts sufficient to repay
the remaining principal balance of such Mortgage Loan by its remaining term to
maturity (taking into account any interest-only period), (ix) the Certificates
are purchased on January 31, 2005, (x) the Index remains constant at 2.40% per
annum for One-Month LIBOR ("1MoL"), 3.18% per annum for One-Year LIBOR ("1YL")
and 2.90% per annum for One Year Treasury ("1CMT") and the Mortgage Rate on each
hypothetical Mortgage Loan is adjusted on the next Adjustment Date (and on
subsequent Adjustment Dates, if necessary) to equal the related Index plus, in
the case of One-Month LIBOR, One-Year LIBOR and One Year Treasury Index, the
applicable Gross Margin, subject to the applicable Periodic Rate Cap, Minimum
Mortgage Rate and Maximum Mortgage Rate, (xi) for the 1MoL, 1YL and 1CMT
hypothetical Mortgage Loans, the

                                      S-86


mortgage rate and scheduled monthly payment adjust monthly or yearly, as
applicable, (xii) the monthly payment on each hypothetical Mortgage Loan is
adjusted on the Due Date immediately following the next Adjustment Date (and on
subsequent Adjustment Dates, if necessary) to equal a fully amortizing monthly
payment as described in clause (viii) above, (xiii) the Minimum Mortgage Rate is
equal to the Gross Margin and (xiv) the hypothetical Mortgage Loans do not have
Net Mortgage Rate caps.





                                      S-87






                       HYPOTHETICAL GROUP I MORTGAGE LOANS



                                                    MONTHS TO
                                                      NEXT
            CUT-OFF DATE     GROSS       NET        INTEREST     REMAINING   ORIGINAL
LOAN         PRINCIPAL      MORTGAGE  MORTGAGE     ADJUSTMENT      TERM        TERM
NUMBER       BALANCE ($)    RATE (%)    RATE (%)      DATE       (MONTHS)    (MONTHS)
------     -------------    --------   ---------   ----------    --------    --------

  1         7,117,177.53      4.842     4.592          31           355        360
  2        55,366,846.10      5.024     4.774          32           356        360
  3        85,216,332.54      4.353     4.103          30           354        360

                                                                                 REMAINING
                                            INITIAL    SUBSEQUENT      RATE       INTEREST
           GROSS     MAXIMUM     MINIMUM    PERIODIC    PERIODIC    ADJUSTMENT      ONLY
LOAN       MARGIN    MORTGAGE    MORTGAGE   RATE CAP    RATE CAP     FREQUENCY     PERIOD      INDEX
NUMBER      (%)      RATE (%)    RATE (%)      (%)         (%)       (MONTHS)     (MONTHS)     TYPE
------     ------    --------    --------   --------   ----------   ----------   ---------     -----

  1         2.250     10.842       2.250     2.000        2.000          12           0         1YL
  2         2.250     11.024       2.250     2.000        2.000          12          32         1YL
  3         2.750     10.353       2.750     2.000        2.000          12           0         1CMT



                                      S-88



                      HYPOTHETICAL GROUP II MORTGAGE LOANS


                                                    MONTHS TO
                                                      NEXT
            CUT-OFF DATE     GROSS       NET        INTEREST     REMAINING   ORIGINAL
LOAN         PRINCIPAL      MORTGAGE   MORTGAGE    ADJUSTMENT      TERM        TERM
NUMBER       BALANCE ($)    RATE (%)    RATE (%)      DATE       (MONTHS)    (MONTHS)
------     -------------    --------   ---------   ----------    --------    --------

  1            461,600.00      4.353     4.103         51           351         360
  2          2,315,000.00      4.151     3.901         50           350         360
  3         58,613,160.70      5.340     5.085         55           354         359
  4        135,021,152.86      5.449     5.199         55           355         360
  5          7,902,621.04      5.233     4.865         57           357         360
  6          3,375,127.92      4.078     3.828         50           350         360
  7         87,208,025.40      4.681     4.316         57           357         360
  8          1,100,000.00      4.000     3.750         44           344         360
  9          3,595,750.00      3.919     3.669         50           350         360
 10         74,825,295.19      4.133     3.883         50           350         360

                                                                                 REMAINING
                                            INITIAL    SUBSEQUENT      RATE       INTEREST
           GROSS     MAXIMUM     MINIMUM    PERIODIC    PERIODIC    ADJUSTMENT      ONLY
LOAN       MARGIN    MORTGAGE    MORTGAGE   RATE CAP    RATE CAP     FREQUENCY     PERIOD      INDEX
NUMBER      (%)      RATE (%)    RATE (%)      (%)         (%)       (MONTHS)     (MONTHS)     TYPE
------     ------    --------    --------   --------   ----------   ----------   ---------     -----

  1        2.139      12.950       2.139        NA         NA           1            51        1MoL
  2        2.252      12.950       2.252        NA         NA           1           110        1MoL
  3        2.250      10.349       2.250      5.000      2.000         12             0        1YL
  4        2.250      10.449       2.250      5.000      2.000         12            55        1YL
  5        2.750      10.233       2.750      5.000      2.000         12             0        1CMT
  6        2.500      10.078       2.500      6.000      2.000         12             0        1CMT
  7        2.729       9.690       2.729      5.000      2.000         12            57        1CMT
  8        2.500      10.000       2.500      6.000      2.000         12            44        1CMT
  9        2.500       9.218       2.500      5.000      2.000         12           110        1CMT
 10        2.500      10.124       2.500      6.000      2.000         12           110        1CMT



                                      S-89




                      HYPOTHETICAL GROUP III MORTGAGE LOANS


                                                         MONTHS TO
                                                           NEXT
            CUT-OFF DATE       GROSS         NET         INTEREST     REMAINING    ORIGINAL
   LOAN      PRINCIPAL        MORTGAGE     MORTGAGE     ADJUSTMENT       TERM        TERM
  NUMBER     BALANCE ($)       RATE (%)    RATE (%)        DATE        (MONTHS)    (MONTHS)
  ------    ------------      ---------    --------     ----------    ---------    --------

    1       13,901,793.20       5.494        5.244          76           352          360
    2       22,959,306.38       5.556        5.306          79           355          360
    3         219,603..83       5.375        5.125          80           356          360

                                              INITIAL   SUBSEQUENT      RATE       REMAINING
            GROSS     MAXIMUM     MINIMUM     PERIODIC   PERIODIC    ADJUSTMENT     INTEREST
   LOAN     MARGIN    MORTGAGE    MORTGAGE      RATE     RATE CAP     FREQUENCY   ONLY PERIOD   INDEX
  NUMBER      (%)      RATE (%)    RATE (%)   CAP (%)       (%)       (MONTHS)      (MONTHS)     TYPE
  ------    ------    ---------   ---------   --------  ----------   ----------   -----------   -----

    1        2.250      10.494      2.250      5.000       2.000         12            0         1YL
    2        2.250      10.556      2.250      5.000       2.000         12            79        1YL
    3        2.750      10.375      2.750      5.000       2.000         12            80        1CMT




                                      S-90



     There will be discrepancies between the characteristics of the actual
Mortgage Loans and the characteristics assumed in preparing the tables. Any such
discrepancy may have an effect upon the percentages of the initial Class
Certificate Balance outstanding (and the weighted average life) of each Class of
Offered Certificates set forth in the tables. In addition, since the actual
Mortgage Loans will have characteristics that differ from those assumed in
preparing the tables set forth below and, since it is not likely the level of
the applicable Index will remain constant as assumed, each Class of Offered
Certificates may mature earlier or later than indicated by the tables.
Variations in the prepayment experience and the balance of the Mortgage Loans
that prepay may increase or decrease the percentages of initial Class
Certificate Balances (and weighted average lives) shown in the following tables.
Such variations may occur even if the average prepayment experience of all such
Mortgage Loans equals any of the specified percentages of CPR.






                                      S-91




         PERCENTAGE OF ORIGINAL CLASS CERTIFICATE BALANCE OUTSTANDING(1)
                       AT THE FOLLOWING PERCENTAGES OF CPR



                                                                  Class I-A Certificates
                                             ----------------------------------------------------------------
Distribution Date                            15.00%        20.00%          25.00%       30.00%         35.00%
-----------------------------------------    ------        ------          ------       ------         ------

Initial Percentage.......................     100%          100%            100%         100%           100%
January 2006.............................      84            78              73           68             63
January 2007.............................      70            61              53           46             39
January 2008.............................      58            48              39           31             24
January 2009.............................      48            37              29           21             15
January 2010.............................      40            29              21           15             10
January 2011.............................      33            23              15           10              6
January 2012.............................      28            18              11            7              4
January 2013.............................      23            14               8            5              3
January 2014.............................      19            11               6            3              2
January 2015.............................      16             9               4            2              1
January 2016.............................      13             7               3            1              1
January 2017.............................      11             5               2            1              *
January 2018.............................       9             4               2            1              *
January 2019.............................       7             3               1            *              *
January 2020.............................       6             2               1            *              *
January 2021.............................       5             2               1            *              *
January 2022.............................       4             1               *            *              *
January 2023.............................       3             1               *            *              *
January 2024.............................       2             1               *            *              *
January 2025.............................       2             1               *            *              *
January 2026.............................       2             *               *            *              *
January 2027.............................       1             *               *            *              *
January 2028.............................       1             *               *            *              *
January 2029.............................       1             *               *            *              *
January 2030.............................       *             *               *            *              *
January 2031.............................       *             *               *            *              *
January 2032.............................       *             *               *            *              *
January 2033.............................       *             *               *            *              *
January 2034.............................       *             *               *            *              *
January 2035.............................       0             0               0            0              0
Weighted Average Life in Years
      to maturity(2).....................     5.35           4.08           3.22          2.62          2.18

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

*        Indicates a value greater than 0.0% but less than 0.5%.
(1)      Rounded to the nearest whole percentage.
(2)      The weighted average life of a Certificate is determined by (i)
         multiplying the assumed net reduction, if any, in the principal amount
         on each Distribution Date on such Class of Certificate by the number of
         years from the date of issuance of the Certificate to the related
         Distribution Date, (ii) adding the results and (iii) dividing the sum
         by the aggregate amount of the assumed net reduction of the Class
         Certificate Balance of such Class of Certificate.



                                      S-92




         PERCENTAGE OF ORIGINAL CLASS CERTIFICATE BALANCE OUTSTANDING(1)
                       AT THE FOLLOWING PERCENTAGES OF CPR


                                                  Class II-A-1 Certificates and Class II-A-2 Certificates
                                             ----------------------------------------------------------------
Distribution Date                            15.00%        20.00%          25.00%        30.00%        35.00%
-----------------------------------------    ------        ------          ------        ------        ------

Initial Percentage.......................     100%          100%            100%          100%          100%
January 2006.............................      84            79              74            69            64
January 2007.............................      71            62              54            47            40
January 2008.............................      59            49              40            32            25
January 2009.............................      50            39              30            22            16
January 2010.............................      42            31              22            15            10
January 2011.............................      35            24              16            11             7
January 2012.............................      29            19              12             7             4
January 2013.............................      24            15               9             5             3
January 2014.............................      20            12               7             3             2
January 2015.............................      17             9               5             2             1
January 2016.............................      14             7               3             2             1
January 2017.............................      11             6               3             1             *
January 2018.............................       9             4               2             1             *
January 2019.............................       8             3               1             *             *
January 2020.............................       6             3               1             *             *
January 2021.............................       5             2               1             *             *
January 2022.............................       4             1               *             *             *
January 2023.............................       3             1               *             *             *
January 2024.............................       3             1               *             *             *
January 2025.............................       2             1               *             *             *
January 2026.............................       2             *               *             *             *
January 2027.............................       1             *               *             *             *
January 2028.............................       1             *               *             *             *
January 2029.............................       1             *               *             *             *
January 2030.............................       *             *               *             *             *
January 2031.............................       *             *               *             *             *
January 2032.............................       *             *               *             *             *
January 2033.............................       *             *               *             *             *
January 2034.............................       *             *               *             *             *
January 2035.............................       0             0               0             0             0
Weighted Average Life in Years
      to maturity(2).....................      5.55          4.21            3.31          2.68          2.22


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

*        Indicates a value greater than 0.0% but less than 0.5%.
(1)      Rounded to the nearest whole percentage.
(2)      The weighted average life of a Certificate is determined by (i)
         multiplying the assumed net reduction, if any, in the principal amount
         on each Distribution Date on such Class of Certificate by the number of
         years from the date of issuance of the Certificate to the related
         Distribution Date, (ii) adding the results and (iii) dividing the sum
         by the aggregate amount of the assumed net reduction of the Class
         Certificate Balance of such Class of Certificate.



                                      S-93




         PERCENTAGE OF ORIGINAL CLASS CERTIFICATE BALANCE OUTSTANDING(1)
                       AT THE FOLLOWING PERCENTAGES OF CPR



                                                                  Class III-A Certificates
                                             ----------------------------------------------------------------
Distribution Date                            15.00%        20.00%          25.00%        30.00%        35.00%
-----------------------------------------    ------        ------          ------        ------        ------

Initial Percentage.......................     100%          100%             100%         100%          100%
January 2006.............................      84            79               74           69            63
January 2007.............................      70            62               54           47            40
January 2008.............................      59            49               39           31            24
January 2009.............................      49            39               29           22            16
January 2010.............................      41            31               22           15            10
January 2011.............................      35            24               16           11             7
January 2012.............................      29            19               12            7             4
January 2013.............................      24            15                9            5             3
January 2014.............................      20            12                6            3             2
January 2015.............................      17             9                5            2             1
January 2016.............................      14             7                3            2             1
January 2017.............................      11             5                2            1             *
January 2018.............................       9             4                2            1             *
January 2019.............................       8             3                1            *             *
January 2020.............................       6             2                1            *             *
January 2021.............................       5             2                1            *             *
January 2022.............................       4             1                *            *             *
January 2023.............................       3             1                *            *             *
January 2024.............................       3             1                *            *             *
January 2025.............................       2             1                *            *             *
January 2026.............................       2             *                *            *             *
January 2027.............................       1             *                *            *             *
January 2028.............................       1             *                *            *             *
January 2029.............................       1             *                *            *             *
January 2030.............................       *             *                *            *             *
January 2031.............................       *             *                *            *             *
January 2032.............................       *             *                *            *             *
January 2033.............................       *             *                *            *             *
January 2034.............................       *             *                *            *             *
January 2035.............................       0             0                0            0             0
Weighted Average Life in Years
      to maturity(2).....................     5.52            4.18           3.29         2.67           2.21


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

*        Indicates a value greater than 0.0% but less than 0.5%.
(1)      Rounded to the nearest whole percentage.
(2)      The weighted average life of a Certificate is determined by (i)
         multiplying the assumed net reduction, if any, in the principal amount
         on each Distribution Date on such Class of Certificate by the number of
         years from the date of issuance of the Certificate to the related
         Distribution Date, (ii) adding the results and (iii) dividing the sum
         by the aggregate amount of the assumed net reduction of the Class
         Certificate Balance of such Class of Certificate.




                                      S-94





         PERCENTAGE OF ORIGINAL CLASS CERTIFICATE BALANCE OUTSTANDING(1)
                       AT THE FOLLOWING PERCENTAGES OF CPR



                                                      Class M-1, Class M-2 and Class M-3 Certificates
                                             ----------------------------------------------------------------
Distribution Date                            15.00%        20.00%          25.00%        30.00%        35.00%
-----------------------------------------    ------        ------          ------        ------        ------

Initial Percentage.......................     100%          100%            100%          100%          100%
January 2006.............................     100           100             100           100           100
January 2007.............................      99            99              99            99            99
January 2008.............................      98            98              98            98            98
January 2009.............................      98            81              73            68            64
January 2010.............................      87            64              54            47            41
January 2011.............................      73            51              40            33            26
January 2012.............................      61            40              30            22            17
January 2013.............................      51            31              22            15            11
January 2014.............................      42            24              16            11             7
January 2015.............................      35            19              12             7             4
January 2016.............................      29            15               8             5             3
January 2017.............................      24            11               6             3             2
January 2018.............................      19             9               4             2             1
January 2019.............................      16             7               3             2             1
January 2020.............................      13             5               2             1             *
January 2021.............................      10             4               2             1             *
January 2022.............................       8             3               1             *             *
January 2023.............................       7             2               1             *             *
January 2024.............................       5             2               1             *             *
January 2025.............................       4             1               *             *             *
January 2026.............................       3             1               *             *             *
January 2027.............................       3             1               *             *             *
January 2028.............................       2             *               *             *             *
January 2029.............................       1             *               *             *             *
January 2030.............................       1             *               *             *             *
January 2031.............................       1             *               *             *             *
January 2032.............................       *             *               *             *             *
January 2033.............................       *             *               *             *             *
January 2034.............................       *             *               *             *             *
January 2035.............................       0             0               0             0             0
Weighted Average Life in Years
      to maturity(2).....................     9.43           7.22           6.24          5.66           5.22


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

*        Indicates a value greater than 0.0% but less than 0.5%.
(1)      Rounded to the nearest whole percentage.
(2)      The weighted average life of a Certificate is determined by (i)
         multiplying the assumed net reduction, if any, in the principal amount
         on each Distribution Date on such Class of Certificate by the number of
         years from the date of issuance of the Certificate to the related
         Distribution Date, (ii) adding the results and (iii) dividing the sum
         by the aggregate amount of the assumed net reduction of the Class
         Certificate Balance of such Class of Certificate.


                                      S-95



         There is no assurance that prepayments of the Mortgage Loans will
conform to any of the levels of CPR indicated in the tables above, or to any
other level, or that the actual weighted average life of any Class of Offered
Certificates will conform to any of the weighted average lives set forth in the
tables above. Furthermore, the information contained in the tables with respect
to the weighted average lives is not necessarily indicative of the weighted
average lives that might be calculated or projected under different or varying
prepayment or Index level assumptions. The characteristics of the Mortgage Loans
will differ from those assumed in preparing the tables above. In addition, it is
unlikely that any Mortgage Loan will prepay at any constant percentage until
maturity, that all of the Mortgage Loans will prepay at the same rate or that
the level of the applicable Index will remain constant at any level for any
period of time. The timing of changes in the rate of prepayments may
significantly affect the actual yield to maturity to investors, even if the
average rate of principal prepayments and the level of the applicable Index is
consistent with the expectations of investors.


                         POOLING AND SERVICING AGREEMENT

GENERAL

     The Certificates will be issued pursuant to the Pooling and Servicing
Agreement (the "Agreement"). The Trust Fund created under the Agreement will
consist of (i) all of the Depositor's right, title and interest in the Mortgage
Loans, the related Mortgage Notes, Mortgages and other related documents, (ii)
all payments on or collections in respect of the Mortgage Loans received after
the Cut-off Date (other than payments due on or before the Cut-off Date),
together with any proceeds thereof, (iii) any Mortgaged Properties acquired on
behalf of Certificateholders by foreclosure or by deed in lieu of foreclosure,
and any revenues received thereon, (iv) the rights of the Trustee under all
insurance policies required to be maintained pursuant to the Agreement, and (v)
the rights of the Depositor under the Mortgage Loan Purchase Agreement between
the Depositor and the Seller. Reference is made to the Prospectus for important
information in addition to that set forth herein regarding the Trust Fund, the
terms and conditions of the Agreement and the Offered Certificates. The Offered
Certificates will be transferable and exchangeable at the corporate trust
offices of the Trustee, located at 401 S. Tryon Street, 12th Floor, NC 1179,
Charlotte, North Carolina 28288. The Depositor will provide to a prospective or
actual Certificateholder without charge, on written request, a copy (without
exhibits) of the Agreement. Requests should be addressed to the Secretary,
Merrill Lynch Mortgage Investors, Inc.

THE SECURITIES ADMINISTRATOR

     Wells Fargo Bank, N.A. will be the securities administrator (the
"Securities Administrator") under the Agreement. The Securities Administrator's
corporate trust office is located at 9062 Old Annapolis Road, Columbia, Maryland
21045-1951, Attention: Merrill Lynch Mortgage Investors, Inc., Series 2005-A1 or
at such other address as the Securities Administrator may designate from time to
time.

     The Securities Administrator may resign at any time, in which event the
Trustee will be obligated to appoint a successor Securities Administrator. The
Trustee may also remove the Securities Administrator if the Securities
Administrator ceases to be eligible to continue as such under the Agreement or
if the Securities Administrator becomes incapable of acting, bankrupt, insolvent
or if a receiver or public officer takes charge of the Securities Administrator
or its property. Upon such resignation or removal of the Securities
Administrator, the Trustee will be entitled to appoint a successor Securities
Administrator. The Securities Administrator may also be removed at any time by
the holders of Certificates evidencing ownership of not less than 51% of the
trust. In the event that the certificateholders remove the Securities
Administrator, the compensation of any successor Securities Administrator shall
be paid by the certificateholders to the extent that such compensation exceeds
the amount agreed to by the


                                      S-96


Trustee and the Securities Administrator. Any resignation or removal of the
Securities Administrator and appointment of a successor Securities Administrator
will not become effective until acceptance of the appointment by the successor
Securities Administrator.

     The Securities Administrator will make available each month, to any
interested party, the statement to Certificateholders (and any additional files
containing the same information in alternative format) via the Securities
Administrator's website. In addition, pursuant to the Agreement, the Securities
Administrator will make available, as a convenience for interested parties (and
not in furtherance of the distribution of the accompanying Prospectus or this
prospectus supplement under the securities laws), the Agreement, the
accompanying prospectus and this prospectus supplement via the Securities
Administrator's website. For assistance with the above-referenced services,
interested parties may call (301) 815-6600. The Securities Administrator will
make no representations or warranties as to the accuracy or completeness of such
documents and will assume no responsibility therefor.

     In connection with providing access to the Securities Administrator's
website, the Securities Administrator may require registration and the
acceptance of a disclaimer. The Securities Administrator shall not be liable for
the dissemination of information in accordance with the Agreement. If the
Securities Administrator and Master Servicer are the same entity, then at any
time the Securities Administrator resigns or is removed hereunder, the Master
Servicer shall likewise be terminated as master servicer hereunder.


                                 USE OF PROCEEDS

     Substantially all of the net proceeds to be received from the sale of the
Offered Certificates will be applied by the Depositor to the purchase price of
the Mortgage Loans and expenses connected with pooling the Mortgage Loans and
issuing the Certificates.


                         FEDERAL INCOME TAX CONSEQUENCES

GENERAL

     The Agreement provides that two elections will be made to treat the Trust
Fund as two REMICs for federal income tax purposes and will designate a single
class of interests as the residual interest in each REMIC. The Offered
Certificates will represent beneficial ownership of regular interests issued by
a REMIC.

         Upon the issuance of the Offered Certificates, Thacher Proffitt & Wood
LLP ("Tax Counsel") will deliver its opinion to the effect that, assuming
compliance with the Agreement, for federal income tax purposes, each of the
REMICs in the Trust Fund will qualify as a REMIC within the meaning of Section
860D of the Internal Revenue Code of 1986, as amended (the "Code").

TAXATION OF REGULAR INTERESTS

     For federal income tax reporting purposes, it is expected that the Class
M-1, Class M-2 and Class M-3 Certificates will, and the other Offered
Certificates will not, be treated as having been issued with original issue
discount. The prepayment assumption that will be used in determining the rate of
accrual of original issue discount, premium and market discount, if any, for
federal income tax purposes will be based on the assumption that subsequent to
the date of any determination the Mortgage Loans will prepay at a constant rate
of 25% CPR. No representation is made that the Mortgage Loans will prepay at
such


                                      S-97


rate or at any other rate. We refer you to "Material Federal Income Tax
Consequences--REMICs--Taxation of Owners of REMIC Regular Certificates--Original
Issue Discount and Premium" in the Prospectus.

     The IRS has issued regulations (the "OID Regulations") under Sections 1271
to 1275 of the Code generally addressing the treatment of debt instruments
issued with original issue discount. Purchasers of the Offered Certificates
should be aware that the OID Regulations do not adequately address certain
issues relevant to, or are not applicable to, securities such as the Offered
Certificates. In addition, there is considerable uncertainty concerning the
application of the OID Regulations to REMIC regular interests that provide for
payments based on a variable rate such as the Offered Certificates. Because of
the uncertainty concerning the application of Section 1272(a)(6) of the Code to
such Certificates, and because the rules of the OID Regulations relating to debt
instruments having a variable rate of interest are limited in their application
in ways that could preclude their application to such Certificates even in the
absence of Section 1272(a)(6) of the Code, the IRS could assert that the Offered
Certificates should be treated as issued with original issue discount or should
be governed by the rules applicable to debt instruments having contingent
payments or by some other manner not yet set forth in regulations. Prospective
purchasers of the Offered Certificates are advised to consult their tax advisors
concerning the tax treatment of such Certificates.

     If the method of computing original issue discount described in the
prospectus results in a negative amount for any period with respect to any
Certificateholder, the amount of original issue discount allocable to the period
would be zero, and that Certificateholder will be permitted to offset such
amounts only against the respective future income, if any, from such
Certificate. Although uncertain, a Certificateholder may be permitted to deduct
a loss to the extent that his or her respective remaining basis in the
certificate exceeds the maximum amount of future payments to which the
Certificateholder is entitled, assuming no further prepayments of the mortgage
loans. Although the matter is not free from doubt, any loss of this kind might
be treated as a capital loss.

     The OID Regulations in some circumstances permit the holder of a debt
instrument to recognize original issue discount under a method that differs from
that of the issuer. Accordingly, it is possible that holders of Offered
Certificates issued with original issue discount may be able to select a method
for recognizing original issue discount that differs from that used in preparing
reports to certificateholders and the IRS. Prospective purchasers of Offered
Certificates issued with original issue discount are advised to consult their
tax advisors concerning the tax treatment of those Certificates in this regard.

     The Offered Certificates will be treated as assets described in Section
7701(a)(19)(C) of the Code and "real estate assets" under Section 856(c)(4)(A)
of the Code, generally in the same proportion that the assets in the Trust Fund
would be so treated. In addition, interest on the Offered Certificates will be
treated as "interest on obligations secured by mortgages on real property" under
Section 856(c)(3)(B) of the Code, generally to the extent that the Offered
Certificates are treated as "real estate assets" under Section 856(c)(4)(A) of
the Code. The Offered Certificates also will be treated as "qualified mortgages"
under Section 860G(a)(3) of the Code. We refer you to "Material Federal Income
Tax Consequences--REMICs" in the Prospectus.

     It is not anticipated that the Trust Fund will engage in any transactions
that would subject it to the prohibited transactions tax as defined in Section
860F(a)(2) of the Code, the contributions tax as defined in Section 860G(d) of
the Code or the tax on net income from foreclosure property as defined in
Section 860G(c) of the Code. However, in the event that any such tax is imposed
on the Trust Fund, such tax will be borne (i) by the Trustee, if the Trustee has
breached its obligations with respect to REMIC compliance under the Agreement,
(ii) the Master Servicer, if the Master Servicer has breached its obligations
with respect to REMIC compliance under the Agreement, and (iii) otherwise by the
Trust Fund, with a


                                      S-98


resulting reduction in amounts otherwise distributable to Holders of the Offered
Certificates. We refer you to "Description of the Securities--General" and
"Material Federal Income Tax Consequences--REMICs--Prohibited Transactions and
Other Taxes" in the Prospectus.


                                LEGAL INVESTMENT

     The Senior Certificates and Class M-1 Certificates will constitute
"mortgage related securities" for purposes of the Secondary Mortgage Market
Enhancement Act of 1984, as amended ("SMMEA") so long as they are rated in one
of the two highest rating categories by at least one nationally recognized
statistical rating organization, and, as such, are legal investments for certain
entities to the extent provided in SMMEA. SMMEA provided the states could
override its provisions on legal investment and restrict or condition investment
in mortgage related securities by taking statutory action on or prior to October
3, 1991. Certain states have enacted legislation which overrides the preemption
provisions of SMMEA. The Class M-2 Certificates and Class M-3 Certificates will
not constitute "mortgage related securities" for purposes of SMMEA.

     The Depositor makes no representation as to the proper characterization of
the Offered Certificates for legal investment or other purposes, or as to the
ability of particular investors to purchase the Offered Certificates under
applicable legal investment restrictions. The uncertainties may adversely affect
the liquidity of the Offered Certificates. Accordingly, all institutions 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 the extent to
which the Offered Certificates constitute a legal investment under SMMEA or are
subject to investment, capital or other restrictions. We refer you to "Legal
Investment" in the Prospectus.


                                  ERISA MATTERS

     A fiduciary of any employee benefit plan or other retirement plans or
arrangements (including individual retirement accounts and annuities, Keogh
plans and collective investment funds and separate accounts in which such plans,
accounts or arrangements are invested) that is subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or Section 4975 of
the Code should carefully review with its legal advisors whether the purchase or
holding of Offered Certificates could give rise to a transaction that is
prohibited or is not otherwise permitted either under ERISA or Section 4975 of
the Code.

     The U.S. Department of Labor issued an individual exemption, Prohibited
Transaction Exemption 90-29, on May 24, 1990, 55 Fed. Reg. 21455, as amended by
PTE 97-34, 62 Fed. Reg. 39021 (July 21, 1997), and PTE 2000-58, 65 Fed. Reg.
67765 (November 13, 2000) (the "2000 Exemption") and Prohibited Transaction
Exemption 2002-41, 67 Fed. Reg. 54,487 (August 22, 2002) (the "2002 Exemption"
and together with the 2000 Exemption, the "Exemption"), to the Underwriter which
generally exempts from the application of the prohibited transaction provisions
of Section 406 of ERISA, and the excise taxes imposed on such prohibited
transactions pursuant to Sections 4975(a) and (b) of the Code and Section 502(i)
of ERISA, certain transactions, among others, relating to the servicing and
operation of mortgage pools and the purchase, sale and holding of mortgage
pass-through certificates underwritten by an Underwriter (as hereinafter
defined), provided that certain conditions set forth in the Exemption are
satisfied. For purposes of this discussion, the term "Underwriter" shall include
(a) Merrill Lynch, Pierce, Fenner & Smith Incorporated, (b) any person directly
or indirectly, through one or more intermediaries, controlling, controlled by or
under common control with Merrill Lynch, Pierce, Fenner &


                                      S-99


Smith Incorporated and (c) any member of the underwriting syndicate or selling
group of which a person described in (a) or (b) is a manager or co-manager with
respect to the Offered Certificates.

     The Exemption sets forth seven general conditions which must be satisfied
for a transaction involving the purchase, sale and holding of the Offered
Certificates to be eligible for exemptive relief thereunder. First, the
acquisition of the Offered Certificates by certain employee benefit plans
subject to Section 4975 of the Code (each, a "Plan"), must be on terms that are
at least as favorable to the Plan as they would be in an arm's-length
transaction with an unrelated party. Second, the rights and interests evidenced
by the Offered Certificates must not be subordinate to the rights and interests
evidenced by the other Certificates of the same trust unless none of the
Mortgage Loans has a loan-to-value ratio at the Closing Date that exceeds 100%.
Third, the Offered Certificates at the time of acquisition by the Plan must be
rated in one of the four highest generic rating categories by Standard & Poor's,
a division of The McGraw-Hill Companies, Inc., Moody's or Fitch ("National
Credit Ratings Agencies") or if the loan-to-value ratio of any Mortgage Loan at
the Closing Date exceeds 100% but does not exceed 125%, one of the two highest
generic rating categories, in which case the Exemption will not apply to Offered
Certificates that are subordinated to the rights and interests evidenced by
other Offered Certificates of the Trust Fund. Fourth, the Trustee cannot be an
affiliate of any member of the "Restricted Group," (which consists of any
Underwriter, the Depositor, the Master Servicer, each sub-servicer and any
mortgagor with respect to the Mortgage Loans constituting more than 5% of the
aggregate unamortized principal balance of the Mortgage Loans as of the date of
initial issuance of the Offered Certificates) other than the Underwriter. Fifth,
the sum of all payments made to and retained by the Underwriter must represent
not more than reasonable compensation for underwriting the Offered Certificates;
the sum of all payments made to and retained by the Depositor pursuant to the
assignment of the Mortgage Loans to the Trust Fund must represent not more than
the fair market value of such obligations; the sum of all payments made to and
retained by the Master Servicer and any sub-servicer must represent not more
than reasonable compensation for such person's services under the Agreement and
reimbursement of such person's reasonable compensation for such person's
services under the Agreement and reimbursement of such person's reasonable
expenses in connection therewith. Sixth, the investing Plan must be 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.
Seventh, (i) the investment pool consists only of assets of the type enumerated
in the Exemption and which have been included in other investment pools; (ii)
certificates evidencing interests in such other investment pools have been rated
in one of the four highest generic rating categories by one of the National
Credit Rating Agencies for at least one year prior to a Plan's acquisition of
certificates; and (iii) certificates evidencing interests in such other
investment pools have been purchased by investors other than Plans for at least
one year prior to a Plan's acquisition of certificates. We refer you to "ERISA
Considerations" in the Prospectus.

     In addition, the Exemption will not apply to a Plan's investment in Offered
Certificates if the plan fiduciary responsible for the decision to invest in
such Offered Certificates is a mortgagor or obligor with respect to more than 5%
of the fair market value of the obligations constituting the Mortgage Loans or
an affiliate of such person, unless: (1) in the case of an acquisition in
connection with the initial issuance of any Certificates, at least 50% of each
Class of Certificates in which Plans have invested is acquired by persons
independent of the Restricted Group and at least 50% of the aggregate interest
in the Trust is acquired by persons independent of the Restricted Group; (2) the
Plan's investment in any Class of Certificates does not exceed 25% of the
outstanding Certificates of that Class at the time of acquisition; (3)
immediately after such acquisition, no more than 25% of the Plan assets with
respect to which the investing fiduciary has discretionary authority or renders
investment advice are invested in Certificates evidencing interest in trusts
sponsored or containing assets sold or serviced by the same entity; and (4) the
Plan is not sponsored by any member of the Restricted Group.


                                     S-100


     As noted above, one requirement for eligibility of the Offered Certificates
under the Exemption is that all of the mortgage loans must have a loan-to-value
ratio of not more than 100%, based on the outstanding principal balance of the
loan and the fair market value of the mortgage property as of the closing date.
It is possible that, if the fair market value of any of the mortgage loans has
declined substantially since origination, this requirement may not be satisfied.
This possibility is greater for the seasoned loans than it is for the other
mortgage loans.

     Each beneficial owner of a Class M-1, Class M-2 or Class M-3 Certificate or
any interest therein shall be deemed to have represented, by virtue of its
acquisition or holding of that certificate or interest therein, that either (i)
it is not a Plan or investing with Plan assets, (ii) it has acquired and is
holding such certificate in reliance on the Exemption, and that it understands
that there are certain conditions to the availability of the Exemption,
including that the certificate must be rated, at the time of purchase, not lower
than "BBB-" (or its equivalent) by Fitch, Moody's or Standard & Poor's, a
division of The McGraw-Hill Companies, Inc., or (iii) (1) it is an insurance
company, (2) the source of funds used to acquire or hold the certificate or
interest therein is an "insurance company general account," as such term is
defined in Prohibited Transaction Class Exemption ("PTCE") 95-60, and (3) the
conditions in Sections I and III of PTCE 95-60 have been satisfied.

     The sale of any of the Offered Certificates to a Plan is in no respect a
representation by the Depositor or the underwriter that such an investment meets
all relevant legal requirements relating to investments by Plans generally or
any particular Plan, or that such an investment is appropriate for Plans
generally or any particular Plan.

     Any Plan fiduciary considering whether to purchase an Offered Certificate
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 Code to such investment.


                             METHOD OF DISTRIBUTION

     Subject to the terms and conditions set forth in the Underwriting Agreement
relating to the Offered Certificates (the "Underwriting Agreement"), the
Depositor has agreed to sell to Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriter") and the Underwriter has agreed to purchase the
Offered Certificates.

     In the Underwriting Agreement, the Underwriter has agreed, subject to the
terms and conditions set forth therein, to purchase all of the Offered
Certificates offered hereby, if any are purchased.

     The distribution of the Offered Certificates by the Underwriter will be
effected from time to time in one or more negotiated transactions, or otherwise,
at varying prices to be determined, in each case, at the time of sale. The
Underwriter may effect such transactions by selling the Offered Certificates to
or through dealers, and such dealers may receive from the Underwriter, for whom
they act as agent, compensation in the form of underwriting discounts,
concessions or commissions. The Underwriter and any dealers that participate
with the Underwriter in the distribution of the Offered Certificates may be
deemed to be underwriters, and any discounts, concessions or commissions
received by them, and any profit on the resale of the Offered Certificates
positioned by them, may be deemed to be underwriting discounts and commissions
under the Act.

     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.


                                     S-101


     All of the Mortgage Loans evidenced by the Certificates have been acquired
by the Depositor from the Seller which acquired them in privately negotiated
transactions with the Originators.

     The Depositor is an affiliate of Merrill Lynch, Pierce, Fenner & Smith
Incorporated.



                                  LEGAL MATTERS

     Certain legal matters relating to the Offered Certificates will be passed
upon for the Depositor and the Underwriter by Thacher Proffitt & Wood LLP, New
York, New York.


                                     RATINGS

     It is a condition of the issuance of the Class I-A, Class II-A-1, Class
II-A-2 and Class III-A Certificates that they be rated "AAA" by each of Fitch
Ratings ("Fitch") and Standard and Poor's, a division of The McGraw-Hill
Companies, Inc. ("S&P"). It is a condition to the issuance of the Class M-1
Certificates that they be rated at least "AA" by each of Fitch and S&P. It is a
condition to the issuance of the Class M-2 Certificates that they be rated at
least "A" by each of Fitch and S&P. It is a condition to the issuance of the
Class M-3 Certificates that they be rated at least "BBB" by each of Fitch and
S&P.

     The ratings assigned to mortgage pass-through certificates address the
likelihood of the receipt of all payments on the Mortgage Loans by the related
certificateholders under the agreements pursuant to which such certificates are
issued. Such ratings take into consideration the credit quality of the related
Loan Group, including any credit support providers, structural and legal aspects
associated with such certificates, and the extent to which the payment stream on
the loan group is adequate to make the payments required by such certificates.
Ratings on such certificates do not, however, constitute a statement regarding
frequency of prepayments of the mortgage loans.

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

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



                                     S-102



                             INDEX OF DEFINED TERMS

1CMT.............................................S-86
1MoL.............................................S-86
1YL..............................................S-86
2000 Exemption...................................S-99
ABN AMRO...................................S-15, S-47
Accrued Certificate Interest.....................S-61
Adjustment Amount................................S-70
Aggregate Cut-off Date Balance...................S-14
Agreement........................................S-72
Available Funds..................................S-59
Bankruptcy Amount................................S-71
Bankruptcy Losses................................S-69
Beneficial Owner.................................S-55
Book-Entry Certificates..........................S-54
Business Day.....................................S-54
Certificate Group................................S-54
Certificateholder................................S-54
Class B Certificates.............................S-53
Class Certificate Balance........................S-63
Class M Certificates.............................S-53
Class R Certificates.............................S-53
Clearstream Luxembourg...........................S-55
Clearstream Luxembourg Participants..............S-56
Closing Date.....................................S-53
Code.............................................S-97
Compensating Interest............................S-80
Corporate Trust Office...........................S-72
Countrywide......................................S-15
CPR..............................................S-86
Credit Support Depletion Date....................S-60
Cut-off Date.....................................S-14
Debt Service Reduction...........................S-69
Defective Mortgage Loan..........................S-45
Deficiency Amount................................S-68
Deficient Valuation..............................S-69
Definitive Certificates..........................S-55
Deleted Mortgage Loan............................S-45
Depositor........................................S-53
Distribution Account.............................S-82
Distribution Date................................S-54
DTC..............................................S-54
Due Date.........................................S-15
Due Period.......................................S-59
ERISA............................................S-99
Euroclear........................................S-55
Euroclear Operator...............................S-57
Euroclear Participants...........................S-57
European Depositories............................S-55
Events of Default................................S-82
Excess Bankruptcy Losses.........................S-62
Excess Fraud Losses..............................S-62
Excess Special Hazard Losses.....................S-62
Exemption........................................S-99
Extraordinary Losses.............................S-62
FHA..............................................S-47
Final Disposition................................S-64
Financial Intermediary...........................S-55
First Republic...................................S-15
Fitch...........................................S-102
Fraud Loss Amount................................S-71
Gross Margin.....................................S-15
Group I..........................................S-14
Group I Certificates.............................S-54
Group I Mortgage Loans...........................S-14
Group I Senior Principal Distribution Amount.....S-64
Group II.........................................S-14
Group II Certificates............................S-54
Group II Mortgage Loans..........................S-14
Group II Senior Principal Distribution Amount....S-64
Group III........................................S-14
Group III Certificates...........................S-54
Group III Mortgage Loans.........................S-15
Group III Senior Principal Distribution Amount...S-64
Index............................................S-15
Initial Period...................................S-15
Insurance Proceeds...............................S-64
Interest Accrual Period..........................S-63
Liquidation Proceeds.............................S-64
Loan Group.......................................S-14
Loan-to-Value Ratio..............................S-16
Master Servicer............................S-53, S-72
Master Servicer Collection Account...............S-81
Maximum Mortgage Rate............................S-15
Minimum Mortgage Rate............................S-15
Modeling Assumptions.............................S-86
Mortgage.........................................S-45
Mortgage File....................................S-45
Mortgage Loans...................................S-14
Mortgage Note....................................S-45
Mortgage Rate....................................S-15
Mortgaged Property...............................S-14
National City....................................S-15
National Credit Ratings Agencies................S-100
Net Mortgage Rate................................S-63
Offered Certificates.............................S-53
OID Regulations..................................S-98
One-Month LIBOR..................................S-44
One-Year LIBOR...................................S-44
One-Year Treasury................................S-44
Participant......................................S-55
Pass-Through Rate................................S-63
Periodic Rate Cap................................S-15
Pooling and Servicing Agreement..................S-53
Portfolio........................................S-76
Prepayment Interest Shortfall....................S-62
Prepayment Period................................S-59
Privately-Offered Certificates...................S-53
pro rata basis...................................S-69


                                     S-103


PTCE............................................S-101
Rating Agencies.................................S-102
Record Date......................................S-54
Release..........................................S-44
Relevant Depository..............................S-55
Relief Act.................................S-13, S-84
Replacement Mortgage Loan........................S-45
Rules............................................S-55
S&P.............................................S-102
SEC................................................ii
Securities Administrator.........................S-53
Seller.....................................S-15, S-44
Senior Accelerated Distribution Percentage.......S-65
Senior Certificates..............................S-53
Senior Percentage................................S-65
Servicer.........................................S-72
SFR..............................................S-75
SMMEA............................................S-99
Special Hazard Amount............................S-70
Stated Principal Balance.........................S-65
Subordinate Certificates.........................S-53
Subordinate Classes..............................S-53
Subordinate Percentage...........................S-65
Subordinate Principal Distribution Amount........S-66
Subordination....................................S-69
Subsequent Recoveries............................S-64
super jumbos.....................................S-48
Terms and Conditions.............................S-57
Trust Fund.......................................S-53
Trustee..........................................S-53
Two-Times Test...................................S-66
Undercollateralized Amount.......................S-61
Undercollateralized Senior Certificates..........S-61
Underwriter.....................................S-101
Underwriting Agreement..........................S-101
VA S-47
Washington Mutual..........................S-15, S-47
Wells Fargo......................................S-72


                                     S-104



                                     ANNEX I
                        GLOBAL CLEARANCE, SETTLEMENT AND
                          TAX DOCUMENTATION PROCEDURES

         Except in certain limited circumstances, the globally offered Merrill
Lynch Mortgage Investors Trust Series MLMI 2005-A1 Mortgage Pass-Through
Certificates (the "Global Certificates") will be available only in book-entry
form. Investors in the Global Certificates may hold such Global Certificates
through any of DTC, Clearstream Luxembourg or Euroclear. The Global Certificates
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 Certificates
through Clearstream Luxembourg and Euroclear will be conducted in the ordinary
way in accordance with their normal rules and operating procedures and in
accordance with conventional eurocertificate practice (i.e., seven calendar day
settlement).

         Secondary market trading between investors holding Global Certificates
through DTC will be conducted according to the rules and procedures applicable
to U.S. corporate debt obligations and prior collateralized mortgage certificate
issues.

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

         A holder that is not a United States person (as described below) of
Global Certificates will be subject to U.S. withholding taxes unless such holder
meets certain requirements and delivers appropriate U.S. tax documents to the
securities clearing organizations or their participants.

INITIAL SETTLEMENT

         All Global Certificates will be held in book-entry form by DTC in the
name of Cede & Co. as nominee of DTC. Investors' interests in the Global
Certificates will be represented through financial institutions acting on their
behalf as direct and indirect Participants in DTC. As a result, Clearstream
Luxembourg and Euroclear will hold positions on behalf of their participants
through their respective European Depositories, which in turn will hold such
positions in accounts as DTC Participants.

         Investors electing to hold their Global Certificates through DTC will
follow the settlement practices applicable to prior mortgage pass-through
certificate issues. Investors' securities custody accounts will be credited with
their holdings against payment in same-day funds on the settlement date.

         Investors electing to hold their Global Certificates through
Clearstream Luxembourg or Euroclear accounts will follow the settlement
procedures applicable to conventional eurocertificates, except that there will
be no temporary global certificate and no "lock-up" or restricted period. Global
Certificates 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.

                                      A-1


         Trading Between DTC Participants. Secondary market trading between DTC
Participants will be settled using the procedures applicable to prior
collateralized mortgage certificate issues in same-day funds.

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

         Trading Between DTC Seller and Clearstream Luxembourg or Euroclear
Purchaser. When Global Certificates are to be transferred from the account of a
DTC Participant to the account of a Clearstream Luxembourg Participant or a
Euroclear Participant, the purchaser will send instructions to Clearstream
Luxembourg or Euroclear through a Clearstream Luxembourg Participant or
Euroclear Participant at least one business day prior to settlement. Clearstream
Luxembourg or Euroclear will instruct the respective European Depository, as the
case may be, to receive the Global Certificates against payment. Payment will
include interest accrued on the Global Certificates from and including the last
coupon Distribution Date to and excluding the settlement date, on the basis of
either the actual number of days in such accrual period and a year assumed to
consist of 360 days or a 360-day year of twelve 30-day months as applicable to
the related class of Global Certificates. 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 European
Depository of the DTC Participant's account against delivery of the Global
Certificates. After settlement has been completed, the Global Certificates will
be credited to the respective clearing system and by the clearing system, in
accordance with its usual procedures, to the Clearstream Luxembourg
Participant's or Euroclear Participant's account. The securities credit will
appear the next day (European time) and the cash debt will be back-valued to,
and the interest on the Global Certificates will accrue from, the value date
(which would be the preceding day when settlement occurred in New York). If
settlement is not completed on the intended value date (i.e., the trade fails),
the Clearstream Luxembourg or Euroclear cash debt will be valued instead as of
the actual settlement date.

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

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

         Since the settlement is taking place during New York business hours,
DTC Participants can employ their usual procedures for sending Global
Certificates to the respective European Depository for the benefit of
Clearstream Luxembourg Participants or Euroclear Participants. The sale proceeds
will be available to the DTC seller on the settlement date. Thus, to the DTC
Participants a cross-market transaction will settle no differently than a trade
between two DTC Participants.

                                      A-2


         Trading Between Clearstream Luxembourg or Euroclear Seller and DTC
Purchaser. Due to time zone differences in their favor, Clearstream Luxembourg
Participants and Euroclear Participants may employ their customary procedures
for transactions in which Global Certificates are to be transferred by the
respective clearing system, through the respective European Depository, to a DTC
Participant. The seller will send instructions to Clearstream Luxembourg or
Euroclear through a Clearstream Luxembourg Participant or Euroclear Participant
at least one business day prior to settlement. In these cases Clearstream
Luxembourg or Euroclear will instruct the respective European Depository, as
appropriate, to deliver the Global Certificates to the DTC Participant's account
against payment. Payment will include interest accrued on the Global
Certificates from and including the last coupon Distribution Date to and
excluding the settlement date on the basis of either the actual number of days
in such accrual period and a year assumed to consist of 360 days or a 360-day
year of twelve 30-day months as applicable to the related class of Global
Certificates. 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 Luxembourg
Participant or Euroclear Participant the following day, and receipt of the cash
proceeds in the Clearstream Luxembourg Participant's or Euroclear Participant's
account would be back-valued to the value date (which would be the preceding
day, when settlement occurred in New York). Should the Clearstream Luxembourg
Participant or Euroclear Participant have a line of credit with its respective
clearing system and elect to be in debt in anticipation of receipt of the sale
proceeds in its account, the back-valuation will extinguish any overdraft
incurred over that one day period. If settlement is not completed on the
intended value date (i.e., the trade fails), receipt of the cash proceeds in the
Clearstream Luxembourg Participant's or Euroclear Participant's account would
instead be valued as of the actual settlement date.

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

                  (A)      borrowing through Clearstream Luxembourg or Euroclear
                           for one day (until the purchase side of the day trade
                           is reflected in their Clearstream Luxembourg or
                           Euroclear accounts) in accordance with the clearing
                           system's customary procedures;

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

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

CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS

         A holder that is not a "United States person" within the meaning of
Section 7701(a)(30) of the Internal Revenue Code of 1986 holding a book-entry
certificate through Clearstream Luxembourg, Euroclear or DTC may be subject to
U.S. withholding tax at a rate of 30% unless such holder provides certain
documentation to the Trustee or to the U.S. entity required to withhold tax (the
"U.S. withholding

                                      A-3


agent") establishing an exemption from withholding. A holder that is not a
United States person may be subject to 30% withholding unless:

                  the Trustee or the U.S. withholding agent receives a
                           statement-

                           from the holder on Internal Revenue Service ("IRS")
                                    Form W-8BEN (or any successor form) that--

                                    is signed by the certificateholder under
                                    penalty of perjury,

                                    certifies that such owner is not a United
                                    States person, and

                                    provides the name and address of the
                                    certificateholder, or

                           from a securities clearing organization, a bank or
                                    other financial institution that holds
                                    customers' securities in the ordinary course
                                    of its trade or business that--

                                    is signed under penalties of perjury by an
                                            authorized representative of the
                                            financial institution,

                                    states that the financial institution has
                                            received an IRS Form W-8BEN (or any
                                            successor form) from the
                                            certificateholder or that another
                                            financial institution acting on
                                            behalf of the certificateholder has
                                            received such IRS Form W-8BEN (or
                                            any successor form),

                                    provides the name and address of the
                                            certificateholder, and

                                    attaches the IRS Form W-8BEN (or any
                                            successor form) provided by the
                                            certificateholder;

                  the holder claims an exemption or reduced rate based on a
                           treaty and provides a properly executed IRS Form
                           W-8BEN (or any successor form) to the Trustee or the
                           U.S. withholding agent;

                  the holder claims an exemption stating that the income is
                           effectively connected to a U.S. trade or business and
                           provides a properly executed IRS Form W-8ECI (or any
                           successor form) to the Trustee or the U.S.
                           withholding agent; or

                  the holder is a "nonwithholding partnership" and provides a
                           properly executed IRS Form W-8IMY (or any successor
                           form) with all necessary attachments to the Trustee
                           or the U.S. withholding agent. Certain pass-through
                           entities that have entered into agreements with the
                           Internal Revenue Service (for example "qualified
                           intermediaries") may be subject to different
                           documentation requirements; it is recommended that
                           such holders consult with their tax advisors when
                           purchasing the Certificates.

         A holder holding book-entry certificates through Clearstream Luxembourg
or Euroclear provides the forms and statements referred to above by submitting
them to the person through which he holds an interest in the book-entry
certificates, which is the clearing agency, in the case of persons holding
directly on the books of the clearing agency. Under certain circumstances a Form
W-8BEN, if furnished with a

                                      A-4


taxpayer identification number ("TIN"), will remain in effect until the status
of the beneficial owner changes, or a change in circumstances makes any
information on the form incorrect. A Form W-8BEN, if furnished without a TIN,
and a Form W-8ECI will remain in effect for a period starting on the date the
form is signed and ending on the last day of the third succeeding calendar year,
unless a change in circumstances makes any information on the form incorrect.

         In addition, all holders holding book-entry certificates through
Clearstream Luxembourg, Euroclear or DTC may be subject to backup withholding
unless the holder:

                  (A)      provides a properly executed IRS Form W-8BEN, Form
                           W-8ECI or Form W-8IMY (or any successor forms) if
                           that person is not a United States person;

                  (B)      provides a properly executed IRS Form W-9 (or any
                           substitute form) if that person is a United States
                           person; or

                  (C)      is a corporation, within the meaning of Section
                           7701(a) of the Internal Revenue Code of 1986, or
                           otherwise establishes that it is a recipient exempt
                           from United States backup withholding.

         This summary does not deal with all aspects of federal income tax
withholding or backup withholding that may be relevant to investors that are not
"United States persons" within the meaning of Section 7701(a)(30) of the
Internal Revenue Code. Such investors are advised to consult their own tax
advisors for specific tax advice concerning their holding and disposing of the
book-entry certificates.

         The term "United States person" means (1) a citizen or resident of the
United States, (2) a corporation or partnership organized in or under the laws
of the United States or any state or the District of Columbia (other than a
partnership that is not treated as a United States person under any applicable
Treasury regulations), (3) an estate the income of which is includable in gross
income for United States tax purposes, regardless of its source, or (4) a trust
if a court within the United States is able to exercise primary supervision over
the administration of the trust and one or more United States persons have
authority to control all substantial decisions of the trust. Notwithstanding the
preceding sentence, to the extent provided in regulations, certain trusts in
existence on August 20, 1996 and treated as United States persons prior to such
date that elect to continue to be so treated also shall be considered United
States persons.

         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 Certificates.

         Investors are advised to consult their own tax advisors for specific
tax advice concerning their holding and disposing of the Global Certificates.



                                      A-5




                      [THIS PAGE INTENTIONALLY LEFT BLANK.]

PROSPECTUS
----------

                            ASSET BACKED CERTIFICATES

                               ASSET BACKED NOTES
                              (ISSUABLE IN SERIES)

                     MERRILL LYNCH MORTGAGE INVESTORS, INC.
                                    DEPOSITOR
                             ----------------------

--------------------------------------------------------------------------------
CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 1 OF THIS PROSPECTUS.

The securities of each series will not represent an obligation of or interest in
the depositor, an obligation of or interest in the depositor, Merrill Lynch,
Pierce, Fenner & Smith Incorporated, any master servicer or any of their
respective affiliates, except to the limited extent described herein and in the
related prospectus supplement.

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

THE SECURITIES

         Merrill Lynch Mortgage Investors, Inc., as depositor, will sell the
securities, which may be in the form of asset backed certificates or asset
backed notes. Each issue of securities will have its own series designation and
will evidence either:

         o   ownership interests in certain assets in a trust fund or

         o   debt obligations secured by certain assets in a trust fund.

         o   Each series of securities will consist of one or more classes. Each
             class of securities will represent the entitlement to a specified
             portion of future interest payments and a specified portion of
             future principal payments on the assets in the related trust fund.
             In each case, the specified portion may equal from 0% to 100%. A
             series may include one or more classes of securities that are
             senior in right of payment to one or more other classes. One or
             more classes of securities may be entitled to receive distributions
             of principal, interest or both prior to one or more other classes,
             or before or after certain specified events have occurred. The
             related prospectus supplement will specify each of these features.

THE TRUST FUND AND ITS ASSETS

         As specified in the related prospectus supplement, each trust fund will
consist primarily of assets from one of the following categories:

         o   one or more segregated pools of various types of mortgage loans (or
             participation interests in mortgage loans) and/or closed-end and/or
             revolving home equity loans (or certain balances of these loans),
             in each case secured by first and/or junior liens on one- to
             five-family residential properties, or security interests in shares
             issued by cooperative housing corporations, including mixed
             residential and commercial structures;

         o   manufactured housing installment contracts and installment loan
             agreements secured by senior or junior liens on manufactured homes
             and/or by mortgages on real estate on which the manufactured homes
             are located;

         o   home improvement installment sales contracts or installment loan
             agreements originated by a home improvement contractor and secured
             by a mortgage on the related mortgaged property that is junior to
             other liens on the mortgaged property; and

         o   mortgage pass-through certificates or mortgage-backed securities
             evidencing interests in mortgage loans or secured thereby or
             certain direct obligations of the United States, agencies thereof
             or agencies created thereby. Each trust fund may be subject to
             early termination in certain circumstances.

MARKET FOR THE SECURITIES

         No market will exist for the securities of any series before they are
issued. In addition, even after the securities of a series have been issued and
sold, there can be no assurance that a resale market will develop.

OFFERS OF THE SECURITIES

         Offers of the securities are made through Merrill Lynch, Pierce, Fenner
& Smith Incorporated and the other underwriters listed in the related prospectus
supplement.

         Neither the Securities and Exchange Commission nor any state securities
commission has approved these securities or determined that this prospectus is
accurate or complete. Any representation to the contrary is a criminal offense.

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

                               MERRILL LYNCH & CO.

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

                  The date of this Prospectus is June 18, 2004.



              IMPORTANT NOTICE ABOUT INFORMATION IN THIS PROSPECTUS
                   AND EACH ACCOMPANYING PROSPECTUS SUPPLEMENT

Information about each series of securities is contained in the following
documents:

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

o  the accompanying prospectus supplement for a particular series, which
   describes the specific terms of the securities of that series. If the
   prospectus supplement contains information about a particular series that
   differs from the information contained in this prospectus, you should rely on
   the information in the prospectus supplement.

         You should rely only on the information contained in this prospectus
and the accompanying prospectus supplement. We have not authorized anyone to
provide you with information that is different from that contained in this
prospectus and the accompanying prospectus supplement. The information in this
prospectus is accurate only as of the date of this prospectus.

         Each prospectus supplement generally will include the following
information with respect to the related series of securities:

         o   the principal amount, interest rate and authorized denominations of
             each class of securities;

         o   information concerning the mortgage loans, home improvement
             contracts and/or securities in the related trust fund;

         o   information concerning the seller or sellers of the mortgage loans,
             home improvement contracts and/or securities and information
             concerning any servicer;

         o   the terms of any credit enhancement with respect to particular
             classes of the securities;

         o   information concerning other trust fund assets, including any
             reserve fund;

         o   the final scheduled distribution date for each class of securities;

         o   the method for calculating the amount of principal to be paid to
             each class of securities, and the timing and order of priority of
             principal payments;

         o   information about any REMIC or FASIT tax elections for some or all
             of the trust fund assets; and

         o   particulars of the plan of distribution for the securities.

         If you require additional information, the mailing address of our
principal executive offices is Merrill Lynch Mortgage Investors, Inc., 250 Vesey
Street, World Financial Center-North Tower, 10th Floor, New York, New York
10281-1310, Attention: Secretary, and our telephone number is (212) 449-0357.
For other means of acquiring additional information about us or a series of
securities, see "Incorporation of Certain Information by Reference" on page 121
of this prospectus.

                                        ii


                                TABLE OF CONTENTS

                                   PROSPECTUS



Risk Factors........................     1
Description of the Trust Funds......     7
     Assets.........................     7
     Mortgage Loans.................     7
     Loan-to-Value Ratio............     8
     Mortgage Loan Information in
       Prospectus Supplements.......     8
     MBS............................    10
     Government Securities..........    12
     Pre-Funding Account............    12
     Accounts.......................    12
     Credit Support.................    12
     Cash Flow Agreements...........    13
Use of Proceeds.....................    13
Yield Considerations................    13
     General........................    13
     Pass-Through Rate and
       Interest Rate................    13
     Timing of Payment of
       Interest.....................    13
     Payments of Principal;
       Prepayments..................    14
     Prepayments--Maturity and
       Weighted Average Life........    15
     Other Factors Affecting
       Weighted Average Life........    16
The Depositor.......................    17
Description of the Securities.......    18
     General........................    18
     Distributions..................    19
     Available Distribution
       Amount.......................    19
     Distributions of Interest on
       the Securities...............    20
     Distributions of Principal of
       the Securities...............    21
     Components.....................    21
     Allocation of Losses and
       Shortfalls...................    21
     Advances in Respect of
       Delinquencies................    21
     Reports to Securityholders.....    22
     Termination....................    24
     Book-Entry Registration and
       Definitive Securities........    25
Recombinable Securities.............    28
     General........................    28
     Exchanges......................    29
     Procedures and Exchange
       Proportions..................    31
Description of the Agreements.......    32
     Agreements Applicable to a
       Series.......................    32
     Assignment of Assets;
       Repurchases..................    33
     Representations and Warranties;
       Repurchases..................    35
     Collection Account and Related
       Accounts.....................    36
     Collection and Other Servicing
       Procedures...................    40
     Sub-Servicers..................    40
     Realization upon Defaulted
       Whole Loans..................    41
     Primary Mortgage Insurance
       Policies.....................    42
     Hazard Insurance Policies......    43
     Fidelity Bonds and Errors and
       Omissions Insurance..........    44
     Due-on-Sale Provisions.........    44
     Retained Interest; Servicing
       Compensation and Payment of
       Expenses.....................    45
     Evidence as to Compliance......    45
     Certain Matters Regarding a
       Master Servicer and the
       Depositor....................    46
     Events of Default under the
       Agreement....................    47
     Rights upon Event of Default
       under the Agreement..........    48
     Amendment......................    48
     The Trustee....................    49
     Duties of the Trustee..........    49
     Certain Matters Regarding the
       Trustee......................    50
     Resignation and Removal of the
       Trustee......................    50
     Certain Terms of the
       Indenture....................    51
Description of Credit Support.......    53
     General........................    53
     Subordinate Securities.........    54
     Cross-Support Provisions.......    54
     Insurance or Guarantees........    54

                                       iii


     Letter of Credit........................         54
     Insurance Policies and Surety
       Bonds.................................         54
     Reserve Funds...........................         55
     Credit Support with Respect to MBS......         55
Certain Legal Aspects of Mortgage
  Loans......................................         55
     General.................................         55
     Types of Mortgage Instruments...........         56
     Interest in Real Property...............         56
     Cooperative Loans.......................         56
     Foreclosure.............................         57
     Junior Mortgages........................         61
     Anti-Deficiency Legislation and Other
       Limitations on Lenders................         61
     Environmental Legislation...............         62
     Due-on-Sale Clauses.....................         63
     Subordinate Financing...................         63
     Applicability of Usury Laws.............         63
     Alternative Mortgage Instruments........         64
     Servicemembers Civil Relief Act.........         65
     Forfeitures in Drug and RICO
       Proceedings...........................         65
     The Contracts...........................         65
Material Federal Income Tax Consequences.....         68
     General.................................         69
     Grantor Trust Funds.....................         69
     New Withholding Regulations.............         77
     REMICs..................................         77
     Tax-Related Restrictions on Transfers of
       REMIC Residual Certificates...........         93
     Tax Characterization of a Trust Fund as
       a Partnership.........................         96
     Tax Treatment of Certificates as Debt
       for Tax Purposes......................        102
     FASIT Securities........................        105
Taxation of Classes of Recombinable
  Securities.................................        108
     General.................................        108
     Tax Status..............................        109
     Tax Accounting for Recombinable
       Securities............................        109
     Exchanges of Recombinable Securities....        110
     Tax Treatment of Foreign Investors......        110
     Backup Withholding......................        110
     Reporting and Administrative Matters....        111
State Tax Considerations.....................        111
ERISA Considerations.........................        111
     General.................................        111
     Prohibited Transactions.................        111
     Availability of Underwriter's Exemption
       for Certificates......................        112
     Review by Plan Fiduciaries..............        117
Legal Investment.............................        118
Plan of Distribution.........................        120
Legal Matters................................        121
Financial Information........................        121
Incorporation of Certain Information by
  Reference..................................        121
Ratings......................................        122
Index of Defined Terms.......................        123

                                        iv


                                  RISK FACTORS

You should consider the following information carefully, since it identifies
certain significant sources of risk associated with an investment in the
securities.

THERE IS A RISK THAT THE SECURITIES WILL HAVE LIMITED LIQUIDITY.

At the time a series of securities is issued, there will not be a secondary
market for them. Merrill Lynch, Pierce, Fenner & Smith Incorporated currently
expects to make a secondary market in the offered securities, but it is not
required to. We cannot assure you that a secondary market for the securities of
any series will develop or, if it does develop, that it will provide holders of
those securities with liquidity of investment or will continue while those
securities remain outstanding.

THERE IS A RISK ASSOCIATED WITH LIMITED ASSETS THAT THOSE ASSETS WILL NOT BE
SUFFICIENT TO PAY THE SECURITIES IN FULL.

o  The securities will not represent an interest in or obligation of the
   depositor, the master servicer or any of their affiliates.

o  The only obligations with respect to the securities or the assets securing
   them will be the obligations (if any) of any "warranting party" (as further
   described in this prospectus) pursuant to certain limited representations and
   warranties made with respect to the mortgage loans, the master servicer's and
   any sub-servicer's servicing obligations under the related agreements
   (including the limited obligation to make certain advances in the event of
   delinquencies on the mortgage loans, but only to the extent they deem such
   advances recoverable) and, if described in the related prospectus supplement,
   certain limited obligations of the master servicer in connection with an
   agreement to purchase or act as remarketing agent with respect to a
   convertible adjustable-rate mortgage loan (as more fully described in this
   prospectus) upon conversion to a fixed rate or a different index.

o  Since certain representations and warranties with respect to the mortgage
   assets may have been made and/or assigned in connection with transfers of the
   mortgage assets prior to the closing date, the rights of the trustee and the
   securityholders with respect to such representations or warranties will be
   limited to their rights as an assignee thereof.

o  Unless otherwise specified in the related prospectus supplement, none of the
   depositor, the master servicer or any affiliate thereof will have any
   obligation with respect to representations or warranties made by any other
   entity.

o  Unless otherwise specified in the related prospectus supplement, neither the
   securities nor the underlying assets will be guaranteed or insured by any
   governmental agency or instrumentality, or by the depositor, the master
   servicer, any sub-servicer or any of their affiliates.

o  Proceeds of the assets included in the related trust fund for each series of
   securities (including the assets and any form of credit enhancement) will be
   the sole source of payments on the securities, and there will be no recourse
   to the depositor or any other entity in the event that these proceeds are
   insufficient or otherwise unavailable to make all payments provided for under
   the securities.

o  Unless otherwise specified in the related prospectus supplement, a series of
   securities will not have any claim against or security interest in the trust
   funds for any other series. If the related trust fund is insufficient to make
   payments on these securities, no other assets will be available for payment
   of the deficiency. Additionally, certain amounts remaining in certain funds
   or accounts, including the collection account and any accounts maintained as
   credit support, may be withdrawn under certain conditions, as described in
   the related prospectus supplement. In the event of such withdrawal, such
   amounts will not be available for future payment of principal of or interest
   on the securities.

o  If provided in the prospectus supplement for a series of securities
   consisting of one or more classes of subordinate securities, on any
   distribution date in respect of which losses or shortfalls in collections on
   the assets have been incurred, the amount of such losses or shortfalls will
   be borne first by one or more classes of the subordinate securities, and,
   thereafter, by the remaining classes of securi-

                                        1


   ties in the priority and manner and subject to the limitations specified in
   that prospectus supplement.

We refer you to "Description of the Trust Funds" for further information.

THERE IS A RISK THAT PREPAYMENTS ON THE ASSETS IN A TRUST FUND WILL ADVERSELY
AFFECT THE AVERAGE LIFE AND YIELDS OF THE RELATED SECURITIES.

o  Prepayments (including those caused by defaults) on the assets in any trust
   fund generally will result in a faster rate of principal payments on one or
   more classes of the related securities than if payments on these assets were
   made as scheduled. Thus, the prepayment experience on the assets may affect
   the average life of each class of related securities. The rate of principal
   payments on pools of mortgage loans varies between pools and from time to
   time is influenced by a variety of economic, demographic, geographic, social,
   tax, legal and other factors. We can't assure you as to the rate of
   prepayment on the assets in any trust fund or that the rate of payments will
   conform to any model we describe here or in any prospectus supplement. If
   prevailing interest rates fall significantly below the applicable mortgage
   interest rates, principal prepayments are likely to be higher than if
   prevailing rates remain at or above the rates borne by the mortgage loans
   underlying or comprising the mortgage assets in any trust fund. As a result,
   the actual maturity of any class of securities evidencing an interest in a
   trust fund containing mortgage assets could occur significantly earlier than
   expected.

o  A series of securities may include one or more classes of securities with
   priorities of payment and, as a result, yields on other classes of
   securities, including classes of offered securities, of such series may be
   more sensitive to prepayments on assets. A series of securities may include
   one or more classes offered at a significant premium or discount. Yields on
   these classes of securities will be sensitive, and in some cases extremely
   sensitive, to prepayments on mortgage assets and, where the amount of
   interest payable with respect to a class is disproportionately high, as
   compared to the amount of principal, as with certain classes of stripped
   interest securities, a holder might, in some prepayment scenarios, fail to
   recoup its original investment. A series of securities may include one or
   more classes of securities, including classes of offered securities, that
   provide for distribution of principal thereof from amounts attributable to
   interest accrued but not currently distributable on one or more classes of
   accrual securities and, as a result, yields on such securities will be
   sensitive to (a) the provisions of such accrual securities relating to the
   timing of distributions of interest thereon and (b) if such accrual
   securities accrue interest at a variable or adjustable pass-through rate or
   interest rate, changes in such rate.

We refer you to "Yield Considerations" in the prospectus and, if applicable, in
the related prospectus supplement for further information.

THERE IS A RISK THAT DEFAULTS BY OBLIGORS OR DECLINES IN THE VALUES OF MORTGAGED
PROPERTIES WILL RESULT IN LOSSES TO INVESTORS.

o  An investment in securities such as the securities which generally represent
   interests in mortgage loans may be affected by, among other things, a decline
   in real estate values and changes in the mortgagors' financial condition. No
   assurance can be given that values of the mortgaged properties have remained
   or will remain at their levels on the dates of origination of the related
   mortgage loans. If the relevant residential real estate market should
   experience an overall decline in property values such that the outstanding
   balances of the related mortgage loans, and any secondary financing on the
   mortgaged properties, become equal to or greater than the value of the
   mortgaged properties, the actual rates of delinquencies, foreclosures and
   losses could be higher than those now generally experienced in the mortgage
   lending industry in that market. In addition, in the case of mortgage loans
   that are subject to negative amortization, due to the addition to principal
   balance of deferred interest, the principal balances of such mortgage loans
   could be increased to an amount equal to or in excess of the value of the
   underlying mortgaged properties, thereby increasing the likelihood of
   default.

o  To the extent that these losses are not covered by the applicable credit
   support, if any, holders

                                        2


   of securities of the series evidencing interests in the related mortgage
   loans will bear all risk of loss resulting from default by mortgagors and
   will have to look primarily to the value of the mortgaged properties for
   recovery of the outstanding principal and unpaid interest on the defaulted
   mortgage loans. Certain of the types of mortgage loans may involve additional
   uncertainties not present in traditional types of loans.

o  For example, certain of the mortgage loans provide for escalating or variable
   payments by the mortgagor under the mortgage loan, as to which the mortgagor
   is generally qualified on the basis of the initial payment amount. In some
   cases the mortgagor's income may not be sufficient to enable it to continue
   to make its loan payments as such payments increase and thus the likelihood
   of default will increase.

o  In addition to the foregoing, certain geographic regions of the United States
   from time to time will experience weaker regional economic conditions and
   housing markets, and will thus experience higher rates of loss and
   delinquency than the mortgage loans generally will experience. The mortgage
   loans underlying certain series of securities may be concentrated in these
   regions, and this concentration may present risk considerations in addition
   to those generally present for similar mortgage-backed securities without
   this concentration.

o  Further, the rate of default on mortgage loans that 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 loans. Additionally, a
   decline in the value of the mortgaged properties will increase the risk of
   loss particularly with respect to any related junior mortgage loans.

We refer you to "--There is a risk that there will be reduced or no proceeds
available when junior lien mortgage loans are liquidated" in this prospectus for
further information.

o  In addition, a prospectus supplement may specify that the loan-to-value
   ratios for the mortgage loans in the related trust will exceed 100%. The
   related mortgaged properties will thus be highly unlikely to provide adequate
   security for these mortgage loans. To the extent specified in that prospectus
   supplement, the assessment of the credit history of a borrower and that
   borrower's capacity to make payments on the related mortgage loan will have
   been the primary considerations in underwriting the mortgage loans included
   in that trust. The evaluation of the adequacy of the loan-to-value ratio, if
   so specified in the related prospectus supplement, will have been given less
   consideration, and in certain cases no consideration, in underwriting those
   mortgage loans.

THERE IS A RISK THAT THERE WILL BE REDUCED OR NO PROCEEDS AVAILABLE WHEN JUNIOR
LIEN MORTGAGE LOANS ARE LIQUIDATED.

o  Certain mortgage loans may be secured by junior liens and the related first
   and other senior liens, if any, may not be included in the mortgage pool.

o  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 senior lien to satisfy fully both the senior lien
   and the mortgage loan. If a holder of the senior 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 senior lien. The claims of the
   holder of the senior lien will be satisfied in full out of proceeds of the
   liquidation of the mortgage loan, if these proceeds are sufficient, before
   the trust fund as holder of the junior lien receives any payments in respect
   of the mortgage loan.

o  If the master servicer were to foreclose on any mortgage loan, it would do so
   subject to any related senior lien. In order for the debt related to the
   mortgage loan to be paid in full at such sale, a bidder at the foreclosure
   sale of that mortgage loan would have to bid an amount sufficient to pay off
   all sums due under the mortgage loan and the senior lien or purchase the
   mortgaged property subject to the senior lien. In the event that such
   proceeds from a foreclosure or similar sale of the related

                                        3


   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. Moreover, deficiency
   judgments may not be available in certain jurisdictions. In addition, a
   junior mortgagee may not foreclose on the property securing a junior mortgage
   unless it forecloses subject to the senior mortgage.

We refer you to "Certain Legal Aspects of the Mortgage Loans--Junior Mortgages"
in this prospectus for further information.

THERE IS A RISK THAT ANY APPLICABLE CREDIT SUPPORT WILL NOT COVER ALL LOSSES.

o  The prospectus supplement for a series of certificates will describe any
   credit support in the related trust fund, which may include letters of
   credit, insurance policies, guarantees, reserve funds or other types of
   credit support, or combinations of these. Any credit support will be subject
   to the conditions and limitations described here and in the related
   prospectus supplement. Moreover, this credit support may not cover all
   potential losses or risks; for example, credit support may or may not cover
   fraud or negligence by a borrower or other parties.

o  A series of securities may include one or more classes of subordinate
   securities (which may include offered securities), if we provide for that in
   the related prospectus supplement. Although subordination is designed to
   reduce the risk to holders of senior securities of delinquent distributions
   or ultimate losses, the amount of subordination will be limited and may
   decline under certain circumstances. In addition, if principal payments on
   one or more classes of securities of a series are made in a specified order
   of priority, any limits with respect to the aggregate amount of claims under
   any related credit support may be exhausted before the principal of the lower
   priority classes of securities of this series has been repaid. As a result,
   the impact of significant losses and shortfalls on the assets may fall
   primarily upon those classes of securities having a lower priority of
   payment. Moreover, if a form of credit support covers more than one series of
   securities (we refer to this as a "covered trust"), holders of securities
   evidencing an interest in a covered trust will be subject to the risk that
   this credit support will be exhausted by the claims of other covered trusts.

o  The amount of any applicable credit support supporting one or more classes of
   offered securities, including the subordination of one or more classes of
   securities, will be determined on the basis of criteria established by each
   rating agency rating such classes of securities based on an assumed level of
   defaults, delinquencies, other losses or other factors. We can't assure you,
   however, that the loss experience on the related assets will not exceed these
   assumed levels.

o  Regardless of the form of credit enhancement, 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. The master servicer will generally be
   permitted to reduce, terminate or substitute all or a portion of the credit
   enhancement for any series of securities, if the applicable rating agency
   indicates that the then-current rating of those securities will not be
   adversely affected.

o  The rating agency rating a series of securities may lower its rating
   following the initial issuance of the securities if the obligations of any
   applicable credit support provider have been downgraded, or as a result of
   losses on the related assets substantially in excess of the levels
   contemplated by that rating agency when it performed its initial rating
   analysis. None of the depositor, the master servicer or any of their
   affiliates will have any obligation to replace or supplement any credit
   support or to take any other action to maintain any rating of any series of
   securities.

We refer you to "--There are risks in relying on the limited nature of ratings",
"Description of the Securities" and "Description of Credit Support" for further
information.

                                        4


THERE IS A RISK TO HOLDERS OF SUBORDINATE SECURITIES THAT LOSSES WILL HAVE A
GREATER IMPACT ON THEM.

o  The rights of subordinate securityholders to receive distributions to which
   they would otherwise be entitled with respect to the assets will be
   subordinate to the rights of the master servicer (to the extent that the
   master servicer is paid its servicing fee, including any unpaid servicing
   fees with respect to one or more prior due periods, and is reimbursed for
   certain unreimbursed advances and unreimbursed liquidation expenses) and the
   senior securityholders to the extent described in the related prospectus
   supplement. As a result of the foregoing, investors must be prepared to bear
   the risk that they may be subject to delays in payment and may not recover
   their initial investments in the subordinate securities.

We refer you to "Description of the Securities--General" and "--Allocation of
Losses and Shortfalls" in this prospectus for further information.

o  The yields on the subordinate securities may be extremely sensitive to the
   loss experience of the assets and the timing of any such losses. If the
   actual rate and amount of losses experienced by the assets exceed the rate
   and amount of such losses assumed by an investor, the yields to maturity on
   the subordinate securities may be lower than you anticipated.

THERE IS A RISK THAT OBLIGORS ON BALLOON LOANS WILL NOT BE ABLE TO MAKE BALLOON
PAYMENTS.

Some of the mortgage loans as of the cut-off date may not be fully amortizing
over their terms to maturity (we call these "balloon loans") 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 mortgagor 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 mortgagor to accomplish either
of these goals will be affected by a number of factors, including the level of
available mortgage interest rates at the time of sale or refinancing, the
mortgagor's equity in the related mortgaged property, the financial condition of
the mortgagor, the value of the mortgaged property, tax laws, prevailing general
economic conditions and the availability of credit for single family or
multifamily real properties generally.

THERE IS A POSSIBILITY, IF THE RELATED PROSPECTUS SUPPLEMENT PROVIDES FOR IT,
THAT UPON AN OPTIONAL TERMINATION OF A TRUST FUND, THE PROCEEDS MAY BE LESS THAN
THE OUTSTANDING PRINCIPAL AMOUNT OF THE SECURITIES PLUS ACCRUED INTEREST.

o  If specified in the related prospectus supplement, a series of securities may
   be subject to optional early termination through the repurchase of the assets
   in the related trust fund by the party specified therein, under the
   circumstances and in the manner set forth therein. If provided in the related
   prospectus supplement, upon the reduction of the security balance of a
   specified class or classes of securities to a specified percentage or amount,
   the party specified therein will solicit bids for the purchase of all assets
   of the trust fund, or of a sufficient portion of such assets to retire such
   class or classes or purchase such 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 therein.

o  In either such case, if the related prospectus supplement provides for it,
   the proceeds available for distribution to securityholders may be less than
   the outstanding principal balance of their securities plus accrued interest.
   If this happens, these securityholders could incur a loss on their
   investment.

THERE ARE RISKS RELATING TO CERTAIN FEDERAL INCOME TAX CONSIDERATIONS REGARDING
REMIC RESIDUAL CERTIFICATES.

o  Holders of REMIC residual certificates must report on their federal income
   tax returns as ordinary income their pro rata share of the taxable income of
   the REMIC, regardless of the amount or timing of their receipt of cash
   payments, as described in "Material Federal Income Tax Consequences--REMICs."
   Under certain circumstances, holders of offered securities that are REMIC
   residual certificates may have taxable income and tax liabilities arising
   from such investment during a taxable year in excess of the cash received
   during such period. Individual holders of REMIC residual

                                        5


   certificates may be limited in their ability to deduct servicing fees and
   other expenses of the REMIC.

o  In addition, REMIC residual certificates are subject to certain restrictions
   on transfer. Because of the special tax treatment of REMIC residual
   certificates, the taxable income arising in a given year on a REMIC residual
   certificate will not be equal to the taxable income associated with
   investment in a corporate bond or stripped instrument having similar cash
   flow characteristics and pre-tax yield. Therefore, the after-tax yield on the
   REMIC residual certificate may be significantly less than that of a corporate
   bond or stripped instrument having similar cash flow characteristics.
   Additionally, prospective purchasers of a REMIC residual certificate should
   be aware that treasury regulations provide that REMIC residual interests may
   not be marked to market.

We refer you to "Material Federal Income Tax Consequences--REMICs" in this
prospectus for further information.

THERE ARE RISKS IN RELYING ON THE LIMITED NATURE OF RATINGS.

         Any rating assigned by a rating agency to a class of securities will
reflect that rating agency's assessment solely of the likelihood that holders of
securities of that class will receive payments to which those securityholders
are entitled under the related agreement. This rating will not be an assessment
of the likelihood that principal prepayments (including those caused by
defaults) on the related mortgage assets will be made, the degree to which the
rate of such prepayments might differ from what you originally anticipated or
the likelihood of early optional termination of the series of securities. This
rating will not address the possibility that prepayment at higher or lower rates
than you anticipated may cause you to experience a yield lower than you
anticipated or that an investor purchasing a security 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 offered
securities of the related series are entitled that is not covered by the
applicable rating.

We refer you to "Ratings" in this prospectus for further information.

                                        6


                         DESCRIPTION OF THE TRUST FUNDS

ASSETS

The primary assets of each Trust Fund (the "Assets") will include:

         (i)   one- to five-family mortgage loans or participation interests in
               mortgage loans (or certain balances thereof) (collectively, the
               "Mortgage Loans"), including without limitation, Home Equity
               Loans, Home Improvement Contracts and Manufactured Housing
               Contracts,

         (ii)  pass-through certificates or other mortgage-backed securities
               (such as debt obligations or participation interests or
               certificates) evidencing interests in or secured by one or more
               Mortgage Loans or other similar participations, certificates or
               securities ("MBS") or

         (iii) direct obligations of the United States, agencies thereof or
               agencies created thereby which are:

               (a)  interest-bearing securities,

               (b)  non-interest-bearing securities,

               (c)  originally interest-bearing securities from which coupons
                    representing the right to payment of interest have been
                    removed, or

               (d)  interest-bearing securities from which the right to payment
                    of principal has been removed (the "Government Securities").

         As used herein, "Mortgage Loans" refers to both whole Mortgage Loans
(or certain balances thereof) and Mortgage Loans underlying MBS. Mortgage Loans
that secure, or interests in which are evidenced by, MBS are herein sometimes
referred to as "Underlying Mortgage Loans." Mortgage Loans (or certain balances
thereof) that are not Underlying Mortgage Loans are sometimes referred to as
"Whole Loans." Any pass-through certificates or other asset-backed certificates
in which an MBS evidences an interest or which secure an MBS are sometimes
referred to herein also as MBS or as "Underlying MBS." Mortgage Loans and MBS
are sometimes referred to herein as "Mortgage Assets." The Mortgage Assets will
not be guaranteed or insured by Merrill Lynch Mortgage Investors, Inc. (the
"Depositor") 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 the Depositor for inclusion in a
Trust Fund from among those purchased, either directly or indirectly, from a
prior holder thereof (an "Asset Seller"), which may be an affiliate of the
Depositor and, with respect to Assets, which prior holder may or may not be the
originator of such Mortgage Loan or the issuer of such MBS.

         Unless otherwise specified in the related Prospectus Supplement, the
Securities will be entitled to payment only from the assets of the related Trust
Fund and will not be entitled to payments in respect of the assets of any other
trust fund established by the Depositor. If specified in the related Prospectus
Supplement, the assets of a Trust Fund will consist of certificates representing
beneficial ownership interests in, or indebtedness of, another trust fund that
contains the Assets.

MORTGAGE LOANS

General

         Unless otherwise specified in the related Prospectus Supplement, each
Mortgage Loan will be secured by:

         (i)   a lien on a Mortgaged Property consisting of a one- to
               five-family residential property (a "Single Family Property" and
               the related Mortgage Loan a "Single Family Mortgage Loan") or

                                        7


         (ii)  a security interest in shares issued by private cooperative
               housing corporations ("Cooperatives"). If so specified in the
               related Prospectus Supplement, a Mortgaged Property may include
               some commercial use.

         Mortgaged Properties will be located, unless otherwise specified in the
related Prospectus Supplement, in any one of the fifty states, the District of
Columbia, the Commonwealth of Puerto Rico or any U.S. possession. To the extent
specified in the related Prospectus Supplement, the Mortgage Loans will be
secured by first and/or junior 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 and leasehold
interests in properties, the title to which is held by third party lessors.
Unless otherwise specified in the 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 (the
"Originator") other than the Depositor. The related Prospectus Supplement will
indicate if any Originator is an affiliate of the Depositor. The Mortgage Loans
will be evidenced by promissory notes (the "Mortgage Notes") secured by
mortgages, deeds of trust or other security instruments (the "Mortgages")
creating a lien on the Mortgaged Properties. If specified in the related
Prospectus Supplement, certain of the Mortgage Loans (by principal balance) in a
Trust Fund will be, as of the related Cut-off Date, 30 days or more past their
most recent contractually scheduled payment date.

         Participation interests in a Mortgage Loan or a loan pool will be
purchased by the Depositor, or an affiliate, pursuant to a participation
agreement (a "Participation Agreement"). The interest acquired by the Depositor
under the Participation Agreement will be evidenced by a participation
certificate (a "Participation Certificate"). The trustee will be the holder of a
Participation Certificate. Unless otherwise specified in the related Prospectus
Supplement, the trustee will not be in possession of or be assignee of record
with respect to the Mortgage Loans represented by any Participation Certificate.

LOAN-TO-VALUE RATIO

         The "Loan-to-Value Ratio" of a Mortgage Loan at any given time is the
ratio (expressed as a percentage) of the then outstanding principal balance of
the Mortgage Loan plus the principal balance of any senior mortgage loan to the
Value of the related Mortgaged Property. If specified in the related Prospectus
Supplement, the Loan-to-Value Ratio of certain Mortgage Loans may exceed 100%.
The "Value" of a Mortgaged Property, other than with respect to Refinance Loans,
is generally the lesser of:

         (a)   the appraised value determined in an appraisal obtained by the
               originator at origination of such loan and

         (b)   the sales price for such property.

"Refinance Loans" are loans made to refinance existing loans. Unless otherwise
set forth in the related Prospectus Supplement, the Value of the Mortgaged
Property securing a Refinance Loan is the appraised value thereof determined in
an appraisal obtained at the time of origination of the Refinance Loan. The
Value of a Mortgaged Property as of the date of initial issuance of the related
series of Certificates may be less than the value at origination and will
fluctuate from time to time based upon changes in economic conditions and the
real estate market.

MORTGAGE LOAN INFORMATION IN PROSPECTUS SUPPLEMENTS

         Each Prospectus Supplement will contain information, as of the dates
specified in such Prospectus Supplement and to the extent then applicable and
specifically known to the Depositor, with respect to the Mortgage Loans,
including:

         (i)     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,

         (ii)    the type of property securing the Mortgage Loans,

                                        8


         (iii)   the weighted average (by principal balance) of the original and
                 remaining terms to maturity of the Mortgage Loans,

         (iv)    the earliest and latest origination date and maturity date of
                 the Mortgage Loans,

         (v)     the range of the Loan-to-Value Ratios at origination of the
                 Mortgage Loans,

         (vi)    the Mortgage Rates or range of Mortgage Rates and the weighted
                 average Mortgage Rate borne by the Mortgage Loans,

         (vii)   the state or states in which most of the Mortgaged Properties
                 are located,

         (viii)  information with respect to the prepayment provisions, if any,
                 of the Mortgage Loans,

         (ix)    with respect to Mortgage Loans with adjustable Mortgage Rates
                 ("ARM Loans"), the index, the frequency of the adjustment
                 dates, the range of margins added to the index, and the maximum
                 Mortgage Rate or monthly payment variation at the time of any
                 adjustment thereof and over the life of the ARM Loan, and

         (x)     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 the
Depositor at the time Securities 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 Securities 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 such initial issuance.

         The related Prospectus Supplement may specify whether the Mortgage
Loans include closed-end and/or revolving home equity loans or certain balances
thereof ("Home Equity Loans"), which may be secured by Mortgages that are junior
to other liens on the related Mortgaged Property and/or home improvement
installment sales contracts or installment loan agreements (the "Home
Improvement Contracts") originated by a home improvement contractor and secured
by a Mortgage on the related Mortgaged Property that is junior to other liens on
the Mortgaged Property. Except as otherwise described in the related Prospectus
Supplement, the home improvements purchased with the Home Improvement Contracts
will generally be replacement windows, house siding, roofs, swimming pools,
satellite dishes, kitchen and bathroom remodeling goods and solar heating
panels. The related Prospectus Supplement will specify whether the Home
Improvement Contracts are partially insured under Title I of the National
Housing Act and, if so, the limitations on such insurance.

         If specified in the related Prospectus Supplement, new draws by
borrowers under the revolving Home Equity Loans will, during a specified period
of time, automatically become part of the Trust Fund for a series. As a result,
the aggregate balance of the revolving Home Equity Loans will fluctuate from day
to day as new draws by borrowers are added to the Trust Fund and principal
collections are applied to purchase such balances. Such amounts will usually
differ each day, as more specifically described in the related Prospectus
Supplement.

         The related Prospectus Supplement may specify whether the Mortgage
Loans consist, in whole or in part, of conventional manufactured housing
installment sales contracts and installment loan agreements, originated by a
manufactured housing dealer in the ordinary course of business (collectively,
"Manufactured Housing Contracts"). Such Manufactured Housing Contracts will be
secured by manufactured homes, located in any of the fifty states or the
District of Columbia, or by mortgages on the real estate on which the
manufactured homes are located.

         The manufactured homes securing the Manufactured Housing Contracts will
consist of manufactured homes within the meaning of 42 United States Code,
Section 5402(6), or manufactured homes meeting those other standards as shall be
described in the related prospectus supplement. Section 5402(6) defines a
"manufactured home" as "a structure, transportable in one or more sections,
which, in the

                                        9


traveling mode, is eight body feet or more in width or forty body feet or more
in length, or, when erected on site, is three hundred twenty or more square
feet, and which is built on a permanent chassis and designed to be used as a
dwelling with or without a permanent foundation when connected to the required
utilities, and includes the plumbing, heating, air conditioning and electrical
systems contained therein; except that the term shall include any structure
which meets all the requirements of [this] paragraph except the size
requirements and with respect to which the manufacturer voluntarily files a
certification required by the Secretary of Housing and Urban Development and
complies with the standards established under [this] chapter."

         Manufactured homes, and home improvements, unlike mortgaged properties,
generally depreciate in value. Consequently, at any time after origination it is
possible, especially in the case of contracts with high loan-to-value ratios at
origination, that the market value of a manufactured home or home improvement
may be lower than the principal amount outstanding under the related contract.

         If specified in the related Prospectus Supplement, principal
collections received on the Mortgage Loans may be applied to purchase additional
Mortgage Loans which will become part of the Trust Fund for a series. Such
additions may be made to the extent that such additions could be made in
connection with a Trust Fund with respect to which a REMIC election has been
made. The related Prospectus Supplement will set forth the characteristics that
such additional Mortgage Loans will be required to meet. Such characteristics
will be specified in terms of the categories described in the second preceding
paragraph.

Payment provisions of the mortgage loans

         Unless otherwise specified in the related Prospectus Supplement, all of
the Mortgage Loans will:

         (i)     have individual principal balances at origination of not less
                 than $25,000,

         (ii)    have original terms to maturity of not more than 40 years, and

         (iii)   provide for payments of principal, interest or both, on due
                 dates that occur monthly, quarterly or semi-annually or at such
                 other interval as is specified in the related Prospectus
                 Supplement.

Each Mortgage Loan may provide for no accrual of interest or for accrual of
interest thereon at an interest rate (a "Mortgage 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 a different adjustable 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. 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 certain
events or that adjust on the basis of other methodologies, and may 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.

MBS

         Any MBS will have been issued pursuant to a pooling and servicing
agreement, a participation agreement, a trust agreement, an indenture or similar
agreement (an "MBS Agreement"). A seller (the "MBS Issuer") and/or servicer (the
"MBS Servicer") of the underlying Mortgage Loans (or Underlying MBS) will have
entered into the MBS Agreement with a trustee or a custodian under the MBS
Agreement (the "MBS Trustee"), if any, or with the original purchaser of the
interest in the underlying Mortgage Loans or MBS evidenced by the MBS.

         Distributions of any principal or interest, as applicable, will be made
on MBS on the dates specified in the related Prospectus Supplement. The MBS may
be issued in one or more classes with characteristics

                                        10



similar to the classes of Securities described in this Prospectus. Any principal
or interest distributions will be made on the MBS by the MBS Trustee or the MBS
Servicer. The MBS Issuer or the MBS Servicer or another person specified in the
related Prospectus Supplement may have the right or obligation to repurchase or
substitute assets underlying the MBS after a certain date or under other
circumstances specified in the related Prospectus Supplement.

         Enhancement in the form of reserve funds, subordination or other forms
of credit support similar to that described for the Securities under
"Description of Credit Support" may be provided with respect to the MBS. The
type, characteristics and amount of such credit support, if any, will be a
function of certain characteristics of the Underlying Mortgage Loans or
Underlying MBS evidenced by or securing such MBS and other factors and generally
will have been established for the MBS on the basis of requirements of either
any Rating Agency that may have assigned a rating to the MBS or the initial
purchasers of the MBS.

         The Prospectus Supplement for a series of Securities evidencing
interests in Mortgage Assets that include MBS will specify, to the extent
available to the Depositor:

         (i)     the aggregate approximate initial and outstanding principal
                 amount or notional amount, as applicable, and type of the MBS
                 to be included in the Trust Fund,

         (ii)    the original and remaining term to stated maturity of the MBS,
                 if applicable,

         (iii)   whether such MBS is entitled only to interest payments, only to
                 principal payments or to both,

         (iv)    the pass-through or bond rate of the MBS or formula for
                 determining such rates, if any,

         (v)     the applicable payment provisions for the MBS, including, but
                 not limited to, any priorities, payment schedules and
                 subordination features,

         (vi)    the MBS Issuer, MBS Servicer and MBS Trustee, as applicable,

         (vii)   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 MBS or directly to such MBS,

         (viii)  the terms on which the related Underlying Mortgage Loans or
                 Underlying MBS for such MBS or the MBS may, or are required to,
                 be purchased prior to their maturity,

         (ix)    the terms on which Mortgage Loans or Underlying MBS may be
                 substituted for those originally underlying the MBS,

         (x)     the servicing fees payable under the MBS Agreement,

         (xi)    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 MBS described in this
                 paragraph,

         (xi)    the trust fund evidenced or secured by the MBS, and

         (xiii)  whether Depository Trust Company or the Participants Trust
                 Company.

Each MBS will be either:

         (i)     a security exempted from the registration requirements of the
                 Securities Act,

         (ii)    a security that has been previously registered under the
                 Securities Act or

         (iii)   a security that is eligible for sale under Rule 144(k) under
                 the Securities Act.

In the case of clause (iii), such security will be acquired in a secondary
market transaction not from the issuer thereof or an affiliate of such issuer.

                                        11


GOVERNMENT SECURITIES

         The Prospectus Supplement for a series of Securities evidencing
interests in Assets of a Trust Fund that include Government Securities will
specify, to the extent available,

         (i)     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,

         (ii)    the original and remaining terms to stated maturity of the
                 Government Securities,

         (iii)   whether such Government Securities are entitled only to
                 interest payments, only to principal payments or to both,

         (iv)    the interest rates of the Government Securities or the formula
                 to determine such rates, if any,

         (v)     the applicable payment provisions for the Government Securities
                 and

         (vi)    to what extent, if any, the obligation evidenced thereby is
                 backed by the full faith and credit of the United States.

PRE-FUNDING ACCOUNT

         To the extent provided in a Prospectus Supplement, the Depositor will
be obligated (subject only to the availability thereof) to sell at a
predetermined price, and the Trust Fund for the related series of Securities
will be obligated to purchase (subject to the satisfaction of certain conditions
described in the applicable Agreement), additional Assets (the "Subsequent
Assets") from time to time (as frequently as daily) within the number of months
specified in the related Prospectus Supplement after the issuance of such series
of Securities having an aggregate principal balance approximately equal to the
amount on deposit in the Pre-Funding Account (the "Pre-Funded Amount") for such
series on date of such issuance.

ACCOUNTS

         Each Trust Fund will include one or more accounts established and
maintained on behalf of the Securityholders into which the person or persons
designated in the related Prospectus Supplement will, to the extent described
herein 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 therein 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 Agreement--Collection
Account and Related Accounts."

CREDIT SUPPORT

         If so provided in the related Prospectus Supplement, partial or full
protection against certain defaults and losses on the Assets in the related
Trust Fund may be provided to one or more classes of Securities in the related
series in the form of subordination of one or more other classes of Securities
in such series and/or by one or more other types of credit support, such as a
letter of credit, insurance policy, guarantee, reserve fund or other type of
credit support consistent with the foregoing, or a combination thereof (any such
coverage with respect to the Securities of any series, "Credit Support"). 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 Securities. See "Risk Factors--Credit Support Limitations" and
"Description of Credit Support."

                                        12



CASH FLOW AGREEMENTS

         If so provided in the related Prospectus Supplement, the Trust Fund may
include guaranteed investment contracts pursuant to which moneys held in the
funds and accounts established for the related series will be invested at a
specified rate. The Trust Fund may also include one or more of the following
agreements: interest rate exchange agreements, interest rate cap or floor
agreements, currency exchange agreements, other swaps and derivative instruments
or other agreements consistent with the foregoing. The principal terms of any
such agreement (any such agreement, a "Cash Flow Agreement"), including, without
limitation, provisions relating to the timing, manner and amount of payments
thereunder and provisions relating to the termination thereof, will be described
in the Prospectus Supplement for the related series. In addition, the related
Prospectus Supplement will provide certain information with respect to the
obligor under any such Cash Flow Agreement.

                                 USE OF PROCEEDS

         The net proceeds to be received from the sale of the Securities will be
applied by the Depositor to the purchase of Assets, or the payment of the
financing incurred in such purchase, and to pay for certain expenses incurred in
connection with such purchase of Assets and sale of Securities. The Depositor
expects to sell the Securities from time to time, but the timing and amount of
offerings of Securities will depend on a number of factors, including the volume
of Assets acquired by the Depositor, prevailing interest rates, availability of
funds and general market conditions.

                              YIELD CONSIDERATIONS

GENERAL

         The yield on any Offered Security will depend on the price paid by the
Securityholder, the Pass-Through Rate or interest rate of the Security, the
receipt and timing of receipt of distributions on the Security 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 AND INTEREST RATE

         Securities of any class within a series may have fixed, variable or
adjustable Pass-Through Rates or interest 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 Securities will specify the
Pass-Through Rate or interest rate for each class of such Securities or, in the
case of a variable or adjustable Pass-Through Rate or interest rate, the method
of determining the Pass-Through Rate or interest rate; the effect, if any, of
the prepayment of any Asset on the Pass-Through Rate or interest rate of one or
more classes of Securities; and whether the distributions of interest on the
Securities of any class will be dependent, in whole or in part, on the
performance of any obligor under a Cash Flow Agreement.

         If so specified in the related Prospectus Supplement, the effective
yield to maturity to each holder of Securities entitled to payments of interest
will be below that otherwise produced by the applicable Pass-Through Rate or
interest rate and purchase price of such Security because, while interest may
accrue on each Asset during a certain period, the distribution of such 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 Securities (or addition to the Security
Balance of a class of Accrual Securities) on a Distribution Date will include
interest accrued during the Interest Accrual Period for such Distribution Date.
As indicated above under "--Pass-Through Rate and Interest Rate," if the
Interest Accrual Period ends on a date other than the day before a Distribution
Date for the related series,

                                        13


the yield realized by the holders of such Securities may be lower than the yield
that would result if the Interest Accrual Period ended on such day before the
Distribution Date.

PAYMENTS OF PRINCIPAL; PREPAYMENTS

         The yield to maturity on the Securities 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, such Mortgage Loans are likely
to be the subject of higher principal prepayments than if prevailing rates
remain at or above the rates borne by such Mortgage Loans. In this regard, it
should be noted that certain Assets may consist of Mortgage Loans with different
Mortgage Rates and the stated pass-through or pay-through interest rate of
certain MBS 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 Securities of a series will correspond to the rate of principal
payments on the Assets in the related Trust Fund. Mortgage Loans with 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 such provisions or with lower Prepayment
Premiums.

         If the purchaser of a Security 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 Security 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 Securities, the effect on yield on
one or more classes of the Securities of such 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 such
classes.

         Unless otherwise specified in the related Prospectus Supplement, when a
full prepayment is made on a Mortgage Loan, the obligor 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. Unless otherwise
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 Securities 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. Unless otherwise 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 such partial prepayment is received.

         The timing of changes in the rate of principal payments on the Assets
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 Assets and distributed on a Security, the greater the effect on such
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.

         The Securityholder will bear the risk of being able to reinvest
principal received in respect of a Security at a yield at least equal to the
yield on such Security.

                                        14


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
Securities may affect the ultimate maturity and the weighted average life of
each class of such series. Prepayments on the Mortgage Loans comprising or
underlying the Assets in a particular Trust Fund will generally accelerate the
rate at which principal is paid on some or all of the classes of the Securities
of the related series.

         If so provided in the Prospectus Supplement for a series of Securities,
one or more classes of Securities may have a final scheduled Distribution Date,
which is the date on or prior to which the Security Balance thereof is scheduled
to be reduced to zero, calculated on the basis of the assumptions applicable to
such series set forth therein.

         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
such security will be repaid to the investor. The weighted average life of a
class of Securities of a series will be influenced by the rate at which
principal on the Mortgage Loans comprising or underlying the Assets is paid to
such class, which may be in the form of scheduled amortization or prepayments
(for this purpose, the term "prepayment" includes prepayments, in whole or in
part, and liquidations due to default).

         In addition, the weighted average life of the Securities may be
affected by the varying maturities of the Mortgage Loans comprising or
underlying the Assets in a Trust Fund. If any Mortgage Loans comprising or
underlying the Assets in a particular Trust Fund have actual terms to maturity
less than those assumed in calculating final scheduled Distribution Dates for
the classes of Securities of the related series, one or more classes of such
Securities 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 such 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 ("CPR")
prepayment model or the Standard Prepayment Assumption ("SPA") prepayment model,
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 such 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 such 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 Assets.

         The Prospectus Supplement with respect to each series of Securities may
contain tables, if applicable, setting forth the projected weighted average life
of each class of Offered Securities of such series and the percentage of the
initial Security Balance of each such class that would be outstanding on
specified Distribution Dates based on the assumptions stated in such 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 such other standard specified in such
Prospectus Supplement. Such tables and assumptions are intended to illustrate
the sensitivity of the weighted average life of the Securities 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
Securities. It is unlikely that prepayment of any Mortgage Loans comprising or
underlying the Assets for

                                        15


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, and because the
ability of a mortgagor 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 a number of 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 mortgagor 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
Securities, thereby lengthening the period of time elapsed from the date of
issuance of a Security until it is retired.

         With respect to certain Mortgage Loans, including ARM 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 mortgagor under each Mortgage Loan
generally will be qualified on the basis of the Mortgage Rate in effect at
origination. The repayment of any such Mortgage Loan may thus be dependent on
the ability of the mortgagor or obligor 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 ("Buydown Mortgage Loans")
pursuant to which the monthly payments made by the mortgagor during the early
years of the Mortgage Loan will be less than the scheduled monthly payments
thereon (the "Buydown Period"). The periodic increase in the amount paid by the
mortgagor of a Buydown Mortgage Loan during or at the end of the applicable
Buydown Period may create a greater financial burden for the mortgagor, 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 certain ARM 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 such index at
which interest accrues), the amount of interest accruing on the principal
balance of such 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 such deferred interest to the principal balance of any related class or
classes of Securities will lengthen the weighted average life thereof and may
adversely affect yield to holders thereof, depending upon the price at which
such Securities were purchased. In addition, with respect to certain ARM Loans
subject to negative amortization, during a period of declining interest rates,
it might be expected that each minimum scheduled monthly payment on such a
Mortgage Loan would exceed the amount of scheduled principal and accrued
interest on the principal balance thereof, and since such excess will be applied
to reduce the principal balance of the related class or classes of Securities,
the weighted average life of such Securities will be reduced and may adversely
affect yield to holders thereof, depending upon the price at which such
Securities were purchased.

Defaults

         The rate of defaults on the Mortgage Loans will also affect the rate,
timing and amount of principal payments on the Assets and thus the yield on the
Securities. 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-

                                        16



Value Ratios, may be higher than for other types of Mortgage 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 Mortgage 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 or repossessions and the principal amount of
the Mortgage Loans comprising or underlying the Assets that are foreclosed or
repossessed 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 Assets and that of the
related series of Securities.

Refinancing

         At the request of a mortgagor, the Master Servicer or a Sub-Servicer
may allow the refinancing of a Mortgage Loan in any Trust Fund by accepting
prepayments thereon and permitting a new loan secured by a mortgage on the same
property. In the event of such a refinancing, the new loan would not be included
in the related Trust Fund and, therefore, such refinancing would have the same
effect as a prepayment in full of the related Mortgage Loan. A Sub-Servicer or
the Master Servicer may, from time to time, implement programs designed to
encourage refinancing. Such 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, Sub-Servicers may encourage the
refinancing of Mortgage Loans, including defaulted Mortgage Loans, that would
permit creditworthy borrowers to assume the outstanding indebtedness of such
Mortgage Loans.

Due-on-Sale Clauses

         Acceleration of mortgage payments as a result of certain 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 Whole Loans, 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. See "Certain Legal Aspects of Mortgage Loans--Due-on-Sale Clauses" and
"Description of the Agreements--Due-on-Sale Provisions."

                                  THE DEPOSITOR

         Merrill Lynch Mortgage Investors, Inc., the Depositor, is a direct
wholly-owned subsidiary of Merrill Lynch Mortgage Capital Inc. and was
incorporated in the State of Delaware on June 13, 1986. The principal executive
offices of the Depositor are located at 250 Vesey Street, World Financial
Center, North Tower, 10th Floor, New York, New York 10218-1310. Its telephone
number is (212) 449-0357.

         The Depositor's principal business is to acquire, hold and/or sell or
otherwise dispose of cash flow assets, usually in connection with the
securitization of that asset. The Depositor does not have, nor is it expected in
the future to have, any significant assets.

                                        17



                         DESCRIPTION OF THE SECURITIES

GENERAL

         The certificates of each series (including any class of certificates
not offered hereby) (collectively, the "Certificates") will represent the entire
beneficial ownership interest in the Trust Fund created pursuant to the related
Agreement. If a series of Securities includes Notes, such Notes will represent
indebtedness of the related Trust Fund and will be issued and secured pursuant
to an indenture (an "Indenture"). Each series of Securities will consist of one
or more classes of Securities that may:

         (i)     provide for the accrual of interest thereon based on fixed,
                 variable or adjustable rates;

         (ii)    be senior (collectively, "Senior Securities") or subordinate
                 (collectively, "Subordinate Securities") to one or more other
                 classes of Securities in respect of certain distributions on
                 the Securities;

         (iii)   be entitled to principal distributions, with disproportionately
                 low, nominal or no interest distributions (collectively,
                 "Stripped Principal Securities");

         (iv)    be entitled to interest distributions, with disproportionately
                 low, nominal or no principal distributions (collectively,
                 "Stripped Interest Securities");

         (v)     provide for distributions of accrued interest thereon
                 commencing only following the occurrence of certain events,
                 such as the retirement of one or more other classes of
                 Securities of such series (collectively, "Accrual Securities");

         (vi)    provide for payments of principal as described in the related
                 Prospectus Supplement, from all or only a portion of the Assets
                 in such Trust Fund, to the extent of available funds, in each
                 case as described in the related Prospectus Supplement; and/or

         (vii)   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
                 Security component and a Stripped Interest Security component.

         If so specified in the related Prospectus Supplement, a Trust Fund may
include additional Mortgage Loans (or certain balances thereof) that will be
transferred to the Trust from time to time and/or, in the case of revolving Home
Equity loans or certain balances thereof, any additional balances advanced to
the borrowers under the revolving Home Equity loans during certain periods. If
so specified in the related Prospectus Supplement, distributions on one or more
classes of a series of Securities may be limited to collections from a
designated portion of the Whole Loans in the related Mortgage Pool (each such
portion of Whole Loans, a "Mortgage Loan Group"). Any such classes may include
classes of Offered Securities.

         Each class of Offered Securities of a series will be issued in minimum
denominations corresponding to the Security Balances or, in case of Stripped
Interest Securities, notional amounts or percentage interests specified in the
related Prospectus Supplement. The transfer of any Offered Securities may be
registered and such Securities may be exchanged without the payment of any
service charge payable in connection with such registration of transfer or
exchange, but the Depositor 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 Securities of a series may be issued in definitive form
("Definitive Securities") or in book-entry form ("Book-Entry Securities"), as
provided in the related Prospectus Supplement. See "Risk Factors--Book-Entry
Registration" and "Description of the Securities--Book-Entry Registration and
Definitive Securities." Definitive Securities will be exchangeable for other
Securities of the same class and series of a like aggregate Security Balance,
notional amount or percentage interest but of different authorized
denominations. See "Risk Factors--Limited Liquidity" and "--Limited Assets."

                                        18



DISTRIBUTIONS

         Distributions on the Securities 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 such series and
such 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 Securities are registered at the close of
business on the last business day of the month preceding the month in which the
Distribution Date occurs (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 (the "Determination Date"). All
distributions with respect to each class of Securities on each Distribution Date
will be allocated pro rata among the outstanding Securities in such class or by
random selection, as described in the related Prospectus Supplement or otherwise
established by the related Trustee. Payments will be made either by wire
transfer in immediately available funds to the account of a Securityholder at a
bank or other entity having appropriate facilities therefor, if such
Securityholder has so notified the Trustee or other person required to make such
payments no later than the date specified in the related Prospectus Supplement
(and, if so provided in the related Prospectus Supplement, holds Securities in
the requisite amount specified therein), or by check mailed to the address of
the person entitled thereto as it appears on the Security Register; provided,
however, that the final distribution in retirement of the Securities (whether
Definitive Securities or Book-Entry Securities) will be made only upon
presentation and surrender of the Securities at the location specified in the
notice to Securityholders of such final distribution.

AVAILABLE DISTRIBUTION AMOUNT

         All distributions on the Securities of each series on each Distribution
Date will be made from the Available Distribution Amount described below, in
accordance with the terms described in the related Prospectus Supplement. Unless
provided otherwise in the related Prospectus Supplement, the "Available
Distribution Amount" for each Distribution Date equals the sum of the following
amounts:

         (i)     the total amount of all cash on deposit in the related
                 Collection Account as of the corresponding Determination Date,
                 exclusive of:

                 (a) all scheduled payments of principal and interest collected
                     but due on a date subsequent to the related Due Period
                     (unless the related Prospectus Supplement provides
                     otherwise, a "Due Period" with respect to any Distribution
                     Date 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),

                 (b) 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

                 (c) all amounts in the Collection Account that are due or
                     reimbursable to the Depositor, the Trustee, an Asset
                     Seller, a Sub-Servicer, 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;

         (ii)    if the related Prospectus Supplement so provides, interest or
                 investment income on amounts on deposit in the Collection
                 Account, including any net amounts paid under any Cash Flow
                 Agreements;

         (iii)   all advances made by a Master Servicer or any other entity as
                 specified in the related Prospectus Supplement with respect to
                 such Distribution Date;

                                        19



         (iv)    if and to the extent the related Prospectus Supplement so
                 provides, amounts paid by a Master 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

         (v)     unless the related Prospectus Supplement provides otherwise, to
                 the extent not on deposit in the related Collection Account as
                 of the corresponding Determination Date, any amounts collected
                 under, from or in respect of any Credit Support with respect to
                 such Distribution Date.

         As described below, the entire Available Distribution Amount will be
distributed among the related Securities (including any Securities 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 SECURITIES

         Each class of Securities (other than classes of Stripped Principal
Securities that have no Pass-Through Rate or interest rate) may have a different
Pass-Through Rate or interest rate, which will be a fixed, variable or
adjustable rate at which interest will accrue on such class or a component
thereof (the "Pass-Through Rate" in the case of Certificates). The related
Prospectus Supplement will specify the Pass-Through Rate or interest rate for
each class or component or, in the case of a variable or adjustable Pass-Through
Rate or interest rate, the method for determining the Pass-Through Rate or
interest rate. Unless otherwise specified in the related Prospectus Supplement,
interest on the Securities will be calculated on the basis of a 360-day year
consisting of twelve 30-day months.

         Distributions of interest in respect of the Securities of any class
will be made on each Distribution Date (other than any class of Accrual
Securities, 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
Securities that are not entitled to any distributions of interest) based on the
Accrued Security Interest for such class and such Distribution Date, subject to
the sufficiency of the portion of the Available Distribution Amount allocable to
such class on such Distribution Date. Prior to the time interest is
distributable on any class of Accrual Securities, the amount of Accrued Security
Interest otherwise distributable on such class will be added to the Security
Balance thereof on each Distribution Date. With respect to each class of
Securities and each Distribution Date (other than certain classes of Stripped
Interest Securities), "Accrued Security Interest" will be equal to interest
accrued for a specified period on the outstanding Security Balance thereof
immediately prior to the Distribution Date, at the applicable Pass-Through Rate
or interest rate, reduced as described below. Unless otherwise provided in the
Prospectus Supplement, Accrued Security Interest on Stripped Interest Securities
will be equal to interest accrued for a specified period on the outstanding
notional amount thereof immediately prior to each Distribution Date, at the
applicable Pass-Through Rate or interest rate, reduced as described below. The
method of determining the notional amount for any class of Stripped Interest
Securities 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 Security Interest on a series of Securities 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 such accrual period on the Mortgage Loans comprising or underlying the
Assets in the Trust Fund for such series. The particular manner in which such
shortfalls are to be allocated among some or all of the classes of Securities 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 Securities, that may otherwise be added to the Security Balance of) a
class of Offered Securities may be reduced as a result of any other
contingencies, including delinquencies, losses and deferred interest on or in
respect of the Mortgage Loans comprising or

                                        20


underlying the Assets in the related Trust Fund. Unless otherwise provided in
the related Prospectus Supplement, any reduction in the amount of Accrued
Security Interest otherwise distributable on a class of Securities by reason of
the allocation to such class of a portion of any deferred interest on the
Mortgage Loans comprising or underlying the Assets in the related Trust Fund
will result in a corresponding increase in the Security Balance of such class.
See "Risk Factors--Average Life of Securities; Prepayments; Yields" and "Yield
Considerations."

DISTRIBUTIONS OF PRINCIPAL OF THE SECURITIES

         The Securities of each series, other than certain classes of Stripped
Interest Securities, will have a "Security Balance" which, at any time, will
equal the then maximum amount that the holder will be entitled to receive in
respect of principal out of the future cash flow on the Assets and other assets
included in the related Trust Fund. The outstanding Security Balance of a
Security will be reduced to the extent of distributions of principal thereon
from time to time 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, may be increased in respect of deferred interest on the related
Mortgage Loans to the extent provided in the related Prospectus Supplement and,
in the case of Accrual Securities prior to the Distribution Date on which
distributions of interest are required to commence, will be increased by any
related Accrued Security Interest. Unless otherwise provided in the related
Prospectus Supplement, the initial aggregate Security Balance of all classes of
Securities 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 Security 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 Securities entitled thereto in
accordance with the provisions described in such Prospectus Supplement until the
Security Balance of such class has been reduced to zero. Stripped Interest
Securities with no Security Balance are not entitled to any distributions of
principal.

COMPONENTS

         To the extent specified in the related Prospectus Supplement,
distribution on a class of Securities may be based on a combination of two or
more different components as described under "--General" above. To such extent,
the descriptions set forth under "--Distributions of Interests on the
Securities" and "--Distributions of Principal of the Securities" above also
relate to components of such a class of Securities. In such case, reference in
such sections to Security Balance and Pass-Through Rate or interest rate refer
to the principal balance, if any, of any such component and the Pass-Through
Rate or interest rate, if any, on any such component, respectively.

ALLOCATION OF LOSSES AND SHORTFALLS

         If so provided in the Prospectus Supplement for a series of Securities
consisting of one or more classes of Subordinate Securities, on any Distribution
Date in respect of which losses or shortfalls in collections on the Assets have
been incurred, the amount of such losses or shortfalls will be borne first by a
class of Subordinate Securities in the priority and manner and subject to the
limitations specified in such 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 Assets comprising such Trust Fund.

ADVANCES IN RESPECT OF DELINQUENCIES

         With respect to any series of Securities evidencing an interest in a
Trust Fund, unless otherwise provided in the related Prospectus Supplement, the
Master Servicer or another entity described therein 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 Collection Account that are not included in
the Available Distribution Amount for such 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) that were due on
the Whole Loans in such Trust Fund during the related Due Period and were
delinquent on the related

                                        21



Determination Date, subject to the Master Servicer's (or another entity's) good
faith determination that such advances will be reimbursable from Related
Proceeds (as defined below). In the case of a series of Securities that includes
one or more classes of Subordinate Securities 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 such delinquencies necessary to
make the required distributions on one or more classes of Senior Securities
and/or may be subject to the Master Servicer's (or another entity's) good faith
determination that such advances will be reimbursable not only from Related
Proceeds but also from collections on other Assets otherwise distributable on
one or more classes of such Subordinate Securities. 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
entitled thereto, rather than to guarantee 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
recoveries on the Mortgage Loans (including amounts received under any form of
Credit Support) respecting which such advances were made (as to any Mortgage
Loan, "Related Proceeds") and, if so provided in the Prospectus Supplement, out
of any amounts otherwise distributable on one or more classes of Subordinate
Securities of such series; provided, however, that any such advance will be
reimbursable from any amounts in the Collection Account prior to any
distributions being made on the Securities to the extent that the Master
Servicer (or such other entity) shall determine in good faith that such advance
(a "Nonrecoverable Advance") is not ultimately recoverable from Related Proceeds
or, if applicable, from collections on other Assets otherwise distributable on
such Subordinate Securities. If advances have been made by the Master Servicer
from excess funds in the Collection Account, the Master Servicer is required to
replace such funds in the Collection Account on any future Distribution Date to
the extent that funds in the Collection Account on such Distribution Date are
less than payments required to be made to Securityholders on such 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 such 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 therein on its outstanding advances and will be entitled to
pay itself such interest periodically from general collections on the Assets
prior to any payment to Securityholders or as otherwise provided in the related
Agreement and described in such Prospectus Supplement.

         The Prospectus Supplement for any series of Securities evidencing an
interest in a Trust Fund that includes MBS will describe any corresponding
advancing obligation of any person in connection with such MBS.

REPORTS TO SECURITYHOLDERS

         Unless otherwise provided in the Prospectus Supplement, with each
distribution to holders of any class of Securities of a series, the Master
Servicer or the Trustee, as provided in the related Prospectus Supplement, will
forward or cause to be forwarded to each such holder, to the Depositor and to
such other parties as may be specified in the related Agreement, a statement
setting forth, in each case to the extent applicable and available:

         (i)     the amount of such distribution to holders of Securities of
                 such class applied to reduce the Security Balance thereof;

         (ii)    the amount of such distribution to holders of Securities of
                 such class allocable to Accrued Security Interest;

         (iii)   the amount of such distribution allocable to Prepayment
                 Premiums;

                                        22


         (iv)    the amount of related servicing compensation received by a
                 Master Servicer (and, if payable directly out of the related
                 Trust Fund, by any Sub-Servicer) and such other customary
                 information as any such Master Servicer or the Trustee deems
                 necessary or desirable, or that a Securityholder reasonably
                 requests, to enable Securityholders to prepare their tax
                 returns;

         (v)     the aggregate amount of advances included in such distribution,
                 and the aggregate amount of unreimbursed advances at the close
                 of business on such Distribution Date;

         (vi)    the aggregate principal balance of the Assets at the close of
                 business on such Distribution Date;

         (vii)   the number and aggregate principal balance of Whole Loans in
                 respect of which:

                 (a) one scheduled payment is delinquent,

                 (b) two scheduled payments are delinquent,

                 (c) three or more scheduled payments are delinquent, and

                 (d) foreclosure proceedings have been commenced;

         (viii)  with respect to any Whole Loan liquidated during the related
                 Due Period, the portion of such liquidation proceeds payable or
                 reimbursable to the Master Servicer (or any other entity) in
                 respect of such Mortgage Loan, and the amount of any loss to
                 Securityholders;

         (ix)    with respect to each REO Property relating to a Whole Loan and
                 included in the Trust Fund as of the end of the related Due
                 Period, the loan number of the related Mortgage Loan and the
                 date of acquisition;

         (x)     with respect to each REO Property relating to a Whole Loan and
                 included in the Trust Fund as of the end of the related Due
                 Period:

                 (a) the book value,

                 (b) the principal balance of the related Mortgage Loan
                     immediately following such Distribution Date (calculated as
                     if such Mortgage Loan were still outstanding taking into
                     account certain limited modifications to the terms thereof
                     specified in the Agreement),

                 (c) the aggregate amount of unreimbursed servicing expenses and
                     unreimbursed advances in respect thereof, and

                 (d) if applicable, the aggregate amount of interest accrued and
                     payable on related servicing expenses and related advances;

         (xi)    with respect to any such REO Property sold during the related
                 Due Period:

                 (a) the aggregate amount of sale proceeds,

                 (b) the portion of such sales proceeds payable or reimbursable
                     to the Master Servicer in respect of such REO Property or
                     the related Mortgage Loan; and

                 (c) the amount of any loss to Securityholders in respect of the
                     related Mortgage Loan;

         (xii)   the aggregate Security Balance or notional amount, as the case
                 may be, of each class of Securities (including any class of
                 Securities not offered hereby) at the close of business on such
                 Distribution Date, separately identifying any reduction in such
                 Security Balance due to the allocation of any loss and increase
                 in the Security Balance of a class of Accrual Securities in the
                 event that Accrued Security Interest has been added to such
                 balance;

         (xiii)  the aggregate amount of principal prepayments made during the
                 related Due Period;

                                        23


         (xiv)   the amount deposited in the reserve fund, if any, on such
                 Distribution Date;

         (xv)    the amount remaining in the reserve fund, if any, as of the
                 close of business on such Distribution Date;

         (xvi)   the aggregate unpaid Accrued Security Interest, if any, on each
                 class of Securities at the close of business on such
                 Distribution Date;

         (xvii)  in the case of Securities with a variable Pass-Through Rate or
                 interest rate, the Pass-Through Rate or interest rate
                 applicable to such Distribution Date, and, if available, the
                 immediately succeeding Distribution Date, as calculated in
                 accordance with the method specified in the related Prospectus
                 Supplement;

         (xviii) in the case of Securities with an adjustable Pass-Through Rate
                 or interest rate, for statements to be distributed in any month
                 in which an adjustment date occurs, the adjustable Pass-Through
                 Rate or interest rate applicable to such Distribution Date, if
                 available, and the immediately succeeding Distribution Date as
                 calculated in accordance with the method specified in the
                 related Prospectus Supplement;

         (xix)   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 such Distribution Date; and

         (xx)    the aggregate amount of payments by the obligors of default
                 interest, late charges and assumption and modification fees
                 collected during the related Due Period.

         In the case of information furnished pursuant to subclauses (i)-(iv)
above, the amounts shall be expressed as a dollar amount per minimum
denomination of Securities or for such other specified portion thereof. In
addition, in the case of information furnished pursuant to subclauses (i), (ii),
(xii), (xvi) and (xvii) above, such amounts shall also be provided with respect
to each component, if any, of a class of Securities. The Master Servicer or the
Trustee, as specified in the related Prospectus Supplement, will forward or
cause to be forwarded to each holder, to the Depositor and to such other parties
as may be specified in the Agreement, a copy of any statements or reports
received by the Master Servicer or the Trustee, as applicable, with respect to
any MBS. The Prospectus Supplement for each series of Offered Securities will
describe any additional information to be included in reports to the holders of
such Securities.

         Within a reasonable period of time after the end of each calendar year,
the Master 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 Security a statement containing the information set forth
in subclauses (i)-(iv) above, aggregated for such calendar year or the
applicable portion thereof during which such person was a Securityholder. Such
obligation of the Master Servicer or the Trustee shall be deemed to have been
satisfied to the extent that substantially comparable information shall be
provided by the Master Servicer or the Trustee pursuant to any requirements of
the Code as are from time to time in force. See "Description of the
Securities--Registration and Definitive Securities."

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 Collection Account or by the Master Servicer,
if any, or the Trustee and required to be paid to them pursuant to such
Agreement following the earlier of (i) the final payment or other liquidation of
the last Asset subject thereto or the disposition of all property acquired upon
foreclosure of any Whole Loan subject thereto and (ii) the purchase of all of
the assets of the Trust Fund by the party entitled to effect such termination,
under the circumstances and in the manner set forth in the related Prospectus
Supplement. In no event, however, will the trust 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 Securityholder, and
the

                                        24



final distribution will be made only upon presentation and surrender of the
Securities at the location to be specified in the notice of termination.

         If so specified in the related Prospectus Supplement, a series of
Securities may be subject to optional early termination through the repurchase
of the assets in the related Trust Fund by the party specified therein, under
the circumstances and in the manner set forth therein. If so provided in the
related Prospectus Supplement, upon the reduction of the Security Balance of a
specified class or classes of Securities by a specified percentage or amount,
the party specified therein will solicit bids for the purchase of all assets of
the Trust Fund, or of a sufficient portion of such assets to retire such class
or classes or purchase such 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 therein.

BOOK-ENTRY REGISTRATION AND DEFINITIVE SECURITIES

         If so provided in the related Prospectus Supplement, one or more
classes of the Offered Securities of any series will be issued as Book-Entry
Securities, and each such class will be represented by one or more single
Securities registered in the name of a nominee for the depository, The
Depository Trust Company ("DTC").

         DTC is a limited-purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the Uniform Commercial Code ("UCC") and a
"clearing agency" registered pursuant to the provisions of Section 17A of the
Securities Exchange Act of 1934, as amended. DTC was created to hold securities
for its participating organizations ("Participants") and facilitate the
clearance and settlement of securities transactions between Participants through
electronic book-entry changes in their accounts, thereby eliminating the need
for physical movement of certificates. Participants include Merrill Lynch,
Pierce, Fenner & Smith Incorporated, securities brokers and dealers, banks,
trust companies and clearing corporations and may include certain other
organizations. Indirect access to the DTC system also is available to others
such as banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a Participant, either directly or
indirectly ("Indirect Participants").

         Unless otherwise provided in the related Prospectus Supplement,
investors that are not Participants or Indirect Participants but desire to
purchase, sell or otherwise transfer ownership of, or other interests in,
Book-Entry Securities may do so only through Participants and Indirect
Participants. In addition, such investors ("Security Owners") will receive all
distributions on the Book-Entry Securities through DTC and its Participants.
Under a book-entry format, Security Owners will receive payments after the
related Distribution Date because, while payments are required to be forwarded
to Cede & Co., as nominee for DTC ("Cede"), on each such date, DTC will forward
such payments to its Participants which thereafter will be required to forward
them to Indirect Participants or Security Owners. Unless otherwise provided in
the related Prospectus Supplement, the only "Securityholder" (as such term is
used in the Agreement) will be Cede, as nominee of DTC, and the Security Owners
will not be recognized by the Trustee as Securityholders under the Agreement.
Security Owners will be permitted to exercise the rights of Securityholders
under the related Agreement, Trust Agreement or Indenture, as applicable, only
indirectly through the Participants who in turn will exercise their rights
through DTC.

         Under the rules, regulations and procedures creating and affecting DTC
and its operations, DTC is required to make book-entry transfers among
Participants on whose behalf it acts with respect to the Book-Entry Securities
and is required to receive and transmit distributions of principal of and
interest on the Book-Entry Securities. Participants and Indirect Participants
with which Security Owners have accounts with respect to the Book-Entry
Securities similarly are required to make book-entry transfers and receive and
transmit such payments on behalf of their respective Security Owners.

         Because DTC can act only on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a Security
Owner to pledge its interest in the Book-Entry Securities to persons or entities
that do not participate in the DTC system, or otherwise take actions in

                                       25



respect of its interest in the Book-Entry Securities, may be limited due to the
lack of a physical certificate evidencing such interest.

         DTC has advised the Depositor that it will take any action permitted to
be taken by a Securityholder under an Agreement only at the direction of one or
more Participants to whose account with DTC interests in the Book-Entry
Securities are credited.

         Cedelbank ("CEDEL") is incorporated under the laws of Luxembourg as a
professional depository. CEDEL holds securities for its participating
organizations ("CEDEL Participants") and facilitates the clearance and
settlement of securities transactions between CEDEL Participants through
electronic book-entry changes in accounts of CEDEL Participants, thereby
eliminating the need for physical movement of certificates. Transactions may be
settled in CEDEL in any of 28 currencies, including United States dollars. CEDEL
provides to its CEDEL Participants, among other things, services for
safekeeping, administration, clearance and settlement of internationally traded
securities and securities lending and borrowing. CEDEL interfaces with domestic
markets in several countries. As a professional depository, CEDEL is subject to
regulation by the Luxembourg Monetary Institute. CEDEL Participants are
recognized financial institutions around the world, including underwriters,
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations and may include the Underwriters. Indirect
access to CEDEL is also available to others, such as banks, brokers, dealers and
trust companies that clear through or maintain a custodial relationship with a
CEDEL Participant, either directly or indirectly.

         The Euroclear System was created in 1968 to hold securities for
participants of the Euroclear System ("Euroclear Participants") and to clear and
settle transactions between Euroclear Participants through simultaneous
electronic book-entry delivery against payment, thereby eliminating the need for
physical movement of certificates and any risk from lack of simultaneous
transfers of securities and cash. Transactions may now be settled in Euroclear
in any of 32 currencies, including United States dollars. The Euroclear System
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. The Euroclear System is
operated by JPMorgan Chase Bank, Brussels, Belgium office (the "Euroclear
Operator" or "Euroclear"), under contract with Euroclear Clearance System, S.C.,
a Belgian cooperative corporation (the "Euroclear Cooperative"). All operations
are conducted by the Euroclear Operator, and all Euroclear securities clearance
accounts and Euroclear cash accounts are accounts with the Euroclear Operator,
not the Euroclear Cooperative. The Euroclear Cooperative establishes policy for
the Euroclear System on behalf of Euroclear Participants. Euroclear Participants
include banks (including central banks), securities brokers and dealers and
other professional financial intermediaries and may include the Underwriters.
Indirect access to the Euroclear System 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 is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it is
regulated and examined by the Board of Governors of the Federal Reserve System
and the New York State Banking Department, as well as the Belgian Banking
Commission.

         Securities clearance accounts and cash accounts with the Euroclear
Operator are governed by the Terms and Conditions Governing Use of Euroclear and
the related Operating Procedures of the Euroclear System and applicable Belgian
law (collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within the Euroclear System, withdrawal of
securities and cash from the Euroclear System, and receipts of payments with
respect to securities in the Euroclear System. All securities in the Euroclear
System are held on a fungible basis without attribution of specific certificates
to specific securities clearance accounts. The Euroclear Operator acts under the
Terms and Conditions only on behalf of Euroclear Participants and has no record
of or relationship with persons holding through Euroclear Participants.

         Distributions with respect to Securities held through CEDEL or
Euroclear will be credited to the cash accounts of CEDEL Participants or
Euroclear Participants in accordance with the relevant system's

                                        26



rules and procedures, to the extent received by its Depositary. Such
distributions will be subject to tax reporting and may be subject to withholding
in accordance with relevant United States tax laws and regulations. See
"Material Federal Income Tax Consequences" in this Prospectus and "Global
Clearance, Settlement and Tax Documentation Procedures" in Annex I to the
related Prospectus Supplement. CEDEL or the Euroclear Operator, as the case may
be, will take any other action permitted to be taken by a Security under the
Indenture, Trust Agreement or Pooling and Servicing Agreement, as applicable, on
behalf of a CEDEL Participant or Euroclear Participant only in accordance with
its relevant rules and procedures and subject to its Depositary's ability to
effect such actions on its behalf through DTC.

         Cede, as nominee for DTC, will hold the Securities. CEDEL and Euroclear
will hold omnibus positions in the Securities on behalf of the CEDEL
Participants and the Euroclear Participants, respectively, through customers'
securities accounts in CEDEL's and Euroclear's names on the books of their
respective depositaries (collectively, the "Depositaries"), which in turn will
hold such positions in customers' securities accounts in the Depositaries' names
on the books of DTC.

         Transfers between DTC's participating organizations (the
"Participants") will occur in accordance with DTC rules. Transfers between CEDEL
Participants and Euroclear Participants will occur in the ordinary way in
accordance with their applicable rules and operating procedures.

         Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through CEDEL
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 its Depositary; however, such cross-market transactions will
require delivery of instructions to the relevant European international clearing
system by the counterparty in such system in accordance with its rules and
procedures and within its established deadlines (European time). The relevant
European international clearing system will, if the transaction meets its
settlement requirements, deliver instructions to its Depositary to take action
to effect final settlement on its behalf by delivering or receiving securities
in DTC, and making or receiving payment in accordance with normal procedures for
same-day funds settlement applicable to DTC. CEDEL Participants and Euroclear
Participants may not deliver instructions directly to the Depositaries.

         Because of time zone differences, credits of securities in CEDEL or
Euroclear as a result of a transaction with a Participant will be made during
the subsequent securities settlement processing, dated the business day
following the DTC settlement date, and such credits or any transactions in such
securities settled during such processing will be reported to the relevant CEDEL
Participant or Euroclear Participant on such business day. Cash received in
CEDEL or Euroclear as a result of sales of securities by or through a CEDEL
Participant or a Euroclear Participant to a Participant will be received with
value on the DTC settlement date but will be available in the relevant CEDEL or
Euroclear cash account only as of the business day following settlement in DTC.

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

         In the event that any of DTC, CEDEL or Euroclear should discontinue its
services, the Administrator would seek an alternative depository (if available)
or cause the issuance of Definitive Securities to the owners thereof or their
nominees in the manner described in the Prospectus under "Description of the
Securities--Book Entry Registration and Definitive Securities".

         Unless otherwise specified in the related Prospectus Supplement,
Securities initially issued in book-entry form will be issued in fully
registered certificated form to Security Owners or their nominees (the
"Definitive Securities"), rather than to DTC or its nominee only if (i) the
Depositor advises the Trustee in writing that DTC is no longer willing or able
to properly discharge its responsibilities as depository with respect to the
Securities and the Depositor is unable to locate a qualified successor or (ii)
the Depositor, at its option, elects to terminate the book-entry system through
DTC.

                                        27



         Upon the occurrence of either of the events described in the
immediately preceding paragraph, DTC is required to notify all Participants of
the availability through DTC of Definitive Securities for the Security Owners.
Upon surrender by DTC of the certificate or certificates representing the
Book-Entry Securities, together with instructions for reregistration, the
Trustee will issue (or cause to be issued) to the Security Owners identified in
such instructions the Definitive Securities to which they are entitled, and
thereafter the Trustee will recognize the holders of such Definitive Securities
as Securityholders under the Agreement.

                             RECOMBINABLE SECURITIES

GENERAL

         If provided in the related prospectus supplement, one or more classes
of offered securities will be recombinable securities. In each series that
includes recombinable securities, all of the classes of recombinable securities
listed on the cover page of the related prospectus supplement will be issued.
Holders of one or more of the specified classes of recombinable securities will
be entitled, upon notice and payment to the trustee of a fee, to exchange all or
a portion of such securities for proportionate interests in one or more of the
other specified classes of recombinable securities.

         The classes of recombinable securities that are exchangeable for one
another will be referred to as being "related" to one another, and related
classes of recombinable securities will be referred to as "Combinations." The
Combinations for the recombinable securities in a series, if any, will be
described in the prospectus supplement for that series.

         The classes that are to be the basis for any such exchange will be
deposited in a separate trust fund (the "Recombinable Securities Trust Fund")
established pursuant to a trust agreement between a trustee and the depositor.
The trustee of the trust fund which issues the securities described in the
related prospectus supplement may also serve as the trustee of the Recombinable
Securities Trust Fund. The Recombinable Securities Trust Fund initially will
issue classes of recombinable securities that are identical in all respects to
the classes of securities deposited in such trust fund. At any time after the
issuance of the recombinable securities, including immediately after such
issuance, the classes of recombinable securities or any portion thereof may be
exchanged for other related classes of recombinable securities that are part of
the same Combination, as specified in the related prospectus supplement.
Simultaneously with such exchange, the Recombinable Securities Trust Fund will
cancel the relevant portion or portions of the class or classes of recombinable
securities that are being exchanged and will issue the corresponding portion or
portions of the class or classes of other related recombinable securities into
which such class or classes of securities are exchangeable. Any recombinable
security received in an exchange may be subject to an unlimited amount of
exchanges thereafter. Each recombinable security issued by a Recombinable
Securities Trust Fund will represent a beneficial ownership interest in the
class or classes of securities deposited in such trust fund.

         In general, the descriptions in this prospectus of classes of
securities of a series also apply to the classes of recombinable securities of
that series, except where the context requires otherwise. For example, the
classes of recombinable securities of a series are entitled to receive
distributions of principal and/or interest, are issued in book-entry form or as
physical securities to securityholders in certain minimum denominations, may be
provided with various forms of credit enhancement, and are subject to yield and
prepayment considerations, in the same manner and to the same extent as are the
other classes of securities of such series. Similarly, the discussions under
"ERISA Considerations" and "Legal Investment" apply to recombinable securities
as well as securities.

                                        28


EXCHANGES

         The ability of a holder to exchange recombinable securities for other
recombinable securities within a Combination will be subject to three
constraints, as follows:

         o   The aggregate principal balance of the recombinable securities
             received in the exchange, immediately thereafter, must equal that
             of the recombinable securities surrendered for such exchange
             immediately prior to the exchange (for this purpose, the principal
             balance of any interest only class will always equal $0).

         o   The aggregate amount of annual interest (the "Annual Interest
             Amount") payable with respect to the recombinable securities
             received in the exchange must equal that of the recombinable
             securities surrendered for exchange.

         o   Such classes must be exchanged in the applicable proportions, if
             any, shown in the related prospectus supplement, which, as
             described below, are based at all times on the original principal
             balance (or original notional principal balances, if applicable) of
             such classes.

         Within any particular series, more than one type of Combination may
exist. For example, a class of recombinable securities with a certificate rate
that adjusts based on an index and a class of recombinable securities with a
certificate rate that adjusts inversely based on an index may be exchangeable
for a class of recombinable securities with a fixed certificate rate. Under
another Combination, a class of recombinable securities that is a principal only
class and a class of recombinable securities that is an interest only class may
be exchanged for a class of recombinable securities that is entitled to
distributions of both principal and interest. Further, a class of recombinable
securities that accretes all of its interest for a period (such accreted
interest being added to the principal of such class) and a class of recombinable
securities that is entitled to principal payments from such accretions may be
exchanged for a class of recombinable securities that is entitled to payments of
interest continuously from the first distribution date until the principal
balance thereof has been reduced to zero. Under another Combination, a class of
recombinable securities that is entitled to principal payments in accordance
with a schedule or a planned amortization class and a class of recombinable
securities that is entitled to principal payments on any distribution date only
if scheduled payments have been made on the planned amortization class may be
exchanged for a class of recombinable securities that is entitled to principal
payments continuously from the first distribution date on which it receives
principal until the principal balance thereof has been reduced to zero and that
also receives a coupon. The foregoing examples describe only some of the types
of Combinations that are possible.

         Set forth below are additional examples that illustrate in simple
mathematical terms how certain Combinations might operate. The first example
illustrates a Combination of a floating rate recombinable security and an
inverse floating rate recombinable security which are exchangeable for a single
class of recombinable securities with a fixed interest rate:



                                                                       MAXIMUM
         ORIGINAL                                                     ORIGINAL
         PRINCIPAL                                                    PRINCIPAL    INTEREST
CLASS     AMOUNT      INTEREST RATES   MAX RATE   MIN RATE   CLASS     AMOUNT       RATES
-----   -----------   --------------   --------   --------   -----   -----------   --------

RS-1    $10,000,000   LIBOR* + 0.55%     8.50%      0.55%    RS-3    $20,000,000     4.25%
RS-2    $10,000,000    7.95% - LIBOR     7.95%      0.00%


---------------
* For purposes of this example, LIBOR shall be equal to 1.375% per annum.

                                        29


         The following example illustrates a Combination in which recombinable
securities of a principal only class and recombinable securities of an interest
only class are exchanged for recombinable securities of a class that are
entitled to distributions of principal and interest:



              ORIGINAL                                MAXIMUM ORIGINAL
CLASS     PRINCIPAL AMOUNT   INTEREST RATES   CLASS   PRINCIPAL AMOUNT   INTEREST RATES
-----     ----------------   --------------   -----   ----------------   --------------

RS-IO*      $10,000,000            10%        RS-3      $10,000,000            10%
             (notional)
RS-PO**     $10,000,000             0%


---------------
 * Class RS-IO is an interest only certificate and will receive no principal
   payments.

** Class RS-PO is a principal only certificate and will receive no interest
   payments.

         In some series, a Combination may include a number of classes of
recombinable securities that may be exchanged for one another and that will
enable a holder of one of the classes of recombinable securities to exchange it
for another class of recombinable securities with a higher or lower certificate
rate. Such a Combination would require the creation of additional classes of
recombinable securities that pay down on a pro rata basis. The following table
illustrates various Combinations for a single class of recombinable securities
having a principal balance of $40,000,000 and a certificate rate of 8.50% per
annum.



              ORIGINAL                                MAXIMUM ORIGINAL
 CLASS    PRINCIPAL AMOUNT   INTEREST RATES   CLASS   PRINCIPAL AMOUNT   INTEREST RATES
-------   ----------------   --------------   -----   ----------------   --------------

RS-4        $40,000,000           8.50%       RS-5      $15,000,000           6.50%
RS-6        $25,000,000           9.00%
RS-7*       $ 2,187,500           8.00%
             (notional)
RS-4        $40,000,000           8.50%       RS-8      $23,000,000           9.50%
RS-9        $12,500,000           9.72%
RS-10**     $ 4,500,000           0.00%


---------------
 * Class RS-7 is an interest only certificate and will receive no principal
   payments.

** Class RS-10 is a principal only certificate and will receive no interest
   payments.

         The foregoing table shows the maximum amount of each other class of
recombinable securities that can be created from the related Class RS-4
recombinable security. Such Combinations could not exist concurrently in their
maximum amounts, as any Combination is limited to the amount of principal and
interest distributable on the related recombinable security to be exchanged. One
method of calculating the maximum amount that can be created in a specific
Combination is to determine the Annual Interest Amount applicable to the
recombinable security to be exchanged, and divide such interest amount by the
coupon of the desired recombinable security. The resulting principal balance can
in no case be greater than the principal balance of recombinable securities to
be exchanged. Using the first Combination in the foregoing table, if the holder
of the Class RS-4 recombinable security desires to create the Class RS-5 and
Class RS-6 recombinable securities, the holder would also have to create an
interest only recombinable security, Class RS-7. Since the Annual Interest
Amount of the Class RS-4 recombinable security is equal to $3,400,000 and the
Annual Interest Amount for the Class RS-5 recombinable security and the Class
RS-6 recombinable security is equal to $975,000 and $2,250,000, respectively,
the holder of the Class RS-4 recombinable security would have to create the
Class RS-7 interest only certificate to receive the remaining $175,000 of
interest. The notional amount of the Class RS-7 recombinable securities would be
calculated by dividing the Annual Interest Amount ($175,000) by the certificate
rate applicable thereto (8.00%) to determine the notional amount ($2,187,500).

         Similarly, if the holder of the Class RS-4 recombinable security
desires to create the Class RS-8 and Class RS-9 recombinable securities, the
holder of the Class RS-4 recombinable security would have to

                                        30



create a principal only recombinable security, Class RS-10, in order to ensure
that the principal amount of the Class RS-4 recombinable security ($40,000,000)
was maintained after the exchange and that the Annual Interest Amount applicable
to the Class RS-4 recombinable security ($3,400,000) was completely utilized.
The sum of the principal amount of the Class RS-8 recombinable security
($23,500,000) and the principal amount of the Class RS-9 recombinable security
($12,500,000) is equal to $35,500,000. The sum of the Annual Interest Amount
applicable to the Class RS-8 recombinable security ($2,185,000) and the Annual
Interest Amount applicable to the Class RS-9 recombinable security ($1,215,000)
is equal to $3,400,000. Since the total amount of Annual Interest applicable to
the Class RS-4 recombinable security has been utilized, the Class RS-10
recombinable security would not be entitled to interest, but would be required
to have a principal balance of $4,500,000.

         The foregoing examples highlight various Combinations of recombinable
securities which differ in interest characteristics (i.e., interest only
classes, principal only classes and classes which are entitled to distributions
of principal and interest). In certain series, a securityholder may also be able
to exchange its recombinable securities for other recombinable securities that
have different principal payment characteristics. For example, an exchange of
two or more classes of recombinable securities for a single class of
recombinable securities may result in a recombinable security with the aggregate
principal payment characteristics of the classes of recombinable securities for
which it was exchanged. In addition, in certain series, recombinable securities
may be exchangeable for other recombinable securities with different credit
characteristics. For example, a class that is senior in priority of payment may
be combined with a subordinated class, to create a new class with the aggregate
credit characteristics of the two classes that were combined.

         At any given time, a number of factors will limit a securityholder's
ability to exchange recombinable securities for other recombinable securities. A
securityholder must, at the time of the proposed exchange, own the class or
classes which are permitted to be exchanged in the proportions necessary to
effect the desired exchange. A securityholder that does not own such class or
classes or the necessary amounts of such class or classes may not be able to
obtain the desired class or classes of recombinable securities. The
securityholder of a class of recombinable securities may be unable or unwilling
to sell such securities or the sale of such recombinable securities may be
subject to certain transfer restrictions imposed by the structure of the
transaction or applicable law, such as the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"). In addition, the amount and timing of
principal payments to the securityholders will, over time, diminish the amounts
available for a desired exchange.

PROCEDURES AND EXCHANGE PROPORTIONS

         To effect an exchange, a securityholder must notify the trustee or
follow other procedures as described in the related prospectus supplement. The
securityholder must give such notice in writing or by telefax not later than
five business days before the proposed exchange date (which date, subject to the
trustee's approval, can be any business day other than the first or last
business day of the month) or as otherwise specified in the related prospectus
supplement. The notice must include the outstanding principal (or notional
principal) amount of the securities to be exchanged and the securities to be
received, and the proposed exchange date. Promptly after the securityholder has
given the required notice, the trustee will provide instructions for delivering
the securities and the payment of the administrative fee to the trustee by wire
transfer. A securityholder's notice becomes irrevocable on the second business
day before the proposed exchange date or as otherwise specified in the related
prospectus supplement.

         An exchanging securityholder will pay an administrative fee to the
trustee in connection with each exchange as specified in the related prospectus
supplement. In the case of recombinable securities issued in book-entry form,
any exchanges will be subject to the rules, regulations and procedures
applicable to DTC's book-entry securities.

         Where exchange proportions are shown in the related prospectus
supplement for classes of recombinable securities, the Issuer will follow the
convention of basing such proportions on the original,

                                        31


rather than on the outstanding, principal or notional principal amounts of such
classes. If such classes receive principal payments pro rata with each other,
the exchange proportions also will apply to their outstanding principal amounts.
If such classes do not receive principal payments pro rata with each other, an
investor can calculate current exchange proportions for such classes, based on
their outstanding principal amounts, by (1) multiplying the exchange proportion
shown in the related prospectus supplement for each such class by its current
Class Factor (as defined below) and (2) dividing each resulting percentage by
the sum of such percentages. The trustee will include the Class Factor for each
class of outstanding recombinable securities having a principal amount in the
statements it furnishes to securityholders in connection with each distribution
date. The current Class Factor also will be available to securityholders from
the depositor or the trustee upon request as specified in the related prospectus
supplement. The "Class Factor" for any month will be a truncated seven-digit
decimal which, when multiplied by the original principal amount of that class,
will equal its remaining principal amount, after giving effect to any payment of
(or addition to) principal to be made on the distribution date in the following
month. A Class Factor for each interest only class having a notional principal
amount will be included in the statements the trustee furnishes to
securityholders in connection with each distribution date and also will be
available to securityholders from the depositor or the trustee upon request as
specified in the related prospectus supplement. Such a Class Factor will reflect
the remaining notional principal amount of the interest only class in an
analogous manner.

         The first payment on a recombinable security received in an exchange
transaction will be made on the distribution date in the month following the
month of the exchange or as specified in the related prospectus supplement. Such
payment will be made to the securityholder of record as of the applicable record
date.

                          DESCRIPTION OF THE AGREEMENTS

AGREEMENTS APPLICABLE TO A SERIES

         REMIC Certificates, Grantor Trust Certificates. Certificates that are
REMIC Certificates, Grantor Trust Certificates or indebtedness for tax purposes
will be issued, and the related Trust Fund will be created, pursuant to a
pooling and servicing agreement (a "Pooling and Servicing Agreement") among the
Depositor, the Master Servicer and the Trustee. The Assets of such Trust Fund
will be transferred to the Trust Fund and thereafter serviced in accordance with
the terms of the Pooling and Servicing Agreement. In the context of the
conveyance and servicing of the related Assets, the Pooling and Servicing
Agreement or the Trust Agreement, as applicable, may be referred to herein as
the "Agreement". If specified in the related Prospectus Supplement, certificates
that are REMIC Certificates, Grantor Trust Certificates or indebtedness for tax
purposes will be issued, and the related Trust Fund will be created, pursuant to
a Trust Agreement (a "Trust Agreement") between the Depositor and the Trustee.
Unless otherwise described in the related Prospectus Supplement, the Assets of
such Trust Fund will be serviced by one or more Master Servicers or servicers
pursuant to one or more servicing agreements between the Trustee and the Master
Servicer or servicer, as applicable (each, a "Servicing Agreement"), each of
which may also be referred to herein as the "Agreement". If the Assets of the
Trust Fund for such a series consists only of Government Securities or MBS, such
Assets will be conveyed to the Trust Fund and administered pursuant to a Trust
Agreement between the Depositor and the Trustee, which may also be referred to
herein as the "Agreement".

         Certificates That Are Partnership Interests for Tax Purposes and Notes.
Certificates that are partnership interests for tax purposes will be issued, and
the related Trust Fund will be created, pursuant to a Trust Agreement between
the Depositor and the Trustee. The Assets of the related Trust Fund will be
transferred to the Trust Fund and thereafter serviced in accordance with a
servicing agreement (a "Servicing Agreement") among the Depositor, the Servicer
and the Trustee. In the context of the conveyance and servicing of the related
Assets, a Servicing Agreement may be referred to herein as the "Agreement".

                                        32


         A series of Notes issued by a Trust Fund will be issued pursuant to the
indenture (the "Indenture") between the related Trust Fund and an indenture
trustee (the "Indenture Trustee") named in the related Prospectus Supplement.

         Notwithstanding the foregoing, if the Assets of a Trust Fund consist
only of MBS or Government Securities, such Assets will be conveyed to the Trust
Fund and administered in accordance with the terms of the Trust Agreement, which
in such context may be referred to herein as the Agreement.

         General. Any Master Servicer and the Trustee with respect to any series
of Securities will be named in the related Prospectus Supplement. In any series
of Securities for which there are multiple Master Servicers, there may also be
multiple Mortgage Loan Groups, each corresponding to a particular Master
Servicer; and, if the related Prospectus Supplement so specifies, the servicing
obligations of each such Master Servicer will be limited to the Whole Loans in
such corresponding Mortgage Loan Group. In lieu of appointing a Master Servicer,
a servicer may be appointed pursuant to the Agreement for any Trust Fund. Such
servicer will service all or a significant number of Whole Loans directly
without a Sub-Servicer. Unless otherwise specified in the related Prospectus
Supplement, the obligations of any such servicer shall be commensurate with
those of the Master Servicer described herein. References in this Prospectus to
Master Servicer and its rights and obligations, unless otherwise specified in
the related Prospectus Supplement, shall be deemed to also be references to any
servicer servicing Whole Loans directly. A manager or administrator may be
appointed pursuant to the Trust Agreement for any Trust Fund to administer such
Trust Fund. The provisions of each Agreement will vary depending upon the nature
of the Securities to be issued thereunder and the nature of the related Trust
Fund. Forms of a Pooling and Servicing Agreement, a Sale and Servicing Agreement
and a Trust Agreement have been filed as exhibits to the Registration Statement
of which this Prospectus is a part.

         The following summaries describe certain provisions that may appear in
each Agreement. The Prospectus Supplement for a series of Securities will
describe any provision of the Agreement relating to such 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 such provisions in the related Prospectus
Supplement. As used herein with respect to any series, the term "Security"
refers to all of the Securities of that series, whether or not offered hereby
and by the related Prospectus Supplement, unless the context otherwise requires.
The Depositor will provide a copy of the Agreement (without exhibits) relating
to any series of Securities without charge upon written request of a holder of a
Security of such series addressed to Merrill Lynch Mortgage Investors, Inc., 250
Vesey Street, World Financial Center, North Tower, 10th Floor, New York, New
York 10281-1310. Attention: Jack Ross.

ASSIGNMENT OF ASSETS; REPURCHASES

         At the time of issuance of any series of Securities, the Depositor 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 such Assets after the Cut-off Date, other than
principal and interest due on or before the Cut-off Date and other than any
Retained Interest. The Trustee will, concurrently with such assignment, deliver
the Securities to the Depositor in exchange for the Assets and the other assets
comprising the Trust Fund for such series. Each Asset will be identified in a
schedule appearing as an exhibit to the related Agreement. Unless otherwise
provided in the related Prospectus Supplement, such schedule will include
detailed information (i) in respect of each Whole Loan included in the related
Trust Fund, including without limitation, the address of the related Mortgaged
Property and type of such 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 (ii) in
respect of each MBS included in the related Trust Fund, including without
limitation, the MBS Issuer, MBS Servicer and MBS Trustee, the pass-through or
bond rate or formula for determining such rate, the issue date and original and
remaining

                                        33


term to maturity, if applicable, the original and outstanding principal amount
and payment provisions, if applicable.

         With respect to each Whole Loan, except as otherwise specified in the
related Prospectus Supplement, the Depositor will deliver or cause to be
delivered to the Trustee (or to the custodian hereinafter referred to) certain
loan documents, which unless otherwise specified in the related Prospectus
Supplement will include the original Mortgage Note endorsed, without recourse,
in blank or to the order of the Trustee, the original Mortgage (or a certified
copy thereof) with evidence of recording indicated thereon and 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 the Depositor 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 such Mortgage Loans, the Trustee (or its nominee) may not be able to
enforce the Mortgage Note against the related borrower. Unless otherwise
specified in the related Prospectus Supplement, the Asset Seller will be
required to agree to repurchase, or substitute for, each such 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 the Depositor or another party specified therein to
promptly cause each such assignment of Mortgage to be recorded in the
appropriate public office for real property records, except in the State of
California or in other states where, in the opinion of counsel acceptable to the
Trustee, such recording is not required to protect the Trustee's interest in the
related Whole Loan against the claim of any subsequent transferee or any
successor to or creditor of the Depositor, the Master Servicer, the relevant
Asset Seller or any other prior holder of the Whole Loan.

         The Trustee (or a custodian) will review such Whole Loan documents
within a specified period of days after receipt thereof, and the Trustee (or a
custodian) will hold such documents in trust for the benefit of the
Certificateholders. Unless otherwise specified in the related Prospectus
Supplement, if any such document is found to be missing or defective in any
material respect, the Trustee (or such custodian) shall immediately notify the
Master Servicer and the Depositor, 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 such 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 such
notice, to repurchase the related Whole Loan from the Trustee at the Purchase
Price or substitute for such Mortgage Loan. There can be no assurance that an
Asset Seller will fulfill this repurchase or substitution obligation, and
neither the Master Servicer nor the Depositor will be obligated to repurchase or
substitute for such Mortgage Loan if the Asset Seller defaults on its
obligation. Unless otherwise 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 such Asset, the Asset Seller may agree to cover
any losses suffered by the Trust Fund as a result of such breach or defect.

         Notwithstanding the preceding two paragraphs, unless otherwise
specified in the related Prospectus Supplement, the documents with respect to
Home Equity Loans, Home Improvement Contracts and Manufactured Housing Contracts
will not be delivered to the Trustee (or a custodian), but will be retained by
the Master Servicer, which may also be the Asset Seller. In addition,
assignments of the related Mortgages to the Trustee will not be recorded, unless
otherwise provided in the related Prospectus Supplement.

         With respect to each Government Security or MBS in certificated form,
the Depositor will deliver or cause to be delivered to the Trustee (or the
custodian) the original certificate or other definitive evidence of such
Government Security or MBS, as applicable, together with bond power or other
instruments, certifications or documents required to transfer fully such
Government Security or MBS, as applicable, to the Trustee for the benefit of the
Certificateholders. With respect to each Government Security or MBS in
uncertificated or book-entry form or held through a "clearing corporation"
within the

                                        34



meaning of the UCC, the Depositor and the Trustee will cause such Government
Security or MBS to be registered directly or on the books of such clearing
corporation or of one or more securities intermediaries in the name of the
Trustee for the benefit of the Securityholders. Unless otherwise provided in the
related Prospectus Supplement, the related Agreement will require that either
the Depositor or the Trustee promptly cause any MBS 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.

REPRESENTATIONS AND WARRANTIES; REPURCHASES

         Unless otherwise provided in the related Prospectus Supplement the
Depositor will, with respect to each Whole Loan, assign certain representations
and warranties, as of a specified date (the person making such representations
and warranties, the "Warranting Party") covering, by way of example, the
following types of matters:

         (i)     the accuracy of the information set forth for such Whole Loan
                 on the schedule of Assets appearing as an exhibit to the
                 related Agreement;

         (ii)    the existence of title insurance insuring the lien priority of
                 the Whole Loan;

         (iii)   the authority of the Warranting Party to sell the Whole Loan;

         (iv)    the payment status of the Whole Loan;

         (v)     in the case of a Whole Loan, 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

         (vi)    the existence of hazard and extended perils insurance coverage
                 on the Mortgaged Property.

         Any Warranting Party shall be an Asset Seller or an affiliate thereof
or such other person acceptable to the Depositor and shall be identified in the
related Prospectus Supplement.

         Representations and warranties made in respect of a Whole 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 such date and the date of initial
issuance of the related series of Certificates evidencing an interest in such
Whole Loan. Unless otherwise specified in the related Prospectus Supplement, in
the event of a breach of any such representation or warranty, the Warranting
Party will be obligated to reimburse the Trust Fund for losses caused by any
such breach or either cure such breach or repurchase or replace the affected
Whole Loan as described below. Since the representations and warranties may not
address events that may occur following the date as of which they were made, the
Warranting 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 such date.
Such party would have no such obligations if the relevant event that causes such
breach occurs after such date.

         Unless otherwise provided in the related Prospectus Supplement, each
Agreement will provide that the Master Servicer and/or Trustee will be required
to notify promptly the relevant Warranting Party of any breach of any
representation or warranty made by it in respect of a Whole Loan that materially
and adversely affects the value of such Whole Loan or the interests therein of
the Securityholders. If such Warranting Party cannot cure such breach within a
specified period following the date on which such party was notified of such
breach, then such Warranting Party will be obligated to repurchase such Whole
Loan from the Trustee within a specified period from the date on which the
Warranting Party was notified of such breach, at the Purchase Price therefor. As
to any Whole Loan, unless otherwise specified in the related Prospectus
Supplement, the "Purchase Price" is equal to the sum of the unpaid principal
balance thereof, plus unpaid accrued interest thereon 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. If so provided in the Prospectus
Supplement for a series, a Warranting Party, rather than repurchase a Whole Loan
as to which a breach has occurred, will have the option, within a specified
period after initial issuance of such series of

                                        35


Certificates, to cause the removal of such Whole Loan from the Trust Fund and
substitute in its place one or more other Whole Loans in accordance with the
standards described in the related Prospectus Supplement. If so provided in the
Prospectus Supplement for a series, a Warranting Party, rather than repurchase
or substitute a Whole Loan as to which a breach has occurred, will have the
option to reimburse the Trust Fund or the Securityholders for any losses caused
by such breach. Unless otherwise specified in the related Prospectus Supplement,
this reimbursement, repurchase or substitution obligation will constitute the
sole remedy available to holders of Securities or the Trustee for a breach of
representation by a Warranting Party.

         Neither the Depositor (except to the extent that it is the Warranting
Party) nor the Master Servicer will be obligated to purchase or substitute for a
Whole Loan if a Warranting Party defaults on its obligation to do so, and no
assurance can be given that Warranting Parties will carry out such obligations
with respect to Whole Loans.

         Unless otherwise provided in the related Prospectus Supplement the
Warranting Party will, with respect to a Trust Fund that includes Government
Securities or MBS, make or assign certain representations or warranties, as of a
specified date, with respect to such Government Securities or MBS, covering the
accuracy of the information set forth therefor on the schedule of Assets
appearing as an exhibit to the related Agreement and covering the authority of
the Warranting Party to sell such 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 such representation of
the Master Servicer which materially and adversely affects the interests of the
Certificateholders and which continues unremedied for the number of days
specified in the Agreement after the giving of written notice of such breach to
the Master Servicer by the Trustee or the Depositor, or to the Master Servicer,
the Depositor and the Trustee by the holders of Certificates evidencing not less
than 25% of the Voting Rights (unless otherwise specified in the related
Prospectus Supplement), will constitute an Event of Default under such Pooling
and Servicing Agreement. See "Events of Default" and "Rights Upon Event of
Default".

COLLECTION ACCOUNT AND RELATED ACCOUNTS

General

         The Master Servicer and/or the Trustee will, as to each Trust Fund,
establish and maintain or cause to be established and maintained one or more
separate accounts for the collection of payments on the related Assets
(collectively, the "Collection Account"), which must be either

         (i)     an account or accounts the deposits in which are insured by the
                 Federal Deposit Insurance Corporation ("FDIC") (to the limits
                 established by the FDIC) and, if so specified in the related
                 Prospectus Supplement, the uninsured deposits in which are
                 otherwise secured such that the Trustee have a claim with
                 respect to the funds in the Collection Account or a perfected
                 first priority security interest against any collateral
                 securing such funds that is superior to the claims of any other
                 depositors or general creditors of the institution with which
                 the Collection Account is maintained or

         (ii)    otherwise maintained with a bank or trust company, and in a
                 manner, satisfactory to the Rating Agency or Agencies rating
                 any class of Securities of such series.

         The collateral eligible to secure amounts in the Collection Account is
limited to United States government securities and other investment grade
obligations specified in the Agreement ("Permitted Investments"). A Collection
Account may be maintained as an interest bearing or a non-interest bearing
account and the funds held therein may be invested pending each succeeding
Distribution Date in certain short-term Permitted Investments. Unless otherwise
provided in the related Prospectus Supplement, any interest or other income
earned on funds in the Collection Account will be paid to a Master Servicer or
its designee as additional servicing compensation. The Collection Account may be
maintained with an

                                        36


institution that is an affiliate of the Master Servicer, if applicable, provided
that such 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 Collection 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.

Deposits

         A Master Servicer or the Trustee will deposit or cause to be deposited
in the Collection 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):

         (i)     all payments on account of principal, including principal
                 prepayments, on the Assets;

         (ii)    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 Sub-Servicer as its
                 servicing compensation and net of any Retained Interest;

         (iii)   all proceeds of the hazard insurance policies to be maintained
                 in respect of each Mortgaged Property securing a Whole Loan in
                 the Trust Fund (to the extent such proceeds are not applied to
                 the restoration of the property or released to the mortgagor in
                 accordance with the normal servicing procedures of a Master
                 Servicer or the related Sub-Servicer, subject to the terms and
                 conditions of the related Mortgage and Mortgage Note)
                 (collectively, "Insurance Proceeds") and all other amounts
                 received and retained in connection with the liquidation of
                 defaulted Mortgage Loans in the Trust Fund, by foreclosure or
                 otherwise ("Liquidation Proceeds"), together with the net
                 proceeds on a monthly basis with respect to any Mortgaged
                 Properties acquired for the benefit of Securityholders by
                 foreclosure or by deed in lieu of foreclosure or otherwise;

         (iv)    any amounts paid under any instrument or drawn from any fund
                 that constitutes Credit Support for the related series of
                 Securities as described under "Description of Credit Support";

         (v)     any advances made as described under "Description of the
                 Securities--Advances in Respect of Delinquencies";

         (vi)    any amounts paid under any Cash Flow Agreement, as described
                 under "Description of the Trust Funds--Cash Flow Agreements";

         (vii)   all proceeds of any Asset or, with respect to a Whole Loan,
                 property acquired in respect thereof purchased by the
                 Depositor, any Asset Seller or any other specified person as
                 described under "Assignment of Assets; Repurchases" and
                 "Representations and Warranties; Repurchases," all proceeds of
                 any defaulted Mortgage Loan purchased as described under
                 "Realization Upon Defaulted Whole Loans," and all proceeds of
                 any Asset purchased as described under "Description of the
                 Securities--Termination" (also, "Liquidation Proceeds");

         (viii)  any amounts paid by a Master Servicer to cover certain interest
                 shortfalls arising out of the prepayment of Whole Loans in the
                 Trust Fund as described under "Description of the
                 Agreements--Retained Interest; Servicing Compensation and
                 Payment of Expenses";

         (ix)    to the extent that any such 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 Assets;

                                        37



         (x)     all payments required to be deposited in the Collection Account
                 with respect to any deductible clause in any blanket insurance
                 policy described under "Hazard Insurance Policies";

         (xi)    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 Collection Account; and

         (xii)   any other amounts required to be deposited in the Collection
                 Account as provided in the related Agreement and described in
                 the related Prospectus Supplement.

Withdrawals

         A Master Servicer or the Trustee may, from time to time, unless
otherwise specified in the related Prospectus Supplement or the related
Agreement, make withdrawals from the Collection Account for each Trust Fund for
any of the following purposes:

         (i)     to make distributions to the Securityholders on each
                 Distribution Date;

         (ii)    to reimburse a Master Servicer for unreimbursed amounts
                 advanced as described under "Description of the
                 Securities--Advances in Respect of Delinquencies," such
                 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 Whole
                 Loans with respect to which the advances were made or out of
                 amounts drawn under any form of Credit Support with respect to
                 such Whole Loans;

         (iii)   to reimburse a Master Servicer for unpaid servicing fees earned
                 and certain unreimbursed servicing expenses incurred with
                 respect to Whole 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 Whole Loans and properties, and net income
                 collected on the particular properties, with respect to which
                 such fees were earned or such expenses were incurred or out of
                 amounts drawn under any form of Credit Support with respect to
                 such Whole Loans and properties;

         (iv)    to reimburse a Master Servicer for any advances described in
                 clause (ii) above and any servicing expenses described in
                 clause (iii) above which, in the Master Servicer's good faith
                 judgment, will not be recoverable from the amounts described in
                 clauses (ii) and (iii), respectively, such 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 Securities,
                 if any remain outstanding, and otherwise any outstanding class
                 of Securities, of the related series;

         (v)     if and to the extent described in the related Prospectus
                 Supplement, to pay a Master Servicer interest accrued on the
                 advances described in clause (ii) above and the servicing
                 expenses described in clause (iii) above while such remain
                 outstanding and unreimbursed;

         (vi)    to reimburse a Master Servicer, the Depositor, 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 "Certain
                 Matters Regarding a Master Servicer and the Depositor";

         (vii)   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;

                                        38


         (viii)  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 under "Certain Matters Regarding the Trustee";

         (ix)    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 Collection Account;

         (x)     to pay the person entitled thereto any amounts deposited in the
                 Collection Account that were identified and applied by the
                 Master Servicer as recoveries of Retained Interest;

         (xi)    to pay for costs reasonably incurred in connection with the
                 proper management and maintenance of any Mortgaged Property
                 acquired for the benefit of Securityholders by foreclosure or
                 by deed in lieu of foreclosure or otherwise, such payments to
                 be made out of income received on such property;

         (xii)   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 under "Material
                 Federal Income Tax Consequences--REMICs--Prohibited
                 Transactions Tax and Other Taxes";

         (xiii)  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 Whole Loan or a property acquired in respect
                 thereof in connection with the liquidation of such Whole Loan
                 or property;

         (xiv)   to pay for the cost of various opinions of counsel obtained
                 pursuant to the related Agreement for the benefit of
                 Securityholders;

         (xv)    to pay for the costs of recording the related Agreement if such
                 recordation materially and beneficially affects the interests
                 of Securityholders, provided that such payment shall not
                 constitute a waiver with respect to the obligation of the
                 Warranting Party to remedy any breach of representation or
                 warranty under the Agreement;

         (xvi)   to pay the person entitled thereto any amounts deposited in the
                 Collection 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; Repurchase" and "Representations and Warranties;
                 Repurchases" or otherwise;

         (xvii)  to make any other withdrawals permitted by the related
                 Agreement; and

         (xviii) to clear and terminate the Collection 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 Securities may provide
for the establishment and maintenance of a separate collection account into
which the Master Servicer or any related Sub-Servicer will deposit on a daily
basis the amounts described under "--Deposits" above for one or more series of
Securities. Any amounts on deposit in any such collection account will be
withdrawn therefrom and deposited into the appropriate Collection 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
Collection Account as described under "--Withdrawals" above, may also be
withdrawn from any such collection account. The Prospectus Supplement will set
forth any restrictions with respect to any such collection account, including
investment restrictions and any restrictions with respect to financial
institutions with which any such collection account may be maintained.

                                        39


COLLECTION AND OTHER SERVICING PROCEDURES

         The Master Servicer, directly or through Sub-Servicers, is required to
make reasonable efforts to collect all scheduled payments under the Whole Loans
and will follow or cause to be followed such collection procedures as it would
follow with respect to mortgage loans that are comparable to the Whole Loans and
held for its own account, provided such procedures are consistent with:

         (i)     the terms of the related Agreement and any related hazard
                 insurance policy or instrument of Credit Support, if any,
                 included in the related Trust Fund described herein or under
                 "Description of Credit Support,"

         (ii)    applicable law and

         (iii)   the general servicing standard specified in the related
                 Prospectus Supplement or, if no such standard is so specified,
                 its normal servicing practices (in either case, 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
payment on a Whole Loan.

         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 herein and in any related Prospectus Supplement,
and filing and settling claims thereunder; maintaining escrow or impoundment
accounts of mortgagors for payment of taxes, insurance and other items required
to be paid by any mortgagor pursuant to a Whole 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 or repossessions; inspecting and managing Mortgaged
Properties under certain circumstances; and maintaining accounting records
relating to the Whole Loans. Unless otherwise specified in the related
Prospectus Supplement, the Master Servicer will be responsible for filing and
settling claims in respect of particular Whole 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
Whole Loan in a manner consistent with the Servicing Standard so long as the
modification, waiver or amendment will not affect the amount or timing of any
scheduled payments of principal or interest on the Whole Loan or, in its
judgment, materially impair the security for the Whole 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 Whole Loan if, unless otherwise
provided in the related Prospectus Supplement, in its judgment, a material
default on the Whole Loan has occurred or a payment default is imminent, and in
its judgment, such modification, waiver or amendment is reasonably likely to
produce a greater recovery with respect to the Whole 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 Whole Loan.

SUB-SERVICERS

         A Master Servicer may delegate its servicing obligations in respect of
the Whole Loans to third-party servicers (each, a "Sub-Servicer"), but such
Master Servicer will remain obligated under the related Agreement. Each
sub-servicing agreement between a Master Servicer and a Sub-Servicer (a
"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 Securities is no longer acting in such capacity, the Trustee
or any successor Master Servicer may assume the Master Servicer's rights and
obligations under such Sub-Servicing Agreement.

         Unless otherwise provided in the related Prospectus Supplement, the
Master Servicer will be solely liable for all fees owed by it to any
Sub-Servicer, irrespective of whether the Master Servicer's compensation
pursuant to the related Agreement is sufficient to pay such fees. However, a
Sub-Servicer

                                        40


may be entitled to a Retained Interest in certain Whole Loans. Each Sub-Servicer
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 WHOLE LOANS

         Unless otherwise provided in the related Prospectus Supplement, the
Master Servicer is required to monitor any Whole Loan which is in default,
initiate corrective action in cooperation with the mortgagor or obligor if cure
is likely, inspect the Mortgaged Property and take such 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 such corrective
action or the need for additional initiatives.

         Any Agreement relating to a Trust Fund that includes Whole Loans may
grant to the Master Servicer and/or the holder or holders of certain classes of
Securities a right of first refusal to purchase from the Trust Fund at a
predetermined purchase price any such Whole Loan as to which a specified number
of scheduled payments thereunder are delinquent. Any such right granted to the
holder of an Offered Security 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 Whole 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 such a sale would produce a greater
recovery on a present value basis than would liquidation through foreclosure,
repossession or similar proceedings. The related Agreement will provide that any
such offering 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
Securityholder) that constitutes a fair price for such defaulted Whole 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 such defaulted Mortgage
Loan as described 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.

         The Master Servicer, on behalf of the Trustee, may at any time
institute foreclosure proceedings, exercise any power of sale contained in any
mortgage, obtain a deed in lieu of foreclosure, or otherwise acquire title to a
Mortgaged Property securing a Whole Loan by operation of law or otherwise, if
such action is consistent with the Servicing Standard and a default on such
Whole Loan has occurred or, in the Master Servicer's judgment, is imminent.

         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 within three years of acquisition,
unless the Internal Revenue Service grants an extension of time to sell such
property, or unless the Trustee receives an opinion of independent counsel to
the effect that the holding of the property by the Trust Fund subsequent to
three years after its acquisition 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
Code at any time that any Security is outstanding. Subject to the foregoing, the
Master Servicer will be required to solicit bids for any Mortgaged Property so
acquired in such a manner as will be reasonably likely to realize a fair price
for such property and 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 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

                                        41


of an amount less than the amount that would otherwise be recovered. See
"Certain Legal Aspects of Mortgage Loans--Foreclosure."

         If recovery on a defaulted Whole 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 such normal practices and procedures
as it deems necessary or advisable to realize upon the defaulted Whole Loan. If
the proceeds of any liquidation of the property securing the defaulted Whole
Loan are less than the outstanding principal balance of the defaulted Whole Loan
plus interest accrued thereon at the Mortgage Rate, as applicable, 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 such difference. The Master Servicer will
be entitled to withdraw or cause to be withdrawn from the Collection Account out
of the Liquidation Proceeds recovered on any defaulted Whole Loan, prior to the
distribution of such Liquidation Proceeds to Securityholders, amounts
representing its normal servicing compensation on the Whole Loan, unreimbursed
servicing expenses incurred with respect to the Whole Loan and any unreimbursed
advances of delinquent payments made with respect to the Whole Loan.

         If any property securing a defaulted Whole Loan is damaged, the Master
Servicer is not required to expend its own funds to restore the damaged property
unless it determines (i) that such restoration will increase the proceeds to
Securityholders on liquidation of the Whole Loan after reimbursement of the
Master Servicer for its expenses and (ii) that such expenses will be recoverable
by it from related Insurance Proceeds or Liquidation Proceeds.

         As servicer of the Whole Loans, a Master Servicer, on behalf of itself,
the Trustee and the Securityholders, 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 Whole Loans.

         If a Master Servicer or its designee recovers payments under any
instrument of Credit Support with respect to any defaulted Whole Loan, the
Master Servicer will be entitled to withdraw or cause to be withdrawn from the
Collection Account out of such proceeds, prior to distribution thereof to
Certificateholders, amounts representing its normal servicing compensation on
such Whole Loan, unreimbursed servicing expenses incurred with respect to the
Whole Loan and any unreimbursed advances of delinquent payments made with
respect to the Whole Loan. See "Hazard Insurance Policies" and "Description of
Credit Support."

PRIMARY MORTGAGE INSURANCE POLICIES

         The Master Servicer will maintain or cause to be maintained, as the
case may be and as permitted by law, in full force and effect, to the extent
specified in the prospectus supplement, a primary mortgage insurance policy
(each, a "Primary Mortgage Insurance Policy") with regard to each Whole Loan for
which that coverage is required. Unless required by law, the Master Servicer
will not cancel or refuse to renew any Primary Mortgage Insurance Policy in
effect at the time of the initial issuance of a series of securities that is
required to be kept in force under the applicable Agreement unless the
replacement Primary Mortgage Insurance Policy for the cancelled or nonrenewed
policy is maintained with an insurer whose claims-paying ability is sufficient
to maintain the current rating of the classes of securities of that series that
have been rated.

         Although the terms and conditions of primary mortgage insurance vary,
the amount of a claim for benefits under a Primary Mortgage Insurance Policy
covering a mortgage loan will consist of the insured percentage of the unpaid
principal amount of the covered loan and accrued and unpaid interest on the
Whole Loan and reimbursement of certain expenses, less:

         o   all rents or other payments collected or received by the insured
             (other than the proceeds of hazard insurance) that are derived from
             or in any way related to the property;

                                        42


         o   hazard insurance proceeds in excess of the amount required to
             restore the property and which have not been applied to the payment
             of the Whole Loan;

         o   amounts expended but not approved by the insurer of the related
             primary mortgage insurance policy;

         o   claim payments previously made by the insurer; and

         o   unpaid premiums.

         Primary Mortgage Insurance Policies reimburse certain losses sustained
by reason of default in payments by borrowers. Primary Mortgage Insurance
Policies will not insure against, and exclude from coverage, losses sustained by
reason of a default arising from or involving certain matters, including:

         o   fraud or negligence in origination or servicing of the Whole Loans,
             including misrepresentation by the originator, mortgagor (or
             obligor) or other persons involved in the origination of the Whole
             Loan;

         o   failure to construct the property subject to the Whole Loan in
             accordance with specified plans;

         o   physical damage to the property; and

         o   the related Master Servicer not being approved as a Master Servicer
             by the insurer.

         Evidence of each Primary Mortgage Insurance Policy will be provided to
the Trustee simultaneously with the transfer to the Trustee of the Whole Loan.
The Master Servicer, on behalf of itself, the Trustee and the securityholders,
is required to present claims to the insurer under any Primary Mortgage
Insurance Policy and to take reasonable steps that are necessary to permit
recovery thereunder with respect to defaulted Whole Loans. Amounts collected by
the Master Servicer on behalf of itself, the Trustee and the securityholders
shall be deposited in the related Collection Account for distribution as set
forth above.

HAZARD INSURANCE POLICIES

         Unless otherwise specified in the related Prospectus Supplement, each
Agreement for a Trust Fund comprised of Whole Loans will require the Master
Servicer to cause the mortgagor on each Whole Loan to maintain a hazard
insurance policy providing for such coverage as is required under the related
mortgage or, if any mortgage permits the holder thereof to dictate to the
mortgagor the insurance coverage to be maintained on the related Mortgaged
Property, then such coverage as is consistent with the Servicing Standard.
Unless otherwise specified in the related Prospectus Supplement, such coverage
will be in general in an amount equal to the lesser of the principal balance
owing on such Whole 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 mortgagors. All amounts collected by the Master Servicer under any
such policy (except for amounts to be applied to the restoration or repair of
the Mortgaged Property or released to the mortgagor 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
Collection Account. The Agreement will provide that the Master Servicer may
satisfy its obligation to cause each mortgagor to maintain such a hazard
insurance policy by the Master Servicer's maintaining a blanket policy insuring
against hazard losses on the Whole Loans. If such blanket policy contains a
deductible clause, the Master Servicer will be required to deposit in the
Collection Account all sums that would have been deposited therein but for such
clause.

         In general, the standard form of fire and extended coverage policy
covers physical damage to or destruction of the improvements on the property by
fire, lightning, explosion, smoke, windstorm and hail,

                                        43


and riot, strike and civil commotion, subject to the conditions and exclusions
specified in each policy. Although the policies relating to the Whole 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 such 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
mudflows), wet or dry rot, vermin, domestic animals and certain other kinds of
uninsured risks.

         The hazard insurance policies covering the Mortgaged Properties
securing the Whole 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, such
clause generally provides that the insurer's liability in the event of partial
loss does not exceed the lesser of (i) the replacement cost of the improvements
less physical depreciation and (ii) such proportion of the loss as the amount of
insurance carried bears to the specified percentage of the full replacement cost
of such improvements.

         Each Agreement for a Trust Fund comprised of Whole Loans will require
the Master Servicer to cause the mortgagor on each Whole Loan to maintain all
such 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 such
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 such cost will not be taken into account for purposes of calculating the
distribution to be made to Certificateholders. Such costs may be recovered by
the Master Servicer or Sub-Servicer, as the case may be, from the Collection
Account, with interest thereon, as provided by the Agreement.

         Under the terms of the Whole Loans, mortgagors 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 Whole Loans. However, the ability of
the Master Servicer to present or cause to be presented such claims is dependent
upon the extent to which information in this regard is furnished to the Master
Servicer by mortgagors.

FIDELITY BONDS AND ERRORS AND OMISSIONS INSURANCE

         Unless otherwise 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 certain criteria set
forth in the Agreement are met.

DUE-ON-SALE PROVISIONS

         The Whole Loans may contain clauses requiring the consent of the
mortgagee to any sale or other transfer of the related Mortgaged Property, or
due-on-sale clauses entitling the mortgagee to accelerate payment of the Whole
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

                                        44



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. Unless otherwise 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.

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.
A "Retained Interest" in an Asset represents a specified portion of the interest
payable thereon. The Retained Interest will be deducted from mortgagor payments
as received and will not be part of the related Trust Fund.

         Unless otherwise specified in the related Prospectus Supplement, the
Master Servicer's and a Sub-Servicer's primary servicing compensation with
respect to a series of Securities 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, such amounts will decrease in accordance with the amortization of
the Assets. The Prospectus Supplement with respect to a series of Securities
evidencing interests in a Trust Fund that includes Whole Loans may provide that,
as additional compensation, the Master Servicer or the Sub-Servicers may retain
all or a portion of assumption fees, modification fees, late payment charges or
Prepayment Premiums collected from mortgagors and any interest or other income
which may be earned on funds held in the Collection Account or any account
established by a Sub-Servicer 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 Securityholders, 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 Whole
Loans and, to the extent so provided in the related Prospectus Supplement,
interest thereon at the rate specified therein 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 Whole Loans in the
related Trust Fund during such period prior to their respective due dates
therein.

EVIDENCE AS TO COMPLIANCE

         Each Agreement relating to Assets which include Whole Loans will
provide that on or before a specified date in each year, beginning with the
first such date at least six months after the related Cut-off Date, a firm of
independent public accountants will furnish a statement to the Trustee to the
effect that, on the basis of the examination by such firm conducted
substantially in compliance with either the Uniform Single Attestation Program
for Mortgage Bankers, the Audit Program for mortgages serviced for the Federal
Home Loan Mortgage Corporation ("FHLMC") or such other audit or attestation
program used by the Master Servicer, the servicing by or on behalf of the Master
Servicer of mortgage loans under agreements substantially similar to each other
(including the related Agreement) was conducted in compliance with the terms of
such agreements or such program except for any significant exceptions or errors
in records that, in the opinion of the firm, either the Audit Program for
mortgages serviced for FHLMC, or paragraph 4 of the Uniform Single Attestation
Program for Mortgage Bankers, or such other audit or attestation program
requires it to report. In rendering its statement such firm may rely, as to
matters relating to the direct servicing of mortgage loans by Sub-Servicers,
upon comparable statements

                                        45


for examinations conducted substantially in compliance with the Uniform Single
Attestation Program for Mortgage Bankers or the Audit Program for mortgages
serviced for FHLMC or such other audit or attestation program used by such
Sub-Servicer (rendered within one year of such statement) of firms of
independent public accountants with respect to the related Sub-Servicer.

         Each such Agreement will also provide for delivery to the Trustee, on
or before a specified date in each year, of an annual statement signed by two
officers of the Master Servicer to the effect that the Master Servicer has
fulfilled its obligations under the Agreement throughout the preceding calendar
year or other specified twelve-month period.

         Unless otherwise provided in the related Prospectus Supplement, copies
of such annual accountants' statement and such statements of officers will be
obtainable by Securityholders without charge upon written request to the Master
Servicer at the address set forth in the related Prospectus Supplement.

CERTAIN MATTERS REGARDING A MASTER SERVICER AND THE DEPOSITOR

         The Master Servicer, if any, or a servicer for substantially all the
Whole Loans under each Agreement will be named in the related Prospectus
Supplement. The entity serving as Master Servicer (or as such servicer) may be
an affiliate of the Depositor and may have other normal business relationships
with the Depositor or the Depositor's affiliates. Reference herein to the Master
Servicer shall be deemed to be to the servicer of substantially all of the Whole
Loans.

         Unless otherwise 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, the other activities of the Master Servicer so causing such a conflict
being of a type and nature carried on by the Master Servicer at the date of the
Agreement. No such resignation will become effective until the Trustee or a
successor servicer has assumed the Master Servicer's obligations and duties
under the Agreement.

         Unless otherwise specified in the related Prospectus Supplement, each
Agreement will further provide that neither any Master Servicer, the Depositor
nor any director, officer, employee, or agent of a Master Servicer or the
Depositor will be under any liability to the related Trust Fund or
Securityholders for any action taken, or for refraining from the taking of any
action, in good faith pursuant to the Agreement; provided, however, that neither
a Master Servicer, the Depositor nor any such person will be protected against
any breach of a representation, warranty or covenant made in such 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 specified in the related Prospectus Supplement, each
Agreement will further provide that any Master Servicer, the Depositor and any
director, officer, employee or agent of a Master Servicer or the Depositor will
be entitled to indemnification by the related Trust Fund and will be held
harmless against any loss, liability or expense incurred in connection with any
legal action relating to the Agreement or the Securities; provided, however,
that such indemnification will not extend to any loss, liability or expense:

         (i)     specifically imposed by such 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 Whole Loan or
                 Whole Loans (except as any such loss, liability or expense
                 shall be otherwise reimbursable pursuant to such Agreement);

         (ii)    incurred in connection with any breach of a representation,
                 warranty or covenant made in such Agreement;

                                        46


         (iii)   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 such
                 obligations or duties;

         (iv)    incurred in connection with any violation of any state or
                 federal securities law; or

         (v)     imposed by any taxing authority if such 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 the Depositor will be under any obligation to appear in, prosecute
or defend any legal action which is not incidental to its respective
responsibilities under the Agreement and which in its opinion may involve it in
any expense or liability. Any such Master Servicer or the Depositor 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 Securityholders thereunder. In such
event, the legal expenses and costs of such action and any liability resulting
therefrom will be expenses, costs and liabilities of the Securityholders, and
the Master Servicer or the Depositor, as the case may be, will be entitled to be
reimbursed therefor and to charge the Collection Account.

         Any person into which the Master Servicer or the Depositor may be
merged or consolidated, or any person resulting from any merger or consolidation
to which the Master Servicer or the Depositor is a party, or any person
succeeding to the business of the Master Servicer or the Depositor, will be the
successor of the Master Servicer or the Depositor, as the case may be, under the
related Agreement.

EVENTS OF DEFAULT UNDER THE AGREEMENT

         Unless otherwise provided in the related Prospectus Supplement, Events
of Default under the related Agreement will include:

         (i)     any failure by the Master Servicer to distribute or cause to be
                 distributed to Securityholders, or to remit to the Trustee or
                 Indenture Trustee, as applicable, for distribution to
                 Securityholders, any required payment that continues after a
                 grace period, if any;

         (ii)    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 (or such other period specified in the related
                 Prospectus Supplement) after written notice of such failure has
                 been given to the Master Servicer by the Trustee or the
                 Depositor, or to the Master Servicer, the Depositor and the
                 Trustee by the holders of Securities evidencing not less than
                 25% of the Voting Rights;

         (iii)   any breach of a representation or warranty made by the Master
                 Servicer under the Agreement which materially and adversely
                 affects the interests of Securityholders and which continues
                 unremedied for thirty days (or such longer period specified in
                 the related Prospectus Supplement) after written notice of such
                 breach has been given to the Master Servicer by the Trustee or
                 the Depositor, or to the Master Servicer, the Depositor and the
                 Trustee by the holders of Securities evidencing not less than
                 25% of the Voting Rights; and

         (iv)    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 specified 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

                                        47


an event, transmit by mail to the Depositor and all Securityholders of the
applicable series notice of such occurrence, unless such default shall have been
cured or waived.

         The manner of determining the "Voting Rights" of a Security or class or
classes of Securities will be specified in the related Prospectus Supplement.

RIGHTS UPON EVENT OF DEFAULT UNDER THE AGREEMENT

         So long as an Event of Default under an Agreement remains unremedied,
the Depositor or the Trustee may, and at the direction of holders of Securities
evidencing not less than 51% (or such other percentage specified in the related
Prospectus Supplement) 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 Securityholder 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 such advances) and will be entitled to similar compensation arrangements.
Unless otherwise specified 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 Securities entitled to at least 51% (or such other
percentage specified in the related Prospectus Supplement) 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 such appointment of at least $15,000,000 (or
such other amount specified in the related Prospectus Supplement) to act as
successor to the Master Servicer under the Agreement. Pending such appointment,
the Trustee is obligated to act in such capacity. The Trustee and any such
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 Securities representing at least 66% (or such other percentage
specified in the related Prospectus Supplement) of the Voting Rights allocated
to the respective classes of Securities affected by any Event of Default will be
entitled to waive such Event of Default; provided, however, that an Event of
Default involving a failure to distribute a required payment to Securityholders
described in clause (i) under "Events of Default" may be waived only by all of
the Securityholders. Upon any such waiver of an Event of Default, such Event of
Default shall cease to exist and shall be deemed to have been remedied for every
purpose under the Agreement.

         No Securityholder will have the right under any Agreement to institute
any proceeding with respect thereto unless such holder previously has given to
the Trustee written notice of default and unless the holders of Securities
evidencing not less than 25% (or such other percentage specified in the related
Prospectus Supplement) of the Voting Rights have made written request upon the
Trustee to institute such proceeding in its own name as Trustee thereunder and
have offered to the Trustee reasonable indemnity, and the Trustee for sixty days
(or such other number of days specified in the related Prospectus Supplement)
has neglected or refused to institute any such 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 Securities covered by
such Agreement, unless such Securityholders 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 Securities covered by the Agreement:

         (i)     to cure any ambiguity or correct any mistake,

                                        48


         (ii)    to correct, modify or supplement any provision therein which
                 may be inconsistent with any other provision therein or with
                 the related Prospectus Supplement,

         (iii)   to make any other provisions with respect to matters or
                 questions arising under the Agreement which are not materially
                 inconsistent with the provisions thereof,

         (iv)    to modify, alter, amend, add to or rescind any of the terms or
                 provisions contained in the Agreement, or

         (v)     to comply with any requirements imposed by the Code; provided,
                 however, that, in the case of clauses (iii) and (iv), such
                 amendment will not, as evidenced by an opinion of counsel to
                 such affect, adversely affect in any material respect the
                 interests of any Securityholder; provided, further, however,
                 that such amendment will be deemed to not adversely affect in
                 any material respect the interest of any Securityholder if the
                 Person requesting such amendment obtains a letter from each
                 applicable Rating Agency stating that such amendment will not
                 result in a reduction or withdrawal of its rating of any class
                 of the related Security.

         Unless otherwise specified in the related Prospectus Supplement, each
Agreement may also be amended by the Depositor, the Master Servicer, if any, and
the Trustee, with the consent of the holders of Securities affected thereby
evidencing not less than 51% (or such other percentage specified in the related
Prospectus Supplement) of the Voting Rights, for any purpose; provided, however,
that unless otherwise specified in the related Prospectus Supplement, no such
amendment may:

         (i)     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 Security without the consent
                 of the holder of such Security or

         (ii)    reduce the consent percentages described in this paragraph
                 without the consent of the holders of all Securities covered by
                 such Agreement then outstanding.

         However, with respect to any series of Securities 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 such 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 Securities are outstanding.

THE TRUSTEE

         The Trustee under each Agreement or Trust 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 the Depositor 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 or Trust Agreement, the Securities 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 Securities or the Assets, or deposited into or
withdrawn from the Collection 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 or Trust Agreement, as applicable. However, upon receipt of
the various certificates, reports or other instruments required to be furnished
to it, the Trustee is required to examine such documents and to determine
whether they conform to the requirements of the Agreement or Trust Agreement, as
applicable.

                                        49


CERTAIN MATTERS REGARDING THE TRUSTEE

         Unless otherwise specified 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 Collection 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:

         (i)     enforcing its rights and remedies and protecting the interests
                 of the Securityholders during the continuance of an Event of
                 Default,

         (ii)    defending or prosecuting any legal action in respect of the
                 related Agreement or series of Securities,

         (iii)   being the mortgagee 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 Securityholders, or

         (iv)    acting or refraining from acting in good faith at the direction
                 of the holders of the related series of Securities entitled to
                 not less than 25% (or such other percentage as is specified in
                 the related Agreement with respect to any particular matter) of
                 the Voting Rights for such series; provided, however, that such
                 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 thereunder, or by reason of its reckless
                 disregard of such obligations or duties, or as may arise from a
                 breach of any representation, warranty or covenant of the
                 Trustee made therein.

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 the Depositor, the Master
Servicer, if any, and all Securityholders. Upon receiving such notice of
resignation, the Depositor 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 such 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
such 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, or if a change in
the financial condition of the Trustee has adversely affected or will adversely
affect the rating on any class of the Securities, then the Depositor may remove
the Trustee and appoint a successor trustee acceptable to the Master Servicer,
if any. Holders of the Securities of any series entitled to at least 51% (or
such other percentage specified in the related Prospectus Supplement) of the
Voting Rights for such 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.

                                        50


CERTAIN TERMS OF THE INDENTURE

         Events of Default. Unless otherwise specified in the related Prospectus
Supplement, Events of Default under the Indenture for each series of Notes
include:

         (i)     default for thirty (30) days (or such other number of days
                 specified in such Prospectus Supplement) or more in the payment
                 of any principal of or interest on any Note of such series;

         (ii)    failure to perform any other covenant of the Depositor or the
                 Trust Fund in the Indenture which continues for a period of
                 sixty (60) days (or such other number of days specified in such
                 Prospectus Supplement) after notice thereof is given in
                 accordance with the procedures described in the related
                 Prospectus Supplement;

         (iii)   any representation or warranty made by the Depositor or the
                 Trust Fund in the Indenture or in any certificate or other
                 writing delivered pursuant thereto or in connection therewith
                 with respect to or affecting such series having been incorrect
                 in a material respect as of the time made, and such breach is
                 not cured within sixty (60) days (or such other number of days
                 specified in such Prospectus Supplement) after notice thereof
                 is given in accordance with the procedures described in the
                 related Prospectus Supplement;

         (iv)    certain events of bankruptcy, insolvency, receivership or
                 liquidation of the Depositor or the Trust Fund; or

         (v)     any other Event of Default provided with respect to Notes of
                 that series.

         If an Event of Default with respect to the Notes of any series at the
time outstanding occurs and is continuing, either the Indenture Trustee or the
holders of a majority of the then aggregate outstanding amount of the Notes of
such series may declare the principal amount (or, if the Notes of that series
are Accrual Securities, such portion of the principal amount as may be specified
in the terms of that series, as provided in the related Prospectus Supplement)
of all the Notes of such series to be due and payable immediately. Such
declaration may, under certain circumstances, be rescinded and annulled by the
holders of a majority in aggregate outstanding amount of the Notes of such
series.

         If, following an Event of Default with respect to any series of Notes,
the Notes of such series have been declared to be due and payable, the Indenture
Trustee may, in its discretion, notwithstanding such acceleration, elect to
maintain possession of the collateral securing the Notes of such series and to
continue to apply distributions on such collateral as if there had been no
declaration of acceleration if such collateral continues to provide sufficient
funds for the payment of principal of and interest on the Notes of such series
as they would have become due if there had not been such a declaration. In
addition, the Indenture Trustee may not sell or otherwise liquidate the
collateral securing the Notes of a series following an Event of Default, other
than a default in the payment of any principal or interest on any Note of such
series for thirty (30) days or more, unless:

         (a)     the holders of 100% (or such other percentage specified in the
                 related Prospectus Supplement) of the then aggregate
                 outstanding amount of the Notes of such series consent to such
                 sale,

         (b)     the proceeds of such sale or liquidation are sufficient to pay
                 in full the principal of and accrued interest, due and unpaid,
                 on the outstanding Notes of such series at the date of such
                 sale or

         (c)     the Indenture Trustee determines that such collateral would not
                 be sufficient on an ongoing basis to make all payments on such
                 Notes as such payments would have become due if such Notes had
                 not been declared due and payable, and the Indenture Trustee
                 obtains the consent of the holders of 66% (or such other
                 percentage specified in the related Prospectus Supplement) of
                 the then aggregate outstanding amount of the Notes of such
                 series.

                                        51


         In the event that the Indenture Trustee liquidates the collateral in
connection with an Event of Default involving a default for thirty (30) days (or
such other number of days specified in the related Prospectus Supplement) or
more in the payment of principal of or interest on the Notes of a series, the
Indenture provides that the Indenture Trustee will have a prior lien on the
proceeds of any such liquidation for unpaid fees and expenses. As a result, upon
the occurrence of such an Event of Default, the amount available for
distribution to the Noteholders would be less than would otherwise be the case.
However, the Indenture Trustee may not institute a proceeding for the
enforcement of its lien except in connection with a proceeding for the
enforcement of the lien of the Indenture for the benefit of the Noteholders
after the occurrence of such an Event of Default.

         Unless otherwise specified in the related Prospectus Supplement, in the
event the principal of the Notes of a series is declared due and payable, as
described above, the holders of any such Notes issued at a discount from par may
be entitled to receive no more than an amount equal to the unpaid principal
amount thereof less the amount of such discount which is unamortized.

         Subject to the provisions of the Indenture relating to the duties of
the Indenture Trustee, in case an Event of Default shall occur and be continuing
with respect to a series of Notes, the Indenture Trustee shall be under no
obligation to exercise any of the rights or powers under the Indenture at the
request or direction of any of the holders of Notes of such series, unless such
holders offered to the Indenture Trustee security or indemnity satisfactory to
it against the costs, expenses and liabilities which might be incurred by it in
complying with such request or direction. Subject to such provisions for
indemnification and certain limitations contained in the Indenture, the holders
of a majority of the then aggregate outstanding amount of the Notes of such
series shall have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Indenture Trustee or exercising
any trust or power conferred on the Indenture Trustee with respect to the Notes
of such series, and the holders of a majority of the then aggregate outstanding
amount of the Notes of such series may, in certain cases, waive any default with
respect thereto, except a default in the payment of principal or interest or a
default in respect of a covenant or provision of the Indenture that cannot be
modified without the waiver or consent of all the holders of the outstanding
Notes of such series affected thereby.

         Discharge of the Indenture. The Indenture will be discharged with
respect to a series of Notes (except with respect to certain continuing rights
specified in the Indenture) upon the delivery to the Indenture Trustee for
cancellation of all the Notes of such series or, with certain limitations, upon
deposit with the Indenture Trustee of funds sufficient for the payment in full
of all of the Notes of such series.

         In addition to such discharge with certain limitations, the Indenture
will provide that, if so specified with respect to the Notes of any series, the
related Trust Fund will be discharged from any and all obligations in respect of
the Notes of such series (except for certain obligations relating to temporary
Notes and exchange of Notes, to register the transfer of or exchange Notes of
such series, to replace stolen, lost or mutilated Notes of such series, to
maintain paying agencies and to hold monies for payment in trust) upon the
deposit with the Indenture Trustee, in trust, of money and/or direct obligations
of or obligations guaranteed by the United States of America which through the
payment of interest and principal in respect thereof in accordance with their
terms will provide money in an amount sufficient to pay the principal of and
each installment of interest on the Notes of such series on the maturity date
for such Notes and any installment of interest on such Notes in accordance with
the terms of the Indenture and the Notes of such series. In the event of any
such defeasance and discharge of Notes of such series, holders of Notes of such
series would be able to look only to such money and/or direct obligations for
payment of principal and interest, if any, on their Notes until maturity.

         Indenture Trustee's Annual Report. The Indenture Trustee for each
series of Notes will be required to mail each year to all related Noteholders a
brief report relating to its eligibility and qualification to continue as
Indenture Trustee under the related Indenture, any amounts advanced by it under
the Indenture, the amount, interest rate and maturity date of certain
indebtedness owing by such Trust to the applicable Indenture Trustee in its
individual capacity, the property and funds physically held by such

                                        52


Indenture Trustee as such and any action taken by it that materially affects
such Notes and that has not been previously reported.

         The Indenture Trustee. The Indenture Trustee for a series of Notes will
be specified in the related Prospectus Supplement. The Indenture Trustee for any
series may resign at any time, in which event the Depositor will be obligated to
appoint a successor trustee for such series. The Depositor may also remove any
such Indenture Trustee if such Indenture Trustee ceases to be eligible to
continue as such under the related Indenture or if such Indenture Trustee
becomes insolvent. In such circumstances the Depositor will be obligated to
appoint a successor trustee for the applicable series of Notes. Any resignation
or removal of the Indenture Trustee and appointment of a successor trustee for
any series of Notes does not become effective until acceptance of the
appointment by the successor trustee for such series.

         The bank or trust company serving as Indenture Trustee may have a
banking relationship with the Depositor or any of its affiliates or the Master
Servicer or any of its affiliates.

                          DESCRIPTION OF CREDIT SUPPORT

GENERAL

         For any series of Securities 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 Securities,
letters of credit, insurance policies, guarantees, the establishment of one or
more reserve funds or another method of Credit Support described in the related
Prospectus Supplement, or any combination of the foregoing. If so provided in
the related Prospectus Supplement, any form of Credit Support may be structured
so as to be drawn upon by more than one series to the extent described therein.

         Unless otherwise provided in the related Prospectus Supplement for a
series of Securities the Credit Support will not provide protection against all
risks of loss and will not guarantee repayment of the entire Security Balance of
the Securities and interest thereon. If losses or shortfalls occur that exceed
the amount covered by Credit Support or that are not covered by Credit Support,
Securityholders will bear their allocable share of deficiencies. Moreover, if a
form of Credit Support covers more than one series of Securities (each, a
"Covered Trust"), holders of Securities evidencing interests in any of such
Covered Trusts will be subject to the risk that such Credit Support will be
exhausted by the claims of other Covered Trusts prior to such Covered Trust
receiving any of its intended share of such coverage.

         If Credit Support is provided with respect to one or more classes of
Securities of a series, or the related Assets, the related Prospectus Supplement
will include a description of:

         (a)     the nature and amount of coverage under such Credit Support,

         (b)     any conditions to payment thereunder not otherwise described
                 herein,

         (c)     the conditions (if any) under which the amount of coverage
                 under such Credit Support may be reduced and under which such
                 Credit Support may be terminated or replaced, and

         (d)     the material provisions relating to such Credit Support.
                 Additionally, the related Prospectus Supplement will set forth
                 certain information with respect to the obligor under any
                 instrument of Credit Support, including

                 (i)     a brief description of its principal business
                         activities,

                 (ii)    its principal place of business, place of incorporation
                         and the jurisdiction under which it is chartered or
                         licensed to do business,

                 (iii)   if applicable, the identity of regulatory agencies that
                         exercise primary jurisdiction over the conduct of its
                         business and

                                        53


                 (iv)    its total assets, and its stockholders' or
                         policyholders' surplus, if applicable, as of the date
                         specified in the Prospectus Supplement.

See "Risk Factors--Credit Support Limitations--Risk That Credit Support Will Not
Cover All Losses."

SUBORDINATE SECURITIES

         If so specified in the related Prospectus Supplement, one or more
classes of Securities of a series may be Subordinate Securities. To the extent
specified in the related Prospectus Supplement, the rights of the holders of
Subordinate Securities to receive distributions of principal and interest from
the Collection Account on any Distribution Date will be subordinated to such
rights of the holders of Senior Securities. 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 Securities in a series, the
circumstances in which such 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 Securities of a series, credit support
may be provided by cross-support provisions requiring that distributions be made
on Senior Securities evidencing interests in one group of Assets prior to
distributions on Subordinate Securities evidencing interests in a different
group of Assets within the Trust Fund. The Prospectus Supplement for a series
that includes a cross-support provision will describe the manner and conditions
for applying such provisions.

INSURANCE OR GUARANTEES

         If so provided in the Prospectus Supplement for a series of Securities,
the Whole Loans in the related Trust Fund will be covered for various default
risks by insurance policies or guarantees.

LETTER OF CREDIT

         If so provided in the Prospectus Supplement for a series of Securities,
deficiencies in amounts otherwise payable on such Securities or certain classes
thereof will be covered by one or more letters of credit, issued by a bank or
financial institution specified in such Prospectus Supplement (the "L/C Bank").
Under a letter of credit, the L/C 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 Assets on the related
Cut-off Date or of the initial aggregate Security Balance of one or more classes
of Securities. 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 L/C Bank under the letter of credit for each series of
Securities will expire at the earlier of the date specified in the related
Prospectus Supplement or the termination of the Trust Fund.

INSURANCE POLICIES AND SURETY BONDS

         If so provided in the Prospectus Supplement for a series of Securities,
deficiencies in amounts otherwise payable on such Securities or certain classes
thereof will be covered by insurance policies and/or surety bonds provided by
one or more insurance companies or sureties. Such instruments may cover, with
respect to one or more classes of Securities of the related series, timely
distributions of interest and/or full distributions of principal on the basis of
a schedule of principal distributions set forth in or determined in the manner
specified in the related Prospectus Supplement.

                                        54


RESERVE FUNDS

         If so provided in the Prospectus Supplement for a series of Securities,
deficiencies in amounts otherwise payable on such Securities 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 such Prospectus Supplement. The
reserve funds for a series may also be funded over time by depositing therein 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 specified 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 therein 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 Securities.

         Moneys deposited in any Reserve Funds will be invested in Permitted
Investments, except as otherwise specified in the related Prospectus Supplement.
Unless otherwise specified in the related Prospectus Supplement, any
reinvestment income or other gain from such investments will be credited to the
related Reserve Fund for such series, and any loss resulting from such
investments will be charged to such Reserve Fund. However, such 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 specified 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 such Reserve
Fund, the balance required to be maintained in the Reserve Fund, the manner in
which such required balance will decrease over time, the manner of funding such
Reserve Fund, the purposes for which funds in the Reserve Fund may be applied to
make distributions to Securityholders and use of investment earnings from the
Reserve Fund, if any.

CREDIT SUPPORT WITH RESPECT TO MBS

         If so provided in the Prospectus Supplement for a series of Securities,
the MBS in the related Trust Fund and/or the Mortgage Loans underlying such MBS
may be covered by one or more of the types of Credit Support described herein.
The related Prospectus Supplement will specify as to each such form of Credit
Support the information indicated above with respect thereto, to the extent such
information is material and available.

                    CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS

         The following discussion contains summaries, which are general in
nature, of certain state law legal aspects of loans secured by single-family or
multi-family residential properties. Because such legal aspects are governed
primarily by the applicable laws of the state in which the related Mortgaged
Property is located (which laws may differ substantially), the summaries do not
purport to be complete nor to reflect the laws of any particular state, nor to
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 which may
be mortgages, deeds of trust, security deeds or deeds to secure debt, depending
upon the prevailing practice and law in the state in which the Mortgaged
Property is located. Mortgages, deeds of trust and deeds to secure debt are
herein collectively referred to

                                        55


as "mortgages." Any of the foregoing types of mortgages will create a lien upon,
or grant a title interest in, the subject property, the priority of which 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 such 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--a mortgagor (the borrower and usually the
owner of the subject property) and a mortgagee (the lender). In contrast, a deed
of trust is a three-party instrument, among a trustor (the equivalent of a
mortgagor), a trustee to whom the mortgaged property is conveyed, and a
beneficiary (the lender) for whose benefit the conveyance is made. As used in
this Prospectus, unless the context otherwise requires, "mortgagor" includes the
trustor under a deed of trust and a grantor under a security deed or a deed to
secure debt. Under a deed of trust, the mortgagor 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 such time as the underlying debt is repaid,
generally with a power of sale as security for the indebtedness evidenced by the
related mortgage note. In case the mortgagor 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 mortgagor.
At origination of a mortgage loan involving a land trust, the mortgagor executes
a separate undertaking to make payments on the mortgage note. The mortgagee'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 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 Service
Members Civil Relief Act) 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, such an instrument may encumber other interests in real property such
as a tenant's interest in a lease of land or improvements, or both, and the
leasehold estate created by such lease. An instrument covering an interest in
real property other than the fee estate requires special provisions in the
instrument creating such interest or in the mortgage, deed of trust, security
deed or deed to secure debt, to protect the mortgagee against termination of
such interest before the mortgage, deed of trust, security deed or deed to
secure debt is paid. Unless otherwise specified in the Prospectus Supplement,
the Depositor 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. Such 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 Securities, the Mortgage Loans may also consist of cooperative apartment
loans ("Cooperative Loans") secured by security interests in shares issued by a
cooperative housing corporation (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. Such a

                                        56


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 mortgagor, 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 (i) arising under a blanket mortgage, the mortgagee
holding a blanket mortgage could foreclose on that mortgage and terminate all
subordinate proprietary leases and occupancy agreements or (ii) 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 such final payment
could lead to foreclosure by the mortgagee. 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
Cooperative's 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 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 such 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--Cooperatives"
below.

FORECLOSURE

General

         Foreclosure is a legal procedure that allows the mortgagee to recover
its mortgage debt by enforcing its rights and available legal remedies under the
mortgage. If the mortgagor defaults in payment or performance of its obligations
under the note or mortgage, the mortgagee has the right to institute foreclosure
proceedings to sell the mortgaged property at public auction to satisfy the
indebtedness.

                                        57


         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. Such 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 mortgagee in connection with
foreclosure. These equitable principles are generally designed to relieve the
mortgagor from the legal effect of mortgage defaults, to the extent that such
effect is perceived as harsh or unfair. Relying on such 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 mortgagor's default and the likelihood that the mortgagor 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 mortgagors 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
mortgagor failed to maintain the mortgaged property adequately or the mortgagor
executed a junior mortgage on the mortgaged property. The exercise by the court
of its equity powers will depend on the individual 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 mortgagor 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 mortgagor.

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
mortgagor 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 such sale,
the trustee under a deed of trust must record a notice of default and notice of
sale and send a copy to the mortgagor 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 mortgagor 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

                                        58


states, the mortgagor 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 such 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
mortgagor'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 such 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 and/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 mortgagee 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 mortgagee 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 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 mortgagor is in default. Any additional
proceeds are generally payable to the mortgagor. 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 such holders.

Rights of Redemption

         The purposes of a foreclosure action are to enable the mortgagee to
realize upon its security and to bar the mortgagor, 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
having an interest which is subordinate to that of the foreclosing mortgagee
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

                                       59


redeeming party must pay certain costs of such 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 (non-statutory) right which
exists prior to completion of the foreclosure, is not waivable by the mortgagor,
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 mortgagor 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 mortgagor 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 for more than three years. Unless
otherwise provided in the related Prospectus Supplement, with respect to a
series of Securities 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 for more than three years if the Internal Revenue Service grants an
extension of time within which to sell such property or independent counsel
renders an opinion to the effect that holding such 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 such tenant-stockholder, including mechanics'
liens against the Cooperative apartment building incurred by such
tenant-stockholder. The proprietary lease or occupancy agreement generally
permits the Cooperative to terminate such 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 such a default 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 such 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 such 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.

                                        60


         In some states, foreclosure on the cooperative shares is accomplished
by a sale in accordance with the provisions of Article 9 of the UCC and the
security agreement relating to those shares. Article 9 of the UCC requires that
a sale be conducted in a "commercially reasonable" manner. Whether a foreclosure
sale has been conducted in a "commercially reasonable" manner will depend on the
facts in each case. In determining commercial reasonableness, a court will look
to the notice given the debtor and the method, manner, time, place and terms of
the foreclosure. Generally, a sale conducted according to the usual practice of
banks selling similar collateral will be considered reasonably conducted.

         Article 9 of the UCC provides that the proceeds of the sale will be
applied first to pay the costs and expenses of the sale and then to satisfy the
indebtedness secured by the lender's security interest. The recognition
agreement, however, generally provides that the lender's right to reimbursement
is subject to the right of the 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 when it 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 or other senior 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 mortgagee or beneficiary to receive and apply hazard
insurance and condemnation proceeds and, upon default of the mortgagor, 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 mortgagee'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" herein.

         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 mortgagor or trustor to
perform any of its obligations, the senior mortgagee 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 mortgagee or
beneficiary become part of the indebtedness secured by the mortgage or deed of
trust. To the extent a first mortgagee expends such 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 mortgagee under a mortgage to obtain a deficiency judgment against
the mortgagor following foreclosure or sale under a deed of trust. A deficiency
judgment would be a personal judgment against the former mortgagor 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 mortgagor.
In certain other states, the lender has the option of bringing a personal action
against the mortgagor on the debt without first exhausting such security;
however, in some of these states, the lender, following judgment on such
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

                                        61


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 mortgagor. Finally, other statutory provisions limit any
deficiency judgment against the former mortgagor 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
mortgagor 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 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 UCC governs foreclosure on cooperative
shares and the related proprietary lease or occupancy agreement. Some courts
have interpreted section 9-504 of the UCC to prohibit a deficiency award unless
the creditor establishes that the sale of the collateral (which, in the case of
a Cooperative Loan, would be the shares of the Cooperative and the related
proprietary lease or occupancy agreement) was conducted in a commercially
reasonable manner.

ENVIRONMENTAL 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

                                        62


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
Securities 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 mortgagor 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 contained in mortgage loans originated by
federal savings and loan associations or 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 such 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.

SUBORDINATE FINANCING

         Where a mortgagor encumbers mortgaged property with one or more junior
liens, the senior lender is subjected to additional risk. First, the mortgagor
may have difficulty servicing and repaying multiple loans. In addition, if the
junior loan permits recourse to the mortgagor (as junior loans often do) and the
senior loan does not, a mortgagor may be more likely to repay sums due on the
junior loan than those on the senior loan. Second, 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
mortgagor 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 mortgagor is
additionally burdened. Third, if the mortgagor defaults on the senior loan
and/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. Moreover, 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 ("Title V"), provides that state
usury limitations shall not apply to certain types of residential

                                        63


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
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
and/or to limit discount points or other charges.

         The Depositor believes 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 such mortgage
loans, any such limitation under such state's usury law would not apply to such
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 such state action will be eligible
for inclusion in a Trust Fund unless (i) such mortgage loan provides for such
interest rate, discount points and charges as are permitted in such state or
(ii) such mortgage loan provides that the terms thereof shall be construed in
accordance with the laws of another state under which such interest rate,
discount points and charges would not be usurious and the mortgagor's counsel
has rendered an opinion that such 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 mortgagor 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 mortgagor 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. Such
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"). Title VIII provides that, notwithstanding
any state law to the contrary, 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; 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 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 provides that any state may reject applicability of the provisions of Title
VIII by adopting, prior to October 15, 1985, a law or constitutional provision
expressly rejecting the applicability of such provisions. Certain states have
taken such action.

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SERVICEMEMBERS CIVIL RELIEF ACT

         The Servicemembers Civil Relief Act was recently signed into law,
revising the Soldiers' and Sailors' Civil Relief Act of 1940 (the "Relief Act").
Under the terms of the Relief Act, a mortgagor who enters military service after
the origination of such mortgagor's Mortgage Loan (including a mortgagor 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% (and all interest in excess of 6% shall be forgiven) during the
period of such mortgagor's active duty status, unless a court orders otherwise
upon application of the lender. The Relief Act applies to mortgagors who are
members of all branches of the military (including draftees and reservists in
military service called to active duty). Because the Relief Act applies to
mortgagors 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 Relief Act.
Application of the Relief Act 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 Relief Act 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, unless otherwise specified in the
related Prospectus Supplement, any form of Credit Support provided in connection
with such Certificates. In addition, the Relief Act imposes limitations that
would impair the ability of the servicer to foreclose on an affected Mortgage
Loan during the mortgagor's period of active duty status, and, under certain
circumstances, during an additional three month period thereafter. Thus, in the
event that such a Mortgage Loan goes into default, there may be delays and
losses occasioned thereby.

FORFEITURES IN DRUG AND RICO PROCEEDINGS

         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 avoid
forfeiture of 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.

THE CONTRACTS

         General. The manufactured housing contracts and home improvement
contracts, other than those that are unsecured or are secured by mortgages on
real estate generally, are "chattel paper" or constitute "purchase money
security interests" each as defined in the UCC. Pursuant to the UCC, the sale of
chattel paper is treated in a manner similar to perfection of a security
interest in chattel paper. Under the related agreement, the Depositor or the
seller will transfer physical possession of the contracts to the trustee or a
designated custodian or may retain possession of the contracts as custodian for
the trustee. In addition, the Depositor will make an appropriate filing of a
UCC-1 financing statement in the appropriate states to, among other things, give
notice of the trust fund's ownership of the contracts. The contracts will not be
stamped or otherwise marked to reflect their assignment from the Depositor or
the trustee unless the related prospectus supplement states that they will be so
stamped. With respect to each transaction, a decision will be made as to whether
or not the contracts will be stamped or otherwise marked to reflect their
assignment from the Depositor to the trustee, based upon, among other things,
the practices and procedures of the related originator and servicer and after
consultation with the applicable rating agency or

                                        65


rating agencies. Therefore, if the contracts are not stamped or otherwise marked
to reflect their assignment from the Depositor to the trustee and through
negligence, fraud or otherwise, a subsequent purchaser were able to take
physical possession of the contracts without notice of the assignment, the trust
fund's interest in the contracts could be defeated.

         Security Interests in Home Improvements. The contracts that are secured
by home improvements grant to the originator of those contracts a purchase money
security interest in the home improvements to secure all or part of the purchase
price of the home improvements and related services. A financing statement
generally is not required to be filed to perfect a purchase money security
interest in consumer goods. The purchase money security interests are
assignable. In general, a purchase money security interest grants to the holder
a security interest that has priority over a conflicting security interest in
the same collateral and the proceeds of that collateral. However, to the extent
that the collateral subject to a purchase money security interest becomes a
fixture, in order for the related purchase money security interest to take
priority over a conflicting interest in the fixture, the holder's interest in
that home improvement must generally be perfected by a timely fixture filing. In
general, a security interest does not exist under the UCC in ordinary building
material incorporated into an improvement on land. Home improvement contracts
that finance lumber, bricks, other types of ordinary building materials or other
goods that are deemed to lose that characterization upon incorporation of those
materials into the related property, will not be secured by a purchase money
security interest in the home improvement being financed.

         Enforcement of Security Interest in Home Improvements. So long as the
home improvement is not governed by real estate law, a creditor can repossess a
home improvement securing a contract by voluntary surrender, by "self-help"
repossession that is "peaceful"--i.e., without breach of the peace--or, in the
absence of voluntary surrender and the ability to repossess without breach of
the peace, by judicial process. The holder of a contract must give the debtor a
number of days' notice, which varies from 10 to 30 days depending on the state,
prior to commencement of any repossession. The UCC and consumer protection laws
in most states place restrictions on repossession sales, including requiring
prior notice to the debtor and commercial reasonableness in effecting a
repossession sale. The law in most states also requires that the debtor be given
notice of any sale prior to resale of the unit that the debtor may redeem at or
before the resale.

         Under the laws of most states, a creditor is entitled to obtain a
deficiency judgment from a debtor for any deficiency on repossession and resale
of the property securing the debtor's mortgage loan. However, some states impose
prohibitions or limitations on deficiency judgments, and in many cases the
defaulting borrower would have no assets with which to pay a judgment. Other
statutory provisions, including federal and state bankruptcy and insolvency laws
and general equitable principles, may limit or delay the ability of a lender to
repossess and resell collateral or enforce a deficiency judgment.

         Security Interests in the Manufactured Homes. The manufactured homes
securing the manufactured housing contracts may be located in all 50 states and
the District of Columbia. Security interests in manufactured homes may be
perfected either by notation of the secured party's lien on the certificate of
title or by delivery of the required documents and payment of a fee to the state
motor vehicle authority, depending on state law. The security interests of the
related trustee in the manufactured homes will not be noted on the certificates
of title or by delivery of the required documents and payment of fees to the
applicable state motor vehicle authorities unless the related prospectus
supplement so states. With respect to each transaction, a decision will be made
as to whether or not the security interests of the related trustee in the
manufactured homes will be noted on the certificates of title and the required
documents and fees will be delivered to the applicable state motor vehicle
authorities based upon, among other things, the practices and procedures of the
related originator and servicer and after consultation with the applicable
rating agency or rating agencies. In some nontitle states, perfection pursuant
to the provisions of the UCC is required. As manufactured homes have become
large and often have been attached to their sites without any apparent intention
to move them, courts in many states have held that manufactured homes, under
particular circumstances, may become governed by real estate title and recording
laws. As a result, a security interest in a manufactured home could be rendered
subordinate to the interests of other

                                        66


parties claiming an interest in the manufactured home under applicable state
real estate law. In order to perfect a security interest in a manufactured home
under real estate laws, the secured party must file either a "fixture filing"
under the provisions of the UCC or a real estate mortgage under the real estate
laws of the state where the home is located. These filings must be made in the
real estate records office of the county where the manufactured home is located.
If so specified in the related prospectus supplement, the manufactured housing
contracts may contain provisions prohibiting the borrower from permanently
attaching the manufactured home to its site. So long as the borrower does not
violate this agreement, a security interest in the manufactured home will be
governed by the certificate of title laws or the UCC, and the notation of the
security interest on the certificate of title or the filing of a UCC financing
statement will be effective to maintain the priority of the security interest in
the manufactured home. If, however, a manufactured home is permanently attached
to its site, the related lender may be required to perfect a security interest
in the manufactured home under applicable real estate laws.

         In the event that the owner of a manufactured home moves it to a state
other than the state in which the manufactured home initially is registered,
under the laws of most states the perfected security interest in the
manufactured home would continue for four months after that relocation and,
after expiration of the four months, only if and after the owner re-registers
the manufactured home in that state. If the owner were to relocate a
manufactured home to another state and not re-register a security interest in
that state, the security interest in the manufactured home would cease to be
perfected. A majority of states generally require surrender of a certificate of
title to re-register a manufactured home; accordingly, the secured party must
surrender possession if it holds the certificate of title to that manufactured
home or, in the case of manufactured homes registered in states which provide
for notation of lien on the certificate of title, notice of surrender would be
given to the secured party noted on the certificate of title. In states that do
not require a certificate of title for registration of a manufactured home,
re-registration could defeat perfection of the security interest.

         Under the laws of most states, liens for repairs performed on a
manufactured home and liens for personal property taxes take priority over a
perfected security interest in the manufactured home.

         Consumer Protection Laws. The so-called "Holder-in-Due Course" rule of
the FTC is intended to defeat the ability of the transferor of a consumer credit
contract who is the seller of goods which gave rise to the transaction, and
particular, related lenders and assignees, to transfer that contract free of
notice of claims by the contract debtor. The effect of this rule is to subject
the assignee of a contract of this type to all claims and defenses that the
debtor under the contract could assert against the seller of goods. Liability
under this rule is limited to amounts paid under a contract; however, the
obligor also may be able to assert the rule to set off remaining amounts due as
a defense against a claim brought by the trustee against that obligor. Numerous
other federal and state consumer protection laws impose requirements applicable
to the origination and lending pursuant to the contracts, including the Truth in
Lending Act, the Federal Trade Commission Act, the Fair Credit Billing Act, the
Fair Credit Reporting Act, the Equal Credit Opportunity Act, the Fair Debt
Collection Practices Act and the Uniform Consumer Credit Code. In the case of
some of these laws, the failure to comply with their provisions may affect the
enforceability of the related contract.

         Applicability of Usury Laws. Title V provides that state usury
limitations shall not apply to any contract that is secured by a first lien on
particular kinds of consumer goods, unless it is covered by any of the following
conditions. The contracts would be covered if they satisfy conditions governing,
among other things, the terms of any prepayments, late charges and deferral fees
and requiring a 30-day notice period prior to instituting any action leading to
repossession of the related unit.

         Title V authorized any state to reimpose limitations on interest rates
and finance charges by adopting before April 1, 1983 a law or constitutional
provision which expressly rejects application of the federal law. Fifteen states
adopted a similar law prior to the April 1, 1983 deadline. In addition, even
where Title V was not 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.

         Installment Contracts. The Mortgage Loans may also consist of
installment contracts. Under an installment contract the property seller, as
lender under the contract, retains legal title to the property and

                                        67


enters into an agreement with the purchaser, as borrower under the contract, for
the payment of the purchase price, plus interest, over the term of that
contract. Only after full performance by the borrower of the contract is the
lender obligated to convey title to the property to the purchaser. As with
mortgage or deed of trust financing, during the effective period of the
installment contract, the borrower is generally responsible for maintaining the
property in good condition and for paying real estate taxes, assessments and
hazard insurance premiums associated with the property.

         The method of enforcing the rights of the lender under an installment
contract varies on a state-by-state basis depending upon the extent to which
state courts are willing, or able pursuant to state statute, to enforce the
contract strictly according to its terms. The terms of installment contracts
generally provide that upon a default by the borrower, the borrower loses his or
her right to occupy the property, the entire indebtedness is accelerated, and
the buyer's equitable interest in the property is forfeited. The lender in that
type of situation does not have to foreclose in order to obtain title to the
property, although in some cases a quiet title action is in order if the
borrower has filed the installment contract in local land records and an
ejectment action may be necessary to recover possession. In a few states,
particularly in cases of borrower default during the early years of an
installment contract, the courts will permit ejectment of the buyer and a
forfeiture of his or her interest in the property. However, most state
legislatures have enacted provisions by analogy to mortgage law protecting
borrowers under installment contracts from the harsh consequences of forfeiture.
Under those statutes, a judicial or nonjudicial foreclosure may be required, the
lender may be required to give notice of default and the borrower may be granted
some grace period during which the installment contract may be reinstated upon
full payment of the default amount and the borrower may have a post-foreclosure
statutory redemption right. In other states, courts in equity may permit a
borrower with significant investment in the property under an installment
contract for the sale of real estate to share in the proceeds of sale of the
property after the indebtedness is repaid or may otherwise refuse to enforce the
forfeiture clause. Nevertheless generally speaking, the lender's procedures for
obtaining possession and clear title under an installment contract in a given
state are simpler and less time-consuming and costly than are the procedures for
foreclosing and obtaining clear title to a property that is encumbered by one or
more liens.

                    MATERIAL FEDERAL INCOME TAX CONSEQUENCES

         The following summary of the anticipated material federal income tax
consequences of the purchase, ownership and disposition of Offered Certificates
represents the opinion of Dechert LLP or Thacher Proffitt & Wood, counsel to the
Depositor, as of the date of this Prospectus. This summary is based on the
Internal Revenue Code of 1986, as amended (the "Code"), laws, regulations,
including the REMIC regulations promulgated by the Treasury Department (the
"REMIC Regulations"), 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 Securities 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 Securities.

         The term "U.S. Person" means a citizen or resident of the United
States, a corporation, partnership or other entity created or organized in or
under the laws of the United States or any state thereof or the District of
Columbia (other than a partnership that is not treated as a United States person
under any applicable Treasury regulations), an estate whose income is subject to
U.S. federal income tax regardless of its source, 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 United States persons have the authority to control
all substantial decisions of the trust. Notwithstanding the preceding sentence,
to the extent provided in regulations, certain trusts in existence on August 20,
1996 and treated as United States persons prior to such date that elect to
continue to be treated as United States persons shall be considered U.S. Persons
as well.

                                        68


GENERAL

         The federal income tax consequences to Securityholders will vary
depending on whether an election is made to treat the Trust Fund relating to a
particular Series of Securities as a REMIC under the Code. The Prospectus
Supplement for each Series of Securities will specify whether a REMIC election
will be made.

GRANTOR TRUST FUNDS

         If the related Prospectus Supplement indicates that the Trust Fund will
be treated as a grantor trust, then Dechert LLP or Thacher Proffitt & Wood will
deliver its opinion that the Trust Fund will not be classified as an association
taxable as a corporation and that each such Trust Fund will be classified as a
grantor trust under subpart E, Part I of subchapter J of the 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 below.

         1. 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 Assets in the Pool. Any amounts received by a
Grantor Trust Certificateholder in lieu of amounts due with respect to any
Mortgage Asset 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 such 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 ("OID"), if any,
prepayment fees, assumption fees, any gain recognized upon an assumption and
late payment charges received by the Master Servicer. Under 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 such 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 such expenses plus all other 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 (which
amount will be adjusted for inflation) will be reduced by the lesser of (i) 3%
of the excess of adjusted gross income over the applicable amount and (ii) 80%
of the amount of itemized deductions otherwise allowable for such taxable year.
This reduction is currently scheduled to be phased-out over a five-year period
beginning in 2006. 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. A Grantor Trust
Certificateholder using an accrual method of accounting must take into account
its pro rata share of income and deductions as they become due or are paid to
the Master Servicer, whichever is earlier. If the servicing fees paid to the
Master Servicer are deemed to exceed reasonable servicing compensation, the
amount of such 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 Assets. The Mortgage Assets would then be subject to
the "coupon stripping" rules of the Code discussed below.

                                        69


         Unless otherwise specified in the related Prospectus Supplement, as to
each Series of Certificates evidencing an interest in a Trust Fund comprised of
Mortgage Loans, Dechert LLP or Thacher Proffitt & Wood will have advised the
Depositor that:

         (i)     a Grantor Trust Certificate owned by a "domestic building and
                 loan association" within the meaning of Code Section
                 7701(a)(19) representing principal and interest payments on
                 Mortgage Assets will be considered to represent "loans . . .
                 secured by an interest in real property which is . . .
                 residential property" within the meaning of Code Section
                 7701(a)(19)(C)(v), to the extent that the Mortgage Assets
                 represented by that Grantor Trust Certificate are of a type
                 described in such Code section;

         (ii)    a Grantor Trust Certificate owned by a real estate investment
                 trust representing an interest in Mortgage Assets will be
                 considered to represent "real estate assets" within the meaning
                 of Code Section 856(c)(4)(A), and interest income on the
                 Mortgage Assets will be considered "interest on obligations
                 secured by mortgages on real property" within the meaning of
                 Code Section 856(c)(3)(B), to the extent that the Mortgage
                 Assets represented by that Grantor Trust Certificate are of a
                 type described in such Code section;

         (iii)   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 Code Section
                 860G(a)(3); and

         (iv)    a Grantor Trust Certificate representing interests in
                 obligations secured by manufactured housing treated as a
                 single-family residence under Section 25(e)(10) of the Code
                 will be considered interests in "qualified mortgages" as
                 defined in Section 860G(a)(3) of the Code.

         The Small Business Job Protection Act of 1996, as part of the repeal of
the bad debt reserve method for thrift institutions, repealed the application of
Code Section 593(d) to any taxable year beginning after December 31, 1995.

         Stripped Bonds and Coupons. Certain Trust Funds may consist of
Government Securities which constitute "stripped bonds" or "stripped coupons" as
those terms are defined in Code Section 1286, and, as a result, such assets
would be subject to the stripped bond provisions of the Code. Under these rules,
such Government Securities are treated as having OID 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 OID 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 such 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 Code. There are no directly 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 such holder's undivided interest in each Mortgage Asset
based on each Mortgage Asset's relative fair market value, so that such holder's
undivided interest in each Mortgage Asset will have its own tax basis. A Grantor
Trust Certificateholder that acquires an interest in Mortgage Assets at a
premium may elect to amortize such premium under a constant interest method,
provided that the underlying mortgage loans with respect to such Mortgage Assets
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.

                                        70


Amortizable bond premium will be treated as an offset to interest income on such
Grantor Trust Certificate. The basis for such 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 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 a Mortgage 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 such Mortgage Loan
(or underlying mortgage loan). If a reasonable prepayment assumption is used to
amortize such 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.

         On December 30, 1997 the IRS issued final regulations (the "Amortizable
Bond Premium Regulations") dealing with amortizable bond premium. These
regulations specifically do not apply to prepayable debt instruments subject to
Code Section 1272(a)(6) such as the Certificates. Absent further guidance from
the IRS, the Trustee intends to account for amortizable bond premium in the
manner described above. Prospective Certificateholders should consult their tax
advisors regarding the possible application of the amortizable Bond Premium
Regulations.

         Original Issue Discount. The IRS has stated in published rulings that,
in circumstances similar to those described herein, the special rules of the
Code relating to original issue discount ("OID")(currently Code Sections 1271
through 1273 and 1275) and Treasury regulations issued on January 27, 1994, as
amended on June 11, 1996, under such Sections (the "OID Regulations"), will be
applicable to a Grantor Trust Certificateholder's interest in those Mortgage
Assets meeting the conditions necessary for these Sections to apply. Rules
regarding periodic inclusion of OID income are applicable to mortgages of
corporations originated after May 27, 1969, mortgages of noncorporate mortgagors
(other than individuals) originated after July 1, 1982, and mortgages of
individuals originated after March 2, 1984. Such OID 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 Code provisions or are not
for services provided by the lender. OID 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 Assets may be subject to the market discount
rules of Code Sections 1276 through 1278 to the extent an undivided interest in
a Mortgage 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 such Mortgage Asset allocable to such holder's
undivided interest over such 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 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 Code Sections 1276 through 1278.

         The Code provides that any principal payment (whether a scheduled
payment or a prepayment) or any gain on disposition of a market discount bond
acquired by the taxpayer after October 22, 1986 shall be treated as ordinary
income to the extent that it does not exceed the accrued market discount at the
time

                                        71


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 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 OID, the amount of market discount that
accrues during any accrual period would be equal to the product of:

         (i)     the total remaining market discount and

         (ii)    a fraction, the numerator of which is the OID accruing during
                 the period and the denominator of which is the total remaining
                 OID at the beginning of the accrual period.

         For Grantor Trust Certificates issued without OID, the amount of market
discount that accrues during a period is equal to the product of:

         (i)     the total remaining market discount and

         (ii)    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 OID 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 such 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 such market discount is includible in income. If such holder elects to
include market discount in income currently as it accrues on all market discount
instruments acquired by such holder in that taxable year or thereafter, the
interest deferral rule described above will not apply.

         Election to Treat All Interest as OID. The OID Regulations permit a
Certificateholder to elect to accrue all interest, discount (including de
minimis market or original issue discount) and premium in income as interest,
based on a constant yield method for Certificates acquired on or after April 4,
1994. If such an 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 instruments having amortizable bond premium that such
Certificateholder owns or acquires. See "--Premium" herein. The election to
accrue interest, discount and premium on a constant yield method with respect to
a Certificate is irrevocable.

         2. Multiple Classes of Grantor Trust Certificates

         a. Stripped Bonds and Stripped Coupons

                                        72


         Pursuant to Code Section 1286, the separation of ownership of the right
to receive some or all of the interest payments on an obligation from ownership
of the right to receive some or all of the principal payments results in the
creation of "stripped bonds" with respect to principal payments and "stripped
coupons" with respect to interest payments. For purposes of Code Sections 1271
through 1288, Code Section 1286 treats a stripped bond or a stripped coupon as
an obligation issued on the date that such stripped interest is created. If a
Trust Fund is created with two classes of Grantor Trust Certificates, one class
of Grantor Trust Certificates may represent the right to principal and interest,
or principal only, on all or a portion of the Mortgage Assets (the "Stripped
Bond Certificates"), while the second class of Grantor Trust Certificates may
represent the right to some or all of the interest on such portion (the
"Stripped Coupon Certificates").

         Servicing fees in excess of reasonable servicing fees ("excess
servicing") will be treated under the stripped bond rules. If the excess
servicing fee is less than 100 basis points (i.e., 1% interest on the Mortgage
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 IRS appears to require that reasonable
servicing fees be calculated on a Mortgage Asset by Mortgage Asset basis, which
could result in some Mortgage Assets being treated as having more than 100 basis
points of interest stripped off.

         Although not entirely clear, a Stripped Bond Certificate generally
should be treated as an in interest in Mortgage Assets issued on the day such
Certificate is purchased for purposes of calculating any OID. Generally, if the
discount on a Mortgage Asset is larger than a de minimis amount (as calculated
for purposes of the OID rules) a purchaser of such a Certificate will be
required to accrue the discount under the OID rules of the Code. See "--Single
Class of Grantor Trust Certificates--Original Issue Discount" herein. However, a
purchaser of a Stripped Bond Certificate will be required to account for any
discount on the Mortgage Assets as market discount rather than OID if either:

         (i)     the amount of OID with respect to the Mortgage Assets is
                 treated as zero under the OID de minimis rule when the
                 Certificate was stripped or

         (ii)    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 Assets.

         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
IRS 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 Code could be read literally to require that OID
computations be made for each payment from each Mortgage Asset. However, based
on the recent IRS guidance, it appears that all payments from a Mortgage Asset
underlying a Stripped Coupon Certificate should be treated as a single
installment obligation subject to the OID rules of the Code, in which case, all
payments from such Mortgage Asset would be included in the Mortgage Asset's
stated redemption price at maturity for purposes of calculating income on such
certificate under the OID rules of the Code.

         It is unclear under what circumstances, if any, the prepayment of
Mortgage Assets will give rise to a loss to the holder of a Stripped Bond
Certificate purchased at a premium or a Stripped Coupon Certificate. If such
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 such 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
such Certificate is treated as an interest in discrete Mortgage Assets, or if no
prepayment assumption is used, then when a Mortgage Asset is prepaid, the holder
of such Certificate should be able to recognize a loss equal to the portion of
the adjusted issue price of such Certificate that is allocable to such Mortgage
Asset.

                                        73


         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 Code sections provide beneficial
treatment to certain taxpayers that invest in Mortgage Assets of the type that
make up the Trust Fund. With respect to these 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 Assets. While Code Section 1286 treats a stripped obligation
as a separate obligation for purposes of the Code provisions addressing OID, it
is not clear whether such characterization would apply with regard to these
other Code sections. Although the issue is not free from doubt, based on policy
considerations, each class of Grantor Trust Certificates, unless otherwise
specified in the related Prospectus Supplement, should be considered to
represent "real estate assets" within the meaning of Code Section 856(c)(4)(A)
and "loans . . . secured by, an interest in real property which is . . .
residential real property" within the meaning of 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 Code Section 856(c)(3)(B), provided that in each
case the underlying Mortgage Assets and interest on such Mortgage Assets 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. Grantor Trust Certificates will be "obligation[s] . . . which [are]
principally secured, directly or indirectly, by an interest in real property"
within the meaning of Code Section 860G(a)(3).

         b. Grantor Trust Certificates Representing Interests in Loans other
than ARM Loans

         The OID rules of Code Sections 1271 through 1275 will be applicable to
a Certificateholder's interest in those Mortgage Assets as to which the
conditions for the application of those sections are met. Rules regarding
periodic inclusion of OID in income are applicable to mortgages of corporations
originated after May 27, 1969, mortgages of noncorporate mortgagors (other than
individuals) originated after July 1, 1982, and mortgages of individuals
originated after March 2, 1984. Under the OID Regulations, such OID could arise
by the charging of points by the originator of the mortgage in an amount greater
than the statutory de minimis exception, including a payment of points that is
currently deductible by the borrower under applicable Code provisions, or under
certain circumstances, by the presence of "teaser" rates on the Mortgage Assets.
OID 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 OID
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 Assets other
than Mortgage Assets with interest rates that adjust periodically (ARM 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 "1986 Act"). The
OID Regulations generally are effective for debt instruments issued on or after
April 4, 1994, but may be relied upon as authority with respect to debt
instruments, such as the Grantor Trust Certificates, issued after December 21,
1992. Alternatively, proposed Treasury regulations issued December 21, 1992 may
be treated as authority for debt instruments issued after December 21, 1992 and
prior to April 4, 1994, and proposed Treasury regulations issued in 1986 and
1991 may be treated as authority for instruments issued before December 21,
1992. In applying these dates, the issue date of the Mortgage Assets should be
used, or, in the case of Stripped Bond Certificates or Stripped Coupon
Certificates, the date such Certificates are acquired. The holder of a
Certificate should be aware, however, that neither the proposed OID Regulations
nor the OID Regulations adequately address certain issues relevant to prepayable
securities.

         Under the Code, the Mortgage Assets underlying the Grantor Trust
Certificate will be treated as having been issued on the date they were
originated with an amount of OID equal to the excess of such Mortgage Asset's
stated redemption price at maturity over its issue price. The issue price of a
Mortgage Asset is generally the amount lent to the mortgagee, which may be
adjusted to take into account certain loan origination fees. The stated
redemption price at maturity of a Mortgage Asset is the sum of all

                                       74


payments to be made on such Mortgage Asset other than payments that are treated
as qualified stated interest payments. The accrual of this OID, as described
below under "--Accrual of Original Issue Discount," will, unless otherwise
specified in the related Prospectus Supplement, utilize 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 (the "Prepayment Assumption"), 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. The legislative history of the 1986 Act (the "Legislative History")
provides, however, that the regulations will require that the Prepayment
Assumption be the prepayment assumption that is used in determining the offering
price of such Certificate. No representation is made that any Certificate will
prepay at the Prepayment Assumption or at any other rate. The prepayment
assumption contained in the Code literally only applies to debt instruments
collateralized by other debt instruments that are subject to prepayment rather
than direct ownership interests in such debt instruments, such as the
Certificates represent. However, no other legal authority provides guidance with
regard to the proper method for accruing OID on obligations that are subject to
prepayment, and, until further guidance is issued, the Master Servicer intends
to calculate and report OID under the method described below.

         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, of the OID on such Grantor Trust Certificate for each day on
which it owns such Certificate, including the date of purchase but excluding the
date of disposition. In the case of an original owner, the daily portions of OID
with respect to each component generally will be determined as set forth under
the OID Regulations. A calculation will be made by the Master Servicer or such
other entity specified in the related Prospectus Supplement of the portion of
OID that accrues during each successive monthly accrual period (or shorter
period from the date of original issue) that ends on the day in the calendar
year corresponding to each of the Distribution Dates on the 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:

         (i)     adding

                 (a)     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

                 (b)     any payments included in the state redemption price at
                         maturity received during such accrual period, and

         (ii)    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 OID 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 OID accruing during such
accrual period will then be divided by the number of days in the period to
determine the daily portion of OID for each day in the period. With respect to
an initial accrual period shorter than a full monthly accrual period, the daily
portions of OID must be determined according to an appropriate allocation under
any reasonable method.

         OID 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 OID
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 OID, less prior
payments of principal. Accordingly, if such Mortgage Assets

                                        75


acquired by a Certificateholder are purchased at a price equal to the then
unpaid principal amount of such Mortgage Asset, no OID attributable to the
difference between the issue price and the original principal amount of such
Mortgage Asset (i.e. points) will be includible by such holder. Other OID on the
Mortgage Assets (e.g., that arising from a "teaser" rate) would still need to be
accrued.

         c. Grantor Trust Certificates Representing Interests in ARM Loans

         The OID Regulations do not address the treatment of instruments, such
as the Grantor Trust Certificates, which represent interests in ARM Loans.
Additionally, the IRS has not issued guidance under the Code's coupon stripping
rules with respect to such instruments. In the absence of any authority, the
Master Servicer will report OID on Grantor Trust Certificates attributable to
ARM Loans ("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 ARM 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 interest deferred by
reason of negative amortization ("Deferred Interest") to the principal balance
of an ARM Loan may require the inclusion of such amount in the income of the
Grantor Trust Certificateholder when such amount accrues. Furthermore, the
addition of Deferred Interest to the Grantor Trust Certificate's principal
balance will result in additional income (including possibly OID 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.

         3. 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 OID 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 Code Section 1221, and
will be long-term or short-term depending on whether the Grantor Trust
Certificate has been owned for the long-term capital gain holding period
(generally more than one year). Long-term capital gains of non-corporate
taxpayers are subject to reduced maximum rates while short-term capital gains
are taxable at ordinary rates. The use of capital losses is subject to
limitations.

         Prospective investors should consult their own tax advisors concerning
the treatment of capital gains.

         Grantor Trust Certificates will be "evidences of indebtedness" within
the meaning of Code Section 582(c)(1), so that gain or loss recognized from the
sale of a Grantor Trust Certificate by a bank or a thrift institution to which
such section applies will be treated as ordinary income or loss.

         4. Non-U.S. Persons

         Generally, to the extent that a Grantor Trust Certificate evidences
ownership in underlying Mortgage Assets that were issued on or before July 18,
1984, interest or OID paid by the person required to withhold tax under Code
Section 1441 or 1442 to (i) an owner that is not a U.S. Person or (ii) a Grantor
Trust Certificateholder 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. Accrued OID 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 Assets issued
after July 18, 1984, by natural persons if such Grantor Trust Certificateholder
complies with certain identification requirements (including delivery of a
statement,

                                        76


signed by the Grantor Trust Certificateholder under penalties of perjury,
certifying that such Grantor Trust Certificateholder is not a U.S. Person and
providing the name and address of such Grantor Trust Certificateholder).
Additional restrictions apply to Mortgage Assets where the mortgagor is not a
natural person in order to qualify for the exemption from withholding.

         5. 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 such 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 such 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 may be required with respect to any payments. Any
amounts deducted and withheld on account of backup withholding from a
distribution to a recipient would be allowed as a credit against such
recipient's federal income tax liability. The backup withholding rate is
currently 28%. This rate is scheduled to adjust for tax years after 2010.

NEW WITHHOLDING REGULATIONS

         On January 1, 2001 new regulations (the "New Regulations") became
effective (subject to certain transition rules) which make certain modifications
to the withholding, backup withholding and information reporting rules described
above. The New Regulations attempt to unify certification requirements and
modify reliance standards. Prospective investors are urged to consult their own
tax advisors regarding the New Regulations.

REMICS


         The Trust Fund relating to a Series of Certificates may elect to be
treated as a REMIC. 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 Tax 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 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 Code provides that a Trust Fund will not be
treated as a REMIC for such year and thereafter. In that event, such entity may
be taxable as a separate corporation, and the related Certificates (the "REMIC
Certificates") may not be accorded the status or given the tax treatment
described below. While the Code authorizes the Treasury Department to issue
regulations providing relief in the event of an inadvertent termination of the
status of a trust fund as a REMIC, no such regulations have been issued. Any
such 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, Dechert LLP or Thacher Proffitt & Wood will
deliver its opinion generally to the effect that, under then existing law and
assuming compliance with all provisions of the related Pooling and Servicing
Agreement, such Trust Fund will qualify as a REMIC, and the related Certificates
will be considered to be regular interests ("REMIC Regular Certificates") or a
sole class of residual interests ("REMIC Residual Certificates") in the REMIC.
The related Prospectus Supplement for each Series of Certificates will indicate
whether the Trust Fund will make a REMIC election and whether a class of
Certificates will be treated as a regular or residual interest in the REMIC.

         In general, with respect to each Series of Certificates for which a
REMIC election is made, (i) such Certificates held by a thrift institution taxed
as a "domestic building and loan association" will

                                        77


constitute assets described in Code Section 7701(a)(19)(C); (ii) such
Certificates held by a real estate investment trust will constitute "real estate
assets" within the meaning of Code Section 856(c)(4)(A); and (iii) interest on
such Certificates held by a real estate investment trust will be considered
"interest on obligations secured by mortgages on real property" within the
meaning of Code Section 856(c)(3)(B). If less than 95% of the REMIC's assets are
assets qualifying under any of the foregoing Code sections, the Certificates
will be qualifying assets only to the extent that the REMIC's assets are
qualifying assets. In addition, payments on Mortgage Assets held pending
distribution on the REMIC Certificates will be considered to be real estate
assets for purposes of Code Section 856(c). The Small Business Job Protection
Act of 1996, as part of the repeal of the bad debt reserve method for thrift
institutions, repealed the application of Code Section 593(d) to any taxable
year beginning after December 31, 1995.

         In some instances the Mortgage Assets 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 Code Section
856(c)(4)(A), and REMIC Certificates held by a regulated investment company will
not constitute "Government Securities" within the meaning of Code Section
851(b)(3)(A)(ii). REMIC Certificates held by certain financial institutions will
constitute "evidences of indebtedness" within the meaning of Code Section
582(c)(1).

         A "qualified mortgage" for REMIC purposes is any obligation (including
certificates of participation in 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 obligations secured by manufactured
housing that qualify as "single-family residences" within the meaning of Code
Section 25(e)(10) may be treated as "qualified mortgages" of a REMIC. Under Code
Section 25(e)(10), the term "single-family residence" includes any manufactured
home which has a minimum of 400 square feet of living space, a minimum width in
excess of 102 inches and which is of a kind customarily used at a fixed
location.


         Tiered REMIC Structures. For certain Series of Certificates, two
separate elections may be made to treat designated portions of the related Trust
Fund as REMICs (respectively, the "Subsidiary REMIC" and the "Master REMIC") for
federal income tax purposes. Upon the issuance of any such Series of
Certificates, Dechert LLP or Thacher Proffitt & Wood, counsel to the Depositor,
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, respectively, will be considered
to evidence ownership of REMIC Regular Certificates or REMIC Residual
Certificates in the related REMIC within the meaning of the REMIC provisions.

         Only REMIC Certificates, other than the residual interest in the
Subsidiary REMIC, issued by the Master REMIC will be offered hereunder. The
Subsidiary REMIC and the Master REMIC will be treated as one REMIC solely for
purposes of determining whether the REMIC Certificates will be (i) "real estate
assets" within the meaning of Code Section 856(c)(4)(A); (ii) "loans secured by
an interest in real property" under Code Section 7701(a)(19)(C); and (iii)
whether the income on such Certificates is interest described in Code Section
856(c)(3)(B).

         1. 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 OID. Generally, such OID, 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

                                        78


OID will be required to include such OID in gross income for federal income tax
purposes as it accrues, in accordance with a constant interest method based on
the compounding of interest as it accrues rather than in accordance with receipt
of the interest payments. The following discussion is based in part on the OID
Regulations and in part on the provisions of the 1986 Act. Holders of REMIC
Regular Certificates (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 OID are set forth in Code Sections 1271 through 1273
and 1275. These rules require that the amount and rate of accrual of OID be
calculated based on the Prepayment Assumption and the anticipated reinvestment
rate, if any, relating to the REMIC Regular Certificates and prescribe a method
for adjusting the amount and rate of accrual of such discount where the actual
prepayment rate differs from the Prepayment Assumption. Under the Code, the
Prepayment Assumption must be determined in the manner prescribed by
regulations, which regulations have not yet been issued. The Legislative History
provides, however, that Congress intended the regulations to require that the
Prepayment Assumption be the prepayment assumption that is used in determining
the initial offering price of 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 OID. 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 OID 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 date of their initial issuance (the "Closing Date"), the issue
price for such class will be treated as the fair market value of such 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 such distributions constitute
"qualified stated interest." Qualified stated interest generally means interest
payable at a single fixed rate or qualified variable rate (as described below)
provided that such interest payments are unconditionally payable at intervals of
one year or less during the entire term of the REMIC Regular Certificate.
Interest is payable at a single fixed rate only if the rate appropriately takes
into account the length of the interval between payments. Distributions of
interest on REMIC Regular Certificates with respect to which Deferred Interest
will accrue will not constitute qualified stated interest payments, and the
stated redemption price at maturity of such 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. The OID Regulations suggest that all interest on a
long first period REMIC Regular Certificate that is issued with non-de minimis
OID, as determined under the foregoing rule, will be treated as OID. 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.

                                        79


         Under the de minimis rule, OID on a REMIC Regular Certificate will be
considered to be zero if such OID 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
such 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 OID pro rata as principal payments are
received, and such 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 OID as well as market discount under a constant interest method.

         The Prospectus Supplement with respect to a Trust Fund may provide for
certain REMIC Regular Certificates to be issued at prices significantly
exceeding their principal amounts or based on notional principal balances (the
"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 OID. The calculation of income in this manner could result in negative
original issue discount (which delays future accruals of OID rather than being
immediately deductible) when prepayments on the Mortgage Assets exceed those
estimated under the Prepayment Assumption. The IRS might contend, however, that
certain proposed contingent payment rules contained in regulations issued on
December 15, 1994, with respect to OID, should apply to such Certificates.
Although such rules are not applicable to instruments governed by Code Section
1272(a)(6), they represent the only guidance regarding the current views of the
IRS with respect to contingent payment instruments. In the alternative, the IRS
could assert that the stated redemption price at maturity of such REMIC Regular
Certificates should be limited to their principal amount (subject to the
discussion below under "--Accrued Interest Certificates"), so that such REMIC
Regular Certificates would be considered for federal income tax purposes to be
issued at a premium. If such a position were to prevail, the rules described
below under "--Taxation of Owners of REMIC Regular Certificates--Premium" would
apply. It is unclear when a loss may be claimed for any unrecovered basis for a
Super-Premium Certificate. It is possible that a holder of a Super-Premium
Certificate may only claim a loss when its remaining basis exceeds the maximum
amount of future payments, assuming no further prepayments or when the final
payment is received with respect to such Super-Premium Certificate.

         Under the REMIC Regulations, if the issue price of a REMIC Regular
Certificate (other than a REMIC Regular Certificate based on a notional amount)
does not exceed 125% of its actual principal amount, the interest rate is not
considered disproportionately high. Accordingly, such REMIC Regular Certificate
generally should not be treated as a Super-Premium Certificate and the rules
described below under "--Taxation of Owners of REMIC Regular
Certificates--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 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 OID 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

                                        80


made of the portion of the OID 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:

         (i)     adding

                 (a)     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

                 (b)     any payments included in the stated redemption price at
                         maturity received during such accrual period, and

         (ii)    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 OID allocable to that accrual period and reduced by
the amount of any payment other than a payment of qualified stated interest made
at the end of or during that accrual period. The OID accrued during an accrual
period will then be divided by the number of days in the period to determine the
daily portion of OID for each day in the accrual period. The calculation of OID
under the method described above will cause the accrual of OID to either
increase or decrease (but never below zero) in a given accrual period to reflect
the fact that prepayments are occurring faster or slower than under the
Prepayment Assumption. With respect to an initial accrual period shorter than a
full accrual period, the daily portions of OID may be determined according to an
appropriate allocation under any reasonable method.

         A subsequent purchaser of a REMIC Regular Certificate issued with OID
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 OID on that REMIC Regular Certificate.
In computing the daily portions of OID 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:

         (a)     the sum of the issue price plus the aggregate amount of OID
                 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

         (b)     any prior payments included in the stated redemption price at
                 maturity, and the denominator of which is the sum of the daily
                 portions for that REMIC Regular Certificate for all days
                 beginning on the date after the purchase date and ending on the
                 maturity date computed under the Prepayment Assumption. A
                 holder who pays an acquisition premium instead may elect to
                 accrue OID by treating the purchase as a purchase at original
                 issue.

         Variable Rate REMIC Regular Certificates. REMIC Regular Certificates
may provide for interest based on a variable rate. Interest based on a variable
rate will constitute qualified stated interest and not contingent interest if,
generally,

         (i)     such interest is unconditionally payable at least annually,

                                       81


         (ii)    the issue price of the debt instrument does not exceed the
                 total noncontingent principal payments, and

         (iii)   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 such REMIC Regular Certificate.

         The amount of OID 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. Appropriate adjustments are made for the actual variable rate.

         Although unclear at present, the Depositor 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 IRS 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. Such treatment may effect the timing of income accruals on such REMIC
Regular Certificates.

         Election to Treat All Interest as OID. 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 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 and 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
"--Taxation of Owners of REMIC Regular Certificates--Premium" herein. The
election to accrue interest, discount and premium on a constant yield method
with respect to a Certificate is irrevocable.

         Market Discount. A purchaser of a REMIC Regular Certificate may also be
subject to the market discount provisions of Code Sections 1276 through 1278.
Under these provisions and the OID Regulations, "market discount" equals the
excess, if any, of

         (i)     the REMIC Regular Certificate's stated principal amount or, in
                 the case of a REMIC Regular Certificate with OID, the adjusted
                 issue price (determined for this purpose as if the purchaser
                 had purchased such REMIC Regular Certificate from an original
                 holder) over

         (ii)    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 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, such election will apply to all market discount bonds
acquired by such Certificateholder on or after the first day of the first
taxable year to which such 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 such REMIC Regular Certificate's stated redemption price
at maturity multiplied by such REMIC Regular Certificate's weighted average
maturity remaining after the date of purchase. If market discount on a REMIC
Regular

                                        82


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 such 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 Code Sections 1276 through 1278.

         The Code provides that any principal payment (whether a scheduled
payment or a prepayment) or any gain on disposition of a market discount bond
acquired by the taxpayer after October 22, 1986, shall be treated as ordinary
income to the extent that it does not exceed the accrued market discount at the
time of 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 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 OID, the amount of market discount that
accrues during a period is equal to the product of:

         (i)     the total remaining market discount and

         (ii)    a fraction, the numerator of which is the OID accruing during
                 the period and the denominator of which is the total remaining
                 OID at the beginning of the period.

For REMIC Regular Certificates issued without OID, the amount of market discount
that accrues during a period is equal to the product of:

         (a)     the total remaining market discount and

         (b)     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 OID 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 such Certificate purchased with market discount. For these purposes,
the de minimis rule referred to above applies. Any such deferred interest
expense would not exceed the market discount that accrues during such taxable
year and is, in general, allowed as a deduction not later than the year in which
such market discount is includible in income. If such holder elects to include
market discount in income currently as it accrues on all market discount
instruments acquired by such holder in that taxable year or thereafter, the
interest deferral rule described above will not apply.

         Premium. A purchaser of a REMIC Regular Certificate that purchases the
REMIC Regular Certificate at a cost (not including accrued qualified stated
interest) greater than its remaining stated redemption price at maturity will be
considered to have purchased the REMIC Regular Certificate at a premium and may
elect to amortize such 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

                                        83


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 OID) will
also apply in amortizing bond premium under Code Section 171. The 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 such
interest payment. On December 30, 1997, the IRS issued final regulations (the
"Amortizable Bond Premium Regulations") dealing with amortizable bond premium.
These regulations specifically do not apply to prepayable debt instruments
subject to Code Section 1272(a)(6). Absent further guidance from the IRS the
Trust intends to account for amortizable bond premium in the manner described
above. 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 ARM
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 OID
(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 Subordinated Certificates, and in the event
there are defaults or delinquencies on the Mortgage Assets, amounts that would
otherwise be distributed on the Subordinated Certificates may instead be
distributed on the Senior Certificates. Subordinated 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 Subordinated Certificates attributable to defaults and
delinquencies on the Mortgage Assets, except to the extent that it can be
established that such amounts are uncollectible. As a result, the amount of
income reported by a Subordinated 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 Subordinated Certificate is reduced as a result of defaults
and delinquencies on the Mortgage Assets. Timing and characterization of such
losses is discussed in "--Taxation of Owners of REMIC Regular
Certificates--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 OID 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 the holder's adjusted
basis in the REMIC Regular Certificate. A REMIC Regular Certificateholder who
receives a final payment that is less than the holder's adjusted basis in the
REMIC Regular Certificate will generally recognize a loss. Except as provided in
the following paragraph and as provided under "--Market Discount" above, any
such gain or loss will be capital gain or loss, provided that the REMIC Regular
Certificate is held as a "capital asset" (generally, property held for
investment) within the meaning of Code Section 1221. Such gain or loss generally
will be long-term capital gain or loss if the Note were held for more than one
year. Long-term capital gains of non-corporate taxpayers are subject to

                                        84


reduced maximum rates while short-term capital gains are taxable at ordinary
rates. The use of capital losses is subject to limitations. Prospective
investors should consult their own tax advisors concerning the treatment of
capital gains.

         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 such gain does not exceed the excess, if any, of (i) the amount that
would have been includible in such 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 Code Section 1274(d) determined as of the date of purchase of
such REMIC Regular Certificate, over (ii) the amount actually includible in such
holder's income.

         The Certificates will be "evidences of indebtedness" within the meaning
of Code Section 582(c)(1), so that gain or loss recognized from the sale of a
REMIC Regular Certificate by a bank or a thrift institution to which such
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. Certain of the REMIC Regular
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 such interval. Purchasers of Payment Lag Certificates for
which the period between the Closing Date and the first Distribution Date does
not exceed such 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 interest that has accrued
prior to the issue date ("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
Certificates' issue price may be computed by subtracting from the issue price
the amount of pre-issuance accrued interest, rather than as an amount payable on
the REMIC Regular Certificate. However, it is unclear under this method how the
OID Regulations treat interest on Payment Lag Certificates. Therefore, in the
case of a Payment Lag Certificate, the Trust Fund intends to include accrued
interest in the issue price and report interest payments made on the first
Distribution Date as interest to the extent such payments represent interest for
the number of days that the Certificateholder has held such 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 "Taxation of
Owners of REMIC Residual Certificates--Pass-Through Non-Interest Expenses of the
REMIC" below.

         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

                                        85


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. Although the matter is not
entirely clear, non-corporate holders of Certificates may be allowed a bad debt
deduction at such time that the principal balance of any such Certificate is
reduced to reflect realized losses resulting from any liquidated Mortgage
Assets. The Internal Revenue Service, however, could take the position that
non-corporate holders will be allowed a bad debt deduction to reflect realized
losses only after all Mortgage Assets remaining in the related Trust Fund have
been liquidated or the Certificates of the related Series have been otherwise
retired. 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. Such taxpayers
are advised to consult their tax advisors regarding the treatment of losses on
Certificates.

         Non-U.S. Persons. Generally, payments of interest (including any
payment with respect to accrued OID) on the REMIC Regular Certificates 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 (i) such 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; (ii) such REMIC Regular Certificateholder is
not a controlled foreign corporation (within the meaning of Code Section 957)
related to the Issuer; and (iii) such REMIC Regular Certificateholder complies
with certain identification requirements (including delivery of a statement,
signed by the REMIC Regular Certificateholder under penalties of perjury,
certifying that such REMIC Regular Certificateholder is a foreign person and
providing the name and address of such REMIC Regular Certificateholder). If a
REMIC Regular Certificateholder is not exempt from withholding, distributions of
interest to such holder, including distributions in respect of accrued OID, may
be subject to a 30% withholding tax, subject to reduction under any applicable
tax treaty.

         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; provided that the REMIC Regular Certificate is not held in
connection with the conduct of a United States trade or business. However,
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
holders of REMIC Residual Certificates (the "REMIC Residual Certificateholder")
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.

         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 such year, such 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 such information available to beneficial
owners or financial intermediaries that hold such 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 may be required with respect to any payments. Any amounts deducted
and withheld from a distribution to a recipient on account of backup withholding
would be allowed as a credit against such recipient's federal income tax
liability.

                                        86


         New Withholding Regulations. On January 1, 2001 the New Regulations
became effective (subject to certain transition rules) which make certain
modifications to the withholding, backup withholding and information reporting
rules described above. The New Regulations attempt to unify certification
requirements and modify reliance standards. Prospective investors are urged to
consult their own tax advisors regarding the New Regulations.

         2. 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 Tax 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 such 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 such 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
Assets 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.
Investors should consult their own tax advisors concerning the federal income
tax treatment of a REMIC Residual Certificate and the impact of such 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 such REMIC Residual Certificateholder owns
such 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
such REMIC Residual Certificate at a price greater than (or less than) the
adjusted basis such 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 such 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 (i) the income from the
Mortgage Assets and the REMIC's other assets and (ii) the deductions allowed to
the REMIC for interest and OID on the REMIC Regular Certificates and, except as
described above under "--Taxation of Owners of REMIC Regular Certificates--Non-

                                        87


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:

         (i)     the limitations on deductibility of investment interest expense
                 and expenses for the production of income do not apply,

         (ii)    all bad loans will be deductible as business bad debts, and

         (iii)   the 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 Assets
may differ from the time of the actual loss on the Mortgage Asset. 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). Such
aggregate basis will be allocated among the Mortgage Assets and other assets of
the REMIC in proportion to their respective fair market value. A Mortgage Asset
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 OID) will be
includible in the income of the REMIC as it accrues, in advance of receipt of
the cash attributable to such income, under a method similar to the method
described above for accruing OID on the REMIC Regular Certificates. The REMIC
expects to elect under Code Section 171 to amortize any premium on the Mortgage
Assets. Premium on any Mortgage Asset to which such election applies would be
amortized under a constant yield method. It is not clear whether the yield of a
Mortgage Asset 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 OID on the REMIC
Regular Certificates. The amount and method of accrual of OID 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 such REMIC Residual Certificate to such
holder and the adjusted basis such 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. Such net loss
would be allocated among the REMIC Residual

                                        88


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 such net loss exceeds such holder's adjusted basis in
such REMIC Residual Certificate. Any net loss that is not currently deductible
by reason of this limitation may only be used by such 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 Code.

         Mark to Market Rules. A Residual Certificate acquired after January 3,
1995 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 (i) 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 (ii) 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 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, Code Section 68 provides that the amount of itemized
deductions otherwise allowable for an individual whose adjusted gross income
exceeds a certain amount (the "Applicable Amount") will be reduced by the lesser
of (i) 3% of the excess of the individual's adjusted gross income over the
Applicable Amount or (ii) 80% of the amount of itemized deductions otherwise
allowable for the taxable year. This reduction is currently scheduled to be
phased-out over a five-year period beginning in 2006. The amount of additional
taxable income recognized by REMIC Residual Certificateholders who are subject
to the limitations of either Code Section 67 or 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

         IRS 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 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 (i) may not, except as described below, be offset by any
unrelated losses, deductions or loss carryovers of a REMIC Residual
Certificateholder; (ii) will be treated as "unrelated business taxable income"
within the meaning of Code Section 512 if the REMIC Residual Certificateholder
is subject to tax only on its unrelated business taxable income (see
"--Tax-Exempt Investors" below); and (iii) 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. See "--Non-U.S. Persons" below. An

                                        89


exception to the excess inclusion rules that applied to thrifts holding certain
residuals was repealed by the Small Business Tax Act of 1996.

         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 (i) the income of such REMIC Residual
Certificateholder for that calendar quarter from its REMIC Residual Certificate
over (ii) the sum of the "daily accruals" (as defined below) for all days during
the calendar quarter on which the REMIC Residual Certificateholder holds such
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" (as defined below) 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 such 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
IRS.

         In the case of any REMIC Residual Certificates held by a real estate
investment trust, the aggregate excess inclusions with respect to such REMIC
Residual Certificates, reduced (but not below zero) by the real estate
investment trust taxable income (within the meaning of Code Section 857(b)(2),
excluding any net capital gain), will be allocated among the shareholders of
such trust in proportion to the dividends received by such 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 such
shareholder. Regulated investment companies, common trust funds and certain
Cooperatives are subject to similar rules.

         Fees Paid to Transferee of a REMIC Residual Certificate. The federal
income tax consequences of any consideration paid to a transferee on a transfer
of a REMIC Residual Certificate are unclear. Recently proposed regulations would
require a transferee of a noneconomic residual interest to recognize any fee
received to induce such transferee to become a holder of such interest over a
period reasonably related to the period during which the applicable REMIC is
expected to generate taxable income or net loss in a manner that reasonably
reflects the after-tax costs and benefits (without regard to such fee) of
holding such interest. The proposed regulations provide two safe harbor methods
that would satisfy this requirement. Under one method, the fee is recognized in
accordance with the method of accounting, and over the same period, that the
taxpayer uses for financial reporting purposes, provided that the fee is
included in income for financial reporting purposes over a period that is not
shorter than the period during which the applicable REMIC is expected to
generate taxable income. Under a second method, the fee is recognized ratably
over the anticipated weighted average life of the applicable REMIC (as
determined under applicable Treasury regulations) remaining as of the date of
acquisition of the noneconomic residual interest. The IRS may provide additional
safe harbor methods in future guidance. Once a taxpayer adopts a particular
method of accounting for such fees, the taxpayer generally may not change to a
different method without consent of the IRS. Under the proposed regulations, if
any portion of such a fee has not been recognized in full by the time the holder
of a noneconomic residual interest disposes of such interest, then the holder
must include the unrecognized portion in income at that time. The proposed
regulations also provide that such a fee shall be treated as income from sources
within the United States. The regulations are proposed to become effective for
taxable years ending on or after the date the regulations are adopted as final
regulations. It is not known whether the proposed regulations will become
adopted as final regulations or, if they are adopted as final regulations,
whether they will be adopted in their current form. Any transferee receiving
consideration with respect to a REMIC Residual Certificate should consult its
tax advisors.

         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

                                        90


REMIC Residual Certificateholder's adjusted basis in such REMIC Residual
Certificate. To the extent a distribution exceeds such 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 below).
A holder's adjusted basis in a REMIC Residual Certificate generally equals the
cost of such REMIC Residual Certificate to such REMIC Residual
Certificateholder, increased by the taxable income of the REMIC that was
included in the income of such REMIC Residual Certificateholder with respect to
such REMIC Residual Certificate, and decreased (but not below zero) by the net
losses that have been allowed as deductions to such REMIC Residual
Certificateholder with respect to such REMIC Residual Certificate and by the
distributions received thereon by such REMIC Residual Certificateholder. In
general, any such 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 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.

         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 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 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.

         3. Prohibited Transactions Tax and Other Taxes

         The Code imposes a tax on REMICs equal to 100% of the net income
derived from "prohibited transactions" (the "Prohibited Transactions Tax"). In
general, subject to certain specified exceptions, a prohibited transaction means
the disposition of a Mortgage Asset, the receipt of income from a source other
than a Mortgage Asset or certain other permitted investments, the receipt of
compensation for services, or gain from the disposition of an asset purchased
with the payments on the Mortgage Assets 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 such Trust Fund as a REMIC made after the day on
which such Trust Fund issues all of its interests could result in the imposition
of a tax on the Trust Fund equal to 100% of the value of the contributed
property (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 such 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 (i) a breach of the related Master Servicer's, Trustee's or
Asset Seller's obligations, as the case may be, under the related Agreement for
such Series, such tax will be borne by such Master Servicer, Trustee or Asset
Seller, as the case may be, out of its own funds or

                                        91


(ii) the Asset Seller's obligation to repurchase a Mortgage Loan, such tax will
be borne by the Asset Seller. In the event that such Master Servicer, Trustee or
Asset Seller, as the case may be, fails to pay or is not required to pay any
such tax as provided above, such tax will be payable out of the Trust Fund for
such Series and will result in a reduction in amounts available to be
distributed to the Certificateholders of such Series.

         4. Liquidation and Termination

         If the REMIC adopts a plan of complete liquidation, within the meaning
of 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.

         5. Administrative Matters

         Solely for the purpose of the administrative provisions of the Code,
the REMIC generally will be treated as a partnership and the REMIC Residual
Certificateholders will be treated as the partners. Certain 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 IRS 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 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.

         6. 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 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.

         7. Residual Certificate Payments--Non-U.S. Persons

         Amounts paid to REMIC Residual Certificateholders who are not U.S.
Persons 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--Non U.S.
Persons" 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 or the "portfolio
interest" exemption. See

                                       92



"--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 OID. The 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
such entity are not held by "disqualified organizations" (as defined below).
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 (i) 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 (ii) 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" (as defined below) 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. The amount of the tax is equal to the product of (A)
the amount of excess inclusions for the taxable year allocable to the interest
held by the disqualified organization and (B) the highest marginal federal
income tax rate applicable to corporations. The pass-through entity otherwise
liable for the tax, for any period during which the disqualified organization is
the record holder of an interest in such entity, will be relieved of liability
for the tax if such record holder furnishes to such entity an affidavit that
such record holder is not a disqualified organization and, for such period, the
pass-through entity does not have actual knowledge that the affidavit is false.
For this purpose, a "pass-through entity" means (i) a regulated investment
company, real estate investment trust or common trust fund, (ii) a partnership,
trust or estate and (iii) 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. The tax on pass-through entities
is generally effective for periods after March 31, 1988, except that in the case
of

                                        93


regulated investment companies, real estate investment trusts, common trust
funds and publicly-traded partnerships the tax shall apply only to taxable years
of such entities beginning after December 31, 1988. Under the Taxpayer Relief
Act of 1997, large partnerships (generally with 250 or more partners) 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, unless the Master
Servicer receives the following: (i) 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 (ii) 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 unless no significant purpose of the transfer is to impede
the assessment or collection of tax. 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. 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, (i) 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 (ii) 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.

         The Treasury Department recently adopted final regulations setting
forth the requirements of a safe harbor under which a transfer of a noneconomic
REMIC Residual Certificate is presumed to be a valid transfer that will be
respected for federal income tax purposes. To be respected under the safe
harbor:

         o the transferor must perform a reasonable investigation of the
financial status of the transferee and determine that the transferee has
historically paid its debts when they become due and find no significant
evidence to indicate that the transferee will not continue to pay its debts as
they come due (the "reasonable investigation requirement");

         o the transferor must obtain a representation from the transferee to
the effect that the transferee understands that as the holder of the REMIC
Residual Certificate the transferee may incur tax liabilities in excess of the
cash flow from the REMIC Residual Certificate and that the transferee intends to
pay taxes associated with holding the Residual Certificate as they become due;

         o the transferee must represent that it will not cause income from the
REMIC Residual Certificate to be attributable to a foreign permanent
establishment or fixed base (within the meaning of an applicable income tax
treaty) of the transferee or another U.S. taxpayer (together with the
representation described in the preceding bullet point, the "transferee
representation requirement"); and

         the transfer must satisfy either the "asset test" or the "formula
test".

         A transfer satisfies the "asset test" if the following three conditions
are satisfied:

         for financial reporting purposes, the transferee's gross assets exceed
$100 million and its net assets exceed $10 million at the time of the transfer
and at the close of both of the transferee's two preceding

                                        94


         fiscal years, excluding certain related party obligations and certain
assets held with a principal purpose of satisfying this requirement;

         the transferee is a domestic C corporation (other than a tax-exempt
corporation, regulated investment company, real estate investment trust, REMIC
or Cooperative) that will not hold the REMIC Residual Certificate through a
foreign permanent establishment (an "Eligible C Corporation") and agrees in
writing that any subsequent transfer of the REMIC Residual Certificate will be
to an Eligible C Corporation and will satisfy the asset test and the other
requirements for the subsequent transfer to satisfy the safe harbor; and

         a reasonable person would not conclude, based on the facts and
circumstances known to the transferor (including any payment made to the
transferee), that the taxes associated with the REMIC Residual Certificate will
not be paid.

         A transfer satisfies the "formula test" if the transfer is not a direct
or indirect transfer of the REMIC Residual Certificate to a foreign permanent
establishment or fixed based (within the meaning of an applicable income tax
treaty) of a domestic transferee, and if the present value of the anticipated
tax liabilities associated with holding the noneconomic REMIC Residual
Certificate does not exceed the sum of:

         the present value of any consideration given to the transferee to
acquire the interest;

         the present value of the expected future distributions on the interest;
and

         the present value of the anticipated tax savings associated with
holding the interest as the REMIC generates losses.

         For purposes of the computations under the formula test, the transferee
generally is assumed to pay tax at the highest rate of tax specified in Code
Section 11(b)(1). However, if the transferee has been subject to the alternative
minimum tax under Code Section 55 in the preceding two years and will compute
its taxable income in the current year using the alternative minimum tax rate,
then the tax rate specified in Code Section 55(b)(1)(B) may be used in lieu of
the highest rate specified in Code Section 11(b)(1). Further, present values
generally are computed using a discount rate equal to the federal short-term
rate prescribed by Code Section 1274(d) for the month of the transfer and the
compounding period used by the transferee. In some situations, satisfaction of
the formula test would require the transferor of a noneconomic REMIC Residual
Certificate to pay more consideration to the transferee than would otherwise be
the case.

         All transfers of REMIC Residual Certificates will be subject to certain
restrictions that are intended to reduce the possibility of any such transfer
being disregarded. Such restrictions will include requirements that (i) the
transferor represent to the Master Servicer or the Trustee that it has conducted
an investigation of the transferee and made the findings needed to satisfy the
reasonable investigation requirement, (ii) the proposed transferee provides to
the Master Servicer or the Trustee the representations needed to satisfy the
transferee representation requirement and (iii) the proposed transferee agrees
that it will not transfer the REMIC Residual Certificate to any person unless
that person agrees to comply with the same restrictions on future transfers.
Prior to purchasing a REMIC Residual Certificate, prospective purchasers should
consider the possibility that a purported transfer of such REMIC Residual
Certificate by such a purchaser to another purchaser at some future date may be
disregarded in accordance with the foregoing rules, which would result in the
retention of tax liability by such purchaser.

         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 such 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 expect that the REMIC will distribute to the
transferee amounts that will equal at least 30 percent of each excess inclusion,
and that such amounts

                                        95


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 provisions in the REMIC
Regulations regarding transfers of REMIC Residual Certificates that have tax
avoidance potential to foreign persons are effective for all transfers after
June 30, 1992. The 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 such person provides the Trustee with a
duly completed IRS Form W-8ECI.

         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.

TAX CHARACTERIZATION OF A TRUST FUND AS A PARTNERSHIP


         Dechert LLP or Thacher Proffitt & Wood, special counsel to the
Depositor, will deliver its opinion that a Trust Fund for which a partnership
election is made will not be an association (or publicly traded partnership)
taxable as a corporation for federal income tax purposes. This opinion will be
based on the assumption that the terms of the Trust Agreement and related
documents will be complied with, and on counsel's conclusions that (1) the
nature of the income of the Trust Fund will exempt it from the rule that certain
publicly traded partnerships are taxable as corporations or (2) the issuance of
the Certificates has been structured as a private placement under an IRS safe
harbor, so that the Trust Fund will not be characterized as a publicly traded
partnership taxable as a corporation.


         If the Trust Fund were taxable as a corporation for federal income tax
purposes, the Trust Fund would be subject to corporate income tax on its taxable
income. The Trust Fund's taxable income would include all its income, possibly
reduced by its interest expense on the Notes. Any such corporate income tax
could materially reduce cash available to make payments on the Notes and
distributions on the Certificates, and Certificateholders could be liable for
any such tax that is unpaid by the Trust Fund.

         1. Tax Consequences to Holders of the Notes

         Treatment of the Notes as Indebtedness. The Trust Fund will agree, and
the Noteholders will agree by their purchase of Notes, to treat the Notes as
debt for federal income tax purposes. Special counsel to the Depositor will,
except as otherwise provided in the related Prospectus Supplement, advise the
Depositor that the Notes will be classified as debt for federal income tax
purposes. The discussion below assumes this characterization of the Notes is
correct.

         OID, etc. The discussion below assumes that all payments on the Notes
are denominated in U.S. dollars. Moreover, the discussion assumes that the
interest formula for the Notes meets the requirements for "qualified stated
interest" under the OID regulations, and that any OID on the Notes (i.e., any
excess of the principal amount of the Notes over their issue price) does not
exceed a de minimis amount (i.e., 1/4% of their principal amount multiplied by
the number of full years included in their term), all within the meaning of the
OID regulations. If these conditions are not satisfied with respect to any given
series of Notes, additional tax considerations with respect to such Notes will
be disclosed in the applicable Prospectus Supplement.

         Interest Income on the Notes. Based on the above assumptions, except as
discussed in the following paragraph, the Notes will not be considered issued
with OID. The stated interest thereon will be taxable to a Noteholder as
ordinary interest income when received or accrued in accordance with such
Noteholder's method of tax accounting. Under the OID regulations, a holder of a
Note issued with a de minimis amount of OID must include such OID in income, on
a pro rata basis, as principal payments are made on the Note. It is believed
that any prepayment premium paid as a result of a mandatory

                                        96


redemption will be taxable as contingent interest when it becomes fixed and
unconditionally payable. A purchaser who buys a Note for more or less than its
principal amount will generally be subject, respectively, to the premium
amortization or market discount rules of the Code.

         A holder of a Note that has a fixed maturity date of not more than one
year from the issue date of such Note (a "Short-Term Note") may be subject to
special rules. An accrual basis holder of a Short-Term Note (and certain cash
method holders, including regulated investment companies, as set forth in Code
Section 1281) generally would be required to report interest income as interest
accrues on a straight-line basis over the term of each interest period. Other
cash basis holders of a Short-Term Note would, in general, be required to report
interest income as interest is paid (or, if earlier, upon the taxable
disposition of the Short-Term Note). However, a cash basis holder of a
Short-Term Note reporting interest income as it is paid may be required to defer
a portion of any interest expense otherwise deductible on indebtedness incurred
to purchase or carry the Short-Term Note until the taxable disposition of the
Short-Term Note. A cash basis taxpayer may elect under Code Section 1281 to
accrue interest income on all nongovernment debt obligations with a term of one
year or less, in which case the taxpayer would include interest on the
Short-Term Note in income as it accrues, but would not be subject to the
interest expense deferral rule referred to in the preceding sentence. Certain
special rules apply if a Short-Term Note is purchased for more or less than its
principal amount.

         Sale or Other Disposition. If a Noteholder sells a Note, the holder
will recognize gain or loss in an amount equal to the difference between the
amount realized on the sale and the holder's adjusted tax basis in the Note.

         The adjusted tax basis of a Note to a particular Noteholder will equal
the holder's cost for the Note, increased by any market discount, acquisition
discount, OID and gain previously included by such Noteholder in income with
respect to the Note and decreased by the amount of bond premium (if any)
previously amortized and by the amount of principal payments previously received
by such Noteholder with respect to such Note. Any such gain or loss will be
capital gain or loss if the Note was held as a capital asset, except for gain
representing accrued interest and accrued market discount not previously
included in income. Capital losses generally may be used only to offset capital
gains.

         Such gain or loss generally will be long-term capital gain or loss if
the Note were held for more than one year. Long-term capital gains of
non-corporate taxpayers are subject to reduced maximum rates while short-term
capital gains are taxable at ordinary rates. The use of capital losses is
subject to limitations. Prospective investors should consult their own tax
advisors concerning the treatment of capital gains.

         Foreign Holders. Interest payments made (or accrued) to a Noteholder
who is a nonresident alien, foreign corporation or other non-United States
person (a "foreign person") generally will be considered "portfolio interest",
and generally will not be subject to United States federal income tax and
withholding tax, if the interest is not effectively connected with the conduct
of a trade or business within the United States by the foreign person and the
foreign person (i) is not actually or constructively a "10 percent shareholder"
of the Trust or the Depositor (including a holder of 10% of the outstanding
Certificates) or a "controlled foreign corporation" with respect to which the
Trust Fund or the Asset Seller is a "related person" within the meaning of the
Code and (ii) provides the Owner Trustee or other person who is otherwise
required to withhold U.S. tax with respect to the Notes with an appropriate
statement (on Form W-8BEN or a similar form), signed under penalties of perjury,
certifying that the beneficial owner of the Note is a foreign person and
providing the foreign person's name and address. If a Note is held through a
securities clearing organization or certain other financial institutions, the
organization or institution may provide the relevant signed statement to the
withholding agent; in that case, however, the signed statement must be
accompanied by a Form W-8BEN or substitute form provided by the foreign person
that owns the Note. If such interest is not portfolio interest, then it will be
subject to United States federal income and withholding tax at a rate of 30
percent, unless reduced or eliminated pursuant to an applicable tax treaty.

                                        97


         Any capital gain realized on the sale, redemption, retirement or other
taxable disposition of a Note by a foreign person will be exempt from United
States federal income and withholding tax, provided that (i) such gain is not
effectively connected with the conduct of a trade or business in the United
States by the foreign person and (ii) in the case of an individual foreign
person, the foreign person is not present in the United States for 183 days or
more in the taxable year.

         Backup Withholding. Each holder of a Note (other than an exempt holder
such as a corporation, tax-exempt organization, qualified pension and
profit-sharing trust, individual retirement account or nonresident alien who
provides certification as to status as a nonresident) will be required to
provide, under penalties of perjury, a certificate containing the holder's name,
address, correct federal taxpayer identification number and a statement that the
holder is not subject to backup withholding. Should a nonexempt Noteholder fail
to provide the required certification, the Trust Fund will be required to
withhold a portion of the amount otherwise payable to the holder, and remit the
withheld amount to the IRS as a credit against the holder's federal income tax
liability. The backup withholding rate is currently 28%. This rate is scheduled
to adjust for tax years after 2010.

         Possible Alternative Treatments of the Notes. If, contrary to the
opinion of special counsel to the Depositor, the IRS successfully asserted that
one or more of the Notes did not represent debt for federal income tax purposes,
the Notes might be treated as equity interests in the Trust Fund. If so treated,
the Trust Fund would likely be treated as a publicly traded partnership that
would not be taxable as a corporation because it would meet certain qualifying
income tests. Nonetheless, treatment of the Notes as equity interests in such a
publicly traded partnership could have adverse tax consequences to certain
holders. For example, income to certain tax-exempt entities (including pension
funds) would be "unrelated business taxable income", income to foreign holders
generally would be subject to U.S. tax and U.S. tax return filing and
withholding requirements, and individual holders might be subject to certain
limitations on their ability to deduct their share of the Trust Fund's expenses.

         2. Tax Consequences to Holders of the Certificates

         Treatment of the Trust Fund as a Partnership. The Depositor will agree,
and the Certificateholders will agree by their purchase of Certificates, to
treat the Trust Fund as a partnership for purposes of federal and state income
tax, franchise tax and any other tax measured in whole or in part by income,
with the assets of the partnership being the assets held by the Trust Fund, the
partners of the partnership being the Certificateholders, and the Notes being
debt of the partnership. However, the proper characterization of the arrangement
involving the Trust Fund, the Certificates, the Notes, the Trust Fund and the
Master Servicer is not clear because there is no authority on transactions
closely comparable to that contemplated herein.

         A variety of alternative characterizations are possible. For example,
because the Certificates have certain features characteristic of debt, the
Certificates might be considered debt of the Trust Fund. Any such
characterization would not result in materially adverse tax consequences to
Certificateholders as compared to the consequences from treatment of the
Certificates as equity in a partnership, described below. The following
discussion assumes that the Certificates represent equity interests in a
partnership.

         Indexed Securities, etc. The following discussion assumes that all
payments on the Certificates are denominated in U.S. dollars, none of the
Certificates are Indexed Securities or Strip Certificates, and that a Series of
Securities includes a single class of Certificates. If these conditions are not
satisfied with respect to any given Series of Certificates, additional tax
considerations with respect to such Certificates will be disclosed in the
applicable Prospectus Supplement.

         Partnership Taxation. As a partnership, the Trust Fund will not be
subject to federal income tax. Rather, each Certificateholder will be required
to separately take into account such holder's allocated share of income, gains,
losses, deductions and credits of the Trust Fund. The Trust Fund's income will
consist primarily of interest and finance charges earned on the Mortgage Loans
(including appropriate adjustments for market discount, OID and bond premium)
and any gain upon collection or disposition of Mortgage

                                        98


Loans. The Trust Fund's deductions will consist primarily of interest accruing
with respect to the Notes, servicing and other fees, and losses or deductions
upon collection or disposition of Mortgage Loans.

         The tax items of a partnership are allocable to the partners in
accordance with the Code, Treasury regulations and the partnership agreement
(here, the Trust Agreement and related documents). The Trust Agreement will
provide, in general, that the Certificateholders will be allocated taxable
income of the Trust Fund for each month equal to the sum of (i) the interest
that accrues on the Certificates in accordance with their terms for such month,
including interest accruing at the Pass-Through Rate for such month and interest
on amounts previously due on the Certificates but not yet distributed; (ii) any
Trust Fund income attributable to discount on the Mortgage Loans that
corresponds to any excess of the principal amount of the Certificates over their
initial issue price; (iii) prepayment premiums payable to the Certificateholders
for such month; and (iv) any other amounts of income payable to the
Certificateholders for such month. Such allocation will be reduced by any
amortization by the Trust Fund of premium on Mortgage Loans that corresponds to
any excess of the issue price of Certificates over their principal amount. All
remaining taxable income of the Trust Fund will be allocated to the Company.
Based on the economic arrangement of the parties, this approach for allocating
Trust Fund income should be permissible under applicable treasury regulations,
although no assurance can be given that the IRS would not require a greater
amount of income to be allocated to Certificateholders. Moreover, even under the
foregoing method of allocation, Certificateholders may be allocated income equal
to the entire Pass-Through Rate plus the other items described above even though
the Trust Fund might not have sufficient cash to make current cash distributions
of such amount. Thus, cash basis holders will in effect be required to report
income from the Certificates on the accrual basis and Certificateholders may
become liable for taxes on Trust Fund income even if they have not received cash
from the Trust Fund to pay such taxes. In addition, because tax allocations and
tax reporting will be done on a uniform basis for all Certificateholders but
Certificateholders may be purchasing Certificates at different times and at
different prices Certificateholders may be required to report on their tax
returns taxable income that is greater or less than the amount reported to them
by the Trust Fund.

         All of the taxable income allocated to a Certificateholder that is a
pension, profit sharing or employee benefit plan or other tax-exempt entity
(including an individual retirement account) will constitute "unrelated business
taxable income" generally taxable to such a holder under the Code.

         An individual taxpayer's share of expenses of the Trust Fund (including
fees to the Master Servicer but not interest expense) would be miscellaneous
itemized deductions. Such deductions might be disallowed to the individual in
whole or in part and might result in such holder being taxed on an amount of
income that exceeds the amount of cash actually distributed to such holder over
the life of the Trust Fund.

         The Trust Fund intends to make all tax calculations relating to income
and allocations to Certificateholders on an aggregate basis. If the IRS were to
require that such calculations be made separately for each Mortgage Loan, the
Trust Fund might be required to incur additional expense but it is believed that
there would not be a material adverse effect on Certificateholders.

         Discount and Premium. It is believed that the Loans were not issued
with OID, and, therefore, the Trust should not have OID income. However, the
purchase price paid by the Trust Fund for the Mortgage Loans may be greater or
less than the remaining principal balance of the Loans at the time of purchase.
If so, the Loan will have been acquired at a premium or discount, as the case
may be. (As indicated above, the Trust Fund will make this calculation on an
aggregate basis, but might be required to recompute it on a Mortgage Loan by
Mortgage Loan basis.)

         If the Trust Fund acquires the Mortgage Loans at a market discount or
premium, the Trust Fund will elect to include any such discount in income
currently as it accrues over the life of the Mortgage Loans or to offset any
such premium against interest income on the Mortgage Loans. As indicated above,
a portion of such market discount income or premium deduction may be allocated
to Certificateholders.

                                        99


         Section 708 Termination. Under Code Section 708, the Trust Fund will be
deemed to terminate for federal income tax purposes if 50% or more of the
capital and profits interests in the Trust Fund are sold or exchanged within a
12-month period. Pursuant to formal Treasury regulations issued May 8, 1997
under Code Section 708, if such a termination occurs, the Trust Fund (the "old
partnership") would be deemed to contribute its assets to a new partnership (the
"new partnership") in exchange for interests in the new partnership. Such
interests would be deemed distributed to the partners of the old partnership in
liquidation thereof, which would not constitute a sale or exchange.

         Disposition of Certificates. Generally, capital gain or loss will be
recognized on a sale of Certificates in an amount equal to the difference
between the amount realized and the seller's tax basis in the Certificates sold.
A Certificateholder's tax basis in a Certificate will generally equal the
holder's cost increased by the holder's share of Trust Fund income (includible
in income) and decreased by any distributions received with respect to such
Certificate. In addition, both the tax basis in the Certificates and the amount
realized on a sale of a Certificate would include the holder's share of the
Notes and other liabilities of the Trust Fund. A holder acquiring Certificates
at different prices may be required to maintain a single aggregate adjusted tax
basis in such Certificates, and, upon sale or other disposition of some of the
Certificates, allocate a portion of such aggregate tax basis to the Certificates
sold (rather than maintaining a separate tax basis in each Certificate for
purposes of computing gain or loss on a sale of that Certificate).

         Any gain on the sale of a Certificate attributable to the holder's
share of unrecognized accrued market discount on the Mortgage Loans would
generally be treated as ordinary income to the holder and would give rise to
special tax reporting requirements. The Trust Fund does not expect to have any
other assets that would give rise to such special reporting requirements. Thus,
to avoid those special reporting requirements, the Trust Fund will elect to
include market discount in income as it accrues.

         If a Certificateholder is required to recognize an aggregate amount of
income (not including income attributable to disallowed itemized deductions
described above) over the life of the Certificates that exceeds the aggregate
cash distributions with respect thereto, such excess will generally give rise to
a capital loss upon the retirement of the Certificates.

         Allocations Between Transferors and Transferees. In general, the Trust
Fund's taxable income and losses will be determined monthly and the tax items
for a particular calendar month will be apportioned among the Certificateholders
in proportion to the principal amount of Certificates owned by them as of the
close of the last day of such month. As a result, a holder purchasing
Certificates may be allocated tax items (which will affect its tax liability and
tax basis) attributable to periods before the actual transaction.

         The use of such a monthly convention may not be permitted by existing
regulations. If a monthly convention is not allowed (or only applies to
transfers of less than all of the partner's interest), taxable income or losses
of the Trust Fund might be reallocated among the Certificateholders. The Trust
Fund's method of allocation between transferors and transferees may be revised
to conform to a method permitted by future regulations.

         Section 754 Election. In the event that a Certificateholder sells its
Certificates at a profit (loss), the purchasing Certificateholder will have a
higher (lower) basis in the Certificates than the selling Certificateholder had.
The tax basis of the Trust Fund's assets will not be adjusted to reflect that
higher (or lower) basis unless the Trust Fund were to file an election under
Code Section 754. In order to avoid the administrative complexities that would
be involved in keeping accurate accounting records, as well as potentially
onerous information reporting requirements, the Trust Fund will not make such
election. As a result, Certificateholders might be allocated a greater or lesser
amount of Trust Fund income than would be appropriate based on their own
purchase price for Certificates.

         Administrative Matters. The Trustee is required to keep or have kept
complete and accurate books of the Trust Fund. Such books will be maintained for
financial reporting and tax purposes on an accrual basis and the fiscal year of
the Trust will be the calendar year. The Trustee will file a partnership
information return (IRS Form 1065) with the IRS for each taxable year of the
Trust Fund and will report

                                       100


each Certificateholder's allocable share of items of Trust Fund income and
expense to holders and the IRS on Schedule K-1. The Trust Fund will provide the
Schedule K-1 information to nominees that fail to provide the Trust Fund with
the information statement described below and such nominees will be required to
forward such information to the beneficial owners of the Certificates.
Generally, holders must file tax returns that are consistent with the
information return filed by the Trust Fund or be subject to penalties unless the
holder notifies the IRS of all such inconsistencies.

         Under Code Section 6031, any person that holds Certificates as a
nominee at any time during a calendar year is required to furnish the Trust Fund
with a statement containing certain information on the nominee, the beneficial
owners and the Certificates so held. Such information includes (i) the name,
address and taxpayer identification number of the nominee and (ii) as to each
beneficial owner (x) the name, address and identification number of such person,
(y) whether such person is a United States person, a tax-exempt entity or a
foreign government, an international organization, or any wholly owned agency or
instrumentality of either of the foregoing, and (z) certain information on
Certificates that were held, bought or sold on behalf of such person throughout
the year. In addition, brokers and financial institutions that hold Certificates
through a nominee are required to furnish directly to the Trust Fund information
as to themselves and their ownership of Certificates. A clearing agency
registered under Section 17A of the Exchange Act is not required to furnish any
such information statement to the Trust Fund. The information referred to above
for any calendar year must be furnished to the Trust Fund on or before the
following January 31. Nominees, brokers and financial institutions that fail to
provide the Trust Fund with the information described above may be subject to
penalties.

         The Company will be designated as the tax matters partner in the
related Trust Agreement and, as such, will be responsible for representing the
Certificateholders in any dispute with the IRS. The Code provides for
administrative examination of a partnership as if the partnership were a
separate and distinct taxpayer. Generally, the statute of limitations for
partnership items does not expire before three years after the date on which the
partnership information return is filed. Any adverse determination following an
audit of the return of the Trust Fund by the appropriate taxing authorities
could result in an adjustment of the returns of the Certificateholders, and,
under certain circumstances, a Certificateholder may be precluded from
separately litigating a proposed adjustment to the items of the Trust Fund. An
adjustment could also result in an audit of a Certificateholder's returns and
adjustments of items not related to the income and losses of the Trust Fund.

         Tax Consequences to Foreign Certificateholders. It is not clear whether
the Trust Fund would be considered to be engaged in a trade or business in the
United States for purposes of federal withholding taxes with respect to non-U.S.
Persons because there is no clear authority dealing with that issue under facts
substantially similar to those described herein. Although it is not expected
that the Trust Fund would be engaged in a trade or business in the United States
for such purposes, the Trust Fund will withhold as if it were so engaged in
order to protect the Trust Fund from possible adverse consequences of a failure
to withhold. The Trust Fund expects to withhold on the portion of its taxable
income that is allocable to foreign Certificateholders pursuant to Code Section
1446, as if such income were effectively connected to a U.S. trade or business,
at a rate equal to the highest rate of tax specified in Code Section 11(b)(i) in
the case of foreign holders that are taxable as corporations and equal to the
highest rate of tax specified in Code Section 1 in the case of all other foreign
holders. Subsequent adoption of Treasury regulations or the issuance of other
administrative pronouncements may require the Trust Fund to change its
withholding procedures. In determining a holder's withholding status, the Trust
Fund may rely on IRS Form W-8BEN, IRS Form W-9 or the holder's certification of
nonforeign status signed under penalties of perjury.

         Each foreign holder might be required to file a U.S. individual or
corporate income tax return (including, in the case of a corporation, the branch
profits tax) on its share of the Trust Fund's income. Each foreign holder must
obtain a taxpayer identification number from the IRS and submit that number to
the Trust Fund on Form W-8BEN in order to assure appropriate crediting of the
taxes withheld. A foreign holder generally would be entitled to file with the
IRS a claim for refund with respect to taxes withheld by the Trust Fund taking
the position that no taxes were due because the Trust Fund was not

                                       101


engaged in a U.S. trade or business. However, interest payments made (or
accrued) to a Certificateholder who is a foreign person generally will be
considered guaranteed payments to the extent such payments are determined
without regard to the income of the Trust Fund. If these interest payments are
properly characterized as guaranteed payments, then the interest will not be
considered "portfolio interest." As a result, Certificateholders will be subject
to United States federal income tax and withholding tax at a rate of 30 percent,
unless reduced or eliminated pursuant to an applicable treaty. In such case, a
foreign holder would only be enticed to claim a refund for that portion of the
taxes in excess of the taxes that should be withheld with respect to the
guaranteed payments.

         Backup Withholding. Distributions made on the Certificates and proceeds
from the sale of the Certificates will be subject to backup withholding tax if,
in general, the Certificateholder fails to comply with certain identification
procedures, unless the holder is an exempt recipient under applicable provisions
of the Code.

         New Withholding Regulations. On January 1, 2001 the New Regulations
became effective (subject to certain transition rules) which make certain
modifications to the withholding, backup withholding and information reporting
rules described above. The New Regulations attempt to unify certification
requirements and modify reliance standards. Prospective investors are urged to
consult their own tax advisors regarding the New Regulations.

TAX TREATMENT OF CERTIFICATES AS DEBT FOR TAX PURPOSES

         1. Characterization of the Certificates as Indebtedness

         If the related Prospectus Supplement indicates that the Certificates
will be treated as indebtedness for federal income tax purposes, then based on
the application of existing law to the facts as set forth in the Trust Agreement
and other relevant documents and assuming compliance with the terms of the Trust
Agreement as in effect on the date of issuance of the Certificates, Dechert LLP
or Thacher Proffitt & Wood, special tax counsel to the Depositor ("Tax
Counsel"), will deliver its opinion that the Certificates will be treated as
debt instruments for federal income tax purposes as of such date.

         The Depositor and the Certificateholders will express in the related
Trust Agreement their intent that, for applicable tax purposes, the Certificates
will be indebtedness secured by the related Assets. The Depositor and the
Certificateholders, by accepting the Certificates, and each Certificate Owner by
its acquisition of a beneficial interest in a Certificate, have agreed to treat
the Certificates as indebtedness for U.S. federal income tax purposes. However,
because different criteria are used to determine the non-tax accounting
characterization of the transaction, the Depositor may treat this transaction as
a sale of an interest in the related Assets for financial accounting and certain
regulatory purposes.

         In general, whether for U.S. federal income tax purposes a transaction
constitutes a sale of property or a loan, the repayment of which is secured by
property, is a question of fact, the resolution of which is based upon the
economic substance of the transaction rather than its form or the manner in
which it is labeled. While the IRS and the courts have set forth several factors
to be take into account in determining whether the substance of a transaction is
a sale of property or a secured loan, the primary factor in making this
determination is whether the transferee has assumed the risk of loss or other
economic burdens relating to the property and has obtained the benefits of
ownership thereof. Tax Counsel will analyze and rely on several factors in
reaching its opinion that the weight of the benefits and burdens of ownership of
the Mortgage Loans will be retained by the Depositor and not transferred to the
Certificate Owners.

         In some instances, courts have held that a taxpayer is bound by the
particular form it has chosen for a transaction, even if the substance of the
transaction does not accord with its form. Tax Counsel will advise that the
rationale of those cases will not apply to this transaction, because the form of
the transaction as reflected in the operative provisions of the documents either
accords with the characterization of the Certificates as debt or otherwise makes
the rationale of those cases inapplicable to this situation.

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         2. Taxation of Interest Income of Certificate Owners

         Assuming that the Certificate Owners are holders of debt obligations
for U.S. federal tax purposes, the Certificates generally will be taxable in the
following manner. While it is not anticipated that the Certificates will be
issued at a greater than de minimis discount, under the OID Regulations it is
possible that the Certificates could nevertheless be deemed to have been issued
with OID if the interest were not treated as "unconditionally payable" under the
OID Regulations. If such regulations were to apply, all of the taxable income to
be recognized with respect to the Certificates would be includible in income of
Certificate owners as OID, but would not be includible again when the interest
is actually received.

         3. Possible Classification of the Trust Fund as a Partnership or
Association Taxable as a Corporation

         Based on application of existing laws to the facts as set forth in the
Trust Agreement and other relevant documents and assuming compliance with the
terms of the Trust Agreement, Tax Counsel will deliver its opinion that the
transaction will not be treated as a partnership or an association taxable as a
corporation. The opinion of Tax Counsel is not binding on the courts or the IRS.
It is possible that the IRS could assert that, for purposes of the Code, the
transaction contemplated by this Prospectus Supplement with respect to the
Certificates constitutes a sale of the Mortgage Loans (or an interest therein)
to the Certificate Owners and that the proper classification of the legal
relationship between the Depositor and the Certificate Owners resulting form
this transaction is that of a partnership (including a publicly traded
partnership treated as a corporation), or an association taxable as a
corporation. Since Tax Counsel will advise that the Certificates will be treated
as indebtedness in the hands of the Certificateholders for U.S. federal income
tax purposes and that the entity constituted by the Trust will not be a publicly
traded partnership treated as a corporation or an association taxable as a
corporation, the Depositor will not attempt to comply with U.S. federal income
tax reporting requirements applicable to partnerships or corporations as such
requirements would apply if the Certificates were treated as indebtedness.

         If it were determined that this transaction created an entity
classified as a corporation (including a publicly traded partnership taxable as
a corporation), the Trust Fund would be subject to U.S. federal income tax at
corporate income tax rates on the income it derives form the Mortgage Loans,
which would reduce the amounts available for distribution to the Certificate
Owners. Cash distributions to the Certificate Owners generally would be treated
as dividends for tax purposes to the extent of such corporation's earnings and
profits.

         If the transaction were treated as creating a partnership between the
Certificate Owners and the Transferor, the partnership itself would not be
subject to U.S. federal income tax (unless it were to be characterized as a
publicly traded partnership taxable as a corporation); rather, the Depositor and
each Certificate Owner would be taxed individually on their respective
distributive shares of the partnership's income, gain, loss, deductions and
credits. The amount and timing of items of income and deductions of the
Certificate Owner could differ if the Certificates were held to constitute
partnership interests rather than indebtedness.

         4. Possible Classification as a Taxable Mortgage Pool

         In relevant part, Code Section 7701(i) provides that any entity (or
portion of an entity) that is a "taxable mortgage pool" will be classified as a
taxable corporation and will not be permitted to file a consolidated U.S.
federal income tax return with another corporation. Any entity (or portion of
any entity) will be a taxable mortgage pool if (i) substantially all of its
assets consist of debt instruments, more than 50% of which are real estate
mortgages, (ii) the entity is the obligor under debt obligations with two or
more maturities, and (iii) under the terms of the entity's debt obligations (or
an underlying arrangement), payments on such debt obligations bear a
relationship to the debt instruments held by the entity.

         In the case of a Trust Fund containing Mortgage Assets, assuming that
all of the provisions of the Trust Agreement, as in effect on the date of
issuance, will be complied with, Tax Counsel will deliver its

                                       103


opinion that the arrangement created by the Agreement will not be a taxable
mortgage pool under Code Section 7701(i) because only one class of indebtedness
secured by the Mortgage Loans will be issued.

         The opinion of Tax Counsel is not binding on the IRS or the courts. If
the IRS were to contend successfully (or future regulations were to provide)
that the arrangement created by the Trust Agreement is a taxable mortgage pool,
such arrangement would be subject to U.S. federal corporate income tax on its
taxable income generated by ownership of the Mortgage Loans. Such a tax might
reduce amounts available for distributions to Certificate Owners. The amount of
such a tax would depend upon whether distributions to Certificate Owners would
be deductible as interest expense in computing the taxable income of such an
arrangement as a taxable mortgage pool.

         5. Foreign Investors

         In general, subject to certain exception, interest (including OID) paid
on a Certificate to a nonresident alien individual, foreign corporation or other
non-United States person is not subject to U.S. federal income tax, provided
that such interest is not effectively connected with a trade or business of the
recipient in the United sates and the Certificate Owner provides the required
foreign person information certification.

         If the interest of the Certificate Owners were deemed to be partnership
interest, the partnership would be required, on a quarterly basis, to pay
withholding tax equal to the product, for each foreign partner, of such foreign
partner's distributive share of "effectively connected" income of the
partnership multiplied by the highest rate of tax applicable to that foreign
partner. In addition, such foreign partner would be subject to branch profits
tax. Each non-foreign partner would be required to certify to the partnership
that it is not a foreign person. The tax withheld from each foreign partner
would be credited against such foreign partner's U.S. income tax liability.

         If the Trust were taxable as a corporation, distributions to foreign
persons, to the extent treated as dividends, would generally be subject to
withholding at the rate of 30%, unless such rate were reduced by an applicable
tax treaty.

         6. Backup Withholding

         Certain Certificate Owners may be subject to backup withholding with
respect to interest paid on the Certificates if the Certificate Owners, upon
issuance of the Certificates, fail to supply the Trustee or the Certificate
Owners' brokers with their respective taxpayer identification numbers, furnish
an incorrect taxpayer identification number, fail to report interest, dividends,
or other "reportable payments" (as defined in the Code) properly, or, under
certain circumstances, fail to provide the Trustee of the Certificate Owners'
brokers with certified statements, under penalty of perjury, that they are not
subject to backup withholding. The backup withholding rate is currently 28%.
This rate is scheduled to adjust for tax years after 2010.

         The Trustee will be required to report annually to the IRS, and to each
Certificateholder of record, the amount of interest paid (and OID accrued, if
any) on the Certificates (and the amount of interest withheld for U.S. federal
income taxes, if any) for each calendar year, except as to exempt holders
(generally, holders that are corporations, certain tax-exempt organizations or
nonresident aliens who provide certification as to their status as
nonresidents). As long as the only "Certificateholder" of record is Cede, as
nominee for DTC, Certificate Owners and the IRS will receive tax and other
information including the amount of interest paid on the Certificates owned from
Participants and Indirect Participants rather than from the Trustee. (The
Trustee, however, will respond to requests for necessary information to enable
Participants, Indirect Participants and certain other persons to complete their
reports.) Each non-exempt Certificate Owner will be required to provide, under
penalty of perjury, a certificate on IRS Form W-9 containing his or her name,
address, correct federal taxpayer identification number and a statement that he
or she is not to subject to backup withholding. Should a non-exempt Certificate
Owner fail to provide the required certification, the Participants or Indirect
Participants (or the Paying Agent) will be required to backup withhold from
interest (and principal) otherwise payable to the holder, and remit the withheld
amount to the IRS as a credit against the holder's federal income tax liability.

                                       104


         7. New Withholding Regulations

         On January 1, 2001, the New Regulations became effective (subject to
certain transition rules) which make certain modifications to the withholding,
backup withholding and information reporting rules described above. The New
Regulations attempt to unify certification requirements and modify reliance
standards. Prospective investors are urged to consult their own tax advisors
regarding the New Regulations.

FASIT SECURITIES

         General. The FASIT provisions of the Code were enacted by the Small
Business Job Protection Act of 1996 and create a new elective statutory vehicle
for the issuance of mortgage-backed and asset-backed securities. Definitive
guidance cannot be provided with respect to many aspects of the tax treatment of
FASIT Securityholders. Investors also should note that the FASIT discussions
contained herein constitutes only a summary of the federal income tax
consequences to holders of FASIT Securities. With respect to each Series of
FASIT Securities, the related Prospectus Supplement will provide a detailed
discussion regarding the federal income tax consequences associated with the
particular transaction.

         FASIT Securities will be classified as either FASIT regular securities
("FASIT Regular Securities"), which generally will be treated as debt for
federal income tax purposes, or FASIT ownership securities ("FASIT Ownership
Securities"), which generally are not treated as debt for such purposes, but
rather as representing rights and responsibilities with respect to the taxable
income or loss of the related Series. The Prospectus Supplement for each Series
of Securities will indicate whether one or more FASIT elections will be made for
that Series and which Securities of such Series will be designated as FASIT
Regular Securities, and which, if any, will be designated as FASIT Ownership
Securities.

         Qualification as a FASIT. The Trust Fund underlying a Series (or one or
more designated pools of assets held in the Trust Fund) will qualify under the
Code as a FASIT in which the FASIT Regular Securities and the FASIT Ownership
Securities will constitute the "regular interests" and the "ownership
interests," respectively, if (i) a FASIT election is in effect, (ii) certain
tests concerning (A) the composition of the FASIT's assets and (B) the nature of
the Securityholders' interest in the FASIT are met on a continuing basis, and
(iii) the Trust Fund is not a regulated investment company as defined in Code
Section 851(a).

         Asset Composition. In order for a Trust Fund (or one or more designated
pools of assets held by a Trust Fund) to be eligible for FASIT status,
substantially all of the assets of the Trust Fund (or the designated pool) must
consist of "permitted assets" as of the close of the third month beginning after
the closing date and at all times thereafter (the "FASIT Qualification Test").
Permitted assets include:

         (i)     cash or cash equivalents,

         (ii)    debt instruments with fixed terms that would qualify as REMIC
                 regular interests if issued by a REMIC (generally, instruments
                 that provide for interest at a fixed rate, a qualifying
                 variable rate, or a qualifying interest-only ("IO") type rate),

         (iii)   foreclosure property,

         (iv)    certain hedging instruments (generally, interest and currency
                 rate swaps and credit enhancement contracts) that are
                 reasonably required to guarantee or hedge against the FASIT's
                 risks associated with being the obligor on FASIT interests,

         (v)     contract rights to acquire assets described in clause (ii) or
                 clause (iv) above,

         (vi)    FASIT regular interests, and

         (vii)   REMIC regular interests. Permitted assets do not include any
                 debt instruments issued by the holder of the FASIT's ownership
                 interest or by any person related to such holder.

                                       105


         Interests in a FASIT. In addition to the foregoing asset qualification
requirements, the interests in a FASIT also must meet certain requirements. All
of the interests in a FASIT must belong to either of the following: (i) one or
more classes of regular interests or (ii) a single class of ownership interest
that is held by a fully taxable domestic corporation.

         A FASIT interest generally qualifies as a regular interest if:

         (i)     it is designated as a regular interest,

         (ii)    it has a stated maturity no greater than thirty years,

         (iii)   it entitles its holder to a specified principal amount,

         (iv)    the issue price of the interest does not exceed 125% of its
                 stated principal amount,

         (v)     the yield to maturity of the interest is less than the
                 applicable Treasury rate published by the IRS plus 5%, and

         (vi)    if it pays interest, such interest is payable at either

                 (a)     fixed rate with respect to the principal amount of the
                         regular interest or

                 (b)     a permissible variable rate with respect to such
                         principal amount.

Permissible variable rates for FASIT regular interests are the same as those for
REMIC regular interest (i.e., certain qualified floating rates and weighted
average rates). See "Material Federal Income Tax Consequences--REMICs--Taxation
of Owners of REMIC Regular Certificates--Variable Rate REMIC Regulation
Certificate."

         If a FASIT Regular Security fails to meet one or more of the
requirements set out in clauses (iii), (iv) or (v), but otherwise meets the
above requirements, it may still qualify as a type of regular interest known as
a "High-Yield Interest." In addition, if a FASIT Regular Security fails to meet
the requirements of clause (vi), but the interest payable on the Security
consists of a specified portion of the interest payments on permitted assets and
that portion does not vary over the life of the FASIT Regular Security, the
FASIT Regular Security also will qualify as a High-Yield Interest. A High-Yield
Interest may be held only by domestic corporations that are fully subject to
corporate income tax ("Eligible Corporations"), other FASITs and dealers in
securities who acquire such interests as inventory, rather than for investment.
In addition, holders of High-Yield Interests are subject to limitations on
offset of income derived from such interest. See "Material Federal Income Tax
Consequences--FASIT Securities--Tax Treatment of FASIT Regular
Securities--Treatment of High-Yield Interests."

         Consequences of Disqualification. If a Series of FASIT Securities fails
to comply with one or more of the Code's ongoing requirements for FASIT status
during any taxable year, the Code provides that FASIT status may be lost for
that year and thereafter. If FASIT status is lost, the treatment of the former
FASIT and the interests therein for federal income tax purposes is uncertain.
The former FASIT might be treated as a grantor trust, as a separate association
taxed as a corporation, or as a partnership. The FASIT Regular Securities could
be treated as debt instruments for federal income tax purposes or as equity
interests. Under proposed regulations under the FASIT provisions of the Code, if
a FASIT fails to continue to qualify as a FASIT, (i) its subsequent
characterization for federal income tax purposes will be determined under
general federal income tax principles, (ii) the holders of the FASIT Ownership
Securities will be treated as exchanging the assets of the FASIT for an amount
equal to their value and will be subject to tax on all gain realized, on an
asset-by-asset basis, on such exchange, (iii) the holders of the FASIT Ownership
Securities must recognize cancellation of indebtedness income to the extent that
the adjusted issue price of the FASIT Regular Securities immediately before the
termination exceeds the fair market value of those interests immediately before
the termination, (iv) any continuing interest of the holders of the FASIT
Ownership Securities in the Trust Fund following cessation will be characterized
under general federal income tax principles and (v) holders of FASIT Regular
Securities will be treated as exchanging their FASIT Regular Securities for
interests in the underlying economic arrangement and will recognize gain on such
exchange if their interest in the underlying economic arrangement is not
classified

                                       106


as debt or is treated as debt that differs materially in kind or extent from
their FASIT Regular Securities. There can be no assurance regarding whether the
proposed regulations will be finalized and the specific provisions that may be
included in the regulations when they are finalized.

         Tax Treatment of FASIT Regular Securities. Payments received by holders
of FASIT Regular Securities generally should be accorded the same tax treatment
under the Code as payments received on other taxable corporate debt instruments
and on REMIC Regular Securities. As in the case of holders of REMIC Regular
Securities, holders of FASIT Regular Securities must report income from such
Securities under an accrual method of accounting, even if they otherwise would
have used the cash receipts and disbursements method. Except in the case of
FASIT Regular Securities issued with original issue discount or acquired with
market discount or premium, interest paid or accrued on a FASIT Regular Security
generally will be treated as ordinary income to the Securityholder and a
principal payment on such Security will be treated as a return of capital to the
extent that the Securityholder's basis is allocable to that payment. FASIT
Regular Securities issued with original issue discount or acquired with market
discount or premium generally will treat interest and principal payments on such
Securities in the same manner described for REMIC Regular Securities. See
"Material Federal Income Tax Consequences--REMICs--Taxation of Owners of REMIC
Regular Certificates" "--Original Issue Discount and Premium" and "--Market
Discount" and "--Premium" above. High-Yield Securities may be held only by fully
taxable domestic corporations, other FASITs, and certain securities dealers.
Holders of High-Yield Securities are subject to limitations on their ability to
use current losses or net operating loss carryforwards or carrybacks to offset
any income derived from those Securities.

         If a FASIT Regular Security is sold or exchanged, the Securityholder
generally will recognize gain or loss upon the sale in the manner described
above for REMIC Regular Securities. See "Material Federal Income Tax
Consequences--REMICs--Taxation of Owners of REMIC Regular Certificates--Sale,
Exchange or Redemption." In addition, if a FASIT Regular Security becomes wholly
or partially worthless as a result of default and delinquencies of the
underlying Assets, the holder of such FASIT Regular Security should be allowed
to deduct the loss sustained (or alternatively be able to report a lesser amount
of income). See "Material Federal Income Tax Consequences--REMICs--Taxation of
Owners of REMIC Regular Certificates", "--Effects of Default and Delinquencies"
and "--Treatment of Realized Losses."

         FASIT Regular Securities held by a REIT will qualify as "real estate
assets" within the meaning of Code Section 856(c)(4)(A), and interest on such
Securities will be considered interest described in Code Section 856(c)(3)(B) to
the same extent that REMIC Securities would be so considered. FASIT Regular
Securities held by a thrift institution taxed as a "domestic building and loan
association" will represent qualifying assets for purposes of the qualification
requirements set forth in Code Section 7701(a)(19) to the same extent that REMIC
Securities would be so considered. See "Material Federal Income Tax
Consequences--REMICs." In addition, FASIT Regular Securities held by a financial
institution to which Code Section 585 applies will be treated as evidences of
indebtedness for purposes of Code Section 582(c)(1). FASIT Securities will not
qualify as "Government Securities" for either REIT or RIC qualification
purposes.

         Treatment of High-Yield Interests. High-Yield Interests are subject to
special rules regarding the eligibility of holders of such interests, and the
ability of such holders to offset income derived from their FASIT Regular
Security with losses. High-Yield Interests may be held only by Eligible
Corporations, other FASITs and dealers in securities who acquire such interests
as inventory. If a securities dealer (other than an Eligible Corporation)
initially acquires a High-Yield Interest as inventory, but later begins to hold
it for investment, the dealer will be subject to an excise tax equal to the
income from the High-Yield Interest multiplied by the highest corporate income
tax rate. In addition, transfers of High-Yield Interests to disqualified holders
will be disregarded for federal income tax purposes, and the transferor still
will be treated as the holder of the High-Yield Interest.

         The holder of a High-Yield Interest may not use non-FASIT current
losses or net operating loss carryforwards or carrybacks to offset any income
derived from the High-Yield Interest, for either regular

                                       107


Federal income tax purposes or for alternative minimum tax purposes. In
addition, the FASIT provisions contain an anti-abuse rule that imposes corporate
income tax on income derived from a FASIT Regular Security that is held by a
pass-through entity (other than another FASIT) that issues debt or equity
securities backed by the FASIT Regular Security and that have the same features
as High-Yield Interests.

         Tax Treatment of FASIT Ownership Securities. A FASIT Ownership Security
represents the residual equity interest in a FASIT. As such, the holder of a
FASIT Ownership Security determines its taxable income by taking into account
all assets, liabilities and items of income, gain, deduction, loss and credit of
the FASIT. In general, the character of the income to the holder of a FASIT
Ownership Interest will be the same as the character of such income of the
FASIT, except that any tax-exempt interest income taken into account by the
holder of a FASIT Ownership Interest is treated as ordinary income. In
determining that taxable income, the holder of a FASIT Ownership Security must
determine the amount of interest, original issue discount, market discount and
premium recognized with respect to the FASIT's assets and the FASIT Regular
Securities issued by the FASIT according to a constant yield methodology and
under an accrual method of accounting. In addition, holders of FASIT Ownership
Securities are subject to the same limitations on their ability to use losses to
offset income from their FASIT Ownership Securities as are the holders of
High-Yield Interests. See "Material Federal Income Tax Consequences--FASIT
Securities--Treatment of High-Yield Interests."

         Rules similar to the wash sale rules applicable to REMIC Residual
Securities also apply to FASIT Ownership Securities. Accordingly, losses on
dispositions of a FASIT Ownership Security generally will be disallowed where,
within six months before or after the disposition, the seller of such FASIT
Ownership Security acquires any other FASIT Ownership Security or, in the case
of a FASIT holding mortgage assets, any interest in a Taxable Mortgage Pool that
is economically comparable to a FASIT Ownership Security. In addition, if any
security that is sold or contributed to a FASIT by the holder of the related
FASIT Ownership Security was required to be marked-to-market under Code Section
475 by such holder, then Code Section 475 will continue to apply to such
securities, except that the amount realized under the mark-to-market rules will
be a greater of the security's value under present law or the security's value
after applying special valuation rules contained in the FASIT provisions. Those
special valuation rules generally require that the value of debt instruments
that are not traded on an established securities market be determined by
calculating the present value of the reasonably expected payments under the
instrument using a discount rate of 120% of the applicable Federal rate,
compounded semiannually. The holder of a FASIT Ownership Security will be
subject to a tax equal to 100% of the net income derived by the FASIT from any
"prohibited transactions." Prohibited transactions include (i) the receipt of
income derived from assets that are not permitted assets, (ii) certain
dispositions of permitted assets, (iii) the receipt of any income derived from
any loan originated by a FASIT, and (iv) in certain cases, the receipt of income
representing a servicing fee or other compensation. Any Series for which a FASIT
election is made generally will be structured in order to avoid application of
the prohibited transaction tax.

         Backup Withholding, Reporting and Tax Administration. Holders of FASIT
Securities will be subject to backup withholding to the same extent holders of
REMIC Securities would be subject. See "Material Federal Income Tax
Consequences--REMICs--Taxation of Owners of REMIC Regular
Certificates--Information Reporting and Backup Withholding." For purposes of
reporting and tax administration, holders of record of FASIT Securities
generally will be treated in the same manner as holders of REMIC Securities.

                 TAXATION OF CLASSES OF RECOMBINABLE SECURITIES

GENERAL

         The arrangement pursuant to which the recombinable securities of a
series are created, sold and administered (an "RS Pool") will be classified as a
grantor trust under subpart E, part I of subchapter J of the Code. The interests
in the classes of securities that have been exchanged for recombinable
securities

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will be the assets of the RS Pool and the classes of recombinable securities
represent beneficial ownership of these interests in the classes of securities.

TAX STATUS

         The classes of recombinable securities should be considered to
represent "real estate assets" within the meaning of Code Section 856(c)(5)(B)
and assets described in Code Section 7701(a)(19)(C), and original issue discount
and interest accruing on classes of recombinable securities should be considered
to represent "interest on obligations secured by mortgages on real property"
within the meaning of Code Section 856(c)(3)(B) in each case to the extent the
securities or income on the securities would be qualifying if held directly
(although the matter is not entirely clear for Strips, defined below). The
classes of recombinable securities will be "qualified mortgages" under Code
Section 860G(a)(3) for a REMIC.

TAX ACCOUNTING FOR RECOMBINABLE SECURITIES

         A class of recombinable securities represents beneficial ownership of
an interest in one or more classes of securities on deposit in a recombinable
security trust fund, as specified in the applicable prospectus supplement. If it
represents an interest in more than one class of securities, a purchaser must
allocate its basis in the class of recombinable securities among the interests
in the classes of securities in accordance with their relative fair market
values as of the time of acquisition. Similarly, on the sale of such
recombinable securities, the holder must allocate the amount received on the
sale among the interests in the classes of securities in accordance with their
relative fair market values as of the time of sale.

         The holder of a recombinable security must account separately for each
interest in a class of securities (there may be only one such interest). Where
the interest represents a pro rata portion of a class of securities that are
REMIC regular securities, the holder of the recombinable securities should
account for such interest as described under "Material Federal Income Tax
Consequences--REMICs--Taxation of Owners of REMIC Regular Certificates" above.
Where the interest represents beneficial ownership of a disproportionate part of
the principal and interest payments on a class of securities (a "Strip"), the
holder is treated as owning, pursuant to Code Section 1286, "stripped bonds" to
the extent of its share of principal payments and "stripped coupons" to the
extent of its share of interest payments on such class of securities. We intend
to treat each Strip as a single debt instrument for purposes of information
reporting. The Internal Revenue Service, however, could take a different
position. For example, the Internal Revenue Service could contend that a Strip
should be treated as a pro rata part of the class of securities to the extent
that the Strip represents a pro rata portion thereof, and "stripped bonds" or
"stripped coupons" with respect to the remainder. An investor should consult its
tax advisor regarding this matter.

         A holder of a recombinable security should calculate original issue
discount with respect to each Strip and include it in ordinary income as it
accrues, which may be before the receipt of cash attributable to such income, in
accordance with a constant interest method that takes into account the
compounding of interest. The holder should determine its yield to maturity based
on its purchase price allocated to the Strip and on a schedule of payments
projected using a prepayment assumption, and then make periodic adjustments to
take into account actual prepayment experience. With respect to a particular
holder, Treasury regulations do not address whether the prepayment assumption
used to calculate original issue discount would be determined at the time of
purchase of the Strip or would be the original prepayment assumption with
respect to the related class of securities. Further, if the related class of
securities is subject to redemption as described in the applicable prospectus
supplement, Treasury regulations do not address the extent to which such
prepayment assumption should take into account the possibility of the retirement
of the Strip concurrently with the redemption of such class of securities. An
investor should consult its tax advisor regarding these matters. For purposes of
information reporting relating to original issue discount, the original yield to
maturity of the Strip, determined as of the date of issuance of the series, will
be calculated based on the original prepayment assumption.

         If original issue discount accruing with respect to a Strip, computed
as described above, is negative for any period, the holder may be entitled to
offset such amount only against future positive original issue

                                       109


discount accruing from such Strip, and income is reported in all cases in this
manner. Although not entirely free from doubt, such a holder may be entitled to
deduct a loss to the extent that its remaining basis would exceed the maximum
amount of future payments to which the holder is entitled with respect to such
Strip, assuming no further prepayments of the Mortgages (or, perhaps, assuming
prepayments at a rate equal to the prepayment assumption). Although the issue is
not free from doubt, all or a portion of such loss may be treated as a capital
loss if the Strip is a capital asset in the hands of the holder.

         A holder realizes gain or loss on the sale of a Strip in an amount
equal to the difference between the amount realized and its adjusted basis in
such Strip. The holder's adjusted basis generally is equal to the holder's
allocated cost of the Strip, increased by income previously included, and
reduced (but not below zero) by distributions previously received. Except as
described below, any gain or loss on such sale generally is capital gain or loss
if the holder has held its interest as a capital asset and is long-term if the
interest has been held for the long-term capital gain holding period (more than
one year). Such gain or loss will be ordinary income or loss (1) for a bank or
thrift institution or (2) if the securities are REMIC regular securities to the
extent income recognized by the holder is less than the income that would have
been recognized if the yield on such interest were 110% of the applicable
federal rate under Code Section 1274(d).

         If a holder exchanges a single class of recombinable securities (an
"Exchanged Class") for several classes of recombinable securities (each, a
"Received Class") and then sells one of the Received Classes, the sale may be
subject the investor to the coupon stripping rules of Code Section 1286. The
holder must allocate its basis in the Exchanged Class between the part of such
class underlying the Received Class that was sold and the part of the Exchanged
Class underlying the Received Classes that was retained, in proportion to their
relative fair market values as of the date of such sale. The holder is treated
as purchasing the interest retained for the amount of basis allocated to such
interest. The holder must calculate original issue discount with respect to the
retained interest as described above.

         Although the matter is not free from doubt, a holder that acquires in
one transaction a Combination of classes of recombinable securities that may be
exchanged for a single class of recombinable securities that is identical to a
class of securities that is on deposit in the related recombinable security
trust fund should be treated as owning the relevant class of securities.

EXCHANGES OF RECOMBINABLE SECURITIES

         An exchange of an interest in one or more classes of recombinable
securities for an interest in one or more other related classes of recombinable
securities that are part of the same combination, or vice versa, will not be a
taxable exchange. After the exchange, the holder is treated as continuing to own
the interests in the class or classes of recombinable securities that it owned
immediately before the exchange.

TAX TREATMENT OF FOREIGN INVESTORS

         A foreign holder of a class of recombinable securities is subject to
taxation in the same manner as foreign holders of REMIC regular securities. Such
manner of taxation is discussed under the heading "Material Federal Income Tax
Consequences--REMICs--Taxation of Owners of REMIC Regular Certificates."

BACKUP WITHHOLDING

         A holder of a class of recombinable securities is subject to backup
withholding rules similar to those applicable to REMIC regular securities. Such
manner of taxation is discussed under the heading "Material Federal Income Tax
Consequences--REMICs--Taxation of Owners of REMIC Regular Certificates."

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REPORTING AND ADMINISTRATIVE MATTERS

         Reports will be made to the Internal Revenue Service and to holders of
record of the classes of recombinable securities that are not excepted from the
reporting requirements.

         DUE TO THE COMPLEXITY OF THE FEDERAL INCOME TAX RULES APPLICABLE TO
SECURITYHOLDERS AND THE CONSIDERABLE UNCERTAINTY THAT EXISTS WITH RESPECT TO
MANY ASPECTS OF THOSE RULES, POTENTIAL INVESTORS SHOULD CONSULT THEIR OWN TAX
ADVISORS REGARDING THE TAX TREATMENT OF THE ACQUISITION, OWNERSHIP, AND
DISPOSITION OF THE SECURITIES.

                            STATE TAX CONSIDERATIONS

         In addition to the federal income tax consequences described in
"Material Federal Income Tax Considerations," potential investors should
consider the state and local income tax consequences of the acquisition,
ownership, and disposition of the Offered Securities. State and local income tax
law may differ substantially from the corresponding federal law, and this
discussion does not purport to describe any aspect of the income tax laws of any
state or locality. Therefore, potential investors should consult their own tax
advisors with respect to the various state and local tax consequences of an
investment in the Offered Securities.

                              ERISA CONSIDERATIONS

GENERAL

         The Employee Retirement Income Security Act of 1974, as amended
("ERISA") and Section 4975 of the Internal Revenue Code of 1986, as amended (the
"Code"), impose certain restrictions on employee benefit plans, individual
retirement accounts and annuities, Keogh plans and collective investment funds
and separate accounts in which those plans, accounts or arrangements are
invested (collectively, "Plans"), and on persons who are parties in interest or
disqualified persons ("Parties In Interest") with respect to such Plans. Certain
employee benefit plans, such as governmental plans and church plans (if no
election has been made under Code Section 410(d)), are not subject to the
restrictions of ERISA and Code Section 4975, and assets of such plans may be
invested in the Securities without regard to the considerations described below,
subject to other applicable federal, state and local law ("Similar Law").
However, any such governmental or church plan which is qualified under Code
Section 401(a) and exempt from taxation under Code Section 501(a) is subject to
the prohibited transaction rules set forth in 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

         ERISA prohibits Parties in Interest with respect to a Plan from
engaging in certain transactions involving a Plan and its assets unless a
statutory, regulatory or administrative exemption applies to the transaction.
Code Section 4975 imposes certain excise taxes and other sanctions (or, in some
cases, a civil penalty may be assessed pursuant to Section 502 of ERISA) on
Parties in Interest which engage in non-exempt prohibited transactions.

Plan Asset Regulations

         The United States Department of Labor ("Labor") has issued regulations
(29 C.F.R. Section 2510.3-101) containing rules for determining what constitutes
the assets of a Plan (the "Plan Asset Regulations"). The Plan Asset Regulations
provide that, as a general rule, the underlying assets and properties

                                       111


of corporations, partnerships, trusts and certain other entities in which a Plan
acquires an "equity interest" will be deemed for purposes of ERISA to be assets
of the Plan unless certain exceptions apply.

         Under the terms of the Plan Asset Regulations, the Trust Fund may be
deemed to hold plan assets by reason of a Plan's investment in a Security; such
plan assets would include an undivided interest in the Mortgage Assets and any
other assets held by the Trust Fund. In such an event, the Asset Seller, the
Master Servicer, the Trustee, any insurer of the Assets and other persons, in
providing services with respect to the assets of the Trust Fund, may be Parties
in Interest, subject to the prohibited transaction provisions of Section 406 of
ERISA, Code Section 4975 or Similar Law, with respect to transactions involving
such assets unless such transactions are subject to a statutory, regulatory or
administrative exemption.

         The Plan Asset Regulations contain a de minimis safe-harbor rule that
exempts an entity from being deemed to hold plan assets if the aggregate equity
investment in such entity by Plans is not significant. For this purpose, equity
investment 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 at least 25% of the value of any class of equity interest.
"Benefit plan investors" are defined as Plans as well as employee benefit plans
not subject to Title I of ERISA (e.g., governmental plans). 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.

         An exception applies if the interest described is treated as
indebtedness under applicable local law and has no substantial equity features.
Generally, a profits interest in a partnership, an undivided ownership interest
in property and a beneficial ownership interest in a trust are deemed to be
"equity interests" under the Plan Asset Regulations. If Notes of a particular
Series are deemed to be indebtedness under applicable local law without any
substantial equity features, an investing Plan's assets would include such
Notes, but not, by reason of such purchase, the underlying assets of the Trust
Fund.

         Labor has issued final regulations under Section 401(c) of ERISA
describing a safe harbor for insurers that issued certain nonguaranteed policies
supported by their general accounts to Plans on or before December 31, 1998, and
under which an insurer would not be considered an ERISA fiduciary with respect
to its general account by virtue of a Plan's investment in such a policy. In
general, to meet the safe harbor, an insurer must (i) disclose certain specified
information to investing Plan fiduciaries initially and on an annual basis, (ii)
allow Plans to terminate or discontinue a policy on 90 days' notice to the
insurer, and to elect, without penalty, either a lump-sum payment or annual
installment payments over a ten-year period, with interest, and (iii) give Plans
written notice of "insurer-initiated amendments" over 60 days before the
amendments take effect.

AVAILABILITY OF UNDERWRITER'S EXEMPTION FOR CERTIFICATES

         Labor has granted to Merrill Lynch, Pierce, Fenner & Smith Incorporated
Prohibited Transaction Exemption ("PTE") 90-29, Exemption Application No.
D-8012, 55 Fed. Reg. 21459 (1990), as amended (the "Exemption"), which exempts
from the application of certain of the prohibited transaction rules transactions
relating to: (1) the acquisition, sale and holding by Plans of certain
certificates representing an undivided interest in certain asset-backed
pass-through trusts, with respect to which Merrill Lynch, Pierce, Fenner & Smith
Incorporated or any of its affiliates is the sole underwriter or the manager or
co-manager of the underwriting syndicate; and (2) the servicing, operation and
management of such asset-backed pass-through trusts, provided that the general
conditions and certain other conditions set forth in the Exemption are
satisfied. With respect to a series of Notes, the related Prospectus Supplement
will discuss whether the Exemption may be applicable to such Notes.

         Section II of 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

                                       112


connection with the servicing, operation and management of the Trust may be
eligible for exemptive relief thereunder:

         o   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 Plan as they would be in an arm's-length
             transaction with an unrelated party;

         o   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, unless the Certificates are
             backed by Trust Fund assets which are residential, home equity,
             multi-family or commercial loans which are described and defined in
             the Exemption as designated transactions ("Designated
             Transactions");

         o   The Certificates acquired by the Plan have received a rating at the
             time of such acquisition that is in one of the three (or in the
             case of a Designated Transaction, four) highest generic rating
             categories from any of Fitch Inc., Moody's Investors Service, Inc.
             and Standard & Poor's, a division of The McGraw-Hill Companies,
             Inc. (each, a "Rating Agency");

         o   The Trustee is not an affiliate of any member of the Restricted
             Group (consisting of the Underwriter, the Asset Seller, the Master
             Servicer, any insurer of the Mortgage Assets, any borrower whose
             obligations under one or more Assets constitute more than 5% of the
             aggregate unamortized principal balance of the assets in the Trust
             Fund, or any of their respective affiliates), other than the
             Underwriter;

         o   The sum of all payments made to and retained by the Underwriter in
             connection with the distribution or placement of the Certificates
             represents not more than reasonable compensation for underwriting
             or placing such Certificates; the sum of all payments made to and
             retained by the Asset Seller pursuant to the sale of the Assets to
             the Trust Fund represents not more than the fair market value of
             such Assets; the sum of all payments made to and retained by the
             Master Servicer represent not more than reasonable compensation for
             the Master Servicer's services under the Agreement and
             reimbursement of the Master Servicer's reasonable expenses in
             connection therewith; and

         o   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.

         The Exemption was amended by PTE 97-34 to extend exemptive relief to
Certificates issued in transactions using pre-funding accounts whereby a portion
of the loans backing the Certificates are transferred to the Trust Fund within a
specified period following the closing date (the "Pre-Funding Period") instead
of requiring that all such loans be either identified or transferred on or
before the closing date. The relief is available provided that the following
conditions are met:

         o   The ratio of the amount allocated to the pre-funding account to the
             total principal amount of the certificates being offered must not
             exceed twenty-five percent (25%);

         o   All loans transferred after the closing date (referred to as
             "additional loans") must meet the same terms and conditions for
             eligibility as the original loans used to create the Trust Fund,
             which terms and conditions have been approved by a Rating Agency;

         o   The transfer of such additional loans to the Trust Fund during the
             Pre-Funding Period must not result in the Certificates 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 Fund;

         o   Solely as a result of the use of pre-funding, the weighted average
             annual percentage interest rate (the "Average Interest Rate") for
             all of the loans in the Trust Fund at the end of the Pre-Funding
             Period must not be more than 100 basis points lower than the
             Average Interest Rate for the loans which were transferred to the
             Trust Fund on the closing date;

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         o   Either (i) the characteristics of the additional loans must be
             monitored by an insurer or other credit support provider which is
             independent of the Asset Seller or (ii) an independent accountant
             retained by the Asset Seller must provide the Asset Seller with a
             letter (with copies provided to the Rating Agency, the Underwriter
             and the Trustee) stating whether or not the characteristics of the
             additional loans conform to the characteristics described in the
             offering documents or the agreement. In preparing such letter, the
             independent accountant must use the same type of procedures as were
             applicable to the loans which were transferred as of the closing
             date;

         o   The Pre-Funding Period must end no later than three months or 90
             days after the closing date or earlier, in certain circumstances,
             if the amount on deposit in the pre-funding account is reduced
             below the minimum level specified in the agreement or an event of
             default occurs under the agreement;

         o   Amounts transferred to any pre-funding account and/or capitalized
             interest account used in connection with the pre-funding may be
             invested only in investments which are permitted by a Rating
             Agency, and (i) are direct obligations of, or obligations fully
             guaranteed as to timely payment of principal and interest by, the
             United States or any agency or instrumentality thereof (provided
             that such obligations are backed by the full faith and credit of
             the United States) or (ii) have been rated (or the obligor has been
             rated) in one of the three highest generic rating categories by a
             Rating Agency; and

         o   Certain disclosure requirements must be met.

         PTE 2000-58 further amended the Exemption to provide that one subset of
Designated Transactions, residential (one-to-four family) and home equity loans
and manufactured housing loans, may be less than fully secured, provided that
(a) the rights and interests evidenced by Certificates issued in such Designated
Transactions are not subordinated to the rights and interests evidenced by
securities of the same Trust Fund, (b) such Certificates have received a rating
from a Rating Agency at the time of such acquisition that is in one of the two
highest generic rating categories, and (c) any loan included in the corpus or
assets of the Trust Fund is secured by collateral whose fair market value on the
closing date of the Designated Transaction is at least equal to 80% of the sum
of (i) the outstanding principal balance due under the loan which is held by the
Trust Fund and (ii) the outstanding principal balance(s) of any other loan(s) of
higher priority (whether or not held by the Trust Fund) which are secured by the
same collateral.

         PTE 2000-58 also permits an interest-rate swap to be an asset of a
Trust Fund which issues Certificates acquired by Plans in an initial offering or
in the secondary market and clarifies the requirements regarding yield
supplement agreements. An interest-rate swap or, if purchased by or on behalf of
the Trust Fund, an interest-rate cap contract (collectively, a "Swap" or "Swap
Agreement") is a permitted Trust Fund asset if it (a) is an "eligible Swap," (b)
is with an "eligible counterparty," (c) is purchased by a "qualified plan
investor," (d) meets certain additional specific conditions which depend on
whether the Swap is a "ratings dependent Swap" or a "non-ratings dependent Swap"
and (e) permits the Trust Fund to make termination payments to the Swap (other
than currently scheduled payments) solely from excess spread or amounts
otherwise payable to the Master Servicer or Asset Seller.

         An "eligible Swap" is one which (a) is denominated in U.S. dollars, (b)
pursuant to which the Trust Fund pays or receives, on or immediately prior to
the respective payment or distribution date for the class of Certificates to
which the Swap relates, a fixed rate of interest or a floating rate of interest
based on a publicly available index (e.g., LIBOR or the U.S. Federal Reserve's
Cost of Funds Index), with the Trust Fund receiving such payments on at least a
quarterly basis and obligated to make separate payments no more frequently than
the counterparty, with all simultaneous payments being netted ("Allowable
Interest Rate"), (c) has a notional amount that does not exceed either: (i) the
principal balance of the class of Certificates to which the Swap relates; or
(ii) the portion of the principal balance of such class represented by
obligations ("Allowable Notional Amount"), (d) is not leveraged (i.e., payments
are based on the applicable notional amount, the day count fractions, the fixed
or floating rates permitted above, and

                                       114


the difference between the products thereof, calculated on a one-to-one ratio
and not on a multiplier of such difference) ("Leveraged"), (e) has a final
termination date that is either the earlier of the date on which the Trust Fund
terminates or the related class of Certificates are fully repaid and (f) does
not incorporate any provision which could cause a unilateral alteration in the
interest rate requirement described above or the prohibition against leveraging.

         An "eligible counterparty" means a bank or other financial institution
which has a rating at the date of issuance of the Certificates, which is one of
the three highest long-term credit rating categories or one of the two highest
short-term credit rating categories, utilized by at least one of the Rating
Agencies rating the Certificates; provided, that if a counterparty is relying on
its short-term rating to establish eligibility hereunder, such counterparty must
either have a long-term rating in one of the three highest long-term rating
categories or not have a long-term rating from the applicable Rating Agency.

         A "qualified plan investor" is a Plan where the decision to buy such
class of Certificates is made on behalf of the Plan by an independent fiduciary
qualified to understand the Swap transaction and the effect the Swap would have
on the rating of the Certificates, and such fiduciary either (i) is a "qualified
professional asset manager" under Prohibited Transaction Class Exemption
("PTCE") 84-14, (ii) is an "in-house asset manager" under PTCE 96-23 or (iii)
has total assets (both Plan and non-Plan) under management of at least $100
million at the time the Certificates are acquired by the Plan.

         In "rating dependent Swaps" (where the rating of a class of
Certificates is dependent on the terms and conditions of the Swap), the Swap
Agreement must provide that if the credit rating of the counterparty is
withdrawn or reduced by any Rating Agency below a level specified by the Rating
Agency, the Master Servicer must, within the period specified under the Swap
Agreement: (a) obtain a replacement Swap Agreement with an eligible counterparty
which is acceptable to the Rating Agency and the terms of which are
substantially the same as the current Swap Agreement (at which time the earlier
Swap Agreement must terminate); or (b) cause the Swap counterparty to establish
any collateralization or other arrangement satisfactory to the Rating Agency
such that the then current rating by the Rating Agency of the particular class
of Certificates will not be withdrawn or reduced (and the terms of the Swap
Agreement must specifically obligate the counterparty to perform these duties
for any class of Certificates with a term of more than one year). In the event
that the Master Servicer fails to meet these obligations, Plan
certificateholders must be notified in the immediately following periodic report
which is provided to certificateholders but in no event later than the end of
the second month beginning after the date of such failure. Sixty days after the
receipt of such report, the relief provided under the Exemption will
prospectively cease to be applicable to any class of Certificates held by a Plan
which involves such a ratings dependent Swap.

         "Non-ratings dependent Swaps" (those where the rating of the
Certificates does not depend on the terms and conditions of the Swap) are
subject to the following conditions. If the credit rating of the counterparty is
withdrawn or reduced below the lowest level permitted above, the Master Servicer
will, within a specified period after such rating withdrawal or reduction: (a)
obtain a replacement Swap Agreement with an eligible counterparty, the terms of
which are substantially the same as the current Swap Agreement (at which time
the earlier Swap Agreement must terminate); (b) cause the counterparty to post
collateral with the Trust Fund in an amount equal to all payments owed by the
counterparty if the Swap transaction were terminated; or (c) terminate the Swap
Agreement in accordance with its terms.

         An "eligible yield supplement agreement" is any yield supplement
agreement or similar arrangement (or if purchased by or on behalf of the Trust
Fund, an interest rate cap contract) to supplement the interest rates otherwise
payable on obligations held by the Trust Fund ("EYS Agreement"). If the EYS
Agreement has a notional principal amount and/or is written on an International
Swaps and Derivatives Association, Inc. form, the EYS Agreement may only be held
as an asset of the Trust Fund with respect to Certificates purchased by Plans on
or after April 7, 1998 if it meets the following conditions: (a) it is
denominated in U.S. dollars; (b) it pays an Allowable Interest Rate; (c) it is
not Leveraged; (d) it does not allow any of the three preceding requirements to
be

                                       115


unilaterally altered without the consent of the Trustee; (e) it is entered into
between the Trust Fund and an eligible counterparty and (f) it has an Allowable
Notional Amount.

         If the general conditions of the Exemption are satisfied, the Exemption
may provide an exemption from the restrictions imposed by ERISA and the Code in
connection with the initial acquisition, transfer or holding, and the
acquisition or disposition in the secondary market, of Certificates by a Plan.
However, no exemption is provided from the restrictions of ERISA for the
acquisition or holding of a Certificate on behalf of an "Excluded Plan" by any
person who is a fiduciary with respect to the assets of such Excluded Plan. For
these purposes, an Excluded Plan is a Plan sponsored by any member of the
Restricted Group. Exemptive relief may also be provided for the acquisition,
holding and disposition of Certificates by Plans if the fiduciary or its
affiliate is the obligor with respect to 5% or less of the fair market value of
the loans in the Trust Fund provided that (i) the Plan is not an Excluded Plan,
(ii) each Plan's investment in each class of Certificates does not exceed 25% of
the outstanding Certificates in the class, (iii) after the Plan's acquisition of
the Certificates, no more than 25% of the assets over which the fiduciary has
investment authority are invested in Certificates of a Trust Fund containing
assets which are sold or serviced by the same entity, and (iv) in the case of
initial issuance (but not secondary market transactions), at least 50% of each
class of Certificates and at least 50% of the aggregate interests in the Trust
Fund are acquired by persons independent of the Restricted Group.

         In the event that Offered Certificates (other than REMIC residual
Certificates) do not meet the requirements of the Exemption solely because they
are subordinated Certificates or fail to meet a minimum rating requirement under
the Exemption, insurance companies may be eligible to purchase Certificates
pursuant to Section III of PTCE 95-60 which permits insurance company general
accounts (as defined in PTCE 95-60) to purchase such Certificates if they
otherwise meet all of the other requirements of the Exemption.

         Before purchasing a Certificate, a fiduciary of a Plan should itself
confirm (a) that the Certificates constitute "certificates" 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.

Prohibited Transaction Class Exemption 83-1

         Labor has issued an administrative exemption, PTCE 83-1, which under
certain conditions exempts from the application of certain of the prohibited
transaction rules of ERISA and the excise tax provisions of Code Section 4975
transactions involving a Plan in connection with the operation of a "mortgage
pool" and the purchase, sale and holding of Certificates which are "mortgage
pool pass-through certificates." A "mortgage pool" is defined as a fixed
investment pool consisting solely of interest-bearing obligations secured by
first or second mortgages or deeds of trust on single-family residential
property, property acquired in foreclosure and undistributed cash. A "mortgage
pool pass-through certificate" is defined as a Certificate which represents a
beneficial undivided interest in a mortgage pool which entitles the holder to
pass through payments of principal and interest from the mortgage loans. PTCE
83-1 requires that: (i) the Asset Seller and the Trustee maintain a system of
insurance or other protection for the mortgage loans, the property securing such
mortgage loans and for indemnifying holders of Certificates against reductions
in pass-through payments due to defaults in loan payments or property damage in
an amount at least equal to the greater of (x) 1% of the aggregate principal
balance of the mortgage loans or (y) 1% of the principal balance of the largest
covered pooled mortgage loans; (ii) the Trustee may not be an affiliate of the
Asset Seller; and (iii) the payments made to, and retained by, the Asset Seller
in connection with the Trust Fund, together with all funds inuring to its
benefit for administering the Trust Fund, represent no more than "adequate
consideration" for selling the mortgage loans, plus reasonable compensation for
services provided to the Trust Fund. In addition, PTCE 83-1 exempts the initial
sale of Certificates to a Plan with respect to which the Asset Seller, the
insurer, the Master Servicer or other servicer or the Trustee is a Party In
Interest if the Plan does not pay more than fair market value for such
Certificates and the rights and interests evidenced by such Certificates are not
subordinated to the rights and interests evidenced by other Certificates of the
same pool.

                                       116


         PTCE 83-1 also exempts from the prohibited transaction rules any
transactions in connection with the servicing and operation of the mortgage
pool, provided that any payments made to the Master Servicer in connection with
the servicing of the Trust Fund are made in accordance with a binding agreement,
copies of which must be made available to prospective Plan investors. In the
case of any Plan with respect to which the Asset Seller, the Master Servicer,
the insurer or the Trustee is a fiduciary, PTCE 83-1 will only apply if, in
addition to the other requirements: (i) the initial sale, exchange or transfer
of Certificates is expressly approved by an independent fiduciary who has
authority to manage and control those Plan assets being invested in
Certificates; (ii) the Plan pays no more for the Certificates than would be paid
in an arm's length transaction; (iii) no investment management, advisory or
underwriting fee, sales transfer commission or similar compensation is paid to
the Asset Seller with regard to the sale, exchange or transfer of Certificates
to the Plan; (iv) the total value of the Certificates purchased by such Plan
does not exceed 25% of the amount issued; and (v) at least 50% of the aggregate
amount of Certificates is acquired by persons independent of the Asset Seller,
the Trustee, the Master Servicer and the insurer. Before purchasing Certificates
in reliance on PTCE 83-1, a fiduciary of a Plan should confirm that the Trust
Fund is a "mortgage pool," that the Certificates constitute "mortgage pool
pass-through certificates" and that the conditions set forth in PTCE 83-1 would
be satisfied. In addition to making its own determination as to the availability
of the exemptive relief provided in PTCE 83-1, the fiduciary should consider the
availability of any other prohibited transaction exemptions. The fiduciary
should also consider its general fiduciary obligations under ERISA in
determining whether to purchase any Certificates on behalf of a Plan pursuant to
PTCE 83-1.

Investor-Based Exemptions

         Even if Securities issued pursuant to an offering are not treated as
equity investments for purposes of the Plan Asset Regulations, the acquisition
or holding of such Securities by or on behalf of a Plan could still be
considered to give rise to a prohibited transaction if the Issuers, the
Depositor, the Indenture Trustee or any of their respective affiliates is or
becomes a party in interest or disqualified person with respect to a Plan or
related investment vehicle unless such transaction is subject to one or more
statutory or administrative exemptions such as: PTCE 90-1, which exempts certain
transactions involving insurance company pooled separate accounts; PTCE 95-60,
which exempts certain transactions involving insurance company general accounts;
PTCE 91-38, which exempts certain transactions involving bank collective
investment funds; PTCE 84-14, which exempts certain transactions effected on
behalf of a Plan by a "qualified professional asset manager;" or PTCE 96-23,
which exempts certain transactions effected on behalf of a Plan by certain
"in-house" asset managers (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 such
exemption may not necessarily cover all acts that might be construed as
prohibited transactions.

         Nevertheless, a Plan generally should not purchase such Securities in
reliance on any of the Investor-Based Exemptions if the Issuers, the Depositor,
the Indenture Trustee or any of their respective affiliates: (a) has investment
discretion with respect to the investment of assets of such Plan; (b) has
authority or responsibility to give or regularly gives investment advise with
respect to assets of such Plan for a fee and pursuant to an agreement or
understanding that such advice will serve as a primary basis for investment
decisions with respect to such assets and that such advice will be based on the
particular investment needs of such Plan; or (c) is an employer maintaining or
contributing to such Plan. A party that is described in the preceding sentence
will generally be construed to be a fiduciary under ERISA with respect to the
Plan and any such purchase might result in a non-exempt "prohibited transaction"
under ERISA, the Code or Similar Law.

REVIEW BY PLAN FIDUCIARIES

         Any Plan fiduciary considering whether to purchase any Securities 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 Code and Similar Law to such investment. Among other things, before

                                       117


purchasing any Securities, a fiduciary of a Plan subject to the fiduciary
responsibility provisions of ERISA or an employee benefit plan subject to the
prohibited transaction provisions of the Code 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 Securities
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 PTCE 83-1 for certain transactions involving
mortgage pool investment trusts.

         Purchasers that are insurance companies should consult with their
counsel with respect to the United States Supreme Court case interpreting the
fiduciary responsibility rules of ERISA, John Hancock Mutual Life Insurance Co.
v. Harris Trust & Savings Bank (decided December 13, 1993). In John Hancock, the
Supreme Court ruled that assets held in an insurance company's general account
may be deemed to be "plan assets" for ERISA purposes under certain
circumstances. Prospective purchasers should determine whether the decision
affects their ability to make purchases of the Securities. In particular, such
an insurance company should consider the exemptive relief granted by Labor for
transactions involving insurance company general accounts in Prohibited
Transaction Exemption 95-60 and under Section 401(c) of ERISA.

                                LEGAL INVESTMENT

         Each class of Offered Securities will be rated at the date of issuance
in one of the four highest rating categories by at least one Rating Agency. The
related Prospectus Supplement will specify which classes of the Securities, if
any, will constitute "mortgage related securities" ("SMMEA Securities") for
purposes of the Secondary Mortgage Market Enhancement Act of 1984 ("SMMEA").
SMMEA Securities will constitute legal investments for persons, trusts,
corporations, partnerships, associations, business trusts and business entities
(including, but not limited to, state chartered savings banks, commercial banks,
savings and loan associations and insurance companies, as well as trustees and
state government employee retirement systems) 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 agency or
instrumentality thereof constitute legal investments for such entities. Alaska,
Arkansas, Colorado, Connecticut, Delaware, Florida, Georgia, Illinois, Kansas,
Maryland, Michigan, Missouri, Nebraska, New Hampshire, New York, North Carolina,
Ohio, South Dakota, Utah, Virginia and West Virginia enacted legislation before
the October 4, 1991 cutoff established by SMMEA for such enactments, limiting to
varying extents the ability of certain entities (in particular, insurance
companies) to invest in mortgage related securities, in most cases by requiring
the affected investors to rely solely upon existing state law, and not SMMEA.
Investors affected by such legislation will be authorized to invest in SMMEA
Certificates only to the extent provided in such legislation. SMMEA provides,
however, that in no event will the enactment of any such legislation affect the
validity of any contractual commitment to purchase, hold or invest in "mortgage
related securities," or require the sale or other disposition of such
securities, so long as such contractual commitment was made or such securities
acquired prior to the enactment of such 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
with "mortgage related securities" without limitation as to the percentage of
their assets represented thereby, federal credit unions may invest in such
securities, and national banks may purchase such securities for their own
account without regard to the limitations generally applicable to investment
securities set forth in 12 U.S.C. 24 (Seventh), subject in each case to such
regulations as the applicable federal regulatory authority may prescribe. In
this connection, federal credit unions should review the National Credit Union
Administration ("NCUA") Letter to Credit Unions No. 96, as modified by Letter to
Credit Unions No. 108, which includes guidelines to assist federal credit unions
in making investment decisions for mortgage related securities, and the NCUA's
regulation "Investment and Deposit Activities"

                                       118


(12 C.F.R. Part 703), which sets forth certain restrictions on investment by
federal credit unions in mortgage related securities.

         Institutions whose investment activities are subject to legal
investment laws or regulations or review by certain regulatory authorities may
be subject to restrictions on investment in certain classes of Offered
Securities. Any financial institution which is subject to the jurisdiction of
the Comptroller of the Currency, the Board of Governors of the Federal Reserve
System, the FDIC, the Office of Thrift Supervision ("OTS"), the NCUA or other
federal or state agencies with similar authority should review any applicable
rules, guidelines and regulations prior to purchasing any Offered Security. The
Federal Financial Institutions Examination Council, for example, has issued a
Supervisory Policy Statement on Securities Activities effective February 10,
1992 (the "Policy Statement") setting forth guidelines for and significant
restrictions on investments in "high-risk mortgage securities." The Policy
Statement has been adopted by the Comptroller of the Currency, the Federal
Reserve Board, the FDIC, the OTS and the NCUA (with certain modifications), with
respect to the depository institutions that they regulate. The Policy Statement
generally indicates that a mortgage derivative product will be deemed to be high
risk if it exhibits greater price volatility than a standard fixed rate
thirty-year mortgage security. According to the Policy Statement, prior to
purchase, a depository institution will be required to determine whether a
mortgage derivative product that it is considering acquiring is high-risk, and
if so that the proposed acquisition would reduce the institution's overall
interest rate risk. Reliance on analysis and documentation obtained from a
securities dealer or other outside party without internal analysis by the
institution would be unacceptable. There can be no assurance that any classes of
Offered Securities will not be treated as high-risk under the Policy Statement.

         The predecessor to the OTS issued a bulletin, entitled, "Mortgage
Derivative Products and Mortgage Swaps", which is applicable to thrift
institutions regulated by the OTS. The bulletin established guidelines for the
investment by savings institutions in certain "high-risk" mortgage derivative
securities and limitations on the use of such securities by insolvent,
undercapitalized or otherwise "troubled" institutions. According to the
bulletin, such "high-risk" mortgage derivative securities include securities
having certain specified characteristics, which may include certain classes of
Securities. In accordance with Section 402 of the Financial Institutions Reform,
Recovery and Enhancement Act of 1989, the foregoing bulletin will remain in
effect unless and until modified, terminated, set aside or superseded by the
FDIC. Similar policy statements have been issued by regulators having
jurisdiction over the types of depository institutions.

         In September 1993 the National Association of Insurance Commissioners
released a draft model investment law (the "Model Law") which sets forth model
investment guidelines for the insurance industry. Institutions subject to
insurance regulatory authorities may be subject to restrictions on investment
similar to those set forth in the Model Law and other restrictions.

         If specified in the related Prospectus Supplement, other classes of
Offered Securities offered pursuant to this Prospectus will not constitute
"mortgage related securities" under SMMEA. The appropriate characterization of
this Offered Security under various legal investment restrictions, and thus the
ability of investors subject to these restrictions to purchase such Offered
Securities, may be subject to significant interpretive uncertainties.

         The Depositor will make no representations as to the proper
characterization of the Offered Certificates for legal investment or financial
institution regulatory purposes, or as to the ability of particular investors to
purchase any Offered 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 Offered Securities) may adversely affect the liquidity of
the Offered Securities.

         The foregoing does not take into consideration the applicability of
statutes, rules, regulations, orders, guidelines or agreements generally
governing investments made by a particular investor, including, but not limited
to, "prudent investor" provisions, percentage-of-assets limits and provisions
which may restrict or prohibit investment in securities which are not "interest
bearing" or "income paying."

                                       119


         There may be other restrictions on the ability of certain investors,
including depository institutions, either to purchase Offered Securities or to
purchase Offered Securities representing more than a specified percentage of the
investor's assets. 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 Offered Securities
of any class constitute legal investments or are subject to investment, capital
or other restrictions.

                              PLAN OF DISTRIBUTION

         The Offered Securities offered hereby and by the Supplements to this
Prospectus will be offered in series. The distribution of the Securities 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 Securities will be
distributed in a firm commitment underwriting, subject to the terms and
conditions of the underwriting agreement, by Merrill Lynch, Pierce, Fenner &
Smith Incorporated ("Merrill Lynch") acting as underwriter with other
underwriters, if any, named therein. Merrill Lynch is an affiliate of the
Depositor. In such event, the Prospectus Supplement may also specify that the
underwriters will not be obligated to pay for any Offered Securities agreed to
be purchased by purchasers pursuant to purchase agreements acceptable to the
Depositor. In connection with the sale of Offered Certificates, underwriters may
receive compensation from the Depositor or from purchasers of Offered Securities
in the form of discounts, concessions or commissions. The Prospectus Supplement
will describe any such compensation paid by the Depositor.

         Alternatively, the Prospectus Supplement may specify that Offered
Securities will be distributed by Merrill Lynch and/or any other person or
persons named therein acting as agent or in some cases as principal with respect
to Offered Securities that it has previously purchased or agreed to purchase. If
Merrill Lynch or such persons act as agents in the sale of Offered Securities,
they will receive a selling commission with respect to such Offered Securities,
depending on market conditions, expressed as a percentage of the aggregate
principal balance or notional amount of such Offered Securities as of the Cut-
off Date. The exact percentage for each series of Securities will be disclosed
in the related Prospectus Supplement. To the extent that Merrill Lynch or such
persons elect to purchase Offered Securities as principal, they 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 the Depositor and
purchasers of Offered Securities of such series.

         This Prospectus may be used, to the extent required, by Merrill Lynch
or any other Underwriter in connection with offers and sales related to market
making transactions.

         The Depositor will indemnify Merrill Lynch and any underwriters against
certain civil liabilities, including liabilities under the Securities Act of
1933, or will contribute to payments Merrill Lynch and any underwriters may be
required to make in respect thereof.

         In the ordinary course of business, Merrill Lynch and its affiliates
may engage in various securities and financing transactions, including
repurchase agreements to provide interim financing of the Depositor's or Asset
Seller's Assets pending the sale of such Assets or interests therein, including
the Securities.

         As to each series of Securities, 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 the Depositor or
Asset Seller, and may be sold by the Depositor or Asset Seller at any time.

         Upon receipt of a request by an investor who has received an electronic
Prospectus Supplement and Prospectus from the Underwriter or a request by such
investor's representative within the period during which there is an obligation
to deliver a Prospectus Supplement and Prospectus, the Depositor or the

                                       120


Underwriter will promptly deliver, or cause to be delivered, without charge, a
paper copy of the Prospectus Supplement and Prospectus.

                                  LEGAL MATTERS

         Certain legal matters in connection with the Securities, including
certain federal income tax consequences, will be passed upon for the Depositor
by Dechert LLP, New York, New York or Thacher Proffitt & Wood, New York, New
York. Certain matters with respect to Delaware law will be passed upon for the
Depositor by Richards, Layton & Finger, P.A., Wilmington, Delaware.

                              FINANCIAL INFORMATION

         A new Trust Fund will be formed with respect to each series of
Securities and no Trust Fund will engage in any business activities or have any
assets or obligations prior to the issuance of the related series of Securities.
Accordingly, no financial statements with respect to any Trust Fund will be
included in this Prospectus or in the related Prospectus Supplement.

                INCORPORATION OF CERTAIN INFORMATION BY REFERENCE

         This Prospectus incorporates by reference all documents and reports
filed on behalf of the Depositor with respect to a Trust Fund pursuant to
Section 13(a), 14 or 15(d) of the Securities Exchange Act of 1934, as amended,
prior to the termination of the offering the related Securities. Upon request by
any person to whom this prospectus is delivered in connection with the offering
of one or more Classes of Offered Securities, the Depositor will provide or
cause to be provided without charge a copy of any of the documents and/or
reports incorporated herein by reference, in each case to the extent the
documents or reports relate to such Classes of Offered Securities, other than
the exhibits to such documents (unless those exhibits are specifically
incorporated by reference in such documents). Requests to the Depositor should
be directed in writing to: Merrill Lynch Mortgage Investors, Inc., 250 Vesey
Street, World Financial Center-North Tower, 10th Floor, New York, New York
10281-1310, Attention: Secretary, telephone number (212) 449-0357. The Depositor
has determined that its financial statements are not material to the offering of
any Offered Securities.

         Investors may read and copy the documents and/or reports incorporated
herein by reference at the Public Reference Room of the Securities and Exchange
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. Investors may
obtain information on the operation of the Public Reference Room by calling the
SEC at 1-800-SEC-0330. In addition, the SEC maintains a website at
http://www.sec.gov containing reports, proxy and information statements and
other information regarding issuers, including each Trust Fund, that file
electronically with the SEC.

                                       121


                                     RATINGS

         It is a condition to the issuance of any class of Offered Securities
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 asset backed securities address the likelihood of receipt by
securityholders of all distributions on the underlying assets. These ratings
address the structural, legal and issuer-related aspects associated with such
certificates, the nature of the underlying assets and the credit quality of the
guarantor, if any. Ratings on asset backed securities 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, securityholders 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.







                                       122


                             INDEX OF DEFINED TERMS

1986 Act............................    74
Accrual Securities..................    18
Accrued Security Interest...........    20
Agreement...........................    32
Allowable Interest Rate.............   114
Allowable Notional Amount...........   114
Amortizable Bond Premium
  Regulations.......................    71
Annual Interest Amount..............    29
Applicable Amount...................    89
ARM Loans...........................     9
Assets..............................     7
Asset Seller........................     7
Available Distribution Amount.......    19
Average Interest Rate...............   113
Book-Entry Securities...............    18
Buydown Mortgage Loans..............    16
Buydown Period......................    16
Cash Flow Agreement.................    13
Cede................................    25
CEDEL...............................    26
CEDEL Participants..................    26
Certificates........................    18
Class Factor........................    32
Closing Date........................    79
Code................................    68
Collection Account..................    36
Combinations........................    28
Cooperative Loans...................    56
Cooperatives........................     8
Contributions Tax...................    91
Covered Trust.......................    53
CPR.................................    15
Credit Support......................    12
Deferred Interest...................    76
Definitive Securities...............    18
Depositaries........................    27
Depositor...........................     7
Designated Transactions.............   113
Determination Date..................    19
DTC.................................    25
Due Period..........................    19
Eligible C Corporation..............    95
Eligible Corporations...............   106
ERISA...............................    31
Euroclear...........................    26
Euroclear Cooperative...............    26
Euroclear Operator..................    26
Euroclear Participants..............    26
Exemption...........................   112
Exchanged Class.....................   110
EYS Agreement.......................   115
FASIT Qualification Test............   105
FASIT Regular Securities............   105
FASIT Ownership Securities..........   105
FDIC................................    36
FHLMC...............................    45
Government Securities...............     7
Home Equity Loans...................     9
Home Improvement Contracts..........     9
Indenture...........................    18
Indenture Trustee...................    33
Indirect Participants...............    25
Insurance Proceeds..................    37
Investor Based Exemptions...........   117
IO..................................   105
L/C Bank............................    54
Labor...............................   111
Legislative History.................    75
Leveraged...........................   115
Liquidation Proceeds................    37
Loan-to-Value Ratio.................     8
Manufactured Housing Contracts......     9
Master REMIC........................    78
MBS.................................     7
MBS Agreement.......................    10
MBS Issuer..........................    10
MBS Servicer........................    10
MBS Trustee.........................    10
Merrill Lynch.......................   120
Model Law...........................   119
Mortgage Assets.....................     7
Mortgage Loan Group.................    18
Mortgage Loans......................     7
Mortgage Notes......................     8
Mortgage Rate.......................    10
Mortgages...........................     8
NCUA................................   118
New Regulations.....................    77
Nonrecoverable Advance..............    22
OID.................................    69
OID Regulations.....................    71
Originator..........................     8
OTS.................................   119
Participation Agreement.............     8
Participation Certificate...........     8
Participants........................    25
Parties In Interest.................   111
Pass-Through Rate...................    20
Payment Lag Certificates............    85
Permitted Investments...............    36
Plan Asset Regulations..............   111
Plans...............................   111
Policy Statement....................   119
Pooling and Servicing Agreement.....    32
Pre-Funded Amount...................    12
Pre-Funding Period..................   113
Prepayment Assumption...............    75
Primary Mortgage Insurance Policy...    42
Prohibited Transactions Tax.........    91
Purchase Price......................    35
PTCE................................   115
PTE.................................   112
Rating Agency.......................   113
Received Class......................   110
Recombinable Securities Trust
  Fund..............................    28
Record Date.........................    19
Refinance Loans.....................     8
Related Proceeds....................    22
Relief Act..........................    65
REMIC Certificates..................    77
REMIC Regular Certificateholders....    79
REMIC Regular Certificates..........    77

                                       123


REMIC Regulations...................    68
REMIC Residual Certificateholder....    86
REMIC Residual Certificates.........    77
Retained Interest...................    45
RS Pool.............................   108
Security............................    33
Security Balance....................    21
Security Owners.....................    25
Senior Securities...................    18
Servicing Agreement.................    32
Servicing Standard..................    40
Short-Term Note.....................    97
Similar Law.........................   111
Single Family Mortgage Loan.........     7
Single Family Property..............     7
SMMEA...............................   118
SMMEA Securities....................   118
SPA.................................    15
Strip...............................   109
Stripped ARM Obligations............    76
Stripped Bond Certificates..........    73
Stripped Coupon Certificates........    73
Stripped Interest Securities........    18
Stripped Principal Securities.......    18
Subordinate Securities..............    18
Subsequent Assets...................    12
Sub-Servicer........................    40
Sub-Servicing Agreement.............    40
Subsidiary REMIC....................    78
Super-Premium Certificates..........    80
Swap................................   114
Swap Agreement......................   114
Tax Counsel.........................   102
Terms and Conditions................    26
Title V.............................    63
Title VIII..........................    64
Trust Agreement.....................    32
U.S. Person.........................    68
UCC.................................    25
Underlying MBS......................     7
Underlying Mortgage Loans...........     7
Value...............................     8
Voting Rights.......................    48
Warranting Party....................    35
Whole Loans.........................     7


                                       124



================================================================================

YOU SHOULD RELY 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 ANY OTHER INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS.
THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER TO
SELL, OR SOLICITATION OF AN OFFER TO BUY, THE SECURITIES OFFERED HEREBY BY
ANYONE IN ANY JURISDICTION IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION
IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE ANY SUCH
OFFER OR SOLICITATION. WE REPRESENT THE ACCURACY OF THE INFORMATION IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS ONLY AS OF THE DATES ON
THEIR RESPECTIVE COVERS.

                           $554,163,000 (Approximate)

                     MERRILL LYNCH MORTGAGE INVESTORS TRUST
                               SERIES MLMI 2005-A1

                       MORTGAGE PASS-THROUGH CERTIFICATES


                             WELLS FARGO BANK, N.A.

                                 MASTER SERVICER


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                              PROSPECTUS SUPPLEMENT

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                               MERRILL LYNCH & CO.





                                JANUARY 21, 2005


         Dealers will be required to deliver a prospectus supplement and
prospectus when acting as underwriters of the certificates offered hereby and
with respect to their unsold allotments or subscriptions. In addition, all
dealers selling the certificates, whether or not participating in this offering,
may be required to deliver a prospectus supplement and prospectus until ninety
days after the date of this prospectus supplement.

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