Filed Pursuant to Rule 424(b)(5)
                                               Registration File No.: 333-130536

PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED MAY 22, 2006)

                         [BANK OF AMERICA LOGO OMITTED]



BANC OF AMERICA FUNDING CORPORATION         BANC OF AMERICA FUNDING 2006-E TRUST
             DEPOSITOR                                 ISSUING ENTITY

                      BANK OF AMERICA, NATIONAL ASSOCIATION
                              SPONSOR AND SERVICER

                                  $632,313,100
                                 (APPROXIMATE)

                MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2006-E
        PRINCIPAL AND/OR INTEREST PAYABLE MONTHLY, BEGINNING IN JUNE 2006

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

YOU SHOULD CAREFULLY CONSIDER THE "RISK FACTORS" BEGINNING ON PAGE S-18 OF THIS
PROSPECTUS SUPPLEMENT.

Neither the Offered Certificates nor the mortgage loans are insured or
guaranteed by any governmental agency or instrumentality or any other entity.

The Offered Certificates represent interests in the Issuing Entity only and will
not be obligations of the Depositor, the Sponsor or any other entity.

This prospectus supplement may be used to offer and sell the Offered
Certificates only if accompanied by the prospectus. Please read both documents
carefully to understand the risks associated with these investments.

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

THE ISSUING ENTITY WILL ISSUE --

o     Four groups consisting of eleven classes of Senior Certificates.

o     Six classes of Subordinate Certificates, all of which are subordinated to,
      and provide credit enhancement for, the Senior Certificates.

o     Each class of Subordinate Certificates is also subordinated to each class
      of Subordinate Certificates, if any, with a lower number.

The classes of Offered Certificates are listed and their sizes and basic payment
characteristics are described in the table on page S-6.

THE ASSETS OF THE ISSUING ENTITY WILL CONSIST PRIMARILY OF MORTGAGE LOANS --

o     Four loan groups originated by the Sponsor, which is an affiliate of the
      Depositor and the Underwriter.

o     All of which are adjustable-rate mortgage loans secured by first liens on
      one- to four-family properties.

o     All of which have original terms to maturity of approximately 30 years.

CREDIT ENHANCEMENT WILL CONSIST OF --

o     Subordination of the Subordinate Certificates to the Senior Certificates
      for the distributions of principal and interest and the allocation of
      losses.

o     Subordination of Super Senior Support Certificates to the related Super
      Senior Certificates for the allocation of losses if the Subordinate
      Certificates are no longer outstanding.

o     Cross-collateralization of the loan groups and the related Certificates.

o     Shifting interest in prepayments through the allocation of all principal
      prepayments and certain liquidation proceeds on the mortgage loans in a
      loan group to the Senior Certificates of the related Group of Certificates
      as described herein.

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

The Offered Certificates will be offered by Banc of America Securities LLC, as
underwriter, at varying prices to be determined at the time of sale to
investors. The anticipated delivery date for the Offered Certificates is May 31,
2006. Total proceeds to Banc of America Funding Corporation for the Offered
Certificates will be approximately 99.781% of the initial class balance of the
Offered Certificates, plus accrued interest, before deducting expenses payable
by the Depositor.

                         BANC OF AMERICA SECURITIES LLC

                                  May 30, 2006


                                TABLE OF CONTENTS



IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS.................................................................................................S-4
SUMMARY OF TERMS...........................................................................................S-7
RISK FACTORS..............................................................................................S-18
   Mortgage Loans Paying Interest Only During the Related Interest Only Period May Have a
        Higher Risk of Delinquency, Default or Rates of Prepayment........................................S-18
   The Rate of Principal Payments on the Mortgage Loans Will Affect the Yield on the
        Offered Certificates..............................................................................S-18
   Delinquencies and Losses on the Mortgage Loans Will Adversely Affect Your Yield........................S-19
   Alternative Underwriting Standards May Increase Risk of Loss...........................................S-20
   The Rate of Default on Mortgage Loans that Are Secured by Investor Properties May be
        Higher than on Other Mortgage Loans...............................................................S-20
   There Are Risks Relating to Mortgaged Properties Subject to Second Lien Mortgage Loans.................S-20
   Credit Scores May Not Accurately Predict the Likelihood of Default.....................................S-20
   Decrement and Sensitivity Tables Are Based Upon Assumptions and Models.................................S-21
   There Is a Risk that Interest Payments on the Mortgage Loans May Be Insufficient to Pay
        Interest on Your Certificates.....................................................................S-21
   Subordination of Super Senior Support and Subordinate Certificates Increases Risk of Loss..............S-21
   Subordinate Certificates Provide Credit Support for the Senior Certificates............................S-22
   The Timing of Changes in the Rate of Prepayments May Significantly Affect the Actual
        Yield to You, Even If the Average Rate of Principal Prepayments is Consistent with
        Your Expectations.................................................................................S-22
   The Variable Rate of Interest on the Offered Certificates Will Affect Your Yield.......................S-22
   Adjustable-Rate Mortgage Loan Borrowers May Be More Likely to Prepay...................................S-22
   Limited Source of Payments - No Recourse to Depositor, Sponsor, Servicer or Trustee....................S-23
   Limited Liquidity......................................................................................S-23
   Geographic Concentrations May Increase Risk of Loss Due to Adverse Economic Conditions
        or Natural Disaster...............................................................................S-23
   Residential Real Estate Values May Fluctuate and Adversely Affect Your Investment......................S-23
   Rights of Beneficial Owners May Be Limited by Book-Entry System........................................S-24
   The Sponsor May Not Be Able to Repurchase Defective Mortgage Loans.....................................S-24
   Tax Consequences of Residual Certificate...............................................................S-24
   United States Military Operations May Increase Risk of Relief Act Shortfalls...........................S-25
THE MORTGAGE POOL.........................................................................................S-26
THE ORIGINATOR............................................................................................S-29
   Bank of America, National Association..................................................................S-29
MORTGAGE LOAN UNDERWRITING STANDARDS......................................................................S-29
   Bank of America's Underwriting Standards...............................................................S-29
THE SPONSOR...............................................................................................S-35
STATIC POOL INFORMATION...................................................................................S-36
THE DEPOSITOR.............................................................................................S-36
THE ISSUING ENTITY........................................................................................S-36
SERVICING OF MORTGAGE LOANS...............................................................................S-37
   Bank of America's Servicing Experience and Procedures..................................................S-37
THE POOLING AND SERVICING AGREEMENT.......................................................................S-40
   Assignment of Mortgage Loans...........................................................................S-40
   Repurchases of Mortgage Loans..........................................................................S-40
   Payments on Mortgage Loans; Accounts...................................................................S-41
   Compensating Interest..................................................................................S-41
   Advances...............................................................................................S-42
   Optional Termination...................................................................................S-42
   The Trustee............................................................................................S-43
   Compensation and Payment of Expenses of the Transaction Parties........................................S-44
   Voting Rights..........................................................................................S-45
DESCRIPTION OF CERTIFICATES...............................................................................S-45
   Denominations and Form.................................................................................S-45
   Distributions..........................................................................................S-46
   Pool Distribution Amount...............................................................................S-46
   Priority of Distributions..............................................................................S-47
   Interest...............................................................................................S-47
   Principal..............................................................................................S-48
   Cross-Collateralization................................................................................S-52
   Allocation of Losses...................................................................................S-53
   Restrictions on Transfer of the Class 1-A-R Certificate................................................S-54
PREPAYMENT AND YIELD CONSIDERATIONS.......................................................................S-56
   Prepayment Considerations and Risks....................................................................S-57
   Assumptions Relating to Tables.........................................................................S-58
   Weighted Average Lives of the Offered Certificates.....................................................S-59
   Yield on the Class 1-A-R Certificate...................................................................S-59
   Yield on the Subordinate Certificates..................................................................S-60
   Yield Considerations with Respect to the Class B-2 and Class B-3 Certificates..........................S-60



                                       S-2



                                TABLE OF CONTENTS



CREDIT SUPPORT............................................................................................S-61
USE OF PROCEEDS...........................................................................................S-61
FEDERAL INCOME TAX CONSEQUENCES...........................................................................S-62
   Regular Certificates...................................................................................S-62
   Residual Certificate...................................................................................S-63
   Backup Withholding and Reporting Requirements..........................................................S-63
STATE TAXES...............................................................................................S-63
ERISA CONSIDERATIONS......................................................................................S-63
REPORTS TO CERTIFICATEHOLDERS.............................................................................S-64
METHOD OF DISTRIBUTION....................................................................................S-65
LEGAL MATTERS.............................................................................................S-65
CERTIFICATE RATINGS.......................................................................................S-65
INDEX TO DEFINED TERMS....................................................................................S-67

Appendix A: Mortgage Loan Data.............................................................................A-1
Appendix B: Decrement Tables...............................................................................B-1
Appendix C: Hypothetical Mortgage Loans....................................................................C-1
Appendix D: Sensitivity and Aggregate
            Realized Loss Tables...........................................................................D-1



                                       S-3



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

      The Offered Certificates are described in two separate documents that
progressively provide more detail: (i) the accompanying prospectus, which
provides general information, some of which may not apply to a particular series
of Certificates such as your Certificates; and (ii) this prospectus supplement,
which incorporates and includes the appendices and describes the specific terms
of your Certificates.

      Information regarding certain entities that are not affiliates of the
Depositor has been provided in this prospectus supplement. See in particular
"The Pooling and Servicing Agreement--The Trustee" in this prospectus
supplement. The information contained in that section of this prospectus
supplement was prepared solely by the party described in that section without
any input from the Depositor.

      If you have received a copy of this prospectus supplement and accompanying
prospectus in electronic format, and if the legal prospectus delivery period has
not expired, you may obtain a paper copy of this prospectus supplement and
accompanying prospectus from the Depositor or from the Underwriter.

      Cross-references are included in this prospectus supplement and the
prospectus to captions in these materials where you can find additional
information. The "Table of Contents" in this prospectus supplement and the
"Table of Contents" in the prospectus provide the locations of these captions.

      The "Index to Defined Terms" beginning on page S-67 of this prospectus
supplement and the "Index of Defined Terms" beginning on page 120 of the
prospectus direct you to the locations of the definitions of capitalized terms
used in each of the documents. Any capitalized terms that are not defined in
this prospectus supplement and that do not have obvious meanings are defined in
the prospectus.

      Banc of America Funding Corporation's principal offices are located at 214
North Tryon Street, Charlotte, North Carolina 28255, and its phone number is
(704) 386-2400.

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

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


                                       S-4



                             EUROPEAN ECONOMIC AREA

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

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

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

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

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

                                 UNITED KINGDOM

      The underwriter has represented and agreed that:

            (a)   it has only communicated or caused to be communicated and will
      only communicate or cause to be communicated an invitation or inducement
      to engage in investment activity (within the meaning of Section 21 of the
      Financial Services and Markets Act) received by it in connection with the
      issue or sale of the Offered Certificates in circumstances in which
      Section 21(1) of the Financial Services and Markets Act does not apply to
      the Issuing Entity; and

            (b)   it has complied and will comply with all applicable provisions
      of the Financial Services and Markets Act with respect to anything done by
      it in relation to the Offered Certificates in, from or otherwise involving
      the United Kingdom.

                       NOTICE TO UNITED KINGDOM INVESTORS

      The distribution of this prospectus supplement and accompanying prospectus
if made by a person who is not an authorized person under the Financial Services
and Markets Act, is being made only to, or directed only at persons who (1) are
outside the United Kingdom or (2) are persons falling within Article 49(2)(a)
through (d) ("high net worth companies, unincorporated associations, etc.") or
19 (Investment Professionals) of the Financial Services and Market Act 2000
(Financial Promotion) Order 2005 (all such persons together being referred to as
the "RELEVANT PERSONS"). This prospectus supplement and accompanying prospectus
must not be acted on or relied on by persons who are not Relevant Persons. Any
investment or investment activity to which this prospectus supplement and
accompanying prospectus relates, including the Offered Certificates, is
available only to Relevant Persons and will be engaged in only with Relevant
Persons.

      Potential investors in the United Kingdom are advised that all, or most,
of the protections afforded by the United Kingdom regulatory system will not
apply to an investment in the Offered Certificates and that compensation will
not be available under the United Kingdom Financial Services Compensation
Scheme.


                                       S-5



                         THE SERIES 2006-E CERTIFICATES



                                                                                                                  INITIAL RATING OF
                                                                                                                   CERTIFICATE(3)
                           INITIAL CLASS   PASS-THROUGH
         CLASS               BALANCE(1)        RATE                PRINCIPAL TYPE(2)           INTEREST TYPE(2)    FITCH    S&P
------------------------   -------------   ------------  -----------------------------------   ----------------   ------  -------
  OFFERED CERTIFICATES

Class 1-A-1                  $33,433,000       (4)           Super Senior, Pass-Through         Variable Rate      AAA      AAA
Class 1-A-2                   $1,454,000       (4)       Super Senior Support, Pass-Through     Variable Rate      AAA      AAA
Class 1-A-R                         $100       (4)             Senior, Sequential Pay           Variable Rate      AAA      AAA
Class 2-A-1                 $113,000,000       (5)           Super Senior, Pass-Through         Variable Rate      AAA      AAA
Class 2-A-2                 $201,149,000       (5)           Super Senior, Pass-Through         Variable Rate      AAA      AAA
Class 2-A-3                   $9,144,000       (5)      Super Senior/Super Senior Support(6),   Variable Rate      AAA      AAA
                                                                    Pass-Through
Class 2-A-4                  $14,056,000       (5)       Super Senior Support, Pass-Through     Variable Rate      AAA      AAA
Class 3-A-1                  $72,054,000       (7)           Super Senior, Pass-Through         Variable Rate      AAA      AAA
Class 3-A-2                   $6,551,000       (7)       Super Senior Support, Pass-Through     Variable Rate      AAA      AAA
Class 4-A-1                 $154,363,000       (8)           Super Senior, Pass-Through         Variable Rate      AAA      AAA
Class 4-A-2                   $6,711,000       (8)       Super Senior Support, Pass-Through     Variable Rate      AAA      AAA
Class B-1                    $12,431,000       (9)                  Subordinated                Variable Rate      AA       None
Class B-2                     $4,461,000       (9)                  Subordinated                Variable Rate       A       None
Class B-3                     $3,506,000       (9)                  Subordinated                Variable Rate      BBB      None

NON-OFFERED CERTIFICATES

Class B-4                     $1,912,000       (9)                  Subordinated                Variable Rate      BB        BB-
Class B-5                     $1,594,000       (9)                  Subordinated                Variable Rate       B         B
Class B-6                     $1,594,047       (9)                  Subordinated                Variable Rate     None      None


____________________
(1)   Approximate. The initial class balances of the Offered Certificates
may vary by a total of plus or minus 5%.

(2)   See "Description of Certificates--Categories of Classes of
Certificates" in the prospectus for a description of these principal and
interest types and see "Description of Certificates--Priority of Distributions"
and "--Allocation of Losses" in this prospectus supplement for a description of
the effects of subordination.

(3)   The Offered Certificates will not be issued unless they receive at
least the ratings set forth in this table. See "Certificate Ratings" in this
prospectus supplement.

(4)   Interest will accrue on these Certificates at a per annum rate equal
to the weighted average of the Net Mortgage Interest Rates of the Group 1
Mortgage Loans (based on the Stated Principal Balances of the Group 1 Mortgage
Loans on the due date in the month preceding the month of such Distribution
Date). For the initial Distribution Date in June 2006, this rate is expected to
be approximately 5.909916% per annum.

(5)   Interest will accrue on these Certificates at a per annum rate equal
to the weighted average of the Net Mortgage Interest Rates of the Group 2
Mortgage Loans (based on the Stated Principal Balances of the Group 2 Mortgage
Loans on the due date in the month preceding the month of such Distribution
Date). For the initial Distribution Date in June 2006, this rate is expected to
be approximately 5.891395% per annum.

(6)   While the Class 2-A-4 Certificates are outstanding, the Class 2-A-3
Certificates will have the characteristics of Super Senior Certificates. After
the class balance of the Class 2-A-4 Certificates has been reduced to zero, the
Class 2-A-3 Certificates will have the characteristics of Super Senior Support
Certificates.

(7)   Interest will accrue on these Certificates at a per annum rate equal
to the weighted average of the Net Mortgage Interest Rates of the Group 3
Mortgage Loans (based on the Stated Principal Balances of the Group 3 Mortgage
Loans on the due date in the month preceding the month of such Distribution
Date). For the initial Distribution Date in June 2006, this rate is expected to
be approximately 5.993469% per annum.

(8)   Interest will accrue on these Certificates at a per annum rate equal
to the weighted average of the Net Mortgage Interest Rates of the Group 4
Mortgage Loans (based on the Stated Principal Balances of the Group 4 Mortgage
Loans on the due date in the month preceding the month of such Distribution
Date). For the initial Distribution Date in June 2006, this rate is expected to
be approximately 6.030532% per annum.

(9)   Interest will accrue on these Certificates at a per annum rate equal
to the weighted average (based on the Group Subordinate Amount for each Loan
Group) of the weighted average of the Net Mortgage Interest Rates of each of the
Mortgage Loans (based on the Stated Principal Balances of the Mortgage Loans in
each Loan Group on the due date in the month preceding the month of such
Distribution Date). For the initial Distribution Date in June 2006, this rate is
expected to be approximately 5.942189% per annum.


                                       S-6



                                SUMMARY OF TERMS

      This summary highlights selected information from this prospectus
supplement. It does not contain all of the information that you need to consider
in making your investment decision. To understand the terms of the Offered
Certificates, you should read this entire prospectus supplement and the
prospectus carefully.


TITLE OF SERIES:             Banc of America Funding
                             Corporation, Mortgage Pass-Through
                             Certificates, Series 2006-E

DEPOSITOR:                   Banc of America Funding
                             Corporation

ISSUING ENTITY:              Banc of America Funding 2006-E
                             Trust

SPONSOR:                     Bank of America, National
                             Association

ORIGINATOR AND SERVICER:     Bank of America, National
                             Association

TRUSTEE:                     Wells Fargo Bank, N.A.

DETERMINATION DATE:          The 16th day of each month in
                             which a distribution date occurs (or
                             if not a business day, the
                             immediately preceding business day)

DISTRIBUTION  DATE:          The 20th day of each month (or if
                             not a business day, the next
                             business day) beginning
                             June 20, 2006

CLOSING DATE:                On or about May 31, 2006

CUT-OFF DATE:                May 1, 2006

RECORD DATE:                 The last business day of the month
                             preceding a distribution date

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

THE TRANSACTION

      On the closing date, the Sponsor will sell the Mortgage Loans to the
Depositor, who will in turn deposit them into a New York common law trust, which
is the Issuing Entity. The Issuing Entity will be formed by a pooling and
servicing agreement, to be dated the closing date, among the Depositor, the
Servicer and the Trustee. The Servicer will service the Mortgage Loans in
accordance with the pooling and servicing agreement. The Trustee will calculate
distributions and other information regarding the Certificates.

      The transfers of the mortgage loans from the Sponsor to the Depositor to
the Issuing Entity in exchange for the Certificates are illustrated below:

[GRAPHIC OMITTED]




              ---------
               Sponsor
              ---------                       Offered                    ------------
                                            Certificates                 Underwriting
Mortgage Loans           Cash                                            ------------

              ---------                                        Offered                Cash
              Depositor                         Cash         Certificates
              ---------
Mortgage Loans           All Certificates                                  ---------
                                                                           Investors
              ---------                                                    ---------
               Issuing
               Eutity
              ---------



                                       S-7



OFFERED CERTIFICATES

      A summary table of the initial class balances, principal types,
pass-through rates, interest types, and ratings of the Offered Certificates
offered by this prospectus supplement is set forth on page S-6.

      The Certificates represent all of the beneficial ownership interest in the
Issuing Entity.



-----------------------------------------------------------------------------------------------------------
                            CLASSIFICATIONS OF CLASSES OF CERTIFICATES
-----------------------------------------------------------------------------------------------------------

Offered Certificates:                       1-A-R, 1-A-1, 1-A-2, 2-A-1, 2-A-2, 2-A-3, 2-A-4, 3-A-1, 3-A-2,
                                            4-A-1, 4-A-2, B-1, B-2 and B-3
-----------------------------------------------------------------------------------------------------------
Non-Offered Certificates:                   B-4, B-5 and B-6
-----------------------------------------------------------------------------------------------------------
Senior Certificates:                        1-A-R, 1-A-1, 1-A-2, 2-A-1, 2-A-2, 2-A-3, 2-A-4, 3-A-1, 3-A-2,
                                            4-A-1 and 4-A-2
-----------------------------------------------------------------------------------------------------------
Subordinate Certificates:                   B-1, B-2, B-3, B-4, B-5 and B-6
-----------------------------------------------------------------------------------------------------------
Group 1 Senior Certificates:                1-A-R, 1-A-1 and 1-A-2
-----------------------------------------------------------------------------------------------------------
Group 2 Senior Certificates:                2-A-1, 2-A-2, 2-A-3 and 2-A-4
-----------------------------------------------------------------------------------------------------------
Group 3 Senior Certificates:                3-A-1 and 3-A-2
-----------------------------------------------------------------------------------------------------------
Group 4 Senior Certificates:                4-A-1 and 4-A-2
-----------------------------------------------------------------------------------------------------------
Super Senior Certificates:                  1-A-1, 2-A-1, 2-A-2, 2-A-3, 3-A-1 and 4-A-1
-----------------------------------------------------------------------------------------------------------
Super Senior Support Certificates:          1-A-2, 2-A-3, 2-A-4, 3-A-2 and 4-A-2
-----------------------------------------------------------------------------------------------------------
Residual Certificate:                       1-A-R
-----------------------------------------------------------------------------------------------------------


      The Senior Certificates are divided into four groups (each, a "GROUP").
The Group 1 Senior Certificates form "GROUP 1," the Group 2 Senior Certificates
form "GROUP 2," the Group 3 Senior Certificates form "GROUP 3" and the Group 4
Senior Certificates form "GROUP 4." The Subordinate Certificates are subordinate
to, and provide credit enhancement for Group 1, Group 2, Group 3 and Group 4.

      Except to the extent of certain cross-collateralization payments described
under "Description of Certificates--Cross-Collateralization," the numeric prefix
for each class of Senior Certificates designates the Group of Senior
Certificates to which that class belongs and represents an interest in the Loan
Group with the same number (e.g. the Senior Certificates whose class
designations begin with "1" correspond to the Group 1 Mortgage Loans, the Senior
Certificates whose class designations begin with "2" correspond to the Group 2
Mortgage Loans and so forth).

      Only the Senior Certificates and the Class B-1, Class B-2 and Class B-3
Certificates are offered by this prospectus supplement.

      The Class B-4, Class B-5 and Class B-6 Certificates are not offered by
this prospectus supplement.

      The Subordinate Certificates are subordinated to the Senior Certificates
for distributions of principal and interest and for allocations of losses on the
Mortgage Loans and the Subordinate Certificates with higher numerical
designations are subordinated to the Subordinate Certificates with lower
numerical designations for distributions of principal and interest and for
allocations of losses on the Mortgage Loans.

      Information provided about non-offered Certificates is included in this
prospectus supplement to aid your understanding of the Offered Certificates.

MORTGAGE POOL

      The mortgage pool will consist of four loan groups ("LOAN GROUP 1," "LOAN
GROUP 2," "LOAN GROUP 3" and "LOAN GROUP 4," and each a "LOAN GROUP") of
adjustable-rate mortgage loans (the "GROUP 1 MORTGAGE LOANS," the "GROUP 2
MORTGAGE LOANS," the "GROUP 3 MORTGAGE LOANS" and the "GROUP 4 MORTGAGE LOANS,"
and collectively, the "MORTGAGE LOANS") secured by first liens on one- to
four-family properties.


                                       S-8



      The Mortgage Loans in each Loan Group have the following characteristics:



                                    INTEREST RATE          PAYMENT                                INTEREST ONLY
  LOAN         INITIAL FIXED         ADJUSTMENT           ADJUSTMENT                                 PERIOD
  GROUP        RATE PERIODS           FREQUENCY           FREQUENCY              INDEX           (IF APPLICABLE)
----------   ----------------     ---------------       --------------    -----------------     -----------------

    1           3 years(1)          12 months(1)         12 months(1)       One-Year LIBOR           3 years
    2             5 years             12 months           12 months         One-Year LIBOR           5 years
    3             7 years             12 months           12 months         One-Year LIBOR           7 years
    4            10 years             12 months           12 months         One-Year LIBOR          10 years


________________________
(1)   Loan Group 1 includes one Mortgage Loan with an initial fixed rate period
      of six months, a mortgage interest rate that adjusts every six months,
      monthly payments which adjust every six months and an index of six-month
      LIBOR.

      The Mortgage Loans provide for a fixed interest rate during an initial
period and thereafter provide for adjustments to the interest rate on an annual
basis or, with respect to one Mortgage Loan in Loan Group 1, a semi-annual
basis. The interest rate of each Mortgage Loan will adjust to equal the sum of
an index and a gross margin. Interest rate adjustments generally will be subject
to certain limitations stated in the related mortgage note on increases and
decreases for any adjustment. In addition, interest rate adjustments will be
subject to an overall maximum mortgage interest rate and a minimum mortgage
interest rate equal to the related gross margin. The index for the Mortgage
Loans will be the arithmetic mean of the London interbank offered rate
quotations for one-year U.S. Dollar-denominated deposits as published in The
Wall Street Journal (other than for one Mortgage Loan in Loan Group 1, for which
the index will be the arithmetic mean of the London interbank offered rate
quotations for six-month U.S. Dollar-denominated deposits as published in The
Wall Street Journal).

      All of the Mortgage Loans were originated by the Sponsor. Certain of the
Mortgage Loans were originated using underwriting standards that are different
from and, in certain respects, less stringent than the Sponsor's general
underwriting standards. See "Risk Factors--Alternative Underwriting Standards
May Increase Risk of Loss" in this prospectus supplement.

      The Depositor expects the Mortgage Loans to have the following approximate
characteristics:

                           SELECTED GROUP 1 MORTGAGE LOAN DATA AS OF MAY 1, 2006



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

Number of Mortgage Loans                                                      61                        --
Aggregate Unpaid Principal Balance                                      $36,340,803.83                  --
Unpaid Principal Balance                                          $71,925.00 to $2,000,000.00     $595,750.88(1)
Interest Rates                                                         5.000% to 7.750%               6.287%
Gross Margin                                                           2.250% to 2.750%               2.258%
Rate Ceiling                                                          11.000% to 13.750%             12.287%
Months to First Adjustment Date                                         6 to 36 months              34 months
Administrative Fee Rate                                                     0.3775%                     --
Remaining Terms to Stated Maturity                                     353 to 360 months            358 months
Original Term                                                             360 months                    --
Loan Age                                                                 0 to 7 months               2 months
Original Loan-to-Value Ratio                                           39.53% to 90.00%               70.66%
Debt-to-Income Ratio                                                    5.47% to 58.00%               38.24%
Credit Scores                                                             639 to 821                   740
Latest Maturity Date                                                      May 1, 2036                   --
Percentage of Interest Only Mortgage Loans(2)                               65.37%                      --
Percentage of "Alternative" Underwriting Guideline Mortgage
Loans(2)                                                                    57.31%                      --
Percentage of Mortgage Loans Secured by Investor Properties(2)               5.89%                      --
Percentage of Buy-Down Loans(2)                                              0.00%                      --
Percentage of Convertible Mortgage Loans(2)                                  0.00%                      --
Geographic Concentration of Mortgaged Properties in Excess of
5% of the Aggregate Unpaid Principal Balance:
      California                                                            38.02%                      --
      Florida                                                               10.11%                      --
      Arizona                                                                9.11%                      --
      Utah                                                                   6.78%                      --
      South Carolina                                                         5.11%                      --
      Illinois                                                               5.03%                      --
Maximum Single Zip Code Concentration(2)                                     5.50%                      --
--------------------------------------------------------------------------------------------------------------------


___________________
(1)   The balance shown is the average unpaid principal balance of the Group 1
      Mortgage Loans.

(2)   As a percentage of the unpaid principal balance of the Group 1 Mortgage
      Loans.


                                       S-9



                           SELECTED GROUP 2 MORTGAGE LOAN DATA AS OF MAY 1, 2006



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

Number of Mortgage Loans                                                      588                       --
Aggregate Unpaid Principal Balance                                      $351,405,929.85                 --
Unpaid Principal Balance                                          $35,633.68 to $3,000,000.00     $597,629.13(1)
Interest Rates                                                         4.500% to 7.625%               6.144%
Gross Margin                                                                2.250%                      --
Rate Ceiling                                                           9.500% to 13.000%             11.148%
Months to First Adjustment Date                                         43 to 63 months             59 months
Administrative Fee Rate                                                     0.2525%                     --
Remaining Terms to Stated Maturity                                     343 to 360 months            359 months
Original Term                                                             360 months                    --
Loan Age                                                                0 to 17 months               1 month
Original Loan-to-Value Ratio                                           21.05% to 95.00%               72.59%
Debt-to-Income Ratio                                                    6.50% to 68.50%               35.75%
Credit Scores                                                             620 to 819                   738
Latest Maturity Date                                                      May 1, 2036                   --
Percentage of Interest Only Mortgage Loans(2)                               69.14%                      --
Percentage of "Alternative" Underwriting Guideline Mortgage
Loans(2)                                                                    36.83%                      --
Percentage of Mortgage Loans Secured by Investor Properties(2)               1.81%                      --
Percentage of Buy-Down Loans(2)                                              0.30%                      --
Percentage of Convertible Mortgage Loans(2)                                  0.33%                      --
Geographic Concentration of Mortgaged Properties in Excess of
5% of the Aggregate Unpaid Principal Balance:
      California                                                            46.09%                      --
      Florida                                                               14.09%                      --
      Virginia                                                               5.39%                      --
Maximum Single Zip Code Concentration(2)                                     1.56%                      --
--------------------------------------------------------------------------------------------------------------------


___________________
(1)   The balance shown is the average unpaid principal balance of the Group 2
      Mortgage Loans.

(2)   As a percentage of the unpaid principal balance of the Group 2 Mortgage
      Loans.

                           SELECTED GROUP 3 MORTGAGE LOAN DATA AS OF MAY 1, 2006



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

Number of Mortgage Loans                                                      127                       --
Aggregate Unpaid Principal Balance                                      $81,880,538.61                  --
Unpaid Principal Balance                                          $73,931.46 to $1,816,933.18     $644,728.65(1)
Interest Rates                                                         5.250% to 7.125%               6.246%
Gross Margin                                                                2.250%                      --
Rate Ceiling                                                          10.250% to 12.125%             11.246%
Months to First Adjustment Date                                         72 to 84 months             83 months
Administrative Fee Rate                                                     0.2525%                     --
Remaining Terms to Stated Maturity                                     354 to 360 months            360 months
Original Term                                                             360 months                    --
Loan Age                                                                 0 to 6 months               0 months
Original Loan-to-Value Ratio                                           34.48% to 80.00%               69.84%
Debt-to-Income Ratio(2)                                                 8.38% to 68.30%               35.48%
Credit Scores                                                             625 to 813                   746
Latest Maturity Date                                                      May 1, 2036                   --
Percentage of Interest Only Mortgage Loans(3)                               72.61%                      --
Percentage of "Alternative" Underwriting Guideline Mortgage
Loans(3)                                                                    29.50%                      --
Percentage of Mortgage Loans Secured by Investor Properties(3)               1.14%                      --
Percentage of Buy-Down Loans(3)                                              0.00%                      --
Percentage of Convertible Mortgage Loans(3)                                  0.00%                      --
Geographic Concentration of Mortgaged Properties in Excess of
5% of the Aggregate Unpaid Principal Balance:
      California                                                            51.59%                      --
      Florida                                                                7.12%                      --
      Colorado                                                               5.48%                      --
      Virginia                                                               5.03%                      --
Maximum Single Zip Code Concentration(3)                                     3.39%                      --
--------------------------------------------------------------------------------------------------------------------


____________________
(1)   The balance shown is the average unpaid principal balance of the Group 3
      Mortgage Loans.

(2)   Excluding the Group 3 Mortgage Loan for which no Debt-to-Income Ratio was
      calculated.

(3)   As a percentage of the unpaid principal balance of the Group 3 Mortgage
      Loans.


                                      S-10



                           SELECTED GROUP 4 MORTGAGE LOAN DATA AS OF MAY 1, 2006



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

Number of Mortgage Loans                                                      254                       --
Aggregate Unpaid Principal Balance                                      $167,785,875.31                 --
Unpaid Principal Balance                                         $160,000.00 to $2,996,000.00     $660,574.31(1)
Interest Rates                                                         5.250% to 7.500%               6.283%
Gross Margin                                                                2.250%                      --
Rate Ceiling                                                          10.250% to 12.500%             11.283%
Months to First Adjustment Date                                        113 to 120 months            119 months
Administrative Fee Rate                                                     0.2525%                     --
Remaining Terms to Stated Maturity                                     353 to 360 months            359 months
Original Term                                                             360 months                    --
Loan Age                                                                 0 to 7 months               1 month
Original Loan-to-Value Ratio                                           25.69% to 80.00%               70.51%
Debt-to-Income Ratio                                                    9.40% to 61.10%               37.07%
Credit Scores                                                             626 to 817                   745
Latest Maturity Date                                                      May 1, 2036                   --
Percentage of Interest Only Mortgage Loans(2)                               93.65%                      --
Percentage of "Alternative" Underwriting Guideline Mortgage
Loans(2)                                                                    41.62%                      --
Percentage of Mortgage Loans Secured by Investor Properties(2)               0.45%                      --
Percentage of Buy-Down Loans(2)                                              0.00%                      --
Percentage of Convertible Mortgage Loans(2)                                  0.00%                      --
Geographic Concentration of Mortgaged Properties in Excess of
5% of the Aggregate Unpaid Principal Balance:
      California                                                            51.95%                      --
      Florida                                                               11.28%                      --
Maximum Single Zip Code Concentration(2)                                     1.79%                      --
--------------------------------------------------------------------------------------------------------------------


____________________
(1)   The balance shown is the average unpaid principal balance of the Group 4
      Mortgage Loans.

(2)   As a percentage of the unpaid principal balance of the Group 4 Mortgage
      Loans.

                         SELECTED AGGREGATE MORTGAGE LOAN DATA AS OF MAY 1, 2006



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

Number of Mortgage Loans                                                    1,030                       --
Aggregate Unpaid Principal Balance                                     $637,413,147.60                  --
Unpaid Principal Balance                                         $35,633.68 to $3,000,000.00      $618,847.72(1)
Interest Rates                                                        4.500% to 7.750%                6.202%
Gross Margin                                                          2.250% to 2.750%                2.250%
Rate Ceiling                                                          9.500% to 13.750%              11.261%
Months to First Adjustment Date                                        6 to 120 months              77 months
Administrative Fee Rate                                              0.2525% to 0.3775%              0.2596%
Remaining Terms to Stated Maturity                                    343 to 360 months             359 months
Original Term                                                            360 months                     --
Loan Age                                                               0 to 17 months                1 month
Original Loan-to-Value Ratio                                          21.05% to 95.00%                71.58%
Debt-to-Income Ratio(2)                                                5.47% to 68.50%                36.21%
Credit Scores                                                            620 to 821                    741
Latest Maturity Date                                                     May 1, 2036                    --
Percentage of Interest Only Mortgage Loans(3)                              75.82%                       --
Percentage of "Alternative"  Underwriting  Guideline  Mortgage
Loans(3)                                                                   38.31%                       --
Percentage of Mortgage Loans Secured by Investor Properties(3)              1.60%                       --
Percentage of Buy-Down Loans(3)                                             0.17%                       --
Percentage of Convertible Mortgage Loans(3)                                 0.18%                       --
Geographic  Concentration of Mortgaged Properties in Excess of
5% of the Aggregate Unpaid Principal Balance:
      California                                                           47.88%                       --
      Florida                                                              12.23%                       --
Maximum Single Zip Code Concentration(3)                                    0.86%                       --
--------------------------------------------------------------------------------------------------------------------


____________________
(1)   The balance shown is the average unpaid principal balance of the Mortgage
      Loans.

(2)   Excluding the Mortgage Loan for which no Debt-to-Income Ratio was
      calculated.

(3)   As a percentage of the unpaid principal balance of the Mortgage Loans.


                                      S-11



      The characteristics of any Loan Group may change because:

            o     Prior to the issuance of the Certificates, the Depositor may
                  remove Mortgage Loans from a Loan Group. The Depositor also
                  may substitute new Mortgage Loans for Mortgage Loans in a Loan
                  Group prior to the Closing Date.

            o     After the issuance of the Certificates, Mortgage Loans in a
                  Loan Group may be removed from the Issuing Entity because of
                  repurchases by the Depositor or the Sponsor, as applicable,
                  for breaches of representations, failure to deliver required
                  documents or as a result of the conversion of a Mortgage Loan
                  from an adjustable to a fixed interest rate. Under certain
                  circumstances and generally only during the two-year period
                  following the Closing Date, the Depositor or the Sponsor may
                  make substitutions for these Mortgage Loans.

      See "The Pooling and Servicing Agreement--Repurchases of Mortgage Loans"
in this prospectus supplement for a discussion of the circumstances under which
the Depositor or the Sponsor may be required to repurchase or substitute for
Mortgage Loans. These removals and/or substitutions may result in changes in the
Loan Group characteristics. These changes may affect the weighted average lives
and yields to maturity of the Offered Certificates.

      Additional information on the Mortgage Pool and each Loan Group appears
under "The Mortgage Pool" in this prospectus supplement and in the tables in
Appendix A, and information regarding repurchases and substitutions of the
Mortgage Loans after the closing date will be available on the Issuing Entity's
monthly distribution reports on Form 10-D. See "Reports to Certificateholders"
in this prospectus supplement.

ADMINISTRATIVE FEES

         The administrative fees for the Mortgage Loans shown in the table below
are payable out of the interest payments on the Mortgage Loans, prior to any
distributions to certificateholders. The administrative fees, which consist of
the servicing fees and the trustee fees, accrue on the Mortgage Loans at the
administrative fee rate or rates set forth in the table below. In addition to
the servicing fees, the Servicer will be entitled to retain as additional
servicing compensation (i) any ancillary income, consisting of late payment
fees, assumption fees and other similar charges, (ii) net income from investment
of funds in the servicer custodial account and (iii) any profits from the
liquidation of Mortgage Loans. The Trustee will receive, in addition to its
trustee fees, net income from the investment of funds in the certificate
account. See "The Pooling and Servicing Agreement--Compensation and Payment of
Expenses of the Transaction Parties" in this prospectus supplement for more
information about fees and expenses of the Servicer and the Trustee.

                                          ADMINISTRATIVE FEE RATES



                                                                                           RATE
FEE                                                                                     (PER ANNUM)
-------------------------------------------------------------------    ----------------------------------------------

Servicing Fee Rate for Loan Group 1                                                       0.3750%
Servicing Fee Rate for Loan Group 2, Loan Group 3 and Loan Group 4                        0.2500%
Trustee Fee Rate                                                                          0.0025%


OPTIONAL TERMINATION

      On any Distribution Date on which the aggregate Stated Principal Balance
of the Mortgage Loans is less than 10% of the aggregate unpaid principal balance
of the Mortgage Loans as of the Cut-off Date, the Servicer may, at its option,
subject to certain conditions, purchase such Mortgage Loans, which would effect
an early retirement of the related classes of Certificates; however, any
optional termination will be permitted only pursuant to a "qualified
liquidation" as defined under Section 860F of the Internal Revenue Code of 1986,
as amended.

      See "The Pooling and Servicing Agreement--Termination; Repurchase of
Mortgage Loans and Mortgage Certificates" in the prospectus.

      IF THE SERVICER EXERCISES ITS RIGHT TO REPURCHASE ALL OF THE MORTGAGE
LOANS, THE CERTIFICATES OUTSTANDING AT THAT TIME WILL BE RETIRED EARLIER THAN
WOULD OTHERWISE BE THE CASE.

      See "Payment and Yield Considerations" in this prospectus supplement.

FINAL SCHEDULED MATURITY DATE

      The final scheduled maturity date for the Offered Certificates will be the
distribution date in June 2036. The final scheduled maturity date represents the
distribution date in the month following the latest maturity date of


                                      S-12



any Mortgage Loan. The actual final payment on your Certificates could occur
earlier or later than the final scheduled maturity date.

DENOMINATIONS AND FORM

      The Offered Certificates (other than the Class 1-A-R Certificate) will be
issuable in book-entry form only. The Class 1-A-R Certificate will be issued in
definitive, fully-registered form. The following table sets forth the original
Certificate form, the minimum denomination and the incremental denomination of
the Offered Certificates. The Offered Certificates are not intended to be and
should not be directly or indirectly held or beneficially owned in amounts lower
than such minimum denominations.

                            FORM AND DENOMINATIONS OF OFFERED CERTIFICATES



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

Senior Certificates (other than Class 1-A-R)         Book-Entry          $1,000            $1
Class 1-A-R                                          Definitive            $100            N/A
Classes B-1, B-2 and B-3                             Book-Entry         $25,000            $1


PRIORITY OF DISTRIBUTIONS

      Distributions on each Group of Senior Certificates and on the Subordinate
Certificates will be made on each Distribution Date from the Pool Distribution
Amount for the related Loan Group, in the case of the Senior Certificates, or
the Pool Distribution Amounts for all Loan Groups, in the case of the
Subordinate Certificates, in the following order of priority:

        ---------------------------------------------------------------
             first, to the Senior Certificates of the Group to pay
                                   interest;
        ---------------------------------------------------------------
                                        |
        ---------------------------------------------------------------
          second, to the Senior Certificates of the Group entitled to
            receive distributions of principal, as set forth in this
                  prospectus supplement under "Description of
                  Certificates--Principal," to pay principal;
        ---------------------------------------------------------------
                                        |
        ---------------------------------------------------------------
           third, to each class of Subordinate Certificates, first to
             pay interest and then to pay principal in the order of
           numerical class designations, beginning with the Class B-1
                               Certificates; and
        ---------------------------------------------------------------
                                        |
        ---------------------------------------------------------------
         fourth, to the Class 1-A-R Certificate, any remaining amounts.
        ---------------------------------------------------------------

      All of the distributions described above are subject to the limitations
set forth in this prospectus supplement under "Description of
Certificates--Interest" and "--Principal."

      Under certain circumstances described in this prospectus supplement,
certain principal payments that would otherwise be made on the Subordinate
Certificates may be made instead on the Senior Certificates of one or more
Groups. See "Description of Certificates--Cross Collateralization" in this
prospectus supplement.

      The source of the distributions to certificateholders is more fully
described under "Description of Certificates--Pool Distribution Amount" in this
prospectus supplement. The amount of interest and principal distributions on
each class of Certificates is more fully described under "Description of
Certificates--Interest" and "--Principal" in this prospectus supplement.

INTEREST DISTRIBUTIONS

      The amount of interest that will accrue on each class of Offered
Certificates during each interest accrual period is equal to:

            o     interest accrued at the applicable pass-through rate on your
                  Certificate during the related interest accrual period, minus


                                      S-13



            o     the amount allocated to your class of certain interest
                  shortfalls arising from the timing of prepayments on the
                  Mortgage Loans, interest rate limitations applicable to
                  certain military or similar personnel and interest losses
                  allocated to your class, as described under "The Pooling and
                  Servicing Agreement--Compensating Interest" and "Description
                  of Certificates--Interest" in this prospectus supplement.

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

PRINCIPAL DISTRIBUTIONS

      On each Distribution Date, principal distributions to the Certificates
will be made in the order and priority described under "Description of
Certificates--Priority of Distributions" in this prospectus supplement.

CREDIT SUPPORT

      Subordination

      Credit support for the Certificates is provided by subordination as
follows:

                  SUBORDINATION OF SUBORDINATE CERTIFICATES(1)

                            --------------------------
            Priority of        Senior Certificates
              Payment        (Credit Support 4.00%)
                            --------------------------
                                    Class B-1
                             (Credit Support 2.05%)
                            --------------------------
                                    Class B-2
                             (Credit Support 1.35%)
                            --------------------------
                                    Class B-3
                             (Credit Support 0.80%)
                            --------------------------
                                    Class B-4
                             (Credit Support 0.50%)
                            --------------------------
                                    Class B-5
                             (Credit Support 0.25%)
                            --------------------------
                                    Class B-6             Order of
                             (Credit Support 0.00%)    Loss Allocation
                            --------------------------

___________________

(1)   The credit support percentage set forth in this chart shows the initial
      class balance of the classes of Certificates subordinate to a class or
      classes as a percentage of the aggregate unpaid balance of the mortgage
      loans as of the cut-off date.

      See "Description of Certificates--Priority of Distributions" and
"--Allocation of Losses" in this prospectus supplement.

      Super Senior Support Certificates

      After the Subordinate Certificates are no longer outstanding, any
principal losses allocated to a class of Super Senior Certificates will be borne
by the related class or classes of Super Senior Support Certificates, for so
long as such class of Super Senior Support Certificates is outstanding.

      Cross-Collateralization

      Under certain circumstances, certain principal payments on the Mortgage
Loans in a Loan Group otherwise distributable to the Subordinate Certificates
may be allocated to the Senior Certificates of an unrelated Group or Groups as
discussed in "Description of Certificates--Cross-Collateralization" in this
prospectus supplement.

      Shifting Interest in Prepayments

      Additional credit enhancement is provided by the allocation of all
principal prepayments and certain liquidation proceeds on the Mortgage Loans in
a Loan Group to the Senior Certificates of the related Group, subject to certain
exceptions, for the first seven years and the disproportionately greater
allocation of prepayments to such Senior Certificates over the following four
years. This disproportionate allocation of prepayments and certain liquidation
proceeds will accelerate the amortization of those Senior Certificates relative
to the amortization of the


                                      S-14



Subordinate Certificates. As a result, the credit support percentage for the
Senior Certificates of a Group should be maintained and may be increased during
the first eleven years.

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

PREPAYMENT AND YIELD CONSIDERATIONS

      The yield to maturity on your Offered Certificates will be sensitive to
the rate and timing of principal payments (which will be affected by
prepayments, defaults and liquidations) on the applicable Mortgage Loans in the
related Loan Group or Loan Groups. As a result, your yield may fluctuate
significantly.

            o     In general, if you purchased your Offered Certificate at a
                  premium and principal distributions occur at a rate faster
                  than you assumed, your actual yield to maturity will be lower
                  than anticipated.

            o     Conversely, if you purchased your Offered Certificate at a
                  discount and principal distributions occur at a rate slower
                  than you assumed, your actual yield to maturity will be lower
                  than anticipated.

      Because each class of Super Senior Support Certificates will bear
principal losses allocated to the related class or classes of Super Senior
Certificates, as well as their own share of such losses, once the Subordinate
Certificates are no longer outstanding (and, in the case of the Class 2-A-3
Certificates, once the Class 2-A-4 Certificates are no longer outstanding), the
yield to maturity of a class of Super Senior Support Certificates will be more
sensitive to the amount and timing of losses on the related Mortgage Loans than
the related class or classes of Super Senior Certificates. See "Description of
Certificates--Allocation of Losses" in this prospectus supplement.

      The yield to maturity of the Class B-1, Class B-2 and Class B-3
Certificates will be increasingly sensitive to the amounts and timing of losses
on the Mortgage Loans due to the fact that, once the aggregate class balance of
the classes of Subordinate Certificates with higher numerical designations has
been reduced to zero, all losses will be allocated to the Class B-3, Class B-2
and Class B-1 Certificates, in that order, until the class balance of each class
has been reduced to zero.

      Because the Mortgage Loans may be prepaid at any time, it is not possible
to predict the rate at which you will receive distributions of principal. Since
prevailing interest rates are subject to fluctuation, you may not be able to
reinvest your distributions at yields equaling or exceeding the yields on the
Offered Certificates. Yields on any reinvestments may be lower, and could be
significantly lower, than the yields on your Offered Certificates.

      See "Prepayment and Yield Considerations" in this prospectus supplement
and in the prospectus.


                                      S-15



                                           WEIGHTED AVERAGE LIVES (IN YEARS)(1)



                                                            CPR(2)
          ---------------------------------------------------------------------------------------------------------
Class           0%             10%            20%             25%             30%            40%             50%
-------   --------------- -------------- --------------- --------------- -------------- --------------- -----------

1-A-1         20.51           7.76            4.16            3.28           2.66            1.86           1.38
1-A-2         20.51           7.76            4.16            3.28           2.66            1.86           1.38
1-A-R          0.06           0.06            0.06            0.06           0.06            0.06           0.06
2-A-1         20.81           7.83            4.19            3.29           2.67            1.87           1.38
2-A-2         20.81           7.83            4.19            3.29           2.67            1.87           1.38
2-A-3         20.81           7.83            4.19            3.29           2.67            1.87           1.38
2-A-4         20.81           7.83            4.19            3.29           2.67            1.87           1.38
3-A-1         21.19           7.92            4.21            3.31           2.68            1.87           1.38
3-A-2         21.19           7.92            4.21            3.31           2.68            1.87           1.38
4-A-1         22.21           8.16            4.28            3.35           2.70            1.88           1.38
4-A-2         22.21           8.16            4.28            3.35           2.70            1.88           1.38
B-1           21.21           13.38           7.35            6.03           5.19            4.01           3.17
B-2           21.21           13.38           7.35            6.03           5.19            4.01           3.17
B-3           21.21           13.38           7.35            6.03           5.19            4.01           3.17


__________________
(1)   Determined as described under "Prepayment and Yield
      Considerations--Weighted Average Lives of the Offered Certificates" in
      this prospectus supplement. Prepayments will not occur at any assumed rate
      shown or any other constant rate, and the actual weighted average lives of
      any or all of the classes of Offered Certificates are likely to differ
      from those shown, perhaps significantly.

(2)   "CPR" is the Constant Prepayment Rate which is described under "Prepayment
      and Yield Considerations--Weighted Average Lives of the Offered
      Certificates" in this prospectus supplement.

FEDERAL INCOME TAX CONSEQUENCES

      For federal income tax purposes, elections will be made to treat the
Issuing Entity as multiple separate "real estate mortgage investment conduits"
(consisting of an "UPPER-TIER REMIC" and one or more "LOWER-TIER REMICS," and
each, a "REMIC").

            o     The Offered Certificates (other than the Class 1-A-R
                  Certificate) will constitute "regular interests" in the
                  Upper-Tier REMIC and will be treated as debt instruments for
                  federal income tax purposes.

            o     The Class 1-A-R Certificate will constitute the sole "residual
                  interest" in each REMIC.

      Interest on the Offered Certificates must be included in your income under
an accrual method of tax accounting, even if you are otherwise a cash method
taxpayer.

      Certain classes of Offered Certificates may, depending on their respective
issue prices, be issued with original issue discount for federal income tax
purposes. If you hold such a Certificate, you will be required to include
original issue discount in income as it accrues on a constant yield method,
regardless of whether you receive concurrently the cash attributable to such
original issue discount.

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

      The Holder of the Class 1-A-R Certificate will be required to report as
ordinary income or loss the net income or the net loss of each REMIC and will be
required to fund tax liabilities with respect to any such net income although no
cash distributions are expected to be made with respect to the Class 1-A-R
Certificate other than the distribution of its class balance and interest on
that balance.

LEGAL INVESTMENT

      If your investment activities are subject to legal investment laws and
regulations, regulatory capital requirements or review by regulatory
authorities, then you may be subject to restrictions on investment in the
Offered Certificates. You are encouraged to consult your legal, tax and
accounting advisers for assistance in determining the suitability of and
consequences to you of the purchase, ownership and sale of Offered Certificates.

            o     The Senior Certificates and the Class B-1 Certificates will
                  constitute "mortgage related securities" for purposes of the
                  Secondary Mortgage Market Enhancement Act of 1984, as amended,
                  or "SMMEA," so long as they are rated in one of the two
                  highest rating categories by at least one nationally
                  recognized statistical rating organization.

            o     The Class B-2 and Class B-3 Certificates will not constitute
                  "mortgage related securities" under SMMEA.


                                      S-16



            o     See "Legal Investment Considerations" in the prospectus.

ERISA CONSIDERATIONS

      If you are a fiduciary or other person acting on behalf of any employee
benefit plan or arrangement, including an individual retirement account, subject
to the Employee Retirement Income Security Act of 1974, as amended, or "ERISA,"
the Internal Revenue Code of 1986, as amended (the "CODE"), or any federal,
state or local law which is similar to ERISA or the Code, you should carefully
review with your legal advisors whether the purchase or holding of an Offered
Certificate could give rise to a transaction prohibited or not otherwise
permissible under ERISA, the Code or similar law.

      Subject to the considerations and conditions described under "Benefit Plan
Considerations" in this prospectus supplement, it is expected that the Offered
Certificates (other than the Class 1-A-R Certificate) may be purchased by
benefit plans. The Class 1-A-R Certificate may not be acquired by benefit plans.

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

AFFILIATIONS

      Bank of America, National Association, which is the Sponsor, the Servicer
and the originator of the Mortgage Loans, is the direct parent of the Depositor
and is an affiliate of Banc of America Securities LLC. There are no additional
relationships, agreements or arrangements outside of this transaction among the
affiliated parties that are material to an understanding of the Offered
Certificates.

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


                                      S-17



                                  RISK FACTORS

          o   The risk factors discussed below and under the heading "Risk
              Factors" in the prospectus describe the material risks of an
              investment in the Offered Certificates and should be carefully
              considered by all potential investors.

          o   The Offered Certificates are not suitable investments for all
              investors.

          o   The Offered Certificates are complex financial instruments, so you
              should not purchase any Offered Certificates unless you or your
              financial advisor possess the necessary expertise to analyze the
              potential risks associated with an investment in mortgage-backed
              securities.

          o   You should not purchase any Offered Certificates unless you
              understand, and are able to bear, the prepayment, credit,
              liquidity and market risks associated with those Offered
              Certificates.

MORTGAGE LOANS PAYING INTEREST ONLY DURING THE RELATED INTEREST ONLY PERIOD MAY
HAVE A HIGHER RISK OF DELINQUENCY, DEFAULT OR RATES OF PREPAYMENT

      Certain of the Mortgage Loans in each Loan Group have an initial interest
only period of up to ten years after the date of origination. During this
interest only period, the payment due from the related mortgagor will be less
than that of a traditional mortgage loan. In addition, the principal balance of
the Mortgage Loan will not be reduced (except in the case of prepayments)
because there will be no scheduled monthly payments of principal during this
period. Accordingly, no principal payments will be distributed to the related
Certificates from these Mortgage Loans during their interest only period except
in the case of a prepayment.

      After the initial interest only period, payments on each of those Mortgage
Loans will be recalculated to amortize fully its unpaid principal balance over
its remaining life and the mortgagor will be required to make scheduled payments
of both principal and interest. The required payment of principal will increase
the burden on the mortgagor and may increase the risk of delinquency, default or
prepayment under the related Mortgage Loan. In underwriting Mortgage Loans with
interest only periods, the originator generally does not consider the ability of
mortgagors to make payments of principal at the end of the interest only period.
Higher scheduled monthly payments may induce the related mortgagors to refinance
their mortgage loans, which would result in higher prepayments. In addition, in
default situations losses may be greater on these Mortgage Loans because they do
not amortize during the related interest only period. Losses, to the extent not
covered by credit enhancement, will be allocated to the related Certificates.

      Mortgage loans with an initial interest only period are relatively new in
the secondary mortgage market. The performance of these mortgage loans may be
significantly different from mortgage loans that amortize from origination. In
particular these mortgagors may be more likely to refinance their mortgage
loans, which may result in higher prepayment speeds than would otherwise be the
case.

THE RATE OF PRINCIPAL PAYMENTS ON THE MORTGAGE LOANS WILL AFFECT THE YIELD ON
THE OFFERED CERTIFICATES

      Because principal prepayments on the Mortgage Loans will be distributed
currently on the Senior Certificates and the Subordinate Certificates, the rate
of distributions of principal and the yield to maturity on your Certificates
will be directly related to (i) the rate of payments of principal on the
Mortgage Loans and (ii) the amount and timing of defaults by borrowers that
result in losses on the Mortgage Loans. Borrowers are permitted to prepay their
Mortgage Loans, in whole or in part, at any time without penalty. The principal
payments on the Mortgage Loans may be in the form of scheduled principal
payments or principal prepayments (for this purpose, the term "principal
prepayment" includes prepayments and any other recovery of principal in advance
of the scheduled due date, including repurchases and liquidations due to
default, casualty, condemnation and the like). Any of these prepayments will
result in distributions to you of amounts that would otherwise be distributed
over the remaining term of the Mortgage Loans.

      The rate of principal payments on the Mortgage Loans will be affected by
the following:

          o   the amortization schedules of the Mortgage Loans;


                                      S-18



          o   the rate of partial prepayments and full prepayments by borrowers
              due to refinancing, job transfer, changes in property values or
              other factors;

          o   liquidations of the properties that secure defaulted Mortgage
              Loans;

          o   repurchases of Mortgage Loans by the Depositor or the Sponsor, as
              applicable, as a result of defective documentation, breaches of
              representations or warranties or as the result of the conversion
              of a Mortgage Loan from an adjustable to a fixed interest rate;

          o   the exercise of due-on-sale clauses by the Servicer in connection
              with transfers of mortgaged properties;

          o   the optional repurchase of all the Mortgage Loans by the Servicer
              to effect a termination of the Issuing Entity when the aggregate
              stated principal balance of the Mortgage Loans is less than 10% of
              the aggregate unpaid principal balance of the Mortgage Loans as of
              the Cut-off Date; and

          o   general and targeted solicitations for refinancing by mortgage
              originators.

      The rate of principal payments on the Mortgage Loans will depend greatly
on the level of mortgage interest rates:

          o   If prevailing interest rates for similar Mortgage Loans fall below
              the interest rates on the mortgage loans in the Issuing Entity,
              the rate of prepayment is likely to increase.

          o   Conversely, if prevailing interest rates for similar mortgage
              loans rise above the interest rates on the Mortgage Loans in the
              Issuing Entity, the rate of prepayment is likely to decrease.

      Mortgage originators (including the Sponsor) make general and, in some
cases, targeted solicitations for refinancings. Any such solicited refinancings
may result in a rate of prepayment that is higher than you might otherwise
expect.

      If you are purchasing Offered Certificates at a discount, you should
consider the risk that if principal payments on the related Mortgage Loans occur
at a rate slower than you expected, your yield will be lower than you expected.

      If you are purchasing Offered Certificates at a premium you should
consider the risk that if principal payments on the related Mortgage Loans,
occur at a rate faster than you expected, your yield may be lower than you
expected.

      In addition, the multiple class structure of the Subordinate Certificates
causes the yield of such classes to be particularly sensitive to changes in the
rates of prepayment of the Mortgage Loans. Because distributions of principal
will be made to the holders of such Certificates according to the priorities
described in this prospectus supplement, the yield to maturity on such classes
of Certificates will be sensitive to the rates of prepayment on the mortgage
loans experienced both before and after the commencement of principal
distributions on such classes. The yield to maturity on such classes of
Certificates will also be extremely sensitive to losses due to defaults on the
Mortgage Loans (and the timing of those losses), to the extent such losses are
not covered by a class of Subordinate Certificates with a lower payment
priority. Furthermore, as described in this prospectus supplement, the timing of
receipt of principal and interest by the Subordinate Certificates may be
adversely affected by losses even if such classes of Certificates do not
ultimately bear such loss.

      See "Summary of Terms--Prepayment and Yield Considerations" and
"Prepayment and Yield Considerations" in this prospectus supplement.

DELINQUENCIES AND LOSSES ON THE MORTGAGE LOANS WILL ADVERSELY AFFECT YOUR YIELD

      Delinquencies on the Mortgage Loans which are not advanced by or on behalf
of the Servicer (because the Servicer has determined that these amounts, if
advanced, would be nonrecoverable), will adversely affect the yield on the
Senior Certificates and the Subordinate Certificates. The Servicer will
determine that a proposed advance is


                                      S-19



nonrecoverable when, in the good faith exercise of its servicing judgment, it
believes the proposed advance would not be ultimately recoverable from the
related mortgagor, related liquidation proceeds or other recoveries in respect
of the Mortgage Loan. Because of the priority of distributions, shortfalls
resulting from delinquencies that are not covered by advances will be borne
first by the Subordinate Certificates (in reverse numerical order) and then by
the Senior Certificates of the related Group.

      Net interest shortfalls will adversely affect the yields on the Offered
Certificates. In addition, losses generally will be borne by the Subordinate
Certificates, as described in this prospectus supplement under "Description of
Certificates--Allocation of Losses." As a result, the yields on the Offered
Certificates will depend on the rate and timing of realized losses on the
Mortgage Loans in the related Loan Group or Loan Groups.

ALTERNATIVE UNDERWRITING STANDARDS MAY INCREASE RISK OF LOSS

      Certain of the Mortgage Loans will have been originated using the
Sponsor's alternative underwriting guidelines. See "The Mortgage Pool--Mortgage
Loan Underwriting Standards" in this prospectus supplement. These underwriting
guidelines are different from and, in certain respects, less stringent than the
general underwriting guidelines employed by the Sponsor. For example, certain of
the Mortgage Loans may have been originated with less than standard
documentation or with higher maximum loan-to-value ratios. Accordingly, the
Mortgage Loans may experience rates of delinquencies, defaults, foreclosure,
bankruptcy and loss that are higher than those experienced by Mortgage Loans
underwritten using the Sponsor's general underwriting standards.

THE RATE OF DEFAULT ON MORTGAGE LOANS THAT ARE SECURED BY INVESTOR PROPERTIES
MAY BE HIGHER THAN ON OTHER MORTGAGE LOANS

      Certain of the Mortgage Loans are expected to be secured by investor
properties. An investor property is a property which, at the time of
origination, the mortgagor represented would not be used as the mortgagor's
primary residence or second home. Because the mortgagor is not living on the
property, the mortgagor may be more likely to default on the Mortgage Loan than
on a comparable mortgage loan secured by a primary residence, or to a lesser
extent, a second home. In addition, income expected to be generated from an
investor property may have been considered for underwriting purposes in addition
to the income of the mortgagor from other sources. Should this income not
materialize, it is possible the mortgagor would not have sufficient resources to
make payments on the Mortgage Loan.

THERE ARE RISKS RELATING TO MORTGAGED PROPERTIES SUBJECT TO SECOND LIEN MORTGAGE
LOANS

      At the time of origination of certain of the Mortgage Loans, a lender
other than the Sponsor may have originated a second lien mortgage loan. Mortgage
loans that have second lien mortgage loans encumbering the same mortgaged
property may have higher rates of delinquency and foreclosure relative to
mortgage loans that do not have second lien mortgage loans behind them. This may
be due to changes in the mortgagor's debt-to-income profile, the fact that
mortgagors may then have less equity in the mortgaged property or other factors.
You should also note that any mortgagor could obtain a second lien mortgage loan
at any time subsequent to the date of origination of their first lien mortgage
loan from any lender.

CREDIT SCORES MAY NOT ACCURATELY PREDICT THE LIKELIHOOD OF DEFAULT

      The Sponsor generally uses credit scores as part of its underwriting
process. The tables in Appendix A to this prospectus supplement show credit
scores for the mortgagors obtained at the time of origination of their Mortgage
Loans. 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 most mortgage loans.
Furthermore, credit scores were not developed specifically for use in connection
with mortgage loans, but for consumer loans in general. Therefore, credit scores
do not address particular mortgage loan characteristics that influence the
probability of repayment by the borrower. Neither the Depositor nor the Sponsor
makes any representations or warranties as to any borrower's current credit
score or the actual performance of any Mortgage Loan or that a particular credit
score should be relied upon as a basis for an expectation that a borrower will
repay its Mortgage Loan according to its terms.


                                      S-20



DECREMENT AND SENSITIVITY TABLES ARE BASED UPON ASSUMPTIONS AND MODELS

      The decrement tables set forth in Appendix B to this prospectus supplement
and the sensitivity tables set forth in Appendix D to this prospectus supplement
have been prepared on the basis of the modeling assumptions described under
"Prepayment and Yield Considerations--Assumptions Relating to Tables." There
will likely be discrepancies between the characteristics of the actual Mortgage
Loans included in each Loan Group and the characteristics of the assumed
mortgage loans used in preparing the related decrement tables and the
sensitivity tables. Any such discrepancy may have an effect upon the percentages
of initial class balances outstanding set forth in the decrement tables (and the
weighted average lives on the Offered Certificates) and the yields to maturity
set forth in the yield tables. In addition, to the extent that the Mortgage
Loans that actually are included in a Loan Group have characteristics that
differ from those assumed in preparing the related decrement tables and the
sensitivity tables, the class balance of a related class of Offered Certificates
could be reduced to zero earlier or later than indicated by the related
decrement tables and the yield to maturity may be higher or lower than indicated
in the related sensitivity tables.

      The models used in this prospectus supplement for prepayments and defaults
also do not purport to be an historical description of prepayment or default
experience or a prediction of the anticipated rate of prepayment or default of
any pool of Mortgage Loans, including the mortgage loans contained in the
Issuing Entity. It is highly unlikely that the Mortgage Loans will prepay or
liquidate at any of the rates specified or that losses will be incurred
according to one particular pattern. The assumed percentages of CPR and the loss
severity percentages are for illustrative purposes only. For a description of
CPR, see "Prepayment and Yield Considerations" in this prospectus supplement.
The actual rates of prepayment and liquidation and loss severity experience of
the Mortgage Loans may not correspond to any of the assumptions made in this
prospectus supplement. For these reasons, the weighted average lives of the
Offered Certificates may differ from the weighted average lives shown in the
related tables on page S-16 of this prospectus supplement and in Appendix B to
this prospectus supplement.

THERE IS A RISK THAT INTEREST PAYMENTS ON THE MORTGAGE LOANS MAY BE INSUFFICIENT
TO PAY INTEREST ON YOUR CERTIFICATES

      When a Mortgage Loan is prepaid in full, the mortgagor is charged interest
only up to the date on which payment is made, rather than for an entire month.
When a mortgagor makes a partial principal prepayment on a Mortgage Loan, the
mortgagor is not charged interest on the prepayment for the month in which the
principal prepayment was received. This may result in a shortfall in interest
collections available for payment on the next Distribution Date. The Servicer is
required to cover a portion of the shortfall in interest collections that is
attributable to prepayments in full and partial prepayments on the Mortgage
Loans, but in each case only up to the amount of Compensating Interest for such
Distribution Date as described herein under "The Pooling and Servicing
Agreement--Compensating Interest." To the extent these shortfalls from the
Mortgage Loans are not covered by the amount of Compensating Interest, they will
be allocated pro rata to all classes of Certificates.

SUBORDINATION OF SUPER SENIOR SUPPORT AND SUBORDINATE CERTIFICATES INCREASES
RISK OF LOSS

      If you purchase Subordinate Certificates, you are more likely to suffer
losses as a result of losses or delinquencies on the applicable Mortgage Loans
than are holders of the Senior Certificates.

          o   The rights of each class of Subordinate Certificates to receive
              distributions of interest and principal are subordinated to the
              rights of the Senior Certificates and each class of Subordinate
              Certificates with a lower numerical designation. For example, the
              Class B-2 Certificates will not receive principal or interest on a
              Distribution Date until the Senior Certificates and the Class B-1
              Certificates have received the amounts to which they are entitled
              on that Distribution Date.

          o   Losses that are realized on the Mortgage Loans will be allocated
              first to the Class B-6 Certificates, then to the Class B-5
              Certificates, and so on, in reverse numerical order of the
              Subordinate Certificates, until the outstanding class balances of
              those classes have been reduced to zero.

      If you purchase a class of Super Senior Support Certificates, you should
consider the risk that after the Subordinate Certificates are no longer
outstanding (and, in the case of the Class 2-A-3 Certificates, the Class 2-A-4
Certificates), the principal portion of losses realized on the Mortgage Loans in
the related Loan Group that is allocated to the related class or classes of
Super Senior Certificates will be borne by your class of Super Senior


                                      S-21



Support Certificates, rather than the related class or classes of Super Senior
Certificates, for so long as your class of Super Senior Support Certificates is
outstanding. See "Description of Certificates--Allocation of Losses" in this
prospectus supplement.

      For a more detailed description of the subordination feature of the
Subordinate Certificates, see "Description of Certificates--Allocation of
Losses" and "--Cross-Collateralization" in this prospectus supplement.

SUBORDINATE CERTIFICATES PROVIDE CREDIT SUPPORT FOR THE SENIOR CERTIFICATES

      Because the Subordinate Certificates provide credit support for all of the
Senior Certificates, the outstanding class balances of the Subordinate
Certificates could be reduced to zero as a result of a disproportionate amount
of Realized Losses on the Mortgage Loans in one or more of the Loan Groups.
Therefore, Realized Losses on the Mortgage Loans in any of the Loan Groups will
reduce the subordination provided by the Subordinate Certificates to all of the
Senior Certificates and increase the likelihood that Realized Losses may be
allocated to those Senior Certificates. See "Description of
Certificates--Allocation of Losses" herein.

      Under certain circumstances principal payments on the Mortgage Loans in a
Loan Group otherwise distributable to the Subordinate Certificates will be paid
to the Senior Certificates, as described under "Description of
Certificates--Cross-Collateralization" in this prospectus supplement.

THE TIMING OF CHANGES IN THE RATE OF PREPAYMENTS MAY SIGNIFICANTLY AFFECT THE
ACTUAL YIELD TO YOU, EVEN IF THE AVERAGE RATE OF PRINCIPAL PREPAYMENTS IS
CONSISTENT WITH YOUR EXPECTATIONS

      In general, the earlier the payment of principal of the Mortgage Loans,
the greater the effect on your yield to maturity. As a result, the effect on
your yield of principal prepayments occurring at a rate higher (or lower) than
the rate you anticipate during the period immediately following the issuance of
the Certificates will not be offset by a subsequent like reduction (or increase)
in the rate of principal prepayments.

THE VARIABLE RATE OF INTEREST ON THE OFFERED CERTIFICATES WILL AFFECT YOUR YIELD

      The mortgage interest rate on each Mortgage Loan will be fixed for an
initial period of approximately six months or three, five, seven or ten years
from its date of origination. After the applicable fixed-rate period, the
mortgage interest rate on each Mortgage Loan will adjust annually or
semi-annually to equal the sum of the applicable index and a gross margin.
Mortgage interest rate adjustments will be subject to the limitations stated in
the mortgage note on increases and decreases for any adjustment (i.e., a
"periodic cap"). In addition, the mortgage interest rate for each Mortgage Loan
will be subject to an overall maximum mortgage interest rate and a minimum
mortgage interest rate equal to the applicable gross margin. The pass through
rate on each certificate may decrease, and may decrease significantly, after the
mortgage interest rates on the applicable Mortgage Loans begin to adjust as a
result of, among other factors, the dates of adjustment, the gross margins and
changes in one-year LIBOR or six-month LIBOR. In addition, even if one-year
LIBOR or six-month LIBOR increases, a rate ceiling or a periodic cap may limit
the mortgage interest rate, which could adversely affect the yield on the
related Certificates.

ADJUSTABLE-RATE MORTGAGE LOAN BORROWERS MAY BE MORE LIKELY TO PREPAY

      Mortgage interest rates on the Mortgage Loans at any time may not equal
the prevailing mortgage interest rates for similar adjustable-rate loans, and
accordingly the prepayment rate may be lower or higher than would otherwise be
anticipated. Moreover, some mortgagors who prefer the certainty provided by
fixed-rate mortgage loans may nevertheless obtain adjustable-rate mortgage loans
at a time when they regard the mortgage interest rates (and, therefore, the
payments) on fixed-rate mortgage loans as unacceptably high. These mortgagors
may be induced to refinance adjustable-rate mortgage loans when the mortgage
interest rates and monthly payments on comparable fixed-rate mortgage loans
decline to levels which these mortgagors regard as acceptable, even though these
mortgage interest rates and monthly payments may be significantly higher than
the current mortgage interest rates and monthly payments on the mortgagors'
adjustable-rate mortgage loans. The ability to refinance a mortgage loan will
depend on a number of factors prevailing at the time refinancing is desired,
such as, among other things, real estate values, the mortgagor's financial
situation, prevailing mortgage interest rates, the mortgagor's equity in the
related mortgaged property, tax laws and prevailing general economic conditions.
Further, because the pass-through rates on the Certificates will be based on the
weighted average of the net mortgage interest rates of the related Mortgage
Loans, disproportionate principal payments on the related Mortgage Loans having
net mortgage


                                      S-22



interest rates higher or lower than the then current pass-through rates on the
Certificates will affect the pass-through rates for the Certificates for future
periods and the yields on the Certificates.

LIMITED SOURCE OF PAYMENTS - NO RECOURSE TO DEPOSITOR, SPONSOR, SERVICER OR
TRUSTEE

      Proceeds of the Mortgage Loans will be the sole source of payments on the
Certificates. The Certificates do not represent an interest in or obligation of
the Depositor, the Sponsor, the Servicer, the Trustee or any of their
affiliates. There are, however, limited obligations of the Depositor and the
Sponsor with respect to certain breaches of representations and warranties, and
limited obligations of the Servicer with respect to its servicing obligations.

      Neither the Certificates nor the Mortgage Loans will be guaranteed by or
insured by any governmental agency or instrumentality, the Depositor, the
Sponsor, the Servicer, the Trustee or any of their affiliates. Consequently, if
payments on the Mortgage Loans are insufficient or otherwise unavailable to make
all payments required on the Certificates, there will be no recourse to the
Depositor, the Sponsor, the Servicer, the Trustee or any of their affiliates.

LIMITED LIQUIDITY

      The Underwriter intends to make a market for purchase and sale of the
Offered Certificates after their initial issuance, but the Underwriter has no
obligation to do so. There is no assurance that such a secondary market will
develop or, if it does develop, that it will provide you with liquidity of
investment or that it will continue for the life of the Offered Certificates. As
a result, you may not be able to sell your Certificates or you may not be able
to sell your Certificates at a high enough price to produce your desired return
on investment.

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

GEOGRAPHIC CONCENTRATIONS MAY INCREASE RISK OF LOSS DUE TO ADVERSE ECONOMIC
CONDITIONS OR NATURAL DISASTER

      At various times, certain geographic regions will experience weaker
economic conditions and housing markets and, consequently, will experience
higher rates of delinquency and loss on mortgage loans generally. In addition,
California, Florida and several other states have experienced natural disasters,
including earthquakes, fires, floods and hurricanes, which may adversely affect
property values. Although mortgaged properties located in certain identified
flood zones will be required to be covered, to the maximum extent available, by
flood insurance, no mortgaged properties will otherwise be required to be
insured against earthquake damage or any other loss not covered by standard
hazard insurance policies. Any concentration of mortgaged properties in a state
or region may present unique risk considerations.

      Approximately 38.02% and 10.11% of the Mortgage Loans in Loan Group 1 are
secured by mortgaged properties located in the states of California and Florida,
respectively, approximately 46.09% and 14.09% of the Mortgage Loans in Loan
Group 2 are secured by mortgaged properties located in the states of California
and Florida, respectively, approximately 51.59% of the Mortgage Loans in Loan
Group 3 are secured by mortgaged properties located in the state of California
and approximately 51.95% and 11.28% of the Mortgage Loans in Loan Group 4 are
secured by mortgaged properties located in the states of California and Florida,
respectively, which, in each such case represent the states in which 10% or more
of the mortgaged properties securing Mortgage Loans in such Loan Groups are
located.

      Any deterioration in housing prices in a state or region due to adverse
economic conditions, natural disaster or other factors, and any deterioration of
economic conditions in a state or region that adversely affects the ability of
borrowers to make payments on the Mortgage Loans, may result in losses on the
Mortgage Loans. Any losses may adversely effect the yield to maturity of the
Offered Certificates.

RESIDENTIAL REAL ESTATE VALUES MAY FLUCTUATE AND ADVERSELY AFFECT YOUR
INVESTMENT

      There can be no assurance that values of the mortgaged properties have
remained or will remain at their levels on the dates of origination of the
related Mortgage Loans. The value of any mortgaged property generally


                                      S-23



will change over time from its value on the appraisal or sales date. If
residential real estate values generally or in a particular geographic area
decline, the loan-to-value ratios shown in the tables in Appendix A might not be
a reliable indicator of the rates of delinquencies, foreclosures and losses that
could occur on the Mortgage Loans. If the residential real estate market should
experience an overall decline in property values large enough to cause the
outstanding balances of the Mortgage Loans and any secondary financing on the
related mortgaged properties to equal or exceed the value of the mortgaged
properties, delinquencies, foreclosures and losses could be higher than those
now generally experienced in the mortgage lending industry or in the Sponsor's
prior securitizations involving the Depositor.

      In addition, adverse economic conditions and other factors (which may or
may not affect real property values) may affect the mortgagors' timely payment
of scheduled payments of principal and interest on the Mortgage Loans and,
accordingly, the actual rates of delinquencies, foreclosures and losses with
respect to the Mortgage Pool. These other factors could include excessive
building resulting in an oversupply of housing in a particular area or a
decrease in employment reducing the demand for housing in an area. To the extent
that credit enhancements do not cover such losses, your yield may be adversely
impacted.

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

      All of the Offered Certificates, other than the Class 1-A-R Certificate,
are Book-Entry Certificates and will be held through the book-entry system of
The Depository Trust Company.

      Transactions in the Book-Entry Certificates generally can be effected only
through DTC and Participants. As a result:

          o   your ability to pledge Book-Entry Certificates to entities that do
              not participate in the DTC system, or to otherwise act with
              respect to Book-Entry Certificates, may be limited due to the lack
              of a physical certificate for your Certificates; and

          o   under a book-entry format, you may experience delays in the
              receipt of payments, since distributions will be made by the
              Trustee to DTC, and not directly to you.

      For a more detailed discussion of the Book-Entry Certificates, see
"Description of Certificates--Book-entry Form" in the prospectus.

THE SPONSOR MAY NOT BE ABLE TO REPURCHASE DEFECTIVE MORTGAGE LOANS

      The Sponsor will make various representations and warranties related to
the Mortgage Loans. If the Sponsor fails to cure a material breach of its
representations and warranties with respect to any Mortgage Loan sold by it in a
timely manner, then the Sponsor would be required to repurchase, or substitute
for, the defective Mortgage Loan. It is possible that the Sponsor may not be
capable of repurchasing or substituting for any defective mortgage loans, for
financial or other reasons. The inability of the Sponsor to repurchase or
substitute for defective Mortgage Loans would likely cause the Mortgage Loans to
experience higher rates of delinquencies, defaults and losses. As a result,
shortfalls in the distributions due on the Certificates could occur.

TAX CONSEQUENCES OF RESIDUAL CERTIFICATE

          o   The Class 1-A-R Certificate will be the sole "residual interest"
              in each REMIC for federal income tax purposes.

          o   The holder of the Class 1-A-R Certificate must report as ordinary
              income or loss the net income or the net loss of each REMIC
              whether or not any cash distributions are made to it. This
              allocation of income or loss may result in a zero or negative
              after-tax return. No cash distributions are expected to be made
              with respect to the Class 1-A-R Certificate other than the
              distribution of its class balance and interest on that balance.

          o   Treasury regulations require a seller of the Class 1-A-R
              Certificate to either pay the buyer an amount designed to
              compensate the buyer for assuming the tax liability or transfer
              only to certain


                                      S-24



              eligible transferees should the seller wish to qualify for "safe
              harbor" protection from possible disregard of such a transfer.

          o   Due to its tax consequences, the Class 1-A-R Certificate will be
              subject to restrictions on transfer that may affect its liquidity.
              In addition, the Class 1-A-R Certificate may not be acquired by
              Plans.

      See "Description of the Certificate--Restrictions on Transfer of the Class
1-A-R Certificate," "Prepayment and Yield Considerations--Yield on the Class
1-A-R Certificate," "ERISA Considerations" and "Federal Income Tax Consequences"
in this prospectus supplement.

UNITED STATES MILITARY OPERATIONS MAY INCREASE RISK OF RELIEF ACT SHORTFALLS

      As a result of military operations in Afghanistan and Iraq, the United
States has placed a substantial number of armed forces reservists and members of
the National Guard on active duty status. It is possible that the number of
reservists and members of the National Guard placed on active duty status may
remain at high levels for an extended time. To the extent that a member of the
military, or a member of the armed forces reserves or National Guard who is
called to active duty, is a mortgagor of a Mortgage Loan, the interest rate
limitation of the Servicemembers Civil Relief Act, and any comparable state law,
will apply. This may result in interest shortfalls on the Mortgage Loans, which
will be borne by all classes of Certificates. Neither the Sponsor nor the
Depositor has taken any action to determine whether any of the Mortgage Loans
would be affected by these interest rate limitations. See "Description of
Certificates--Interest" in this prospectus supplement and "Certain Legal Aspects
of the Mortgage Loans--Servicemembers Civil Relief Act and Similar Laws" in the
prospectus.


                                      S-25



                                THE MORTGAGE POOL

      The following descriptions of the Mortgage Loans and the mortgaged
properties are based upon the expected characteristics of the Mortgage Loans as
of the close of business on the Cut-off Date. The balances shown have been
adjusted for the scheduled principal payments due on or before the Cut-off Date.
Prior to the Closing Date, Mortgage Loans may be removed from the Loan Groups
and other Mortgage Loans may be substituted for them. The Depositor believes
that the information set forth in this prospectus supplement is representative
of the characteristics of the Loan Groups as they will be constituted on the
Closing Date. Unless the context requires otherwise, references below and in
Appendix A to percentages of the Mortgage Loans in a Loan Group or in all of the
Loan Groups in the aggregate are approximate percentages of the aggregate Stated
Principal Balance of the Mortgage Loans in such Loan Group or in all of the Loan
Groups in the aggregate as of the Cut-off Date.

      The Issuing Entity will consist primarily of a pool (the "MORTGAGE POOL")
of adjustable-rate mortgage loans (the "MORTGAGE LOANS") secured by first liens
on one- to four-family residential properties. The Mortgage Loans have been
divided into four Loan Groups. The Mortgage Loans in each Loan Group and in all
of the Loan Groups in the aggregate have the characteristics set forth in the
tables under "Summary of Terms--Mortgage Pool."

      The Mortgage Pool consists of Mortgage Loans originated by the Sponsor.

      The Mortgage Loans will be sold by the Sponsor to the Depositor on the
Closing Date pursuant to a mortgage loan purchase agreement between the Sponsor
and the Depositor (the "MORTGAGE LOAN PURCHASE AGREEMENT"). See "The Pooling and
Servicing Agreement--Repurchases of Mortgage Loans" in this prospectus
supplement.

      Certain of the Mortgage Loans were originated using underwriting standards
that are different from, and in certain respects, less stringent than the
general underwriting standards of the Sponsor. See "Risk Factors--Alternative
Underwriting Standards May Increase Risk of Loss" and "Mortgage Loan
Underwriting Standards--Bank of America Underwriting Standards--Alternative
Underwriting Standards" in this prospectus supplement.

      The Mortgage Loans will have scheduled monthly payments of interest and,
except for those with initial interest only periods (which Mortgage Loans will
have no scheduled payments of principal during such initial interest only
period) principal due on the first day of each month. Each Mortgage Loan bears
interest initially at a fixed rate and then at a variable rate of interest,
based upon the applicable Index.

      The Mortgage Loans were selected by the Sponsor, with advice from Banc of
America Securities LLC as to the characteristics of the Mortgage Loans that will
optimize marketability of the Certificates, from the Sponsor's originated
portfolio of first lien, closed-end, adjustable-rate mortgage loans, and were
chosen to meet the requirements imposed by the rating agencies to achieve the
credit support percentages listed under "Summary of Terms--Credit
Support--Subordination."

      As of the Cut-off Date, no Mortgage Loan was delinquent. Approximately
0.10% of the Group 2 Mortgage Loans and approximately 3.44% of the Group 4
Mortgage Loans have been one payment delinquent once during the preceding twelve
months and approximately 0.21% of the Group 4 Mortgage Loans have been one
payment delinquent twice during the preceding twelve months. No Group 1 or Group
3 Mortgage Loan has been delinquent during the preceding twelve months.

      As of the Cut-off Date, approximately 0.30% of the Group 2 Mortgage Loans
were Buy-Down Loans. None of the Group 1 Mortgage Loans, Group 3 Mortgage Loans
or Group 4 Mortgage Loans were Buy-Down Loans as of the Cut-off Date. See "The
Trust Estates--The Mortgage Loans--Payment Provisions of the Mortgage Loans" in
the prospectus.

      As of the Cut-off Date, none of the Group 1 Mortgage Loans, approximately
0.33% of the Group 2 Mortgage Loans, none of the Group 3 Mortgage Loans, none of
the Group 4 Mortgage Loans and approximately 0.18% of all of the Mortgage Loans
had mortgage interest rates that can be converted to fixed interest rates at the
option of the mortgagor on the first, second or third Adjustment Date (the
"CONVERTIBLE MORTGAGE LOANS"). Upon the conversion to a fixed interest rate, the
Depositor will be required by the Pooling and Servicing Agreement to repurchase
any such Convertible Mortgage Loans at a price equal to the Purchase Price.
Under the Mortgage Loan Purchase Agreement, the Sponsor will agree to purchase
any such repurchased Convertible Mortgage Loans from the Depositor.


                                      S-26



      As of the Cut-off Date, no Mortgage Loan will have a Loan-to-Value Ratio
of more than 95.00%. The "LOAN-TO-VALUE RATIO" of a Mortgage Loan generally
means the ratio, expressed as a percentage, of (i) the principal balance of the
Mortgage Loan at origination divided by (ii) the lesser of (a) the value of the
related mortgaged property, based on the lesser of any appraisal (or in certain
cases, an automated valuation model or tax assessed value) made at the time of
origination of the Mortgage Loan or the purchase price; provided, however, that
in the case of a refinanced Mortgage Loan, the value will be based solely on the
appraisal (or automated valuation model or tax assessed value) made in
connection with the origination of such refinanced Mortgage Loan. The value of
any mortgaged property generally will change from the level that existed on the
appraisal or sales date. If residential real estate values generally or in a
particular geographic area decline, the Loan-to-Value Ratios might not be a
reliable indicator of the rates of delinquencies, foreclosures and losses that
could occur with respect to the Mortgage Loans. For more information on the
Loan-to-Value Ratios of the Mortgage Loans, see the "Original Loan-to-Value
Ratios" tables in Appendix A to this prospectus supplement. Subject to minor
exceptions permitted in the discretion of the Sponsor, each Mortgage Loan with a
Loan-to-Value Ratio at origination in excess of 80% will be covered by a primary
mortgage guaranty insurance policy which conforms to the standards of Fannie Mae
or Freddie Mac. 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 is less than 80%. Notwithstanding the foregoing, a Mortgage
Loan which at origination was covered by a primary mortgage guaranty insurance
policy may no longer be covered by such policy as a result of the mortgagor
obtaining an appraisal after origination indicating a loan-to-value ratio at the
time of such appraisal of less than 80%.

      The Sponsor may have used Credit Scores as part of its origination
processes. "CREDIT SCORES" are statistical credit scores obtained by many
mortgage lenders in connection with the loan application to help assess a
borrower's credit-worthiness. Credit Scores are generated by models developed by
a third party and are made available to lenders through three national credit
bureaus, Experian (FICO), Equifax (Beacon) and TransUnion (Empirica). The models
were derived by analyzing data on consumers in order to establish patterns which
are believed to be indicative of the borrower's probability of default. A 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 300 to approximately 850,
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 on the probability of repayment by the
borrower. The Credit Scores set forth in the tables in Appendix A to this
prospectus supplement were obtained at either the time of origination of the
Mortgage Loan or more recently. Neither the Depositor nor the Sponsor makes any
representations or warranties as to the actual performance of any Mortgage Loan
or that a particular Credit Score should be relied upon as a basis for an
expectation that a borrower will repay its Mortgage Loan according to its terms.

      Each mortgage note provides for adjustments to the mortgage interest rate
thereon at the end of the initial fixed-rate period set forth on the table on
page S-9 and adjusts annually or, in the case of one Mortgage Loan in Loan Group
1, semi-annually thereafter (each, an "ADJUSTMENT DATE"). Each Mortgage Loan
will be fully-amortized by the maturity of such Mortgage Loan.

      On each Adjustment Date, the mortgage interest rate of each Mortgage Loan
will adjust to the sum of the applicable Index (as defined below) and the number
of basis points specified in the applicable mortgage note (the "GROSS MARGIN"),
rounded up as specified in the related note, subject to the limitation that with
respect to each Adjustment Date, the interest rate after such adjustment may not
vary from the mortgage interest rate in effect prior to such adjustment by more
than the amount specified in the mortgage note (the "PERIODIC CAP"). The
Periodic Caps for the Group 1, Group 2, Group 3 and Group 4 Mortgage Loans are
2%, 5%, 5% and 5%, respectively, for the first Adjustment Date and 2% for every
subsequent Adjustment Date (other than for the Group 1 Mortgage Loan with an
Index of Six-Month LIBOR, for which the Periodic Cap is 1% for each Adjustment
Date and for one Group 2 Mortgage Loan with a Periodic Cap of 2% for the initial
Adjustment Date). In addition, adjustments to the interest rate for each
Mortgage Loan are subject to a lifetime maximum mortgage interest rate (a "RATE
CEILING"). None of


                                      S-27



the Mortgage Loans is subject to a lifetime minimum mortgage interest rate.
Therefore, the minimum mortgage interest rate for each Mortgage Loan will be the
applicable Gross Margin for that Mortgage Loan. On the first due date following
each Adjustment Date for each Mortgage Loan, the monthly payment for the
Mortgage Loan will be adjusted, if necessary, to an amount that will fully
amortize such Mortgage Loan at the adjusted mortgage interest rate over its
remaining scheduled term to maturity. See the tables in Appendix A to this
prospectus supplement for certain statistical information on Rate Ceilings
applicable to the Mortgage Loans in each Loan Group.

      The index for all but one of the Mortgage Loans in Loan Group 1 and all of
the Mortgage Loans in Loan Group 2, Loan Group 3 and Loan Group 4 will be the
arithmetic mean of the London interbank offered rate quotations for one-year
U.S. Dollar-denominated deposits, as published in The Wall Street Journal and
most recently available either (i) as of the first business day in the month
preceding the month of the applicable Adjustment Date or (ii) up to forty-five
days before the applicable Adjustment Date ("ONE-YEAR LIBOR"). In the event
One-Year LIBOR is no longer available, the Servicer will select a substitute
index in accordance with the terms of the related mortgage note in compliance
with federal and state law.

      Listed below are historical values of One-Year LIBOR available as of the
first business day in the month shown below. The values shown are intended only
to provide an historical summary of the movements of One-Year LIBOR and may not
be indicative of future rates. The source of the values shown below is British
Bankers' Association.

                                                     YEAR
                               -------------------------------------------------
MONTH                            2006     2005    2004     2003    2002    2001
                               -------------------------------------------------
January.......................   4.85%    3.11%   1.48%    1.46%   2.40%   5.94%
February......................   4.95     3.27    1.47     1.46    2.57    5.11
March.........................   5.12     3.57    1.37     1.38    2.48    4.91
April.........................   5.29     3.81    1.34     1.27    3.06    4.58
May...........................   5.38     3.71    1.82     1.29    2.64    4.44
June..........................     --     3.76    2.11     1.25    2.60    4.17
July..........................     --     3.90    2.39     1.16    2.27    4.19
August........................     --     4.22    2.35     1.44    1.97    3.80
September.....................     --     4.13    2.26     1.45    1.92    3.59
October.......................     --     4.48    2.49     1.24    1.66    2.68
November......................     --     4.72    2.54     1.48    1.62    2.29
December......................     --     4.82    2.96     1.60    1.73    2.34

      The index for one of the Mortgage Loans in Loan Group 1 will be the
arithmetic mean of the London interbank offered rate quotations for six-month
U.S. Dollar-denominated deposits, as published in The Wall Street Journal and
most recently available either (i) as of the first business day in the month
preceding the month of the applicable Adjustment Date or (ii) up to forty-five
days before the applicable Adjustment Date ("SIX-MONTH LIBOR" and together with
One-Year LIBOR, an "INDEX"). In the event Six-Month LIBOR is no longer
available, the Servicer will select a substitute index in accordance with the
terms of the related mortgage note in compliance with federal and state law.

      Listed below are historical values of Six-Month LIBOR available as of the
first business day in the month shown below. The values shown are intended only
to provide an historical summary of the movements of Six-Month LIBOR and may not
be indicative of future rates. The source of the values shown below is British
Bankers' Association.

                                                     YEAR
                               -------------------------------------------------
MONTH                            2006     2005    2004     2003    2002    2001
                               -------------------------------------------------
January.......................   4.71%    2.79%   1.22%    1.38%   1.96%   6.16%
February......................   4.82     2.97    1.21     1.35    2.08    5.22
March.........................   4.98     3.19    1.17     1.34    2.04    4.95
April.........................   5.14     3.39    1.16     1.23    2.36    4.64
May...........................   5.25     3.43    1.38     1.26    2.12    4.30
June..........................     --     3.54    1.61     1.24    2.08    3.93
July..........................     --     3.73    1.90     1.12    1.95    3.90
August........................     --     3.95    1.94     1.21    1.83    3.67
September.....................     --     4.00    1.98     1.20    1.80    3.47
October.......................     --     4.27    2.20     1.16    1.66    2.54
November......................     --     4.47    2.32     1.23    1.57    2.17
December......................     --     4.63    2.63     1.27    1.47    2.00


                                      S-28



      The tables in Appendix A to this prospectus supplement set forth certain
statistical information with respect to the Mortgage Loans in each of the Loan
Groups and in all of the Loan Groups in the aggregate. Due to rounding, the
percentages shown may not total 100.00%.

                                 THE ORIGINATOR

BANK OF AMERICA, NATIONAL ASSOCIATION

      Bank of America has been originating mortgage loans in excess of 25 years.

      Bank of America originates mortgage loans (i) directly to consumers; (ii)
indirectly through brokers; and (iii) through other loan originators. Bank of
America's direct-to-consumer originations include mortgage loans made to:

          o   customers applying for a mortgage at one of Bank of America's
              banking center locations;

          o   customers applying for a Bank of America mortgage via telephone;

          o   customers applying for a mortgage utilizing Bank of America's
              internet site; and

          o   customers applying for a mortgage with one of Bank of America's
              retail mortgage account executives, who obtain customers by
              networking with realtors and builders in their local markets.

      Bank of America also originates loans indirectly through its wholesale
channel where:

          o   the initial application is processed by an independent mortgage
              broker approved to sell loans to Bank of America; or

          o   applications are processed and the mortgage loan is originated by
              another entity and subsequently acquired by Bank of America after
              closing.

      The real estate lending processes for one- to four-family mortgage loans
in all origination channels follow standard procedures, designed to comply with
applicable federal, state and local laws and regulations.

      The table below sets forth the number and aggregate principal balance of
mortgage loans of the type which may be included in trusts similar to the
Issuing Entity, which were originated by Bank of America during the periods
indicated:



                                                                                      THREE-
                                                                                   MONTHS ENDED
                                          TWELVE-MONTHS ENDED DECEMBER 31,          MARCH 31,
                           --------------------------------------------------------------------
                            2002           2003           2004           2005          2006

By Number                  522,891        792,496        454,683        394,942       77,834
By Aggregate Principal
Balance (in billions)       $88.0         $131.1          $87.5          $86.8        $17.2


                      MORTGAGE LOAN UNDERWRITING STANDARDS

      The Depositor will purchase the Mortgage Loans from Bank of America,
National Association ("BANK OF AMERICA") as the Sponsor. All of the Mortgage
Loans were originated by the Sponsor. The underwriting standards used by the
Sponsor are intended to evaluate the Mortgagor's credit standing and repayment
ability and the value and adequacy of the mortgaged property as collateral. All
of the Mortgage Loans were underwritten in accordance with the following
standards.

BANK OF AMERICA'S UNDERWRITING STANDARDS

      General Underwriting Standards

      The Application and Use of Credit Scoring. Regardless of the channel in
which the loan was originated, a mortgage application is completed containing
information that assists in evaluating the mortgagor's credit standing,


                                      S-29



capacity to repay the loan and adequacy of the mortgaged property as collateral
for the loan. During the application process, the applicant is required to
authorize Bank of America to obtain a credit report that summarizes the
applicant's credit history with merchants and lenders and any record of
bankruptcy or prior foreclosure. This credit information may be obtained from
either a single credit repository or from up to three credit repositories. The
credit bureau inquiry also includes a request for the applicant's Credit Score.
If the credit bureaus cannot generate a Credit Score due to insufficient
information about an applicant, Bank of America will consider proof of an
applicant's alternative credit history, such as a history of consistent rent and
utility payments.

      In addition to a Credit Score, Bank of America may obtain a Custom
Mortgage Score. In order to generate a Custom Mortgage Score, the applicant must
have at least one trade line on his or her credit report and also have a Credit
Score. The "CUSTOM MORTGAGE SCORE" was developed on a population of mortgage
loans serviced by Bank of America and is designed to assess the likelihood that
a mortgage loan will become 60 days or more delinquent within two years of
application. The Custom Mortgage Score used by Bank of America will either have
been developed by Bank of America individually or with the assistance of a third
party. The Custom Mortgage Score requires a Credit Score and utilizes
information obtained from one of the three major credit bureaus. The credit
bureau used depends on the geographic location of the applicant's residence at
the time of application. Bank of America may evaluate a prospective borrower's
creditworthiness with either (i) a Credit Score, (ii) a Custom Mortgage Score or
(iii) a combination of a Credit Score and a Custom Mortgage Score.

      Underwriting Evaluation by Automated Underwriting Decision Engine or
Manual Underwriter. Each mortgage loan underwritten to Bank of America's general
underwriting standards is underwritten in accordance with guidelines established
in Bank of America's Product and Policy Guides (the "PRODUCT GUIDES"). These
underwriting standards applied by Bank of America in originating or acquiring
mortgage loans are intended to evaluate the applicants' repayment ability,
credit standing, and the adequacy of the mortgage property as collateral for the
mortgage loan. The underwriting standards as established in the Product Guides
are continuously updated to reflect prevailing conditions in the residential
market, new mortgage products, and the investment market for residential
mortgage loans.

      Each mortgage application is evaluated by either an automated underwriting
decision engine and/or a human underwriter to determine the appropriate credit
decision and documentation requirements for the loan transaction. The automated
underwriting decision engine may be an engine developed by an outside company
and updated by Bank of America risk management personnel to facilitate automated
decisions on Bank of America loan transactions. Alternatively, it may be an
external decision engine such as Fannie Mae's Desktop Underwriter(R) or Freddie
Mac's Loan Prospector(R) decision engines. If the loan is not automatically
approved or declined by the automated underwriting decision engine, it is
directed to an underwriter who evaluates the application against a set of
specific criteria. The underwriter may be an employee of the lender or may be an
individual performing underwriting on a contract basis through a third party
firm such as a mortgage insurance company.

      Desktop Underwriter(R) is an automated underwriting system developed by
Fannie Mae for conventional conforming loans. Desktop Underwriter(R) indicates
the minimum income and asset verification, credit-related documentation and
other requirements necessary to complete processing of the loan file. These
requirements are based on the specific risk factors present in each loan file.
Bank of America utilizes Fannie Mae's Custom Desktop Underwriter(R) which allows
Bank of America's conditions and policies to display on a customized findings
report specific to it.

      Loan Prospector(R) is an automated underwriting system developed by
Freddie Mac for conventional conforming loans. Loan Prospector(R) indicates the
minimum income and asset verification, credit-related documentation and other
requirements necessary to complete processing of the loan file. These
requirements are based on the specific risk factors present in each mortgage
application.

      Either the automated underwriting decision engine or the underwriter
evaluates the application information to the guidelines for the product type
under which the applicant has applied. As part of the underwriting evaluation,
the loan-to-value ratio is calculated. The "loan-to-value ratio" is the
percentage equal to (i) the principal balance of the mortgage loan at
origination divided by (ii) the lesser of (a) the appraised value of the related
mortgaged property determined in an appraisal obtained at origination of the
mortgage loan or an automated valuation model or tax assessed value (if
permitted by the applicable product type) and (b) except for mortgage loans made
for refinancing purposes, the sales price for the mortgaged property. In
addition to evaluating the loan-to-value ratio, the automated underwriting
decision engine or human underwriter will also evaluate the applicant's credit
history and/or Credit Score and/or Custom Mortgage Score, the amount of the
applicant's debts (including proposed


                                      S-30



housing payment and related expenses such as property taxes and hazard
insurance) to his or her gross monthly income, the intended occupancy of the
subject property, the property type, and the purpose of the loan transaction to
determine whether the mortgage loan generally meets the guidelines established
for the program under which the applicant is applying. If there are multiple
applicants on a loan transaction, Bank of America generally utilizes the Credit
Score and/or Custom Mortgage Score associated with the highest wage-earner on
the transaction as the representative score(s) for the transaction. The
automated underwriting decision engine and/or the underwriter may utilize
compensating factors to offset one or more features of the loan transaction that
may not specifically comply with the product guidelines. Therefore, the
application of the underwriting guidelines for a product type by either an
underwriter or an automated decision engine does not imply that each specific
standard was satisfied individually. A loan is considered to be underwritten in
accordance with a given set of guidelines if, based on an overall qualitative
evaluation, the loan is in substantial compliance with such underwriting
guidelines.

      As part of the underwriting evaluation, the applicant's "DEBT-TO-INCOME
RATIO" is calculated as the amount of the monthly debt obligations (including
the proposed new housing payment and related expenses such as property taxes and
hazard insurance) to his or her gross monthly income. Bank of America's
Debt-to-Income Ratio guidelines are based on the loan instrument, loan term,
Credit Score, loan-to-value ratio, property type, and occupancy characteristics
of the subject loan transaction. Bank of America permits ratios to exceed
guidelines when the applicant has documented compensating factors for exceeding
ratio guidelines such as documented excess funds in reserves after closing, a
history of making a similar sized monthly debt payment on a timely basis,
substantial residual income after monthly obligations are met, evidence that
ratios will be reduced shortly after closing when a financed property under
contract for sale is sold, or additional income has been verified for one or
more applicants that is ineligible for consideration as qualifying income.

      For certain mortgage loans, underwriting may be based on data obtained by
third parties that are involved at various stages in the mortgage origination or
acquisition process. This typically occurs under circumstances in which loans
are subject to more than one approval process, as when correspondents, certain
mortgage brokers or similar entities that have been approved by Bank of America
to underwrite loans on its behalf, or independent contractors hired by these
parties to perform underwriting services on Bank of America's behalf, make
initial determinations as to the consistency of loans with established
underwriting guidelines. The underwriting of mortgage loans acquired from
another lender generally relies on the representations from the originating
lender that the mortgage loans were underwritten in accordance with agreed upon
underwriting standards that are materially similar to Bank of America's.
Generally, Bank of America conducts a post-purchase review of a sampling of all
mortgage loans acquired from another lender to determine whether agreed upon
requirements were met. In order to be eligible to sell mortgage loans under a
delegated underwriting arrangement, the lender must meet certain requirements
including, among other things, certain quality, operational and financial
guidelines.

      Certain of the mortgage loans may have been purchased by Bank of America
in negotiated transactions, and these negotiated transactions may be governed by
contractual agreements. The contractual agreements may provide the commitment by
Bank of America to accept the delivery of a certain dollar amount of mortgage
loans over a specific period of time; this commitment may allow for the delivery
of mortgage loans one at a time or in multiples as aggregated by the seller.
Many of the contractual agreements allow the delegation of all underwriting
functions to the seller, who will represent that the mortgage loans have been
originated in accordance with underwriting standards agreed to by Bank of
America.

      Loans with Secondary Financing. First lien purchase money mortgage loans
may have secondary financing to the borrower contemporaneously with the
origination of the first lien mortgage loan. First lien refinance transactions
may have existing secondary financing with the applicant that is resubordinated
to the new first lien transaction or may have new secondary financing originated
simultaneously with the first lien mortgage. The secondary financing may or may
not be provided by Bank of America. The Total Loan-to-Value Ratio and Combined
Loan-to-Value Ratio are evaluated on each loan with subordinate financing. The
"TOTAL LOAN-TO-VALUE RATIO" is the principal balance of the first lien mortgage
loan at origination plus any secondary financing that was drawn upon at that
time divided by the value of the mortgaged property. The "COMBINED LOAN-TO-VALUE
RATIO" is the principal balance of the first lien mortgage loan at origination
plus the total amount of available secondary financing (including any unused
amount on a home equity line of credit) divided by the value of the mortgaged
property. A mortgage loan with secondary financing is evaluated to determine if
the Total Loan-to-Value Ratio and Combined Loan-to-Value Ratio meet the
requirements for the program under which the application is submitted or if the
application contains compensating factors to warrant an exception to the
applicable guidelines. Some applicants request a first lien mortgage loan with a
loan-to-value ratio of 80% with a simultaneously funded second


                                      S-31



lien transaction in order to avoid the cost of primary mortgage insurance
associated with first lien mortgage loans with loan-to-value ratios exceeding
80%.

      Documentation. In assessing an applicant, Bank of America requires
supporting documentation (or other verification) for all material data provided
by the applicant, such as income and source of down payment, unless the
applicant qualifies for one of the Accelerated Processing Programs discussed
below.

      Under Bank of America's standard documentation process (the "STANDARD
DOCUMENTATION PROCESS") the following verifications are required: a salaried
applicant's income is verified by either having the applicant provide copies of
the previous year's federal withholding form (IRS W-2) and a current payroll
earnings statement or by sending a verification of employment form to the
applicant's employer. A verification of employment form asks the employer to
report the applicant's length of employment with the employer, the current
salary and an indication as to whether it is expected that the applicant will
continue to be employed in the future. A self-employed applicant is required to
provide copies of tax returns for the prior two years. Bank of America verifies
down payment funds by (i) obtaining bank or other financial statements covering
the most recent 60-day period confirming the existence of these funds, (ii)
determining electronically that these funds are on deposit with Bank of America,
(iii) obtaining documentation that these funds are to be obtained from a gift or
sale of assets or (iv) asking the applicant's financial institution to complete
a verification of deposit form detailing asset information. Asset verifications
are not required on refinance transactions.

      If the applicant lacks a traditional credit history, then the loan
approval may be conditioned upon the documentation of an acceptable alternative
credit history consisting of at least four references showing timely payment of
utilities, insurance premiums or rent, or other alternative credit references in
the prior twelve months.

      In order to qualify for Bank of America's general underwriting standards,
applicants must be willing to have the income and assets stated on their
application verified. Applicants who have indicated that they do not wish to
have their income and/or assets verified are directed to other Bank of America
programs outlined in "--Alternative Underwriting Standards" below. While the
applicants under Bank of America's general underwriting standards are willing to
have income and asset information stated in the application verified, the level
of verifications required (if any) are based on the applicant's credit profile,
requested loan terms, and whether the applicant has an existing loan serviced by
Bank of America that is being refinanced with the new loan transaction. Bank of
America matches documentation requirements on mortgage loans to the overall risk
parameters of the loan file under various "ACCELERATED PROCESSING PROGRAMS" such
as: (i) Rapid; (ii) PaperSaver(R) (also known as Threshold); (iii) Stated
Income, Stated Asset; (iv) All-Ready Home; (v) Mortgage Rewards; (vi) No Ratio
or (vii) Stated Income.

      Under Bank of America's "RAPID" documentation program, only the most
recent pay stub (if salaried) or first two pages of the most recent tax return
(if self-employed) of an applicant is required for income verification and only
the most recent bank statement of an applicant is required for asset
verification on purchase transactions if the applicant meets the Total
Loan-to-Value Ratio and Credit Score requirements for that program.

      Under Bank of America's "PAPERSAVER(R)" documentation program,
verification of the applicant's stated income and stated assets is not requested
(with the exception of self-employed applicants who are required to sign the IRS
form 4506-T (Request for Transcript of Tax Returns)) if the applicant meets the
designated Credit Score, Custom Mortgage Score, Loan-to-Value Ratios and other
eligibility requirements. An applicant with a designated higher Credit Score and
designated higher Custom Mortgage Score which together indicate a favorable
credit history is eligible for PaperSaver(R) documentation. The PaperSaver(R)
documentation program has certain limitations relating to occupancy, property
type, purpose and principal balance.

      Under Bank of America's "STATED INCOME, STATED ASSET" documentation
program, which is only available through the wholesale channel, income or asset
verifications are not requested from applicants if they meet the Total
Loan-to-Value Ratio, Credit Score and other eligibility requirements for the
program. Although the Stated Income, Stated Asset program permits applicants to
simply state their income and assets without verification, all applicants are
required to sign an IRS form 4506 permitting income verification from tax return
data if the file is selected as part of Bank of America's quality assurance
audit.

      Bank of America may originate new mortgage loans under its "ALL-READY
HOME" mortgage refinance program or its "MORTGAGE REWARDS" refinance program.
Under each of these programs, Bank of America will pay certain closing costs
normally paid by the customer. Under these programs, a borrower whose current
mortgage loan is serviced by Bank of America does not need to provide income or
asset verification documentation if the


                                      S-32



current mortgage loan has had no 30 day or more delinquent payments in the
previous twelve months (or since origination if less than 12 months). In
addition, Bank of America typically requires a drive-by appraisal rather than an
interior inspection appraisal. Because these programs involve the refinancing of
mortgage loans that Bank of America originally underwrote, Bank of America will
not apply any significant borrower credit or property underwriting standards
(other than a minimum Credit Score). Mortgage Loans initially included in the
Issuing Entity may have been the subject of a refinancing described above. To
the extent a borrower becomes eligible for the All-Ready Home or Mortgage
Rewards program after his or her Mortgage Loan has been included in the Issuing
Entity, his or her Mortgage Loan could be more easily refinanced, resulting in a
prepayment of the Mortgage Loan. See "Prepayment and Yield
Considerations--Weighed Average Life of the Offered Certificates."

      For a description of the No Ratio and Stated Income programs, see
"--Alternative Underwriting Standards" below.

      In addition, mortgage applications evaluated by Desktop Underwriter(R) or
Loan Prospector(R) follow the Standard Documentation Process unless the
applicant's credit profile indicates a more favorable credit history, in which
case the mortgage loan may be originated with the applicant furnishing only a
recent pay stub showing year-to-date earnings (if salaried) or the first two
pages of the most recent tax return (if self-employed) for income verification
and only the most recent bank statement for asset verification.

      Collateral Valuation. Bank of America conducts a valuation of the
mortgaged property as collateral for each mortgage loan. This collateral
valuation may be determined by (i) an interior inspection appraisal, (ii) a tax
assessed value, (iii) a desktop appraisal, (iv) a drive-by appraisal, (v) an
automated valuation model, or (vi) reference to the collateral valuation
obtained in connection with the origination of the previous loan if the loan is
a refinance of a mortgage loan that was previously serviced by Bank of America.
An interior inspection appraisal is an appraisal report based on an interior
inspection of the subject property. A tax assessed value is a factor applied to
the tax value recorded for the subject property that reflects the general
relationship between the assessed value and the market value of the property.
These factors are established for each county by a third party vendor. A tax
assessed value also does not entail any physical inspection of the subject
property. A desktop appraisal is a report completed by a certified/licensed
appraiser utilizing a sales comparison analysis from a local multiple listing
service without conducting a physical inspection of the property. A drive-by
appraisal report is a limited, summary appraisal report based on an exterior
inspection of the property and comparable sales by a certified/licensed
appraiser. An automated valuation model is an electronically generated valuation
that utilizes real estate information such as property characteristics, market
demographics, sales price data, and regional trends to calculate a value for a
specific property. Bank of America utilizes the automated valuation models of
several vendors. An automated valuation model does not entail any physical
inspection of the subject property. In addition, no updated appraisal valuation
may be performed if the loan is a refinance of a loan that was previously
serviced by Bank of America and the valuation from the time of origination of
the loan being refinanced reflects adequate value for the mortgaged property.

      In certain instances, the interior, desktop or drive-by appraisal reports
may be conducted by an employee of Bank of America or an affiliate. The
appraisal report, however, may be performed by an independent appraiser
contracted by Bank of America or an affiliate of Bank of America on direct
channel originations. Appraisal reports on indirect channel originations are
generally performed by an appraiser selected by the originating lender but
indirect channel appraisers cannot be performed by appraisers that have been
deemed to be ineligible to perform appraisals by Bank of America.

      Appraisers may note on their appraisal any environmental hazard the
appraiser becomes aware of while appraising the property. EPA Lead Paint
requirements for notice and an inspection period are standard for properties
built before 1978. Properties containing other hazards may be eligible for
financing if the appraiser can value the property showing the impact of the
hazard, and the borrower executes a "hold harmless" letter to the lender.
Environmental hazards are not noted on collateral valuations where no physical
inspection of the property takes place, such as on loans where the collateral
valuation is conducted by an automated valuation model or tax assessed value.
Appraisers only note environmental hazards on a desktop appraisal if they
generally are known in the area.

      Certain states have "anti-deficiency" laws which, in general, require
lenders providing credit on one to four family properties to look solely to the
property for repayment in the event of foreclosure. See "Certain Legal Aspects
of the Mortgage Loans--Anti-Deficiency Legislation, the Bankruptcy Code and
Other Limitations on Lenders" in this prospectus. The underwriting guidelines in
all states (including anti deficiency states) require that


                                      S-33



      the value of the property being financed, as indicated by the collateral
valuation, currently supports and is anticipated to support in the future the
outstanding loan balance and provides sufficient value to mitigate the effects
of adverse shifts in real estate values, although there can be no assurance that
the value will support the outstanding loan balance in the future.

      Flood Determinations and Hazard Insurance. Each mortgage loan is evaluated
to determine if the subject property is located in a federal flood zone. If the
property is located in a flood zone, then flood insurance is required on the
loan transaction with an amount of coverage that meets or exceeds federal law
requirements. Generally, evidence of acceptable hazard insurance coverage on the
subject property is a requirement for loan approval. This documentation,
however, is not required if the mortgage loan is a refinance of an existing Bank
of America serviced loan transaction and hazard insurance was documented for the
previous loan transaction or the mortgage loan is originated under a program
that does not require the review of evidence of hazard insurance.

      Mortgage Insurance and Title. Mortgage loans originated with loan-to-value
ratios in excess of 80% may be covered by primary mortgage insurance. Except as
noted below in connection with certain refinance transactions, mortgage loans
will generally be covered by an appropriate standard form American Land Title
Association ("ALTA") title insurance policy, or a substantially similar policy
or form of insurance acceptable to Fannie Mae or Freddie Mac, or if the related
mortgaged property is located in a jurisdiction where these policies are
generally not available, an opinion of counsel of the type customarily rendered
in these jurisdiction in lieu of title insurance will be obtained instead. If
required, the title insurance policy may include environmental protection lien
endorsement coverage (ALTA Form 8.1 or its equivalent) excepting only Superliens
which may arise after the loan is made. See "Certain Legal Aspects of the
Mortgage Loans--Environmental Considerations" in this prospectus.

      Mortgage loans on refinance transactions generally do not contain title
insurance policies. Title searches are often performed on these refinance
transactions in lieu of obtaining a title insurance policy. A title search is a
limited search of a specified parcel of land summarizing information concerning
current owner(s) and all judgments, mortgages, and tax obligations filed.

      Borrowers Protection Plan(R). Bank of America's Borrowers Protection
Plan(R) ("BPP") is a debt-cancellation contract between the borrower and Bank of
America. This optional plan can cancel a borrower's monthly principal and
interest payment for up to a total of twelve months if the borrower loses his or
her job or becomes disabled. Additionally, the outstanding principal balance of
a mortgage loan with BPP will be cancelled if the borrower dies as a result of
an accident. While Bank of America will cancel payment of the principal,
interest and BPP fees, the borrower will still be responsible for the payment of
taxes and insurance. Bank of America will be obligated to pay to the Issuing
Entity any amounts cancelled due to BPP on a Mortgage Loan.

      The following three protection options are available in a BPP contract:
(i) disability, involuntary unemployment and accidental death; (ii) involuntary
unemployment and accidental death or (iii) disability and accidental death.

      The benefit period ranges from six to twelve months. A borrower may elect
single (i.e., one borrower who is named in the mortgage note) or joint coverage
(i.e., any two of the borrowers named in the mortgage note).

      BPP is only available on certain first-lien fixed-rate and adjustable-rate
mortgage loan products and programs. The term of protection is the lesser of the
loan term and ten years. Upon expiration, BPP is discontinued and the monthly
BPP fee is no longer assessed. If the borrower has an active BPP claim prior to
the expiration date, however, loan protection can extend beyond the expiration
date. BPP is optional and the borrower's choice regarding BPP is not considered
when evaluating the loan request. The borrower must select the BPP plan prior to
loan closing.

      Alternative Underwriting Standards

      In addition to the general underwriting standards described above under
"--General Underwriting Standards," Bank of America provides for certain
alternative underwriting programs for qualified borrowers, some of which enable
the applicant to request reductions in the verification documentation required
for the mortgage loan.

      Bank of America's "STATED INCOME PROGRAM" provides applicants the ability
to request that income stated on the loan application not be verified. The
Debt-to-Income Ratio calculation used by the underwriter to evaluate the
applicant's capacity for the loan is based on income the applicant discloses on
the application. Under the Stated Income Program, applicants who have steady
employment and complex sources of income or rapidly expanding incomes may be
eligible. The Stated Income Program is designed to meet the needs of applicants
with a traditional


                                      S-34



credit history who meet the minimum Credit Score requirement of the program. A
verbal verification of employment confirming the applicant's date of employment,
job status and title is required. While income information is not provided, the
applicant must continue to provide documentation of assets used for down
payment, closing costs, and reserves on purchase transactions.

      Bank of America's "NO RATIO LOAN PROGRAM" provides applicants with a
minimum Credit Score and a sufficient asset base the ability to obtain mortgage
loans with no income verification or Debt-to-Income Ratio calculation. Under
this program, the applicant does not state his or her income at the time of loan
application. The applicant must evidence a propensity and capacity to save and
to maintain stable employment, defined as a minimum of two years in the same
line of work. A verbal verification of employment information provided in the
application, without reference to income, takes place under this program. While
income information is not provided, the applicant must continue to provide
documentation of his or her assets used for down payment, closing costs, and
reserves on purchase transactions.

      Bank of America's "100% LTV PROGRAM" provides applicants the ability to
obtain a mortgage loan with no down payment. The 100% LTV Program is only
available if the primary borrower has a minimum Credit Score. The 100% LTV
Program also permits loan-to-value ratios of up to 103% (including closing costs
and prepaid items in an amount up to 3% of the value of the mortgaged property).
Under this program, Bank of America uses the Standard Documentation Process.

      Bank of America's "97% LTV PROGRAM" provides applicants with the
opportunity to obtain low down payment mortgage loans. This program allows an
applicant to obtain financing for a mortgage loan by requiring only a 3% cash
down payment from the applicant's own funds. The 97% LTV Program is only
available if the primary borrower has a minimum Credit Score. The 97% LTV
Program is a fully amortizing 30-year fixed-rate mortgage that is available on
owner-occupied principal residences only. This program is available on purchase
and rate or term refinance transactions. Under this program, Bank of America
uses the Standard Documentation Process.

      Bank of America's "CONDOMINIUM HOTEL LOAN PROGRAM" provides applicants the
ability to purchase a unit in a condominium hotel. The Condominium Hotel Loan
Program offers a fully amortizing 15-year or 30-year fixed-rate mortgage loan
that is available on a primary residence or second home. The Condominium Hotel
Loan Program is only available if the primary borrower has a minimum Credit
Score. Condominium Hotel Mortgage Loans are available on purchase and rate or
term refinance transactions. Under this program, Bank of America uses the
Standard Documentation Process.

      Bank of America's "NON-RESIDENT ALIEN LOAN PROGRAM" provides financing to
non-resident aliens to purchase or refinance second home properties within the
United States. Applicants without a United States credit history must document
an acceptable credit history within their primary country of origin. Under this
program, Bank of America uses the Standard Documentation Process.

      Bank of America's "80/20 PROGRAM" provides applicants with an 80%
Loan-to-Value Ratio first lien mortgage that is funded simultaneously with a 20%
Loan-to-Value Ratio second lien mortgage so that the Total Loan-to-Value Ratio
is 100%. By structuring loans in such a manner, the applicant is able to avoid
the cost of primary mortgage insurance on the transaction. The 80/20 Program is
only available if the primary borrower has a minimum Credit Score. Bank of
America may originate both the first and second lien transactions under an 80/20
transaction or the second lien may be originated by another lender. Under this
program, Bank of America uses the Standard Documentation Process.

                                   THE SPONSOR

      The Sponsor, Bank of America, National Association, is an indirect
wholly-owned subsidiary of Bank of America Corporation.

      See "The Sponsor," "Mortgage Purchase Program," "Servicing of the Mortgage
Loans" and "The Pooling and Servicing Agreement" in the prospectus for more
information about the Sponsor, its securitization programs and its material
roles and duties in this securitization.


                                      S-35



                             STATIC POOL INFORMATION

      Information concerning the Sponsor's prior residential mortgage loan
securitizations related to the Depositor involving fixed- and adjustable-rate
first lien mortgage loans is available on the internet at www.bofa.com/bafc. On
this website, you can view for each of these securitizations, summary pool
information as of the applicable securitization cut-off date and delinquency,
cumulative loss, and prepayment information as of each distribution date by
securitization for the past five years, or since the applicable securitization
closing date if the applicable securitization closing date occurred less than
five years from the date of this prospectus supplement. Each of the mortgage
loan securitizations identified on this website is unique, and the
characteristics of each securitized mortgage loan pool varies from each other as
well as from the mortgage loans to be included in the Issuing Entity that will
issue the Certificates offered by this prospectus supplement. In addition, the
performance information relating to the prior securitizations described above
may have been influenced by factors beyond the Sponsor's control, such as
housing prices and market interest rates. Therefore, the performance of these
prior mortgage loan securitizations is likely not to be indicative of the future
performance of the mortgage loans to be included in the Issuing Entity.

      The static pool data referred to above relating to securitized pools
issued prior to January 1, 2006 will not form a part of this prospectus
supplement, the accompanying prospectus or the Depositor's registration
statement.

      The performance of prior residential mortgage loan pools may not be
indicative of the future performance of the Mortgage Loans.

                                  THE DEPOSITOR

      The Depositor, Banc of America Funding Corporation, is an indirect
subsidiary of Bank of America Corporation.

      See "The Depositor," "Mortgage Purchase Program" and "The Pooling and
Servicing Agreement" in the prospectus for more information about the Depositor
and its material roles and duties in this securitization.

                               THE ISSUING ENTITY

      The issuing entity will be a New York common law trust (the "ISSUING
ENTITY"), formed on the Closing Date pursuant to the Pooling and Servicing
Agreement. The Mortgage Loans will be deposited by the Depositor into the
Issuing Entity under the Pooling and Servicing Agreement as described in the
prospectus under "The Pooling and Servicing Agreement--Assignment of Mortgage
Loans to the Trustee." The Issuing Entity will have no officers or directors and
no activities or continuing duties other than to hold the assets underlying the
Certificates and to issue the Certificates. The fiscal year end of the Issuing
Entity will be December 31 of each year.

      The Issuing Entity will be administered by the Trustee pursuant to the
terms of the Pooling and Servicing Agreement as described under "The Pooling and
Servicing Agreement" in this prospectus supplement. The Trustee, on behalf of
the Issuing Entity, is, prior to an Event of Default, only permitted to take the
actions specifically provided in the Pooling and Servicing Agreement. Under the
Pooling and Servicing Agreement, the Trustee on behalf of the Issuing Entity
will not have the power to issue additional certificates representing interests
in the Issuing Entity, borrow money on behalf of the Issuing Entity or make
loans from the assets of the Issuing Entity to any person or entity.

      The Issuing Entity, as a common law trust, may not be eligible to be a
debtor in a bankruptcy proceeding, unless it can be characterized as a "business
trust" for purposes of federal bankruptcy laws. Bankruptcy courts consider
various factors in making a determination as to whether an entity is a business
trust, therefore it is not possible to predict with any certainty whether or not
the Issuing Entity would be considered a "business trust." In addition, in the
event of bankruptcy of the Sponsor, the Depositor or any other party to the
transaction, it is not anticipated that the trust fund would become part of the
bankruptcy estate or subject to the bankruptcy of a third party. See "Risk
Factors--Special Power of the FDIC in the Event of Insolvency of the Sponsor
Could Delay or Reduce Distributions on the Certificates" and "--Insolvency of
the Depositor May Delay or Reduce Collections on Mortgage Loans" in the
prospectus.


                                      S-36



                           SERVICING OF MORTGAGE LOANS

      Bank of America (in its capacity as servicer, the "SERVICER") will service
all of the Mortgage Loans pursuant to the Pooling and Servicing Agreement.

      The Servicer may perform any of its obligations under the Pooling and
Servicing Agreement through one or more subservicers. Despite the existence of
subservicing arrangements, the Servicer will be liable for its servicing duties
and obligations under the Pooling and Servicing Agreement as if the Servicer
alone were servicing the related Mortgage Loans. The duties of a "Master
Servicer" described in the prospectus will be performed by the Servicer in
accordance with the Pooling and Servicing Agreement.

BANK OF AMERICA'S SERVICING EXPERIENCE AND PROCEDURES

      General

      Bank of America has been servicing consumer mortgage loans in excess of 25
years. The table below sets forth information about Bank of America's portfolio
of first-lien, residential mortgage loans (excluding revolving home equity lines
of credit) as of the dates indicated:



                                                   AS OF                AS OF               AS OF             AS OF
                                       DECEMBER 31, 2003    DECEMBER 31, 2004   DECEMBER 31, 2005    MARCH 31, 2006

First Lien Mortgage Loans

     By Aggregate Unpaid Principal
     Balance (in billions)                        $246.5               $273.1              $296.8            $302.3
     By Number                                 2,215,425            2,258,581           2,227,378         2,226,589


      Bank of America has been approved as a mortgagee and seller/servicer by
the Department of Housing and Urban Development, the Veterans Administration,
Ginnie Mae, Fannie Mae and Freddie Mac. In addition to servicing certain
mortgages securitized by the Depositor, Bank of America also services loans that
are held in its portfolio and whole loans that are sold to a variety of
investors.

      Bank of America utilizes a mortgage-servicing technology platform with
multiple capabilities and reporting functions that is widely used within the
residential mortgage industry. This platform allows Bank of America to process
mortgage servicing activities including but not limited to: (i) performing
account maintenance; (ii) tracking consumer communications; (iii) facilitating
communication between Bank of America's different internal business units, and
between Bank of America and its third-party vendors; (iv) entering and updating
transaction data; and (v) generating various reports.

      Bank of America has implemented and tested a business continuity plan. In
case of a disruption, all functions of the disrupted facility are automatically
transferred to a different undisrupted facility. The facility receiving the
transfer of functionality will have access to all data and tools necessary to
continue servicing all mortgage loans. Bank of America's business continuity
plan is tested and updated annually.

      Bank of America's servicing policies and procedures have been generally
consistent for the last three years in all material respects. The only
significant changes in Bank of America's policies and procedures have come in
response to changes in federal or state law or investor requirements, such as
updates issued by Fannie Mae or Freddie Mac.

      Bank of America may perform any of its obligations under the Pooling and
Servicing Agreement through one or more third-party vendors, affiliates or
subsidiaries. Bank of America may engage third-party vendors to provide
technology or process efficiencies. Bank of America monitors its third-party
vendors in compliance with the guidelines reviewed by the OCC. Bank of America
has entered into contracts with third-party vendors for functions related to
customer bankruptcy, certain foreclosure-related activities, hazard insurance,
lockbox and document printing.

      Delinquencies, Losses, Bankruptcies and Recoveries

      Bank of America monitors mortgage loans for a variety of situations that
present the risk of delinquency or loss to the Issuer. Those situations include,
without limitation, situations where a mortgagor has sold or transferred the
mortgaged property, where there has been damage to the mortgaged property, where
the mortgagor is late in


                                      S-37



making payments for any number of reasons, and where the mortgagor has declared
bankruptcy. The following is a description of Bank of America's policies and
procedures to respond to each of these situations.

      Property Damage

      Bank of America has retained a vendor to address most of the work related
to recovery of proceeds of hazard insurance. This vendor generally performs the
following tasks: (i) insurance customer service, (ii) flood processing and
tracking, (iii) renewal, (iv) lender-placed hazard insurance tracking and
placement and (v) claims processing. The vendor tracks and reports its
activities by directly accessing Bank of America's servicing system which
reports Bank of America employees actively monitor.

      Collections and Loss Mitigation

      Account status is monitored and efforts are made to prevent a mortgage
loan on which a payment is delinquent from going to foreclosure. Based on
account payment history, prior contact with the borrower, property status, and
various other factors, an appropriate course of action is employed to make
direct mail or phone contact with the borrower(s). All of the preceding factors
are considered when determining the appropriate timing for the contact efforts.

      Initial phone contact is pursued by Bank of America's collections
department, which utilizes a predictive dialer and manual efforts to perform
strategic call campaigns based on selected criteria including stage of
delinquency and industry credit/behavioral risk scoring. Call attempts may begin
within several days of the payment due date and continue throughout the
delinquency in accordance with investor, mortgage insurance and government
agency guidelines. The collection activities of Bank of America are consistent
with fair debt collection practices, including, but not limited to placing calls
to the mortgagor after 8:00 a.m. or before 9:00 p.m. local time at the
customer's location. Each caller in the collection department attempts to: (i)
obtain the reason for default; (ii) obtain information related to the
mortgagor's current financial situation; (iii) verify occupancy; (iv) refer the
mortgagor to counseling agencies if appropriate; and (v) determine the best
possible loss mitigation option. Systemic stops may be used to prevent accounts
from being subject to notices, letters, calls and inspections in certain
situations. Some examples of situations subject to a stop of collection activity
may include the initial period following the transfer of servicing to Bank of
America, certain bankruptcy accounts, and customers who are the victim of fraud
or identity theft.

      Bank of America grants a grace period of fifteen days after the due date
in which a borrower can make a monthly payment without incurring a penalty or
late charge. In addition, a mortgage loan is not considered delinquent unless a
full monthly payment has not been received by the close of business on the last
day of the month of the due date. For example, a mortgage loan with a due date
of May 1 is considered delinquent if a full monthly payment is not received by
May 31.

      Late charges are generally assessed after the due date at the expiration
of a grace period, if applicable. There may be situations, based on the customer
or account circumstances, where a late fee could be waived. Also certain
systemic stops may prevent the assessment of late fees, such as during the
initial period following the transfer of servicing to Bank of America.

      Direct mail contact efforts occur during the various stages of
delinquency. Generally a courtesy notice is sent to customers after the due date
and expiration of any grace period. General default communications may continue
with a late fee notice, account billing statements, breach letters, loss
mitigation solicitations, occupancy and property status inquiries, and
foreclosure notices, if appropriate. More specifically, customer contact is
generally made as follows: (i) during the first 30 days of delinquency, Bank of
America generally assesses a late fee, sends a late notice and generally calls
the customer during the last week of the 30-day period, (ii) during the next 30
days of delinquency, Bank of America again calls the customer, sends a loss
mitigation letter (setting forth appropriate options to bring the loan current)
within the first 15 days of this period and then, in the third week of this
period, sends a formal notice, known as a "breach letter," that is legally
required prior to commencing formal foreclosure proceedings, (iii) during the
next 15 days of delinquency, Bank of America calls the customer, sends another
loss mitigation letter and performs an inspection of the property, and (iv)
during the next 15 days of delinquency, Bank of America sends a final loss
mitigation solicitation letter before referring the matter to its foreclosure
vendor.

      In recognition of the fact that mortgage loans that are delinquent are at
higher risk for abandonment by the borrower, and may also face issues related to
maintenance, Bank of America has developed guidelines for inspecting properties
for which a monthly payment is delinquent. Depending on various factors, such as
the ability to contact


                                      S-38



the customer, the delinquency status of the account, and the property occupancy
status, Bank of America will hire a vendor to inspect the related property to
determine its condition. If the inspection results indicate a need for property
safeguarding measures, such as securing or winterizing, Bank of America will
ensure the appropriate safeguards are implemented in accordance with industry,
legal and investor standards.

      Bank of America has a dedicated loss mitigation unit that receives case
referrals from its collection, foreclosure, and bankruptcy departments as well
as from the loss mitigation unit's own contact efforts. Delinquent mortgage
loans are reviewed for investor eligible loss mitigation options, which can
include a promise to pay, repayment plan, forbearance, moratorium, modification,
short sale, special forbearance, deed-in-lieu of foreclosure, borrower
assistance, partial claim, assumption, sale of property, demand arrears, or
foreclosure. Bank of America will opt for any one or more of these mitigation
options depending on various factors, but will pursue more extensive loss
mitigation solutions when a suitable arrangement for repayment or promise to pay
is not feasible because of the borrowers financial situation or unwillingness to
remain in the property. Payment activities on delinquent mortgage loans are
monitored to ensure the appropriate application of partial payments where
specific arrangements have been agreed to allow partial payments and to ensure
an appropriate response to situations in which a customer has paid with a check
that is returned for insufficient funds. Payment plans are monitored according
to the plan due dates.

      During the default process, if Bank of America becomes aware that the
borrower cannot continue to make regular scheduled payments and escrow
contributions, the loan will be deemed uncollectible. This may occur due to the
borrower's inability to bear the payment plan or failure to adhere to the
payment plan. Losses may be experienced on a mortgage loan during the real
estate owned process if the value of the property at time of liquidation is less
than the sum of the unpaid principal balance and all outstanding advances
(including, but not limited to, the outstanding unpaid principal balance of the
mortgage loan, interest advances, escrow advances, uncollected Servicing Fees,
property maintenance fees, attorney fees, and other necessary fees).

      Bankruptcy

      When a mortgagor files for bankruptcy, Bank of America's options for
recovery are more limited. Bank of America monitors bankruptcy proceedings and
develops appropriate responses based on a variety of factors, including: (i) the
chapter of the Bankruptcy Code under which the mortgagor filed; (ii) federal,
state and local regulations; (iii) determination-of-claim requirements; (iv)
motion requirements; and (v) specific orders issued through the applicable
court. Bank of America utilizes a vendor to receive automated notices on all new
bankruptcy filings. The vendor is either a law firm or retains a law firm from a
pre-approved list of law firms. After validation of the bankruptcy, the loan is
automatically added to the mortgage servicing system's bankruptcy workstation
and the loan is flagged or coded to prevent collection calls and notices. Bank
of America's bankruptcy staff is responsible for the daily monitoring of the
bankruptcy cases, including all customer inquiries, debtor and trustee payment
application, escrow analysis, strict compliance orders, reaffirmation agreements
and compliance with all investor and agency servicing and reporting
requirements.

      The vendor is responsible for filing all proof of claims, reviewing plans,
making objections and filing motions for relief. Bank of America aggressively
monitors the performance of the vendor daily, weekly and monthly via control
reports to ensure that investor/agency requirements are met and that service
levels are maintained.

      Foreclosure

      Bank of America delegates to a vendor initial responsibility for
activities related to foreclosure. Once Bank of America's collections department
approves a foreclosure, it places a stop on the mortgage loan and refers the
matter to the foreclosure vendor. The foreclosure vendor performs the following
services: (a) conducting pre-foreclosure monitoring; (b) retaining and managing
counsel to pursue the foreclosure; (c) conducting property inspections and
taking appropriate actions to preserve the value of the mortgaged property; (d)
obtaining broker price opinions; and (e) if applicable, filing damaged property
claims with insurance carriers on foreclosure mortgage loans. Bank of America
obtains an inspection of the property for loans that are delinquent sixty days
or more.

      Bank of America manages the foreclosure vendor by reviewing monthly
automated performance reports that measure the timeliness and efficiency of the
foreclosure vendor's processing of loans in the foreclosure process.


                                      S-39



                       THE POOLING AND SERVICING AGREEMENT

      The certificates (the "CERTIFICATES") will be issued pursuant to a pooling
and servicing agreement (the "POOLING AND SERVICING AGREEMENT") to be dated the
Closing Date, among the Depositor, the Servicer and the Trustee. The prospectus
contains important additional information regarding the terms and conditions of
the Pooling and Servicing Agreement and the Certificates. See "The Pooling and
Servicing Agreement" in the prospectus.

      The following summaries do not purport to be complete and are subject to
the provisions of the Pooling and Servicing Agreement which are incorporated by
reference. The Depositor plans to file a final copy of the Pooling and Servicing
Agreement with the Securities and Exchange Commission pursuant to a Current
Report on Form 8-K after the Closing Date.

ASSIGNMENT OF MORTGAGE LOANS

      In connection with the transfer and assignment of the Mortgage Loans to
the Trustee, the Depositor will deliver or cause to be delivered to the Trustee,
or a custodian for the Trustee, among other things, with respect to each
Mortgage Loan (collectively, the "MORTGAGE FILE"):

          o   the original Mortgage Note endorsed without recourse in blank or
              to the order of the Trustee (or its nominee) or a certificate
              signed by an officer of the Depositor certifying that the related
              original Mortgage Note has been lost;

          o   the original or a certified copy of the Mortgage with evidence of
              recording indicated thereon (except for any Mortgage not returned
              from the public recording office, which will be delivered to the
              Trustee or a custodian as soon as the same is available to the
              Depositor);

          o   except as described below, an assignment in recordable form of the
              Mortgage (or a copy, if such assignment has been submitted for
              recording); and

          o   if applicable, any riders or modifications to such Mortgage Note
              and Mortgage.

      Assignments of the Mortgage Loans to the Trustee (or its nominee) will be
recorded in the appropriate public office for real property records, except in
states where, in the opinion of counsel acceptable to the Trustee, such
recording is not required to protect the Trustee's interests in the Mortgage
Loan against the claim of any subsequent transferee or any successor to or
creditor of the Depositor or the Sponsor. The Trustee, or a custodian on behalf
of the Trustee, will promptly review each Mortgage File after the Closing Date
(or promptly after the Trustee's or custodian's receipt of any document
permitted to be delivered after the Closing Date) to determine if any of the
foregoing documents is missing. If any portion of the Mortgage File is not
delivered to the Trustee, or a custodian on behalf of the Trustee, and the
Depositor does not cure such omission or defect within 90 days, the Depositor
will be required to repurchase the related Mortgage Loan (or any property
acquired in respect thereof) at the Purchase Price described below to the extent
such omission or defect materially and adversely affects the value of such
Mortgage Loan.

REPURCHASES OF MORTGAGE LOANS

      Under the Mortgage Loan Purchase Agreement, the Sponsor will make certain
representations and warranties with respect to the related Mortgage Loans, as of
the date of transfer of those Mortgage Loans to the Sponsor, which will be
assigned by the Depositor to the Trustee for the benefit of the
certificateholders. To the extent that any fact, condition or event with respect
to a Mortgage Loan constitutes a breach of any of these representations made by
the Sponsor with respect thereto and such breach materially and adversely
affects the value of a Mortgage Loan or the interest of the purchaser therein,
the Sponsor will be obligated to cure such breach. If the Sponsor does not cure
such breach in accordance with the Mortgage Loan Purchase Agreement, the Sponsor
will be required (i) to repurchase such Mortgage Loan (or any property acquired
in respect thereof) at a price (the "PURCHASE PRICE") equal to 100% of the
unpaid principal balance of such Mortgage Loan plus accrued and unpaid interest
on such principal balance at the related mortgage interest rate minus, so long
as the entity repurchasing such Mortgage Loan is the servicer of such Mortgage
Loan, the Servicing Fee Rate or (ii) substitute an Eligible Substitute


                                      S-40



Mortgage Loan; however, such substitution is permitted only within two years of
the Closing Date. Any Mortgage Loan repurchased or subject to a substitution as
described in this section is referred to as a "DELETED MORTGAGE LOAN." In
addition, in the case of the breach of the representation made by the Sponsor
that a Mortgage Loan complied with any applicable federal, state or local
predatory or abusive lending laws, the Sponsor will be required to pay any costs
or damages incurred by the Issuing Entity as a result of a violation of such
laws.

      An "ELIGIBLE SUBSTITUTE MORTGAGE LOAN" generally will:

          o   have a principal balance, after deduction of all Monthly Payments
              due in the month of substitution, not in excess of the Stated
              Principal Balance of the Deleted Mortgage Loan (the amount of any
              shortfall to be deposited by the Sponsor to be held for
              distribution to the certificateholders on the related Distribution
              Date (a "SUBSTITUTION ADJUSTMENT AMOUNT"));

          o   have a Net Mortgage Rate not less than, and not more than 2%
              greater than, that of the Deleted Mortgage Loan;

          o   be of the same type as the Deleted Mortgage Loan;

          o   have a Loan-to-Value Ratio not higher than that of the Deleted
              Mortgage Loan;

          o   have a Credit Score not less than that of the Deleted Mortgage
              Loan;

          o   have a credit grade not lower in quality than that of the Deleted
              Mortgage Loan;

          o   have the same lien priority as the Deleted Mortgage Loan;

          o   have a remaining term to maturity not greater than (and not more
              than one year less than) that of the Deleted Mortgage Loan; and

          o   comply with all of the applicable representations and warranties
              in the Mortgage Loan Purchase Agreement and the Pooling and
              Servicing Agreement as of the date of substitution.

      This cure, repurchase or substitution obligation constitutes the sole
remedy available to certificateholders or the Trustee for omission of, or a
material defect in, a Mortgage Loan document or for a material breach of a
representation or warranty of the Sponsor under the Mortgage Loan Purchase
Agreement.

PAYMENTS ON MORTGAGE LOANS; ACCOUNTS

      Prior to the Closing Date, the Servicer will establish a trust account,
which account may contain funds relating to other mortgage loans serviced by the
Servicer (the "SERVICER CUSTODIAL ACCOUNT"). Funds credited to a Servicer
Custodial Account may be invested for the benefit of and at the risk of the
Servicer in certain eligible investments, as described in the Pooling and
Servicing Agreement. On the 18th day of each month (or if such day is not a
business day, the preceding business day) (the "REMITTANCE DATE"), the Servicer
will withdraw from the Servicer Custodial Account all amounts required to be
remitted by the Servicer for such month pursuant to the Pooling and Servicing
Agreement and will remit such amount to the Trustee for deposit in an account
established by the Trustee on or prior to the Closing Date (the "CERTIFICATE
ACCOUNT"). The Certificate Account will be maintained as a separate trust
account by the Trustee in trust for the benefit of certificateholders. Funds
credited to the Certificate Account may be invested at the direction of the
Trustee and for the benefit and at the risk of the Trustee in certain eligible
investments, as described in the Pooling and Servicing Agreement, that are
scheduled to mature on or prior to the Distribution Date.

COMPENSATING INTEREST

      When a mortgagor prepays a Mortgage Loan in full between due dates for the
Mortgage Loan, the mortgagor pays interest on the amount prepaid only to the
date of prepayment instead of for the entire month. Also, when a partial
prepayment is made on a Mortgage Loan together with the scheduled monthly
payment for a month on or after the related due date, the Stated Principal
Balance of the Mortgage Loan is reduced by the amount of the


                                      S-41



partial prepayment as of that due date, but the principal is not distributed to
the related certificateholders until the Distribution Date in the next month;
therefore, one month of interest shortfall accrues on the amount of such partial
prepayment.

      To reduce the adverse effect on certificateholders from the deficiency in
interest payable as a result of prepayments on a Mortgage Loan, the Servicer
will pass through Compensating Interest to the certificateholders to the limited
extent and in the manner described below.

      Pursuant to the Pooling and Servicing Agreement, the aggregate Servicing
Fee payable to the Servicer for any Distribution Date will be reduced (but not
below zero) by an amount equal to the lesser of (i) the aggregate Prepayment
Interest Shortfall for such Distribution Date and (ii) one-twelfth of 0.2500% of
the aggregate Stated Principal Balance of the Mortgage Loans as of the due date
in the month preceding the month of the related Distribution Date (such amount,
"COMPENSATING INTEREST").

      A "PREPAYMENT INTEREST SHORTFALL" on a Mortgage Loan for any Distribution
Date is equal to the excess of (x) 30 days' interest at the mortgage interest
rate (less the Servicing Fee Rate) on the amount of each prepayment on such
Mortgage Loan over (y) the amount of interest actually paid by the related
mortgagor on the amount of such prepayments during the calendar month preceding
the month of that Distribution Date.

      Any Prepayment Interest Shortfalls on the Mortgage Loans in excess of the
amount of Compensating Interest paid by the Servicer will reduce the amount of
interest available to be distributed on the Certificates from what would have
been the case in the absence of such Prepayment Interest Shortfalls. See
"Description of Certificates--Interest" in this prospectus supplement.

ADVANCES

      Subject to the following limitations, the Servicer will be required
pursuant to the Pooling and Servicing Agreement to advance (any such advance, an
"ADVANCE") on or prior to each Remittance Date an amount equal to the aggregate
of payments of principal and interest (net of the Servicing Fee) which were due
on the related due date on the Mortgage Loans and which were delinquent on the
related Determination Date. Advances made by the Servicer will be made from its
own funds or funds in the Servicer Custodial Account that do not constitute a
portion of the applicable Pool Distribution Amount for such Distribution Date.
The obligation to make an Advance with respect to any Mortgage Loan will
continue until the ultimate disposition of the REO Property or mortgaged
property relating to such Mortgage Loan. An "REO PROPERTY" is a mortgaged
property that has been acquired by the Issuing Entity through foreclosure or
grant of a deed in lieu of foreclosure. With respect to any Distribution Date,
the "DETERMINATION DATE" will be the 16th day of the month in which such
Distribution Date occurs (or if such day is not a business day, the immediately
preceding business day).

      Advances are intended to maintain a regular flow of scheduled interest and
principal payments on the Certificates rather than to guarantee or insure
against losses. The Servicer is obligated to make Advances if the Advances are,
in its good faith judgment, recoverable from future payments and collections or
insurance payments or proceeds of liquidation of the related Mortgage Loan. If
the Servicer determines on any Determination Date to make an Advance, such
Advance will be included with the distribution to certificateholders on the
related Distribution Date. In the event that the Servicer determines that an
Advance previously made is not recoverable from future payments and collections,
it is entitled to reimbursement from funds in the Servicer Custodial Account. In
the event the Servicer fails to make a required Advance, such failure will
constitute an event of default and the Trustee (if it succeeds to the
obligations of the Servicer under the Pooling and Servicing Agreement) or a
successor servicer will be obligated to make the Advance, in accordance with the
terms of the Pooling and Servicing Agreement.

OPTIONAL TERMINATION

      The circumstances under which the obligations created by the Pooling and
Servicing Agreement will terminate in respect of the Certificates are described
in "The Pooling and Servicing Agreement--Termination; Repurchase of Mortgage
Loans and Mortgage Certificates" in the prospectus. In addition, on any
Distribution Date on which the aggregate Stated Principal Balance of the
Mortgage Loans is less than 10% of the aggregate unpaid principal balance of the
Mortgage Loans as of the Cut-off Date, the Servicer may, at its option, subject
to certain conditions, purchase the Mortgage Loans and any related property of
the Issuing Entity. The purchase price will generally be equal to the sum of the
unpaid principal balances of the applicable Mortgage Loans and the fair market


                                      S-42



value of any related REO Properties held by the Issuing Entity together with the
amount of any accrued and unpaid interest on such Mortgage Loans at the
applicable mortgage interest rate. However, for so long as the Servicer is
subject to regulation by the OCC, the FDIC, the Federal Reserve or the OTS, it
may exercise its purchase option only if the aggregate fair market value of the
Mortgage Loans and REO Properties is greater than or equal to the purchase price
described in the preceding sentence.

      Distributions in respect of an optional termination will be paid to
certificateholders in order of their priority of distributions as described
below under "Description of Certificates--Priority of Distributions." The
proceeds from such a distribution may not be sufficient to distribute the full
amount to which each class is entitled if the purchase price is based in part on
the fair market value of the REO Property and such fair market value is less
than the scheduled balance of the related Mortgage Loan.

      In no event will the Issuing Entity created by the Pooling and Servicing
Agreement continue beyond the later of (a) the repurchase described above, (b)
the expiration of 21 years from the death of the survivor of the person named in
the Pooling and Servicing Agreement and (c) the final distribution to
certificateholders of amounts received in respect of the assets of the Issuing
Entity. The termination of the Issuing Entity will be effected in a manner
consistent with applicable federal income tax regulations and the REMIC status
of the Issuing Entity.

THE TRUSTEE

      Wells Fargo Bank, N.A. ("WELLS FARGO BANK") will be the Trustee and
custodian under the Pooling and Servicing Agreement.

      Wells Fargo Bank is a national banking association and a wholly-owned
subsidiary of Wells Fargo & Company. A diversified financial services company
with approximately $482 billion in assets, 23 million customers and 153,000+
employees as of December 31, 2005, Wells Fargo & Company is a U.S. bank holding
company, providing banking, insurance, trust, mortgage and consumer finance
services throughout the United States and internationally. Wells Fargo Bank
provides retail and commercial banking services and corporate trust, custody,
securities lending, securities transfer, cash management, investment management
and other financial and fiduciary services. The Depositor, the Sponsor and the
Servicer may maintain banking and other commercial relationships with Wells
Fargo Bank and its affiliates. Wells Fargo Bank maintains principal corporate
trust offices located at 9062 Old Annapolis Road, Columbia, Maryland 21045-1951
(among other locations), and its office for certificate transfer services is
located at Sixth Street and Marquette Avenue, Minneapolis, Minnesota 55479.
Under the terms of the Pooling and Servicing Agreement, the Trustee also is
responsible for securities administration, which includes pool performance
calculations, distribution calculations and the preparation of monthly
distribution reports. As securities administrator, the Trustee is responsible
for the preparation and filing of all REMIC tax returns on behalf of the Issuing
Entity and the preparation of monthly reports on Form 10-D, current reports on
Form 8-K and annual reports on Form 10-K that are required to be filed with the
Securities and Exchange Commission on behalf of the Issuing Entity. Wells Fargo
Bank has been engaged in the business of securities administration since June
30, 1995. As of March 31, 2006, Wells Fargo Bank was acting as securities
administrator with respect to more than $829,726,924,092 of outstanding
residential mortgage-backed securities.

      The Trustee also will perform administrative functions on behalf of the
Issuing Entity and for the benefit of the certificateholders pursuant to the
terms of the Pooling and Servicing Agreement. The Trustee's duties are limited
solely to its express obligations under the Pooling and Servicing Agreement
which generally include: (i) reviewing resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments; (ii) appointing any
co-trustee or separate trustee; (iii) executing and delivering to the Servicer
any request for reconveyance, deed of reconveyance or release or satisfaction of
mortgage or such instrument releasing the lien of the mortgage (as furnished by
the Servicer); (iv) terminating any custodian; (v) providing any notifications
of default; (vi) waiving any permitted defaults; and (vii) all other
administrative functions as set forth under the Pooling and Servicing Agreement.
See "The Pooling and Servicing Agreement" in this prospectus supplement.

      Trustee

      Wells Fargo Bank will act as Trustee under the Pooling and Servicing
Agreement. Wells Fargo Bank has provided corporate trust services since 1934. As
of March 31, 2006, Wells Fargo Bank acts as a trustee for a variety of
transactions and asset types, including corporate and municipal bonds,
mortgage-backed and asset-backed securities and collateralized debt obligations.
As of March 31, 2006, Wells Fargo Bank was acting as trustee on


                                      S-43



more than 1169 series of residential mortgage-backed securities with an
aggregate principal balance of approximately $292,966,468,442.

      Custodian

      Wells Fargo Bank will act as custodian of the mortgage loan files pursuant
to the Pooling and Servicing Agreement. In that capacity, Wells Fargo Bank will
be responsible for holding and safeguarding the mortgage notes and other
contents of the Mortgage Files on behalf of the Trustee and the
certificateholders. Wells Fargo Bank maintains each mortgage loan file in a
separate file folder marked with a unique bar code to assure loan-level file
integrity and to assist in inventory management. Files are segregated by
transaction or investor. Wells Fargo Bank has been engaged in the mortgage
document custody business for more than 25 years. Wells Fargo Bank maintains
document custody facilities in its Minneapolis, Minnesota headquarters and in
three regional offices located in Richfield, Minnesota, Irvine, California, and
Salt Lake City, Utah. As of March 31, 2006, Wells Fargo Bank maintains mortgage
custody vaults in each of those locations with an aggregate capacity of over
eleven million files.

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

      In the case of any appointment of a co-trustee, all rights, powers, duties
and obligations conferred or imposed upon the Trustee will be conferred or
imposed upon and exercised or performed by the Trustee and the co-trustee
jointly, unless the law of a jurisdiction prohibits the Trustee from performing
its duties under the Pooling and Servicing Agreement, in which event such
rights, powers, duties and obligations (including the holding of title to the
Issuing Entity or any portion of the Issuing Entity in any such jurisdiction)
shall be exercised and performed by the co-trustee at the direction of the
Trustee.

      See "The Pooling and Servicing Agreement--The Trustee" in the prospectus
for more information about the Trustee and its obligations under the Pooling and
Servicing Agreement.

COMPENSATION AND PAYMENT OF EXPENSES OF THE TRANSACTION PARTIES

      The Administrative Fees with respect to a Loan Group are payable out of
the interest payments received (and, in the case of the Trustee Fee, advanced)
on each Mortgage Loan in the related Loan Group. The "ADMINISTRATIVE FEES" for a
Loan Group consist of (a) a servicing fee payable to the Servicer in respect of
its servicing activities (the "SERVICING FEE") and (b) a trustee fee payable to
the Trustee (the "TRUSTEE FEE"). The Administrative Fees for a Loan Group will
accrue on the Stated Principal Balance of each Mortgage Loan in the related Loan
Group as of the due date in the month preceding the month of the related
Distribution Date at a rate (the "ADMINISTRATIVE FEE RATE") equal to the sum of
the related Servicing Fee Rate and the Trustee Fee Rate. The "SERVICING FEE
RATE" with respect to each Mortgage Loan in Loan Group 1 will be 0.3750% per
annum and with respect to each Mortgage Loan in Loan Group 2, Loan Group 3 and
Loan Group 4 will be 0.2500% per annum. The "TRUSTEE FEE RATE" with respect to
each Mortgage Loan will be 0.0025% per annum.

      The Trustee will be entitled, as compensation for its duties under the
Pooling and Servicing Agreement, to any income from investment of amounts on
deposit in the Certificate Account. The Trustee is obligated to pay certain
ongoing expenses associated with the Issuing Entity and incurred by the Trustee
in connection with its responsibilities under the Pooling and Servicing
Agreement. Those amounts will be paid by the Trustee from the Trustee's
compensation. The Servicer is obligated to pay certain ongoing expenses
associated with the Issuing Entity and incurred by the Servicer in connection
with its responsibilities under the Pooling and Servicing Agreement without
reimbursement from the Issuing Entity. Those amounts, including the fees of any
subservicer hired by the Servicer, will be paid by the Servicer out of its
Servicing Fee. For each Mortgage Loan, the amount of the Servicing Fee is
subject to adjustment with respect to certain prepayments, as described above
under "--Compensating Interest." In the event the Trustee succeeds to the role
of the Servicer, it will be entitled to the same Servicing Fee as the
predecessor servicer, and if the Trustee appoints a successor servicer under the
Pooling and Servicing Agreement, the Trustee may make such arrangements for the
compensation of such successor out of the payments on the Mortgage Loans as it
and such successor shall agree, not to exceed the Servicing Fee Rate. The
Servicer is also entitled to receive (i) all late payment fees, assumption fees,
prepayment premiums and other similar charges, (ii) all investment income earned
on amounts on deposit in the Servicer Custodial Account and (iii) the


                                      S-44



excess of the amount by which Liquidation Proceeds on a Liquidated Mortgage Loan
exceeds the unpaid principal balance thereof plus accrued interest thereon at
the Mortgage Interest Rate (such excess, "FORECLOSURE PROFITS"). The Servicer is
entitled to be reimbursed from collections on the Mortgage Loans for any
Advances previously made by it, as described under "The Pooling and Servicing
Agreement--Periodic Advances and Servicing Advances" in the prospectus.

      The Trustee is entitled to be reimbursed from and indemnified by the
Issuing Entity prior to distributions for certificateholders for certain
expenses incurred by it in connection with its responsibilities under the
Pooling and Servicing Agreement.

      The Depositor, the Servicer and the Sponsor are entitled to
indemnification and reimbursement of certain expenses from the Issuing Entity
under the Pooling and Servicing Agreement as discussed in the prospectus under
the headings "The Depositor," "Servicing of the Mortgage Loans--The Servicers,"
and "The Pooling and Servicing Agreement--Certain Matters Regarding the
Depositor, the Sponsor and the Master Servicer."

VOTING RIGHTS

      Voting rights for certain actions specified in the Pooling and Servicing
Agreement will be allocated as follows:

          o   99% of all voting rights will be allocated among the holders of
              the Senior Certificates (other than the Class 1-A-R Certificates)
              and Subordinate Certificates based on the outstanding balances of
              their Certificates.

          o   1% of all voting rights will be allocated to the holder of the
              Class 1-A-R Certificate.

      The voting rights allocated to each class will be allocated among the
Certificates of such class based on their Percentage Interests.

      The "PERCENTAGE INTEREST" of a Certificate of a class is the percentage
obtained by dividing the initial principal balance of such Certificate by the
initial class balance of such class.

                           DESCRIPTION OF CERTIFICATES

      The Certificates will consist of (i) the fourteen classes of Offered
Certificates listed in the table on page S-6 of this prospectus supplement and
(ii) the Class B-4, Class B-5 and Class B-6 Certificates, which are not offered
by this prospectus supplement.

      The Group 1 Senior Certificates will evidence an initial beneficial
ownership interest of approximately 96.00% in Loan Group 1. The Group 2 Senior
Certificates will each evidence an initial beneficial ownership interest of
approximately 96.00% in Loan Group 2. The Group 3 Senior Certificates will
evidence an initial beneficial ownership interest of approximately 96.00% in
Loan Group 3. The Group 4 Senior Certificates will evidence an initial
beneficial ownership interest of approximately 96.00% in Loan Group 4. The
Subordinate Certificates will evidence the remaining initial beneficial
ownership interest in all of the Loan Groups.

      The "FINAL SCHEDULED MATURITY DATE" for the Offered Certificates will be
the Distribution Date in June 2036. The Final Scheduled Maturity Date represents
the Distribution Date in the month following the latest maturity date of any
Mortgage Loan. The actual final payment on your Certificates could occur earlier
or later than the Final Scheduled Maturity Date.

DENOMINATIONS AND FORM

      The Offered Certificates (other than the Class 1-A-R Certificate) will be
issuable in book-entry form only (the "BOOK-ENTRY CERTIFICATES"). The Class
1-A-R Certificate will be issued in definitive, fully-registered form (such
form, the "DEFINITIVE CERTIFICATEs"). The following table sets forth the
original Certificate form, the minimum denomination and the incremental
denomination of each class of Offered Certificates. The Offered Certificates are
not intended to be and should not be directly or indirectly held or beneficially
owned in amounts lower than such minimum denominations.


                                      S-45





                         FORM AND DENOMINATIONS OF OFFERED CERTIFICATES

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

Senior Certificates (other than Class 1-A-R)       Book-Entry           $1,000            $1
Class 1-A-R                                        Definitive            $100            N/A
Classes B-1, B-2 and B-3                           Book-Entry          $25,000            $1


DISTRIBUTIONS

      Distributions on the Certificates will be made by the Trustee on the 20th
day of each month (or, if not a business day, the next business day), commencing
in June 2006 (each, a "DISTRIBUTION DATE"), to the persons in whose names such
Certificates are registered at the close of business on the last business day of
the month preceding the month of such Distribution Date (the "RECORD DATE").

      Distributions on each Distribution Date will be made by check mailed to
your address as it appears on the applicable certificate register or, if you
have notified the Trustee in writing in accordance with the Pooling and
Servicing Agreement, by wire transfer in immediately available funds to your
account at a bank or other depository institution having appropriate wire
transfer facilities. However, the final distribution in retirement of a
Certificate will be made only upon presentment and surrender of the Certificate
at the Corporate Trust Office of the Trustee in Minnesota. If you own a
Book-Entry Certificate, distributions will be made to you through the facilities
of DTC, as described under "Description of Certificates--Book-entry Form" in the
prospectus.

      Interest will accrue on each class of Certificates during each one-month
period ending on the last day of the month preceding the month in which each
Distribution Date occurs (each, an "INTEREST ACCRUAL PERIOD"). The initial
Interest Accrual Period will be deemed to have commenced on May 1, 2006.
Interest which accrues on each class of Certificates during an Interest Accrual
Period will be calculated on the assumption that distributions in reduction of
the class balances thereof on the Distribution Date in that Interest Accrual
Period are made on the first day of the Interest Accrual Period. Interest will
be calculated and payable on the basis of a 360-day year consisting of twelve
30-day months, regardless of the actual number of days in the related Interest
Accrual Period.

POOL DISTRIBUTION AMOUNT

      The "POOL DISTRIBUTION AMOUNT" for each Loan Group with respect to any
Distribution Date, as more fully described in the Pooling and Servicing
Agreement, will be determined by reference to amounts received in connection
with the Mortgage Loans in such Loan Group, less certain reimbursable expenses
and indemnity payments pursuant to the Pooling and Servicing Agreement, and will
generally be equal to the sum of:

      (a)   all scheduled installments of interest (net of the related
Administrative Fees) and principal due on the Mortgage Loans in such Loan Group
on the due date in the calendar month in which such Distribution Date occurs and
received prior to the related Determination Date, together with any Advances in
respect thereof or any Compensating Interest allocable to the Mortgage Loans in
such Loan Group;

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

      (c)   all partial or full prepayments received on the Mortgage Loans in
such Loan Group during the calendar month preceding the month of that
Distribution Date;

      (d)   amounts received with respect to such Distribution Date as the
Substitution Adjustment Amount or Purchase Price in respect of any Deleted
Mortgage Loan in such Loan Group or amounts received in connection with the
optional termination of the Issuing Entity by the Servicer as of such
Distribution Date, reduced by amounts in reimbursement for Advances previously
made and other amounts as to which the Servicer is entitled to be reimbursed
pursuant to the Pooling and Servicing Agreement; and


                                      S-46



      (e)   any amounts required to be paid by the Sponsor to the Issuing Entity
during the prior calendar month with respect to the Mortgage Loans in such Loan
Group as a result of a breach of certain representations and warranties
regarding compliance with predatory or abusive lending laws (the "REIMBURSEMENT
AMOUNT"), net of any portion thereof used to reimburse any class of Certificates
that previously bore a loss as a result of such breach.

PRIORITY OF DISTRIBUTIONS

      The aggregate amount available for distribution to the Group 1 Senior
Certificates on each Distribution Date (except to the extent of
cross-collateralization payments) will be the Pool Distribution Amount for Loan
Group 1. The aggregate amount available for distribution to the Group 2 Senior
Certificates on each Distribution Date (except to the extent of
cross-collateralization payments) will be the Pool Distribution Amount for Loan
Group 2. The aggregate amount available for distribution to the Group 3 Senior
Certificates on each Distribution Date (except to the extent of
cross-collateralization payments) will be the Pool Distribution Amount for Loan
Group 3. The aggregate amount available for distribution to the Group 4 Senior
Certificates on each Distribution Date (except to the extent of
cross-collateralization payments) will be the Pool Distribution Amount for Loan
Group 4. The Subordinate Certificates will be entitled to distributions from the
Pool Distribution Amounts for all of the Loan Groups.

      On each Distribution Date, the Pool Distribution Amount or Amounts for
each Loan Group or Loan Groups will be allocated in the following order of
priority (the "POOL DISTRIBUTION AMOUNT ALLOCATION"):

      (a)   to the Senior Certificates of the related Group to pay interest;

      (b)   to the classes of Senior Certificates of the related Group, based on
the applicable Senior Principal Distribution Amount, as described below under
"--Principal," to pay principal;

      (c)   subject to any payments described under "--Cross Collateralization,"
to each class of Subordinate Certificates, first to pay interest and then to pay
principal in the order of numerical class designations, beginning with the Class
B-1 Certificates; and

      (d)   to the Class 1-A-R Certificate any remaining amounts, subject to the
limitations set forth below under "--Interest" and "--Principal."

INTEREST

      The pass-through rate for each class of Offered Certificates for each
Distribution Date is as set forth or described in the table on page S-6 of this
prospectus supplement.

      On each Distribution Date, to the extent of the applicable Pool
Distribution Amount or Amounts, each class of Certificates will be entitled to
receive interest (as to each such class, the "INTEREST DISTRIBUTION AMOUNT")
with respect to the related Interest Accrual Period. The Interest Distribution
Amount for any class of Certificates will be equal to the sum of (i) interest
accrued during the related Interest Accrual Period at the applicable
pass-through rate on the related class balance, reduced by the applicable
portion of any Net Interest Shortfall as described below, and (ii) the sum of
the amounts, if any, by which the amount described in clause (i) above on each
prior Distribution Date exceeded the amount actually distributed in respect of
interest on such prior Distribution Dates and not subsequently distributed.

      The interest entitlement described in clause (i) of the Interest
Distribution Amount for each class of Certificates will be reduced by the amount
of Net Interest Shortfalls (regardless of which Loan Group the shortfall is
attributable to) for such Distribution Date allocated to such class as described
below.

      With respect to any Distribution Date, the "NET INTEREST SHORTFALL" is
equal to the sum of (i) the shortfall in interest received with respect to any
Mortgage Loan as a result of a Relief Act Reduction and (ii) any Non-Supported
Interest Shortfalls. Net Interest Shortfalls on any Distribution Date will be
allocated pro rata among all classes Certificates based on the amount of
interest accrued on each such class of Certificates on such Distribution Date
before taking into account any reduction in such amounts resulting from such Net
Interest Shortfalls. A "RELIEF ACT REDUCTION" is a reduction in the amount of
the monthly interest payment on a Mortgage Loan pursuant to the Servicemembers
Civil Relief Act or similar state legislation. With respect to any Distribution
Date, the "NON-SUPPORTED INTEREST SHORTFALL" is the amount by which the
aggregate of Prepayment Interest Shortfalls for the Mortgage Loans for such
Distribution Date exceeds the Compensating Interest for such Distribution Date.
See "The


                                      S-47



Pooling and Servicing Agreement--Compensating Interest" in this prospectus
supplement and "Certain Legal Aspects of the Mortgage Loans--Servicemembers
Civil Relief Act and Similar Laws" in the prospectus.

      Allocations of the interest portion of Realized Losses on the Mortgage
Loans in a Loan Group first to the Subordinate Certificates in reverse numerical
order will result from the priority of distributions first to the Senior
Certificates of the related Group and then to the classes of Subordinate
Certificates in numerical order, of the applicable Pool Distribution Amount as
described above under "--Priority of Distributions."

      After the Senior Credit Support Depletion Date, the Senior Certificates of
a Group will bear the risk of loss for the interest portion of any Realized
Losses on the Mortgage Loans in the related Loan Group pro rata based on the
interest entitlement described in clause (i) of the applicable Interest
Distribution Amount.

      Accrued interest to be distributed on any Distribution Date will be
calculated for each class of Certificates on the basis of the related class
balance immediately prior to such Distribution Date.

      If on a particular Distribution Date, the applicable Pool Distribution
Amount or Amounts applied in the order described above under "--Priority of
Distributions" is not sufficient to make a full distribution of the Interest
Distribution Amount for each class entitled to distributions therefrom, interest
will be distributed on each class of equal priority pro rata based on the
Interest Distribution Amount the class would otherwise have been entitled to
receive in the absence of such shortfall. Any unpaid amount will be carried
forward and added to the Interest Distribution Amount of that class on the next
Distribution Date. No amounts will be payable on any class that is no longer
outstanding. Such a shortfall could occur, for example, if Realized Losses on
the Mortgage Loans in a Loan Group were exceptionally high or were concentrated
in a particular month. Any such unpaid amount will not bear interest.

      Under certain circumstances, the unpaid interest amounts for a Group of
Senior Certificates will be payable from amounts otherwise distributable as
principal on the Subordinate Certificates in reverse order of numerical
designation. See "--Cross-Collateralization" in this prospectus supplement.

      The "CLASS BALANCE" of a class of Certificates at any time will equal its
initial class balance less (i) all distributions of principal made to such class
and (ii) losses allocated to such class as described under "--Allocation of
Losses."

      The "GROUP SUBORDINATE AMOUNT" for any Distribution Date and any Loan
Group is equal to the excess of the Pool Principal Balance for such Loan Group
over the aggregate class balance of the Senior Certificates of the related Group
immediately prior to such date.

      The "NET MORTGAGE INTEREST RATE" of a Mortgage Loan is the excess of its
mortgage interest rate over the applicable Administrative Fee Rate.

PRINCIPAL

      On each Distribution Date, the Principal Amount for a Loan Group will be
distributed (i) as principal of the Senior Certificates of the related Group in
an amount up to the Senior Principal Distribution Amount for such Loan Group and
(ii) as principal of the Subordinate Certificates in an amount up to the
Subordinate Principal Distribution Amount for such Loan Group.

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

      (a)   all monthly payments of principal due on each Mortgage Loan in such
Loan Group on the related due date;

      (b)   the principal portion of the Purchase Price (net of unreimbursed
Advances and other amounts as to which the Servicer will be entitled to be
reimbursed pursuant to the Pooling and Servicing Agreement) of each Mortgage
Loan in such Loan Group that was purchased by the Depositor or the Sponsor as of
that Distribution Date and the principal portion of any amount allocated to such
Loan Group in connection with the optional termination of the Issuing Entity by
the Servicer as described under "The Pooling and Servicing Agreement--Optional
Termination";

      (c)   any Substitution Adjustment Amount (net of unreimbursed Advances and
other amounts as to which the related Servicer is entitled to be reimbursed
pursuant to the Pooling and Servicing Agreement) in


                                      S-48



connection with a Deleted Mortgage Loan in such Loan Group received in the
calendar month preceding the month of that Distribution Date;

      (d)   any Liquidation Proceeds allocable to recoveries of principal of
Mortgage Loans in such Loan Group that are not yet Liquidated Mortgage Loans
received during the calendar month preceding the month of that Distribution
Date;

      (e)   with respect to each Mortgage Loan in such Loan Group that became a
Liquidated Mortgage Loan during the calendar month preceding the month of that
Distribution Date, the amount of the Liquidation Proceeds (other than
Foreclosure Profits) allocable to principal received with respect to that
Mortgage Loan during the calendar month preceding the month of that Distribution
Date; and

      (f)   all full and partial principal prepayments by mortgagors on the
Mortgage Loans in such Loan Group received during the calendar month preceding
the month of that Distribution Date.

      The amounts described in clauses (a) through (d) are referred to as
"SCHEDULED PRINCIPAL PAYMENTS." The amounts described in clauses (e) and (f) are
referred to as "UNSCHEDULED PRINCIPAL PAYMENTS."

      Senior Principal Distribution Amount

      With respect to the Group 1 Senior Certificates:

      On each Distribution Date, an amount equal to the lesser of (a) the Senior
Principal Distribution Amount for Loan Group 1 for such Distribution Date and
(b) the Pool Distribution Amount for Loan Group 1 remaining after distributions
of interest on the Group 1 Senior Certificates will be distributed as principal
to the following classes of Group 1 Senior Certificates, sequentially, as
follows:

      first, to the Class 1-A-R Certificate, until its class balance has been
reduced to zero; and

      second, concurrently, to the Class 1-A-1 and Class 1-A-2 Certificates, pro
rata, until their class balances have been reduced to zero.

      With respect to the Group 2 Senior Certificates:

      On each Distribution Date, an amount equal to the lesser of (a) the Senior
Principal Distribution Amount for Loan Group 2 for such Distribution Date and
(b) the Pool Distribution Amount for Loan Group 2 remaining after distributions
of interest on the Group 2 Senior Certificates will be distributed as principal
to the following classes of Group 2 Senior Certificates, concurrently, as
follows:

      (a) approximately 95.8333950894%, concurrently, as follows:

            (i) approximately 34.9528137015% to Class 2-A-1 Certificates, until
      their class balance has been reduced to zero; and

            (ii) approximately 65.0471862985%, concurrently, to Class 2-A-2 and
      Class 2-A-3 Certificates, pro rata, until their class balances have been
      reduced to zero; and

      (b) approximately 4.1666049106% to the Class 2-A-4 Certificates, until
their class balance has been reduced to zero.

      With respect to the Group 3 Senior Certificates:

      On each Distribution Date, an amount equal to the lesser of (a) the Senior
Principal Distribution Amount for Loan Group 3 for such Distribution Date and
(b) the Pool Distribution Amount for Loan Group 3 remaining after distributions
of interest on the Group 3 Senior Certificates will be distributed concurrently
as principal to the Class 3-A-1 and Class 3-A-2 Certificates, pro rata, until
their class balances have been reduced to zero.

      With respect to the Group 4 Senior Certificates:

      On each Distribution Date, an amount equal to the lesser of (a) the Senior
Principal Distribution Amount for Loan Group 4 for such Distribution Date and
(b) the Pool Distribution Amount for Loan Group 4 remaining after distributions
of interest on the Group 4 Senior Certificates will be distributed concurrently
as principal to the Class 4-A-1 and Class 4-A-2 Certificates, pro rata, until
their class balances have been reduced to zero.


                                      S-49



      The "SENIOR CREDIT SUPPORT DEPLETION DATE" is the date on which the
aggregate class balance of the Subordinate Certificates has been reduced to
zero.

      The "SENIOR PRINCIPAL DISTRIBUTION AMOUNT" for a Loan Group for any
Distribution Date will equal the sum of:

      (a)   the Senior Percentage for such Loan Group of the Scheduled Principal
Payments for that Distribution Date; and

      (b)   the Senior Prepayment Percentage for such Loan Group of the
Unscheduled Principal Payments for that Distribution Date.

      "STATED PRINCIPAL BALANCE" means, as to any Mortgage Loan and due date,
the unpaid principal balance of such Mortgage Loan as of such due date, as
specified in the amortization schedule at the time relating thereto (before any
adjustment to such amortization schedule by reason of any moratorium or similar
waiver or grace period), after giving effect to any previous partial principal
prepayments and Liquidation Proceeds (net of unreimbursed expenses and
unreimbursed Advances) allocable to principal received and to the payment of
principal due on such due date and irrespective of any delinquency in payment by
the related mortgagor and after giving effect to any Deficient Valuation.

      The "POOL PRINCIPAL BALANCE" for a Loan Group with respect to any
Distribution Date equals the aggregate Stated Principal Balances of the Mortgage
Loans in such Loan Group outstanding on the due date in the month preceding the
month of such Distribution Date.

      The "SENIOR PERCENTAGE" for a Loan Group for any Distribution Date will
equal (i) the sum of the aggregate class balance of the Senior Certificates of
the related Group immediately prior to such date, divided by (ii) the Pool
Principal Balance of the such Loan Group for such date.

      The "SUBORDINATE PERCENTAGE" for a Loan Group for any Distribution Date
will equal 100% minus the Senior Percentage for such Loan Group for such date.

      As of the Cut-off Date, the approximate Senior Percentage and Subordinate
Percentage for each Loan Group are expected to be as follows:

                                       SENIOR              SUBORDINATE
        LOAN GROUP                   PERCENTAGE             PERCENTAGE
        ---------------          ------------------     -----------------
        Loan Group 1                  95.9998%               4.0002%
        Loan Group 2                  95.9998%               4.0002%
        Loan Group 3                  95.9996%               4.0004%
        Loan Group 4                  95.9997%               4.0003%

      The "SENIOR PREPAYMENT PERCENTAGE" for a Loan Group will be for any
Distribution Date occurring during the periods set forth below will be as
follows:

DISTRIBUTION DATE OCCURRING IN              SENIOR PREPAYMENT PERCENTAGE
--------------------------------     ------------------------------------------
June 2006 through May 2013           100%;
June 2013 through May 2014           the applicable Senior Percentage, plus 70%
                                     of the applicable Subordinate Percentage;
June 2014 through May 2015           the applicable Senior Percentage, plus 60%
                                     of the applicable Subordinate Percentage;
June 2015 through May 2016           the applicable Senior Percentage, plus 40%
                                     of the applicable Subordinate Percentage;
June 2016 through May 2017           the applicable Senior Percentage, plus 20%
                                     of the applicable Subordinate Percentage;
                                     and
June 2017 and thereafter             the applicable Senior Percentage;

provided, however, (i) if on any Distribution Date the percentage equal to (x)
the sum of the aggregate class balances of the Senior Certificates divided by
(y) the aggregate Pool Principal Balance (such percentage the "TOTAL SENIOR
PERCENTAGE") exceeds such percentage as of the Closing Date, then the Senior
Prepayment Percentage for each Loan Group for such Distribution Date will equal
100%, (ii) if on any Distribution Date prior to the June 2009 Distribution Date,
prior to giving effect to any distributions, the percentage equal to the
aggregate class balance of


                                      S-50



the Subordinate Certificates divided by the aggregate Pool Principal Balance
(the "TOTAL SUBORDINATE PERCENTAGE") is greater than or equal to twice such
percentage calculated as of the Closing Date, then the Senior Prepayment
Percentage for each Loan Group for such Distribution Date will equal the Senior
Percentage for such Loan Group plus 50% of the Subordinate Percentage for such
Loan Group and (iii) if on any Distribution Date on or after the June 2009
Distribution Date, prior to giving effect to any distributions, the Total
Subordinate Percentage is greater than or equal to twice such percentage
calculated as of the Closing Date, then the Senior Prepayment Percentage for
such Loan Group for such Distribution Date will equal the Senior Percentage for
such Loan Group.

      No decrease in the share of the applicable Subordinate Percentage (for
calculating the applicable Senior Prepayment Percentage) will occur, and the
Senior Prepayment Percentages for such prior period will be calculated without
regard to clause (ii) or (iii) of the applicable paragraph above, if as of any
Distribution Date as to which any such decrease applies, (i) the outstanding
principal balance of all Mortgage Loans (including, for this purpose, any
Mortgage Loans in foreclosure, any REO Property and any Mortgage Loan for which
the mortgagor has filed for bankruptcy after the Closing Date) delinquent 60
days or more (averaged over the preceding six-month period), as a percentage of
the aggregate class balance of the Subordinate Certificates, is equal to or
greater than 50% or (ii) cumulative Realized Losses with respect to the Mortgage
Loans exceed the percentages of the aggregate class balance of the Subordinate
Certificates as of the Closing Date (the "ORIGINAL SUBORDINATE PRINCIPAL
BALANCE"), indicated below:

                                                    PERCENTAGE OF
                                                      ORIGINAL
                                                     SUBORDINATE
            DISTRIBUTION DATE OCCURRING IN        PRINCIPAL BALANCE
            -------------------------------      -------------------
            June 2006 through May 2009                   20%
            June 2009 through May 2014                   30%
            June 2014 through May 2015                   35%
            June 2015 through May 2016                   40%
            June 2016 through May 2017                   45%
            June 2017 and thereafter                     50%

      This disproportionate allocation of certain unscheduled payments in
respect of principal will have the effect of accelerating the amortization of
the Senior Certificates of a Group while, in the absence of Realized Losses on
the Mortgage Loans in the related Loan Group, increasing the relative interest
in the Pool Principal Balance evidenced by the Subordinate Certificates.
Increasing the interest of the Subordinate Certificates relative to that of the
applicable Senior Certificates of such Group is intended to preserve the
availability of the subordination provided by the Subordinate Certificates.

      The "SUBORDINATE PREPAYMENT PERCENTAGE" for a Loan Group as of any
Distribution Date will equal 100% minus the Senior Prepayment Percentage for
such Loan Group for such date.

      If on any Distribution Date the allocation to any class of Senior
Certificates then entitled to distributions of full and partial principal
prepayments and other amounts to be allocated in accordance with the applicable
Senior Prepayment Percentage, as described above, would reduce the outstanding
class balance of such class below zero, the distribution to that class of the
applicable Senior Prepayment Percentage of those amounts for such Distribution
Date will be limited to the percentage necessary to reduce the related class
balance to zero.

      Subordinate Principal Distribution Amount

      On each Distribution Date, each class of Subordinate Certificates that is
entitled to receive a principal distribution will receive its pro rata share
(based on the class balances of all the Subordinate Certificates in respect of
clause (a) of the Subordinate Principal Distribution Amounts and the class
balances of all the Subordinate Certificates that are entitled to receive a
principal distribution, in respect of clause (b) of the Subordinate Principal
Distribution Amounts) of the Subordinate Principal Distribution Amounts for all
of the Loan Groups, to the extent that the remaining Pool Distribution Amounts
from all of the Loan Groups are sufficient therefor. With respect to each class
of Subordinate Certificates if on any Distribution Date the Fractional Interest
is less than the Fractional Interest for that class on the Closing Date, no
classes of Subordinate Certificates with higher numerical designations than such
class will be entitled to receive a principal distribution in respect of clause
(b) of the Subordinate Principal Distribution Amounts.


                                      S-51



      Distributions of principal on each class of Subordinate Certificates that
is entitled to receive a principal distribution on a Distribution Date will be
made sequentially to each class of Subordinate Certificates in the order of
their numerical class designations, beginning with the Class B-1 Certificates,
until each such class has received its respective pro rata share for the
Distribution Date.

      The "FRACTIONAL INTEREST" with respect to any Distribution Date and each
class of Subordinate Certificates will equal (i) the aggregate of the class
balances immediately prior to such Distribution Date of all classes of
Subordinate Certificates that have higher numerical class designations than such
class, divided by (ii) the aggregate Pool Principal Balance for such
Distribution Date.

      The approximate Fractional Interests for the Subordinate Certificates on
the Closing Date are expected to be as follows:

                      Class B-1                        2.05%
                      Class B-2                        1.35%
                      Class B-3                        0.80%
                      Class B-4                        0.50%
                      Class B-5                        0.25%
                      Class B-6                        0.00%

      The "SUBORDINATE PRINCIPAL DISTRIBUTION AMOUNT" for a Loan Group for any
Distribution Date will equal the sum of:

      (a)   the Subordinate Percentage for such Loan Group of the Scheduled
Principal Payments for such Distribution Date; and

      (b)   the Subordinate Prepayment Percentage for such Loan Group of the
Unscheduled Principal Payments for such Distribution Date.

      Class 1-A-R Certificate

      The Class 1-A-R Certificate will remain outstanding for so long as the
Issuing Entity exists, whether or not it is receiving current distributions of
principal or interest. In addition to distributions of interest and principal as
described above, on each Distribution Date, the holder of the Class 1-A-R
Certificate will be entitled to receive any Pool Distribution Amount for a Loan
Group remaining after the payment of (i) interest and principal on the Senior
Certificates of the related Group and (ii) interest and principal on the
Subordinate Certificates, as described above. It is not anticipated that there
will be any significant amounts remaining for any such distribution.

CROSS-COLLATERALIZATION

      On each Distribution Date prior to the Senior Credit Support Depletion
Date but on or after the date on which the class balances of the Senior
Certificates of a Group have been reduced to zero, amounts otherwise
distributable as Unscheduled Principal Payments with respect to the related Loan
Group on the Subordinate Certificates will be paid as principal to the remaining
classes of Senior Certificates of the other Groups in accordance with the
priorities set forth for the applicable Group under "--Principal--Senior
Principal Distribution Amount," provided that on such Distribution Date (a) the
Total Subordinate Percentage for such Distribution Date is less than twice the
initial Total Subordinate Percentage or (b) the average outstanding principal
balance of the Mortgage Loans (including, for this purpose, any Mortgage Loan in
foreclosure, any REO Property and any Mortgage Loan in such Loan Group for which
the mortgagor has filed for bankruptcy after the Closing Date) delinquent 60
days or more over the last six months as a percentage of the aggregate class
balance of the Subordinate Certificates is greater than or equal to 50%. If the
Senior Certificates of two or more Groups remain outstanding, the distributions
described above will be made to the Senior Certificates of such Groups, pro
rata, in proportion to the aggregate class balance of the Senior Certificates of
each such Group.

      In addition, if on any Distribution Date, after giving effect to the
preceding paragraph, the aggregate class balance of the Senior Certificates of a
Group (after giving effect to distributions to be made on such Distribution
Date) is greater than the Adjusted Pool Amount of the related Loan Group (any
such Group, the "UNDERCOLLATERALIZED GROUP" and any such excess, the
"UNDERCOLLATERALIZED AMOUNT"), all amounts otherwise distributable as principal
on the Subordinate Certificates, in reverse order of their numerical
designations, will be


                                      S-52



paid as principal to the Senior Certificates of the Undercollateralized Group
together with the applicable Senior Principal Distribution Amount in accordance
with the priorities set forth under "--Principal--Senior Principal Distribution
Amount," until the aggregate class balance of the Senior Certificates of the
Undercollateralized Group equals the Adjusted Pool Amount of the related Loan
Group.

      Also, the amount of any unpaid interest shortfall amounts described in
clause (ii) of the definition of Interest Distribution Amount with respect to
the Undercollateralized Group (including any interest shortfall amount for such
Distribution Date) will be paid to the Undercollateralized Group in accordance
with clause (i) in the definition of "Pool Distribution Amount Allocation" prior
to the payment of any Undercollateralized Amount from amounts otherwise
distributable as principal on the Subordinate Certificates, in reverse order of
their numerical designations.

      If two or more groups are Undercollateralized Groups, the distributions
described above will be made, pro rata, in proportion to their
Undercollateralized Amounts.

ALLOCATION OF LOSSES

      On each Distribution Date, any Realized Loss will be allocated first to
the Subordinate Certificates, in the reverse order of their numerical class
designations (beginning with the class of Subordinate Certificates then
outstanding with the highest numerical class designation), in each case until
the class balance of the respective class of Subordinate Certificates has been
reduced to zero, and then to the Senior Certificates of the related Group pro
rata based on their respective class balances.

      Such allocation will be effected on each such Distribution Date by
reducing the class balance of the class of Subordinate Certificates then
outstanding with the highest numerical class designation if and to the extent
that the sum of the class balances of all classes of the Senior Certificates and
the Subordinate Certificates (after taking into account the amount of all
distributions to be made on such Distribution Date) exceeds the sum of the
Adjusted Pool Amounts for such Distribution Date for all Loan Groups.

      After the Senior Credit Support Depletion Date, on each Distribution Date,
the aggregate of the class balances of all classes of Senior Certificates of
each related Group then outstanding will be reduced if and to the extent that
such aggregate class balance (after taking into account the amount of all
distributions to be made on such Distribution Date) exceeds the Adjusted Pool
Amount for the related Loan Group for such Distribution Date. The amount of any
such reduction will be allocated among the Senior Certificates of such Group pro
rata based on their respective class balances.

      After the Senior Credit Support Depletion Date (and, in the case of the
Class 2-A-3 Certificates, once the Class 2-A-4 Certificates are no longer
outstanding), the class balance of a class of Super Senior Support Certificates
will be reduced not only by the principal portion of Realized Losses allocated
to such class as provided in the preceding paragraph but also by the principal
portion of Realized Losses allocated to the related class or classes of Super
Senior Certificates that are indicated in the following table.

      The related classes of Super Senior and Super Senior Support Certificates
are as follows:

             SUPER SENIOR CLASSES               SUPER SENIOR SUPPORT CLASSES
---------------------------------------------   ----------------------------
                     1-A-1                                  1-A-2
                   2-A-2(1)                                2-A-3(1)
         2-A-1, 2-A-2(1) and 2-A-3(1)                       2-A-4
                     3-A-1                                  3-A-2
                     4-A-1                                  4-A-2

_______________

(1) While the Class 2-A-4 Certificates are outstanding, the Class 2-A-1, Class
2-A-2 and Class 2-A-3 Certificates will be Super Senior Certificates related to
the Class 2-A-4 Certificates. After the Class 2-A-4 Certificates are no longer
outstanding, the Class 2-A-3 Certificates will be Super Senior Support
Certificates related to the Class 2-A-2 Certificates.

      In the event an amount is received with respect to a Mortgage Loan in a
Loan Group as to which a Realized Loss had previously been allocated to a class
of Certificates (a "RECOVERY"), such Recovery will be distributed to the Senior
Certificates of such Group and the then-outstanding Subordinate Certificates in
the same manner as Liquidation Proceeds are distributed.


                                      S-53



      In general, a "REALIZED LOSS" means, (a) with respect to a Liquidated
Mortgage Loan, the amount by which the remaining unpaid principal balance of the
Mortgage Loan exceeds the amount of Liquidation Proceeds applied to the
principal balance of the related Mortgage Loan and (b) a Bankruptcy Loss.

      "BANKRUPTCY LOSSES" are losses that are incurred as a result of Debt
Service Reductions or Deficient Valuations. As used in this prospectus
supplement, a "DEFICIENT VALUATION" occurs when a bankruptcy court establishes
the value of a mortgaged property at an amount less than the then-outstanding
principal balance of the Mortgage Loan secured by such mortgaged property or
reduces the then-outstanding principal balance of a Mortgage Loan. In the case
of a reduction in the value of the related mortgaged property, the amount of the
secured debt could be reduced to such value, and the holder of such Mortgage
Loan thus would become an unsecured creditor to the extent the then-outstanding
principal balance of such Mortgage Loan exceeds the value so assigned to the
mortgaged property by the bankruptcy court. In addition, certain other
modifications of the terms of a Mortgage Loan can result from a bankruptcy
proceeding, including the reduction (a "DEBT SERVICE REDUCTION") of the amount
of the Monthly Payment on the related Mortgage Loan. However, none of these
events will be considered a Debt Service Reduction or Deficient Valuation so
long as the Servicer is pursuing any other remedies that may be available with
respect to the related Mortgage Loan and (i) such Mortgage Loan is not in
default with respect to any payment due thereunder or (ii) scheduled Monthly
Payments are being advanced by the Servicer without giving effect to any Debt
Service Reduction.

      A "LIQUIDATED MORTGAGE LOAN" is a defaulted Mortgage Loan as to which the
Servicer has determined that all recoverable Liquidation Proceeds have been
received.

      With respect to any Distribution Date, the "ADJUSTED POOL AMOUNT" for a
Loan Group will equal the aggregate unpaid principal balance of the Mortgage
Loans in such Loan Group as of the Cut-off Date minus the sum of (i) all amounts
in respect of principal received in respect of the Mortgage Loans in such Loan
Group (including amounts received as Advances, principal prepayments and
Liquidation Proceeds in respect of principal) and distributed on the
Certificates on such Distribution Date and all prior Distribution Dates and (ii)
the principal portion of all Realized Losses (other than Debt Service
Reductions) incurred on the Mortgage Loans in such Loan Group from the Cut-off
Date through the end of the month preceding such Distribution Date.

RESTRICTIONS ON TRANSFER OF THE CLASS 1-A-R CERTIFICATE

      The Class 1-A-R Certificate will be subject to the following restrictions
on transfer and will contain a legend describing such restrictions.

      The REMIC provisions of the Code impose certain taxes on (i) transferors
of residual interests to, or agents that acquire residual interests on behalf
of, Disqualified Organizations (as defined in the prospectus) and (ii) certain
Pass-Through Entities (as defined in the prospectus) that have Disqualified
Organizations as beneficial owners. No tax will be imposed on a Pass-Through
Entity (other than an "electing large partnership" (as defined in the
prospectus)) with respect to the Class 1-A-R Certificate to the extent it has
received an affidavit from the owner thereof that such owner is not a
Disqualified Organization or a nominee for a Disqualified Organization.

      The Pooling and Servicing Agreement will provide that no legal or
beneficial interest in the Class 1-A-R Certificate may be transferred to or
registered in the name of any person unless:

          o   the proposed purchaser provides to the Trustee an affidavit to the
              effect that, among other items, such transferee is not a
              Disqualified Organization and is not purchasing the Class 1-A-R
              Certificate as an agent for a Disqualified Organization (i.e., as
              a broker, nominee or other middleman thereof); and

          o   the transferor states in writing to the Trustee that it has no
              actual knowledge that such affidavit is false.

      Further, such affidavit will require the transferee to affirm that it (a)
historically has paid its debts as they have come due and intends to do so in
the future, (b) understands that it may incur tax liabilities with respect to
the Class 1-A-R Certificate in excess of cash flows generated thereby, (c)
intends to pay taxes associated with holding the Class 1-A-R Certificate as such
taxes become due and (d) will not transfer the Class 1-A-R Certificate to any
person or entity that does not provide a similar affidavit. The transferor must
certify in writing to the Trustee that, as


                                      S-54



of the date of the transfer, it had no knowledge or reason to know that the
affirmations made by the transferee pursuant to the preceding sentence were
false.

      Treasury regulations applicable to REMICs (the "REMIC REGULATIONS")
disregard certain transfers of residual interests, in which case the transferor
would continue to be treated as the owner of a residual interest and thus would
continue to be subject to tax on its allocable portion of the net income of the
applicable REMIC. Under the REMIC Regulations, a transfer of a "noneconomic
residual interest" (as defined below) to a holder generally is disregarded for
all federal income tax purposes if a significant purpose of the transfer is to
impede the assessment or collection of tax. A residual interest in a REMIC
(including a residual interest with a positive value at issuance) is a
"noneconomic residual interest" unless, at the time of the transfer, (i) the
present value of the expected future distributions on the residual interest 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 on each excess inclusion. The REMIC Regulations
explain that 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. Under the REMIC Regulations, a
safe harbor is provided if (i) the transferor conducted, at the time of the
transfer, a reasonable investigation of the financial condition of the
transferee and found that the transferee historically had paid its debts as they
came due and found no significant evidence to indicate that the transferee would
not continue to pay its debts as they came due in the future, (ii) the
transferee represents to the transferor that it understands that, as the holder
of the non-economic residual interest, the transferee may incur liabilities in
excess of any cash flows generated by the interest and that the transferee
intends to pay taxes associated with holding the residual interest as they
become due and (iii) the transferee represents to the transferor that it will
not cause income from the residual interest to be attributable to a foreign
permanent establishment or fixed base, within the meaning of an applicable
income tax treaty, and the residual interest is, in fact, not transferred to
such a permanent establishment or fixed base of the transferee or any other
person. The Pooling and Servicing Agreement will require a transferee of the
Class 1-A-R Certificate to certify to the matters in the preceding sentence as
part of the affidavit described above.

      In addition to the three conditions set forth above for the transferor of
a noneconomic residual interest to be presumed not to have knowledge that the
transferee would be unwilling or unable to pay taxes due on its share of the
taxable income of the REMIC, the REMIC Regulations contain a fourth condition
for the transferor to be presumed to lack such knowledge. This fourth condition
requires that one of the two following tests be satisfied:

      (a)   the present value of the anticipated tax liabilities associated
with holding the noneconomic residual interest not exceed the sum of:

            (i)   the present value of any consideration given to the transferee
                  to acquire the interest;

            (ii)  the present value of the expected future distributions on the
                  interest; and

            (iii) the present value of the anticipated tax savings associated
                  with holding the interest as the applicable REMIC generates
                  losses; or

      (b)   (i)   the transferee must be a domestic "C" corporation (other than
a corporation exempt from taxation or a regulated investment company or real
estate investment trust) that meets certain asset tests;

            (ii)  the transferee must agree in writing that any subsequent
                  transfer of the residual interest would be to an eligible "C"
                  corporation and would meet the requirements for a safe harbor
                  transfer; and

            (iii) the facts and circumstances known to the transferor on or
                  before the date of the transfer must not reasonably indicate
                  that the taxes associated with ownership of the residual
                  interest will not be paid by the transferee.

      For purposes of the computations in clause (a) the transferee is assumed
to pay tax at the highest corporate rate of tax specified in the Code or, in
certain circumstances, the alternative minimum tax rate. Further, present


                                      S-55



values generally are computed using a discount rate equal to the short-term
Federal rate set forth in Section 1274(d) of the Code for the month of the
transfer and the compounding period used by the transferee.

      The Pooling and Servicing Agreement will not require that transfers of the
Class 1-A-R Certificate meet the fourth requirement above, and therefore such
transfers may not meet the safe harbor. The holder of the Class 1-A-R
Certificate is advised to consult its tax advisor regarding the advisability of
meeting the safe harbor.

      In addition, the Class 1-A-R Certificate may not be purchased by or
transferred to any person that is not a U.S. Person, unless:

          o   such person holds the Class 1-A-R Certificate in connection with
              the conduct of a trade or business within the United States and
              furnishes the transferor and the Trustee with an effective
              Internal Revenue Service Form W-8ECI; or

          o   the transferee delivers to both the transferor and the Trustee an
              opinion of a nationally-recognized tax counsel to the effect that
              such transfer is in accordance with the requirements of the Code
              and the regulations promulgated thereunder and that such transfer
              of the Class 1-A-R Certificate will not be disregarded for federal
              income tax purposes.

      The term "U.S. PERSON" means a citizen or resident of the United States, a
corporation or partnership (unless, in the case of a partnership, Treasury
regulations are adopted that provide otherwise) created or organized in or under
the laws of the United States, any state thereof or the District of Columbia,
including an entity treated as a corporation or partnership for federal income
tax purposes, an estate whose income is subject to United States federal income
tax regardless of its source, or a trust if a court within the United States is
able to exercise primary supervision over the administration of such trust, and
one or more such U.S. Persons have the authority to control all substantial
decisions of such trust (or, to the extent provided in applicable Treasury
regulations, certain trusts in existence on August 20, 1996 which are eligible
to elect to be treated as U.S. Persons).

      THE POOLING AND SERVICING AGREEMENT WILL PROVIDE THAT ANY ATTEMPTED OR
PURPORTED TRANSFER IN VIOLATION OF THESE TRANSFER RESTRICTIONS WILL BE NULL AND
VOID AND WILL VEST NO RIGHTS IN ANY PURPORTED TRANSFEREE.

      Any transferor or agent to whom the Trustee provides information as to any
applicable tax imposed on such transferor or agent may be required to bear the
cost of computing or providing such information.

      See "Federal Income Tax Consequences--Federal Income Tax Consequences for
REMIC Certificates--Taxation of Residual Certificates--Tax-Related Restrictions
on Transfer of Residual Certificates" in the prospectus.

      THE CLASS 1-A-R CERTIFICATE MAY NOT BE PURCHASED BY OR TRANSFERRED TO ANY
PLAN OR ANY PERSON ACTING ON BEHALF OF OR INVESTING THE ASSETS OF SUCH PLAN.

      See "Benefit Plan Considerations" in this prospectus supplement and
"Benefit Plan Considerations" in the prospectus.

                       PREPAYMENT AND YIELD CONSIDERATIONS

      Delinquencies on the Mortgage Loans in a Loan Group which are not advanced
by or on behalf of the Servicer (because amounts, if advanced, would be
nonrecoverable), will adversely affect the yield on the Senior Certificates of
the related Group and the Subordinate Certificates. Because of the priority of
distributions, shortfalls resulting from delinquencies on the Mortgage Loans of
a Loan Group not so advanced will be borne first by the related Subordinate
Certificates in the reverse order of their numerical designations and then by
the Senior Certificates of the related Group.

      Net Interest Shortfalls will adversely affect the yields on the Senior
Certificates and the Subordinate Certificates. In addition, losses generally
will be borne first by the Subordinate Certificates, as described in this
prospectus supplement under "Description of Certificates--Allocation of Losses."
The yields on the Offered Certificates will depend on the rate and timing of
Realized Losses on the applicable Mortgage Loans in the related Loan Group or
Loan Groups.


                                      S-56



      The effective yields to investors will be lower than the yields otherwise
produced by the applicable rate at which interest is passed through to investors
and the purchase price of their Certificates because monthly distributions will
not be payable to investors until the 20th day (or, if not a business day, the
next business day) of the month following the month in which interest accrues on
the Mortgage Loans (without any additional distribution of interest or earnings
thereon in respect of such delay).

PREPAYMENT CONSIDERATIONS AND RISKS

      Because principal payments on the Mortgage Loans in a Loan Group will be
distributed currently on the Senior Certificates of the related Group and the
Subordinate Certificates, the rate of principal payments on the Offered
Certificates, the aggregate amount of each interest payment on the Offered
Certificates, and the yield to maturity of Offered Certificates purchased at a
price other than par are directly related to the rate of payments of principal
on the applicable Mortgage Loans in the related Loan Group or Loan Groups. The
principal payments on the Mortgage Loans may be in the form of scheduled
principal payments or principal prepayments (for this purpose, the term
"principal prepayment" includes prepayments and any other recovery of principal
in advance of its scheduled due date, including repurchases and liquidations due
to default, casualty, condemnation and the like). Any such prepayments will
result in distributions to you of amounts that would otherwise be distributed
over the remaining term of the Mortgage Loans. See "Prepayment and Yield
Considerations" in the prospectus.

      The rate at which mortgage loans in general prepay may be influenced by a
number of factors, including general economic conditions, mortgage market
interest rates, availability of mortgage funds and homeowner mobility.

          o   In general, if prevailing mortgage interest rates fall
              significantly below the mortgage interest rates on the Mortgage
              Loans, the Mortgage Loans are likely to prepay at higher rates
              than if prevailing mortgage interest rates remain at or above the
              mortgage interest rates on the Mortgage Loans.

          o   Conversely, if prevailing mortgage interest rates rise above the
              mortgage interest rates on the Mortgage Loans, the rate of
              prepayment would be expected to decrease.

          o   Certain of the Mortgage Loans are Interest Only Mortgage Loans. At
              the end of the interest only period, the payments on such Mortgage
              Loans will be recalculated to fully amortize over the remaining
              life of the loan and the mortgagor will be required to make
              payments of principal and interest which may increase the burden
              of the mortgagor and may increase the risk of default under the
              Mortgage Loan.

      The timing of changes in the rate of prepayments may significantly affect
the actual yield to you, even if the average rate of principal prepayments is
consistent with your expectations. In general, the earlier the payment of
principal of the Mortgage Loans the greater the effect on your yield to
maturity. As a result, the effect on your yield of principal prepayments
occurring at a rate higher (or lower) than the rate you anticipate during the
period immediately following the issuance of the Certificates will not be offset
by a subsequent like reduction (or increase) in the rate of principal
prepayments. You should also consider the risk, in the case of an Offered
Certificate purchased at a discount, that a slower than anticipated rate of
payments in respect of principal (including prepayments) on the Mortgage Loans
in the related Loan Group or Loan Groups will have a negative effect on the
yield to maturity of such Offered Certificate. You should also consider the
risk, in the case of an Offered Certificate purchased at a premium, that a
faster than anticipated rate of payments in respect of principal (including
prepayments) on the Mortgage Loans in the related Loan Group or Loan Groups will
have a negative effect on the yield to maturity of such Offered Certificate. You
must make your own decisions as to the appropriate prepayment assumptions to be
used in deciding whether to purchase Offered Certificates.

      Mortgagors are permitted to prepay the Mortgage Loans, in whole or in
part, at any time without penalty. The rate of payment of principal may also be
affected by any repurchase of the Mortgage Loans permitted or required by the
Pooling and Servicing Agreement, including any termination. See "The Pooling and
Servicing Agreement--Optional Termination" in this prospectus supplement for a
description of the Servicer's option to purchase the Mortgage Loans when the
Stated Principal Balance of the Mortgage Loans is less than 10% of the unpaid
principal balance of the Mortgage Loans as of the Cut-off Date. The Depositor or
the Sponsor may be required to repurchase Mortgage Loans because of defective
documentation, material breaches in its representations


                                      S-57



and warranties with respect to such Mortgage Loans or the conversion of any
Convertible Mortgage Loan. Any repurchases will shorten the weighted average
lives of the related classes of Offered Certificates.

      All of the Mortgage Loans will include "due-on-sale" clauses which allow
the holder of the Mortgage Loan to demand payment in full of the remaining
principal balance upon sale or certain transfers of the property securing such
Mortgage Loan. To the extent that the Servicer has knowledge of the conveyance
or proposed conveyance of the underlying mortgaged property, the Servicer
generally will be required to enforce "due-on-sale" clauses to the extent
permitted by applicable law. However, the Servicer will not take any action in
relation to the enforcement of any "due-on-sale" provisions which would impair
or threaten to impair any recovery under any related primary mortgage insurance
policy. See "Prepayment and Yield Considerations" in the prospectus.
Acceleration of Mortgage Loans as a result of enforcement of such "due-on-sale"
provisions in connection with transfers of the related mortgaged properties or
the occurrence of certain other events resulting in acceleration would affect
the level of prepayments on the Mortgage Loans, thereby affecting the weighted
average lives of the related classes of Offered Certificates.

      As described in this prospectus supplement under "Description of
Certificates--Principal," the Senior Prepayment Percentage for a Loan Group of
all principal prepayments (excluding for this purpose, partial liquidations due
to default, casualty, condemnation and the like) initially will be distributed
to the classes of Senior Certificates then entitled to receive principal
prepayment distributions. This may result in all (or a disproportionate
percentage) of those principal prepayments being distributed to the Senior
Certificates and none (or less than their pro rata share) of such principal
prepayments being distributed to holders of the Subordinate Certificates during
the periods of time described in the definition of "Senior Prepayment
Percentage."

ASSUMPTIONS RELATING TO TABLES

      The tables set forth in Appendix B (the "DECREMENT TABLES") have been
prepared on the basis of the following assumptions (the "MODELING ASSUMPTIONS"):

      (a)   each Loan Group consists of the hypothetical mortgage loans
presented in Appendix C;

      (b)   the initial class balances and pass-through rates for the Offered
Certificates are as set forth or described in the table on page S-6 of this
prospectus supplement;

      (c)   there are no Net Interest Shortfalls, Relief Act Reductions,
delinquencies or Realized Losses with respect to the Mortgage Loans;

      (d)   scheduled payments of principal and interest with respect to the
Mortgage Loans are received on the applicable due date beginning on June 1,
2006;

      (e)   prepayments are received, together with a 30 days' interest
thereon, on the last day of each month beginning in May 2006;

      (f)   the Mortgage Loans prepay at the indicated percentages of CPR;

      (g)   optional termination of the Issuing Entity does not occur;

      (h)   no Mortgage Loans are required to be repurchased from the Issuing
Entity and no Mortgage Loans are substituted for the Mortgage Loans included in
the Issuing Entity on the Closing Date;

      (i)   the Certificates are issued on the Closing Date;

      (j)   cash payments on the Certificates are received on the 20th day of
each month beginning in June 2006 in accordance with the priorities and amounts
described in this prospectus supplement under "Description of Certificates";

      (k)   One-Year LIBOR remains constant at 5.41200% per annum; and

      (l)   Six-Month LIBOR remains constant at 5.29700% per annum.

      Although the characteristics of the mortgage loans for the Decrement
Tables have been prepared on the basis of the weighted average characteristics
of the Mortgage Loans which are expected to be in the Mortgage Pool, there is no
assurance that the Modeling Assumptions will reflect the actual characteristics
or performance of the Mortgage Loans or that the performance of the Offered
Certificates will conform to the results set forth in the tables.


                                      S-58



WEIGHTED AVERAGE LIVES OF THE OFFERED CERTIFICATES

      Weighted average life of a class of Offered Certificates refers to the
average amount of time that will elapse from the date of issuance of the
Certificate until each dollar in reduction of its balance is distributed to
investors. The weighted average lives of classes of Offered Certificates will be
influenced by, among other things, the rate at which principal of the Mortgage
Loans in the related Loan Group or Loan Groups is paid, which may be in the form
of scheduled principal payments or principal prepayments (for this purpose, the
term "prepayments" includes prepayments and liquidations due to default,
casualty, condemnation and the like), the timing of changes in such rate of
principal payments and the priority sequence of distributions of principal of
such Offered Certificates. The interaction of the foregoing factors may have
different effects on each class of Offered Certificates and the effects on any
such class may vary at different times during the life of such class.
Accordingly, no assurance can be given as to the weighted average life of any
such class of Offered Certificates. For an example of how the weighted average
lives of the Offered Certificates are affected by the foregoing factors at
various constant percentages of CPR, see the Decrement Tables set forth in
Appendix B.

      Prepayments on mortgage loans are commonly measured relative to a
prepayment standard or model. The prepayment model used in this prospectus
supplement is the Constant Prepayment Rate ("CPR"), which represents an assumed
rate of principal prepayment each year relative to the then-outstanding
principal balance of a pool of mortgage loans for the life of such mortgage
loans. A prepayment assumption of 0% CPR assumes constant prepayment rates of 0%
per annum, a prepayment assumption of 5% CPR assumes constant prepayment rates
of 5% per annum, a prepayment rate of 25% CPR assumes constant prepayment rates
of 25% per annum and so forth, each of the then-outstanding principal balance of
such mortgage loans. CPR does not purport to be a historical description of
prepayment experience or a prediction of the anticipated rate of prepayment of
any pool of mortgage loans, including the Mortgage Loans. The Depositor believes
that no existing statistics of which it is aware provide a reliable basis for
investors to predict the amount or the timing of receipt of prepayments on the
Mortgage Loans.

      The Decrement Tables set forth in Appendix B have been prepared on the
basis of the Modeling Assumptions described above under "--Assumptions Relating
to Tables." There will likely be discrepancies between the characteristics of
the actual Mortgage Loans included in each Loan Group and the characteristics of
the mortgage loans assumed in preparing the Decrement Tables. Any such
discrepancy may have an effect upon the percentages of initial class balances
outstanding set forth in the Decrement Tables (and the weighted average lives of
the Offered Certificates). In addition, to the extent that the Mortgage Loans
that actually are included in a Loan Group have characteristics that differ from
those assumed in preparing the Decrement Tables, the class balance of a class of
Offered Certificates could be reduced to zero earlier or later than indicated by
such Decrement Tables.

      Furthermore, the information contained in the Decrement Tables with
respect to the weighted average life of any Offered Certificate is not
necessarily indicative of the weighted average life of that class of Offered
Certificates that might be calculated or projected under different or varying
prepayment assumptions.

      It is not likely that (i) all of the Mortgage Loans in a Loan Group will
have the interest rates or remaining terms to maturity assumed or (ii) the
Mortgage Loans in a Loan Group will prepay at the indicated percentage of CPR
until maturity. In addition, the diverse remaining terms to maturity of the
Mortgage Loans in a Loan Group (which include many recently originated Mortgage
Loans) could produce slower or faster reductions of the class balances than
indicated in the Decrement Tables at the various percentages of CPR specified.

      Based upon the Modeling Assumptions, the Decrement Tables in Appendix B
indicate the projected weighted average life of each class of the Offered
Certificates and set forth the percentages of the initial class balance of each
class that would be outstanding after each of the dates shown at various
constant percentages of CPR.

YIELD ON THE CLASS 1-A-R CERTIFICATE

      The after-tax rate of return to the holder of the Class 1-A-R Certificate
will reflect its pre-tax rate of return, reduced by the taxes required to be
paid with respect to such Certificate. If you hold the Class 1-A-R Certificate,
you may have tax liabilities during the early years of each REMIC's term that
substantially exceed any distributions payable thereon during any such period.
In addition, the present value of the tax liabilities with respect to your Class
1-A-R Certificate may substantially exceed the present value of expected
distributions on your Class 1-A-R Certificate and of any tax benefits that may
arise with respect to it. Accordingly, the after-tax rate of return on the Class
1-A-R Certificate may be negative or may be otherwise significantly adversely
affected. The timing and


                                      S-59



amount of taxable income attributable to the Class 1-A-R Certificate will depend
on, among other things, the timing and amounts of prepayments and losses
experienced with respect to the Mortgage Loans.

      If you own the Class 1-A-R Certificate, you should consult your tax
advisors regarding the effect of taxes and the receipt of any payments made in
connection with the purchase of the Class 1-A-R Certificate on your after-tax
rate of return. See "Federal Income Tax Consequences" in this prospectus
supplement and in the prospectus.

YIELD ON THE SUBORDINATE CERTIFICATES

      The weighted average life of, and the yield to maturity on, the
Subordinate Certificates, in increasing order of their numerical class
designation, will be progressively more sensitive to the rate and timing of
mortgagor defaults and the severity of ensuing losses on the Mortgage Loans. If
the actual rate and severity of losses on the Mortgage Loans is higher than
those you assumed, the actual yield to maturity of your Subordinate Certificate
may be lower than the yield you expected. The timing of losses on Mortgage Loans
will also affect your actual yield to maturity, even if the rate of defaults and
severity of losses over the life of the Issuing Entity are consistent with your
expectations. In general, the earlier a loss occurs, the greater the effect on
an investor's yield to maturity. The Realized Losses on the Mortgage Loans will
be allocated to reduce the class balance of the applicable class of Subordinate
Certificates (as described in this prospectus supplement under "Description of
Certificates--Allocation of Losses"), without the receipt of cash equal to the
reduction. In addition, shortfalls in cash available for distributions on the
Subordinate Certificates will result in a reduction in the class balance of the
class of Subordinate Certificates then outstanding with the highest numerical
class designation if and to the extent that the aggregate class balance of
Certificates, following all distributions and the allocation of Realized Losses
on a Distribution Date, exceeds the sum of the Adjusted Pool Amounts. As a
result of such reductions, less interest will accrue on that class of
Subordinate Certificates than otherwise would be the case. The yield to maturity
of the Subordinate Certificates will also be affected by the disproportionate
allocation of principal prepayments to the Senior Certificates, Net Interest
Shortfalls, other cash shortfalls in the Pool Distribution Amounts and
distribution of funds to the Senior Certificates of one or more
Undercollateralized Groups as a result of cross-collateralization otherwise
available for distribution on the Subordinate Certificates. See "Description of
Certificates--Allocation of Losses" and "--Cross-Collateralization" in this
prospectus supplement.

      If on any Distribution Date, the Fractional Interest for any class of
Subordinate Certificates is less than its original Fractional Interest, all
Unscheduled Principal Payments available for distribution on the Subordinate
Certificates will be allocated solely to that class and all other classes of
Subordinate Certificates with lower numerical class designations, thereby
accelerating the amortization thereof relative to that of the classes with
higher numerical designations than that class and reducing the weighted average
lives of the classes of Subordinate Certificates receiving such distributions.
Accelerating the amortization of the classes of Subordinate Certificates with
lower numerical class designations relative to the other classes of Subordinate
Certificates is intended to preserve the availability of the subordination
provided by those other classes.

YIELD CONSIDERATIONS WITH RESPECT TO THE CLASS B-2 AND CLASS B-3 CERTIFICATES

      Defaults on mortgage loans may be measured relative to a default standard
or model. The model used in this prospectus supplement, the standard default
assumption ("SDA"), represents an assumed rate of default each month relative to
the outstanding performing principal balance of a pool of new mortgage loans. A
default assumption of 100% SDA assumes constant default rates of 0.02% per annum
of the outstanding principal balance of such mortgage loans in the first month
of the life of the mortgage loans and an additional 0.02% per annum in each
month thereafter until the 30th month. Beginning in the 30th month and in each
month thereafter through the 60th month of the life of the mortgage loans, 100%
SDA assumes a constant default rate of 0.60% per annum each month. Beginning in
the 61st month and in each month thereafter through the 120th month of the life
of the mortgage loans, 100% SDA assumes that the constant default rate declines
each month by 0.0095% per annum, and that the constant default rate remains at
0.03% per annum in each month after the 120th month. For the tables in Appendix
D, it is assumed that there is no delay between the default and liquidation of
the mortgage loans. As used in the tables in Appendix D, "0% SDA" assumes no
defaults. SDA is not a historical description of default experience or a
prediction of the rate of default of any pool of mortgage loans.

      The tables in Appendix D indicate the sensitivity of the pre-tax yield to
maturity on the Class B-2 and Class B-3 Certificates to various rates of
prepayment and varying levels of Realized Losses. The tables in Appendix D are
based upon, among other things, the Modeling Assumptions (other than the
assumption that no defaults shall have


                                      S-60



occurred with respect to the Mortgage Loans) and the additional assumption that
liquidations (other than those scenarios indicated as 0% of SDA (no defaults))
occur monthly on the last day of the preceding month (other than on a due date)
at the percentages of SDA set forth in the table.

      In addition, it was assumed that (i) Realized Losses on liquidations of
25% or 50% of the outstanding principal balance of the Liquidated Mortgage Loans
in each Loan Group, as indicated in the tables in Appendix D (referred to as a
"LOSS SEVERITY PERCENTAGE"), will occur at the time of liquidation and (ii) the
Class B-2 and Class B-3 Certificates are purchased on the Closing Date at
assumed purchase prices equal to 98.5625% and 96.8750%, in each case, of their
class balance plus accrued interest from May 1, 2006 to (but not including) the
Closing Date.

      It is highly unlikely that the Mortgage Loans of a Loan Group will have
the precise characteristics referred to in this prospectus supplement or that
they will prepay or liquidate at any of the rates specified or that the Realized
Losses will be incurred according to one particular pattern. The assumed
percentages of SDA and CPR and the Loss Severity Percentages shown in the
Appendixes are for illustrative purposes only. Those assumptions may not be
correct and the actual rates of prepayment and liquidation and loss severity
experience of the Mortgage Loans of a Loan Group may not correspond to any of
the assumptions made in this prospectus supplement. For these reasons, and
because the timing of cash flows is critical to determining yield, the pre-tax
yields to maturity on the Class B-2 and Class B-3 Certificates are likely to
differ from the pre-tax yields to maturity shown in the tables in Appendix D.

      The pre-tax yields to maturity set forth in Appendix D were calculated by
determining the monthly discount rates which, when applied to the assumed
streams of cash flows to be paid on the Class B-2 and Class B-3 Certificates,
would cause the discounted present value of those assumed streams of cash flows
to equal the aggregate assumed purchase prices of the Class B-2 and Class B-3
Certificates set forth above plus, in each case, accrued interest from May 1,
2006 to (but not including) the Closing Date. In all cases, monthly rates were
then converted to the corporate bond equivalent rates shown in the tables in
Appendix D. Implicit in the use of any discounted present value or internal rate
of return calculations such as these is the assumption that intermediate cash
flows are reinvested at the discount rates at which investors may be able to
reinvest funds received by them as distributions on the Class B-2 and Class B-3
Certificates. Consequently, these yields do not purport to reflect the total
return on any investment in the Class B-2 and Class B-3 Certificates when
reinvestment rates are considered.

      You should make your investment decisions based on your determinations of
anticipated rates of prepayment and Realized Losses under a variety of
scenarios. If you are purchasing Class B-2 and Class B-3 Certificates you should
fully consider the risk that Realized Losses on the Mortgage Loans could result
in the failure to fully recover your investments.

                                 CREDIT SUPPORT

      The rights of holders of each class of Subordinate Certificates to receive
distributions of principal and interest are subordinated to such rights of
holders of the Senior Certificates and holders of each class of Subordinate
Certificates with a lower number. For example, the holders of the Class B-2
Certificates will not receive principal or interest on a Distribution Date until
the holders of the Senior Certificates and the Class B-1 Certificates have
received the amounts to which they are entitled on that Distribution Date.

      The subordination described above is intended to increase the likelihood
of receipt by holders of the Senior Certificates and the holders of the
Subordinate Certificates with lower numbers of the amount to which they are
entitled on any Distribution Date and to provide those holders with protection
against Realized Losses.

      The Senior Certificates of a Group will receive the Senior Prepayment
Percentage of principal prepayments received with respect to the Mortgage Loans
in the related Loan Group until the seventh anniversary of the first
Distribution Date. During the following four years, those Senior Certificates
will receive a large, but generally decreasing, share of such principal
prepayments. This disproportionate allocation of prepayments will result in an
acceleration of the amortization of those Senior Certificates and will enhance
the likelihood that holders of those Certificates will receive the entire amount
of principal to which they are entitled. See "Description of
Certificates--Principal" in this prospectus supplement.

                                 USE OF PROCEEDS

      The Depositor will apply the net proceeds of the sale of the Offered
Certificates against the purchase of the Mortgage Loans from the Sponsor.


                                      S-61



                         FEDERAL INCOME TAX CONSEQUENCES

      Elections will be made to treat the Issuing Entity as multiple separate
"real estate mortgage investment conduits" (consisting of an "UPPER-TIER REMIC"
and one or more "LOWER-TIER REMICS," and each, a "REMIC") for federal income tax
purposes under the Code.

          o   The Certificates will be designated as "regular interests" in the
              Upper-Tier REMIC. All the Certificates (other than the Class 1-A-R
              Certificate) are "REGULAR CERTIFICATES" for purposes of the
              following discussion.

          o   The Class 1-A-R Certificate will be designated as the sole class
              of "residual interests" in each REMIC.

      Upon the issuance of the Offered Certificates, Hunton & Williams LLP will
deliver its opinion to the effect that, assuming compliance with the Pooling and
Servicing Agreement, for federal income tax purposes, each REMIC will qualify as
a REMIC within the meaning of Section 860D of the Code.

      See "Federal Income Tax Consequences--Federal Income Tax Consequences for
REMIC Certificates" in the prospectus.

REGULAR CERTIFICATES

      The Regular Certificates generally will be treated as debt instruments
issued by the Upper-Tier REMIC for federal income tax purposes. Income on the
Regular Certificates must be reported under an accrual method of accounting.

      The Offered Certificates may, depending on their respective issue prices,
be treated for federal income tax purposes as having been issued with original
issue discount. See "Federal Income Tax Consequences--Federal Income Tax
Consequences for REMIC Certificates--Taxation of Regular Certificates--Original
Issue Discount" in the prospectus. Certain classes of the Regular Certificates
may be treated for federal income tax purposes as having been issued at a
premium. Whether any holder of such a class of Certificates will be treated as
holding a Certificate with amortizable bond premium will depend on such
certificateholder's purchase price and the distributions remaining to be made on
such Certificate at the time of its acquisition by such certificateholder.
Holders of such classes of Certificates should consult their own tax advisors
regarding the possibility of making an election to amortize such premium. See
"Federal Income Tax Consequences--Federal Income Tax Consequences for REMIC
Certificates--Taxation of Regular Certificates--Premium" in the prospectus. For
purposes of determining the amount and the rate of accrual of original issue
discount and market discount, the Depositor intends to assume that there will be
prepayments on the Mortgage Loans at a rate equal to 25% CPR. No representation
is made as to the actual rate at which the Mortgage Loans will be prepaid.

      The Regular Certificates will be treated as regular interests in a REMIC
under Section 860G of the Code. Accordingly, to the extent described in the
prospectus:

          o   the Regular Certificates will be treated as assets described in
              Section 7701(a)(19)(c) of the Code;

          o   the Regular Certificates will be treated as "real estate assets"
              within the meaning of Section 856(c)(4)(a) of the Code;

          o   interest on the Regular Certificates will be treated as interest
              on obligations secured by mortgages on real property within the
              meaning of Section 856(c)(3)(b) of the Code; and

          o   the Regular Certificates will be treated as "qualified mortgages"
              within the meaning of Section 860G(a)(3) of the Code.

      See "Federal Income Tax Consequences--Federal Income Tax Consequences for
REMIC Certificates--Status of REMIC Certificates" in the prospectus.


                                      S-62



RESIDUAL CERTIFICATE

      If you hold the Class 1-A-R Certificate, you must include the taxable
income of the Upper-Tier REMIC and any Lower-Tier REMIC in determining your
federal taxable income. Your resulting tax liability may exceed cash
distributions to you during certain periods. In addition, all or a portion of
the taxable income you recognize from the Class 1-A-R Certificate may be treated
as "excess inclusion" income, which, among other consequences, will result in
your inability to use net operating losses to offset such income from the
Upper-Tier REMIC and any Lower-Tier REMIC. The Holder of the Class 1-A-R
Certificate generally must account separately for its interest in each REMIC and
may not offset income from one REMIC with losses from another REMIC.

      You should consider carefully the tax consequences of any investment in
the Class 1-A-R Certificate discussed in the prospectus and should consult your
tax advisors with respect to those consequences. See "Federal Income Tax
Consequences" in the prospectus. Specifically, you should consult your tax
advisors regarding whether, at the time of acquisition, the Class 1-A-R
Certificate will be treated as a "noneconomic" residual interest and "tax
avoidance potential" residual interest. See "Federal Income Tax
Consequences--Federal Income Tax Consequences for REMIC Certificates--Taxation
of Residual Certificates--Tax-Related Restrictions on Transfer of Residual
Certificates--Noneconomic Residual Interests," "--Foreign Investors" and "--Mark
to Market Regulations" in the prospectus. Additionally, for information
regarding Prohibited Transactions, see "Federal Income Tax Consequences--Federal
Income Tax Consequences for REMIC Certificates--Taxes That May Be Imposed on the
REMIC Pool--Prohibited Transactions" in the prospectus.

BACKUP WITHHOLDING AND REPORTING REQUIREMENTS

      Certain holders or other beneficial owners of Offered Certificates may be
subject to backup withholding with respect to interest paid on the Offered
Certificates if those holders or beneficial owners, upon issuance, fail to
supply the Trustee or their broker with their taxpayer identification number,
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 or their broker with a
certified statement, under penalty of perjury, that they are not subject to
backup withholding. See "Federal Income Tax Consequences--Federal Income Tax
Consequences for REMIC Certificates--Backup Withholding" in the prospectus.

      The Trustee, on behalf of the Issuing Entity, will be required to report
annually to the IRS and to each certificateholder of record, the amount of
interest paid (and original issue discount accrued, if any) on the Regular
Certificates and the amount of interest withheld for 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 of the Offered Certificates (other than the
Class 1-A-R Certificate) is Cede & Co., as nominee for DTC, beneficial owners of
the Offered Certificates and the IRS will receive tax and other information
including the amount of interest paid on such Certificates from DTC Participants
rather than from the Trustee. (The Trustee, however, will respond to requests
for necessary information to enable Participants and certain other persons to
complete their reports.) See "Federal Income Tax Consequences--Federal Income
Tax Consequences for REMIC Certificates--Reporting Requirements" in the
prospectus.

      All investors should consult their tax advisors regarding the federal,
state, local or foreign income tax consequences of the purchase, ownership and
disposition of the Offered Certificates.

                                   STATE TAXES

      The Depositor makes no representations regarding the tax consequences of
purchase, ownership or disposition of the Offered Certificates under the tax
laws of any state. Investors considering an investment in the Offered
Certificates should consult their tax advisors regarding such tax consequences.

                              ERISA CONSIDERATIONS

      A fiduciary or other person acting on behalf of any employee benefit plan
or arrangement, including an individual retirement account (an "IRA"), subject
to ERISA, the Code or any federal, state or local law ("SIMILAR LAW") which is
similar to ERISA or the Code (collectively, a "BENEFIT PLAN") should carefully
review with its legal advisors whether the purchase or holding of an Offered
Certificate could give rise to a transaction prohibited or not otherwise
permissible under ERISA, the Code or Similar Law. See "Benefit Plan
Considerations" in the prospectus.


                                      S-63



      The U.S. Department of Labor has extended to Banc of America Securities
LLC ("BANC OF AMERICA SECURITIES") an administrative exemption (the "EXEMPTION")
from certain of the prohibited transaction rules of ERISA and the related excise
tax provisions of Section 4975 of the Code for the initial purchase, the holding
and the subsequent resale by certain Benefit Plans of certificates in
pass-through trusts that consist of certain receivables, loans and other
obligations that meet the conditions and requirements of the Exemption. The
Exemption applies to mortgage loans such as the Mortgage Loans, but does not
cover certain IRAs and certain employee benefit plans covering only
self-employed individuals which are subject to the prohibited transaction
provisions of the Code.

      For a general description of the Exemption and the conditions that must be
satisfied for the Exemption to apply, see "Benefit Plan Considerations" in the
prospectus.

      The Exemption may cover the acquisition and holding of the Offered
Certificates (other than the Class 1-A-R Certificate) by the Benefit Plans to
which it applies provided that all conditions of the Exemption other than those
within the control of the investors will be met. In addition, as of the date
hereof, there is no single mortgagor that is the obligor on 5% of the initial
balance of the Mortgage Pool.

      The rating of a security may change. If a class of Offered Certificates
(other than the Class 1-A-R Certificate) is no longer rated at least BBB- or
Baa3, Certificates of that class will no longer be eligible for relief under the
Exemption (although a Plan that had purchased the Certificate when it had an
investment grade rating would not be required by the Exemption to dispose of
it). Consequently, an Offered Certificate (other than the Class 1-A-R
Certificate) that is no longer rated at least BBB- or Baa3 may not be
transferred unless the transferee delivers to the Trustee either (i) a
representation letter stating that (a) it is not, and is not acting on behalf
of, a Plan or using the assets of a Plan to effect such purchase or (b) if it is
an insurance company, that the source of funds used to purchase the Offered
Certificate is an "insurance company general account" (as such term is defined
in Section V(e) of Prohibited Transaction Class Exemption 95-60 ("PTE 95-60"),
60 Fed. Reg. 35925 (July 12, 1995)), that there is no Plan with respect to which
the amount of such general account's reserves and liabilities for the
contract(s) held by or on behalf of such Plan and all other Plans maintained by
the same employer (or affiliate thereof as defined in Section V(a)(1) of PTE
95-60) or by the same employee organization exceeds 10% of the total of all
reserves and liabilities of such general account (as such amounts are determined
under Section I(a) of PTE 95-60) at the date of acquisition and all Plans that
have an interest in such general account are Plans to which PTE 95-60 applies,
or (ii) an opinion of counsel in form and substance satisfactory to the Trustee
to the effect that the purchase or holding of such Offered Certificate by or on
behalf of such Plan will not constitute or result in a non-exempt prohibited
transaction within the meaning of ERISA, Section 4975 of the Code or Similar Law
and will not subject the Trustee, the Depositor or the Servicer to any
obligation in addition to those undertaken in the Pooling and Servicing
Agreement, which opinion of counsel shall not be an expense of the Trustee or
the Servicer. Each person who acquires any such Offered Certificate or interest
therein will be deemed to have made the representations required by the
representation letter referred to in the preceding sentence, unless such person
has provided such representation letter or opinion of counsel referred to in the
preceding sentence to the Trustee.

      Benefit Plan investors are encouraged to consult with their legal advisors
concerning the impact of ERISA, the Code and Similar Law, the applicability of
the Exemption, and the potential consequences in their specific circumstances,
prior to making an investment in the Offered Certificates. Moreover, each
Benefit Plan fiduciary should determine whether under the governing plan
instruments and the applicable fiduciary standards of investment prudence and
diversification, an investment in the Offered Certificates is appropriate for
the Benefit Plan, taking into account the overall investment policy of the
Benefit Plan and the composition of the Benefit Plan's investment portfolio.

      The Class 1-A-R Certificate may not be purchased by or transferred to a
Benefit Plan or a person acting on behalf of or investing assets of a Benefit
Plan. See "Description of Certificates--Restrictions on Transfer of the Class
1-A-R Certificate" in this prospectus supplement.

                          REPORTS TO CERTIFICATEHOLDERS

      The Trustee will prepare on a monthly basis a statement containing, among
other things, information relating to principal and interest distributions on
the Certificates, the status of the Mortgage Pool and certain other information,
as set forth in the Pooling and Servicing Agreement, required under Item 1121 of
Regulation AB (17 C.F.R. SS. 229.1121), as described under "Description of
Certificates--Reports to Certificateholders" in the prospectus. In addition, the
Servicer and certain other parties will furnish to the Trustee, and the Trustee
will furnish to the Depositor, the compliance statements, assessments and
attestation reports in accordance with Items 1122 and


                                      S-64



1123 of Regulation AB (17 C.F.R. SS.SS. 229.1122 and 229.1123) detailed under
"Servicing of the Mortgage Loans--Evidence as to Compliance" in the prospectus.

      Copies of these statements and reports will be filed on Form 10-D and
10-K, as applicable, with the Securities and Exchange Commission through its
EDGAR system located at http://www.sec.gov under the name of the Issuing Entity
for so long as the Issuing Entity is subject to the reporting requirement of the
Securities Exchange Act of 1934, as amended.

      The Trustee will make the statement described in the prospectus under
"Description of Certificates--Reports to Certificateholders" available to
certificateholders and the other parties to the Pooling and Servicing Agreement
via the Trustee internet website. The Trustee will also make the Periodic
Reports described in the prospectus under "Where You Can Find More Information"
relating to the Issuing Entity available through its website promptly after they
are filed with the Securities and Exchange Commission (which may not be the same
day). The Trustee's internet website will initially be located at
"www.ctslink.com." Assistance in using the website can be obtained by calling
the Trustee's customer service desk at 301-815-6600. Parties that are unable to
use the website are entitled to have a paper copy mailed to them at no charge
via first class mail by calling the customer service desk.

                             METHOD OF DISTRIBUTION

      Subject to the terms and conditions set forth in the underwriting
agreement among the Depositor, Banc of America Securities LLC (the
"UNDERWRITER") and the Sponsor, the Depositor has agreed to sell to the
Underwriter, and the Underwriter has agreed to purchase from the Depositor, all
of the Offered Certificates. Proceeds to the Depositor from the sale of the
Offered Certificates are expected to be approximately 99.781% of the initial
balance of those Certificates plus accrued interest, before deducting expenses
estimated at approximately $473,609 payable by the Depositor.

      Distribution of the Offered Certificates will be made by the Underwriter
from time to time in negotiated transactions or otherwise at varying prices to
be determined at the time of sale. The Underwriter and any dealers that
participate with the Underwriter in the distribution of the Offered Certificates
will be underwriters, and the difference between the purchase price for the
Offered Certificates paid to the Depositor and the proceeds from the sale of the
Offered Certificates realized by the Underwriter and any dealers that
participate with the Underwriter in the distribution of the Offered Certificates
will constitute underwriting discounts and commissions.

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

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

      The Underwriter is an affiliate of the Depositor and the Sponsor and is a
registered broker/dealer. Any obligations of the Underwriter are the sole
responsibility of the Underwriter and do not create any obligation or guarantee
on the part of any affiliate of the Underwriter.

                                  LEGAL MATTERS

      The validity of and certain federal income tax matters relating to the
Offered Certificates will be passed upon for the Depositor and the Underwriter
by Hunton & Williams LLP, Charlotte, North Carolina.

                               CERTIFICATE RATINGS

      At their issuance, each class of Offered Certificates is required to
receive from Standard & Poor's, a division of The McGraw-Hill Companies, Inc.
("S&P") and Fitch Ratings ("FITCH") at least the rating set forth in the table
on page S-6 of this prospectus supplement.

      Ratings on mortgage pass-through certificates address the likelihood of
receipt by certificateholders of payments required under the Pooling and
Servicing Agreement.

      S&P's and Fitch's ratings take into consideration the credit quality of
the Mortgage Pool, including any credit support, structural and legal aspects
associated with the Offered Certificates, and the extent to which the


                                      S-65



payment stream of the Mortgage Pool is adequate to make payments required under
the Offered Certificates. S&P's and Fitch's ratings on the Offered Certificates
do not, however, constitute a statement regarding frequency of prepayments on
the Mortgage Loans.

      S&P's and Fitch's ratings on the Class 1-A-R Certificate do not address
the likelihood of a return to investors other than to the extent of its class
balance and interest at the pass-through rate thereon.

      The Depositor has not requested a rating of any class of Offered
Certificates by any rating agency other than S&P and Fitch. However, there can
be no assurance 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 any such other rating agency to a class of
Offered Certificates may be lower than the ratings assigned by S&P and Fitch.

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

      In addition, S&P and Fitch will monitor the initial ratings of the Offered
Certificates for so long as the Offered Certificates remain outstanding.


                                      S-66



                             INDEX TO DEFINED TERMS

100% LTV Program............................................................S-35
80/20 Program...............................................................S-35
97% LTV Program.............................................................S-35
Accelerated Processing Programs.............................................S-32
Adjusted Pool Amount........................................................S-54
Adjustment Date.............................................................S-27
Administrative Fee Rate.....................................................S-44
Administrative Fees.........................................................S-44
Advance.....................................................................S-42
All-Ready Home..............................................................S-32
ALTA........................................................................S-34
Banc of America Securities..................................................S-64
Bank of America.............................................................S-29
Bankruptcy Losses...........................................................S-54
Benefit Plan................................................................S-63
Book-Entry Certificates.....................................................S-45
BPP.........................................................................S-34
Certificate Account.........................................................S-41
Certificates................................................................S-40
class balance...............................................................S-48
Code........................................................................S-17
Combined Loan-to-Value Ratio................................................S-31
Compensating Interest.......................................................S-42
Condominium Hotel Loan Program..............................................S-35
Convertible Mortgage Loans..................................................S-26
CPR.........................................................................S-59
Credit Scores...............................................................S-27
Custom Mortgage Score.......................................................S-30
Debt Service Reduction......................................................S-54
Debt-to-Income Ratio........................................................S-31
Decrement Tables............................................................S-58
Deficient Valuation.........................................................S-54
Definitive Certificates.....................................................S-45
Deleted Mortgage Loan.......................................................S-41
Determination Date..........................................................S-42
Distribution Date...........................................................S-46
Eligible Substitute Mortgage Loan...........................................S-41
Exemption...................................................................S-64
Final Scheduled Maturity Date...............................................S-45
Fitch.......................................................................S-65
Foreclosure Profits.........................................................S-45
Fractional Interest.........................................................S-52
Gross Margin................................................................S-27
Group........................................................................S-8
Group 1......................................................................S-8
Group 1 Mortgage Loans.......................................................S-8
Group 1 Senior Certificates..................................................S-8
Group 2......................................................................S-8
Group 2 Mortgage Loans.......................................................S-8
Group 2 Senior Certificates..................................................S-8
Group 3......................................................................S-8
Group 3 Mortgage Loans.......................................................S-8
Group 3 Senior Certificates..................................................S-8
Group 4......................................................................S-8
Group 4 Mortgage Loans.......................................................S-8
Group 4 Senior Certificates..................................................S-8
Group Subordinate Amount....................................................S-48
Index.......................................................................S-28
Interest Accrual Period.....................................................S-46
Interest Distribution Amount................................................S-47
IRA.........................................................................S-63
Issuing Entity..............................................................S-36
Liquidated Mortgage Loan....................................................S-54
Liquidation Proceeds........................................................S-46
Loan Group...................................................................S-8
Loan Group 1.................................................................S-8
Loan Group 2.................................................................S-8
Loan Group 3.................................................................S-8
Loan Group 4.................................................................S-8
Loan-to-Value Ratio.........................................................S-27
Loss Severity Percentage....................................................S-61
Lower-Tier REMICs...........................................................S-16
Modeling Assumptions........................................................S-58
Mortgage File...............................................................S-40
Mortgage Loan Purchase Agreement............................................S-26
Mortgage Loans...............................................................S-8
Mortgage Pool...............................................................S-26
Mortgage Rewards............................................................S-32
Net Interest Shortfall......................................................S-47
Net Mortgage Interest Rate..................................................S-48
No Ratio Loan Program.......................................................S-35
Non-Offered Certificates.....................................................S-8
Non-Resident Alien Loan Program.............................................S-35
Non-Supported Interest Shortfall............................................S-47
Offered Certificates.........................................................S-8
One-Year LIBOR..............................................................S-28
Original Subordinate Principal Balance......................................S-51
PaperSaver(R)...............................................................S-32
Percentage Interest.........................................................S-45
Periodic Cap................................................................S-27
Pool Distribution Amount....................................................S-46
Pool Distribution Amount Allocation.........................................S-47
Pool Principal Balance......................................................S-50
Pooling and Servicing Agreement.............................................S-40
Prepayment Interest Shortfall...............................................S-42
Principal Amount............................................................S-48
Product Guides..............................................................S-30
Purchase Price..............................................................S-40
Rapid.......................................................................S-32
Rate Ceiling................................................................S-27
Realized Loss...............................................................S-54
Record Date.................................................................S-46
Recovery....................................................................S-53
Regular Certificates........................................................S-62
Reimbursement Amount........................................................S-47
Relevant Implementation Date.................................................S-5


                                      S-67



Relevant Member State........................................................S-5
Relevant Persons.............................................................S-5
Relief Act Reduction........................................................S-47
REMIC.......................................................................S-16
REMIC Regulations...........................................................S-55
Remittance Date.............................................................S-41
REO Property................................................................S-42
Residual Certificate.........................................................S-8
S&P.........................................................................S-65
Scheduled Principal Payments................................................S-49
SDA.........................................................................S-60
Senior Certificates..........................................................S-8
Senior Credit Support Depletion Date........................................S-50
Senior Percentage...........................................................S-50
Senior Prepayment Percentage................................................S-50
Senior Principal Distribution Amount........................................S-50
Servicer....................................................................S-37
Servicer Custodial Account..................................................S-41
Servicing Fee...............................................................S-44
Servicing Fee Rate..........................................................S-44
Similar Law.................................................................S-63
Six-Month LIBOR.............................................................S-28
SMMEA.......................................................................S-16
Standard Documentation Process..............................................S-32
Stated Income Program.......................................................S-34
Stated Income, Stated Asset.................................................S-32
Stated Principal Balance....................................................S-50
Subordinate Certificates.....................................................S-8
Subordinate Percentage......................................................S-50
Subordinate Prepayment Percentage...........................................S-51
Subordinate Principal Distribution Amount...................................S-52
Substitution Adjustment Amount..............................................S-41
Super Senior Certificates....................................................S-8
Super Senior Support Certificates............................................S-8
Total Loan-to-Value Ratio...................................................S-31
Total Senior Percentage.....................................................S-50
Total Subordinate Percentage................................................S-51
Trustee Fee.................................................................S-44
Trustee Fee Rate............................................................S-44
U.S. Person.................................................................S-56
Undercollateralized Amount..................................................S-52
Undercollateralized Group...................................................S-52
Underwriter.................................................................S-65
Unscheduled Principal Payments..............................................S-49
Upper-Tier REMIC............................................................S-16
Wells Fargo Bank............................................................S-43


                                      S-68





                                   APPENDIX A

                               MORTGAGE LOAN DATA


                                       A-1



                                  LOAN GROUP 1



                            OCCUPANCY OF MORTGAGED PROPERTIES OF THE GROUP 1 MORTGAGE LOANS(1)

-------------------------------------------------------------------------------------------------------------------------
                                              AGGREGATE       % OF GROUP 1                                     WEIGHTED
                               NUMBER OF    CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                                GROUP 1        STATED            STATED      STATED PRINCIPAL   AVERAGE        ORIGINAL
                               MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
          OCCUPANCY              LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

Primary Residence                 49       $ 29,311,302.44        80.66%      $  598,189.85       738           72.08%
Second Home                        7          4,888,300.81        13.45          698,328.69       758           57.03
Investor Property                  5          2,141,200.58         5.89          428,240.12       734           82.27
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                            61       $ 36,340,803.83       100.00%      $  595,750.88       740           70.66%
=========================================================================================================================


(1)   Based solely on representations of the mortgagor at the time of
      origination of the related Group 1 Mortgage Loan.



                                       PROPERTY TYPES OF THE GROUP 1 MORTGAGE LOANS

-------------------------------------------------------------------------------------------------------------------------
                                              AGGREGATE       % OF GROUP 1                                     WEIGHTED
                               NUMBER OF    CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                                GROUP 1        STATED            STATED      STATED PRINCIPAL   AVERAGE        ORIGINAL
                               MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
        PROPERTY TYPE            LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

Single Family Residence           33       $ 21,211,499.94        58.37%      $  642,772.73       731           70.50%
PUD                               13          7,543,597.00        20.76          580,276.69       756           66.32
Condominium                       13          6,875,110.39        18.92          528,854.65       755           75.49
2-Family                           2            710,596.50         1.96          355,298.25       736           74.74
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                            61       $ 36,340,803.83       100.00%      $  595,750.88       740           70.66%
=========================================================================================================================




                                   MORTGAGE LOAN PURPOSE OF THE GROUP 1 MORTGAGE LOANS

-------------------------------------------------------------------------------------------------------------------------
                                              AGGREGATE       % OF GROUP 1                                     WEIGHTED
                               NUMBER OF    CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                                GROUP 1        STATED            STATED      STATED PRINCIPAL   AVERAGE        ORIGINAL
                               MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
          PURPOSE                LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

Purchase                          38       $ 21,839,753.42        60.10%      $  574,730.35       741           74.27%
Refinance-Cashout                 15          7,939,767.56        21.85          529,317.84       721           62.54
Refinance-Rate/Term                8          6,561,282.85        18.05          820,160.36       761           68.46
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                            61       $ 36,340,803.83       100.00%      $  595,750.88       740           70.66%
=========================================================================================================================



                                       A-2





                                   GEOGRAPHICAL DISTRIBUTION OF THE MORTGAGE PROPERTIES
                                             OF THE GROUP 1 MORTGAGE LOANS(1)

-------------------------------------------------------------------------------------------------------------------------
                                              AGGREGATE       % OF GROUP 1                                     WEIGHTED
                               NUMBER OF    CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                                GROUP 1        STATED            STATED      STATED PRINCIPAL   AVERAGE        ORIGINAL
                               MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
       GEOGRAPHIC AREA           LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

Arizona                            3       $  3,311,682.85         9.11%      $1,103,894.28       772           60.15%
California                        25         13,817,142.01        38.02          552,685.68       726           71.49
District of Columbia               1            393,814.40         1.08          393,814.40       761           54.86
Florida                            7          3,674,516.39        10.11          524,930.91       787           76.23
Georgia                            3          1,516,200.00         4.17          505,400.00       776           72.11
Hawaii                             1            445,925.19         1.23          445,925.19       727           80.00
Illinois                           3          1,829,356.31         5.03          609,785.44       767           73.67
Louisiana                          1            173,918.46         0.48          173,918.46       639           85.00
Maryland                           1            538,363.00         1.48          538,363.00       703           80.00
Nevada                             1            425,000.00         1.17          425,000.00       813           52.80
New Jersey                         2            873,796.11         2.40          436,898.06       773           79.22
New Mexico                         1            720,000.00         1.98          720,000.00       705           74.61
New York                           1            486,000.00         1.34          486,000.00       700           90.00
Oregon                             1            610,000.00         1.68          610,000.00       725           74.85
Pennsylvania                       1            599,000.00         1.65          599,000.00       752           72.26
Rhode Island                       1          1,038,989.18         2.86        1,038,989.18       666           80.00
South Carolina                     4          1,857,500.81         5.11          464,375.20       770           60.86
Utah                               2          2,463,200.00         6.78        1,231,600.00       721           61.93
Washington                         1            632,000.00         1.74          632,000.00       683           80.00
Wisconsin                          1            934,399.12         2.57          934,399.12       711           68.70
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                            61       $ 36,340,803.83       100.00%      $  595,750.88       740           70.66%
=========================================================================================================================


(1)   As of the Cut-off Date, no more than approximately 5.50% of the Group 1
      Mortgage Loans are expected to be secured by mortgaged properties in any
      one five-digit postal zip code.


                                       A-3





                          CURRENT MORTGAGE LOAN PRINCIPAL BALANCES OF THE GROUP 1 MORTGAGE LOANS

-------------------------------------------------------------------------------------------------------------------------
                                              AGGREGATE       % OF GROUP 1                                     WEIGHTED
                               NUMBER OF    CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                                GROUP 1        STATED            STATED      STATED PRINCIPAL   AVERAGE        ORIGINAL
    CURRENT MORTGAGE LOAN      MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
   PRINCIPAL BALANCES ($)        LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

50,000.01 - 100,000.00             1       $     71,925.00         0.20%      $   71,925.00       688           51.38%
100,000.01 - 150,000.00            3            373,209.23         1.03          124,403.08       750           80.00
150,000.01 - 200,000.00            2            359,162.46         0.99          179,581.23       689           82.42
250,000.01 - 300,000.00            1            263,510.74         0.73          263,510.74       757           80.00
300,000.01 - 350,000.00            1            342,559.49         0.94          342,559.49       651           76.67
350,000.01 - 400,000.00            1            393,814.40         1.08          393,814.40       761           54.86
400,000.01 - 450,000.00            8          3,438,238.05         9.46          429,779.76       758           67.36
450,000.01 - 500,000.00           11          5,263,811.87        14.48          478,528.35       737           73.34
500,000.01 - 550,000.00            7          3,755,763.39        10.33          536,537.63       751           73.27
550,000.01 - 600,000.00            4          2,345,800.39         6.46          586,450.10       748           76.43
600,000.01 - 650,000.00            6          3,721,850.00        10.24          620,308.33       749           78.33
650,000.01 - 700,000.00            1            668,800.00         1.84          668,800.00       710           80.00
700,000.01 - 750,000.00            6          4,389,091.00        12.08          731,515.17       761           72.94
900,000.01 - 950,000.00            2          1,857,272.44         5.11          928,636.22       695           71.83
950,000.01 - 1,000,000.00          3          2,999,999.00         8.26          999,999.67       775           55.73
1,000,000.01 - 1,500,000.00        2          2,284,312.52         6.29        1,142,156.26       687           68.08
1,500,000.01 - 2,000,000.00        2          3,811,683.85        10.49        1,905,841.93       731           63.57
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                            61       $ 36,340,803.83       100.00%      $  595,750.88       740           70.66%
=========================================================================================================================



                                       A-4





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

-------------------------------------------------------------------------------------------------------------------------
                                              AGGREGATE       % OF GROUP 1                                     WEIGHTED
                               NUMBER OF    CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                                GROUP 1        STATED            STATED      STATED PRINCIPAL   AVERAGE        ORIGINAL
   ORIGINAL LOAN-TO-VALUE      MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
         RATIOS (%)              LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

35.01 - 40.00                      1       $    500,000.00         1.38%      $  500,000.00       809           39.53%
40.01 - 45.00                      1          1,000,000.00         2.75        1,000,000.00       779           44.44
45.01 - 50.00                      1            423,412.86         1.17          423,412.86       664           50.00
50.01 - 55.00                      7          3,635,738.40        10.00          519,391.20       774           52.57
55.01 - 60.00                      3          3,743,456.13        10.30        1,247,818.71       707           58.02
60.01 - 65.00                      1            422,500.00         1.16          422,500.00       751           65.00
65.01 - 70.00                      2          2,746,082.97         7.56        1,373,041.49       735           69.56
70.01 - 75.00                     14          8,781,415.10        24.16          627,243.94       738           73.71
75.01 - 80.00                     29         14,428,279.91        39.70          497,526.89       743           79.69
80.01 - 85.00                      1            173,918.46         0.48          173,918.46       639           85.00
85.01 - 90.00                      1            486,000.00         1.34          486,000.00       700           90.00
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                            61       $ 36,340,803.83       100.00%      $  595,750.88       740           70.66%
=========================================================================================================================




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

-------------------------------------------------------------------------------------------------------------------------
                                              AGGREGATE       % OF GROUP 1                                     WEIGHTED
                               NUMBER OF    CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                                GROUP 1        STATED            STATED      STATED PRINCIPAL   AVERAGE        ORIGINAL
  CURRENT MORTGAGE INTEREST    MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
          RATES (%)              LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

4.751 - 5.000                      1       $    538,363.00         1.48%      $  538,363.00       703           80.00%
5.001 - 5.250                      1          1,000,000.00         2.75        1,000,000.00       748           70.13
5.251 - 5.500                      1             71,925.00         0.20           71,925.00       688           51.38
5.501 - 5.750                      4          2,360,250.00         6.49          590,062.50       727           70.41
5.751 - 6.000                     14          6,888,730.00        18.96          492,052.14       747           78.40
6.001 - 6.250                     13          7,347,507.45        20.22          565,192.88       755           67.07
6.251 - 6.500                     16         10,839,032.96        29.83          677,439.56       739           67.61
6.501 - 6.750                      5          4,157,675.00        11.44          831,535.00       733           66.57
6.751 - 7.000                      4          2,205,395.23         6.07          551,348.81       720           73.86
7.001 - 7.250                      1            486,000.00         1.34          486,000.00       700           90.00
7.501 - 7.750                      1            445,925.19         1.23          445,925.19       727           80.00
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                            61       $ 36,340,803.83       100.00%      $  595,750.88       740           70.66%
=========================================================================================================================


(1)   As of the Cut-off Date, the weighted average cxurrent Mortgage Interest
      Rate of the Group 1 Mortgage Loans is expected to be approximately 6.287%
      per annum.


                                       A-5





                                     GROSS MARGINS OF THE GROUP 1 MORTGAGE LOANS (1)

-------------------------------------------------------------------------------------------------------------------------
                                              AGGREGATE       % OF GROUP 1                                     WEIGHTED
                               NUMBER OF    CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                                GROUP 1        STATED            STATED      STATED PRINCIPAL   AVERAGE        ORIGINAL
                               MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
      GROSS MARGIN (%)           LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

2.250                             60       $ 35,790,803.83        98.49%      $  596,513.40       740           70.95%
2.750                              1            550,000.00         1.51          550,000.00       N/A           51.50
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                            61       $ 36,340,803.83       100.00%      $  595,750.88       740           70.66%
=========================================================================================================================


(1)   As of the Cut-off Date, the weighted average Gross Margin of the Group 1
      Mortgage Loans is expected to be approximately 2.258% per annum.



                                     RATE CEILINGS OF THE GROUP 1 MORTGAGE LOANS (1)

-------------------------------------------------------------------------------------------------------------------------
                                              AGGREGATE       % OF GROUP 1                                     WEIGHTED
                               NUMBER OF    CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                                GROUP 1        STATED            STATED      STATED PRINCIPAL   AVERAGE        ORIGINAL
                               MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
      RATE CEILINGS (%)          LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

10.751 - 11.000                    1       $    538,363.00         1.48%      $  538,363.00       703           80.00%
11.001 - 11.250                    1          1,000,000.00         2.75        1,000,000.00       748           70.13
11.251 - 11.500                    1             71,925.00         0.20           71,925.00       688           51.38
11.501 - 11.750                    4          2,360,250.00         6.49          590,062.50       727           70.41
11.751 - 12.000                   14          6,888,730.00        18.96          492,052.14       747           78.40
12.001 - 12.250                   13          7,347,507.45        20.22          565,192.88       755           67.07
12.251 - 12.500                   16         10,839,032.96        29.83          677,439.56       739           67.61
12.501 - 12.750                    5          4,157,675.00        11.44          831,535.00       733           66.57
12.751 - 13.000                    4          2,205,395.23         6.07          551,348.81       720           73.86
13.001 - 13.250                    1            486,000.00         1.34          486,000.00       700           90.00
13.501 - 13.750                    1            445,925.19         1.23          445,925.19       727           80.00
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                            61       $ 36,340,803.83       100.00%      $  595,750.88       740           70.66%
=========================================================================================================================


(1)   As of the Cut-off Date, the weighted average Rate Ceiling of the Group 1
      Mortgage Loans is expected to be approximately 12.287% per annum.


                                       A-6





                               FIRST RATE ADJUSTMENT DATE OF THE GROUP 1 MORTGAGE LOANS (1)

-------------------------------------------------------------------------------------------------------------------------
                                              AGGREGATE       % OF GROUP 1                                     WEIGHTED
                               NUMBER OF    CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                                GROUP 1        STATED            STATED      STATED PRINCIPAL   AVERAGE        ORIGINAL
         FIRST RATE            MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
       ADJUSTMENT DATE           LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

November 1, 2006                   1       $    550,000.00         1.51%      $  550,000.00       N/A           51.50%
October 1, 2008                    1            342,559.49         0.94          342,559.49       651           76.67
November 1, 2008                   1             71,925.00         0.20           71,925.00       688           51.38
December 1, 2008                   2          1,923,040.16         5.29          961,520.08       749           70.58
January 1, 2009                    9          6,142,346.29        16.90          682,482.92       712           68.70
February 1, 2009                   1            393,814.40         1.08          393,814.40       761           54.86
March 1, 2009                      9          3,206,956.92         8.82          356,328.55       743           77.67
April 1, 2009                     17         11,138,112.57        30.65          655,183.09       728           72.07
May 1, 2009                       20         12,572,049.00        34.59          628,602.45       765           69.87
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                            61       $ 36,340,803.83       100.00%      $  595,750.88       740           70.66%
=========================================================================================================================


(1)   As of the Cut-off Date, the weighted average number of months to the first
      rate Adjustment Date for the Group 1 Mortgage Loans is expected to be
      approximately 34 months.



                                    REMAINING TERMS OF THE GROUP 1 MORTGAGE LOANS (1)

-------------------------------------------------------------------------------------------------------------------------
                                              AGGREGATE       % OF GROUP 1                                     WEIGHTED
                               NUMBER OF    CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                                GROUP 1        STATED            STATED      STATED PRINCIPAL   AVERAGE        ORIGINAL
                               MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
  REMAINING TERM (MONTHS)        LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

341 - 360                         61       $ 36,340,803.83       100.00%      $  595,750.88       740           70.66%
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                            61       $ 36,340,803.83       100.00%      $  595,750.88       740           70.66%
=========================================================================================================================


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


                                       A-7





                                CREDIT SCORING OF MORTGAGORS OF THE GROUP 1 MORTGAGE LOANS

-------------------------------------------------------------------------------------------------------------------------
                                              AGGREGATE       % OF GROUP 1                                     WEIGHTED
                               NUMBER OF    CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                                GROUP 1        STATED            STATED      STATED PRINCIPAL   AVERAGE        ORIGINAL
                               MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
       CREDIT SCORES             LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

801 - 850                          7       $  3,526,725.39         9.70%      $  503,817.91       807           68.88%
751 - 800                         19         10,345,562.26        28.47          544,503.28       776           69.87
701 - 750                         20         15,017,818.17        41.32          750,890.91       726           70.15
651 - 700                         12          6,023,688.55        16.58          501,974.05       679           75.16
601 - 650                          1            173,918.46         0.48          173,918.46       639           85.00
Not Scored                         2          1,253,091.00         3.45          626,545.50       N/A           64.69
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                            61       $ 36,340,803.83       100.00%      $  595,750.88       740           70.66%
=========================================================================================================================




                       ORIGINAL DEBT-TO-INCOME RATIO OF MORTGAGORS OF THE GROUP 1 MORTGAGE LOANS(1)

-------------------------------------------------------------------------------------------------------------------------
                                              AGGREGATE       % OF GROUP 1                                     WEIGHTED
                               NUMBER OF    CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                                GROUP 1        STATED            STATED      STATED PRINCIPAL   AVERAGE        ORIGINAL
   ORIGINAL DEBT-TO-INCOME     MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
         RATIOS (%)              LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

5.01 - 10.00                       1       $  2,000,000.00         5.50%      $2,000,000.00       715           57.74%
10.01 - 15.00                      1            430,400.00         1.18          430,400.00       727           80.00
15.01 - 20.00                      1            500,000.00         1.38          500,000.00       809           39.53
20.01 - 25.00                      3          1,214,556.31         3.34          404,852.10       800           77.17
25.01 - 30.00                      4          1,930,057.79         5.31          482,514.45       737           71.49
30.01 - 35.00                      6          2,695,970.91         7.42          449,328.49       761           71.74
35.01 - 40.00                     18         10,748,589.64        29.58          597,143.87       732           70.29
40.01 - 45.00                     14          8,510,214.96        23.42          607,872.50       750           74.75
45.01 - 50.00                      8          4,753,299.46        13.08          594,162.43       732           69.67
50.01 - 55.00                      2          1,625,789.57         4.47          812,894.79       695           77.70
55.01 - 60.00                      3          1,931,925.19         5.32          643,975.06       747           64.11
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                            61       $ 36,340,803.83       100.00%      $  595,750.88       740           70.66%
=========================================================================================================================


(1)   As of the Cut-off Date, the weighted average original Debt-to-Income Ratio
      of the Group 1 Mortgage Loans is expected to be approximately 38.24%.



                                MONTHS SINCE ORIGINATION OF THE GROUP 1 MORTGAGE LOANS (1)

-------------------------------------------------------------------------------------------------------------------------
                                              AGGREGATE       % OF GROUP 1                                     WEIGHTED
                               NUMBER OF    CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                                GROUP 1        STATED            STATED      STATED PRINCIPAL   AVERAGE        ORIGINAL
                               MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
  MONTHS SINCE ORIGINATION       LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

1 - 6                             59       $ 35,926,319.34        98.86%      $  608,920.67       741           70.64%
-------------------------------------------------------------------------------------------------------------------------
7 - 12                             2            414,484.49         1.14          207,242.25       657           72.28
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                            61       $ 36,340,803.83       100.00%      $  595,750.88       740           70.66%
=========================================================================================================================


(1)   As of the Cut-off Date, the weighted average months since origination of
      the Group 1 Mortgage Loans is expected to be approximately 3 months.


                                       A-8





                                  DOCUMENTATION LEVELS OF THE GROUP 1 MORTGAGE LOANS(1)

-------------------------------------------------------------------------------------------------------------------------
                                              AGGREGATE       % OF GROUP 1                                     WEIGHTED
                               NUMBER OF    CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                                GROUP 1        STATED            STATED      STATED PRINCIPAL   AVERAGE        ORIGINAL
                               MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
     DOCUMENTATION LEVEL         LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

Accelerated - Stated              20       $ 12,940,605.14        35.61%      $  647,030.26       728           70.15%
Standard                          23         12,937,792.85        35.60          562,512.73       719           74.45
Accelerated - Rapid                8          5,122,014.40        14.09          640,251.80       779           63.34
Accelerated - PaperSaver(R)
  /Threshold                       6          3,296,725.39         9.07          549,454.23       792           71.66
Accelerated - Stated
  Income/Stated Asset              4          2,043,666.05         5.62          510,916.51       762           66.61
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                            61       $ 36,340,803.83       100.00%      $  595,750.88       740           70.66%
=========================================================================================================================


(1)   For a description of each documentation level, see "Mortgage Loan
      Underwriting Standards" in this prospectus supplement.


                                       A-9



                                  LOAN GROUP 2



                            OCCUPANCY OF MORTGAGED PROPERTIES OF THE GROUP 2 MORTGAGE LOANS(1)

-------------------------------------------------------------------------------------------------------------------------
                                              AGGREGATE       % OF GROUP 2                                     WEIGHTED
                               NUMBER OF    CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                                GROUP 2        STATED            STATED      STATED PRINCIPAL   AVERAGE        ORIGINAL
                               MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
          OCCUPANCY              LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

Primary Residence                512       $303,222,156.92        86.29%      $  592,230.78       738           72.54%
Second Home                       61         41,819,949.76        11.90          685,572.95       744           72.59
Investor Property                 15          6,363,823.17         1.81          424,254.88       723           74.65
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                           588       $351,405,929.85       100.00%      $  597,629.13       738           72.59%
=========================================================================================================================


(1)   Based solely on representations of the mortgagor at the time of
      origination of the related Group 2 Mortgage Loan.



                                       PROPERTY TYPES OF THE GROUP 2 MORTGAGE LOANS

-------------------------------------------------------------------------------------------------------------------------
                                              AGGREGATE       % OF GROUP 2                                     WEIGHTED
                               NUMBER OF    CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                                GROUP 2        STATED            STATED      STATED PRINCIPAL   AVERAGE        ORIGINAL
                               MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
        PROPERTY TYPE            LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

Single Family Residence          328       $198,128,494.82        56.38%      $  604,050.29       739           72.42%
PUD                              153         86,769,042.98        24.69          567,117.93       739           71.37
Condominium                       91         53,907,843.81        15.34          592,393.89       739           74.19
2-Family                           6          5,442,055.82         1.55          907,009.30       738           77.08
Townhouse                          7          4,837,013.40         1.38          691,001.91       714           80.00
3-Family                           3          2,321,479.02         0.66          773,826.34       713           69.27
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                           588       $351,405,929.85       100.00%      $  597,629.13       738           72.59%
=========================================================================================================================




                                   MORTGAGE LOAN PURPOSE OF THE GROUP 2 MORTGAGE LOANS

-------------------------------------------------------------------------------------------------------------------------
                                              AGGREGATE       % OF GROUP 2                                     WEIGHTED
                               NUMBER OF    CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                                GROUP 2        STATED            STATED      STATED PRINCIPAL   AVERAGE        ORIGINAL
                               MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
           PURPOSE               LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

Purchase                         408       $236,568,355.89        67.32%      $  579,824.40       739           75.65%
Refinance-Cashout                109         69,794,990.72        19.86          640,321.02       735           66.89
Refinance-Rate/Term               71         45,042,583.24        12.82          634,402.58       739           65.34
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                           588       $351,405,929.85       100.00%      $  597,629.13       738           72.59%
=========================================================================================================================



                                      A-10





                                   GEOGRAPHICAL DISTRIBUTION OF THE MORTGAGE PROPERTIES
                                             OF THE GROUP 2 MORTGAGE LOANS(1)

-------------------------------------------------------------------------------------------------------------------------
                                              AGGREGATE       % OF GROUP 2                                     WEIGHTED
                               NUMBER OF    CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                                GROUP 2        STATED            STATED      STATED PRINCIPAL   AVERAGE        ORIGINAL
                               MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
       GEOGRAPHIC AREA           LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

Arizona                           15       $  7,743,176.94         2.20%      $  516,211.80       725           70.85%
California                       269        161,946,245.93        46.09          602,030.65       739           72.59
Colorado                           9          7,505,622.52         2.14          833,958.06       728           77.38
Connecticut                        4          3,228,609.83         0.92          807,152.46       776           64.35
Delaware                           1            518,059.08         0.15          518,059.08       708           59.31
District of Columbia               6          3,114,920.00         0.89          519,153.33       711           77.75
Florida                           82         49,511,079.70        14.09          603,793.65       734           73.66
Georgia                           15          7,579,399.05         2.16          505,293.27       729           76.80
Hawaii                             6          5,813,202.52         1.65          968,867.09       719           66.74
Illinois                          15         11,836,731.34         3.37          789,115.42       740           72.21
Indiana                            2            837,074.00         0.24          418,537.00       720           80.00
Maine                              1            394,000.00         0.11          394,000.00       688           80.00
Maryland                          19         10,180,012.93         2.90          535,790.15       727           72.47
Massachusetts                     15          9,663,052.41         2.75          644,203.49       745           67.80
Minnesota                          1          1,000,000.00         0.28        1,000,000.00       751           60.61
Missouri                           5          4,109,134.00         1.17          821,826.80       739           71.60
Nebraska                           1            531,444.56         0.15          531,444.56       715           80.00
Nevada                            14          6,567,301.87         1.87          469,092.99       735           68.06
New Hampshire                      1            576,000.00         0.16          576,000.00       735           80.00
New Jersey                         7          4,136,501.60         1.18          590,928.80       736           73.65
New Mexico                         1            649,305.11         0.18          649,305.11       703           36.11
New York                           6          2,971,986.45         0.85          495,331.08       743           72.98
North Carolina                     3          1,785,671.94         0.51          595,223.98       728           80.00
Ohio                               1            440,000.00         0.13          440,000.00       745           80.00
Oklahoma                           1            195,258.62         0.06          195,258.62       692           80.00
Oregon                             3          1,140,881.64         0.32          380,293.88       763           73.12
Pennsylvania                       3          2,754,465.81         0.78          918,155.27       699           60.02
Rhode Island                       1            808,198.71         0.23          808,198.71       748           80.00
South Carolina                     6          2,370,376.83         0.67          395,062.81       774           73.24
Tennessee                          2          1,078,275.00         0.31          539,137.50       758           70.90
Texas                             17          7,497,346.00         2.13          441,020.35       763           72.69
Utah                               5          2,711,388.27         0.77          542,277.65       722           72.93
Vermont                            2          1,703,920.00         0.48          851,960.00       781           62.08
Virginia                          32         18,947,121.71         5.39          592,097.55       740           75.93
Washington                        14          6,985,765.48         1.99          498,983.25       741           78.60
Wisconsin                          2          1,634,400.00         0.47          817,200.00       762           56.01
Wyoming                            1            940,000.00         0.27          940,000.00       779           63.09
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                           588       $351,405,929.85       100.00%      $  597,629.13       738           72.59%
=========================================================================================================================


(1)   As of the Cut-off Date, no more than approximately 1.56% of the Group 2
      Mortgage Loans are expected to be secured by mortgaged properties in any
      one five-digit postal zip code.


                                      A-11





                          CURRENT MORTGAGE LOAN PRINCIPAL BALANCES OF THE GROUP 2 MORTGAGE LOANS

-------------------------------------------------------------------------------------------------------------------------
                                              AGGREGATE       % OF GROUP 2                                     WEIGHTED
                               NUMBER OF    CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                                GROUP 2        STATED            STATED      STATED PRINCIPAL   AVERAGE        ORIGINAL
    CURRENT MORTGAGE LOAN      MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
   PRINCIPAL BALANCES ($)        LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

0.01 - 50,000.00                   1       $     35,633.68         0.01%      $   35,633.68       696           80.00%
50,000.01 - 100,000.00             4            322,007.56         0.09           80,501.89       708           71.43
100,000.01 - 150,000.00            9          1,152,641.93         0.33          128,071.33       743           73.31
150,000.01 - 200,000.00           10          1,814,381.62         0.52          181,438.16       699           84.11
200,000.01 - 250,000.00           11          2,406,666.84         0.68          218,787.89       738           76.14
250,000.01 - 300,000.00           13          3,542,124.12         1.01          272,471.09       717           76.16
300,000.01 - 350,000.00            8          2,571,516.97         0.73          321,439.62       713           72.85
350,000.01 - 400,000.00           17          6,385,866.66         1.82          375,639.22       734           71.42
400,000.01 - 450,000.00           57         24,891,258.61         7.08          436,688.75       726           74.63
450,000.01 - 500,000.00          117         55,851,846.71        15.89          477,366.21       738           74.95
500,000.01 - 550,000.00           86         45,157,302.46        12.85          525,084.91       736           73.66
550,000.01 - 600,000.00           80         46,004,383.24        13.09          575,054.79       746           73.59
600,000.01 - 650,000.00           51         32,223,124.66         9.17          631,825.97       731           72.13
650,000.01 - 700,000.00           21         14,341,666.99         4.08          682,936.52       745           69.56
700,000.01 - 750,000.00           18         13,199,009.53         3.76          733,278.31       737           71.22
750,000.01 - 800,000.00           13         10,167,816.77         2.89          782,139.75       753           73.37
800,000.01 - 850,000.00            4          3,321,590.71         0.95          830,397.68       764           77.46
850,000.01 - 900,000.00            8          6,999,566.42         1.99          874,945.80       745           71.69
900,000.01 - 950,000.00            9          8,366,341.65         2.38          929,593.52       740           74.19
950,000.01 - 1,000,000.00         23         22,844,906.64         6.50          993,256.81       755           67.41
1,000,000.01 - 1,500,000.00       15         18,844,735.66         5.36        1,256,315.71       725           67.04
1,500,000.01 - 2,000,000.00        4          7,275,000.00         2.07        1,818,750.00       793           59.06
2,000,000.01 - 2,500,000.00        4          9,160,911.22         2.61        2,290,227.81       714           80.00
2,500,000.01 - 3,000,000.00        5         14,525,629.20         4.13        2,905,125.84       724           71.57
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                           588       $351,405,929.85       100.00%      $  597,629.13       738           72.59%
=========================================================================================================================



                                      A-12





                               ORIGINAL LOAN-TO-VALUE RATIOS OF THE GROUP 2 MORTGAGE LOANS

-------------------------------------------------------------------------------------------------------------------------
                                              AGGREGATE       % OF GROUP 2                                     WEIGHTED
                               NUMBER OF    CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                                GROUP 2        STATED            STATED      STATED PRINCIPAL   AVERAGE        ORIGINAL
   ORIGINAL LOAN-TO-VALUE      MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
         RATIOS (%)              LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

20.01 - 25.00                      3       $  2,583,300.00         0.74%      $  861,100.00       779           21.56%
25.01 - 30.00                      2            689,854.21         0.20          344,927.11       779           27.45
30.01 - 35.00                      4          2,259,179.00         0.64          564,794.75       757           32.31
35.01 - 40.00                      4          2,574,305.11         0.73          643,576.28       738           37.00
40.01 - 45.00                      3          2,124,000.00         0.60          708,000.00       727           43.91
45.01 - 50.00                     18         11,138,553.17         3.17          618,808.51       755           47.87
50.01 - 55.00                     16         10,158,014.17         2.89          634,875.89       752           53.12
55.01 - 60.00                     13         10,302,448.72         2.93          792,496.06       750           58.24
60.01 - 65.00                     43         29,396,713.21         8.37          683,644.49       739           62.70
65.01 - 70.00                     60         39,755,743.88        11.31          662,595.73       743           68.45
70.01 - 75.00                     66         43,666,813.04        12.43          661,618.38       740           73.96
75.01 - 80.00                    347        194,386,334.08        55.32          560,191.16       734           79.69
85.01 - 90.00                      8          2,129,907.90         0.61          266,238.49       696           89.86
90.01 - 95.00                      1            240,763.36         0.07          240,763.36       N/A           95.00
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                           588       $351,405,929.85       100.00%      $  597,629.13       738           72.59%
=========================================================================================================================




                            CURRENT MORTGAGE INTEREST RATES OF THE GROUP 2 MORTGAGE LOANS (1)

-------------------------------------------------------------------------------------------------------------------------
                                              AGGREGATE       % OF GROUP 2                                     WEIGHTED
                               NUMBER OF    CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                                GROUP 2        STATED            STATED      STATED PRINCIPAL   AVERAGE        ORIGINAL
  CURRENT MORTGAGE INTEREST    MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
          RATES (%)              LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

4.251 - 4.500                      1       $    361,600.00         0.10%      $  361,600.00       791           80.00%
4.501 - 4.750                      3          1,594,275.00         0.45          531,425.00       742           74.20
4.751 - 5.000                      4          2,556,994.00         0.73          639,248.50       741           72.13
5.001 - 5.250                     25         11,260,503.40         3.20          450,420.14       742           73.80
5.251 - 5.500                     38         19,172,722.76         5.46          504,545.34       746           75.36
5.501 - 5.750                     66         42,993,064.63        12.23          651,410.07       746           71.04
5.751 - 6.000                    119         71,604,130.49        20.38          601,715.38       736           72.70
6.001 - 6.250                    132         77,217,320.39        21.97          584,979.70       741           70.11
6.251 - 6.500                    121         71,616,747.68        20.38          591,873.95       738           75.72
6.501 - 6.750                     44         27,037,842.38         7.69          614,496.42       719           74.15
6.751 - 7.000                     26         17,802,306.38         5.07          684,704.09       739           71.22
7.001 - 7.250                      4          3,434,419.49         0.98          858,604.87       668           73.19
7.251 - 7.500                      3          4,425,000.00         1.26        1,475,000.00       769           57.39
7.501 - 7.750                      2            329,003.25         0.09          164,501.63       700           80.00
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                           588       $351,405,929.85       100.00%      $  597,629.13       738           72.59%
=========================================================================================================================


(1)   As of the Cut-off Date, the weighted average current Mortgage Interest
      Rate of the Group 2 Mortgage Loans is expected to be approximately 6.144%
      per annum.


                                      A-13





                                      GROSS MARGINS OF THE GROUP 2 MORTGAGE LOANS(1)

-------------------------------------------------------------------------------------------------------------------------
                                              AGGREGATE       % OF GROUP 2                                     WEIGHTED
                               NUMBER OF    CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                                GROUP 2        STATED            STATED      STATED PRINCIPAL   AVERAGE        ORIGINAL
                               MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
      GROSS MARGIN (%)           LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

2.250                            588       $351,405,929.85       100.00%      $  597,629.13       738           72.59%
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                           588       $351,405,929.85       100.00%      $  597,629.13       738           72.59%
=========================================================================================================================


(1)   As of the Cut-off Date, the weighted average Gross Margin of the Group 2
      Mortgage Loans is expected to be approximately 2.250% per annum.



                                      RATE CEILINGS OF THE GROUP 2 MORTGAGE LOANS(1)

-------------------------------------------------------------------------------------------------------------------------
                                              AGGREGATE       % OF GROUP 2                                     WEIGHTED
                               NUMBER OF    CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                                GROUP 2        STATED            STATED      STATED PRINCIPAL   AVERAGE        ORIGINAL
                               MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
      RATE CEILINGS (%)          LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

9.251 - 9.500                      1       $    361,600.00         0.10%      $  361,600.00       791           80.00%
9.501 - 9.750                      3          1,594,275.00         0.45          531,425.00       742           74.20
9.751 - 10.000                     4          2,556,994.00         0.73          639,248.50       741           72.13
10.001 - 10.250                   24         10,760,514.40         3.06          448,354.77       742           73.67
10.251 - 10.500                   39         19,672,711.76         5.60          504,428.51       746           75.39
10.501 - 10.750                   66         42,993,064.63        12.23          651,410.07       746           71.04
10.751 - 11.000                  119         71,604,130.49        20.38          601,715.38       736           72.70
11.001 - 11.250                  132         77,217,320.39        21.97          584,979.70       741           70.11
11.251 - 11.500                  120         70,817,470.90        20.15          590,145.59       738           75.85
11.501 - 11.750                   44         27,037,842.38         7.69          614,496.42       719           74.15
11.751 - 12.000                   26         17,802,306.38         5.07          684,704.09       739           71.22
12.001 - 12.250                    4          3,434,419.49         0.98          858,604.87       668           73.19
12.251 - 12.500                    3          4,425,000.00         1.26        1,475,000.00       769           57.39
12.501 - 12.750                    2            329,003.25         0.09          164,501.63       700           80.00
12.751 - 13.000                    1            799,276.78         0.23          799,276.78       699           63.95
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                           588       $351,405,929.85       100.00%      $  597,629.13       738           72.59%
=========================================================================================================================


(1)   As of the Cut-off Date, the weighted average Rate Ceiling of the Group 2
      Mortgage Loans is expected to be approximately 11.148% per annum.


                                      A-14





                               FIRST RATE ADJUSTMENT DATE OF THE GROUP 2 MORTGAGE LOANS(1)

-------------------------------------------------------------------------------------------------------------------------
                                              AGGREGATE       % OF GROUP 2                                     WEIGHTED
                               NUMBER OF    CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                                GROUP 2        STATED            STATED      STATED PRINCIPAL   AVERAGE        ORIGINAL
         FIRST RATE            MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
       ADJUSTMENT DATE           LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

December 1, 2009                   2       $    471,180.19         0.13%      $  235,590.10       786           80.00%
January 1, 2010                    1            275,260.75         0.08          275,260.75       779           77.78
June 1, 2010                       1            209,119.19         0.06          209,119.19       742           75.00
July 1, 2010                       1            276,221.26         0.08          276,221.26       750           80.00
August 1, 2010                     1            272,240.78         0.08          272,240.78       759           50.00
September 1, 2010                  4          1,210,000.00         0.34          302,500.00       710           67.34
October 1, 2010                    6          1,811,339.87         0.52          301,889.98       723           73.43
November 1, 2010                   7          1,726,139.32         0.49          246,591.33       757           76.04
December 1, 2010                   6          2,399,325.12         0.68          399,887.52       690           69.69
January 1, 2011                   11          4,203,143.69         1.20          382,103.97       704           76.71
February 1, 2011                   3          2,530,454.24         0.72          843,484.75       718           66.69
March 1, 2011                     54         32,498,906.83         9.25          601,831.61       712           74.48
April 1, 2011                    244        147,835,365.17        42.07          605,882.64       736           73.97
May 1, 2011                      246        155,256,075.34        44.18          631,122.26       748           70.88
August 1, 2011                     1            431,158.10         0.12          431,158.10       676           75.52
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                           588       $351,405,929.85       100.00%      $  597,629.13       738           72.59%
=========================================================================================================================


(1)   As of the Cut-off Date, the weighted average number of months to the first
      rate Adjustment Date for the Group 2 Mortgage Loans is expected to be
      approximately 59 months.



                                     REMAINING TERMS OF THE GROUP 2 MORTGAGE LOANS(1)

-------------------------------------------------------------------------------------------------------------------------
                                              AGGREGATE       % OF GROUP 2                                     WEIGHTED
                               NUMBER OF    CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                                GROUP 2        STATED            STATED      STATED PRINCIPAL   AVERAGE        ORIGINAL
                               MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
   REMAINING TERM (MONTHS)       LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

341 - 360                        588       $351,405,929.85       100.00%      $  597,629.13       738           72.59%
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                           588       $351,405,929.85       100.00%      $  597,629.13       738           72.59%
=========================================================================================================================


(1)   As of the Cut-off Date, the weighted average remaining term to stated
      maturity of the Group 2 Mortgage Loans is expected to be approximately 359
      months.


                                      A-15





                                CREDIT SCORING OF MORTGAGORS OF THE GROUP 2 MORTGAGE LOANS

-------------------------------------------------------------------------------------------------------------------------
                                              AGGREGATE       % OF GROUP 2                                     WEIGHTED
                               NUMBER OF    CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                                GROUP 2        STATED            STATED      STATED PRINCIPAL   AVERAGE        ORIGINAL
                               MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
        CREDIT SCORES            LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

801 - 850                         27       $ 17,380,767.47         4.95%      $  643,732.13       806           63.43%
751 - 800                        219        138,495,720.16        39.41          632,400.55       772           71.14
701 - 750                        203        113,411,042.97        32.27          558,675.09       727           74.68
651 - 700                        123         69,846,269.09        19.88          567,855.85       682           73.35
601 - 650                         11          6,809,683.34         1.94          619,062.12       635           79.14
Not Scored                         5          5,462,446.82         1.55        1,092,489.36       N/A           77.01
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                           588       $351,405,929.85       100.00%      $  597,629.13       738           72.59%
=========================================================================================================================




                       ORIGINAL DEBT-TO-INCOME RATIO OF MORTGAGORS OF THE GROUP 2 MORTGAGE LOANS(1)

-------------------------------------------------------------------------------------------------------------------------
                                              AGGREGATE       % OF GROUP 2                                     WEIGHTED
                               NUMBER OF    CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                                GROUP 2        STATED            STATED      STATED PRINCIPAL   AVERAGE        ORIGINAL
   ORIGINAL DEBT-TO-INCOME     MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
         RATIOS (%)              LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

5.01 - 10.00                       4       $  2,002,550.00         0.57%      $  500,637.50       756           69.76%
10.01 - 15.00                     12          6,215,037.35         1.77          517,919.78       768           67.62
15.01 - 20.00                     18         11,119,113.03         3.16          617,728.50       748           64.54
20.01 - 25.00                     49         33,170,237.73         9.44          676,943.63       741           72.65
25.01 - 30.00                     77         43,442,466.14        12.36          564,187.87       743           70.02
30.01 - 35.00                     87         58,578,384.71        16.67          673,314.77       737           75.08
35.01 - 40.00                    126         71,342,824.52        20.30          566,212.89       734           73.67
40.01 - 45.00                    123         74,060,366.85        21.08          602,116.80       735           72.93
45.01 - 50.00                     54         31,351,316.07         8.92          580,579.93       735           73.76
50.01 - 55.00                     25         14,076,995.60         4.01          563,079.82       737           71.83
55.01 - 60.00                      8          4,229,645.42         1.20          528,705.68       739           66.26
60.01 - 65.00                      4          1,555,833.25         0.44          388,958.31       728           63.86
65.01 - 70.00                      1            261,159.18         0.07          261,159.18       720           80.00
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                           588       $351,405,929.85       100.00%      $  597,629.13       738           72.59%
=========================================================================================================================


(1)   As of the Cut-off Date, the weighted average original Debt-to-Income Ratio
      of the Group 2 Mortgage Loans is expected to be approximately 35.75%.


                                      A-16





                                MONTHS SINCE ORIGINATION OF THE GROUP 2 MORTGAGE LOANS(1)

-------------------------------------------------------------------------------------------------------------------------
                                              AGGREGATE       % OF GROUP 2                                     WEIGHTED
                               NUMBER OF    CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                                GROUP 2        STATED            STATED      STATED PRINCIPAL   AVERAGE        ORIGINAL
                               MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
  MONTHS SINCE ORIGINATION       LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

1 - 6                            562       $343,424,004.61        97.73%      $  611,074.74       738           72.59%
7 - 12                            21          6,304,337.20         1.79          300,206.53       730           71.10
13 - 18                            4          1,246,429.94         0.35          311,607.49       765           78.13
19 - 24                            1            431,158.10         0.12          431,158.10       676           75.52
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                           588       $351,405,929.85       100.00%      $  597,629.13       738           72.59%
=========================================================================================================================


(1)   As of the Cut-off Date, the weighted average months aince origination of
      the Group 2 Mortgage Loans is expected to be approximately 2 months.



                                  DOCUMENTATION LEVELS OF THE GROUP 2 MORTGAGE LOANS(1)

-------------------------------------------------------------------------------------------------------------------------
                                              AGGREGATE       % OF GROUP 2                                     WEIGHTED
                               NUMBER OF    CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                                GROUP 2        STATED            STATED      STATED PRINCIPAL   AVERAGE        ORIGINAL
                               MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
     DOCUMENTATION LEVEL         LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

Standard                         212       $135,382,230.78        38.53%      $  638,595.43       724           73.93%
Accelerated - Stated             130         70,507,236.32        20.06          542,363.36       723           72.74
Accelerated - PaperSaver(R)
  /Threshold                     122         68,868,275.53        19.60          564,494.06       765           70.04
Accelerated - Rapid               81         51,668,812.70        14.70          637,886.58       752           71.57
Accelerated - Stated Income
  /Stated Asset                   40         24,058,378.24         6.85          601,459.46       753           73.74
Desktop Underwriter(R)/Loan
  Prospector(R)                    3            920,996.28         0.26          306,998.76       742           80.00
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                           588       $351,405,929.85       100.00%      $  597,629.13       738           72.59%
=========================================================================================================================


(1)   For a description of each documentation level, see "Mortgage Loan
      Underwriting Standards" in this prospectus supplement.


                                      A-17



                                  LOAN GROUP 3



                            OCCUPANCY OF MORTGAGED PROPERTIES OF THE GROUP 3 MORTGAGE LOANS(1)

-------------------------------------------------------------------------------------------------------------------------
                                              AGGREGATE       % OF GROUP 3                                     WEIGHTED
                               NUMBER OF    CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                                GROUP 3        STATED            STATED      STATED PRINCIPAL   AVERAGE        ORIGINAL
                               MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
          OCCUPANCY              LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

Primary Residence                114       $ 74,370,049.02        90.83%      $  652,368.85       746           70.04%
Second Home                       11          6,574,636.53         8.03          597,694.23       747           66.82
Investor Property                  2            935,853.06         1.14          467,926.53       751           75.00
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                           127       $ 81,880,538.61       100.00%      $  644,728.65       746           69.84%
=========================================================================================================================


(1)   Based solely on representations of the mortgagor at the time of
      origination of the related Group 3 Mortgage Loan.



                                       PROPERTY TYPES OF THE GROUP 3 MORTGAGE LOANS

-------------------------------------------------------------------------------------------------------------------------
                                              AGGREGATE       % OF GROUP 3                                     WEIGHTED
                               NUMBER OF    CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                                GROUP 3        STATED            STATED      STATED PRINCIPAL   AVERAGE        ORIGINAL
                               MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
        PROPERTY TYPE            LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

Single Family Residence           75       $ 46,214,161.65        56.44%      $  616,188.82       744           70.14%
PUD                               37         27,589,280.62        33.69          745,656.23       750           69.19
Condominium                       14          7,635,323.90         9.32          545,380.28       744           70.05
4-Family                           1            441,772.44         0.54          441,772.44       766           75.00
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                           127       $ 81,880,538.61       100.00%      $  644,728.65       746           69.84%
=========================================================================================================================




                                   MORTGAGE LOAN PURPOSE OF THE GROUP 3 MORTGAGE LOANS

-------------------------------------------------------------------------------------------------------------------------
                                              AGGREGATE       % OF GROUP 3                                     WEIGHTED
                               NUMBER OF    CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                                GROUP 3        STATED            STATED      STATED PRINCIPAL   AVERAGE        ORIGINAL
                               MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
           PURPOSE               LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

Purchase                          66       $ 40,996,905.01        50.07%      $  621,165.23       751           74.18%
Refinance-Cashout                 35         21,721,089.92        26.53          620,602.57       742           67.31
Refinance-Rate/Term               26         19,162,543.68        23.40          737,020.91       740           63.43
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                           127       $ 81,880,538.61       100.00%      $  644,728.65       746           69.84%
=========================================================================================================================



                                      A-18





                                   GEOGRAPHICAL DISTRIBUTION OF THE MORTGAGE PROPERTIES
                                             OF THE GROUP 3 MORTGAGE LOANS(1)

-------------------------------------------------------------------------------------------------------------------------
                                              AGGREGATE       % OF GROUP 3                                     WEIGHTED
                               NUMBER OF    CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                                GROUP 3        STATED            STATED      STATED PRINCIPAL   AVERAGE        ORIGINAL
                               MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
     GEOGRAPHIC AREA             LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

Arizona                            3       $  3,372,933.18         4.12%      $1,124,311.06       763           72.65%
Arkansas                           1            479,600.00         0.59          479,600.00       742           80.00
California                        66         42,238,230.36        51.59          639,973.19       747           69.71
Colorado                           5          4,489,300.00         5.48          897,860.00       727           64.98
Connecticut                        2          1,144,000.00         1.40          572,000.00       752           80.00
District of Columbia               1            464,000.00         0.57          464,000.00       729           80.00
Florida                           10          5,827,403.29         7.12          582,740.33       750           65.63
Georgia                            4          2,326,421.73         2.84          581,605.43       724           73.66
Idaho                              1            646,000.00         0.79          646,000.00       780           51.35
Illinois                           5          1,829,743.23         2.23          365,948.65       700           77.42
Maryland                           1            644,000.00         0.79          644,000.00       707           80.00
Massachusetts                      1            720,000.00         0.88          720,000.00       799           60.00
Minnesota                          1            519,200.00         0.63          519,200.00       681           80.00
Missouri                           1            483,279.79         0.59          483,279.79       773           80.00
Nevada                             2            925,862.00         1.13          462,931.00       708           76.42
New Jersey                         1            680,000.00         0.83          680,000.00       764           80.00
New York                           2          1,893,500.00         2.31          946,750.00       767           63.46
North Carolina                     4          2,344,023.50         2.86          586,005.88       712           69.00
South Carolina                     5          2,529,636.53         3.09          505,927.31       747           74.50
Texas                              4          2,818,423.00         3.44          704,605.75       780           59.78
Virginia                           5          4,120,982.00         5.03          824,196.40       758           76.74
Washington                         2          1,384,000.00         1.69          692,000.00       750           62.40
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                           127       $ 81,880,538.61       100.00%      $  644,728.65       746           69.84%
=========================================================================================================================


(1)   As of the Cut-off Date, no more than approximately 3.39% of the Group 3
      Mortgage Loans are expected to be secured by mortgaged properties in any
      one five-digit postal zip code.


                                      A-19





                          CURRENT MORTGAGE LOAN PRINCIPAL BALANCES OF THE GROUP 3 MORTGAGE LOANS

-------------------------------------------------------------------------------------------------------------------------
                                              AGGREGATE       % OF GROUP 3                                     WEIGHTED
                               NUMBER OF    CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                                GROUP 3        STATED            STATED      STATED PRINCIPAL   AVERAGE        ORIGINAL
    CURRENT MORTGAGE LOAN      MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
   PRINCIPAL BALANCES ($)        LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

50,000.01 - 100,000.00             1       $     73,931.46         0.09%      $   73,931.46       746           80.00%
200,000.01 - 250,000.00            1            217,403.29         0.27          217,403.29       722           80.00
250,000.01 - 300,000.00            1            251,736.89         0.31          251,736.89       763           80.00
350,000.01 - 400,000.00            2            782,132.03         0.96          391,066.02       705           65.75
400,000.01 - 450,000.00           11          4,716,231.47         5.76          428,748.32       732           72.63
450,000.01 - 500,000.00           27         12,883,218.75        15.73          477,156.25       737           72.88
500,000.01 - 550,000.00           17          8,917,705.07        10.89          524,570.89       738           74.51
550,000.01 - 600,000.00           15          8,809,681.55        10.76          587,312.10       740           68.69
600,000.01 - 650,000.00           12          7,679,030.00         9.38          639,919.17       732           73.01
650,000.01 - 700,000.00            6          4,104,335.80         5.01          684,055.97       753           74.11
700,000.01 - 750,000.00            3          2,168,028.00         2.65          722,676.00       771           73.36
750,000.01 - 800,000.00            6          4,738,200.00         5.79          789,700.00       769           67.77
800,000.01 - 850,000.00            3          2,423,500.00         2.96          807,833.33       774           58.92
850,000.01 - 900,000.00            6          5,306,592.18         6.48          884,432.03       770           71.68
950,000.01 - 1,000,000.00          6          5,899,955.94         7.21          983,325.99       736           69.57
1,000,000.01 - 1,500,000.00        9         11,091,923.00        13.55        1,232,435.89       751           60.13
1,500,000.01 - 2,000,000.00        1          1,816,933.18         2.22        1,816,933.18       793           70.00
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                           127       $ 81,880,538.61       100.00%      $  644,728.65       746           69.84%
=========================================================================================================================




                              ORIGINAL LOAN-TO-VALUE RATIOS OF THE GROUP 3 MORTGAGE LOANS(1)

-------------------------------------------------------------------------------------------------------------------------
                                              AGGREGATE       % OF GROUP 3                                     WEIGHTED
                               NUMBER OF    CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                                GROUP 3        STATED            STATED      STATED PRINCIPAL   AVERAGE        ORIGINAL
   ORIGINAL LOAN-TO-VALUE      MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
         RATIOS (%)              LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

30.01 - 35.00                      1       $  1,200,000.00         1.47%      $1,200,000.00       704           34.48%
35.01 - 40.00                      1          1,100,000.00         1.34        1,100,000.00       771           40.00
40.01 - 45.00                      2          1,189,000.00         1.45          594,500.00       769           41.64
45.01 - 50.00                      6          4,827,123.00         5.90          804,520.50       769           47.67
50.01 - 55.00                      7          4,701,130.00         5.74          671,590.00       742           53.06
55.01 - 60.00                      8          4,522,926.48         5.52          565,365.81       757           58.20
60.01 - 65.00                      9          5,985,405.94         7.31          665,045.10       746           62.47
65.01 - 70.00                     10          7,849,463.18         9.59          784,946.32       749           68.87
70.01 - 75.00                     18         13,331,376.56        16.28          740,632.03       732           73.35
75.01 - 80.00                     65         37,174,113.45        45.40          571,909.44       747           79.32
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                           127       $ 81,880,538.61       100.00%      $  644,728.65       746           69.84%
=========================================================================================================================


(1)   As of the Cut-off Date, the weighted average Loan-to-Value Ratio at
      origination of the Group 3 Mortgage Loans is expected to be approximately
      69.84%.


                                      A-20





                            CURRENT MORTGAGE INTEREST RATES OF THE GROUP 3 MORTGAGE LOANS(1)

-------------------------------------------------------------------------------------------------------------------------
                                              AGGREGATE       % OF GROUP 3                                    WEIGHTED
                               NUMBER OF    CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                                GROUP 3        STATED            STATED      STATED PRINCIPAL   AVERAGE       ORIGINAL
 CURRENT MORTGAGE INTEREST     MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
         RATES (%)               LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

5.001 - 5.250                      1       $    680,000.00         0.83%      $  680,000.00       764           80.00%
5.251 - 5.500                      4          2,643,422.07         3.23          660,855.52       788           72.74
5.501 - 5.750                     10          5,621,287.21         6.87          562,128.72       743           73.09
5.751 - 6.000                     14         10,922,405.00        13.34          780,171.79       748           68.97
6.001 - 6.250                     49         28,825,329.79        35.20          588,272.04       744           69.69
6.251 - 6.500                     34         22,487,308.92        27.46          661,391.44       743           69.04
6.501 - 6.750                     10          5,692,580.00         6.95          569,258.00       734           72.22
6.751 - 7.000                      4          4,023,205.62         4.91        1,005,801.41       775           69.91
7.001 - 7.250                      1            985,000.00         1.20          985,000.00       705           54.72
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                           127       $ 81,880,538.61       100.00%      $  644,728.65       746           69.84%
=========================================================================================================================


(1)   As of the Cut-off Date, the weighted average current Mortgage Interest
      Rate of the Group 3 Mortgage Loans is expected to be approximately 6.246%
      per annum.



                                     GROSS MARGINS OF THE GROUP 3 MORTGAGE LOANS(1)

-------------------------------------------------------------------------------------------------------------------------
                                              AGGREGATE       % OF GROUP 3                                    WEIGHTED
                               NUMBER OF    CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                                GROUP 3        STATED            STATED      STATED PRINCIPAL   AVERAGE       ORIGINAL
                               MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
     GROSS MARGIN (%)            LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

2.250                            127       $ 81,880,538.61       100.00%      $  644,728.65       746           69.84%
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                           127       $ 81,880,538.61       100.00%      $  644,728.65       746           69.84%
=========================================================================================================================


(1)   As of the Cut-off Date, the weighted average Gross Margin of the Group 3
      Mortgage Loans is expected to be approximately 2.250% per annum.



                                     RATE CEILINGS OF THE GROUP 3 MORTGAGE LOANS(1)

-------------------------------------------------------------------------------------------------------------------------
                                              AGGREGATE       % OF GROUP 3                                    WEIGHTED
                               NUMBER OF    CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                                GROUP 3        STATED            STATED      STATED PRINCIPAL   AVERAGE       ORIGINAL
                               MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
     RATE CEILINGS (%)           LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

10.001 - 10.250                    1       $    680,000.00         0.83%      $  680,000.00       764           80.00%
10.251 - 10.500                    4          2,643,422.07         3.23          660,855.52       788           72.74
10.501 - 10.750                   10          5,621,287.21         6.87          562,128.72       743           73.09
10.751 - 11.000                   14         10,922,405.00        13.34          780,171.79       748           68.97
11.001 - 11.250                   49         28,825,329.79        35.20          588,272.04       744           69.69
11.251 - 11.500                   34         22,487,308.92        27.46          661,391.44       743           69.04
11.501 - 11.750                   10          5,692,580.00         6.95          569,258.00       734           72.22
11.751 - 12.000                    4          4,023,205.62         4.91        1,005,801.41       775           69.91
12.001 - 12.250                    1            985,000.00         1.20          985,000.00       705           54.72
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                           127       $ 81,880,538.61       100.00%      $  644,728.65       746           69.84%
=========================================================================================================================


(1)   As of the Cut-off Date, the weighted average Rate Ceiling of the Group 3
      Mortgage Loans is expected to be approximately 11.246% per annum.


                                      A-21





                               FIRST RATE ADJUSTMENT DATE OF THE GROUP 3 MORTGAGE LOANS(1)

-------------------------------------------------------------------------------------------------------------------------
                                              AGGREGATE       % OF GROUP 3                                    WEIGHTED
                               NUMBER OF    CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                                GROUP 3        STATED            STATED      STATED PRINCIPAL   AVERAGE       ORIGINAL
        FIRST RATE             MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
      ADJUSTMENT DATE            LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

May 1, 2012                        1       $    877,110.18         1.07%      $  877,110.18       716           76.43%
November 1, 2012                   1            397,608.53         0.49          397,608.53       743           56.86
December 1, 2012                   2            810,057.03         0.99          405,028.52       700           67.78
January 1, 2013                    1            384,523.50         0.47          384,523.50       665           74.95
March 1, 2013                      7          4,904,229.79         5.99          700,604.26       757           72.97
April 1, 2013                     36         21,048,949.58        25.71          584,693.04       740           68.24
May 1, 2013                       79         53,458,060.00        65.29          676,684.30       749           70.17
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                           127       $ 81,880,538.61       100.00%      $  644,728.65       746           69.84%
=========================================================================================================================


(1)   As of the Cut-off Date, the weighted average number of months to the first
      rate Adjustment Date for the Group 3 Mortgage Loans is expected to be
      approximately 83 months.



                                    REMAINING TERMS OF THE GROUP 3 MORTGAGE LOANS(1)

-------------------------------------------------------------------------------------------------------------------------
                                              AGGREGATE       % OF GROUP 3                                    WEIGHTED
                               NUMBER OF    CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                                GROUP 3        STATED            STATED      STATED PRINCIPAL   AVERAGE       ORIGINAL
                               MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
  REMAINING TERM (MONTHS)        LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

341 - 360                        127       $ 81,880,538.61       100.00%      $  644,728.65       746           69.84%
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                           127       $ 81,880,538.61       100.00%      $  644,728.65       746           69.84%
=========================================================================================================================


(1)   As of the Cut-off Date, the weighted average remaining term to stated
      maturity of the Group 3 Mortgage Loans is expected to be approximately 360
      months.



                               CREDIT SCORING OF MORTGAGORS OF THE GROUP 3 MORTGAGE LOANS

-------------------------------------------------------------------------------------------------------------------------
                                              AGGREGATE       % OF GROUP 3                                    WEIGHTED
                               NUMBER OF    CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                                GROUP 3        STATED            STATED      STATED PRINCIPAL   AVERAGE       ORIGINAL
                               MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
       CREDIT SCORES             LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

801 - 850                          5       $  3,238,132.00         3.95%      $  647,626.40       806           62.23%
751 - 800                         53         37,570,556.86        45.88          708,878.43       776           68.75
701 - 750                         52         31,849,321.37        38.90          612,486.95       725           70.88
651 - 700                         15          8,154,898.38         9.96          543,659.89       682           74.28
601 - 650                          2          1,067,630.00         1.30          533,815.00       629           66.43
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                           127       $ 81,880,538.61       100.00%      $  644,728.65       746           69.84%
=========================================================================================================================



                                      A-22





                       ORIGINAL DEBT-TO-INCOME RATIO OF MORTGAGORS OF THE GROUP 3 MORTGAGE LOANS(1)

-------------------------------------------------------------------------------------------------------------------------
                                              AGGREGATE       % OF GROUP 3                                    WEIGHTED
                               NUMBER OF    CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                                GROUP 3        STATED            STATED      STATED PRINCIPAL   AVERAGE       ORIGINAL
  ORIGINAL DEBT-TO-INCOME      MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
        RATIOS (%)               LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

5.01 - 10.00                       5       $  3,383,000.00         4.13%      $  676,600.00       748           61.58%
10.01 - 15.00                      3          2,200,000.00         2.69          733,333.33       778           56.29
15.01 - 20.00                      3          2,043,000.00         2.50          681,000.00       751           78.13
20.01 - 25.00                     10          7,367,600.00         9.00          736,760.00       753           60.12
25.01 - 30.00                      7          3,818,813.22         4.66          545,544.75       763           67.68
30.01 - 35.00                     22         15,565,914.89        19.01          707,541.59       739           72.73
35.01 - 40.00                     35         21,191,609.48        25.88          605,474.56       736           71.51
40.01 - 45.00                     21         12,922,636.83        15.78          615,363.66       747           69.24
45.01 - 50.00                     11          7,363,075.87         8.99          669,370.53       757           73.19
50.01 - 55.00                      3          1,725,000.00         2.11          575,000.00       707           73.86
55.01 - 60.00                      5          3,482,279.79         4.25          696,455.96       781           75.76
65.01 - 70.00                      1            397,608.53         0.49          397,608.53       743           56.86
Not Scored                         1            420,000.00         0.51          420,000.00       709           72.10
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                           127       $ 81,880,538.61       100.00%      $  644,728.65       746           69.84%
=========================================================================================================================


(1)   As of the Cut-off Date, the weighted average original Debt-to-Income Ratio
      of the Group 3 Mortgage Loans (other than the Mortgage Loans for which no
      Debt-to-Income Ratio was calculated) is expected to be approximately
      35.48%.



                                MONTHS SINCE ORIGINATION OF THE GROUP 3 MORTGAGE LOANS(1)

-------------------------------------------------------------------------------------------------------------------------
                                              AGGREGATE       % OF GROUP 3                                    WEIGHTED
                               NUMBER OF    CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                                GROUP 3        STATED            STATED      STATED PRINCIPAL   AVERAGE       ORIGINAL
                               MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
 MONTHS SINCE ORIGINATION        LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

1 - 6                            125       $ 80,605,819.90        98.44%      $  644,846.56       747           69.83%
7 - 12                             1            397,608.53         0.49          397,608.53       743           56.86
13 - 18                            1            877,110.18         1.07          877,110.18       716           76.43
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                           127       $ 81,880,538.61       100.00%      $  644,728.65       746           69.84%
=========================================================================================================================


(1)   As of the Cut-off Date, the weighted average months since origination of
      the Group 3 Mortgage Loans is expected to be approximately 2 months.


                                      A-23





                                  DOCUMENTATION LEVELS OF THE GROUP 3 MORTGAGE LOANS(1)

-------------------------------------------------------------------------------------------------------------------------
                                              AGGREGATE       % OF GROUP 3                                    WEIGHTED
                               NUMBER OF    CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                                GROUP 3        STATED            STATED      STATED PRINCIPAL   AVERAGE       ORIGINAL
                               MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
      DOCUMENTATION LEVEL        LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

Standard                          39       $ 24,436,951.93        29.84%      $  626,588.51       735           74.17%
Accelerated - Rapid               30         22,191,040.18        27.10          739,701.34       757           63.72
Accelerated - Stated              28         17,659,618.54        21.57          630,700.66       740           68.54
Accelerated - PaperSaver(R)/
Threshold                         18         10,668,094.33        13.03          592,671.91       768           71.78
Accelerated - Stated Income/
Stated Asset                      10          5,955,233.63         7.27          595,523.36       739           74.20
Desktop Underwriter(R)/Loan
Prospector(R)                      1            549,600.00         0.67          549,600.00       682           80.00
Accelerated - No Ratio             1            420,000.00         0.51          420,000.00       709           72.10
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                           127       $ 81,880,538.61       100.00%      $  644,728.65       746           69.84%
=========================================================================================================================


(1)   For a description of each documentation level, see "Mortgage Loan
      Underwriting Standards" in this prospectus supplement.


                                      A-24



                                  LOAN GROUP 4



                           OCCUPANCY OF MORTGAGED PROPERTIES OF THE GROUP 4 MORTGAGE LOANS(1)

-------------------------------------------------------------------------------------------------------------------------
                                              AGGREGATE       % OF GROUP 4                                    WEIGHTED
                               NUMBER OF    CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                                GROUP 4        STATED            STATED      STATED PRINCIPAL   AVERAGE       ORIGINAL
                               MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
         OCCUPANCY               LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

Primary Residence                234       $154,036,400.31        91.81%      $  658,275.22       743           70.54%
Second Home                       18         12,987,510.00         7.74          721,528.33       766           69.81
Investor Property                  2            761,965.00         0.45          380,982.50       774           76.05
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                           254       $167,785,875.31       100.00%      $  660,574.31       745           70.51%
=========================================================================================================================


(1)   Based solely on representations of the mortgagor at the time of
      origination of the related Group 4 Mortgage Loan.



                                      PROPERTY TYPES OF THE GROUP 4 MORTGAGE LOANS

-------------------------------------------------------------------------------------------------------------------------
                                              AGGREGATE       % OF GROUP 4                                    WEIGHTED
                               NUMBER OF    CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                                GROUP 4        STATED            STATED      STATED PRINCIPAL   AVERAGE       ORIGINAL
                               MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
      PROPERTY TYPE              LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

Single Family Residence          157       $107,063,084.25        63.81%      $  681,930.47       741           69.77%
PUD                               57         36,380,015.36        21.68          638,245.88       740           70.62
Condominium                       33         19,974,131.74        11.90          605,276.72       769           73.73
3-Family                           2          1,886,644.54         1.12          943,322.27       767           77.98
2-Family                           3          1,660,000.00         0.99          553,333.33       753           65.48
Townhouse                          2            821,999.42         0.49          410,999.71       714           76.53
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                           254       $167,785,875.31       100.00%      $  660,574.31       745           70.51%
=========================================================================================================================




                                   MORTGAGE LOAN PURPOSE OF THE GROUP 4 MORTGAGE LOANS

-------------------------------------------------------------------------------------------------------------------------
                                              AGGREGATE       % OF GROUP 4                                    WEIGHTED
                               NUMBER OF    CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                                GROUP 4        STATED            STATED      STATED PRINCIPAL   AVERAGE       ORIGINAL
                               MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
        PURPOSE                  LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

Purchase                         141       $ 95,250,603.49        56.77%      $  675,536.19       752           74.25%
Refinance-Cashout                 63         40,439,584.66        24.10          641,898.17       739           64.10
Refinance-Rate/Term               50         32,095,687.16        19.13          641,913.74       729           67.47
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                           254       $167,785,875.31       100.00%      $  660,574.31       745           70.51%
=========================================================================================================================



                                      A-25





                                  GEOGRAPHICAL DISTRIBUTION OF THE MORTGAGE PROPERTIES
                                            OF THE GROUP 4 MORTGAGE LOANS(1)

-------------------------------------------------------------------------------------------------------------------------
                                              AGGREGATE       % OF GROUP 4                                    WEIGHTED
                               NUMBER OF    CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                                GROUP 4        STATED            STATED      STATED PRINCIPAL   AVERAGE       ORIGINAL
                               MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
      GEOGRAPHIC AREA            LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

Arizona                            4       $  2,173,400.00         1.30%      $  543,350.00       710           75.83%
California                       134         87,163,320.58        51.95          650,472.54       745           70.92
Colorado                           3          2,098,000.00         1.25          699,333.33       784           66.95
Connecticut                        4          3,679,000.00         2.19          919,750.00       773           65.54
District of Columbia               3          2,265,000.00         1.35          755,000.00       765           69.49
Florida                           28         18,930,956.60        11.28          676,105.59       748           66.43
Georgia                            5          3,033,900.00         1.81          606,780.00       770           72.99
Hawaii                             1            536,250.00         0.32          536,250.00       769           75.00
Illinois                           3          1,660,000.00         0.99          553,333.33       749           80.00
Indiana                            1            667,425.00         0.40          667,425.00       789           75.00
Kentucky                           1            160,000.00         0.10          160,000.00       683           80.00
Maine                              2          1,581,000.00         0.94          790,500.00       674           71.16
Maryland                          10          6,903,095.15         4.11          690,309.52       737           72.12
Massachusetts                      2          1,337,500.00         0.80          668,750.00       751           70.80
Michigan                           2          4,491,505.20         2.68        2,245,752.60       746           64.25
Missouri                           2          1,025,767.00         0.61          512,883.50       758           80.00
Nevada                             3          1,200,920.00         0.72          400,306.67       769           72.53
New Jersey                         4          2,804,314.05         1.67          701,078.51       751           77.02
New York                           5          4,241,644.54         2.53          848,328.91       757           63.30
North Carolina                     6          4,149,199.42         2.47          691,533.24       740           71.29
Oregon                             2          1,086,480.00         0.65          543,240.00       756           80.00
South Carolina                     3          1,356,029.01         0.81          452,009.67       745           74.93
Texas                             10          5,944,377.69         3.54          594,437.77       722           71.89
Utah                               2          1,214,000.00         0.72          607,000.00       733           61.06
Virginia                           8          4,897,932.07         2.92          612,241.51       739           76.13
Washington                         5          2,760,859.00         1.65          552,171.80       707           68.78
Wyoming                            1            424,000.00         0.25          424,000.00       774           80.00
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                           254       $167,785,875.31       100.00%      $  660,574.31       745           70.51%
=========================================================================================================================


(1)   As of the Cut-off Date, no more than approximately 1.79% of the Group 4
      Mortgage Loans are expected to be secured by mortgaged properties in any
      one five-digit postal zip code.


                                      A-26





                          CURRENT MORTGAGE LOAN PRINCIPAL BALANCES OF THE GROUP 4 MORTGAGE LOANS

-------------------------------------------------------------------------------------------------------------------------
                                              AGGREGATE       % OF GROUP 4                                    WEIGHTED
                               NUMBER OF    CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                                GROUP 4        STATED            STATED      STATED PRINCIPAL   AVERAGE       ORIGINAL
   CURRENT MORTGAGE LOAN       MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
  PRINCIPAL BALANCES ($)         LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

150,000.01 - 200,000.00            1       $    160,000.00         0.10%      $  160,000.00       683           80.00%
200,000.01 - 250,000.00            1            233,200.00         0.14          233,200.00       680           55.52
250,000.01 - 300,000.00            3            766,948.43         0.46          255,649.48       738           75.50
350,000.01 - 400,000.00            3          1,092,450.00         0.65          364,150.00       757           75.14
400,000.01 - 450,000.00           18          7,796,443.80         4.65          433,135.77       739           74.75
450,000.01 - 500,000.00           41         19,547,830.51        11.65          476,776.35       740           71.23
500,000.01 - 550,000.00           32         16,751,030.63         9.98          523,469.71       748           71.28
550,000.01 - 600,000.00           42         24,397,319.43        14.54          580,888.56       740           70.23
600,000.01 - 650,000.00           27         16,923,509.17        10.09          626,796.64       750           74.09
650,000.01 - 700,000.00           14          9,516,875.00         5.67          679,776.79       753           74.69
700,000.01 - 750,000.00            8          5,846,499.41         3.48          730,812.43       733           65.50
750,000.01 - 800,000.00           12          9,356,320.60         5.58          779,693.38       731           64.37
800,000.01 - 850,000.00            9          7,503,991.06         4.47          833,776.78       750           70.70
850,000.01 - 900,000.00            4          3,542,500.00         2.11          885,625.00       762           72.96
900,000.01 - 950,000.00            6          5,616,390.00         3.35          936,065.00       760           76.67
950,000.01 - 1,000,000.00         19         18,702,589.11        11.15          984,346.80       747           70.69
1,000,000.01 - 1,500,000.00       13         17,035,978.16        10.15        1,310,459.86       742           64.26
2,500,000.01 - 3,000,000.00        1          2,996,000.00         1.79        2,996,000.00       762           65.13
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                           254       $167,785,875.31       100.00%      $  660,574.31       745           70.51%
=========================================================================================================================




                                  ORIGINAL LOAN-TO-VALUE RATIOS OF THE GROUP 4 MORTGAGE LOANS

-------------------------------------------------------------------------------------------------------------------------
                                              AGGREGATE       % OF GROUP 4                                    WEIGHTED
                               NUMBER OF    CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                                GROUP 4        STATED            STATED      STATED PRINCIPAL   AVERAGE       ORIGINAL
  ORIGINAL LOAN-TO-VALUE       MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
        RATIOS (%)               LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

25.01 - 30.00                      1       $    650,000.00         0.39%      $  650,000.00       795           25.69%
30.01 - 35.00                      1            470,000.00         0.28          470,000.00       752           32.41
35.01 - 40.00                      2          1,645,000.00         0.98          822,500.00       786           36.56
40.01 - 45.00                      8          6,466,799.00         3.85          808,349.88       741           43.32
45.01 - 50.00                      5          3,079,676.00         1.84          615,935.20       739           48.29
50.01 - 55.00                     11          7,477,999.41         4.46          679,818.13       748           53.06
55.01 - 60.00                     10          6,562,173.72         3.91          656,217.37       723           57.60
60.01 - 65.00                     21         16,019,855.20         9.55          762,850.25       743           62.57
65.01 - 70.00                     32         22,014,107.60        13.12          687,940.86       741           67.99
70.01 - 75.00                     51         35,267,824.63        21.02          691,525.97       747           74.07
75.01 - 80.00                    112         68,132,439.75        40.61          608,325.35       746           79.59
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                           254       $167,785,875.31       100.00%      $  660,574.31       745           70.51%
=========================================================================================================================



                                      A-27





                            CURRENT MORTGAGE INTEREST RATES OF THE GROUP 4 MORTGAGE LOANS(1)

-------------------------------------------------------------------------------------------------------------------------
                                              AGGREGATE       % OF GROUP 4                                    WEIGHTED
                               NUMBER OF    CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                                GROUP 4        STATED            STATED      STATED PRINCIPAL   AVERAGE       ORIGINAL
 CURRENT MORTGAGE INTEREST     MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
         RATES (%)               LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

5.001 - 5.250                      2       $    738,200.00         0.44%      $  369,100.00       748           80.00%
5.251 - 5.500                      3          2,036,091.06         1.21          678,697.02       775           67.62
5.501 - 5.750                      8          5,713,943.87         3.41          714,242.98       755           69.25
5.751 - 6.000                     46         27,371,226.90        16.31          595,026.67       750           72.13
6.001 - 6.250                     89         58,533,348.76        34.89          657,678.08       747           70.85
6.251 - 6.500                     69         46,568,938.03        27.75          674,912.15       742           69.59
6.501 - 6.750                     32         22,673,759.49        13.51          708,554.98       739           70.21
6.751 - 7.000                      4          2,654,862.00         1.58          663,715.50       722           71.42
7.251 - 7.500                      1          1,495,505.20         0.89        1,495,505.20       715           62.50
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                           254       $167,785,875.31       100.00%      $  660,574.31       745           70.51%
=========================================================================================================================


(1)   As of the Cut-off Date, the weighted average current Mortgage Interest
      Rate of the Group 4 Mortgage Loans is expected to be approximately 6.283%
      per annum.



                                       GROSS MARGINS OF THE GROUP 4 MORTGAGE LOANS

-------------------------------------------------------------------------------------------------------------------------
                                              AGGREGATE       % OF GROUP 4                                    WEIGHTED
                               NUMBER OF    CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                                GROUP 4        STATED            STATED      STATED PRINCIPAL   AVERAGE       ORIGINAL
                               MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
     GROSS MARGIN (%)            LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

2.250                            254       $167,785,875.31       100.00%      $  660,574.31       745           70.51%
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                           254       $167,785,875.31       100.00%      $  660,574.31       745           70.51%
=========================================================================================================================




                                     RATE CEILINGS OF THE GROUP 4 MORTGAGE LOANS(1)

-------------------------------------------------------------------------------------------------------------------------
                                              AGGREGATE       % OF GROUP 4                                    WEIGHTED
                               NUMBER OF    CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                                GROUP 4        STATED            STATED      STATED PRINCIPAL   AVERAGE       ORIGINAL
                               MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
     RATE CEILINGS (%)           LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

10.001 - 10.250                    2       $    738,200.00         0.44%      $  369,100.00       748           80.00%
10.251 - 10.500                    3          2,036,091.06         1.21          678,697.02       775           67.62
10.501 - 10.750                    8          5,713,943.87         3.41          714,242.98       755           69.25
10.751 - 11.000                   46         27,371,226.90        16.31          595,026.67       750           72.13
11.001 - 11.250                   89         58,533,348.76        34.89          657,678.08       747           70.85
11.251 - 11.500                   69         46,568,938.03        27.75          674,912.15       742           69.59
11.501 - 11.750                   32         22,673,759.49        13.51          708,554.98       739           70.21
11.751 - 12.000                    4          2,654,862.00         1.58          663,715.50       722           71.42
12.251 - 12.500                    1          1,495,505.20         0.89        1,495,505.20       715           62.50
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                           254       $167,785,875.31       100.00%      $  660,574.31       745           70.51%
=========================================================================================================================


(1)   As of the Cut-off Date, the weighted average Rate Ceiling of the Group 4
      Mortgage Loans is expected to be approximately 11.283% per annum.


                                      A-28





                               FIRST RATE ADJUSTMENT DATE OF THE GROUP 4 MORTGAGE LOANS(1)

-------------------------------------------------------------------------------------------------------------------------
                                              AGGREGATE       % OF GROUP 4                                    WEIGHTED
                               NUMBER OF    CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                                GROUP 4        STATED            STATED      STATED PRINCIPAL   AVERAGE       ORIGINAL
        FIRST RATE             MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
      ADJUSTMENT DATE            LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

October 1, 2015                    2       $    822,995.00         0.49%      $  411,497.50       707           73.54%
November 1, 2015                   2            898,185.00         0.54          449,092.50       762           80.00
December 1, 2015                   2            765,600.00         0.46          382,800.00       723           80.00
January 1, 2016                    9          7,528,284.97         4.49          836,476.11       732           68.81
February 1, 2016                   1            650,000.00         0.39          650,000.00       770           69.52
March 1, 2016                     43         28,219,586.52        16.82          656,269.45       744           69.87
April 1, 2016                    101         63,436,138.53        37.81          628,080.58       743           72.64
May 1, 2016                       94         65,465,085.29        39.02          696,437.08       748           68.64
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                           254       $167,785,875.31       100.00%      $  660,574.31       745           70.51%
=========================================================================================================================


(1)   As of the Cut-off Date, the weighted average number of months to the first
      rate Adjustment Date for the Group 4 Mortgage Loans is expected to be
      approximately 119 months.



                                    REMAINING TERMS OF THE GROUP 4 MORTGAGE LOANS(1)

-------------------------------------------------------------------------------------------------------------------------
                                              AGGREGATE       % OF GROUP 4                                    WEIGHTED
                               NUMBER OF    CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                                GROUP 4        STATED            STATED      STATED PRINCIPAL   AVERAGE       ORIGINAL
                               MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
  REMAINING TERM (MONTHS)        LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

341 - 360                        254       $167,785,875.31       100.00%      $  660,574.31       745           70.51%
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                           254       $167,785,875.31       100.00%      $  660,574.31       745           70.51%
=========================================================================================================================


(1)   As of the Cut-off Date, the weighted average remaining term to stated
      maturity of the Group 4 Mortgage Loans is expected to be approximately 359
      months.



                                CREDIT SCORING OF MORTGAGORS OF THE GROUP 4 MORTGAGE LOANS

-------------------------------------------------------------------------------------------------------------------------
                                              AGGREGATE       % OF GROUP 4                                    WEIGHTED
                               NUMBER OF    CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                                GROUP 4        STATED            STATED      STATED PRINCIPAL   AVERAGE       ORIGINAL
                               MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
       CREDIT SCORES             LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

801 - 850                          9       $  6,196,937.31         3.69%      $  688,548.59       808           69.85%
751 - 800                        116         77,146,525.93        45.98          665,056.26       774           69.94
701 - 750                         90         60,487,108.54        36.05          672,078.98       728           72.65
651 - 700                         33         20,898,967.72        12.46          633,302.05       682           66.34
601 - 650                          5          2,456,335.81         1.46          491,267.16       635           74.88
Not Scored                         1            600,000.00         0.36          600,000.00       N/A           60.91
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                           254       $167,785,875.31       100.00%      $  660,574.31       745           70.51%
=========================================================================================================================



                                      A-29





                      ORIGINAL DEBT-TO-INCOME RATIO OF MORTGAGORS OF THE GROUP 4 MORTGAGE LOANS(1)

-------------------------------------------------------------------------------------------------------------------------
                                              AGGREGATE       % OF GROUP 4                                    WEIGHTED
                               NUMBER OF    CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                                GROUP 4        STATED            STATED      STATED PRINCIPAL   AVERAGE       ORIGINAL
  ORIGINAL DEBT-TO-INCOME      MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
        RATIOS (%)               LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

5.01 - 10.00                       1       $    479,900.00         0.29%      $  479,900.00       799           76.19%
10.01 - 15.00                      4          2,104,600.00         1.25          526,150.00       759           66.72
15.01 - 20.00                      7          4,396,250.00         2.62          628,035.71       750           66.60
20.01 - 25.00                     15          8,751,114.01         5.22          583,407.60       734           74.16
25.01 - 30.00                     23         13,477,387.31         8.03          585,973.36       747           69.74
30.01 - 35.00                     46         31,700,587.75        18.89          689,143.21       749           71.84
35.01 - 40.00                     59         43,407,557.39        25.87          735,721.31       745           68.96
40.01 - 45.00                     68         42,620,068.85        25.40          626,765.72       744           72.49
45.01 - 50.00                     15         10,403,450.00         6.20          693,563.33       750           67.84
50.01 - 55.00                     10          6,208,760.00         3.70          620,876.00       734           71.12
55.01 - 60.00                      5          3,726,200.00         2.22          745,240.00       733           61.45
60.01 - 65.00                      1            510,000.00         0.30          510,000.00       670           67.11
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                           254       $167,785,875.31       100.00%      $  660,574.31       745           70.51%
=========================================================================================================================


(1)   As of the Cut-off Date, the weighted average original Debt-to-Income Ratio
      of the Group 4 Mortgage Loans is expected to be approximately 37.07%.



                                MONTHS SINCE ORIGINATION OF THE GROUP 4 MORTGAGE LOANS(1)

-------------------------------------------------------------------------------------------------------------------------
                                              AGGREGATE       % OF GROUP 4                                    WEIGHTED
                               NUMBER OF    CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                                GROUP 4        STATED            STATED      STATED PRINCIPAL   AVERAGE       ORIGINAL
                               MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
 MONTHS SINCE ORIGINATION        LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

1 - 6                            250       $166,064,695.31        98.97%      $  664,258.78       745           70.44%
-------------------------------------------------------------------------------------------------------------------------
7 - 12                             4          1,721,180.00         1.03          430,295.00       736           76.91
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                           254       $167,785,875.31       100.00%      $  660,574.31       745           70.51%
=========================================================================================================================


(1)   As of the Cut-off Date, the weighted average months since origination of
      the Group 4 Mortgage Loans is expected to be approximately 2 months.



                                  DOCUMENTATION LEVELS OF THE GROUP 4 MORTGAGE LOANS(1)

-------------------------------------------------------------------------------------------------------------------------
                                              AGGREGATE       % OF GROUP 4                                    WEIGHTED
                               NUMBER OF    CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                                GROUP 4        STATED            STATED      STATED PRINCIPAL   AVERAGE       ORIGINAL
                               MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
     DOCUMENTATION LEVEL         LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

Standard                          74       $ 53,540,687.71        31.91%      $  723,522.81       739           70.94%
Accelerated - Stated              82         48,139,481.84        28.69          587,066.85       739           68.00
Accelerated - Rapid               50         33,803,012.69        20.15          676,060.25       752           69.52
Accelerated - PaperSaver(R)/
 Threshold                        33         21,320,293.07        12.71          646,069.49       760           72.74
Accelerated - Stated Income/
 Stated Asset                     15         10,982,400.00         6.55          732,160.00       745           78.06
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                           254       $167,785,875.31       100.00%      $  660,574.31       745           70.51%
=========================================================================================================================


(1)   For a description of each documentation level, see "Mortgage Loan
      Underwriting Standards" in this prospectus supplement.


                                      A-30



                          AGGREGATE OF ALL LOAN GROUPS



                               OCCUPANCY OF MORTGAGED PROPERTIES OF THE MORTGAGE LOANS(1)

-------------------------------------------------------------------------------------------------------------------------
                                                                  % OF
                                              AGGREGATE        AGGREGATE                                      WEIGHTED
                                            CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                               NUMBER OF       STATED            STATED      STATED PRINCIPAL   AVERAGE       ORIGINAL
                               MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
        OCCUPANCY                LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

Primary Residence                  909     $560,939,908.69        88.00%      $  617,095.61       740           71.64%
Second Home                         97       66,270,397.10        10.40          683,199.97       750           70.32
Investor Property                   24       10,202,841.81         1.60          425,118.41       731           76.39
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                           1,030     $637,413,147.60       100.00%      $  618,847.72       741           71.58%
=========================================================================================================================


(1)   Based solely on representations of the mortgagor at the time of
      origination of the related Mortgage Loan.



                                          PROPERTY TYPES OF THE MORTGAGE LOANS

-------------------------------------------------------------------------------------------------------------------------
                                                                  % OF
                                              AGGREGATE        AGGREGATE                                      WEIGHTED
                                            CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                               NUMBER OF       STATED            STATED      STATED PRINCIPAL   AVERAGE       ORIGINAL
                               MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
      PROPERTY TYPE              LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

Single Family Residence            593     $372,617,240.66        58.46%      $  628,359.60       740           71.27%
PUD                                260      158,281,935.96        24.83          608,776.68       742           70.57
Condominium                        151       88,392,409.84        13.87          585,380.20       748           73.83
2-Family                            11        7,812,652.32         1.23          710,241.12       741           74.40
Townhouse                            9        5,659,012.82         0.89          628,779.20       714           79.50
3-Family                             5        4,208,123.56         0.66          841,624.71       737           73.18
4-Family                             1          441,772.44         0.07          441,772.44       766           75.00
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                           1,030     $637,413,147.60       100.00%      $  618,847.72       741           71.58%
=========================================================================================================================




                                       MORTGAGE LOAN PURPOSE OF THE MORTGAGE LOANS

-------------------------------------------------------------------------------------------------------------------------
                                                                  % OF
                                              AGGREGATE        AGGREGATE                                      WEIGHTED
                                            CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                               NUMBER OF       STATED            STATED      STATED PRINCIPAL   AVERAGE       ORIGINAL
                               MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
         PURPOSE                 LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

Purchase                           653     $394,655,617.81        61.92%      $  604,373.07       744           75.08%
Refinance-Cashout                  222      139,895,432.86        21.95          630,159.61       736           65.90
Refinance-Rate/Term                155      102,862,096.93        16.14          663,626.43       738           65.85
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                           1,030     $637,413,147.60       100.00%      $  618,847.72       741           71.58%
=========================================================================================================================



                                      A-31





                      GEOGRAPHICAL DISTRIBUTION OF THE MORTGAGE PROPERTIES OF THE MORTGAGE LOANS(1)

-------------------------------------------------------------------------------------------------------------------------
                                                                  % OF
                                              AGGREGATE        AGGREGATE                                      WEIGHTED
                                            CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                               NUMBER OF       STATED            STATED      STATED PRINCIPAL   AVERAGE       ORIGINAL
                               MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
     GEOGRAPHIC AREA             LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

Arizona                             25     $ 16,601,192.97         2.60%      $  664,047.72       740           69.73%
Arkansas                             1          479,600.00         0.08          479,600.00       742           80.00
California                         494      305,164,938.88        47.88          617,742.79       741           71.66
Colorado                            17       14,092,922.52         2.21          828,995.44       736           71.88
Connecticut                         10        8,051,609.83         1.26          805,160.98       771           67.11
Delaware                             1          518,059.08         0.08          518,059.08       708           59.31
District of Columbia                11        6,237,734.40         0.98          567,066.76       735           73.47
Florida                            127       77,943,955.98        12.23          613,731.94       741           71.42
Georgia                             27       14,455,920.78         2.27          535,404.47       742           75.00
Hawaii                               8        6,795,377.71         1.07          849,422.21       723           68.26
Idaho                                1          646,000.00         0.10          646,000.00       780           51.35
Illinois                            26       17,155,830.88         2.69          659,839.65       740           73.68
Indiana                              3        1,504,499.00         0.24          501,499.67       751           77.78
Kentucky                             1          160,000.00         0.03          160,000.00       683           80.00
Louisiana                            1          173,918.46         0.03          173,918.46       639           85.00
Maine                                3        1,975,000.00         0.31          658,333.33       677           72.93
Maryland                            31       18,265,471.08         2.87          589,208.74       729           72.82
Massachusetts                       18       11,720,552.41         1.84          651,141.80       749           67.66
Michigan                             2        4,491,505.20         0.70        2,245,752.60       746           64.25
Minnesota                            2        1,519,200.00         0.24          759,600.00       727           67.24
Missouri                             8        5,618,180.79         0.88          702,272.60       746           73.86
Nebraska                             1          531,444.56         0.08          531,444.56       715           80.00
Nevada                              20        9,119,083.87         1.43          455,954.19       740           68.79
New Hampshire                        1          576,000.00         0.09          576,000.00       735           80.00
New Jersey                          14        8,494,611.76         1.33          606,757.98       748           75.84
New Mexico                           2        1,369,305.11         0.21          684,652.56       704           56.35
New York                            14        9,593,130.99         1.51          685,223.64       752           67.68
North Carolina                      13        8,278,894.86         1.30          636,838.07       730           72.52
Ohio                                 1          440,000.00         0.07          440,000.00       745           80.00
Oklahoma                             1          195,258.62         0.03          195,258.62       692           80.00
Oregon                               6        2,837,361.64         0.45          472,893.61       752           76.13
Pennsylvania                         4        3,353,465.81         0.53          838,366.45       713           62.21
Rhode Island                         2        1,847,187.89         0.29          923,593.95       702           80.00
South Carolina                      18        8,113,543.18         1.27          450,752.40       760           71.08
Tennessee                            2        1,078,275.00         0.17          539,137.50       758           70.90
Texas                               31       16,260,146.69         2.55          524,520.86       751           70.16
Utah                                 9        6,388,588.27         1.00          709,843.14       724           66.43
Vermont                              2        1,703,920.00         0.27          851,960.00       781           62.08
Virginia                            45       27,966,035.78         4.39          621,467.46       743           76.08
Washington                          22       11,762,624.48         1.85          534,664.75       731           74.46
Wisconsin                            3        2,568,799.12         0.40          856,266.37       743           60.62
Wyoming                              2        1,364,000.00         0.21          682,000.00       777           68.35
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                           1,030     $637,413,147.60       100.00%      $  618,847.72       741           71.58%
=========================================================================================================================


(1)   As of the Cut-off Date, no more than approximately 0.86% of the Mortgage
      Loans are expected to be secured by mortgaged properties in any one
      five-digit postal zip code.


                                      A-32





                             CURRENT MORTGAGE LOAN PRINCIPAL BALANCES OF THE MORTGAGE LOANS

-------------------------------------------------------------------------------------------------------------------------
                                                                  % OF
                                              AGGREGATE        AGGREGATE                                      WEIGHTED
                                            CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                               NUMBER OF       STATED            STATED      STATED PRINCIPAL   AVERAGE       ORIGINAL
   CURRENT MORTGAGE LOAN       MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
  PRINCIPAL BALANCES ($)         LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

0.01 - 50,000.00                     1     $     35,633.68         0.01%      $   35,633.68       696           80.00%
50,000.01 - 100,000.00               6          467,864.02         0.07           77,977.34       711           69.70
100,000.01 - 150,000.00             12        1,525,851.16         0.24          127,154.26       745           74.95
150,000.01 - 200,000.00             13        2,333,544.08         0.37          179,503.39       697           83.57
200,000.01 - 250,000.00             13        2,857,270.13         0.45          219,790.01       731           74.75
250,000.01 - 300,000.00             18        4,824,320.18         0.76          268,017.79       725           76.46
300,000.01 - 350,000.00              9        2,914,076.46         0.46          323,786.27       705           73.30
350,000.01 - 400,000.00             23        8,654,263.09         1.36          376,272.31       735           70.62
400,000.01 - 450,000.00             94       40,842,171.93         6.41          434,491.19       732           73.81
450,000.01 - 500,000.00            196       93,546,707.84        14.68          477,279.12       738           73.80
500,000.01 - 550,000.00            142       74,581,801.55        11.70          525,223.95       740           73.21
550,000.01 - 600,000.00            141       81,557,184.61        12.80          578,419.75       744           72.14
600,000.01 - 650,000.00             96       60,547,513.83         9.50          630,703.27       738           73.17
650,000.01 - 700,000.00             42       28,631,677.79         4.49          681,706.61       748           72.16
700,000.01 - 750,000.00             35       25,602,627.94         4.02          731,503.66       743           70.39
750,000.01 - 800,000.00             31       24,262,337.37         3.81          782,656.04       748           68.80
800,000.01 - 850,000.00             16       13,249,081.77         2.08          828,067.61       758           70.24
850,000.01 - 900,000.00             18       15,848,658.60         2.49          880,481.03       757           71.97
900,000.01 - 950,000.00             17       15,840,004.09         2.49          931,764.95       742           74.79
950,000.01 - 1,000,000.00           51       50,447,450.69         7.91          989,165.70       751           68.18
1,000,000.01 - 1,500,000.00         39       49,256,949.34         7.73        1,262,998.70       735           64.57
1,500,000.01 - 2,000,000.00          7       12,903,617.03         2.02        1,843,373.86       774           61.93
2,000,000.01 - 2,500,000.00          4        9,160,911.22         1.44        2,290,227.81       714           80.00
2,500,000.01 - 3,000,000.00          6       17,521,629.20         2.75        2,920,271.53       732           70.47
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                           1,030     $637,413,147.60       100.00%      $  618,847.72       741           71.58%
=========================================================================================================================



                                      A-33





                                   ORIGINAL LOAN-TO-VALUE RATIOS OF THE MORTGAGE LOANS

-------------------------------------------------------------------------------------------------------------------------
                                                                  % OF
                                              AGGREGATE        AGGREGATE                                      WEIGHTED
                                            CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                               NUMBER OF       STATED            STATED      STATED PRINCIPAL   AVERAGE       ORIGINAL
 ORIGINAL LOAN-TO-VALUE        MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
       RATIOS (%)                LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

20.01 - 25.00                        3     $  2,583,300.00         0.41%      $  861,100.00       779           21.56%
25.01 - 30.00                        3        1,339,854.21         0.21          446,618.07       787           26.60
30.01 - 35.00                        6        3,929,179.00         0.62          654,863.17       740           32.98
35.01 - 40.00                        8        5,819,305.11         0.91          727,413.14       764           37.66
40.01 - 45.00                       14       10,779,799.00         1.69          769,985.64       745           43.36
45.01 - 50.00                       30       19,468,765.03         3.05          648,958.83       754           47.93
50.01 - 55.00                       41       25,972,881.98         4.07          633,484.93       752           53.01
55.01 - 60.00                       34       25,131,005.05         3.94          739,147.21       738           58.03
60.01 - 65.00                       74       51,824,474.35         8.13          700,330.73       741           62.65
65.01 - 70.00                      104       72,365,397.63        11.35          695,821.13       743           68.40
70.01 - 75.00                      149      101,047,429.33        15.85          678,170.67       741           73.90
75.01 - 80.00                      553      314,121,167.19        49.28          568,031.04       739           79.62
80.01 - 85.00                        1          173,918.46         0.03          173,918.46       639           85.00
85.01 - 90.00                        9        2,615,907.90         0.41          290,656.43       697           89.88
90.01 - 95.00                        1          240,763.36         0.04          240,763.36         0           95.00
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                           1,030     $637,413,147.60       100.00%      $  618,847.72       741           71.58%
=========================================================================================================================




                                CURRENT MORTGAGE INTEREST RATES OF THE MORTGAGE LOANS(1)

-------------------------------------------------------------------------------------------------------------------------
                                                                  % OF
                                              AGGREGATE        AGGREGATE                                      WEIGHTED
                                            CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                               NUMBER OF       STATED            STATED      STATED PRINCIPAL   AVERAGE       ORIGINAL
    CURRENT MORTGAGE           MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
   INTEREST RATES (%)            LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

4.251 - 4.500                        1     $    361,600.00         0.06%      $  361,600.00       791           80.00%
4.501 - 4.750                        3        1,594,275.00         0.25          531,425.00       742           74.20
4.751 - 5.000                        5        3,095,357.00         0.49          619,071.40       735           73.50
5.001 - 5.250                       29       13,678,703.40         2.15          471,679.43       744           74.17
5.251 - 5.500                       46       23,924,160.89         3.75          520,090.45       753           74.34
5.501 - 5.750                       88       56,688,545.71         8.89          644,188.02       746           71.03
5.751 - 6.000                      193      116,786,492.39        18.32          605,111.36       741           72.55
6.001 - 6.250                      283      171,923,506.39        26.97          607,503.56       744           70.16
6.251 - 6.500                      240      151,512,027.59        23.77          631,300.11       740           72.26
6.501 - 6.750                       91       59,561,856.87         9.34          654,525.90       729           71.94
6.751 - 7.000                       38       26,685,769.23         4.19          702,257.09       741           71.26
7.001 - 7.250                        6        4,905,419.49         0.77          817,569.92       679           71.15
7.251 - 7.500                        4        5,920,505.20         0.93        1,480,126.30       755           58.68
7.501 - 7.750                        3          774,928.44         0.12          258,309.48       716           80.00
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                           1,030     $637,413,147.60       100.00%      $  618,847.72       741           71.58%
=========================================================================================================================


(1)   As of the Cut-off Date, the weighted average current Mortgage Interest
      Rate of the Mortgage Loans is expected to be approximately 6.202% per
      annum.


                                      A-34





                                         GROSS MARGINS OF THE MORTGAGE LOANS(1)

-------------------------------------------------------------------------------------------------------------------------
                                                                  % OF
                                              AGGREGATE        AGGREGATE                                      WEIGHTED
                                            CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                               NUMBER OF       STATED            STATED      STATED PRINCIPAL   AVERAGE       ORIGINAL
                               MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
    GROSS MARGIN (%)             LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

2.250                            1,029     $636,863,147.60        99.91%      $  618,914.62       741           71.59%
2.750                                1          550,000.00         0.09          550,000.00       N/A           51.50
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                           1,030     $637,413,147.60       100.00%      $  618,847.72       741           71.58%
=========================================================================================================================


(1)   As of the Cut-off Date, the weighted average Gross Margin of the Mortgage
      Loans is expected to be approximately 2.250% per annum.



                                         RATE CEILINGS OF THE MORTGAGE LOANS(1)

-------------------------------------------------------------------------------------------------------------------------
                                                                  % OF
                                              AGGREGATE        AGGREGATE                                      WEIGHTED
                                            CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                               NUMBER OF       STATED            STATED      STATED PRINCIPAL   AVERAGE       ORIGINAL
                               MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
    RATE CEILINGS (%)            LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

9.251 - 9.500                        1     $    361,600.00         0.06%      $  361,600.00       791           80.00%
9.501 - 9.750                        3        1,594,275.00         0.25          531,425.00       742           74.20
9.751 - 10.000                       4        2,556,994.00         0.40          639,248.50       741           72.13
10.001 - 10.250                     27       12,178,714.40         1.91          451,063.50       744           74.41
10.251 - 10.500                     46       24,352,224.89         3.82          529,396.19       753           74.45
10.501 - 10.750                     84       54,328,295.71         8.52          646,765.43       746           71.06
10.751 - 11.000                    180      110,436,125.39        17.33          613,534.03       741           72.23
11.001 - 11.250                    271      165,575,998.94        25.98          610,981.55       744           70.30
11.251 - 11.500                    224      139,945,642.85        21.96          624,757.33       740           72.66
11.501 - 11.750                     90       57,764,431.87         9.06          641,827.02       729           72.26
11.751 - 12.000                     48       31,369,104.00         4.92          653,523.00       744           72.64
12.001 - 12.250                     18       11,766,926.94         1.85          653,718.16       726           67.82
12.251 - 12.500                     20       16,759,538.16         2.63          837,976.91       745           64.45
12.501 - 12.750                      7        4,486,678.25         0.70          640,954.04       731           67.55
12.751 - 13.000                      5        3,004,672.01         0.47          600,934.40       714           71.23
13.001 - 13.250                      1          486,000.00         0.08          486,000.00       700           90.00
13.501 - 13.750                      1          445,925.19         0.07          445,925.19       727           80.00
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                           1,030     $637,413,147.60       100.00%      $  618,847.72       741           71.58%
=========================================================================================================================


(1)   As of the Cut-off Date, the weighted average Rate Ceiling of the Mortgage
      Loans is expected to be approximately 11.261% per annum.


                                      A-35





                                   FIRST RATE ADJUSTMENT DATE OF THE MORTGAGE LOANS(1)

-------------------------------------------------------------------------------------------------------------------------
                                                                  % OF
                                              AGGREGATE        AGGREGATE                                      WEIGHTED
                                            CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                               NUMBER OF       STATED            STATED      STATED PRINCIPAL   AVERAGE       ORIGINAL
       FIRST RATE              MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
     ADJUSTMENT DATE             LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

November 1, 2006                     1     $    550,000.00         0.09%      $  550,000.00       N/A           51.50%
October 1, 2008                      1          342,559.49         0.05          342,559.49       651           76.67
November 1, 2008                     1           71,925.00         0.01           71,925.00       688           51.38
December 1, 2008                     2        1,923,040.16         0.30          961,520.08       749           70.58
January 1, 2009                      9        6,142,346.29         0.96          682,482.92       712           68.70
February 1, 2009                     1          393,814.40         0.06          393,814.40       761           54.86
March 1, 2009                        9        3,206,956.92         0.50          356,328.55       743           77.67
April 1, 2009                       17       11,138,112.57         1.75          655,183.09       728           72.07
May 1, 2009                         20       12,572,049.00         1.97          628,602.45       765           69.87
December 1, 2009                     2          471,180.19         0.07          235,590.10       786           80.00
January 1, 2010                      1          275,260.75         0.04          275,260.75       779           77.78
June 1, 2010                         1          209,119.19         0.03          209,119.19       742           75.00
July 1, 2010                         1          276,221.26         0.04          276,221.26       750           80.00
August 1, 2010                       1          272,240.78         0.04          272,240.78       759           50.00
September 1, 2010                    4        1,210,000.00         0.19          302,500.00       710           67.34
October 1, 2010                      6        1,811,339.87         0.28          301,889.98       723           73.43
November 1, 2010                     7        1,726,139.32         0.27          246,591.33       757           76.04
December 1, 2010                     6        2,399,325.12         0.38          399,887.52       690           69.69
January 1, 2011                     11        4,203,143.69         0.66          382,103.97       704           76.71
February 1, 2011                     3        2,530,454.24         0.40          843,484.75       718           66.69
March 1, 2011                       54       32,498,906.83         5.10          601,831.61       712           74.48
April 1, 2011                      244      147,835,365.17        23.19          605,882.64       736           73.97
May 1, 2011                        246      155,256,075.34        24.36          631,122.26       748           70.88
August 1, 2011                       1          431,158.10         0.07          431,158.10       676           75.52
May 1, 2012                          1          877,110.18         0.14          877,110.18       716           76.43
November 1, 2012                     1          397,608.53         0.06          397,608.53       743           56.86
December 1, 2012                     2          810,057.03         0.13          405,028.52       700           67.78
January 1, 2013                      1          384,523.50         0.06          384,523.50       665           74.95
March 1, 2013                        7        4,904,229.79         0.77          700,604.26       757           72.97
April 1, 2013                       36       21,048,949.58         3.30          584,693.04       740           68.24
May 1, 2013                         79       53,458,060.00         8.39          676,684.30       749           70.17
October 1, 2015                      2          822,995.00         0.13          411,497.50       707           73.54
November 1, 2015                     2          898,185.00         0.14          449,092.50       762           80.00
December 1, 2015                     2          765,600.00         0.12          382,800.00       723           80.00
January 1, 2016                      9        7,528,284.97         1.18          836,476.11       732           68.81
February 1, 2016                     1          650,000.00         0.10          650,000.00       770           69.52
March 1, 2016                       43       28,219,586.52         4.43          656,269.45       744           69.87
April 1, 2016                      101       63,436,138.53         9.95          628,080.58       743           72.64
May 1, 2016                         94       65,465,085.29        10.27          696,437.08       748           68.64
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                           1,030     $637,413,147.60       100.00%      $  618,847.72       741           71.58%
=========================================================================================================================


(1)   As of the Cut-off Date, the weighted average number of months to the first
      rate Adjustment Date for the Mortgage Loans is expected to be
      approximately 77 months.


                                      A-36





                                        REMAINING TERMS OF THE MORTGAGE LOANS(1)

-------------------------------------------------------------------------------------------------------------------------
                                                                  % OF
                                              AGGREGATE        AGGREGATE                                      WEIGHTED
                                            CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                               NUMBER OF       STATED            STATED      STATED PRINCIPAL   AVERAGE       ORIGINAL
                               MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
 REMAINING TERM (MONTHS)         LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

341 - 360                        1,030     $637,413,147.60       100.00%      $  618,847.72       741           71.58%
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                           1,030     $637,413,147.60       100.00%      $  618,847.72       741           71.58%
=========================================================================================================================


(1)   As of the Cut-off Date, the weighted average remaining term to stated
      maturity of the Mortgage Loans is expected to be approximately 359 months.



                                   CREDIT SCORING OF MORTGAGORS OF THE MORTGAGE LOANS

-------------------------------------------------------------------------------------------------------------------------
                                                                  % OF
                                              AGGREGATE        AGGREGATE                                      WEIGHTED
                                            CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                               NUMBER OF       STATED            STATED      STATED PRINCIPAL   AVERAGE       ORIGINAL
                               MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
      CREDIT SCORES              LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

801 - 850                           48     $ 30,342,562.17         4.76%      $  632,136.71       807           65.25%
751 - 800                          407      263,558,365.21        41.35          647,563.55       773           70.40
701 - 750                          365      220,765,291.05        34.63          604,836.41       727           73.27
651 - 700                          183      104,923,823.74        16.46          573,354.23       682           72.13
601 - 650                           19       10,507,567.61         1.65          553,029.87       634           76.95
Not Scored                           8        7,315,537.82         1.15          914,442.23       N/A           73.58
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                           1,030     $637,413,147.60       100.00%      $  618,847.72       741           71.58%
=========================================================================================================================



                                      A-37





                          ORIGINAL DEBT-TO-INCOME RATIO OF MORTGAGORS OF THE MORTGAGE LOANS(1)

-------------------------------------------------------------------------------------------------------------------------
                                                                  % OF
                                              AGGREGATE        AGGREGATE                                      WEIGHTED
                                            CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                               NUMBER OF       STATED            STATED      STATED PRINCIPAL   AVERAGE       ORIGINAL
 ORIGINAL DEBT-TO-INCOME       MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
       RATIOS (%)                LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

5.01 - 10.00                        11     $  7,865,450.00         1.23%      $  715,040.91       745           63.58%
10.01 - 15.00                       20       10,950,037.35         1.72          547,501.87       766           65.66
15.01 - 20.00                       29       18,058,363.03         2.83          622,702.17       750           65.88
20.01 - 25.00                       77       50,503,508.05         7.92          655,889.71       743           71.19
25.01 - 30.00                      111       62,668,724.46         9.83          564,583.10       745           69.86
30.01 - 35.00                      161      108,540,858.26        17.03          674,166.82       742           73.72
35.01 - 40.00                      238      146,690,581.03        23.01          616,346.98       738           71.72
40.01 - 45.00                      226      138,113,287.49        21.67          611,120.74       740           72.56
45.01 - 50.00                       88       53,871,141.40         8.45          612,172.06       741           72.18
50.01 - 55.00                       40       23,636,545.17         3.71          590,913.63       731           72.19
55.01 - 60.00                       21       13,370,050.40         2.10          636,669.07       750           67.08
60.01 - 65.00                        5        2,065,833.25         0.32          413,166.65       714           64.66
65.01 - 70.00                        2          658,767.71         0.10          329,383.86       734           66.03
Not Scored                           1          420,000.00         0.07          420,000.00       709           72.10
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                           1,030     $637,413,147.60       100.00%      $  618,847.72       741           71.58%
=========================================================================================================================


(1)   As of the Cut-off Date, the weighted average original Debt-to-Income Ratio
      of the Mortgage Loans (other than the Mortgage Loans for which no
      Debt-to-Income Ratio was calculated) is expected to be approximately
      36.21%.



                                    MONTHS SINCE ORIGINATION OF THE MORTGAGE LOANS(1)

-------------------------------------------------------------------------------------------------------------------------
                                                                  % OF
                                              AGGREGATE        AGGREGATE                                      WEIGHTED
                                            CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                               NUMBER OF       STATED            STATED      STATED PRINCIPAL   AVERAGE       ORIGINAL
                               MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
MONTHS SINCE ORIGINATION         LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

1 - 6                              996     $626,020,839.16        98.21%      $  628,534.98       741           71.55%
7 - 12                              28        8,837,610.22         1.39          315,628.94       729           71.65
13 - 18                              5        2,123,540.12         0.33          424,708.02       745           77.43
19 - 24                              1          431,158.10         0.07          431,158.10       676           75.52
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                           1,030     $637,413,147.60       100.00%      $  618,847.72       741           71.58%
=========================================================================================================================


(1)   As of the Cut-off Date, the weighted average months since origination of
      the Mortgage Loans is expected to be approximately 2 months.


                                      A-38





                                      DOCUMENTATION LEVELS OF THE MORTGAGE LOANS(1)

-------------------------------------------------------------------------------------------------------------------------
                                                                  % OF
                                              AGGREGATE        AGGREGATE                                      WEIGHTED
                                            CUT-OFF DATE      CUT-OFF DATE       AVERAGE        WEIGHTED       AVERAGE
                               NUMBER OF       STATED            STATED      STATED PRINCIPAL   AVERAGE       ORIGINAL
                               MORTGAGE       PRINCIPAL        PRINCIPAL      BALANCE AS OF      CREDIT     LOAN-TO-VALUE
    DOCUMENTATION LEVEL          LOANS         BALANCE          BALANCE        CUT-OFF DATE      SCORE          RATIO
-------------------------------------------------------------------------------------------------------------------------

Standard                           348     $226,297,663.27        35.50%      $  650,280.64       729           73.28%
Accelerated - Stated               260      149,246,941.84        23.41          574,026.70       731           70.49
Accelerated - Rapid                169      112,784,879.97        17.69          667,366.15       754           69.04
Accelerated - PaperSaver(R)/
Threshold                          179      104,153,388.32        16.34          581,862.50       765           70.83
Accelerated - Stated Income/
Stated Asset                        69       43,039,677.92         6.75          623,763.45       749           74.57
Desktop Underwriter(R)/Loan
Prospector(R)                        4        1,470,596.28         0.23          367,649.07       719           80.00
Accelerated - No Ratio               1          420,000.00         0.07          420,000.00       709           72.10
-------------------------------------------------------------------------------------------------------------------------
TOTAL:                           1,030     $637,413,147.60       100.00%      $  618,847.72       741           71.58%
=========================================================================================================================


(1)   For a description of each documentation level, see "Mortgage Loan
      Underwriting Standards" in this prospectus supplement.


                                      A-39



                      [THIS PAGE INTENTIONALLY LEFT BLANK]




                                   APPENDIX B

                                DECREMENT TABLES


                                       B-1





                              PERCENTAGE OF INITIAL CLASS BALANCE OUTSTANDING
                           AT THE RESPECTIVE PERCENTAGES OF CPR SET FORTH BELOW:

                                                         CLASS 1-A-1 AND CLASS 1-A-2
                                 ---------------------------------------------------------------------------
                                    0%         10%         20%        25%        30%        40%        50%
------------------------------   ---------  ----------  ---------  ---------  ---------  ---------  --------

Distribution Date

Initial Percentage ...........      100        100        100        100        100        100        100
May 20, 2007 .................      100         89         79         74         68         58         48
May 20, 2008 .................       99         80         62         54         46         34         23
May 20, 2009 .................       99         71         49         40         32         19         11
May 20, 2010 .................       98         63         38         29         22         12          5
May 20, 2011 .................       96         55         30         22         15          7          3
May 20, 2012 .................       95         49         24         16         11          4          1
May 20, 2013 .................       94         43         19         12          7          2          1
May 20, 2014 .................       92         38         15          9          5          1          *
May 20, 2015 .................       90         34         12          6          3          1          *
May 20, 2016 .................       88         30          9          5          2          *          *
May 20, 2017 .................       86         26          7          3          2          *          *
May 20, 2018 .................       84         23          6          3          1          *          *
May 20, 2019 .................       82         20          4          2          1          *          *
May 20, 2020 .................       80         17          3          1          1          *          *
May 20, 2021 .................       77         15          3          1          *          *          *
May 20, 2022 .................       74         13          2          1          *          *          *
May 20, 2023 .................       71         11          2          1          *          *          *
May 20, 2024 .................       68         10          1          *          *          *          *
May 20, 2025 .................       64          8          1          *          *          *          *
May 20, 2026 .................       60          7          1          *          *          *          *
May 20, 2027 .................       56          6          *          *          *          *          *
May 20, 2028 .................       51          5          *          *          *          *          *
May 20, 2029 .................       46          4          *          *          *          *          *
May 20, 2030 .................       41          3          *          *          *          *          *
May 20, 2031 .................       35          2          *          *          *          *          *
May 20, 2032 .................       29          2          *          *          *          *          *
May 20, 2033 .................       22          1          *          *          *          *          *
May 20, 2034 .................       15          1          *          *          *          *          *
May 20, 2035 .................        7          *          *          *          *          *          0
May 20, 2036 .................        0          0          0          0          0          0          0

Weighted Average Life to
   Maturity (in years)(1) ....     20.51       7.76       4.16       3.28       2.66       1.86       1.38


__________________________

(1)   The weighted average life of a class of Certificates is determined by (i)
      multiplying the amount of each distribution in reduction of the class
      balance by the number of years from the date of the issuance of such class
      to the related Distribution Date, (ii) adding the results and (iii)
      dividing the sum by the initial class balance.

*     Less than 0.5%, but greater than zero.


                                       B-2





                              PERCENTAGE OF INITIAL CLASS BALANCE OUTSTANDING
                           AT THE RESPECTIVE PERCENTAGES OF CPR SET FORTH BELOW:

                                                                 CLASS 1-A-R
                                 ---------------------------------------------------------------------------
                                    0%         10%         20%        25%        30%        40%        50%
------------------------------   ---------  ----------  ---------  ---------  ---------  ---------  --------

Distribution Date

Initial Percentage ...........      100        100        100        100        100        100        100
May 20, 2007 .................       0          0          0          0          0          0          0
May 20, 2008 .................       0          0          0          0          0          0          0
May 20, 2009 .................       0          0          0          0          0          0          0
May 20, 2010 .................       0          0          0          0          0          0          0
May 20, 2011 .................       0          0          0          0          0          0          0
May 20, 2012 .................       0          0          0          0          0          0          0
May 20, 2013 .................       0          0          0          0          0          0          0
May 20, 2014 .................       0          0          0          0          0          0          0
May 20, 2015 .................       0          0          0          0          0          0          0
May 20, 2016 .................       0          0          0          0          0          0          0
May 20, 2017 .................       0          0          0          0          0          0          0
May 20, 2018 .................       0          0          0          0          0          0          0
May 20, 2019 .................       0          0          0          0          0          0          0
May 20, 2020 .................       0          0          0          0          0          0          0
May 20, 2021 .................       0          0          0          0          0          0          0
May 20, 2022 .................       0          0          0          0          0          0          0
May 20, 2023 .................       0          0          0          0          0          0          0
May 20, 2024 .................       0          0          0          0          0          0          0
May 20, 2025 .................       0          0          0          0          0          0          0
May 20, 2026 .................       0          0          0          0          0          0          0
May 20, 2027 .................       0          0          0          0          0          0          0
May 20, 2028 .................       0          0          0          0          0          0          0
May 20, 2029 .................       0          0          0          0          0          0          0
May 20, 2030 .................       0          0          0          0          0          0          0
May 20, 2031 .................       0          0          0          0          0          0          0
May 20, 2032 .................       0          0          0          0          0          0          0
May 20, 2033 .................       0          0          0          0          0          0          0
May 20, 2034 .................       0          0          0          0          0          0          0
May 20, 2035 .................       0          0          0          0          0          0          0
May 20, 2036 .................       0          0          0          0          0          0          0

Weighted Average Life to
   Maturity (in years)(1) ....      0.06       0.06       0.06       0.06       0.06       0.06       0.06


__________________________

(1)   The weighted average life of a class of Certificates is determined by (i)
      multiplying the amount of each distribution in reduction of the class
      balance by the number of years from the date of the issuance of such class
      to the related Distribution Date, (ii) adding the results and (iii)
      dividing the sum by the initial class balance.


                                       B-3





                               PERCENTAGE OF INITIAL CLASS BALANCE OUTSTANDING
                            AT THE RESPECTIVE PERCENTAGES OF CPR SET FORTH BELOW:

                                            CLASS 2-A-1, CLASS 2-A-2, CLASS 2-A-3 AND CLASS 2-A-4
                                 ---------------------------------------------------------------------------
                                    0%         10%         20%        25%        30%        40%        50%
------------------------------   ---------  ----------  ---------  ---------  ---------  ---------  --------

Distribution Date

Initial Percentage ...........      100        100        100        100        100        100        100
May 20, 2007 .................      100         89         79         74         68         58         48
May 20, 2008 .................       99         80         62         54         47         34         23
May 20, 2009 .................       99         71         49         40         32         19         11
May 20, 2010 .................       98         63         39         30         22         12          5
May 20, 2011 .................       98         56         31         22         15          7          3
May 20, 2012 .................       96         49         24         16         11          4          1
May 20, 2013 .................       95         44         19         12          7          2          1
May 20, 2014 .................       93         39         15          9          5          1          *
May 20, 2015 .................       92         34         12          7          3          1          *
May 20, 2016 .................       90         30          9          5          2          *          *
May 20, 2017 .................       88         26          7          4          2          *          *
May 20, 2018 .................       86         23          6          3          1          *          *
May 20, 2019 .................       83         20          4          2          1          *          *
May 20, 2020 .................       81         18          3          1          1          *          *
May 20, 2021 .................       78         15          3          1          *          *          *
May 20, 2022 .................       75         13          2          1          *          *          *
May 20, 2023 .................       72         12          2          1          *          *          *
May 20, 2024 .................       69         10          1          *          *          *          *
May 20, 2025 .................       65          8          1          *          *          *          *
May 20, 2026 .................       61          7          1          *          *          *          *
May 20, 2027 .................       57          6          1          *          *          *          *
May 20, 2028 .................       52          5          *          *          *          *          *
May 20, 2029 .................       47          4          *          *          *          *          *
May 20, 2030 .................       42          3          *          *          *          *          *
May 20, 2031 .................       36          2          *          *          *          *          *
May 20, 2032 .................       30          2          *          *          *          *          *
May 20, 2033 .................       23          1          *          *          *          *          *
May 20, 2034 .................       16          1          *          *          *          *          *
May 20, 2035 .................        8          *          *          *          *          *          *
May 20, 2036 .................        0          0          0          0          0          0          0

Weighted Average Life to
   Maturity (in years)(1) ....     20.81       7.83       4.19       3.29       2.67       1.87       1.38


__________________________

(1)   The weighted average life of a class of Certificates is determined by (i)
      multiplying the amount of each distribution in reduction of the class
      balance by the number of years from the date of the issuance of such class
      to the related Distribution Date, (ii) adding the results and (iii)
      dividing the sum by the initial class balance.

*     Less than 0.5%, but greater than zero.


                                       B-4





                              PERCENTAGE OF INITIAL CLASS BALANCE OUTSTANDING
                           AT THE RESPECTIVE PERCENTAGES OF CPR SET FORTH BELOW:

                                                         CLASS 3-A-1 AND CLASS 3-A-2
                                 ---------------------------------------------------------------------------
                                    0%         10%         20%        25%        30%        40%        50%
------------------------------   ---------  ----------  ---------  ---------  ---------  ---------  --------

Distribution Date

Initial Percentage ...........      100        100        100        100        100        100        100
May 20, 2007 .................      100         89         79         74         69         58         48
May 20, 2008 .................       99         80         62         54         47         34         23
May 20, 2009 .................       99         71         49         40         32         20         11
May 20, 2010 .................       99         63         39         30         22         12          5
May 20, 2011 .................       98         56         31         22         16          7          3
May 20, 2012 .................       98         50         25         17         11          4          1
May 20, 2013 .................       97         45         20         12          8          2          1
May 20, 2014 .................       96         39         15          9          5          1          *
May 20, 2015 .................       94         35         12          7          4          1          *
May 20, 2016 .................       92         31          9          5          2          1          *
May 20, 2017 .................       90         27          7          4          2          *          *
May 20, 2018 .................       88         24          6          3          1          *          *
May 20, 2019 .................       85         21          4          2          1          *          *
May 20, 2020 .................       83         18          3          1          1          *          *
May 20, 2021 .................       80         16          3          1          *          *          *
May 20, 2022 .................       77         14          2          1          *          *          *
May 20, 2023 .................       74         12          2          1          *          *          *
May 20, 2024 .................       70         10          1          *          *          *          *
May 20, 2025 .................       67          9          1          *          *          *          *
May 20, 2026 .................       63          7          1          *          *          *          *
May 20, 2027 .................       58          6          1          *          *          *          *
May 20, 2028 .................       54          5          *          *          *          *          *
May 20, 2029 .................       48          4          *          *          *          *          *
May 20, 2030 .................       43          3          *          *          *          *          *
May 20, 2031 .................       37          3          *          *          *          *          *
May 20, 2032 .................       31          2          *          *          *          *          *
May 20, 2033 .................       24          1          *          *          *          *          *
May 20, 2034 .................       16          1          *          *          *          *          *
May 20, 2035 .................        8          *          *          *          *          *          *
May 20, 2036 .................        0          0          0          0          0          0          0

Weighted Average Life to
   Maturity (in years)(1)  ...     21.19       7.92       4.21       3.31       2.68       1.87       1.38


__________________________

(1)   The weighted average life of a class of Certificates is determined by (i)
      multiplying the amount of each distribution in reduction of the class
      balance by the number of years from the date of the issuance of such class
      to the related Distribution Date, (ii) adding the results and (iii)
      dividing the sum by the initial class balance.

*     Less than 0.5%, but greater than zero.


                                       B-5





                              PERCENTAGE OF INITIAL CLASS BALANCE OUTSTANDING
                           AT THE RESPECTIVE PERCENTAGES OF CPR SET FORTH BELOW:

                                                         CLASS 4-A-1 AND CLASS 4-A-2
                                 ---------------------------------------------------------------------------
                                    0%         10%         20%        25%        30%        40%        50%
------------------------------   ---------  ----------  ---------  ---------  ---------  ---------  --------

Distribution Date

Initial Percentage ...........      100        100        100        100        100        100        100
May 20, 2007 .................      100         90         79         74         69         58         48
May 20, 2008 .................      100         80         62         54         47         34         23
May 20, 2009 .................      100         72         49         40         32         20         11
May 20, 2010 .................      100         64         39         30         22         12          5
May 20, 2011 .................      100         57         31         22         16          7          3
May 20, 2012 .................       99         51         25         17         11          4          1
May 20, 2013 .................       99         46         20         13          8          3          1
May 20, 2014 .................       99         41         16          9          5          2          *
May 20, 2015 .................       99         37         13          7          4          1          *
May 20, 2016 .................       99         33         10          5          3          1          *
May 20, 2017 .................       97         29          8          4          2          *          *
May 20, 2018 .................       94         26          6          3          1          *          *
May 20, 2019 .................       92         22          5          2          1          *          *
May 20, 2020 .................       89         20          4          2          1          *          *
May 20, 2021 .................       86         17          3          1          *          *          *
May 20, 2022 .................       83         15          2          1          *          *          *
May 20, 2023 .................       79         13          2          1          *          *          *
May 20, 2024 .................       76         11          1          *          *          *          *
May 20, 2025 .................       72          9          1          *          *          *          *
May 20, 2026 .................       67          8          1          *          *          *          *
May 20, 2027 .................       62          7          1          *          *          *          *
May 20, 2028 .................       57          5          *          *          *          *          *
May 20, 2029 .................       52          4          *          *          *          *          *
May 20, 2030 .................       46          4          *          *          *          *          *
May 20, 2031 .................       40          3          *          *          *          *          *
May 20, 2032 .................       33          2          *          *          *          *          *
May 20, 2033 .................       25          1          *          *          *          *          *
May 20, 2034 .................       17          1          *          *          *          *          *
May 20, 2035 .................        9          *          *          *          *          *          *
May 20, 2036 .................        0          0          0          0          0          0          0

Weighted Average Life to
   Maturity (in years)(1) ....     22.21       8.16       4.28       3.35       2.70       1.88       1.38


__________________________

(1)   The weighted average life of a class of Certificates is determined by (i)
      multiplying the amount of each distribution in reduction of the class
      balance by the number of years from the date of the issuance of such class
      to the related Distribution Date, (ii) adding the results and (iii)
      dividing the sum by the initial class balance.

*     Less than 0.5%, but greater than zero.


                                       B-6





                              PERCENTAGE OF INITIAL CLASS BALANCE OUTSTANDING
                           AT THE RESPECTIVE PERCENTAGES OF CPR SET FORTH BELOW:

                                                     CLASS B-1, CLASS B-2 AND CLASS B-3
                                 ---------------------------------------------------------------------------
                                    0%         10%         20%        25%        30%        40%        50%
------------------------------   ---------  ----------  ---------  ---------  ---------  ---------  --------

Distribution Date

Initial Percentage ...........      100        100        100        100        100        100        100
May 20, 2007 .................      100        100        100        100        100        100        100
May 20, 2008 .................       99         99         99         99         99         86         71
May 20, 2009 .................       99         99         99         91         83         66         50
May 20, 2010 .................       99         99         82         68         58         40         25
May 20, 2011 .................       98         98         65         51         40         24         12
May 20, 2012 .................       97         97         52         38         28         14          6
May 20, 2013 .................       96         92         41         28         19          8          3
May 20, 2014 .................       95         82         32         21         13          5          2
May 20, 2015 .................       94         73         26         15          9          3          1
May 20, 2016 .................       92         64         20         11          6          2          *
May 20, 2017 .................       90         57         16          8          4          1          *
May 20, 2018 .................       88         50         12          6          3          1          *
May 20, 2019 .................       86         44         10          4          2          *          *
May 20, 2020 .................       83         38          7          3          1          *          *
May 20, 2021 .................       80         33          6          2          1          *          *
May 20, 2022 .................       77         29          4          2          1          *          *
May 20, 2023 .................       74         25          3          1          *          *          *
May 20, 2024 .................       71         21          3          1          *          *          *
May 20, 2025 .................       67         18          2          1          *          *          *
May 20, 2026 .................       63         15          1          *          *          *          *
May 20, 2027 .................       58         13          1          *          *          *          *
May 20, 2028 .................       54         11          1          *          *          *          *
May 20, 2029 .................       49          9          1          *          *          *          *
May 20, 2030 .................       43          7          *          *          *          *          *
May 20, 2031 .................       37          5          *          *          *          *          *
May 20, 2032 .................       31          4          *          *          *          *          *
May 20, 2033 .................       24          3          *          *          *          *          *
May 20, 2034 .................       16          2          *          *          *          *          *
May 20, 2035 .................        8          1          *          *          *          *          *
May 20, 2036 .................        0          0          0          0          0          0          0

Weighted Average Life to
   Maturity (in years)(1) ....     21.21      13.38       7.35       6.03       5.19       4.01       3.17


__________________________

(1)   The weighted average life of a class of Certificates is determined by (i)
      multiplying the amount of each distribution in reduction of the class
      balance by the number of years from the date of the issuance of such class
      to the related Distribution Date, (ii) adding the results and (iii)
      dividing the sum by the initial class balance.

*     Less than 0.5%, but greater than zero.


                                       B-7



                      [THIS PAGE INTENTIONALLY LEFT BLANK]





                                   APPENDIX C

                   HYPOTHETICAL MORTGAGE LOAN CHARACTERISTICS


                                       C-1





                                   Hypothetical Mortgage Loan Characteristics

                                              CURRENT
                              CURRENT           NET
              UNPAID          MORTGAGE        MORTGAGE                                INITIAL         PERIODIC
            PRINCIPAL         INTEREST        INTEREST      REMAINING                 PERIODIC          RATE
             BALANCE            RATE            RATE          TERM         AGE          CAP             CAP
 GROUP         ($)              (%)             (%)         (MONTHS)    (MONTHS)        (%)             (%)
-------- ---------------- ---------------- -------------- ------------ ---------- ---------------- -------------

   1          550,000.00    5.6250000000    5.2475000000       360          0       1.0000000000    1.0000000000
   1          342,559.49    6.0000000000    5.6225000000       353          7       2.0000000000    2.0000000000
   1        1,923,040.16    6.4638085074    6.0863085074       355          5       2.0000000000    2.0000000000
   1        5,527,146.29    6.6512648207    6.2737648207       356          4       2.0000000000    2.0000000000
   1          393,814.40    6.0000000000    5.6225000000       357          3       2.0000000000    2.0000000000
   1          699,282.12    6.4769824481    6.0994824481       358          2       2.0000000000    2.0000000000
   1        1,563,514.57    6.2508044057    5.8733044057       359          1       2.0000000000    2.0000000000
   1        1,585,000.00    6.7772082019    6.3997082019       360          0       2.0000000000    2.0000000000
   1           71,925.00    5.5000000000    5.1225000000       354          6       2.0000000000    2.0000000000
   1          615,200.00    7.0000000000    6.6225000000       356          4       2.0000000000    2.0000000000
   1        2,507,674.80    6.2508985116    5.8733985116       358          2       2.0000000000    2.0000000000
   1        9,574,598.00    6.3340179922    5.9565179922       359          1       2.0000000000    2.0000000000
   1       10,987,049.00    5.9813928426    5.6038928426       360          0       2.0000000000    2.0000000000
   2          209,119.19    6.5000000000    6.2475000000       358          2       2.0000000000    2.0000000000
   2          370,112.00    5.5000000000    5.2475000000       354          6       5.0000000000    2.0000000000
   2          101,068.19    5.1250000000    4.8725000000       343         17       5.0000000000    2.0000000000
   2          275,260.75    5.8750000000    5.6225000000       344         16       5.0000000000    2.0000000000
   2          276,221.26    5.7500000000    5.4975000000       350         10       5.0000000000    2.0000000000
   2          272,240.78    5.5000000000    5.2475000000       351          9       5.0000000000    2.0000000000
   2          356,399.87    5.8750000000    5.6225000000       353          7       5.0000000000    2.0000000000
   2          306,523.48    6.2500000000    5.9975000000       355          5       5.0000000000    2.0000000000
   2          239,795.69    6.6250000000    6.3725000000       356          4       5.0000000000    2.0000000000
   2        2,530,454.24    6.4064055111    6.1539055111       357          3       5.0000000000    2.0000000000
   2        8,220,484.26    6.6091146358    6.3566146358       358          2       5.0000000000    2.0000000000
   2       45,416,498.26    6.1568610314    5.9043610314       359          1       5.0000000000    2.0000000000
   2       49,816,988.34    6.0612137800    5.8087137800       360          0       5.0000000000    2.0000000000
   2          431,158.10    6.1250000000    5.8725000000       358          2       5.0000000000    2.0000000000
   2        1,210,000.00    5.5047520661    5.2522520661       352          8       5.0000000000    2.0000000000
   2        1,454,940.00    5.1993965387    4.9468965387       353          7       5.0000000000    2.0000000000
   2        1,726,139.32    5.2984064664    5.0459064664       354          6       5.0000000000    2.0000000000


                                           ORIGINAL      MONTHS
                                           INTEREST     TO FIRST      PAYMENT
              GROSS           RATE           ONLY      ADJUSTMENT    ADJUSTMENT
             MARGIN          CEILING         TERM         DATE       FREQUENCY
 GROUP         (%)             (%)         (MONTHS)     (MONTHS)      (MONTHS)       INDEX
-------- --------------- --------------- ----------- ------------- -------------- ----------

   1      2.7500000000    11.6250000000        0            6             6        6MO LIBOR
   1      2.2500000000    12.0000000000        0           29            12        1YR LIBOR
   1      2.2500000000    12.4638085074        0           31            12        1YR LIBOR
   1      2.2500000000    12.6512648207        0           32            12        1YR LIBOR
   1      2.2500000000    12.0000000000        0           33            12        1YR LIBOR
   1      2.2500000000    12.4769824481        0           34            12        1YR LIBOR
   1      2.2500000000    12.2508044057        0           35            12        1YR LIBOR
   1      2.2500000000    12.7772082019        0           36            12        1YR LIBOR
   1      2.2500000000    11.5000000000       36           30            12        1YR LIBOR
   1      2.2500000000    13.0000000000       36           32            12        1YR LIBOR
   1      2.2500000000    12.2508985116       36           34            12        1YR LIBOR
   1      2.2500000000    12.3340179922       36           35            12        1YR LIBOR
   1      2.2500000000    11.9813928426       36           36            12        1YR LIBOR
   2      2.2500000000    11.5000000000        0           49            12        1YR LIBOR
   2      2.2500000000    10.5000000000       49           43            12        1YR LIBOR
   2      2.2500000000    10.1250000000        0           43            12        1YR LIBOR
   2      2.2500000000    10.8750000000        0           44            12        1YR LIBOR
   2      2.2500000000    10.7500000000        0           50            12        1YR LIBOR
   2      2.2500000000    10.5000000000        0           51            12        1YR LIBOR
   2      2.2500000000    10.8750000000        0           53            12        1YR LIBOR
   2      2.2500000000    11.2500000000        0           55            12        1YR LIBOR
   2      2.2500000000    11.6250000000        0           56            12        1YR LIBOR
   2      2.2500000000    11.4064055111        0           57            12        1YR LIBOR
   2      2.2500000000    11.6091146358        0           58            12        1YR LIBOR
   2      2.2500000000    11.1832592614        0           59            12        1YR LIBOR
   2      2.2500000000    11.0612137800        0           60            12        1YR LIBOR
   2      2.2500000000    11.1250000000        0           63            12        1YR LIBOR
   2      2.2500000000    10.5047520661       60           52            12        1YR LIBOR
   2      2.2500000000    10.1993965387       60           53            12        1YR LIBOR
   2      2.2500000000    10.2984064664       60           54            12        1YR LIBOR



                                       C-2





                                   Hypothetical Mortgage Loan Characteristics

                                              CURRENT
                              CURRENT           NET
              UNPAID          MORTGAGE        MORTGAGE                                INITIAL         PERIODIC
            PRINCIPAL         INTEREST        INTEREST      REMAINING                 PERIODIC          RATE
             BALANCE            RATE            RATE          TERM         AGE          CAP             CAP
 GROUP         ($)              (%)             (%)         (MONTHS)    (MONTHS)        (%)             (%)
-------- ---------------- ---------------- -------------- ------------ ---------- ---------------- -------------

   2        2,092,801.64    5.9263138909    5.6738138909       355          5       5.0000000000    2.0000000000
   2        3,963,348.00    5.8571489307    5.6046489307       356          4       5.0000000000    2.0000000000
   2       24,278,422.57    6.2127916119    5.9602916119       358          2       5.0000000000    2.0000000000
   2      102,418,866.91    6.1384990982    5.8859990982       359          1       5.0000000000    2.0000000000
   2      105,439,087.00    6.1789996508    5.9264996508       360          0       5.0000000000    2.0000000000
   3          877,110.18    5.6250000000    5.3725000000       358          2       5.0000000000    2.0000000000
   3          810,057.03    5.9393302577    5.6868302577       355          5       5.0000000000    2.0000000000
   3          384,523.50    6.2500000000    5.9975000000       356          4       5.0000000000    2.0000000000
   3        2,752,786.24    6.8053183254    6.5528183254       358          2       5.0000000000    2.0000000000
   3        3,706,023.58    5.8948712899    5.6423712899       359          1       5.0000000000    2.0000000000
   3       13,895,268.00    6.3484775177    6.0959775177       360          0       5.0000000000    2.0000000000
   3          397,608.53    5.7500000000    5.4975000000       354          6       5.0000000000    2.0000000000
   3        2,151,443.55    6.4665431874    6.2140431874       358          2       5.0000000000    2.0000000000
   3       17,342,926.00    6.1066575862    5.8541575862       359          1       5.0000000000    2.0000000000
   3       39,562,792.00    6.2780006148    6.0255006148       360          0       5.0000000000    2.0000000000
   4        2,771,085.55    6.9905658267    6.7380658267       356          4       5.0000000000    2.0000000000
   4        2,849,095.47    5.8545067893    5.6020067893       359          1       5.0000000000    2.0000000000
   4        5,039,960.00    6.0679588727    5.8154588727       360          0       5.0000000000    2.0000000000
   4          822,995.00    5.9461949951    5.6936949951       353          7       5.0000000000    2.0000000000
   4          898,185.00    5.5350108831    5.2825108831       354          6       5.0000000000    2.0000000000
   4          765,600.00    5.5876436782    5.3351436782       355          5       5.0000000000    2.0000000000
   4        4,757,199.42    6.6602203629    6.4077203629       356          4       5.0000000000    2.0000000000
   4          650,000.00    6.2500000000    5.9975000000       357          3       5.0000000000    2.0000000000
   4       28,219,586.52    6.2371321908    5.9846321908       358          2       5.0000000000    2.0000000000
   4       60,587,043.06    6.2796096780    6.0271096780       359          1       5.0000000000    2.0000000000
   4       60,425,125.29    6.3087724373    6.0562724373       360          0       5.0000000000    2.0000000000


                                           ORIGINAL      MONTHS
                                           INTEREST     TO FIRST      PAYMENT
              GROSS           RATE           ONLY      ADJUSTMENT    ADJUSTMENT
             MARGIN          CEILING         TERM         DATE       FREQUENCY
 GROUP         (%)             (%)         (MONTHS)     (MONTHS)      (MONTHS)       INDEX
-------- --------------- --------------- ----------- ------------- -------------- ----------

   2      2.2500000000    10.9263138909        60          55            12        1YR LIBOR
   2      2.2500000000    10.8571489307        60          56            12        1YR LIBOR
   2      2.2500000000    11.2127916119        60          58            12        1YR LIBOR
   2      2.2500000000    11.1397195496        60          59            12        1YR LIBOR
   2      2.2500000000    11.1789996508        60          60            12        1YR LIBOR
   3      2.2500000000    10.6250000000         0          72            12        1YR LIBOR
   3      2.2500000000    10.9393302577         0          79            12        1YR LIBOR
   3      2.2500000000    11.2500000000         0          80            12        1YR LIBOR
   3      2.2500000000    11.8053183254         0          82            12        1YR LIBOR
   3      2.2500000000    10.8948712899         0          83            12        1YR LIBOR
   3      2.2500000000    11.3484775177         0          84            12        1YR LIBOR
   3      2.2500000000    10.7500000000        84          78            12        1YR LIBOR
   3      2.2500000000    11.4665431874        84          82            12        1YR LIBOR
   3      2.2500000000    11.1066575862        84          83            12        1YR LIBOR
   3      2.2500000000    11.2780006148        84          84            12        1YR LIBOR
   4      2.2500000000    11.9905658267         0         116            12        1YR LIBOR
   4      2.2500000000    10.8545067893         0         119            12        1YR LIBOR
   4      2.2500000000    11.0679588727         0         120            12        1YR LIBOR
   4      2.2500000000    10.9461949951       120         113            12        1YR LIBOR
   4      2.2500000000    10.5350108831       120         114            12        1YR LIBOR
   4      2.2500000000    10.5876436782       120         115            12        1YR LIBOR
   4      2.2500000000    11.6602203629       120         116            12        1YR LIBOR
   4      2.2500000000    11.2500000000       120         117            12        1YR LIBOR
   4      2.2500000000    11.2371321908       120         118            12        1YR LIBOR
   4      2.2500000000    11.2796096780       120         119            12        1YR LIBOR
   4      2.2500000000    11.3087724373       120         120            12        1YR LIBOR



                                       C-3



                      [THIS PAGE INTENTIONALLY LEFT BLANK]

s



                                   APPENDIX D

                 SENSITIVITY AND AGGREGATE REALIZED LOSS TABLES



                             SENSITIVITY OF PRE-TAX YIELDS TO MATURITY OF THE CLASS B-2
                                   CERTIFICATES TO PREPAYMENTS AND REALIZED LOSSES

                                                                        PERCENTAGE OF CPR
                        LOSS SEVERITY   --------------------------------------------------------------------------------
PERCENTAGE OF SDA        PERCENTAGE         0%         10%        20%         25%         30%         40%         50%
-----------------       -------------   ---------   ---------   --------   ---------   ---------   ---------   ---------

0%..................          0%           6.93%       6.78%      6.56%       6.51%       6.48%       6.46%       6.48%
75%.................         25%           6.93        6.79       6.57        6.51        6.48        6.46        6.48
75%.................         50%           5.76        6.81       6.57        6.51        6.47        6.46        6.48
100%................         25%           6.93        6.79       6.56        6.51        6.48        6.46        6.48
100%................         50%          (5.79)       6.81       6.58        6.51        6.47        6.46        6.48
150%................         25%           5.94        6.81       6.57        6.51        6.47        6.46        6.48
150%................         50%         (34.32)       0.43       6.58        6.52        6.47        6.45        6.48
200%................         25%          (3.92)       6.81       6.57        6.51        6.47        6.45        6.48
200%................         50%         (48.59)     (32.37)      3.86        6.51        6.47        6.45        6.48




                             SENSITIVITY OF PRE-TAX YIELDS TO MATURITY OF THE CLASS B-3
                                   CERTIFICATES TO PREPAYMENTS AND REALIZED LOSSES

                                                                        PERCENTAGE OF CPR
                        LOSS SEVERITY   --------------------------------------------------------------------------------
PERCENTAGE OF SDA        PERCENTAGE         0%         10%        20%         25%         30%         40%         50%
-----------------       -------------   ---------   ---------   --------   ---------   ---------   ---------   ---------

0%..................          0%           7.09%       6.98%      6.88%       6.88%       6.89%       6.97%       7.12%
75%.................         25%           7.09        6.99       6.88        6.87        6.89        6.97        7.10
75%.................         50%         (21.33)       5.40       6.87        6.87        6.89        6.97        7.10
100%................         25%           4.85        6.99       6.87        6.87        6.89        6.97        7.10
100%................         50%         (36.36)      (1.37)      6.87        6.87        6.89        6.97        7.10
150%................         25%         (20.74)       5.53       6.87        6.87        6.89        6.97        7.10
150%................         50%         (56.72)     (42.50)     (2.46)       2.76        5.70        6.98        7.10
200%................         25%         (35.90)      (0.69)      6.87        6.87        6.89        6.97        7.10
200%................         50%         (71.99)     (59.83)    (41.03)     (20.40)      (1.98)       5.48        7.10


      The following table sets forth the amount of Realized Losses that would be
incurred with respect to the Mortgage Loans, expressed as a percentage of the
aggregate outstanding principal balance of the Mortgage Loans as of the Cut-off
Date.



                                    AGGREGATE REALIZED LOSSES FOR THE MORTGAGE LOANS

                                                                        PERCENTAGE OF CPR
                        LOSS SEVERITY   --------------------------------------------------------------------------------
PERCENTAGE OF SDA        PERCENTAGE         0%         10%        20%         25%         30%         40%         50%
-----------------       -------------   ---------   ---------   --------   ---------   ---------   ---------   ---------

75%.................         25%           0.76%       0.46%      0.29%       0.24%       0.19%       0.13%       0.08%
75%.................         50%           1.52        0.92       0.59        0.47        0.38        0.25        0.17
100%................         25%           1.01        0.61       0.39        0.32        0.26        0.17        0.11
100%................         50%           2.01        1.22       0.78        0.63        0.51        0.34        0.22
150%................         25%           1.49        0.91       0.58        0.47        0.38        0.25        0.17
150%................         50%           2.99        1.82       1.17        0.94        0.76        0.50        0.33
200%................         25%           1.97        1.21       0.77        0.62        0.51        0.33        0.22
200%................         50%           3.95        2.41       1.55        1.25        1.01        0.67        0.44



                                       D-1



                      [THIS PAGE INTENTIONALLY LEFT BLANK]




                                   PROSPECTUS

                       BANC OF AMERICA FUNDING CORPORATION
                                    DEPOSITOR

                      BANK OF AMERICA, NATIONAL ASSOCIATION
                                     SPONSOR

                       MORTGAGE PASS-THROUGH CERTIFICATES
                              (ISSUABLE IN SERIES)

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

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

YOU SHOULD CAREFULLY CONSIDER THE "RISK FACTORS" BEGINNING ON PAGE 7 OF THIS
PROSPECTUS.

Except as otherwise described in the applicable prospectus supplement, neither
the certificates of any series nor the underlying mortgage loans will be insured
or guaranteed by any governmental agency or instrumentality or any other entity.

The certificates of each series will represent interests in the related issuing
entity only and will not be obligations of the depositor, the sponsor or any
other entity.

This prospectus may be used to offer and sell any series of certificates only if
accompanied by the prospectus supplement for that series. Please read both
documents carefully to understand the risks associated with these investments.

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

EACH ISSUING ENTITY --

o   will issue a series of mortgage pass-through certificates that will consist
    of one or more classes of certificates; and

o   will own either:

    o   one or more pools of fixed or adjustable interest rate mortgage loans,
        each of which is secured by a first lien on a one- to four-family
        residential property; or

    o   mortgage-backed certificates that represent an interest in or are
        secured by a pool of mortgage loans.

EACH POOL OF MORTGAGE LOANS --

o   will be sold to the related issuing entity by the depositor, who will have
    in turn purchased the mortgage loans from the sponsor;

o   will be underwritten to the standards described in this prospectus and the
    accompanying prospectus supplement; and

o   will be serviced by one or more servicers affiliated or unaffiliated with
    the depositor.

EACH SERIES OF CERTIFICATES --

o   will represent interests in the related issuing entity;

o   may provide credit support by "subordinating" certain classes to other
    classes of certificates; any subordinate classes will be entitled to payment
    subject to the payment of more senior classes and will bear losses before
    more senior classes;

o   may be entitled to the benefit of one or more of the other types of credit
    support or derivative instruments described in this prospectus and in more
    detail in the accompanying prospectus supplement; and

o   will be paid only from the assets of the related issuing entity.

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


                                -----------------
                                  MAY 22, 2006






                                             TABLE OF CONTENTS

                                                                                                       PAGE
                                                                                                       ----

IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS PROSPECTUS AND THE PROSPECTUS SUPPLEMENT...........iii
SUMMARY OF TERMS..........................................................................................1
RISK FACTORS..............................................................................................7
   Limited Source of Payments - No Recourse to Depositor, Sponsor, Master Servicer or Trustee.............7
   Limited Liquidity for Certificates May Affect Your Ability to Resell Certificates......................7
   Certain Certificates May Not Be Appropriate For Individual Investors...................................8
   Credit Enhancement is Limited in Amount and Coverage...................................................8
   The Ratings of Your Certificates May Be Lowered or Withdrawn Which May Adversely Affect
   the Liquidity or Market Value of Your Certificates.....................................................9
   Real Estate Market Conditions May Affect Mortgage Loan Performance.....................................9
   Geographic Concentration May Increase Rates of Loss and Delinquency...................................10
   General Economic Conditions May Increase Risk of Loss.................................................10
   Collateral Securing Cooperative Loans May Diminish in Value...........................................10
   Leaseholds May Be Subject to Default Risk on the Underlying Lease.....................................11
   Yields of Certificates Sensitive to Rate and Timing of Principal Prepayment...........................11
   Timing of Prepayments on the Mortgage Loans May Result in Interest Shortfalls on the Certificates.....12
   Exercise of Rights Under Special Servicing Agreements May Be Adverse to Other Certificateholders......12
   Special Powers of the FDIC in the Event of Insolvency of the Sponsor Could Delay or Reduce
   Distributions on the Certificates ....................................................................13
   Insolvency of the Depositor May Delay or Reduce Collections on Mortgage Loans.........................14
   Owners of Book-Entry Certificates are Not Entitled to Exercise Rights of Holders of Certificates......14
   Book-Entry System for Certain Classes of Certificates May Decrease Liquidity and Delay Payment........15
   Cash Flow Agreements and External Credit Enhancements are Subject to Counterparty Risk................15
   Amounts Received from an Auction and a Related Swap Agreement May Be Insufficient to Assure
   Completion of the Auction ............................................................................15
   Servicing Transfer Following Event of Default May Result in Payment Delays or Losses..................16
   Effects of Failure to Comply With Consumer Protection Laws............................................16
   Increased Risk of Loss If Delinquent Mortgage Loans are Assets of a Trust.............................17
THE TRUST ESTATES........................................................................................17
   General...............................................................................................17
   The Mortgage Loans....................................................................................17
   Mortgage Certificates.................................................................................22
   Distribution Account..................................................................................27
DESCRIPTION OF CERTIFICATES..............................................................................27
   General...............................................................................................28
   Definitive Form.......................................................................................28
   Book-entry Form.......................................................................................29
   Distributions.........................................................................................34
   Categories of Classes of Certificates.................................................................35
   Residual Certificates.................................................................................39
   Mandatory Auction of Certificates.....................................................................40
   Reports To Certificateholders.........................................................................40
CREDIT ENHANCEMENT.......................................................................................42
   General...............................................................................................42
   Subordination.........................................................................................43
   Limited Guarantee.....................................................................................43
   Financial Guaranty Insurance Policy or Surety Bond....................................................44
   Letter of Credit......................................................................................44
   Mortgage Pool Insurance Policy........................................................................44
   Special Hazard Insurance Policy.......................................................................45
   Mortgagor Bankruptcy Bond.............................................................................46
   Reserve Fund..........................................................................................46
   Cross-Collateralization...............................................................................47
   Overcollateralization.................................................................................47
   Excess Interest.......................................................................................47
   Cash Flow Agreements..................................................................................47
   Fraud Waiver..........................................................................................48
   FHA Insurance or VA Guarantee.........................................................................48
PREPAYMENT AND YIELD CONSIDERATIONS......................................................................49
   Factors Affecting Prepayment..........................................................................50
   Effect of Principal Prepayments.......................................................................50
   Weighted Average Life of Certificates.................................................................50
   Scheduled Delays In Distributions.....................................................................51
THE SPONSOR..............................................................................................51
THE DEPOSITOR............................................................................................52
USE OF PROCEEDS..........................................................................................53
MORTGAGE PURCHASE PROGRAM................................................................................53
SERVICING OF THE MORTGAGE LOANS..........................................................................54
   The Master Servicer...................................................................................54
   The Servicers.........................................................................................54
THE POOLING AND SERVICING AGREEMENT......................................................................56
   Assignment of Mortgage Loans to the Trustee...........................................................56
   Representations and Warranties........................................................................58



                                        i




                                             TABLE OF CONTENTS

                                                                                                       PAGE
                                                                                                       ----

   Special Servicing Agreements..........................................................................59
   Payments on Mortgage Loans............................................................................59
   Periodic Advances and Servicing Advances..............................................................62
   Collection and Other Servicing Procedures.............................................................63
   Enforcement of "Due-on-Sale" Clauses; Realization Upon Defaulted Mortgage Loans.......................64
   Insurance Policies....................................................................................65
   Primary Mortgage Insurance............................................................................66
   Recoveries Under Primary Mortgage Insurance Policies..................................................66
   Fixed Retained Yield, Servicing Compensation and Payment of Expenses..................................67
   Evidence as to Compliance.............................................................................68
   Certain Matters Regarding the Depositor, the Sponsor and the Master Servicer..........................68
   Events of Default.....................................................................................69
   Rights Upon Event of Default..........................................................................69
   Enforcement...........................................................................................70
   Amendment.............................................................................................70
   List of Certificateholders............................................................................71
   Termination; Repurchase of Mortgage Loans and Mortgage Certificates...................................71
   The Trustee...........................................................................................72
CERTAIN LEGAL ASPECTS OF THE MORTGAGE LOANS..............................................................73
   General...............................................................................................73
   Condominiums..........................................................................................73
   Cooperatives..........................................................................................74
   Foreclosure...........................................................................................74
   Rights of Redemption..................................................................................76
   Anti-Deficiency Legislation, the Bankruptcy Code and Other Limitations On Lenders.....................76
   Texas Home Equity Loans...............................................................................79
   "Due-on-Sale" Clauses.................................................................................79
   Applicability of Usury Laws...........................................................................80
   Forfeiture for Drug, RICO and Money Laundering Violations.............................................80
   Homeowners Protection Act of 1998.....................................................................81
   Servicemembers Civil Relief Act and Similar Laws......................................................81
   Environmental Considerations..........................................................................81
   Enforceability of Certain Provisions..................................................................84
BENEFIT PLAN CONSIDERATIONS..............................................................................84
   General...............................................................................................84
   Certain ERISA and Code Requirements...................................................................85
   ERISA Administrative Exemptions.......................................................................86
   Non-ERISA Plans and Exempt Plans......................................................................89
   Unrelated Business Taxable Income--Residual Certificates..............................................89
LEGAL INVESTMENT CONSIDERATIONS..........................................................................89
FEDERAL INCOME TAX CONSEQUENCES..........................................................................91
   Federal Income Tax Consequences for REMIC Certificates................................................91
   Taxation of Regular Certificates......................................................................94
   Taxation of Residual Certificates....................................................................100
   Federal Income Tax Consequences for Certificates as to Which No REMIC Election Is Made...............110
STATE TAX CONSIDERATIONS................................................................................116
PLAN OF DISTRIBUTION....................................................................................116
USE OF PROCEEDS.........................................................................................117
FINANCIAL INFORMATION...................................................................................117
LEGAL MATTERS...........................................................................................117
RATING..................................................................................................118
REPORTS TO CERTIFICATEHOLDERS...........................................................................118
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE.......................................................118
WHERE YOU CAN FIND MORE INFORMATION.....................................................................118



                                       ii



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

      Information is provided to you about the certificates in two separate
documents that progressively provide more detail: (a) this prospectus, which
provides general information, some of which may not apply to your series of
certificates; and (b) the accompanying prospectus supplement, which will
describe the specific terms of your series of certificates including:

      o   the principal balances and/or interest rates of each class;

      o   the timing and priority of interest and principal payments;

      o   statistical and other information about the mortgage loans;

      o   information about credit enhancement for each class;

      o   the ratings for each class; and

      o   the method for selling the certificates.

YOU SHOULD RELY ON THE INFORMATION IN THE PROSPECTUS SUPPLEMENT FOR THE TERMS OF
YOUR SERIES OF CERTIFICATES.

      You should rely only on the information in this prospectus and the
accompanying prospectus supplement including the information incorporated by
reference. No one has been authorized to provide different information to you.
The certificates are not being offered in any state where the offer is not
permitted. The depositor does not claim the accuracy of the information in this
prospectus or the accompanying prospectus supplement as of any date other than
the dates stated on their covers.

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

      You can find a listing of the pages where capitalized terms used in this
prospectus are defined under the caption "Index of Terms" beginning on page 120
of this prospectus.

      The depositor's principal executive offices are located at 214 North Tryon
Street, Charlotte, North Carolina 28255 and the depositor's phone number is
(704) 386-2400.


                                       iii



                                SUMMARY OF TERMS

      o   THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THIS DOCUMENT, BUT
          DOES NOT CONTAIN ALL OF THE INFORMATION THAT YOU SHOULD CONSIDER IN
          MAKING YOUR INVESTMENT DECISION. TO UNDERSTAND ALL OF THE TERMS OF A
          SERIES OF CERTIFICATES, PLEASE READ THIS ENTIRE DOCUMENT AND THE
          ACCOMPANYING PROSPECTUS SUPPLEMENT CAREFULLY.

      o   THIS SUMMARY PROVIDES AN OVERVIEW OF CERTAIN CALCULATIONS, CASH FLOWS
          AND OTHER INFORMATION TO AID YOUR UNDERSTANDING OF THE TERMS OF THE
          CERTIFICATES AND IS QUALIFIED BY THE FULL DESCRIPTION OF THESE
          CALCULATIONS, CASH FLOWS AND OTHER INFORMATION IN THIS PROSPECTUS AND
          THE ACCOMPANYING PROSPECTUS SUPPLEMENT.

RELEVANT PARTIES

ISSUING ENTITY

      Each series of mortgage pass-through certificates will be issued by a
separate common law trust. Each trust will be established and each series of
certificates will be issued under a separate pooling and servicing agreement to
be entered into among the depositor and the master servicer or one or more
servicers and the trustee specified in the applicable prospectus supplement.

DEPOSITOR

      Banc of America Funding Corporation will serve as the depositor for each
series of certificates. The depositor is an indirect subsidiary of Bank of
America Corporation. It is not expected that the depositor will have any
business operations other than offering certificates and related activities.

SPONSOR

      Bank of America, National Association will serve as the sponsor for each
series of certificates. The depositor will acquire the collateral that will
serve as security for a series from the sponsor. The sponsor is an affiliate of
the depositor and may be an affiliate of a servicer.

SERVICER(S)

      The sponsor or one or more entities affiliated or unaffiliated with the
depositor and named in the applicable prospectus supplement will service the
mortgage loans in each trust. Each servicer will perform certain servicing
functions relating to the mortgage loans serviced by it in accordance with the
related pooling and servicing agreement or underlying servicing agreement.

MASTER SERVICER

      The related prospectus supplement may provide for a master servicer for
that series of certificates. The master servicer will supervise the servicers. A
master servicer may be an affiliate of the depositor, the sponsor, a servicer
and/or an originator.

TRUSTEE

      A trustee for each trust will be named in the applicable prospectus
supplement. The trustee generally will be responsible under each pooling and
servicing agreement for providing general administrative services on behalf of
the trust for a series. To the extent specified in the related prospectus
supplement, a securities administrator or other entity may perform certain of
the duties of the trustee.

ISSUING ENTITY ASSETS

      Each trust will own the assets specified in the related prospectus
supplement. These assets will consist of any combination of the following items:

      o   mortgage loans, or mortgage-backed securities or mortgage certificates
          that are secured by mortgage loans;

      o   any real estate acquired through foreclosure of a mortgage loan;

      o   any credit enhancement device described in this prospectus; and

      o   amounts on deposit in the servicer custodial accounts, master servicer
          custodial account or distribution account maintained for the trust.


                                       1



      If specified in the related prospectus supplement, the master servicer or
another party may retain the right to receive specified payments to be made with
respect to the mortgage loans or the mortgage certificates. Payments generated
by these retained interests will not be available to make payments on any
certificates.

      The related prospectus supplement will specify the cut-off date after
which the trust is entitled to receive collections on the mortgage loans and/or
mortgage certificates that it holds.

MORTGAGE LOANS

      Each trust will own the related mortgage loans (other than the fixed
retained yield, which is the portion of the mortgage interest rate, if any, not
contained in the trust).

      The mortgage loans in each trust estate:

      o   will be secured by first liens on fee simple or leasehold interests in
          one- to four-family properties;

      o   may include cooperative apartment loans secured by shares issued by
          private, nonprofit cooperative housing corporations;

      o   may be secured by second homes or investor properties;

      o   may be loans not insured or guaranteed by any governmental agency or
          may be loans insured by the Federal Housing Authority or partially
          guaranteed by the Veterans' Administration; and

      o   will be secured by real property located in one of the fifty states,
          the District of Columbia, Guam, Puerto Rico or any other territory of
          the United States.

      See "The Pooling and Servicing Agreement--Fixed Retained Yield, Servicing
Compensation and Payment of Expenses" for a description of fixed retained yield.
See "The Trust Estates" for a description of mortgage loans secured by leases
and "Certain Legal Aspects of the Mortgage Loans--Condominiums,"
"--Cooperatives" and "--Leaseholds" for a description of mortgage loans secured
by condominium units, shares issued by cooperatives, and leaseholds,
respectively.

      A trust may include one or more of the following types of mortgage loans:

      o   fixed-rate loans;

      o   adjustable-rate loans;

      o   interest only mortgage loans;

      o   graduated payment loans;

      o   subsidy loans;

      o   buy-down loans; and

      o   balloon loans.

      The mortgage loans will be:

      o   acquired by the depositor from the sponsor;

      o   originated or acquired by the sponsor; and

      o   underwritten to the standards described in this prospectus and the
          applicable prospectus supplement.

      See "Mortgage Purchase Program" for a description of the Depositor's
purchase program for mortgage loans and "The Sponsor" for a description of the
sponsor.

      You should refer to the applicable prospectus supplement for the precise
characteristics or expected characteristics of the Mortgage Loans included in a
trust.

MORTGAGE CERTIFICATES

      The mortgage certificates in a trust may include:

      o   Fannie Mae mortgage pass-through certificates;

      o   Freddie Mac mortgage pass-through certificates;


                                       2



      o   Ginnie Mae mortgage pass-through certificates; or

      o   Private mortgage pass-through certificates or mortgage-backed debt
          securities.

      Each mortgage certificate will represent an interest in a pool of mortgage
loans and/or payments of interest or principal on mortgage loans. The related
prospectus supplement will describe the mortgage certificates for a series in
detail including the underlying collateral and any credit enhancement for the
mortgage certificates.

THE CERTIFICATES

      Each certificate of a series will represent an ownership interest in a
trust or in specified monthly payments with respect to that trust. A series of
certificates will include one or more classes. A class of certificates will be
entitled, to the extent of funds available, to receive distributions from
collections on the related mortgage loans and, to the extent specified in the
related prospectus supplement, from any credit enhancements described in this
prospectus.

INTEREST DISTRIBUTIONS

      For each series of certificates, interest on the related mortgage loans at
the weighted average of their mortgage interest rates (net of servicing fees and
certain other amounts as described in this prospectus or in the applicable
prospectus supplement), will be passed through to holders of the related classes
of certificates in accordance with the particular terms of each class of
certificates. The terms of each class of certificates will be described in the
related prospectus supplement. See "Description of
Certificates--Distributions--Interest."

      Interest will accrue at the pass-through rate for each class indicated in
the applicable prospectus supplement on its outstanding class balance or
notional amount.

PRINCIPAL DISTRIBUTIONS

      For a series of certificates, principal payments (including prepayments)
on the related mortgage loans will be passed through to holders of the related
certificates or otherwise applied in accordance with the related pooling and
servicing agreement on each distribution date. Principal distributions will be
allocated among the classes of certificates of a series in the manner specified
in the applicable prospectus supplement. See "Description of
Certificates--Distributions--Principal."

DISTRIBUTION DATES

      Distributions on the certificates will be made on the dates specified in
the related prospectus supplement.

      Distributions on certificates may be made monthly, quarterly or
semi-annually, as specified in the prospectus supplement.

RECORD DATES

      Distributions will be made on each distribution date to certificateholders
of record at the close of business on the last business day of the month
preceding the month in which the distribution date occurs or on another date
specified in the applicable prospectus supplement.

CREDIT ENHANCEMENT

SUBORDINATION

      A series of certificates may include one or more classes of senior
certificates and one or more classes of subordinate certificates. The rights of
the holders of subordinate certificates of a series to receive distributions
will be subordinated to the rights of the holders of the senior certificates of
the same series to the extent and in the manner specified in the applicable
prospectus supplement.

      Subordination is intended to enhance the likelihood of the timely receipt
by the senior certificateholders of their proportionate share of scheduled
monthly principal and interest payments on the related mortgage loans and to
protect them from losses. This protection will be effected by:

      o   the preferential right of the senior certificateholders to receive,
          prior to any distribution being made in respect of the related
          subordinated certificates on each distribution date, current
          distributions of principal and interest due them on each distribution
          date out of the funds available for distributions on the distribution
          date;

      o   the right of the senior certificateholders to receive future
          distributions on the


                                       3



          mortgage loans that would otherwise have been payable to the
          subordinate certificateholders;

      o   the prior allocation to the subordinate certificates of all or a
          portion of losses realized on the underlying mortgage loans; and/or

      o   any other method specified in the related prospectus supplement.

      However, subordination does not provide full assurance that there will be
no losses on the senior certificates.

OTHER TYPES OF CREDIT ENHANCEMENT

      If specified in the applicable prospectus supplement, the certificates of
any series, or any one or more classes of a series, may be entitled to the
benefits of one or more of the following types of credit enhancement:

      o   subordination;

      o   limited guarantee;

      o   financial guaranty insurance policy or surety bond;

      o   letter of credit;

      o   mortgage pool insurance policy;

      o   special hazard insurance policy;

      o   mortgagor bankruptcy bond;

      o   reserve fund;

      o   cross-collateralization;

      o   overcollateralization;

      o   excess interest;

      o   cash flow agreements;

      o   fraud waiver; or

      o   FHA insurance or a VA guarantee.

      See "Credit Enhancement."

ADVANCES OF DELINQUENT PAYMENTS

      If specified in the related prospectus supplement, the servicers may be
obligated to advance amounts corresponding to delinquent principal and interest
payments on the mortgage loans until the first day of the month following the
date on which the related mortgaged property is sold at a foreclosure sale or
the related mortgage loan is otherwise liquidated, or until any other time as
specified in the related prospectus supplement, unless determined to be
non-recoverable.

      If specified in the related prospectus supplements, the master servicer,
the trustee or another entity may be required to make advances from its own
funds if the servicers fail to do so, unless the master servicer, the trustee or
such other entity, as the case may be, determines that it will not be able to
recover those amounts from future payments on the mortgage loan. Advances will
be reimbursable to the extent described in this prospectus and in the related
prospectus supplement.

      See "The Pooling and Servicing Agreement--Periodic Advances and Servicing
Advances."

FORMS OF CERTIFICATES

      The certificates will be issued either:

      o   in book-entry form through the facilities of DTC; or

      o   in definitive, fully-registered, certificated form.

      If you own certificates in book-entry form, you will not receive a
physical certificate representing your ownership interest in the book-entry
certificates, except under extraordinary circumstances. Instead, DTC will effect
payments and transfers by means of its electronic recordkeeping services, acting
through certain participating organizations including Clearstream and Euroclear.
This may result in certain delays in your receipt of distributions and may
restrict your ability to pledge your certificates. Your rights relating to your
book-entry certificates generally may be exercised only through DTC and its
participating organizations including Clearstream and Euroclear.

      See "Description of the Certificates--Book-entry Form."


                                       4



OPTIONAL TERMINATION

      If specified in the prospectus supplement for a series, the depositor or
another party specified in the applicable prospectus supplement may purchase all
or a part of the mortgage loans in the related trust and any property acquired
in connection with those mortgage loans. Any purchase must be made in the manner
and at the price specified under "The Pooling and Servicing
Agreement--Termination; Repurchase of Mortgage Loans and Mortgage Certificates."

      If an election is made to treat the related trust estate (or one or more
segregated pools of assets in the trust estate) as one or more "real estate
mortgage investment conduits," any optional purchase will be permitted only
pursuant to a "qualified liquidation," as defined under Section 860F(a)(4)(A) of
the Internal Revenue Code of 1986, as amended.

      Exercise of the right of purchase will cause the early retirement of some
or all of the certificates of that series.

      See "Prepayment and Yield Considerations."

TAX STATUS

      The treatment of the certificates for federal income tax purposes will
depend on:

      o   whether one or more REMIC elections are made for a series of
          certificates;

      o   if one or more REMIC elections are made, whether the certificates are
          regular interests or residual interests; and

      o   whether the certificates are interests in a trust treated as a grantor
          trust

      If one or more REMIC elections are made, certificates that are regular
interests will be treated as newly issued debt instruments of the REMIC and must
be accounted for under an accrual method of accounting. Certificates that are
residual interests are not treated as debt instruments, but rather must be
treated according to the rules prescribed in the Internal Revenue Code for REMIC
residual interests, including restrictions on transfer and the reporting of net
income or loss of the REMIC, including the possibility of a holder of such
certificate having taxable income without a corresponding distribution of cash
to pay taxes currently due.

      See "Federal Income Tax Consequences."

BENEFIT PLAN CONSIDERATIONS

      If you are a fiduciary or other person acting on behalf of any employee
benefit plan or other retirement plan or arrangement subject to Title I of
ERISA, Section 4975 of the Internal Revenue Code or similar law, you should
carefully review with your legal counsel whether the purchase or holding of
certificates could give rise to a transaction prohibited or otherwise
impermissible under these laws.

      Certain classes of certificates may not be transferred unless the trustee
is furnished with a letter of representation or an opinion of counsel to the
effect that the transfer will not result in a violation of the prohibited
transaction provisions of ERISA or the Internal Revenue Code and will not
subject the trustee, the depositor, the sponsor, any servicers or the master
servicer to additional obligations.

      See "Benefit Plan Considerations."

LEGAL INVESTMENT

      The applicable prospectus supplement will specify whether the class or
classes of certificates offered will constitute "mortgage related securities"
for purposes of the Secondary Mortgage Market Enhancement Act of 1984, as
amended. If your investment authority is subject to legal restrictions you
should consult your own legal advisors to determine whether and to what extent
the certificates constitute legal investments for you.

      See "Legal Investment Considerations" in this prospectus.

RATING

      Certificates of any series will not be offered by this prospectus and a
prospectus supplement unless each class offered is rated in one of the four
highest rating categories by at least one nationally recognized statistical
rating organization.

      o   A security rating is not a recommendation to buy, sell or hold the
          certificates of any series and is subject to revision or withdrawal at
          any time by the assigning rating agency.


                                       5



      o   Ratings do not address the effect of prepayments on the yield you may
          anticipate when you purchase your certificates.


                                       6



                                  RISK FACTORS

      Before making an investment decision, you should carefully consider the
following risk factors and the risk factors discussed in the related prospectus
supplement.

LIMITED SOURCE OF PAYMENTS - NO RECOURSE TO DEPOSITOR, SPONSOR, MASTER SERVICER
OR TRUSTEE

      Except for any related insurance policies and any reserve fund or credit
enhancement described in the applicable prospectus supplement:

      o   the mortgage loans or mortgage certificates included in the related
          trust will be the sole source of payments on the certificates of a
          series;

      o   the certificates of any series will not represent an interest in or
          obligation of the depositor, the sponsor, any originator, the master
          servicer, the trustee or any of their affiliates; and

      o   except to the extent described in the related prospectus supplement ,
          neither the certificates of any series nor the related mortgage loans
          will be guaranteed or insured by any governmental agency or
          instrumentality, the depositor, the sponsor, any originator, the
          master servicer, the trustee, any of their affiliates or any other
          person.

      Consequently, if payments on the mortgage loans underlying your series of
certificates are insufficient or otherwise unavailable to make all payments
required on your certificates, there will be no recourse to the depositor, the
sponsor, the master servicer, the trustee or any of their affiliates or, except
as specified in the applicable prospectus supplement, any other entity.

LIMITED LIQUIDITY FOR CERTIFICATES MAY AFFECT YOUR ABILITY TO RESELL
CERTIFICATES

      The liquidity of your certificates may be limited. You should consider
that:

      o   a secondary market for the certificates of any series may not develop,
          or if it does, it may not provide you with liquidity of investment or
          it may not continue for the life of the certificates of any series;

      o   the prospectus supplement for any series of certificates may indicate
          that an underwriter intends to establish a secondary market in those
          certificates, but no underwriter will be obligated to do so; and

      o   unless specified in the applicable prospectus supplement, the
          certificates will not be listed on any securities exchange.

      As a result, you may not be able to sell your certificates or you may not
be able to sell your certificates at a high enough price to produce your desired
return on investment.

      The secondary market for mortgage-backed securities has experienced
periods of illiquidity and can be expected to do so in the future. Illiquidity
can have a severely adverse effect on the prices of certificates that are
especially sensitive to prepayment, credit, or interest rate risk (such as
certificates that receive only payments of principal or interest or subordinate
certificates), or that have been structured to meet the investment requirements
of limited categories of investors.


                                       7



CERTAIN CERTIFICATES MAY NOT BE APPROPRIATE FOR INDIVIDUAL INVESTORS

      If you are an individual investor who does not have sufficient resources
or expertise to evaluate the particular characteristics of a class of
certificates, certain certificates of a series may not be an appropriate
investment for you. This may be the case because, among other things:

      o   if you purchase your certificates at a price other than par, your
          yield to maturity will be sensitive to the uncertain rate and timing
          of principal prepayments on the applicable mortgage loans;

      o   the rate of principal distributions on, and the weighted average lives
          of, the certificates will be sensitive to the uncertain rate and
          timing of principal prepayments on the applicable mortgage loans and
          the priority of principal distributions among the classes of
          certificates. Because of this, the certificates may be inappropriate
          investments for you if you require a distribution of a particular
          amount of principal on a specific date or an otherwise predictable
          stream of distributions;

      o   you may not be able to reinvest amounts distributed relating to
          principal on your certificates (which distributions, in general, are
          expected to be greater during periods of relatively low interest
          rates) at a rate at least as high as the applicable pass-through rate
          or your expected yield;

      o   a secondary market for the certificates may not develop or provide you
          with liquidity of investment; and

      o   you must pay tax on any interest or original issue discount in the
          year it accrues, even if the cash is paid to you in a different year.

      If you are an individual investor considering the purchase of a
certificate of a series, you should also carefully consider the other risk
factors discussed in this prospectus and in the applicable prospectus
supplement.

CREDIT ENHANCEMENT IS LIMITED IN AMOUNT AND COVERAGE

      Credit enhancement for a series of certificates may be provided in limited
amounts to cover certain types of losses on the underlying mortgage loans. Under
certain circumstances, credit enhancement may be provided only for one or more
classes of certificates of a series.

      Credit enhancement will be provided in one or more of the forms referred
to in this prospectus, including, but not limited to:

      o   subordination;

      o   limited guarantee;

      o   financial guaranty insurance policy or surety bond;

      o   letter of credit;

      o   mortgage pool insurance policy;

      o   special hazard insurance policy;

      o   mortgagor bankruptcy bond;

      o   reserve fund;

      o   cross-collateralization;


                                       8



      o   overcollateralization;

      o   excess interest;

      o   cash flow agreements;

      o   fraud waiver; or

      o   FHA insurance or a VA guarantee.

See "Credit Enhancement."

      Regardless of the form of credit enhancement provided:

      o   the amount of coverage will be limited in amount and in most cases
          will be subject to periodic reduction in accordance with a schedule or
          formula; and

      o   the credit enhancement may provide only very limited coverage as to
          certain types of losses, and may provide no coverage as to certain
          other types of losses.

      If losses exceed the amount of coverage provided by any credit enhancement
or losses of a type not covered by any credit enhancement occur, the losses will
be borne by the holders of specified classes of the related certificates.

      None of the depositor, the sponsor or any of their affiliates will have
any obligation to replace or supplement any credit enhancement, or to take any
other action to maintain any rating of any class of certificates.

      See "Credit Enhancement."

THE RATINGS OF YOUR CERTIFICATES MAY BE LOWERED OR WITHDRAWN WHICH MAY ADVERSELY
AFFECT THE LIQUIDITY OR MARKET VALUE OF YOUR CERTIFICATES

      It is a condition to the issuance of the certificates that they be rated
in one of the four highest rating categories by at least one nationally
recognized statistical rating organization. A security rating is not a
recommendation to buy, sell or hold securities and may be subject to revision or
withdrawal at any time. No person is obligated to maintain the rating on any
certificate, and accordingly, there can be no assurance to you that the ratings
assigned to any certificate on the date on which the certificate is originally
issued will not be lowered or withdrawn by a rating agency at any time
thereafter. The rating(s) of any series of certificates by any applicable rating
agency may be lowered following the initial issuance of the certificates as a
result of the downgrading of the obligations of any applicable credit support
provider, or as a result of losses on the related mortgage loans in excess of
the levels contemplated by the rating agency at the time of its initial rating
analysis. Neither the depositor nor the sponsor nor any of their respective
affiliates will have any obligations to replace or supplement any credit
support, or to take any other action to maintain any rating(s) of any series of
certificates. If any rating is revised or withdrawn, the liquidity or the market
value of your certificate may be adversely affected.

REAL ESTATE MARKET CONDITIONS MAY AFFECT MORTGAGE LOAN PERFORMANCE

      An investment in securities such as the certificates, which generally
represent interests in pools of residential mortgage loans, may be affected by a
decline in real estate values and changes in the mortgagor's financial
condition. There is no assurance that the values of the mortgaged properties
securing the mortgage loans underlying any series of certificates have remained
or will remain at their levels on the dates of origination of the related
mortgage loans.

      Delinquencies, foreclosures and losses could be higher than those now
generally experienced in the mortgage lending industry or in the sponsor's prior
securitizations involving the depositor, if the residential real


                                       9



estate market experiences an overall decline in property values large enough to
cause the outstanding balance of the mortgage loans in a trust and any secondary
financing on the mortgaged properties to become equal to or greater than the
value of the mortgaged properties.

      If losses on mortgage loans underlying a series are not covered by credit
enhancement, certificateholders of the series 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. See "The Trust Estates--The
Mortgage Loans."

GEOGRAPHIC CONCENTRATION MAY INCREASE RATES OF LOSS AND DELINQUENCY

      The mortgage loans underlying certain series of certificates may be
concentrated in certain regions. Any concentration may present risk
considerations in addition to those generally present for similar
mortgage-backed securities without a concentration in a particular region.
Certain geographic regions of the United States from time to time will
experience weaker regional economic conditions and housing markets or be
directly or indirectly affected by natural disasters or civil disturbances such
as earthquakes, hurricanes, floods, eruptions or riots. Mortgage loans in
affected areas will experience higher rates of loss and delinquency than on
mortgage loans generally. Although mortgaged properties located in certain
identified flood zones will be required to be covered, to the maximum extent
available, by flood insurance, as described under "The Pooling and Servicing
Agreement--Insurance Policies," no mortgaged properties will be required to be
insured otherwise against earthquake damage or any other loss not covered by
standard insurance policies, as described under "The Pooling and Servicing
Agreement--Insurance Policies."

      The ability of mortgagors to make payments on the mortgage loans may also
be affected by factors that do not necessarily affect property values, such as
adverse economic conditions generally, in particular geographic areas or
industries, or affecting particular segments of the borrowing community, such as
mortgagors relying on commission income and self-employed mortgagors. These
factors may affect the timely payment by mortgagors of scheduled payments of
principal and interest on the mortgage loans and, accordingly, the actual rates
of delinquencies, foreclosures and losses with respect to any trust.

      See the related prospectus supplement for further information regarding
the geographic concentration of the mortgage loans underlying the certificates
of any series.

GENERAL ECONOMIC CONDITIONS MAY INCREASE RISK OF LOSS

      Adverse economic conditions generally, in particular geographic areas or
industries, or affecting particular segments of the borrowing community (such as
mortgagors relying on commission income and self-employed mortgagors) and other
factors which may or may not affect real property values (including the purposes
for which the mortgage loans were made and the uses of the mortgaged properties)
may affect the timely payment by mortgagors of scheduled payments of principal
and interest on the mortgage loans and, accordingly, the actual rates of
delinquencies, foreclosures and losses on the mortgage loans. If these losses
are not covered by the applicable credit enhancement, certificateholders of the
series evidencing interests in the related trust 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.

COLLATERAL SECURING COOPERATIVE LOANS MAY DIMINISH IN VALUE

      If specified in the related prospectus supplement, certain of the mortgage
loans may be cooperative loans. In a cooperative loan, a tenant-stockholder's
ownership interest in the cooperative and accompanying rights is financed
through a cooperative share loan and secured by a security interest in the
occupancy agreement or proprietary lease and in the related cooperative shares.
There are certain risks that differentiate cooperative loans from other types of
mortgage loans. Ordinarily, the cooperative incurs a blanket mortgage in
connection with the construction or purchase of the cooperative's apartment
building and the underlying land. The interests of the individual occupants
under proprietary leases or occupancy agreements to which the cooperative is a
party are generally subordinate to the interest of the holder of the blanket
mortgage. If the cooperative is unable to meet the


                                       10



payment obligations arising under its blanket mortgage, the mortgagee holding
the blanket mortgage could foreclose on that mortgage and terminate all
subordinate proprietary leases and occupancy agreements. In addition, the
blanket mortgage on a cooperative may provide financing in the form of a
mortgage that does not fully amortize, with a significant portion of principal
being due in one lump sum at final maturity. The inability of the cooperative to
refinance this mortgage, and its consequent inability to make such final
payment, could lead to foreclosure by the mortgagee providing the financing. A
foreclosure in either event by the holder of the blanket mortgage could
eliminate or significantly diminish the value of the collateral securing the
cooperative loans.

LEASEHOLDS MAY BE SUBJECT TO DEFAULT RISK ON THE UNDERLYING LEASE

      If specified in the related prospectus supplement, certain of the mortgage
loans may be secured by leasehold mortgages. Leasehold mortgages are subject to
certain risks not associated with mortgage loans secured by a fee estate of the
mortgagor. The most significant of these risks is that the ground lease creating
the leasehold estate could terminate, leaving the leasehold mortgagee without
its security. The ground lease may terminate, if, among other reasons, the
ground lessee breaches or defaults in its obligations under the ground lease or
there is a bankruptcy of the ground lessee or the ground lessor. Any leasehold
mortgages underlying a series of certificates will contain provisions protective
of the mortgagee, as described under "The Trust Estates--The Mortgage Loans,"
such as the right of the leasehold mortgagee to receive notices from the ground
lessor of any defaults by the mortgagor and to cure those defaults, with
adequate cure periods; if a default is not susceptible of cure by the leasehold
mortgagee, the right to acquire the leasehold estate through foreclosure or
otherwise; the ability of the ground lease to be assigned to and by the
leasehold mortgagee or purchaser at a foreclosure sale and for the simultaneous
release of the ground lessee's liabilities under the new lease; and the right of
the leasehold mortgagee to enter into a new ground lease with the ground lessor
on the same terms and conditions as the old ground lease upon a termination.

YIELDS OF CERTIFICATES SENSITIVE TO RATE AND TIMING OF PRINCIPAL PREPAYMENT

      The yield on the certificates of each series will depend in part on the
rate and timing of principal payment on the mortgage loans, including
prepayments, liquidations due to defaults and mortgage loan repurchases. Your
yield may be adversely affected, depending upon whether a particular certificate
is purchased at a premium or a discount, by a higher or lower than anticipated
rate of prepayments on the related mortgage loans. In particular:

      o   the yield on classes of certificates entitling their holders primarily
          or exclusively to payments of interest, such as interest only
          certificates, or primarily or exclusively to payments of principal,
          such as principal only certificates, will be extremely sensitive to
          the rate and timing of prepayments on the related mortgage loans; and

      o   the yield on certain other classes of certificates, such as companion
          certificates, may be relatively more sensitive to the rate and timing
          of prepayments of specified mortgage loans than other classes of
          certificates.

      The rate and timing of prepayments on mortgage loans is influenced by a
number of factors, including but not limited to:

      o   prevailing mortgage market interest rates;

      o   local and national economic conditions;

      o   homeowner mobility; and

      o   the ability of the borrower to obtain refinancing.

      If you are purchasing certificates at a discount, and specifically if you
are purchasing principal only certificates, you should consider the risk that if
principal payments on the mortgage loans, or, in the case of any ratio strip
certificates, the related mortgage loans, occur at a rate lower than you
expected, your yield will be lower than


                                       11



you expected. Further information relating to yield on those certificates will
be included in the applicable prospectus supplement, including a table
demonstrating the particular sensitivity of any class of principal only
certificates to the rate of prepayments.

      If you are purchasing certificates at a premium, or are purchasing an
interest only certificate, you should consider the risk that if principal
payments on the mortgage loans or, in the case of any interest only certificates
entitled to a portion of interest paid on certain mortgage loans with higher
mortgage interest rate, those mortgage loans, occur at a rate faster than you
expected, your yield may be lower than you expected. If you are purchasing
interest only certificates, you should consider the risk that a rapid rate of
principal payments on the applicable mortgage loans could result in your failure
to recover your initial investment. Further information relating to yield on
those certificates will be included in the applicable prospectus supplement,
including, in the case of interest only certificates that are extremely
sensitive to principal prepayments, a table demonstrating the particular
sensitivity of those interest only certificates to the rate of prepayments.

      If you are purchasing any inverse floating rate certificates, you should
also consider the risk that a high rate of the applicable index may result in a
lower actual yield than you expected or a negative yield. In particular, you
should consider the risk that high constant rates of the applicable index or
high constant prepayment rates on the mortgage loans may result in the failure
to recover your initial investment. Further information relating to yield on
those certificates will be included in the applicable prospectus supplement,
including a table demonstrating the particular sensitivity of those certificates
to the rate of prepayments on the mortgage loans and changes in the applicable
index.

TIMING OF PREPAYMENTS ON THE MORTGAGE LOANS MAY RESULT IN INTEREST SHORTFALLS ON
THE CERTIFICATES

      When a mortgage loan is prepaid in full, the mortgagor pays interest on
the amount prepaid only to the date of prepayment. Liquidation proceeds and
amounts received in settlement of insurance claims are also likely to include
interest only to the time of payment or settlement. When a mortgage loan is
prepaid in full or in part, an interest shortfall may result depending on the
timing of the receipt of the prepayment and the timing of when those prepayments
are passed through to certificateholders. To partially mitigate this reduction
in yield, the pooling and servicing agreement and/or underlying servicing
agreements relating to a series may provide, to the extent specified in the
applicable prospectus supplement, that for specified types of principal
prepayments received, the applicable servicer or the master servicer will be
obligated, on or before each distribution date, to pay an amount equal to the
lesser of (i) the aggregate interest shortfall with respect to the distribution
date resulting from those principal prepayments by mortgagors and (ii) all or a
portion of the servicer's or the master servicer's, as applicable, servicing
compensation for the distribution date as specified in the applicable prospectus
supplement or other mechanisms specified in the applicable prospectus
supplement. To the extent these shortfalls from the mortgage loans are not
covered by the amount of compensating interest or other mechanisms specified in
the applicable prospectus supplement, they will be allocated among the classes
of interest bearing certificates as described in the related prospectus
supplement under "Description of the Certificates -- Interest." No comparable
interest shortfall coverage will be provided by the servicer or the master
servicer with respect to liquidations of any mortgage loans. Any interest
shortfall arising from liquidations will be covered by means of the
subordination of the rights of subordinate certificateholders or any other
credit support arrangements described in this prospectus.

EXERCISE OF RIGHTS UNDER SPECIAL SERVICING AGREEMENTS MAY BE ADVERSE TO OTHER
CERTIFICATEHOLDERS

      The pooling and servicing agreement for a series will permit a servicer to
enter into a special servicing agreement with an unaffiliated holder of a class
of subordinate certificates or a class of securities backed by a class of
subordinate certificates, pursuant to which the holder may instruct the servicer
to commence or delay foreclosure proceedings with respect to delinquent mortgage
loans. This right is intended to permit the holder of a class of certificates
that is highly sensitive to losses on the mortgage loans to attempt to mitigate
losses by exercising limited power of direction over servicing activities which
accelerate or delay realization of losses on the mortgage loans. Such directions
may, however, be adverse to the interest of those classes of senior certificates
that are more sensitive to prepayments than to losses on the mortgage loans. In
particular, accelerating foreclosure will adversely affect the yield to maturity
on interest only certificates, while delaying foreclosure will adversely affect
the yield to maturity of principal only certificates.


                                       12



SPECIAL POWERS OF THE FDIC IN THE EVENT OF INSOLVENCY OF THE SPONSOR COULD DELAY
OR REDUCE DISTRIBUTIONS ON THE CERTIFICATES

      The mortgage loans will be originated or acquired by the sponsor, a
national bank whose deposits are insured to the applicable limits by the FDIC.
If the sponsor becomes insolvent, is in an unsound condition or engages in
violations of its bylaws or regulations applicable to it or if similar
circumstances occur, the FDIC could act as conservator and, if a receiver were
appointed, would act as a receiver for the sponsor. As receiver, the FDIC would
have broad powers to:

      o   require the trust, as assignee of the depositor, to go through an
          administrative claims procedure to establish its rights to payments
          collected on the mortgage loans; or

      o   request a stay of proceedings to liquidate claims or otherwise enforce
          contractual and legal remedies against the sponsor, or

      o   if the sponsor is a servicer for a series of certificates, repudiate
          without compensation the sponsor's ongoing servicing obligations under
          the pooling and servicing agreement, such as its duty to collect and
          remit payments or otherwise service the mortgage loans; or

      o   prevent the appointment of a successor servicer; or

      o   alter the terms on which the sponsor continues to service the mortgage
          loans, including the amount or the priority of the fees paid to the
          sponsor as servicer.

      If the FDIC were to take any of those actions, distributions on the
certificates could be accelerated, delayed or reduced and you may suffer losses.

      By statute, the FDIC as conservator or receiver of the sponsor is
authorized to repudiate any "contract" of the sponsor upon payment of "actual
direct compensatory damages." This authority may be interpreted by the FDIC to
permit it to repudiate the transfer of the mortgage loans to the depositor.
Under an FDIC regulation, however, the FDIC as conservator or receiver of a bank
has stated that it will not reclaim, recover or recharacterize a bank's transfer
of financial assets in connection with a securitization or participation,
provided that the transfer meets all conditions for sale accounting treatment
under generally accepted accounting principles, other than the "legal isolation"
condition as it applies to institutions for which the FDIC may be appointed as
conservator or receiver, was made for adequate consideration and was not made
fraudulently, in contemplation of insolvency, or with the intent to hinder,
delay or defraud the bank or its creditors. For purposes of the FDIC regulation,
the term securitization means, as relevant, the issuance by a special purpose
entity of beneficial interests the most senior class of which at time of
issuance is rated in one of the four highest categories assigned to long-term
debt or in an equivalent short-term category (within either of which there may
be sub-categories or gradations indicating relative standing) by one or more
nationally recognized statistical rating organizations. A special purpose
entity, as the term is used in the regulation, means a trust, corporation, or
other entity demonstrably distinct from the insured depository institution that
is primarily engaged in acquiring and holding (or transferring to another
special purpose entity) financial assets, and in activities related or
incidental to these actions, in connection with the issuance by the special
purpose entity (or by another special purpose entity that acquires financial
assets directly or indirectly from the special purpose entity) of beneficial
interests. The transactions contemplated by this prospectus and the related
prospectus supplement will be structured so that this FDIC regulation should
apply to the transfer of the mortgage loans from the sponsor to the depositor.

      If a condition required under the FDIC regulation, or other statutory or
regulatory requirement applicable to the transaction, were found not to have
been satisfied, the FDIC as conservator or receiver might refuse to recognize
the sponsor's transfer of the mortgage loans to the depositor. In that event the
depositor could be limited to seeking recovery based upon its security interest
in the mortgage loans. The FDIC's statutory authority has been interpreted by
the FDIC and at least one court to permit the repudiation of a security interest
upon payment of actual direct compensatory damages measured as of the date of
conservatorship or receivership. These damages do not include damages for lost
profits or opportunity, and no damages would be paid for the period between the
date of


                                       13



conservatorship or receivership and the date of repudiation. As a result, you
may suffer losses. The FDIC could delay its decision whether to recognize the
sponsor's transfer of the mortgage loans for a reasonable period following its
appointment as conservator or receiver for the sponsor. If the FDIC were to
refuse to recognize the sponsor's transfer of the mortgage loans, distributions
on the certificates could be accelerated, delayed or reduced.

      If specified in the applicable prospectus supplement, the sponsor will
also act as servicer of the mortgage loans. If the FDIC acted as receiver for
the sponsor after the sponsor's insolvency, the FDIC could prevent the
termination of the sponsor as servicer of the mortgage loans, even if a
contractual basis for termination exists. This inability to terminate the
sponsor as servicer could result in a delay or possibly a reduction in
distributions on the certificates to the extent the sponsor received, but did
not remit to the trustee, mortgage loan collections received by the sponsor
before the date of insolvency or if the sponsor failed to make any required
advances.

      Certain banking laws and regulations may apply not only to the sponsor but
to its subsidiaries as well. Arguments can also be made that the FDIC's rights
and powers extend to the depositor, the sponsor and the issuing entity and that,
as a consequence, the FDIC could repudiate or otherwise directly affect the
rights of the certificate holders under the transaction documents. If the FDIC
were to take this position, delays or reductions on payments to certificate
holders could occur.

INSOLVENCY OF THE DEPOSITOR MAY DELAY OR REDUCE COLLECTIONS ON MORTGAGE LOANS

      Neither the United States Bankruptcy Code nor similar applicable state
laws prohibit the depositor from filing a voluntary application for relief under
these laws. However, the transactions contemplated by this prospectus and the
related prospectus supplement will be structured so that the voluntary or
involuntary application for relief under the bankruptcy laws by the depositor is
unlikely. The depositor is a separate, limited purpose subsidiary, the
certificate of incorporation of which contains limitations on the nature of the
depositor's business, including the ability to incur debt other than debt
associated with the transactions contemplated by this prospectus, and
restrictions on the ability of the depositor to commence voluntary or
involuntary cases or proceedings under bankruptcy laws without the prior
unanimous affirmative vote of all its directors (who are required to consider
the interests of the depositor's creditors, in addition to the depositor's
stockholders, in connection with the filing of a voluntary application for
relief under applicable insolvency laws). Further, the transfer of the mortgage
loans to the related trust will be structured so that the trustee has no
recourse to the depositor, other than for breaches of representations and
warranties about the mortgage loans.

      If the depositor were to become the subject of a proceeding under the
bankruptcy laws, a court could conclude that the transfer of the mortgage loans
from the depositor to the trust should not be characterized as an absolute
transfer, and accordingly, that the mortgage loans should be included as part of
the depositor's estate. Under these circumstances, the bankruptcy proceeding
could delay or reduce distributions on the certificates. In addition, a
bankruptcy proceeding could result in the temporary disruption of distributions
on the certificates.

OWNERS OF BOOK-ENTRY CERTIFICATES ARE NOT ENTITLED TO EXERCISE RIGHTS OF HOLDERS
OF CERTIFICATES

      If so provided in a prospectus supplement, one or more classes of
certificates of a series may be issued in book-entry form. These book-entry
certificates will be represented initially by one or more certificates
registered in the name of Cede & Co., the nominee for The Depository Trust
Company, and will not be registered in the names of the owners or their
nominees. As a result, unless definitive Certificates are issued, owners of
beneficial interests in certificates will not be recognized by the trustee as
"certificateholders" under the related pooling and servicing agreement. If you
own book-entry certificates, you will not be able to exercise the rights of a
certificateholder directly and must act indirectly through The Depository Trust
Company and its participating organizations. See "Description of
Certificates--Book-entry Form."


                                       14



BOOK-ENTRY SYSTEM FOR CERTAIN CLASSES OF CERTIFICATES MAY DECREASE LIQUIDITY AND
DELAY PAYMENT

      Because transactions in the classes of book-entry certificates of any
series generally can be effected only through DTC, DTC participants and indirect
DTC participants:

      o   your ability to pledge book-entry certificates to someone who does not
          participate in the DTC system, or to otherwise take action relating to
          your book-entry certificates, may be limited due to the lack of a
          physical certificate;

      o   you may experience delays in your receipt of payments on book-entry
          certificates because distributions will be made by the trustee, or a
          paying agent on behalf of the trustee, to Cede & Co., as nominee for
          DTC, rather than directly to you; and

      o   you may experience delays in your receipt of payments on book-entry
          certificates in the event of misapplication of payments by DTC, DTC
          participants or indirect DTC participants or bankruptcy or insolvency
          of those entities and your recourse will be limited to your remedies
          against those entities.

      See "Description of the Certificates--Book-entry Form."

CASH FLOW AGREEMENTS AND EXTERNAL CREDIT ENHANCEMENTS ARE SUBJECT TO
COUNTERPARTY RISK

      The assets of a trust may, if specified in the related prospectus
supplement, include cash flow agreements such as swap, cap, floor or similar
agreements which will require a counterparty to the trust (or the trustee acting
on behalf of the trust) to make payments to the trust under the circumstances
described in the prospectus supplement. If payments on the certificates of the
related series depend in part on payments to be received under this type of
agreement, the ability of the trust to make payments on the certificates will be
subject to the credit risk of the provider of the agreement.

      In addition, the ratings assigned to the certificates of a series may
depend in part on the ratings assigned to the provider of certain types of
external credit enhancement, such as a mortgage pool insurance policy, surety
bond, financial guaranty insurance policy or limited guarantee. Any reduction in
the ratings assigned to the provider of one of these types of external credit
enhancement could result in the reduction of the ratings assigned to the
certificates of the series. A reduction in the ratings assigned to the
certificates of a series is likely to affect adversely the liquidity and market
value of the certificates.

AMOUNTS RECEIVED FROM AN AUCTION AND A RELATED SWAP AGREEMENT MAY BE
INSUFFICIENT TO ASSURE COMPLETION OF THE AUCTION

      If specified in the prospectus supplement for a series, one or more
classes of certificates may be subject to a mandatory auction. If you hold a
class of certificates subject to a mandatory auction, on the distribution date
specified in the related prospectus supplement for the auction your certificate
will be transferred to successful auction bidders, thereby ending your
investment in that certificate. If the class balance of your class of auction
certificates plus, if applicable, accrued interest, after application of all
distributions and realized losses on the distribution date of the auction, is
greater than the amount received in the auction, a counterparty will be
obligated, pursuant to a swap agreement, to pay the amount of that difference to
the administrator of the auction for distribution to the holders of the class of
auction certificates. Auction bidders will be permitted to bid for all or a
portion of a class of auction certificates. If the counterparty under the swap
agreement defaults on its obligations, no bids for all or a portion of a class
of auction certificates will be accepted unless the amount of the bids are equal
to the class balance of a class of auction certificates plus, if applicable,
accrued interest, after application of all distributions and realized losses on
the distribution date of the auction (or a pro rata portion of this price). If
the counterparty under the swap agreement defaults and no bids for a class or
portion of a class of auction certificates are accepted, or there are no bids
for the class or portion of the class, all or a portion of the certificates of
the class will not be transferred to auction bidders. In the event this happens,
you will retain the non-transferred portion of your certificates after the
distribution date for the auction.


                                       15



      See "Description of the Certificates--Mandatory Auction of the Auction
Certificates" in this prospectus.

SERVICING TRANSFER FOLLOWING EVENT OF DEFAULT MAY RESULT IN PAYMENT DELAYS OR
LOSSES

      Following the occurrence of an event of default under a pooling and
servicing agreement, the trustee for the related series may, in its discretion
or pursuant to direction from certificateholders, remove the defaulting master
servicer or servicer and succeed to its responsibilities, or may petition a
court to appoint a successor master servicer or servicer. The trustee or the
successor master servicer or servicer will be entitlted to reimbursement of its
costs of effecting the servicing transfer from the predecessor master servicer
or servicer, or from the assets of the related trust if the predecessor fails to
pay. In the event that reimbursement to the trustee or the successor master
servicer or servicer is made from trust assets, the resulting shortfall will be
borne by holders of the related certificates, to the extent not covered by any
applicable credit support. In addition, during the pendency of a servicing
transfer or for some time thereafter, mortgagors of the related mortgage loans
may delay making their monthly payments or may inadvertently continue making
payments to the predecessor servicer, potentially resulting in delays in
distributions on the related certificates.

EFFECTS OF FAILURE TO COMPLY WITH CONSUMER PROTECTION LAWS

      There are various federal and state laws, public policies and principles
of equity that protect consumers. Among other things, these laws, policies and
principles:

      o   regulate interest rates and other charges;

      o   require certain disclosures;

      o   require licensing of mortgage loan originators;

      o   limit or prohibit certain mortgage loan features, such as prepayment
          penalties or balloon payments;

      o   prohibit discriminatory or predatory lending practices;

      o   require lenders to provide credit counseling and/or make affirmative
          determinations regarding the borrower's ability to repay the mortgage
          loan;

      o   regulate the use of consumer credit information; and

      o   regulate debt collection practices.

      Violation of certain provisions of these laws, policies and principles:

      o   may limit a servicer's ability to collect all or part of the principal
          of or interest on the mortgage loans;

      o   may entitle the borrower to a refund of amounts previously paid; and

      o   could subject a servicer to damages and administrative sanctions.

      The depositor will generally be required to repurchase any mortgage loan
which, at the time of origination, did not comply with federal and state laws
and regulations. In addition, the sponsor will be required to pay to the
depositor, and the depositor will be required to pay to the applicable trust,
any costs or damages incurred by the related trust as a result of a violation of
these laws or regulations.


                                       16



INCREASED RISK OF LOSS IF DELINQUENT MORTGAGE LOANS ARE ASSETS OF A TRUST

      A portion of the mortgage loans in a trust may be delinquent when the
related certificates are issued. You should consider the risk that the inclusion
of delinquent mortgage loans in a trust may cause the rate of defaults and
prepayments on the mortgage loans to increase. As a result, the related credit
enhancement for those series of certificates may not cover the related losses.

                                THE TRUST ESTATES

GENERAL

      The assets underlying each series of certificates (each, a "TRUST ESTATE")
will be held by the trustee named in the related prospectus supplement (the
"TRUSTEE") for the benefit of the related certificateholders. Each Trust Estate
will consist of a mortgage pool comprised of mortgage loans (the "MORTGAGE
LOANS") and/or mortgage-backed securities (the "MORTGAGE CERTIFICATES" and,
together with the Mortgage Loans, the "MORTGAGE ASSETS") together with payments
in respect of the Mortgage Assets and certain accounts, obligations or
agreements, in each case as specified in the related prospectus supplement.

      The certificates will be entitled to payment from the assets of the
related Trust Estate and will not be entitled to payments in respect of the
assets of any other Trust Estate established by the depositor, Banc of America
Funding Corporation.

      The following is a brief description of the Mortgage Assets expected to be
included in the Trust Estates. If specific information respecting the Mortgage
Assets is not known at the closing date for a series of certificates, more
general information of the nature described below will be provided in the
related prospectus supplement, and final specific information will be set forth
in a Current Report on Form 8-K to be available to investors on the closing date
and to be filed with the Securities and Exchange Commission within fifteen days
after the closing date. A schedule of the Mortgage Assets relating to the series
will be attached to the pooling and servicing agreement delivered to the Trustee
upon delivery of the certificates.

      The Trust Estate will not include the portion of interest on the Mortgage
Loans which constitutes the Fixed Retained Yield, if any. See "The Pooling and
Servicing Agreement--Fixed Retained Yield, Servicing Compensation and Payment of
Expenses."

THE MORTGAGE LOANS

   GENERAL

      The mortgaged properties securing the Mortgage Loans may be located in any
one of the fifty states, the District of Columbia, Guam, Puerto Rico or any
other territory of the United States.

   PAYMENT PROVISIONS OF THE MORTGAGE LOANS

      The Mortgage Loans in a Trust Estate will have monthly payment dates as
set forth in the related prospectus supplement. The payment terms of the
Mortgage Loans to be included in a Trust Estate will be described in the related
prospectus supplement and will be one of the following types of mortgage loans:

      a. Fixed-Rate Loans. If specified in the applicable prospectus supplement,
   a Trust Estate may contain fixed-rate, fully amortizing Mortgage Loans
   providing for level monthly payments of principal and interest and terms at
   origination or modification of not more than 40 years. If specified in the
   applicable prospectus supplement, fixed rates on certain Mortgage Loans may
   be converted to adjustable rates after origination of these Mortgage Loans
   and upon the satisfaction of other conditions specified in the applicable
   prospectus supplement. If specified in the applicable prospectus supplement,
   the pooling and servicing agreement will require the Depositor or another
   party identified in the applicable prospectus supplement to repurchase each
   of these converted Mortgage Loans at the price set forth in the applicable
   prospectus supplement. A Trust Estate


                                       17



   containing fixed-rate Mortgage Loans may contain convertible Mortgage Loans
   which have converted from an adjustable interest rate prior to the formation
   of the Trust Estate and which are subject to no further conversions.

      b. Adjustable-Rate Loans. If specified in the applicable prospectus
   supplement, a Trust Estate may contain adjustable-rate, fully amortizing
   Mortgage Loans having an original or modified term to maturity of not more
   than 40 years with a related mortgage interest rate which generally adjusts
   initially either one, three or six months, or one, three, five, seven or ten
   years, subsequent to the initial Due Date, and thereafter at either
   one-month, six-month, one-year or other intervals over the term of the
   Mortgage Loan to equal the sum of a fixed margin set forth in the related
   mortgage note (the "GROSS MARGIN") and an index. The applicable prospectus
   supplement will set forth the relevant index and the highest, lowest and
   weighted average Gross Margin with respect to the adjustable-rate Mortgage
   Loans in the related Trust Estate. The index will be one of the following:
   one-month, three-month, six-month or one-year LIBOR (an average of the
   interest rate on one-month, three-month, six-month or one-year
   dollar-denominated deposits traded between banks in London), CMT (weekly or
   monthly average yields of U.S. treasury short- and long-term securities,
   adjusted to a constant maturity), COFI (an index of the weighted average
   interest rate paid by savings institutions in Nevada, Arizona and
   California), MTA (a one-year average of the monthly average yields of U.S.
   treasury securities) or the Prime Rate (an interest rate charged by banks for
   short-term loans to their most creditworthy customers). The applicable
   prospectus supplement will also indicate any periodic or lifetime limitations
   on the adjustment of any mortgage interest rate.

      If specified in the applicable prospectus supplement, adjustable rates on
certain Mortgage Loans may be converted to fixed rates generally on the first,
second or third adjustment date after origination of those Mortgage Loans at the
option of the mortgagor. If specified in the applicable prospectus supplement,
the Depositor or another party specified in the applicable prospectus supplement
will generally be required to repurchase each of these converted Mortgage Loans
at the price set forth in the applicable prospectus supplement. A Trust Estate
containing adjustable-rate Mortgage Loans may contain convertible Mortgage Loans
which have converted from a fixed interest rate prior to the formation of the
Trust Estate.

      If specified in the applicable prospectus supplement, a Trust Estate may
contain adjustable-rate Mortgage Loans with original terms to maturity of not
more than 40 years and flexible payment options ("OPTION ARM MORTGAGE LOANS").
The initial required monthly payment is fully amortizing based on the initial
mortgage interest rate (which may be a rate that is less than the sum of the
applicable index at origination and the Gross Margin specified in the related
mortgage). After an introductory period of either one or three months, the
borrower may select from up to four payment options each month: (i) a monthly
payment of principal and interest sufficient to fully amortize the mortgage loan
based on the remaining scheduled term of the loan, (ii) a monthly payment of
principal and interest sufficient to fully amortize the mortgage loan over the
remaining term based on a term of 15 years from the date of the first scheduled
payment on the mortgage loan (this option ceases to be available when the
mortgage loan has been paid to its 16th year), (iii) an interest only payment
that would cover solely the amount of interest that accrued during the previous
month (this option is only available if it would exceed the minimum payment
option for the month), or (iv) a minimum payment equal to either (a) the initial
monthly payment, (b) the monthly payment as of the most recent annual adjustment
date, or (c) the monthly payment as of the most recent automatic adjustment,
whichever is most recent. The minimum payment adjusts annually after the first
payment date but is subject to a payment cap which limits any increase or
decrease to no more than 7.5% of the previous year's minimum payment amount. In
addition, the minimum payment is subject to an automatic adjustment every five
years or if the outstanding principal balance of the mortgage loan exceeds a
certain percentage specified in the applicable prospectus supplement, in each
case without regard to the 7.5% limitation. On each annual adjustment date and
in the event of an automatic adjustment, the minimum monthly payment is adjusted
to an amount sufficient to fully amortize the mortgage loan based on the
then-current mortgage interest rate and remaining scheduled term of the loan,
unless, in the case of an annual adjustment, the monthly payment is restricted
by the 7.5% limitation, in which case the monthly payment is adjusted by 7.5%. A
minimum payment may not cover the amount of interest accrued during a month and
may not pay down any principal. Any interest not covered by a monthly payment
("DEFERRED INTEREST") will be added to the principal balance of the Mortgage
Loan. This is called "negative amortization" and results in an increase in the
amount of principal the borrower owes. Interest will then accrue on this new
larger principal balance. The index for an Option ARM Mortgage Loan will be
determined monthly or at other less frequent intervals specified in the
applicable prospectus supplement.


                                       18



      c. Interest Only Mortgage Loans. If specified in the applicable prospectus
   supplement, a Trust Estate may contain "INTEREST ONLY MORTGAGE LOANS" which
   are (i) Mortgage Loans having an original term to maturity of not more than
   40 years with a Mortgage Interest Rate which adjusts initially either one,
   three or six months, or one, three, five, seven or ten years subsequent to
   the initial payment date, and thereafter at one-month, six-month, one-year or
   other intervals (with corresponding adjustments in the amount of monthly
   payments) over the term of the mortgage loan to equal the sum of the related
   Gross Margin and index, and providing for monthly payments of interest only
   for a period specified in the applicable prospectus supplement and monthly
   payments of principal and interest after the interest only period sufficient
   to fully amortize the Mortgage Loans over their remaining terms to maturity
   or (ii) fixed-rate, fully-amortizing Mortgage Loans having an original term
   to maturity of not more than 40 years providing for monthly payments of
   interest only prior to a date specified in the Mortgage Note and monthly
   payments of principal and interest after such date sufficient to
   fully-amortize the Mortgage Loans over their remaining terms to maturity.

      d. Graduated Payment Loans. If specified in the applicable prospectus
   supplement, a Trust Estate may contain fixed rate, graduated payment Mortgage
   Loans having original or modified terms to maturity of not more than 40 years
   with monthly payments during the first year calculated on the basis of an
   assumed interest rate which is a specified percentage below the mortgage
   interest rate on the Mortgage Loan. The monthly payments increase at the
   beginning of the second year by a specified percentage of the monthly payment
   during the preceding year and each year thereafter to the extent necessary to
   amortize the Mortgage Loan over the remainder of its term or other shorter
   period. Mortgage Loans incorporating these graduated payment features may
   include (i) "GRADUATED PAY MORTGAGE LOANS," pursuant to which amounts
   constituting Deferred Interest are added to the principal balances of these
   Mortgage Loans, (ii) "TIERED PAYMENT MORTGAGE LOANS," pursuant to which, if
   the amount of interest accrued in any month exceeds the current scheduled
   payment for that month, these excess amounts are paid from a subsidy account
   (usually funded by a home builder or family member) established at closing
   and (iii) "GROWING EQUITY MORTGAGE LOANS," for which the monthly payments
   increase at a rate which has the effect of amortizing the loan over a period
   shorter than the stated term.

      e. Subsidy Loans. If specified in the applicable prospectus supplement, a
   Trust Estate may contain Mortgage Loans subject to temporary interest subsidy
   agreements ("SUBSIDY LOANS") pursuant to which the monthly payments made by
   the related mortgagors will be less than the scheduled monthly payments on
   these Mortgage Loans with the present value of the resulting difference in
   payment ("SUBSIDY PAYMENTS") being provided by the employer of the mortgagor,
   generally on an annual basis. Subsidy Payments will generally be placed in a
   custodial account ("SUBSIDY ACCOUNT") by the related Servicer. Despite the
   existence of a subsidy program, a mortgagor remains primarily liable for
   making all scheduled payments on a Subsidy Loan and for all other obligations
   provided for in the related mortgage note and Mortgage Loan.

      Subsidy Loans are offered by employers generally through either a
graduated or fixed subsidy loan program, or a combination of these programs. The
terms of the subsidy agreements relating to Subsidy Loans generally range from
one to ten years. The subsidy agreements relating to Subsidy Loans made under a
graduated program generally will provide for subsidy payments that result in
effective subsidized interest rates between three percentage points and five
percentage points below the mortgage interest rates specified in the related
mortgage notes. Generally, under a graduated program, the subsidized rate for a
Mortgage Loan will increase approximately one percentage point per year until it
equals the full mortgage interest rate. For example, if the initial subsidized
interest rate is five percentage points below the mortgage interest rate in year
one, the subsidized rate will increase to four percentage points below the
mortgage interest rate in year two, and likewise until year six, when the
subsidized rate will equal the mortgage interest rate. Where the subsidy
agreements relating to Subsidy Loans are in effect for longer than five years,
the subsidized interest rates generally increase at smaller percentage
increments for each year. The subsidy agreements relating to Subsidy Loans made
under a fixed program generally will provide for subsidized interest rates at
fixed percentages (generally one percentage point to two percentage points)
below the mortgage interest rates for specified periods, generally not in excess
of ten years. Subsidy Loans are also offered pursuant to combination
fixed/graduated programs. The subsidy agreements relating to these Subsidy Loans
generally will provide for an initial fixed subsidy of up to five percentage
points below the related mortgage interest rate for up to five years, and then a
periodic reduction in the subsidy for up to five years, at an equal fixed
percentage per year until the subsidized rate equals the mortgage interest rate.


                                       19



      Generally, employers may terminate subsidy programs in the event of (i)
the mortgagor's death, retirement, resignation or termination of employment,
(ii) the full prepayment of the Subsidy Loan by the mortgagor, (iii) the sale or
transfer by the mortgagor of the related Mortgaged Property as a result of which
the mortgagee is entitled to accelerate the Subsidy Loan under the "due on sale"
clause contained in the mortgage, or (iv) the commencement of foreclosure
proceedings or the acceptance of a deed in lieu of foreclosure. In addition,
some subsidy programs provide that if prevailing market rates of interest on
mortgage loans similar to a Subsidy Loan are less than the mortgage interest
rate of that Subsidy Loan, the employer may request that the mortgagor refinance
its Subsidy Loan and may terminate the related subsidy agreement if the
mortgagor fails to refinance its Subsidy Loan. In the event the mortgagor
refinances its Subsidy Loan, the new loan will not be included in the Trust
Estate. See "Prepayment and Yield Considerations." In the event a subsidy
agreement is terminated, the amount remaining in the Subsidy Account will be
returned to the employer, and the mortgagor will be obligated to make the full
amount of all remaining scheduled payments, if any. The mortgagor's reduced
monthly housing expense as a consequence of payments under a subsidy agreement
may be used by the originator in determining certain expense to income ratios
utilized in underwriting a Subsidy Loan.

      f. Buy Down Loans. If specified in the applicable prospectus supplement, a
   Trust Estate may contain Mortgage Loans subject to temporary buy down plans
   ("BUY DOWN LOANS") under which the monthly payments made by the mortgagor
   during the early years of the Mortgage Loan will be less than the scheduled
   monthly payments on the Mortgage Loan. The resulting difference in payment
   will be compensated for from an amount contributed by the seller of the
   related Mortgaged Property or another source, including the originator of the
   Mortgage Loan (generally on a present value basis) and, if specified in the
   applicable prospectus supplement, placed in a custodial account (the "BUY
   DOWN FUND") by the related Servicer. If the mortgagor on a Buy Down Loan
   prepays the Mortgage Loan in its entirety, or defaults on the Mortgage Loan
   and the related Servicer liquidates the related Mortgaged Property, during
   the period when the mortgagor is not obligated, by virtue of the buy down
   plan, to pay the full monthly payment otherwise due on the loan, the unpaid
   principal balance of the Buy Down Loan will be reduced by the amounts
   remaining in the Buy Down Fund for the Buy Down Loan, and these amounts will
   be deposited in the Servicer Custodial Account or the Distribution Account,
   net of any amounts paid relating to the Buy Down Loan by any insurer,
   guarantor or other person under a credit enhancement arrangement described in
   the applicable prospectus supplement.

      g. Balloon Loans. If specified in the applicable prospectus supplement, a
   Trust Estate may contain Mortgage Loans which are amortized over a fixed
   period not exceeding 40 years but which have shorter terms to maturity
   ("BALLOON LOANS") that causes the outstanding principal balance of the
   related Mortgage Loan to be due and payable at the end of a certain specified
   period (the "BALLOON PERIOD"). The borrower of a Balloon Loan will be
   obligated to pay the entire outstanding principal balance of the Balloon Loan
   at the end of the related Balloon Period. In the event the related mortgagor
   refinances a Balloon Loan at maturity, the new loan will not be included in
   the Trust Estate. See "Prepayment and Yield Considerations" herein.

      Mortgage Loans with certain loan-to-value ratios and/or certain principal
balances may be covered wholly or partially by primary mortgage insurance
policies. The existence, extent and duration of any coverage will be described
in the related prospectus supplement. 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 to the appraised value
of the related mortgaged property. The appraised value is either:

      (i)   the lesser of:

        (a) the appraised value determined in an appraisal obtained by the
            originator of the Mortgage Loan and

        (b) the sales price for the property,

      except that, in the case of Mortgage Loans the proceeds of which were
      used to refinance an existing mortgage loan, the appraised value of the
      related mortgaged property is the appraised value determined in an
      appraisal obtained at the time of refinancing; or


                                       20



      (ii)  the appraised value determined in an appraisal made at the request
            of a mortgagor subsequent to origination to eliminate the
            mortgagor's obligation to keep a primary mortgage insurance policy
            in force.

   MORTGAGE LOAN INFORMATION IN PROSPECTUS SUPPLEMENT

      Each prospectus supplement for a series representing interests in a Trust
Estate that consists of Mortgage Loans will contain information, as of the
Cut-off Date and to the extent known to the Depositor, with respect to the
Mortgage Loans contained in the Trust Estate, including:

      o   the number of Mortgage Loans;

      o   the geographic distribution of the Mortgage Loans;

      o   the aggregate principal balance of the Mortgage Loans;

      o   the types of dwelling constituting the mortgaged properties;

      o   the longest and shortest scheduled term to maturity;

      o   the maximum principal balance of the Mortgage Loans;

      o   the maximum loan-to-value ratio of the Mortgage Loans at origination
          or other date specified in the related prospectus supplement;

      o   the maximum and minimum interest rates on the Mortgage Loans; and

      o   the aggregate principal balance of nonowner-occupied mortgaged
          properties.

   SINGLE FAMILY AND COOPERATIVE LOANS

      Mortgage Loans will consist of mortgage loans, deeds of trust or
participations or other beneficial interests in those instruments, secured by
first liens on one- to four-family residential properties or other Mortgage
Loans specified in the related prospectus supplement. If so specified, the
Mortgage Loans may include cooperative loans secured by security interests in
stock, shares or membership certificates issued by private, nonprofit,
cooperative housing corporations, known as "COOPERATIVES," and in the related
proprietary leases or occupancy agreements granting exclusive rights to occupy
specific dwelling units in such Cooperatives' buildings. These loans may be
loans that are not insured or guaranteed by any governmental agency or loans
insured by the FHA or partially guaranteed by the VA, as specified in the
related prospectus supplement.

      The mortgaged properties relating to single family mortgage loans will
consist of:

      o   detached or semi-detached one-family dwelling units;

      o   two- to four-family dwelling units;

      o   townhouses;

      o   rowhouses;

      o   individual condominium units, including condominium hotels, where
          features of the property may include maid service, a front desk or
          resident manager, rental pools and up to 20% of commercial space;


                                       21



      o   individual units in planned unit developments; and

      o   certain other dwelling units.

      The mortgaged properties may include:

      o   vacation homes;

      o   second homes;

      o   investment properties;

      o   leasehold interests; and

      o   manufactured housing.

      In the case of leasehold interests, the term of the leasehold will exceed
the scheduled maturity of the Mortgage Loan by at least five years. Certain
Mortgage Loans may be originated or acquired in connection with corporate
programs, including employee relocation programs. In limited instances, a
borrower who uses the dwelling unit as a primary residence may also make some
business use of the property.

   SUBSTITUTION OF MORTGAGE LOANS

      Substitution of Mortgage Loans will be permitted in the event of breaches
of representations and warranties relating to any original Mortgage Loan or if
the documentation relating to any Mortgage Loan is determined by the Trustee or
a custodian appointed by the Trustee to be incomplete. The period during which
the substitution will be permitted generally will be indicated in the related
prospectus supplement. The related prospectus supplement will describe any other
conditions upon which Mortgage Loans may be substituted for Mortgage Loans
initially included in the Trust Estate.

MORTGAGE CERTIFICATES

      A Trust Estate that contains Mortgage Certificates will have either Ginnie
Mae Certificates, Freddie Mac Certificates, Fannie Mae Certificates, Private
Certificates or a combination of any of those types of Mortgage Certificates.
The Mortgage Certificates will be acquired by the Depositor from one or more
affiliated or unaffiliated sellers.

      All of the Mortgage Certificates will be registered in the name of the
Trustee or its nominee or, in the case of Mortgage Certificates issued only in
book-entry form, a financial intermediary (which may be the Trustee) that is a
member of the Federal Reserve System or of a clearing corporation on the books
of which the security is held. Each Mortgage Certificate will evidence an
interest in a pool of mortgage loans and/or cooperative loans and/or in
principal distributions and interest distributions thereon.

      The descriptions of Ginnie Mae, Freddie Mac and Fannie Mae Certificates
and of Private Certificates that are set forth below are descriptions of
certificates representing proportionate interests in a pool of mortgage loans
and in the payments of principal and interest from that pool. Ginnie Mae,
Freddie Mac, Fannie Mae or the issuer of a particular series of Private
Certificates may also issue mortgage-backed securities representing a right to
receive distributions of interest only or principal only or disproportionate
distributions of principal or interest, or to receive distributions of principal
and/or interest prior or subsequent to distributions on other certificates
representing interests in the same pool of mortgage loans. In addition, any
issuer may issue certificates representing interests in mortgage loans having
characteristics that are different from the types of mortgage loans described
below. The terms of any Mortgage Certificates that are included in a Trust
Estate (and of the underlying mortgage loans) will be described in the related
prospectus supplement, and the descriptions that follow are subject to
modification as appropriate to reflect the actual terms of those Mortgage
Certificates.


                                       22



   GINNIE MAE

      Ginnie Mae is a wholly owned corporate instrumentality of the United
States within the Department of Housing and Urban Development ("HUD"). Section
306(g) of Title III of the National Housing Act of 1934, as amended (the
"HOUSING ACT"), authorizes Ginnie Mae to guarantee the timely payment of the
principal of and interest on certificates that are based on and backed by a pool
of loans ("FHA LOANS") insured or guaranteed by the United States Federal
Housing Administration (the "FHA") under the Housing Act or Title V of the
Housing Act of 1949, or by the United States Department of Veteran Affairs (the
"VA") under the Servicemen's Readjustment Act of 1944, as amended, or Chapter 37
of Title 38, United States Code or by pools of other eligible mortgage loans.

      Section 306(g) of the Housing Act provides that "the full faith and credit
of the United States is pledged to the payment of all amounts which may be
required to be paid under any guaranty under this subsection." To meet its
obligations under its guaranties, Ginnie Mae is authorized, under Section 306(d)
of the Housing Act, to borrow from the United States Treasury with no
limitations as to amount.

   GINNIE MAE CERTIFICATES

      All of the Ginnie Mae Certificates (the "GINNIE MAE CERTIFICATES") will be
mortgage-backed certificates issued and serviced by Ginnie Mae- or Fannie
Mae-approved mortgage servicers. The mortgage loans underlying Ginnie Mae
Certificates may consist of FHA Loans secured by mortgages on one- to four
family residential properties or multifamily residential properties, loans
secured by mortgages on one- to four-family residential properties or
multifamily residential properties, mortgage loans which are partially
guaranteed by the VA and other mortgage loans eligible for inclusion in mortgage
pools underlying Ginnie Mae Certificates. At least 90% by original principal
amount of the mortgage loans underlying a Ginnie Mae Certificate will be
mortgage loans having maturities of 20 years or more.

      Each Ginnie Mae Certificate provides for the payment by or on behalf of
the issuer of the Ginnie Mae Certificate to the registered holder of that Ginnie
Mae Certificate of monthly payments of principal and interest equal to the
registered holder's proportionate interest in the aggregate amount of the
monthly scheduled principal and interest payments on each underlying eligible
mortgage loan, less servicing and guaranty fees aggregating the excess of the
interest on each mortgage loan over the Ginnie Mae Certificate pass-through
rate. In addition, each payment to a holder of a Ginnie Mae Certificate will
include proportionate pass-through payments to that holder of any prepayments of
principal of the mortgage loan underlying the Ginnie Mae Certificate, and the
holder's proportionate interest in the remaining principal balance in the event
of a foreclosure or other disposition of the mortgage loan.

      The Ginnie Mae Certificates included in a Trust Estate may be issued under
either or both of the Ginnie Mae I program ("GINNIE MAE I CERTIFICATES") and the
Ginnie Mae II program ("GINNIE MAE II CERTIFICATES"). All mortgages underlying a
particular Ginnie Mae I Certificate must have the same annual interest rate
(except for pools of mortgages secured by mobile homes). The annual interest
rate on each Ginnie Mae I Certificate is one-half percentage point less than the
annual interest rate on the mortgage loans included in the pool of mortgages
backing the Ginnie Mae I Certificate. Mortgages underlying a particular Ginnie
Mae II Certificate may have annual interest rates that vary from each other by
up to one percentage point. The annual interest rate on each Ginnie Mae II
Certificate will be between one-half percentage point and one and one-half
percentage points less than the highest annual interest rate on the mortgage
loans included in the pool of mortgages backing the Ginnie Mae II Certificate.

      Ginnie Mae will have approved the issuance of each of the Ginnie Mae
Certificates in accordance with a guaranty agreement between Ginnie Mae and the
servicer of the mortgage loans underlying the Ginnie Mae Certificate. Pursuant
to this type of agreement, the servicer is required to advance its own funds to
make timely payments of all amounts due on the Ginnie Mae Certificate, even if
the payments received by the servicer on the mortgage loans backing the Ginnie
Mae Certificate are less than the amounts due on the Ginnie Mae Certificate. If
a servicer is unable to make payments on a Ginnie Mae Certificate as it becomes
due, it must promptly notify Ginnie Mae and request Ginnie Mae to make the
payment. Upon notification and request, Ginnie Mae will make the payments
directly to the registered holder of the Ginnie Mae Certificate. If no payment
is made by the servicer and the servicer fails to notify and request Ginnie Mae
to make the payment, the registered holder of the Ginnie Mae Certificate has
recourse only against Ginnie Mae to obtain the payment. The registered holder of
the Ginnie Mae


                                       23



Certificates included in a Trust Estate is entitled to proceed directly against
Ginnie Mae under the terms of each Ginnie Mae Certificate or the guaranty
agreement or contract relating to the Ginnie Mae Certificate for any amounts
that are not paid when due under each Ginnie Mae Certificate.

      As described above, the Ginnie Mae Certificates included in a Trust
Estate, and the related underlying mortgage loans, may have characteristics and
terms different from those described above. Any different characteristics and
terms will be described in the related prospectus supplement.

   FREDDIE MAC

      Freddie Mac is a federally-chartered and stockholder-owned corporation
created pursuant to Title III of the Emergency Home Finance Act of 1970, as
amended (the "FREDDIE MAC ACT"). Freddie Mac was established primarily for the
purpose of increasing the availability of mortgage credit for the financing of
urgently needed housing. It seeks to provide an enhanced degree of liquidity for
residential mortgage investments primarily by assisting in the development of
secondary markets for mortgages. The principal activity of Freddie Mac currently
consists of the purchase of first lien residential mortgage loans or
participation interests in those mortgage loans and the resale of those mortgage
loans in the form of mortgage securities. Freddie Mac is confined to purchasing,
so far as practicable, mortgage loans and participation interests in mortgages
which it deems to be of the quality, type and class that meet generally the
purchase standards imposed by private institutional mortgage investors.

   FREDDIE MAC CERTIFICATES

      Freddie Mac Certificates ("FREDDIE MAC CERTIFICATES") represent an
undivided interest in a group of mortgage loans purchased by Freddie Mac.
Mortgage loans underlying the Freddie Mac Certificates included in a Trust
Estate will consist of fixed- or adjustable-rate mortgage loans with original
terms to maturity of from 10 to 30 years, all of which are secured by first
liens on one-to four-family residential properties or properties containing five
or more units and designed primarily for residential use.

      Freddie Mac Certificates are issued and maintained and may be transferred
only on the book-entry system of a Federal Reserve Bank and may only be held of
record by entities eligible to maintain book-entry accounts at a Federal Reserve
Bank. Beneficial owners will hold Freddie Mac Certificates ordinarily through
one or more financial intermediaries. The rights of a beneficial owner of a
Freddie Mac Certificate against Freddie Mac or a Federal Reserve Bank may be
exercised only through the Federal Reserve Bank on whose book-entry system the
Freddie Mac Certificate is held.

      Under its Cash and Guarantor Programs, Freddie Mac guarantees to each
registered holder of a Freddie Mac Certificate the timely payment of interest at
the rate provided for by the Freddie Mac Certificate on the registered holder's
pro rata share of the unpaid principal balance outstanding of the related
mortgage loans, whether or not received. Freddie Mac also guarantees to each
registered holder of a Freddie Mac Certificate ultimate collection of all
principal of the related mortgage loans, without any offset or deduction, to the
extent of the holder's pro rata share thereof, but does not, except if specified
in the related prospectus supplement for a series of Certificates, guarantee the
timely payment of scheduled principal. Pursuant to its guarantees, Freddie Mac
indemnifies holders of Freddie Mac Certificates against any diminution in
principal by reason of charges for property repairs, maintenance and
foreclosure. Freddie Mac may remit the amount due on account of its guarantee of
ultimate collection of principal at any time after default on an underlying
mortgage loan, but not later than 30 days following (i) foreclosure sale, (ii)
payment of the claim by any mortgage insurer, or (iii) the expiration of any
right of redemption, whichever occurs later, but in any event no later than one
year after demand has been made upon the mortgagor for accelerated payment of
principal. In taking actions regarding the collection of principal after default
on the mortgage loans underlying Freddie Mac Certificates, including the timing
of demand for acceleration, Freddie Mac reserves the right to exercise its
servicing judgment with respect to the mortgages in the same manner as for
mortgages that it has purchased but not sold.

      Under Freddie Mac's Cash Program, there is no limitation on the amount by
which interest rates on the mortgage loans underlying a Freddie Mac Certificate
may exceed the interest rate on the Freddie Mac Certificate. For Freddie Mac
Pools formed under Freddie Mac's Guarantor Program having pool numbers beginning
with 18-


                                       24



012, the range between the lowest and highest annual interest rates on
the mortgage loans does not exceed two percentage points.

      Under its Gold PC Program, Freddie Mac guarantees to each registered
holder of a Freddie Mac Certificate the timely payment of interest calculated in
the same manner as described above, as well as timely installments of scheduled
principal based on the difference between the pool factor published in the month
preceding the month of distribution and the pool factor published in the month
of distribution for the related Freddie Mac Certificate.

      Freddie Mac Certificates are not guaranteed by the United States or by any
Federal Home Loan Bank and do not constitute debts or obligations of the United
States or any Federal Home Loan Bank. The obligations of Freddie Mac under its
guarantee are obligations solely of Freddie Mac and are not backed by, nor
entitled to, the full faith and credit of the United States.

      As described above, the Freddie Mac Certificates included in a Trust
Estate, and the related underlying mortgage loans, may have characteristics and
terms different from those described above. Any different characteristics and
terms will be described in the related prospectus supplement.

   FANNIE MAE

      Fannie Mae is a federally-chartered and stockholder-owned corporation
organized and existing under the Federal National Mortgage Association Charter
Act, as amended. Fannie Mae was originally established in 1938 as a United
States government agency to provide supplemental liquidity to the mortgage
market and was transformed into a stockholder owned and privately managed
corporation by legislation enacted in 1968.

      Fannie Mae provides funds to the mortgage market primarily by purchasing
home mortgage loans from local lenders, thereby replenishing their funds for
additional lending. Fannie Mae acquires funds to purchase home mortgage loans
from many capital market investors that may not ordinarily invest in mortgages,
thereby expanding the total amount of funds available for housing. Operating
nationwide, Fannie Mae helps to redistribute mortgage funds from capital-surplus
to capital-short areas. In addition, Fannie Mae issues mortgage-backed
securities primarily in exchange for pools of mortgage loans from lenders.

   FANNIE MAE CERTIFICATES

      Fannie Mae Certificates ("FANNIE MAE CERTIFICATES") represent fractional
interests in a pool of mortgage loans formed by Fannie Mae.

      Fannie Mae guarantees to each registered holder of a Fannie Mae
Certificate that it will distribute amounts representing scheduled principal and
interest at the applicable pass-through rate on the underlying mortgage loans,
whether or not received, and that holder's proportionate share of the full
principal amount of any foreclosed or other finally liquidated mortgage loan,
whether or not the principal amount is actually recovered. If Fannie Mae were
unable to perform these obligations, distributions on Fannie Mae Certificates
would consist solely of payments and other recoveries on the underlying mortgage
loans and, accordingly, delinquencies and defaults would affect monthly
distributions to holders of Fannie Mae Certificates. The obligations of Fannie
Mae under its guarantees are obligations solely of Fannie Mae and are not backed
by, nor entitled to, the full faith and credit of the United States.

      As described above, the Fannie Mae Certificates included in a Trust
Estate, and the related underlying mortgage loans, may have characteristics and
terms different from those described above. Any different characteristics and
terms will be described in the related prospectus supplement.

   PRIVATE CERTIFICATES

      Private Certificates ("PRIVATE CERTIFICATES") may consist of (a) mortgage
pass-through certificates or participation certificates representing beneficial
interests in loans of the type that would otherwise be eligible to be Mortgage
Loans (the "UNDERLYING LOANS") or (b) collateralized mortgage obligations
secured by Underlying Loans. Private Certificates may include stripped
mortgage-backed securities representing an undivided interest in all or a


                                       25



part of either the principal distributions (but not the interest distributions)
or the interest distributions (but not the principal distributions) or in some
portion of the principal and interest distributions (but not all of those
distributions) or certain mortgage loans. The Private Certificates will have
previously been (1) offered and distributed to the public pursuant to an
effective registration statement or (2) purchased in a transaction not involving
any public offering from a person who is not an affiliate of the issuer of those
securities at the time of sale (nor an affiliate thereof at any time during the
three preceding months); provided that a period of two years has elapsed since
the later of the date the securities were acquired from the issuer or one of its
affiliates. Although individual Underlying Loans may be insured or guaranteed by
the United States or an agency or instrumentality thereof, they need not be, and
the Private Certificates themselves will not be so insured or guaranteed. The
seller/servicer of the underlying mortgage loans will have entered into a
pooling and servicing agreement, an indenture or similar agreement (a "PC
AGREEMENT") with the trustee under that PC Agreement (the "PC TRUSTEE"). The PC
Trustee or its agent, or a custodian, will possess the mortgage loans underlying
those Private Certificates. The mortgage loans underlying the Private
Certificates may be subserviced by one or more loan servicing institutions under
the supervision of a master servicer (the "PC SERVICER").

      The sponsor of the Private Certificates (the "PC SPONSOR") will be a
financial institution or other entity that is or has affiliates that are engaged
generally in the business of mortgage lending, a public agency or
instrumentality of a state, local or federal government, or a limited purpose
corporation organized for the purpose of, among other things, establishing
trusts and acquiring and selling mortgage loans to those trusts and selling
beneficial interests in those trusts. The PC Sponsor may be an affiliate of the
Depositor. The obligations of the PC Sponsor will generally be limited to
certain representations and warranties with respect to the assets conveyed by it
to the related trust. The PC Sponsor will not have guaranteed any of the assets
conveyed to the related trust or any of the Private Certificates issued under
the PC Agreement. Additionally, although the mortgage loans underlying the
Private Certificates may be guaranteed by an agency or instrumentality of the
United States, the Private Certificates themselves will not be so guaranteed.

      The Depositor will acquire Private Certificates in open market
transactions or in privately negotiated transactions which may be with or
through affiliates.

      The prospectus supplement for a series for which the Trust Estate includes
Private Certificates will specify (this disclosure may be on an approximate
basis and will be as of the date specified in the related prospectus supplement)
to the extent relevant and to the extent the information is reasonably available
to the Depositor and the Depositor reasonably believes the information to be
reliable:

      o   the aggregate approximate principal amount and type of the Private
          Certificates to be included in the Trust Estate;

      o   certain characteristics of the mortgage loans that comprise the
          underlying assets for the Private Certificates including:

          o   the payment features of the underlying mortgage loans;

          o   the approximate aggregate principal balance, if known, of
              underlying mortgage loans insured or guaranteed by a governmental
              entity;

          o   the servicing fee or range of servicing fees with respect to the
              underlying mortgage loans; and

          o   the minimum and maximum stated maturities of the underlying
              mortgage loans at origination;

      o   the maximum original term-to-stated maturity of the Private
          Certificates;

      o   the weighted average term-to-stated maturity of the Private
          Certificates;

      o   the pass-through or certificate rate of the Private Certificates;


                                       26



      o   the weighted average pass-through or certificate rate of the Private
          Certificates;

      o   the PC Sponsor, the PC Trustee and the PC Servicer;

      o   certain characteristics of credit support, if any, such as reserve
          funds, insurance policies, surety bonds, letters of credit or
          guaranties relating to the mortgage loans underlying the Private
          Certificates or to the Private Certificates themselves;

      o   the terms on which the underlying mortgage loans for the Private
          Certificates may, or are required to, be purchased prior to their
          stated maturity or the stated maturity of the Private Certificates;
          and

      o   the terms on which mortgage loans may be substituted for those
          originally underlying the Private Certificates.

DISTRIBUTION ACCOUNT

      The Trustee or other entity identified in the related prospectus
supplement will, as to each series of Certificates, establish and maintain an
account or accounts (collectively, the "DISTRIBUTION ACCOUNT") for the benefit
of the Trustee and holders of the Certificates of that series for receipt of:

      o   each distribution or monthly payment, as the case may be, made to the
          Trustee with respect to the Mortgage Assets;

      o   the amount of cash, if any, specified in the related pooling and
          servicing agreement to be initially deposited therein;

      o   the amount of cash, if any, withdrawn from any related reserve fund or
          other fund; and

      o   the reinvestment income, if any.

      The pooling and servicing agreement for a series may authorize the Trustee
to invest the funds in the Distribution Account in certain investments that will
qualify as "permitted investments" under Code Section 860G(a)(5) in the case of
REMIC Certificates. These eligible investments will generally mature not later
than the business day immediately preceding the next Distribution Date for the
series (or, in certain cases, on the Distribution Date). Eligible investments
include, among other investments, obligations of the United States and certain
of its agencies, federal funds, certificates of deposit, commercial paper
carrying the ratings specified in the related pooling and servicing agreement of
each rating agency rating the Certificates of that series that has rated the
commercial paper, demand and time deposits and banker's acceptances sold by
eligible commercial banks, certain repurchase agreements of United States
government securities and certain minimum reinvestment agreements. Reinvestment
earnings, if any, on funds in the Distribution Account generally will belong to
the Trustee.

                           DESCRIPTION OF CERTIFICATES

      Each series of certificates (the "CERTIFICATES") will be issued pursuant
to a separate pooling and servicing agreement among the Depositor, the Sponsor
(if so provided in the related prospectus supplement), the Trustee (and, if
applicable, a securities administrator or other entity identified in the related
prospectus supplement) and a Master Servicer or one or more Servicers. A form of
pooling and servicing agreement is filed as an exhibit to the Registration
Statement of which this prospectus is a part. The following summaries describe
material provisions that may appear in each pooling and servicing agreement. The
prospectus supplement for a series of Certificates will describe any provision
of the related pooling and servicing agreement that materially differs from the
description 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 pooling and servicing agreement and the
prospectus supplement related to a particular series of Certificates.


                                       27



GENERAL

      The Certificates are issuable in series, each evidencing the entire
ownership interest in a Trust Estate of assets consisting primarily of Mortgage
Assets. The Certificates of each series will be issued either in fully
registered form or in book-entry form and in the authorized denominations for
each class specified in the related prospectus supplement. The Certificates of
each series will evidence specified beneficial ownership interests in the
related Trust Estate created pursuant to the related pooling and servicing
agreement and will not be entitled to payments in respect of the assets included
in any other Trust Estate established by the Depositor. The Certificates will
not represent obligations of the Depositor, the Master Servicer, the Trustee or
any affiliate of those parties. Any qualifications on direct or indirect
ownership of Residual Certificates, as well as restrictions on the transfer of
Residual Certificates, will be set forth in the related prospectus supplement.

      Each series of Certificates will be issued in one or more classes. Each
class of Certificates of a series will evidence beneficial ownership of a
specified percentage (which may be 0%) or portion of future interest payments
and a specified percentage (which may be 0%) or portion of future principal
payments on the Mortgage Assets in the related Trust Estate. A series of
Certificates may include one or more classes that are senior in right to payment
to one or more other classes of Certificates of that series. Certain series or
classes of Certificates may be covered by insurance policies, surety bonds or
other forms of credit enhancement, in each case as described in this prospectus
and in the related prospectus supplement. One or more classes of Certificates of
a series may be entitled to receive distributions of principal, interest or any
combination of principal and interest. Distributions on one or more classes of a
series of Certificates may be made:

      o   prior to one or more other classes;

      o   after the occurrence of specified events;

      o   in accordance with a schedule or formula;

      o   on the basis of collections from designated portions of the Mortgage
          Assets in the related Trust Estate; or

      o   on a different basis;

in each case as specified in the related prospectus supplement. The timing and
amounts of distributions may vary among classes or over time as specified in the
related prospectus supplement.

DEFINITIVE FORM

      Certificates of a series that are issued in fully-registered, certificated
form are referred to as "DEFINITIVE CERTIFICATES." Distributions of principal
of, and interest on, Definitive Certificates will be made directly to holders of
Definitive Certificates in accordance with the procedures set forth in the
pooling and servicing agreement. The Definitive Certificates of a series offered
by this prospectus and the applicable prospectus supplement will be transferable
and exchangeable at the office or agency maintained by the Trustee or other
entity for that purpose set forth in the applicable prospectus supplement. No
service charge will be made for any transfer or exchange of Definitive
Certificates, but the Trustee or another entity may require payment of a sum
sufficient to cover any tax or other governmental charges in connection with the
transfer or exchange.

      In the event that an election or multiple elections are made to treat the
Trust Estate (or one or more segregated pools of assets of the Trust Estate) as
one or more REMICs, the Residual Certificate will be issued as a Definitive
Certificate. No legal or beneficial interest in all or any portion of any
"residual interest" may be transferred without the receipt by the transferor and
the Trustee of an affidavit signed by the transferee stating, among other
things, that the transferee (1) is not a disqualified organization within the
meaning of Code Section 860E(e) or an agent (including a broker, nominee or
middleman) of a disqualified organization and (ii) understands that it may incur
tax liabilities in excess of any cash flows generated by the residual interest.
Further, the transferee must state in the affidavit that it (a) historically has
paid its debts as they have come due, (b) intends to pay its debts


                                       28



as they come due in the future and (c) intends to pay taxes associated with
holding the residual interest as they become due. The transferor must certify to
the Trustee that, as of the time of the transfer, it has no actual knowledge
that any of the statements made in the transferee affidavit are false and no
reason to know that the statements made by the transferee pursuant to clauses
(a), (b) and (c) of the preceding sentence are false. See "Federal Income Tax
Consequences--Federal Income Tax Consequences for REMIC Certificates--Taxation
of Residual Certificates----Tax--Related Restrictions on Transfer of Residual
Certificates."

BOOK-ENTRY FORM

      Persons acquiring beneficial ownership interests ("BENEFICIAL OWNERS") in
the Certificates issued in book-entry form (the "BOOK-ENTRY CERTIFICATES") will
hold their Certificates through DTC in the United States, or Clearstream or
Euroclear (in Europe) if they are participants of those systems (the
"PARTICIPANTS"), or indirectly through organizations which are participants in
those systems (the "INDIRECT PARTICIPANTS"). Each class of the Book-Entry
Certificates of a series initially will be represented by one or more physical
certificates registered in the name of Cede & Co., as nominee of DTC, which will
be the "holder" or "Certificateholder" of those Certificates, as those terms are
used in this prospectus and the applicable prospectus supplement for a series.
No Beneficial Owner of a Book-Entry Certificate will be entitled to receive a
Definitive Certificate representing that person's interest in the Book-Entry
Certificate, except as set forth below. Unless and until Definitive Certificates
are issued under the limited circumstances described below, all references to
actions taken by Certificateholders or holders shall, in the case of the
Book-Entry Certificates, refer to actions taken by DTC upon instructions from
its DTC Participants, and all references in this prospectus and the applicable
prospectus supplement for a series to distributions, notices, reports and
statements to Certificateholders or holders shall, in the case of the Book-Entry
Certificates, refer to distributions, notices, reports and statements to DTC or
Cede & Co., as the registered holder of the Book-Entry Certificates, as the case
may be, for distribution to Beneficial Owners in accordance with DTC procedures.
Clearstream and Euroclear will hold omnibus positions on behalf of their
Participants through customers' securities accounts in Clearstream's and
Euroclear's names on the books of their respective depositaries which in turn
will hold those positions in customers' securities accounts in the depositaries'
names on the books of DTC. Citibank will act as depositary for Clearstream and
JPMorgan Chase Bank, National Association will act as depositary for Euroclear
(in those capacities, individually the "RELEVANT DEPOSITARY" and collectively
the "EUROPEAN DEPOSITARIES"). Investors may hold beneficial interests in the
Book-Entry Certificates in minimum denominations of $1,000.

      The Beneficial Owner's ownership of a Book-Entry Certificate will be
recorded on the records of the brokerage firm, bank, thrift institution or other
financial intermediary (each, a "FINANCIAL INTERMEDIARY") that maintains the
beneficial owner's account for that purpose. In turn, the Financial
Intermediary's ownership of a Book-Entry Certificate will be recorded on the
records of DTC (or of a participating firm that acts as agent for the 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 or Euroclear, as appropriate).

      Beneficial Owners will receive all distributions of principal of, and
interest on, the Book-Entry Certificates from the Trustee through DTC and
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
distributions of principal of, and interest on, the Book-Entry Certificates.
Participants and Indirect Participants with whom Beneficial Owners have accounts
for their Book-Entry Certificates are similarly required to make book-entry
transfers and receive and transmit these distributions on behalf of their
respective Beneficial Owners. Accordingly, although Beneficial Owners will not
possess certificates representing their respective interests in the Book-Entry
Certificates, the Rules provide a mechanism by which Beneficial Owners will
receive distributions and will be able to transfer their interest.

      Certificateholders will not receive or be entitled to receive certificates
representing their respective interests in the Book-Entry Certificates, except
under the limited circumstances described below. Unless and until Definitive
Certificates are issued, Certificateholders who are not Participants may
transfer ownership of Book-Entry Certificates only through Participants and
Indirect Participants by instructing Participants and Indirect Participants to
transfer Book-Entry Certificates, by book-entry transfer, through DTC, for the
account of the purchasers of the


                                       29



Book-Entry Certificates, which account is maintained with their respective
Participants. Under the Rules and in accordance with DTC's normal procedures,
transfers of ownership of Book-Entry Certificates will be executed through DTC
and the accounts of the respective Participants at DTC will be debited and
credited. Similarly, the Participants and Indirect Participants will make debits
or credits, as the case may be, on their records on behalf of the selling and
purchasing Certificateholders.

      Because of time zone differences, credits of securities received in
Clearstream or Euroclear as a result of a transaction with a Participant will be
made during subsequent securities settlement processing and dated the business
day following the DTC settlement date. These credits or any transactions in
securities settled during this processing will be reported to the relevant
Euroclear or Clearstream Participants on that following business day. Cash
received in Clearstream or Euroclear as a result of sales of securities by or
through a Clearstream Participant or Euroclear Participant to a DTC Participant
will be received with value on the DTC settlement date but will be available in
the relevant Clearstream or Euroclear cash account only as of the business day
following settlement in DTC. For information with respect to tax documentation
procedures relating to the Certificates see "--Certain U.S. Federal Income Tax
Documentation Requirements" below and "Federal Income Tax Consequences--Federal
Income Tax Consequences for REMIC Certificates--Taxation of Certain Foreign
Investors" and "--Backup Withholding."

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

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

      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 New York Uniform Commercial Code and a
"clearing agency" registered pursuant to Section 17A, of the Securities Exchange
Act of 1934, as amended. DTC 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, as in effect from time to time.

      Clearstream International, a Luxembourg limited liability company, was
formed in January 2000 through the merger of Cede & Co. International and
Deutsche Boerse Clearing.

      Clearstream is registered as a bank in Luxembourg and is subject to
regulation by the Luxembourg Monetary Authority, which supervises Luxembourg
banks.

      Clearstream holds securities for its Participants and facilitates the
clearance and settlement of securities transactions by electronic book-entry
transfers between their accounts. Clearstream provides various services,
including safekeeping, administration, clearance and settlement of
internationally traded securities and securities lending and borrowing.
Clearstream also deals with domestic securities markets in several countries
through established depository and custodial relationships. Clearstream has
established an electronic bridge with Euroclear Bank S.A./N.V. (which operates
Euroclear) as the Euroclear operator in Brussels to facilitate settlement of
trades between systems. Clearstream currently accepts over 200,000 securities
issues on its books.

      Clearstream's customers are world-wide financial institutions including
underwriters, securities brokers and dealers, banks, trust companies and
clearing corporations. Clearstream's United States customers are limited to
securities brokers and dealers and banks. Currently, Clearstream has
approximately 2,500 customers located in over


                                       30



80 countries, including all major European countries, Canada and the United
States. Indirect access to Clearstream is available to other institutions which
clear through or maintain custodial relationship with an account holder of
Clearstream.

      The Euroclear System was created in 1968 to hold securities for its
Participants and to clear and settle transactions between Euroclear Participants
through simultaneous electronic book-entry delivery against payment, thereby
eliminating the need for physical movement of certificates and any risk from
lack of simultaneous transfers of securities and cash. Transactions may be
settled in a variety of currencies, including United States dollars. Euroclear
provides various other services, including securities lending and borrowing and
interfaces with domestic markets in several countries generally similar to the
arrangements for cross-market transfers with DTC described above. Euroclear is
operated by Euroclear Bank S.A./N.V. (the "EUROCLEAR OPERATOR"). All operations
are conducted by the Euroclear Operator, and all Euroclear securities clearance
accounts and Euroclear cash accounts are accounts with the Euroclear Operator.
Euroclear plc establishes policy for Euroclear on behalf of Euroclear
Participants. Euroclear Participants include banks (including central banks),
securities brokers and dealers and other professional financial intermediaries.
Indirect access to Euroclear is also available to other firms that clear through
or maintain a custodial relationship with a Euroclear Participant, either
directly or indirectly.

      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. These 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 of Euroclear only on behalf of Euroclear Participants, and
has no record of or relationship with persons holding through Euroclear
Participants.

      Distributions on the Book-Entry Certificates will be made on each
Distribution Date by the Trustee to Cede & Co., as nominee of DTC. DTC will be
responsible for crediting the amount of these distributions to the accounts of
the applicable DTC Participants in accordance with DTC `s normal procedures.
Each DTC Participant will be responsible for disbursing these distributions to
the Beneficial Owners of the Book-Entry Certificates that it represents and to
each Financial Intermediary for which it acts as agent. Each Financial
Intermediary will be responsible for disbursing funds to the Beneficial Owners
of the Book-Entry Certificates that it represents.

      Under a book-entry format, Beneficial Owners of the Book-Entry
Certificates may experience some delay in their receipt of payments, since
payments will be forwarded by the Trustee to Cede & Co. Distributions with
respect to Certificates held through Clearstream or Euroclear will be credited
to the cash accounts of Clearstream Participants or Euroclear Participants in
accordance with the relevant system's rules and procedures, to the extent
received by the Relevant Depositary. These distributions will be subject to tax
reporting in accordance with relevant United States tax laws and regulations.
See "Federal Income Tax Consequences--Federal Income Tax Consequences for REMIC
Certificates Taxation of Certain Foreign Investors" and "--Backup Withholding."
Because DTC can only act on behalf of DTC Participants, the ability of a
Beneficial Owner to pledge Book-Entry Certificates to persons or entities that
do not participate in the depository system, or otherwise take actions regarding
their Book-Entry Certificates, may be limited due to the lack of physical
certificates for their Book-Entry Certificates. In addition, issuance of the
Book-Entry Certificates in book-entry form may reduce the liquidity of the
Book-Entry Certificates in the secondary market since certain potential
investors may be unwilling to purchase Certificates for which they cannot obtain
physical certificates.

      DTC has advised the Depositor that, unless and until Definitive
Certificates are issued, DTC will take any action the holders of the Book-Entry
Certificates are permitted to take under the pooling and servicing agreement
only at the direction of one or more DTC Participants to whose DTC accounts the
Book-Entry Certificates are credited, to the extent that these actions are taken
on behalf of Financial Intermediaries whose holdings include the Book-Entry
Certificates. Clearstream or the Euroclear Operator, as the case may be, will
take any other action permitted to be taken by a Certificateholder under the
pooling and servicing agreement on behalf of a Clearstream Participant or
Euroclear Participant only in accordance with its relevant rules and procedures
and subject to the ability of the Relevant Depositary to effect these actions on
its behalf through DTC. DTC may take actions, at the


                                       31



direction of the related Participants, with respect to some Book-Entry
Certificates which conflict with actions taken with respect to other Book-Entry
Certificates.

      Definitive Certificates will be issued to beneficial owners of the
Book-Entry Certificates, or their nominees, rather than to DTC, only if (a) DTC
advises the Trustee in writing that DTC is no longer willing, qualified or able
to discharge properly its responsibilities as nominee and depository with
respect to the Book-Entry Certificates and the Depositor or the Trustee is
unable to locate a qualified successor or (b) in the case of Certificates of a
series that receive distributions pursuant to request or random lot, if pro rata
distributions cannot be made through the facilities of DTC.

      Upon the occurrence of any event described in the immediately preceding
paragraph, the Trustee will be required to notify the applicable beneficial
owners of the occurrence of the event and the availability through DTC of
Definitive Certificates. Upon surrender by DTC of the global certificate or
certificates representing the Book-Entry Certificates and instructions for
re-registration, the Trustee will issue Definitive Certificates, and thereafter
the Trustee will recognize the holders of those Definitive Certificates as
Certificateholders under the pooling and servicing agreement.

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

      None of the Depositor, the Master Servicer, any Servicers or the Trustee
will have any responsibility for any aspect of the records relating to or
payments made on account of beneficial ownership interests of the Book-Entry
Certificates held by Cede & Co., as nominee for DTC, or for maintaining,
supervising or reviewing any records relating to those beneficial ownership
interests. In the event of the insolvency of DTC, a DTC Participant or an
Indirect DTC Participant in whose name Book-Entry Certificates are registered,
the ability of the Beneficial Owners of the Book-Entry Certificates to obtain
timely payment and, if the limits of applicable insurance coverage by the
Securities Investor Protection Corporation are exceeded or if the coverage is
otherwise unavailable, ultimate payment, of amounts distributable with respect
to the Book-Entry Certificates may be impaired.

   SECONDARY MARKET TRADING

      Since the purchaser determines the place of delivery, it is important to
establish at the time of the trade where both the purchaser's and seller's
accounts are located to ensure that settlement can be made on the desired value
date.

      Trading between DTC Participants. Secondary market trading between DTC
Participants will be settled using the procedures applicable to prior mortgage
loan asset backed certificates issues in same-day funds.

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

      Trading between DTC seller and Clearstream or Euroclear purchaser. When
Book-Entry Certificates are to be transferred from the account of a DTC
Participant to the account of a Clearstream Participant or a Euroclear
Participant, the purchaser will send instructions to Clearstream or Euroclear
through a Clearstream Participant or Euroclear Participant at least one business
day prior to settlement. Clearstream or Euroclear will instruct the respective
Depositary, as the case may be, to receive the Book-Entry Certificates against
payment. Payment will include interest accrued on the Book-Entry Certificates
from and including the last coupon payment date to and excluding the settlement
date, on the basis of either a 360-day year comprised of 30-day months or the
actual number of days in the accrual period and a year assumed to consist of 360
days, as applicable. For transactions settling on the 31st of the month, payment
will include interest accrued to and excluding the first day of the following
month. Payment will then be made by the respective Depositary of the DTC
Participant's account against delivery of the Book-Entry Certificates. After
settlement has been completed, the Book-Entry Certificates will be


                                       32



credited to the respective clearing system and by the clearing system, in
accordance with its usual procedures, to the Clearstream Participant's or
Euroclear Participant's account. The securities credit will appear the next day
(European time) and the cash debt will be back-valued to, and the interest on
the Book-Entry 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 or
Euroclear cash debt will be valued instead as of the actual settlement date.

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

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

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

      Trading between Clearstream or Euroclear Seller and DTC Purchaser. Due to
time zone differences in their favor, Clearstream Participants and Euroclear
Participants may employ their customary procedures for transactions in which
Book-Entry Certificates are to be transferred by the respective clearing system,
through the respective Depositary, to a DTC Participant. The seller will send
instructions to Clearstream or Euroclear through a Clearstream Participant or
Euroclear Participant at least one business day prior to settlement. In these
cases Clearstream or Euroclear will instruct the respective Depositary, as
appropriate, to deliver the Book-Entry Certificates to the DTC Participant's
account against payment. Payment will include interest accrued on the Book-Entry
Certificates from and including the last coupon payment to and excluding the
settlement date on the basis of either a 360-day year comprised of 30-day months
or the actual number of days in the accrual period and a year assumed to consist
of 360 days, as applicable. For transactions settling on the 31st of the month,
payment will include interest accrued to and excluding the first day of the
following month. The payment will then be reflected in the account of the
Clearstream Participant or Euroclear Participant the following day, and receipt
of the cash proceeds in the Clearstream Participant's or Euroclear Participant's
account would be back-valued to the value date (which would be the preceding
day, when settlement occurred in New York). Should the Clearstream Participant
or Euroclear Participant have a line of credit with its respective clearing
system and elect to be in debt in anticipation of receipt of the sale proceeds
in its account, the back-valuation will extinguish any overdraft incurred over
that one-day period. If settlement is not completed on the intended value date
(i, e., the trade fails), receipt of the cash proceeds in the Clearstream
Participant's or Euroclear Participant's account would instead be valued as of
the actual settlement date.

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

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


                                       33



            (b) borrowing the Book-Entry Certificates in the U.S. from a DTC
      Participant no later than one day prior to settlement, which would give
      the Book-Entry Certificates sufficient time to be reflected in their
      Clearstream 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
      Participant or Euroclear Participant.

      Certain U.S. Federal Income Tax Documentation Requirements. A Beneficial
Owner of Book-Entry Certificates that is not a U.S. Person within the meaning of
Code Section 7701(a)(30) holding a Book-Entry Certificate through Clearstream,
Euroclear or DTC may be subject to U.S. withholding tax unless it provides
certain documentation to the Trustee, a Paying Agent or any other entity
required to withhold tax establishing an exemption from withholding.

      In addition, all holders, including holders that are U.S. Persons, holding
Book-Entry Certificates through Clearstream, Euroclear or DTC may be subject to
backup withholding unless the holder provides appropriate documentation or
otherwise qualifies for an exemption. See "Federal Income Tax Consequences"
herein, and in particular "--Taxation of Certain Foreign Investors."

      Prospective investors should be aware, however, that this discussion and
the discussions referenced herein do not deal with all of the aspects of U.S.
federal income tax withholding or backup withholding that may be relevant to
investors. Prospective investors are advised to consult their own tax advisors
for specific tax advice concerning their holding and disposing of Book-Entry
Certificates. Each certificateholder is encouraged to consult its tax advisors
regarding the tax documentation and certifications that must be provided to
secure the exemption from United States withholding taxes.

DISTRIBUTIONS

      Distributions of principal of and interest on the Certificates of a series
will be made on the dates specified in the related prospectus supplement (each,
a "DISTRIBUTION DATE"), and allocated to the classes in the amounts and in the
order specified, in the related prospectus supplement. Distributions will be
made by wire transfer (in the case of Certificates that are of a certain minimum
denomination, as specified in the related prospectus supplement) or by check
mailed to record holders of those Certificates as of the related record date at
their addresses appearing on the certificate register, except that the Trustee
will make the final distribution of principal only upon presentation and
surrender of each Certificate at the office or agency of the Trustee or a paying
agent specified in the related prospectus supplement. Notice will be mailed
before the Distribution Date on which the final distribution is expected to be
made to the holder of a Certificate. If the Certificates of a series are issued
in book-entry form, the Trustee will make distributions on those Certificates,
including the final distribution in retirement of those Certificates, through
the facilities of a depository in accordance with the depository's usual
procedures in the manner described in the related prospectus supplement.

      The Trustee will distribute principal of and interest on the Certificates
out of the Distribution Account established under the pooling and servicing
agreement. All distributions on the Mortgage Certificates, if any, included in
the Trust Estate for a series, remittances on the Mortgage Loans by the Master
Servicer pursuant to the pooling and servicing agreement, together with any
reinvestment income (if so specified in the related prospectus supplement) from
those funds, and amounts withdrawn from any reserve fund or other fund or
payments in respect of other credit enhancement are required to be deposited
directly into the Distribution Account. These funds will be available (except
for funds held for future distribution and for funds payable to the Master
Servicer) to make distributions on Certificates of that series on the next
Distribution Date. See "The Trust Estates--Distribution Account" and "The
Pooling and Servicing Agreement--Payments on Mortgage Loans."

   INTEREST

      Interest will accrue on the aggregate certificate principal balance (or,
in the case of IO Certificates, the aggregate notional amount) of each class of
Certificates entitled to interest at the pass-through rate (which may be a


                                       34



fixed rate or a rate adjustable as specified in the prospectus supplement)
during each interest accrual period specified in the related prospectus
supplement. The interest accrual period with respect to any Distribution Date is
the period from and including the first day of the month preceding the month of
that Distribution Date (or, in the case of the first Distribution Date, from the
closing date for the series of Certificates) through the last day of the
preceding month, or any other period as may be specified in the related
prospectus supplement. If funds are available for distribution, the Trustee will
distribute interest accrued during each interest accrual period on each class of
Certificates entitled to interest (other than a class of Certificates that
provides for interest that accrues, but is not currently payable on the
Distribution Dates specified in the related prospectus supplement until the
class certificate balance of that class is reduced to zero or, in the case of
Certificates entitled only to distributions allocable to interest, until the
aggregate notional amount of those Certificates is reduced to zero or for the
period of time designated in the related prospectus supplement. The notional
amount of a Notional Amount Certificate will not evidence an interest in or
entitlement to distributions allocable to principal but will be used solely for
convenience in expressing the calculation of interest and for certain other
purposes.

      The Trustee will begin distributing interest on each class of Accrual
Certificates only after the occurrence of the events specified in the related
prospectus supplement and, prior to that time, interest will be added to the
class certificate balance of each class of Accrual Certificates. Any class of
Accrual Certificates then will accrue interest on its outstanding class
certificate balance as adjusted. For a description of Accrual Certificates, see
"--Categories of Classes of Certificates."

   PRINCIPAL

      The class certificate balance of any class of Certificates entitled to
distributions of principal will be the original class certificate balance of
that class of Certificates specified in the prospectus supplement, reduced by
all distributions reported to holders of the Certificates as allocable to
principal and adjustments, if any, in respect of losses and (i) in the case of
Accrual Certificates, increased by all interest accrued but not then
distributable on those Accrual Certificates and (ii) in the case of
adjustable-rate Certificates, subject to the effect of any negative
amortization. The related prospectus supplement will specify the method by which
the amount of principal to be distributed on the Certificates on each
Distribution Date will be calculated and the manner in which that amount will be
allocated among the classes of Certificates entitled to distributions of
principal.

      Each class of Certificates of a series (except for IO Certificates), to
the extent of funds available for distribution, will receive distributions of
principal in the amounts, at the times and in the manner specified in the
related prospectus supplement until its initial aggregate certificate balance
has been reduced to zero. The Trustee will allocate distributions of principal
to the Certificates of each class, during the periods and in the order specified
in the related prospectus supplement.

CATEGORIES OF CLASSES OF CERTIFICATES

      In general, the classes of Certificates of each series fall into different
categories. The following chart identifies and generally defines certain of the
more typical categories. The prospectus supplement for a series of Certificates
may identify the classes of that series by reference to the following
categories.


                                       35





                                                     PRINCIPAL TYPES

CATEGORIES OF CLASSES                                     DEFINITIONS
-------------------------------------------------------   -----------------------------------------------------------------

ACCRETION DIRECTED CERTIFICATES                           A class of Certificates that receives principal payments from
                                                          amounts that otherwise would be distributed as interest on
                                                          specified Accrual Certificates. These principal payments may be
                                                          in lieu of or in addition to principal payments from principal
                                                          receipts on the Mortgage Assets or other assets of the Trust
                                                          Estate for the related series.

COMPANION CERTIFICATES OR SUPPORT CERTIFICATES            A class of Certificates that receives principal payments on a
                                                          Distribution Date only if scheduled payments have been made on
                                                          specified Planned Amortization Certificates, Targeted
                                                          Amortization Certificates and/or Scheduled Amortization
                                                          Certificates.

COMPONENT CERTIFICATES                                    A class of Certificates consisting of two or more specified
                                                          components, as described in the applicable prospectus supplement.
                                                          The components of a class of Component Certificates may have
                                                          different principal and/or interest payment characteristics but
                                                          together constitute a single class and do not represent several
                                                          interests. Each component of a class of Component Certificates
                                                          may be identified as falling into one or more of the categories
                                                          in this chart.

LOCKOUT CERTIFICATES                                      A class of Senior Certificates that is locked out of or is
                                                          designed not to participate in or to participate to a limited
                                                          extent in, for a specified period, the receipt of (1) principal
                                                          prepayments on the Mortgage Loans that are allocated
                                                          disproportionately to the classes of Senior Certificates of the
                                                          series as a group under a "shifting interest" structure and/or
                                                          (2) scheduled principal payments on the Mortgage Loans that are
                                                          allocated to the classes of Senior Certificates of the series as
                                                          a group. A class of Lockout Certificates typically will not
                                                          receive distributions of principal prepayments and/or scheduled
                                                          principal payments, as applicable, for a period of several years,
                                                          during which time all or a portion of the principal payments that
                                                          it would otherwise receive in the absence of a "lockout"
                                                          structure will be distributed in reduction of the principal
                                                          balances of other Senior Certificates. Lockout Certificates are
                                                          designed to minimize their weighted average life volatility
                                                          during the lockout period.

NOTIONAL AMOUNT CERTIFICATES                              A class of Certificates having no principal balance and bearing
                                                          interest on a notional amount. The notional amount is a
                                                          hypothetical amount used for calculating interest distributions.

PASS-THROUGH CERTIFICATES                                 A class of Senior Certificates that receives a specified
                                                          percentage of the principal payments that are distributable to
                                                          the Senior Certificates or a group of Senior Certificates, other
                                                          than any Ratio Strip Certificates, in the aggregate on a
                                                          Distribution Date and that is not a class of Sequential Pay
                                                          Certificates.



                                       36





PLANNED AMORTIZATION CERTIFICATES OR PAC CERTIFICATES     A class of Certificates that is designed to receive principal
                                                          payments (or has a notional amount that is based on the class
                                                          balance(s) of one or more classes of Certificates that are
                                                          designed to receive principal payments) using a predetermined
                                                          principal balance schedule derived by assuming two constant
                                                          prepayment rates for the underlying Mortgage Assets. These two
                                                          rates are the endpoints for the "structuring range" for the class
                                                          of Planned Amortization Certificates. The Planned Amortization
                                                          Certificates in any series may be subdivided into different
                                                          categories such as Planned Amortization Certificates I or PAC I
                                                          Certificates, Planned Amortization Certificates II or PAC II
                                                          Certificates and so forth which are derived using different
                                                          structuring ranges. A class of PAC Certificates is designed to
                                                          provide protection against prepayments occurring at a constant
                                                          rate within the structuring range.

RATIO STRIP CERTIFICATES                                  A class of Certificates that receives a constant proportion, or
                                                          "ratio strip," of the principal payments on some or all of the
                                                          Mortgage Assets.

SCHEDULED AMORTIZATION CERTIFICATES                       A class of Certificates that is designed to receive principal
                                                          payments (or has a notional amount that is based on the class
                                                          balance(s) of one or more classes of Certificates that are
                                                          designed to receive principal payments) using a predetermined
                                                          principal balance schedule but is not designated as a class of
                                                          Planned Amortization Certificates or Targeted Amortization
                                                          Certificates. The schedule is derived by assuming either two
                                                          constant prepayment rates or a single constant prepayment rate
                                                          for the Mortgage Assets. In the case of two constant rates, these
                                                          two rates are the endpoints for the "structuring range" for the
                                                          class of Scheduled Amortization Certificates and the range
                                                          generally is narrower than that for a class of Planned
                                                          Amortization Certificates. Typically, the Support Certificates
                                                          for the applicable series of Certificates generally will
                                                          represent a smaller percentage of a class of Scheduled
                                                          Amortization Certificates than the Support Certificates generally
                                                          would represent in relation to a Planned Amortization Certificate
                                                          or a Targeted Amortization Certificate. A Scheduled Amortization
                                                          Certificate generally is less sensitive to prepayments than a
                                                          Support Certificate, but is more sensitive than a class of
                                                          Planned Amortization Certificates or Targeted Amortization
                                                          Certificates.

SENIOR CERTIFICATES                                       A class of Certificates that is entitled to receive payments of
                                                          principal and interest on each Distribution Date prior to the
                                                          classes of Subordinate Certificates.



                                       37





SEQUENTIAL PAY CERTIFICATES                               A class of Certificates that receives principal payments in a
                                                          prescribed sequence, that does not have a predetermined principal
                                                          balance schedule and that, in most cases, is entitled to receive
                                                          payments of principal continuously from the first Distribution
                                                          Date on which they receive principal until they are retired. A
                                                          class of Sequential Pay Certificates may receive payments of
                                                          principal concurrently with one or more other classes of
                                                          Sequential Pay Certificates. A single class that is entitled to
                                                          receive principal payments before or after all other classes in
                                                          the same series of Certificates may be identified as a Sequential
                                                          Pay Certificate.

SUBORDINATE CERTIFICATES                                  A class of Certificates that receives payments of principal and
                                                          interest on each Distribution Date only after the Senior
                                                          Certificates and classes of Subordinate Certificates with higher
                                                          priority of distributions have received their full principal and
                                                          interest entitlements.

SUPER SENIOR CERTIFICATES                                 A class of Senior Certificates that will not bear its share of
                                                          certain losses, after the Subordinate Certificates are no longer
                                                          outstanding, for so long as one or more specified classes of
                                                          Senior Certificates are outstanding.

SUPER SENIOR SUPPORT CERTIFICATES                         A class of Senior Certificates that bears certain losses that
                                                          otherwise would have been allocated to a class of Super Senior
                                                          Certificates.

TARGETED AMORTIZATION CERTIFICATES OR TAC                 A class of Certificates that receives principal payments (or has
CERTIFICATES                                              a notional amount that is based on the class balance(s) of one or
                                                          more classes of Certificates that are designed to receive
                                                          principal payments) using a predetermined principal balance
                                                          schedule derived by assuming a single constant prepayment rate
                                                          for the Mortgage Assets. A class of TAC Certificates is designed
                                                          to provide some protection against prepayments at a rate
                                                          exceeding the assumed constant prepayment used to derive the
                                                          principal balance schedule for that class.




                                                     INTEREST TYPES

Categories of Classes                                     DEFINITIONS
-------------------------------------------------------   ---------------------------------------------------------------

ACCRUAL CERTIFICATES                                      A class of Certificates that accretes the amount of accrued
                                                          interest otherwise distributable on the class, which amount will
                                                          be added to the principal balance of the class on each applicable
                                                          Distribution Date. The accretion may continue until some
                                                          specified event has occurred or until the class of Accrual
                                                          Certificates is retired.

FIXED-RATE CERTIFICATES                                   A class of Certificates with an interest rate that is fixed
                                                          throughout the life of the class.



                                       38





FLOATING-RATE CERTIFICATES                                A class of Certificates with an interest rate that resets
                                                          periodically based upon a designated index and that varies
                                                          directly with changes in the index.

INTEREST-ONLY CERTIFICATES OR IO CERTIFICATES             A class of Certificates that receives some or all of the interest
                                                          payments made on the Mortgage Assets and little or no principal.
                                                          Interest-Only Certificates have either a nominal principal
                                                          balance or a notional amount. A nominal principal balance
                                                          represents actual principal that will be paid on the
                                                          Certificates. It is referred to as nominal since it is extremely
                                                          small compared to other classes. A notional amount is an amount
                                                          used as a reference to calculate the amount of interest due on a
                                                          class of Interest-Only Certificates that is not entitled to any
                                                          distributions in respect of principal.

INVERSE FLOATING-RATE CERTIFICATES                        A class with an interest rate that resets periodically based upon
                                                          a designated index and that varies inversely with changes in the
                                                          index. The interest rate for a class of Inverse Floating-Rate
                                                          Certificates typically will vary inversely with changes in the
                                                          interest rate on a class of Floating-Rate Certificates in the
                                                          same series.

PRINCIPAL-ONLY CERTIFICATES OR PO CERTIFICATES            A class of Certificates that does not bear interest and is
                                                          entitled to receive only distributions in respect of principal.

STEP COUPON CERTIFICATES                                  A class of Certificates with a fixed interest rate that is
                                                          reduced to a lower fixed rate after a specified period of time.
                                                          The difference between the initial interest rate and the lower
                                                          interest rate will be supported by a reserve fund established on
                                                          the closing date for that series of Certificates.

VARIABLE RATE CERTIFICATES                                A class of Certificates with an interest rate that resets
                                                          periodically and is calculated by reference to the rate or rates
                                                          of interest applicable to the Mortgage Assets or another class or
                                                          classes of Certificates..


RESIDUAL CERTIFICATES

      A series of REMIC Certificates will include a class of Residual
Certificates representing the right to receive on each Distribution Date, in
addition to any other distributions to which they may be entitled, the excess of
the sum of distributions, payments and other amounts received over the sum of
(i) the amount required to be distributed to certificateholders on that
Distribution Date and (ii) certain expenses, all as more specifically described
in the related prospectus supplement. In addition, after the aggregate principal
balance of all classes of Regular Certificates has been fully amortized, holders
of the Residual Certificates will be the sole owners of the related Trust Estate
and will have sole rights with respect to the Mortgage Assets and other assets
remaining in the Trust Estate. Some or all of the Residual Certificates of a
series may be offered by this prospectus and the related prospectus supplement;
if so, the terms of those Residual Certificates will be described in the
prospectus supplement. Any qualifications on direct or indirect ownership of
Residual Certificates offered by this prospectus and the related prospectus
supplement, as well as restrictions on the transfer of those Residual
Certificates, will be set forth in the related prospectus supplement. If
Residual Certificates are not so offered, the Depositor may (but need not) sell
some or all of the Residual Certificates on or after the date of original
issuance of that series in transactions exempt from registration under the
Securities Act of 1933, as amended, and otherwise under circumstances that will
not adversely affect the REMIC status of the Trust Estate.


                                       39



MANDATORY AUCTION OF CERTIFICATES

      If specified in the prospectus supplement for a series, one or more
classes of Certificates ("AUCTION CERTIFICATES") may be subject to a mandatory
auction. Prior to a Distribution Date specified in the applicable prospectus
supplement (the "AUCTION DISTRIBUTION DATE"), the Trustee or another party
specified in the prospectus supplement, in its capacity as auction administrator
(the "AUCTION ADMINISTRATOR"), will solicit bids for the purchase of each class
of Auction Certificates then outstanding from third-party investors.

      On the Auction Distribution Date, the Auction Certificates will be
transferred to third-party investors, and upon this transfer the holders of each
class of Auction Certificates will be entitled to receive an amount (the "PAR
PRICE") equal to the related class balance, plus, if applicable, accrued
interest on that class balance (following all distributions and the allocation
of Realized Losses on the Auction Distribution Date.

      The Auction Administrator will enter into a swap agreement pursuant to
which the counterparty will agree to pay the excess, if any, of the Par Price
over the amounts received for a class of Auction Certificates in the auction. If
all or a portion of a class of Auction Certificates is not sold in the auction,
the counterparty will pay the Auction Administrator the Par Price (or a portion
of the Par Price) of the unsold Certificates. If the amount received in the
auction is greater than the Par Price, that excess will be paid by the Trust to
the counterparty to the swap agreement and will not be available for
distribution to Certificateholders.

      If the counterparty defaults on its obligations under the swap agreement,
no Certificates of a class of Auction Certificates will be transferred to third
parties unless bids equal to or higher than the applicable Par Price (or pro
rata portion in the case of a bid for less than all of a class) are received. In
addition, if the counterparty defaults and third-party investors bid an amount
equal to or higher than the pro rata portion of the Par Price for some, but not
all, of a class of Auction Certificates, only a portion of the Certificates of
such class will be transferred to the successful bidders on the Auction
Distribution Date. If only a portion of a class is transferred, each holder of
such class will transfer only a pro rata portion of its Certificates on the
Auction Distribution Date.

      See "Risk Factors--Amounts Received from the Auction and the Swap
Agreement May Be Insufficient to Assure Completion of the Auction" in this
prospectus.

REPORTS TO CERTIFICATEHOLDERS

      Prior to or concurrently with each distribution on a Distribution Date and
except as otherwise set forth in the related prospectus supplement, the Master
Servicer or the Trustee will make available to each Certificateholder of record
of the related series a statement setting forth, if applicable to that series of
Certificates, among other things:

            (i)    the amount of the distribution allocable to principal of the
      related Mortgage Loans, separately identifying the aggregate amount of any
      principal prepayments, and Liquidation Proceeds and the amount of the
      distribution allocable to interest on the related Mortgage Loans;

            (ii)   if the distribution to Certificateholders is less than the
      full amount that would be distributable if there were sufficient funds
      available, the amount of the shortfall and the allocation of the shortfall
      between principal and interest;

            (iii)  the class balance of each class of Certificates after giving
      effect to the distribution of principal on the Distribution Date;

            (iv)   the amount of servicing compensation with respect to the
      related Trust Estate and any other customary information as is required to
      enable Certificateholders to prepare their tax returns;

             (v)   the amount by which the Servicing Fee or Master Servicing
      Fee, as applicable, for the related Distribution Date has been reduced by
      interest shortfalls due to prepayments;


                                       40



            (vi)   the amount of Advances included in the distribution on the
      Distribution Date, the aggregate amount of Advances outstanding as of the
      close of business on the Distribution Date and the amount of Advances
      reimbursed since the previous Distribution Date;

            (vii)  to each holder of a Certificate entitled to the benefits of
      payments under any form of credit enhancement;

                   (a)   the amounts so distributed under the form of credit
            enhancement on the applicable Distribution Date; and

                   (b)   the amount of coverage remaining under the form of
            credit enhancement, after giving effect to any payments thereunder
            and other amounts charged thereto on the Distribution Date;

            (viii) any payments made or accrued relating to credit enhancement
      provided by a party, identifying the general purpose of the payments and
      the party receiving the payments.;

            (ix)   the Pass-Through Rate (if any) for each class of
      Certificates;

            (x)    for any Mortgage Loan that became and REO Property during the
      preceding calendar month, the loan number and Stated Principal Balance of
      the Mortgage Loan as of the close of business on the Determination Date
      preceding the Distribution Date and the date of acquisition thereof;

            (xi)   the total number and principal balance of any REO Properties
      (and market value, if available) as of the close of business on the
      Determination Date preceding the Distribution Date;

            (xii)  the aggregate amount of Realized Losses incurred during the
      preceding calendar month;

            (xiii) any expenses or indemnification amounts paid by the related
      Trust Estate, the specific purpose of each payment and the parties to whom
      these payments are made;

            (xiv)  the number and total principal balance of the Mortgage Loans,
      the weighted average mortgage interest rate and weighted average remaining
      term to maturity of the Mortgage Loans and cumulative prepayment amounts;

            (xv)   any material modifications, extensions or waivers to Mortgage
      Loan terms, fees, penalties or payments since the previous Distribution
      Date or cumulatively since the closing date for that series of
      Certificates;

            (xvi)  any material breaches of representations and warranties
      relating to the Mortgage Loans or material breaches of transaction
      covenants;

            (xvii) the number and aggregate principal balance of any Mortgage
      Loans repurchased by the Depositor from the related Trust Estate since the
      previous Distribution Date; and

            (xviii) the number and aggregate principal amounts of Mortgage Loans
      (A) delinquent (exclusive of Mortgage Loans in foreclosure or bankruptcy),
      (B) in foreclosure, as of the close of business on the last day of the
      calendar month preceding the Distribution Date and (C) in bankruptcy as of
      the close of business on the last day of the calendar month preceding the
      Distribution Date.

      Where applicable, any amount set forth above may be expressed as a dollar
amount per single Certificate of the relevant class specified in the related
prospectus supplement. The report to certificateholders for any series of
Certificates may include additional or other information of a similar nature to
that specified above.


                                       41



      In addition, within a reasonable period of time after the end of each
calendar year, the Master Servicer or the Trustee will mail to each
certificateholder of record at any time during that calendar year a report:

      o   as to the aggregate of amounts reported pursuant to clauses (i) and
          (ii) for that calendar year or, if a person was a certificateholder of
          record during a portion of that calendar year, for the applicable
          portion of that year; and

      o   other customary information as is necessary or desirable for
          certificateholders to prepare their tax returns.

                               CREDIT ENHANCEMENT

GENERAL

      Credit enhancement may be provided with respect to one or more classes of
a series of Certificates or with respect to the Mortgage Assets in the related
Trust Estate. Credit enhancement may be only in the form of any one or more of
the following:

      o   subordination;

      o   limited guarantee;

      o   financial guaranty insurance policy or surety bond;

      o   letter of credit;

      o   mortgage pool insurance policy;

      o   special hazard insurance policy;

      o   mortgagor bankruptcy bond;

      o   reserve fund;

      o   cross-collateralization;

      o   overcollateralization;

      o   excess interest;

      o   cash flow agreements;

      o   fraud waiver; or

      o   FHA insurance or a VA guarantee.

If losses occur which exceed the amount covered by credit enhancement or which
are not covered by the credit enhancement, certificateholders will bear their
allocable share of any deficiencies.

      If specified in the related prospectus supplement, the coverage provided
by one or more forms of credit enhancement may apply concurrently to two or more
related Trust Estates. If applicable, the related prospectus supplement will
identify the Trust Estates to which the credit enhancement relates and the
manner of determining the amount of the coverage provided thereby and of the
application of the coverage to the identified Trust Estates.


                                       42



      The applicable prospectus supplement will describe the material terms of
such credit enhancement, including any limits on the timing or amount of such
credit enhancement or any conditions that must be met before such credit
enhancement may be accessed. If the provider of the credit enhancement is liable
or contingently liable to provide payments representing 10% or more of the cash
flow supporting any offered class of Certificates, the applicable prospectus
supplement will disclose the name of the provider, the organizational form of
the provider, the general character of the business of the provider and
financial information required by Item 1114(b)(2) of Regulation AB (17 C.F.R.
ss. 229.1114). Copies of the limited guarantee, financial guaranty insurance
policy, surety bond, letter of credit, pool insurance policy, mortgagor
bankruptcy bond, special hazard insurance policy or Cash Flow Agreement, if any,
relating to a series of Certificates will be filed with the SEC as an exhibit to
a Current Report on Form 8-K.

SUBORDINATION

      If so specified in the related prospectus supplement, the rights of
holders of one or more classes of subordinate Certificates will be subordinate
to the rights of holders of one or more classes of senior Certificates of that
series to distributions in respect of scheduled principal, principal
prepayments, interest or any combination thereof that otherwise would have been
payable to holders of subordinate Certificates under the circumstances and to
the extent specified in the related prospectus supplement. If so specified in
the related prospectus supplement, certain classes of subordinate Certificates
may be senior to other classes of Subordinate Certificates and be rated
investment grade. If specified in the related prospectus supplement, delays in
receipt of scheduled payments on the Mortgage Assets and certain losses with
respect to the Mortgage Assets will be borne first by the various classes of
subordinate Certificates and thereafter by the various classes of senior
Certificates, in each case under the circumstances and subject to the
limitations specified in the related prospectus supplement. The aggregate
distributions in respect of delinquent payments on the Mortgage Assets over the
lives of the Certificates or at any time, the aggregate losses in respect of
Mortgage Assets which must be borne by the subordinate Certificates because of
subordination and the amount of distributions otherwise distributable to
subordinate certificateholders that will be distributable to senior
certificateholders on any Distribution Date may be limited as specified in the
related prospectus supplement. If aggregate distributions in respect of
delinquent payments on the Mortgage Assets or aggregate losses in respect of the
Mortgage Assets were to exceed the amount specified in the related prospectus
supplement, senior certificateholders would experience losses on their
Certificates.

      If specified in the related prospectus supplement, various classes of
senior certificates and subordinate Certificates may themselves be subordinate
in their right to receive certain distributions to other classes of senior
Certificates and subordinate Certificates through a cross-collateralization
mechanism or otherwise.

      As between classes of senior Certificates and as between classes of
subordinate Certificates, distributions may be allocated among those classes:

      o   in the order of their scheduled final distribution dates;

      o   in accordance with a schedule or formula;

      o   in relation to the occurrence of events; or

      o   otherwise, as specified in the related prospectus supplement.

LIMITED GUARANTEE

      If specified in the prospectus supplement for a series of Certificates,
credit enhancement may be provided in the form of a limited guarantee issued by
a guarantor named in that prospectus supplement. The limited guarantee may cover
deficiencies in amounts otherwise payable on some or all of the Certificates of
a series. The limited guarantee may cover timely distributions of interest or
full distributions of principal or both on the basis of a schedule of principal
distributions set forth in or determined in the manner specified in the related
prospectus supplement. The limited guarantee may provide additional protection
against losses on the Mortgage Loans included in a Trust Estate, provide payment
of administrative expenses, or establish a minimum reinvestment rate on


                                       43



the payments made on the Mortgage Loans or principal payment rate on the
Mortgage Loans. A limited guarantee will be limited in amount to the dollar
amount or percentage of the principal balance of the Mortgage Loans or
Certificates specified in the applicable prospectus supplement.

FINANCIAL GUARANTY INSURANCE POLICY OR SURETY BOND

      If specified in the prospectus supplement for a series of Certificates,
credit enhancement may be provided in the form of a financial guaranty insurance
policy or a surety bond issued by one or more insurers named in that prospectus
supplement. The financial guarantee insurance policy will guarantee, with
respect to one or more classes of Certificates of the related series, timely
distributions of interest and ultimate distributions of principal at the dates
set forth in or determined in the manner specified in the prospectus supplement.
If specified in the prospectus supplement, the financial guaranty insurance
policy will also guarantee against any payment made to a Certificateholder that
is subsequently recovered as a preferential transfer under the Bankruptcy Code.

LETTER OF CREDIT

      If specified in the prospectus supplement for a series of Certificates,
credit enhancement may be provided by a letter of credit issued by a bank or
other financial institution specified in the applicable prospectus supplement.
Under the letter of credit, the provider will be obligated to pay up to an
aggregate fixed dollar amount, net of previous drawings on the letter, equal to
the percentage specified in the prospectus supplement of the unpaid principal
balance of the Mortgage Loans or of one or more classes of Certificates. If
specified in the prospectus supplement, the letter of credit may permit drawings
in the event of losses not covered by insurance policies or other credit
support, such as losses arising from damage not covered by standard hazard
insurance policies, losses resulting from the bankruptcy of a borrower and the
application of certain provisions of the Bankruptcy Code, or losses resulting
from the denial of insurance coverage due to misrepresentations in connection
with the origination of a Mortgage Loan. The amount available under the letter
of credit will, in all cases, be reduced to the extent of the unreimbursed
payments previously paid. The obligations of the provider under the letter of
credit for each series of Certificates will expire at the earlier of the date
specified in the prospectus supplement or the termination of the Trust.

MORTGAGE POOL INSURANCE POLICY

      If specified in the prospectus supplement relating to a series of
Certificates, credit enhancement may be provided by a mortgage pool insurance
policy for the Mortgage Loans in the related Trust Estate. Each mortgage pool
insurance policy, in accordance with the limitations described in this
prospectus and in the prospectus supplement, if any, will cover any loss by
reason of default on a Mortgage Loan in an amount equal to a percentage
specified in the applicable prospectus supplement of the unpaid principal
balance of the Mortgage Loans. As described under "The Pooling and Servicing
Agreement--Primary Mortgage Insurance," the Master Servicer generally will be
required to use its best efforts to maintain the mortgage pool insurance policy
and to present claims to the pool insurer. The mortgage pool insurance policies,
however, are not blanket policies against loss, since claims may only be made
respecting particular defaulted mortgage loans and only upon satisfaction of
specified conditions precedent described below. The mortgage pool insurance
policies will generally not cover losses due to a failure to pay or denial of a
claim under a primary mortgage insurance policy, regardless of the reason for
nonpayment.

      As more specifically provided in the related prospectus supplement, each
mortgage pool insurance policy will provide for conditions under which claims
may be presented and covered under the policy. Upon satisfaction of these
conditions, the pool insurer will have the option either (a) to purchase the
property securing the defaulted Mortgage Loan at a price equal to its unpaid
principal balance plus accrued and unpaid interest at the applicable mortgage
interest rate to the date of purchase plus certain Advances, or (b) to pay the
amount by which the sum of the unpaid principal balance of the defaulted
Mortgage Loan plus accrued and unpaid interest at the mortgage interest rate to
the date of payment of the claim plus certain Advances exceeds the proceeds
received from an approved sale of the Mortgaged Property, in either case net of
certain amounts paid or assumed to have been paid under any related primary
mortgage insurance policy.


                                       44



      Certificateholders may experience a shortfall in the amount of interest
payable on the related Certificates in connection with the payment of claims
under a mortgage pool insurance policy because the pool insurer is only required
to remit unpaid interest through the date a claim is paid rather than through
the end of the month in which the claim is paid. In addition, Certificateholders
may also experience losses with respect to the related Certificates in
connection with payments made under a mortgage pool insurance policy to the
extent that the related Servicer expends funds to cover unpaid real estate taxes
or to repair the related Mortgaged Property in order to make a claim under a
mortgage pool insurance policy, as those amounts will not be covered by payments
under the policy and will be reimbursable to the related Servicer from funds
otherwise payable to the Certificateholders. If any Mortgaged Property securing
a defaulted Mortgage Loan is damaged and proceeds, if any, from the related
hazard insurance policy or applicable special hazard insurance policy are
insufficient to restore the damaged property to a condition sufficient to permit
recovery under the mortgage pool insurance policy, a Servicer will generally not
be required to expend its own funds to restore the damaged property unless it
determines that (a) restoration will increase the proceeds to one or more
classes of Certificates on liquidation of the Mortgage Loan after reimbursement
of the related Servicer for its expenses and (b) the expenses will be
recoverable by it through Liquidation Proceeds or insurance proceeds.

      A mortgage pool insurance policy and some primary mortgage insurance
policies will generally not insure against loss sustained by reason of a default
arising from, among other things, fraud or negligence in the origination or
servicing of a Mortgage Loan, including misrepresentation by the mortgagor, the
seller, or other persons involved in the origination or the Mortgage Loan,
failure to construct a Mortgaged Property in accordance with plans and
specifications, or bankruptcy, unless, as specified in the related prospectus
supplement, an endorsement to the mortgage pool insurance policy provides for
insurance against that type of loss.

      The original amount of coverage under each mortgage pool insurance policy
will be reduced over the life of the related series of Certificates by the
aggregate amount of claims paid, less the aggregate of the net amounts realized
by the pool insurer upon disposition of all foreclosed properties. The amount of
claims paid includes some expenses incurred by the related Servicer or Master
Servicer as well as accrued interest on delinquent Mortgage Loans to the date of
payment of the claim. Accordingly, if aggregate net claims paid under any
mortgage pool insurance policy reach the original policy limit, coverage under
that mortgage pool insurance policy will be exhausted and any further losses
will be borne by the related Certificates, to the extent not covered by other
credit enhancement.

SPECIAL HAZARD INSURANCE POLICY

      Any insurance policy covering special hazard losses obtained for a Trust
will be issued by the insurer named in the related prospectus supplement. Each
special hazard insurance policy will be subject to limitations described in this
paragraph and in the related prospectus supplement, if any, and will protect the
related Certificateholders from special hazard losses. Aggregate claims under a
special hazard insurance policy will be limited to the amount set forth in the
related pooling and servicing agreement and will be subject to reduction as
described in the related pooling and servicing agreement. A special hazard
insurance policy will provide that no claim may be paid unless hazard insurance
and, if applicable, flood insurance on the Mortgaged Property securing the
Mortgage Loan has been kept in force and other protection and preservation
expenses have been paid by the related Servicer or Master Servicer, as the case
may be.

      In accordance with the foregoing limitations, a special hazard insurance
policy will provide that, where there has been damage to the Mortgaged Property
securing a foreclosed Mortgage Loan, title to which has been acquired by the
insured, and to the extent the damage is not covered by the hazard insurance
policy or flood insurance policy, if any, maintained by the mortgagor or the
related Servicer or Master Servicer, as the case may be, the insurer will pay
the lesser of (i) the cost of repair or replacement of the related Mortgaged
Property or (ii) upon transfer of the property to the insurer, the unpaid
principal balance of the Mortgage Loan at the time of acquisition of the related
property by foreclosure or deed in lieu of foreclosure, plus accrued interest at
the mortgage interest rate to the date of claim settlement and certain expenses
incurred by the related Servicer or the Master Servicer, as the case may be,
with respect to the related Mortgaged Property.

      If the Mortgaged Property is transferred to a third party in a sale
approved by the special hazard insurer, the amount that the special hazard
insurer will pay will be the amount under (ii) above, reduced by the net
proceeds of


                                       45



the sale of the Mortgaged Property. If the unpaid principal balance
plus accrued interest and certain Advances is paid by the special hazard
insurer, the amount of further coverage under the related special hazard
insurance policy will be reduced by that amount, less any net proceeds from the
sale of the Mortgaged Property. Any amount paid as the cost of repair of the
property will further reduce coverage by that amount. Restoration of the
property with the proceeds described under (i) above will satisfy the condition
under any mortgage pool insurance policy that the property be restored before a
claim under the policy may be validly presented with respect to the defaulted
Mortgage Loan secured by the related Mortgaged Property. The payment described
under (ii) above will render presentation of a claim relating to a Mortgage Loan
under the related mortgage pool insurance policy unnecessary. Therefore, so long
as a mortgage pool insurance policy remains in effect, the payment by the
insurer under a special hazard mortgage insurance policy of the cost of repair
or of the unpaid principal balance of the related Mortgage Loan plus accrued
interest and certain Advances will not affect the total insurance proceeds paid
to Certificateholders, but will affect the relative amounts of coverage
remaining under the related special hazard insurance policy and mortgage pool
insurance policy.

MORTGAGOR BANKRUPTCY BOND

      If specified in the related prospectus supplement, a bankruptcy bond to
cover losses resulting from proceedings under the federal Bankruptcy Code with
respect to a Mortgage Loan will be issued by an insurer named in the prospectus
supplement. Each bankruptcy bond will cover, to the extent specified in the
related prospectus supplement, certain losses resulting from a reduction by the
court of scheduled payments of principal and interest on a Mortgage Loan or a
reduction by the court of the unpaid principal balance of a Mortgage Loan and
will cover certain unpaid interest on the amount of the principal reduction from
the date of the filing of a bankruptcy petition. The required amount of coverage
under each bankruptcy bond will be set forth in the prospectus supplement.

RESERVE FUND

      If specified in the applicable prospectus supplement, credit enhancement
with respect to a series of Certificates may be provided by the establishment of
one or more reserve funds for the series. Any reserve fund for a series may be
funded (i) by a deposit of cash, U.S. Treasury securities or instruments
evidencing entitlements to principal or interest payments, letters of credit,
demand notes, certificates of deposit or a combination of these in the aggregate
amount specified in the applicable prospectus supplement or (ii) by the deposit
from time to time of certain amounts received on or in respect of the related
Mortgage Loans, as specified in the applicable prospectus supplement.

      If specified in the prospectus supplement, reserve funds may be
established to provide limited protection, in an amount satisfactory to each
Rating Agency, against certain interest shortfalls arising from the timing of
principal prepayments, certain types of losses not covered by insurance policies
or other credit support, such as losses arising from damage not covered by
standard hazard insurance policies, losses resulting from the bankruptcy of a
borrower and the application of certain provisions of the Bankruptcy Code, or
losses resulting from denial of insurance coverage due to fraud or
misrepresentation in connection with the origination of a Mortgage Loan.
Following each Distribution Date, amounts in a reserve fund in excess of any
required reserve fund amount may be released from the reserve fund under the
conditions and to the extent specified in the prospectus supplement and will not
be available for further application to the related Certificates.

      If specified in the prospectus supplement, any reinvestment income or
other gain from investments in eligible investments will be credited to the
related reserve fund for the series, and any loss resulting from the investments
will be charged to the reserve fund. The reserve fund for a series will not be a
part of the Trust Estate.

      Additional information concerning any reserve fund will be set forth in
the prospectus supplement, including the initial balance of the reserve fund,
the required reserve fund balance to be maintained, the purposes for which funds
in the reserve fund may be applied to make distributions to Certificateholders
and use of investment earnings from the reserve fund, if any.


                                       46



CROSS-COLLATERALIZATION

      If specified in the applicable prospectus supplement, the beneficial
ownership of separate groups of Mortgage Loans included in a Trust Estate may be
evidenced by separate classes of Certificates. In this case, credit support may
be provided by a cross-collateralization feature which requires that
distributions be made to certain classes from Mortgage Loan payments that would
otherwise be distributed to Subordinate Certificates evidencing a beneficial
ownership interest in other loan groups within the same Trust Estate. As a
result, the amount of credit enhancement available to a class of Certificates
against future losses on the Mortgage Loans in which that class represents an
interest may be reduced as the result of losses on a group of Mortgage Loans in
which that class has no interest. The applicable prospectus supplement for a
series that includes a cross-collateralization feature will describe its
specific operation.

OVERCOLLATERALIZATION

      If specified in the applicable prospectus supplement, subordination
provisions of a series may be used to accelerate to a limited extent the
amortization of one or more classes of Certificates relative to the amortization
of the related Mortgage Loans. The accelerated amortization is achieved by the
application of certain excess interest to the payment of principal of one or
more classes of Certificates. This acceleration feature creates, with respect to
the Mortgage Loans or a group of Mortgage Loans, overcollateralization which
results from the excess of the aggregate principal balance of the related
Mortgage Loans, or group of Mortgage Loans, over the class balance of the
related class or classes of Certificates. This acceleration may continue for the
life of the related Certificates, or may have a shorter duration. In the case of
limited acceleration, once the required level of overcollateralization is
reached, and subject to certain provisions specified in the related prospectus
supplement, this limited acceleration feature may cease, unless necessary to
maintain the required level of overcollateralization.

EXCESS INTEREST

      If specified in the applicable prospectus supplement, the Mortgage Loans
in a Trust may generate more interest than is necessary to pay the interest
earned on the classes of Certificates each month. The excess interest may be
used to maintain overcollateralization, to pay interest that was previously
earned but not paid to certain classes of Certificates and to reimburse certain
classes of Certificates for losses and certain shortfalls that they experienced
previously.

CASH FLOW AGREEMENTS

      If specified in the prospectus supplement, the Trust Estate may include
cash flow agreements consisting of one or more guaranteed investment contracts,
swap agreements or interest rate cap or floor agreements (also called yield
maintenance agreements), each of which agreements is intended to reduce the
effects of interest rate fluctuations on the assets or on one or more classes of
Certificates (each, a "CASH FLOW AGREEMENT"). The applicable prospectus
supplement will describe the name, organizational form and general character of
the business of the counterparty under any Cash Flow Agreement. In addition, the
prospectus supplement for the related series of Certificates will disclose
whether the significance percentage is less than 10%, at least 10% but less than
20%, or more than 20%, calculated in accordance with Item 1115 of Regulation AB
(17 C.F.R. ss. 229.1115). To the extent this percentage is (a) 10% or more but
less than 20%, the related prospectus supplement will provide financial data
required by Item 301 of Regulation S-K (17 C.F.R. ss. 229.301) or (b) greater
than 20%, the related prospectus supplement will provide financial statements
required by Item 1115(b)(2) of Regulation AB (17 C.F.R. ss. 229.1115) and, in
either case, the related prospectus supplement will contain a description of the
operation and material terms of the Cash Flow Agreement, including, without
limitation, conditions to payment or limits on the timing or amount of payments
and material provisions relating to the termination of the Cash Flow Agreement
or the substitution of another Cash Flow Agreement for the Cash Flow Agreement.
Copies of the Cash Flow Agreement, if any, relating to a series of Certificates
will be filed with the Commission as an exhibit to a Current Report on Form 8-K.

      Guaranteed Investment Contracts. If specified in the related prospectus
supplement, the Trustee on behalf of the Trust may enter into one or more
guaranteed investment contracts. Guaranteed investment contracts are generally
used to maximize the investment income on funds held between Distribution Dates
pending distribution to Certificateholders. Under a guaranteed investment
contract, the issuer of the contract, which is typically a highly


                                       47



rated financial institution, guarantees a fixed or floating rate of interest
over the life of the contract, as well as the ultimate return of principal. Any
payments received from the issuer of the contract by the Trust will be
distributed to the related class or classes of Certificates as specified in the
applicable prospectus supplement.

      Yield Maintenance Agreements. If specified in the related prospectus
supplement, the Trustee on behalf of the Trust will enter into one or more yield
maintenance agreements in order to support the yield on one or more classes of
Certificates. The counterparty to a yield maintenance agreement will receive an
upfront payment and the Trust will have no ongoing payment obligations.
Generally, if the index specified in the applicable prospectus supplement, which
index will be one-month, three-month, six-month or one-year LIBOR, CMT, COFI,
MTA or the Prime Rate, exceeds a percentage for a particular date specified in
the applicable prospectus supplement, the counterparty to the yield maintenance
agreement will be required to pay to the Trustee an amount equal to that excess,
multiplied by a notional amount or the class certificate balance or balances of
one or more classes of Certificates, multiplied by one-twelfth. This amount may
be adjusted to reflect the actual number of days in the interest accrual period
for the related class or classes of Certificates and will be paid to the class
or classes of Certificates as specified in the related prospectus supplement.

      Swap Agreements. If specified in the related prospectus supplement, the
Trustee on behalf of the Trust will enter into a swap agreement to support the
yield on one or more classes of Certificates. Under the swap agreement, the
Trust will be obligated to pay an amount equal to a certain percentage of a
notional amount set forth in the related prospectus supplement to the
counterparty, and the Trust will be entitled to receive an amount equal to
one-month, three-month, six-month or one-year LIBOR, CMT, COFI, MTA or the Prime
Rate on the notional amount from the counterparty, until the swap agreement is
terminated. Only the net amount of the two obligations will be paid by the
appropriate party. In the event that the Trust is required to make a payment to
the counterparty, that payment will be paid on the related Distribution Date
prior to distributions to Certificateholders. Generally, any payments received
from the counterparty by the Trust will be distributed to cover certain
shortfalls as set forth in the applicable prospectus supplement.

      If specified in the related prospectus supplement, the Trustee on behalf
of the Trust will enter into one or more swap agreements to cover any shortfalls
on one or more classes of Certificates in the event those Certificates are
auctioned to third-party investors on a date specified in the related prospectus
supplement and the proceeds from the auction are less than the outstanding class
certificate balance of the applicable class or classes of Certificates plus any
accrued and unpaid interest. In the event the proceeds from the auction are
greater than the outstanding class certificate balance of the applicable class
or classes of Certificates plus any accrued and unpaid interest, this excess
will be paid to the counterparty or counterparties under the swap agreement(s).
See "Risk Factors--Amounts Received from the Auction and the Swap Agreement May
Be Insufficient to Assure Completion of the Auction" and "--Mandatory Auction of
Certificates" in this prospectus.

FRAUD WAIVER

      If so specified in the related prospectus supplement, a letter may be
obtained from the issuer of a pool insurance policy waiving the right of the
insurer to deny a claim or rescind coverage under the related pool insurance
policy by reason of fraud, dishonesty or misrepresentation in connection with
the origination of, or application for insurance for, the related Mortgage Loan
or the denial or adjustment of coverage under any related primary mortgage
insurance policy because of that fraud, dishonesty or misrepresentation. In
these circumstances, the issuer of the pool insurance policy will be indemnified
by the Sponsor for the amount of any loss paid by the issuer of the pool
insurance policy under the terms of the waiver letter. The maximum aggregate
amount of these fraud losses covered under the waiver letter and the period of
time during which the coverage will be provided will be specified in the related
prospectus supplement.

FHA INSURANCE OR VA GUARANTEE

      The Housing Act authorizes various FHA mortgage insurance programs. If so
specified in the related prospectus supplement, some of the Mortgage Loans may
be insured under either Section 203(b), Section 234 or Section 235 of the
Housing Act. Under Section 203(b), the FHA insures mortgage loans of up to 30
years' duration for the purchase of one- to four-family dwelling units. Mortgage
loans for the purchase of condominium units are insured by the FHA under Section
234. Loans insured under these programs must bear interest at a rate not


                                       48



exceeding the maximum rate in effect at the time the loan is made, as
established by HUD, and may not exceed specified percentages of the lesser of
the appraised value of the property and the sales price, less seller-paid
closing costs for the property, up to certain specified maximums. In addition,
the FHA imposes initial investment minimums and other requirements on mortgage
loans insured under the Section 203(b) and Section 234 programs.

      Under Section 235, assistance payments are paid by HUD to the mortgagee on
behalf of eligible mortgagors for as long as the mortgagors continue to be
eligible for the payments. To be eligible, a mortgagor must be part of a family,
have income within the limits prescribed by HUD at the time of initial
occupancy, occupy the property and meet requirements for recertification at
least annually.

      The regulations governing these programs provide that insurance benefits
are payable either upon foreclosure, or other acquisition of possession, and
conveyance of the mortgaged premises to HUD or upon assignment of the defaulted
mortgage loan to HUD. The FHA insurance that may be provided under these
programs upon the conveyance of the home to HUD is equal to 100% of the
outstanding principal balance of the mortgage loan, plus accrued interest, as
described below, and certain additional costs and expenses. When entitlement to
insurance benefits results from assignment of the mortgage loan to HUD, the
insurance payment is computed as of the date of the assignment and includes the
unpaid principal amount of the mortgage loan plus mortgage interest accrued and
unpaid to the assignment date.

      When entitlement to insurance benefits results from foreclosure (or other
acquisition of possession) and conveyance, the insurance payment is equal to the
unpaid principal amount of the mortgage loan, adjusted to reimburse the
mortgagee for certain tax, insurance and similar payments made by it and to
deduct certain amounts received or retained by the mortgagee after default, plus
reimbursement not to exceed two-thirds of the mortgagee's foreclosure costs. Any
FHA insurance relating to contracts underlying a series of Certificates will be
described in the accompanying prospectus supplement.

      The Servicemen's Readjustment Act of 1944, as amended, permits a veteran,
or, in certain instances, his or her spouse, to obtain a mortgage loan guaranty
by the VA, covering mortgage financing of the purchase of a one- to four-family
dwelling unit to be occupied as the veteran's home, at an interest rate not
exceeding the maximum rate in effect at the time the loan is made, as
established by HUD. The program has no limit on the amount of a mortgage loan,
requires no down payment from the purchaser and permits the guaranty of mortgage
loans with terms, limited by the estimated economic life of the property, up to
30 years. The maximum guaranty that may be issued by the VA under this program
is 50% of the original principal amount of the mortgage loan up to a certain
dollar limit established by the VA. The liability on the guaranty is reduced or
increased pro rata with any reduction or increase in the amount of indebtedness,
but in no event will the amount payable on the guaranty exceed the amount of the
original guaranty. Notwithstanding the dollar and percentage limitations of the
guaranty, a mortgagee will ordinarily suffer a monetary loss only when the
difference between the unsatisfied indebtedness and the proceeds of a
foreclosure sale of mortgaged premises is greater than the original guaranty as
adjusted. The VA may, at its option, and without regard to the guaranty, make
full payment to a mortgagee of the unsatisfied indebtedness on a mortgage upon
its assignment to the VA.

      Since there is no limit imposed by the VA on the principal amount of a
VA-guaranteed mortgage loan but there is a limit on the amount of the VA
guaranty, additional coverage under a primary mortgage insurance policy may be
required by the Depositor for VA loans in excess of certain amounts. The amount
of any additional coverage will be described in the accompanying prospectus
supplement. Any VA guaranty relating to contracts underlying a series of
Certificates will be described in the accompanying prospectus supplement.

                       PREPAYMENT AND YIELD CONSIDERATIONS

      The yields to maturity and weighted average lives of Certificates will be
affected primarily by the amount and timing of principal payments received on or
in respect of the Mortgage Loans included in the related Trust Estate. The
original terms to maturity of the Mortgage Loans in a given mortgage pool will
vary depending upon the type of Mortgage Loans in the pool. Each prospectus
supplement will contain information with respect to the type and maturities of
the Mortgage Loans in the related mortgage pool. Mortgage Loans may be prepaid
without penalty


                                       49



in full or in part at any time except as specified in the prospectus supplement.
The prepayment experience on the Mortgage Loans in a mortgage pool will affect
the life of the related series of certificates.

FACTORS AFFECTING PREPAYMENT

      A number of factors, including, but not limited to, homeowner mobility,
economic conditions, the presence and enforceability of due-on-sale clauses,
mortgage market interest rates and the availability of mortgage funds, may
affect prepayment experience of mortgage loans.

      The Mortgage Loans may be partially or fully repaid at any time.
Fixed-rate Mortgage Loans generally will contain "due-on-sale" clauses that
permit the mortgagee to accelerate the maturity of a Mortgage Loan upon the
conveyance of the related mortgaged property. Adjustable-rate Mortgage Loans
generally will permit creditworthy borrowers to assume a Mortgage Loan upon a
transfer of the related mortgaged property.

      The rate of prepayments with respect to mortgage loans has fluctuated
significantly in recent years. In general, if prevailing rates fall
significantly below the mortgage rates borne by the Mortgage Loans, the Mortgage
Loans are likely to be subject to higher prepayment rates than if prevailing
interest rates remain at or above those mortgage rates. Conversely, if
prevailing interest rates rise appreciably above the mortgage rates borne by the
Mortgage Loans, the Mortgage Loans are likely to experience a lower prepayment
rate than if prevailing rates remain at or below those mortgage rates. However,
there can be no assurance that this will be the case.

EFFECT OF PRINCIPAL PREPAYMENTS

      When a Mortgage Loan is prepaid in full, the mortgagor pays interest on
the amount prepaid only to the date of prepayment. Liquidation proceeds and
amounts received in settlement of insurance claims are also likely to include
interest only to the time of payment or settlement. When a Mortgage Loan is
prepaid in full or in part, an interest shortfall may result depending on the
timing of the receipt of the prepayment and the timing of when those prepayments
are passed through to Certificateholders. To partially mitigate this reduction
in yield, the pooling and servicing agreement relating to a series may provide
that with respect to certain principal prepayments received, the Master Servicer
will be obligated to pay an amount equal to the lesser of (i) the aggregate
interest shortfall for that Distribution Date resulting from principal
prepayments and (ii) all or a portion of the Master Servicer's servicing
compensation for that Distribution Date, as specified in the applicable
prospectus supplement. Any interest shortfall arising from liquidations will be
covered by means of the subordination of the rights of subordinate
certificateholders or any other credit support arrangements.

      A lower rate of principal prepayments than anticipated would negatively
affect the total return to investors in any Certificates of a series that are
offered at a discount to their principal amount and a higher rate of principal
prepayments than anticipated would negatively affect the total return to
investors in the Certificates of a series that are offered at a premium to their
principal amount. The yield on Certificates that are entitled solely or
disproportionately to distributions of principal or interest may be particularly
sensitive to prepayment rates, and further information relating to yield on
those Certificates will be included in the applicable prospectus supplement.

WEIGHTED AVERAGE LIFE OF CERTIFICATES

      Prepayments on mortgage loans are commonly measured relative to a
prepayment standard or model. The prepayment model, if any, used with respect to
a particular series will be identified and described in the related prospectus
supplement. The prospectus supplement for a series of Certificates may contain
tables setting forth percentages of the initial certificate balance of each
class expected to be outstanding after each of the dates shown in each table.
Any table will be based upon a number of assumptions stated in the prospectus
supplement, including assumptions that prepayments on the mortgage loans
underlying the related Mortgage Certificates or on the Mortgage Loans are made
at rates corresponding to various percentages of the specified prepayment model.
It is unlikely, however, that the prepayment of the mortgage loans underlying
the Mortgage Certificates, or of the Mortgage Loans, underlying any series will
conform to any of the percentages of the prepayment model described in a table.


                                       50



      The rate of principal prepayments on pools of mortgage loans underlying
the Mortgage Certificates and on the Mortgage Loans is influenced by a variety
of economic, geographic, social and other factors. In general, however, if
prevailing interest rates fall significantly below the interest rates on those
mortgage loans or on the Mortgage Loans included in a Trust Estate, those
mortgage loans or Mortgage Loans are likely to be the subject of higher
principal prepayments than if prevailing rates remain at or above the rates
borne by those mortgage loans or Mortgage Loans. Conversely, if prevailing
interest rates rise appreciably above the interest rates on those mortgage loans
or on the rates borne by the Mortgage Loans included in a Trust Estate, those
mortgage loans or Mortgage Loans are likely to experience a lower prepayment
rate than if prevailing rates remain at or below the rates borne by those
mortgage loans or Mortgage Rates. Other factors affecting prepayment of mortgage
loans and Mortgage Loans include changes in mortgagors' housing needs, job
transfers, unemployment, mortgagors' net equity in the properties securing the
mortgage loans and Mortgage Loans and servicing decisions. However, because many
different factors affect prepayment behavior, as described above, prepayments
may not rise or fall in direct relation to changes in mortgage interest rates.
It should be noted that Certificates of a series may evidence an interest in a
Trust Estate with Mortgage Loans with different mortgage interest rates.

      Prepayments may also result from the enforcement of any "due-on-sale"
provisions contained in a mortgage note permitting the holder of the mortgage
note to demand immediate repayment of the outstanding balance of the Mortgage
Loan upon conveyance by the Mortgagor of the underlying Mortgaged Property. The
Master Servicer will agree that it or the applicable subservicer will enforce
any "due-on-sale" clause to the extent it has knowledge of the conveyance or
proposed conveyance of the underlying Mortgaged Property and reasonably believes
that it is entitled to do so under applicable law; provided, however, that the
Master Servicer or the subservicer will not take any action in relation to the
enforcement of any "due-on-sale" provision which would impair or threaten to
impair any recovery under any related Primary Mortgage Insurance Policy. Under
current law, that exercise is permitted for substantially all the mortgage loans
which contain those clauses. Acceleration is not permitted, however, for certain
types of transfers, including transfers upon the death of a joint tenant or
tenant by the entirety and the granting of a leasehold interest of three years
or less not containing an option to purchase. See the related prospectus
supplement for a description of certain provisions of each pooling and servicing
agreement and certain legal developments that may affect the prepayment
experience on the Mortgage Loans.

      The Sponsor, Originator or Depositor, as specified in the related
prospectus supplement, will be obligated, under the circumstances specified in
"The Pooling and Servicing Agreement--Assignment of Mortgage Loans to the
Trustee," to repurchase Mortgage Loans that have breached representations or
warranties, or with respect to which all proper documentation has not been
delivered to the Trustee. In addition, if so specified in the applicable
prospectus supplement, the Depositor or another person identified therein will
have the option to purchase all, but not less than all, of the Mortgage Assets
in any Trust Estate under the limited conditions specified in the prospectus
supplement. For any series of Certificates for which an election has been made
to treat the Trust Estate (or one or more segregated pools of assets in the
Trust Estate) as a REMIC, any purchase or repurchase may be effected only
pursuant to a "qualified liquidation," as defined in Code Section 860F(a)(4)(A).
See "The Pooling and Servicing Agreement--Termination; Repurchase of Mortgage
Loans and Mortgage Certificates." Any purchase or repurchase of Mortgage Assets
will shorten the weighted average life of one or more classes of Certificates of
the related series.

SCHEDULED DELAYS IN DISTRIBUTIONS

      Upon the issuance of Certificates of a series offered by this prospectus
and the applicable prospectus supplement, the initial purchasers may be required
to pay for accrued interest at the applicable pass-through rate from the Cut-off
Date for that series to the date of issuance. The effective yield to
certificateholders will be below the yield otherwise produced by the applicable
pass-through rate because the distribution of principal and interest that is due
on each due date will not be made until the Distribution Date in the month in
which that due date occurs.

                                   THE SPONSOR

      Bank of America, National Association ("BANK OF AMERICA") will serve as
sponsor (the "SPONSOR") of each series of Certificates. Bank of America is an
indirect wholly-owned subsidiary of Bank of America Corporation. Bank of America
is engaged in a general consumer banking, commercial banking, and trust
business, offering a wide range of commercial, corporate, international,
financial, market, retail, and fiduciary banking


                                       51



services. Bank of America is a national banking association chartered by the
Office of the Comptroller of the Currency (the "OCC") and is subject to the
regulation, supervision, and examination of the OCC.

      Bank of America and its affiliates have been active in the securitization
market since inception, and Bank of America has sponsored publicly offered
securitization transactions since 1977. Bank of America and its affiliates have
been involved with the origination of auto loans, student loans, home equity
loans, credit card receivables, manufactured housing contracts, residential
mortgage loans and commercial mortgage loans, as well as less traditional asset
classes. Bank of America and its affiliates have also participated in a variety
of collateralized loan obligation transactions, synthetic securitizations, and
asset-backed commercial paper programs. Bank of America and its affiliates have
served as sponsors, issuers, dealers, and servicers in a wide array of
securitization transactions.

      The Depositor's securitization program principally is used by Bank of
America to finance fully amortizing prime mortgage loans secured by first liens
on one- to four-family residential properties acquired from third parties. The
Depositor's securitization program may also include mortgage loans originated
through correspondent arrangements. Bank of America currently does not rely on
securitization as a material funding source.

      The table below sets forth the number and aggregate principal balance of
mortgage loans which have been included in Trusts formed by the Depositor, which
were originated or acquired by Bank of America during the periods indicated:


                                 2002             2003              2004             2005

      Number                    1,494            4,110             13,276           29,360

      Aggregate Principal
      Balance                $299,960,769    $1,855,340,346    $4,446,655,671   $11,007,632,007


      Bank of America serves as the Sponsor, and may serve as a Servicer, in the
Depositor's securitization program, in addition to owning all of the Depositor's
equity. Banc of America Securities LLC serves as an underwriter for the
Depositor's securitization program, is an affiliate of Bank of America, and
assists Bank of America and the Depositor in connection with the selection of
mortgage loans, including the Mortgage Loans, for various transactions. See
"Plan of Distribution."

      Bank of America's headquarters and its executive offices are located at
101 South Tryon Street, Charlotte, North Carolina 28255, and the telephone
number is (704) 386-5478. Bank of America has been approved as a mortgagee and
seller/servicer by the Department of Housing and Urban Development, the Veterans
Administration, Ginnie Mae, Fannie Mae and Freddie Mac.

      See "The Mortgage Purchase Program" for information regarding Bank of
America's procedures for acquiring mortgage loans similar to the Mortgage Loans.

                                  THE DEPOSITOR

      Banc of America Funding Corporation (formerly known as NationsBanc
Montgomery Funding Corp.), a Delaware corporation (the "DEPOSITOR"), was
organized on November 28, 1994, for the limited purpose of acquiring, owning and
transferring Mortgage Assets and selling interests in Mortgage Assets or bonds
secured by Mortgage Assets. The Depositor is an indirect subsidiary of Bank of
America Corporation. It is not expected that the Depositor will have any
business operations other than offering mortgage pass-through certificates and
related activities.

      The Depositor will have limited obligations and rights under each pooling
and servicing agreement after the closing date for any series, including, but
not limited to, repurchasing Mortgage Loans due to breaches of representations
and warranties.


                                       52



      The Depositor maintains its principal office at 214 North Tryon Street,
Charlotte, North Carolina 28255. Its telephone number is (704) 386-2400.

      The Depositor and any director, officer, employee or agent of the
Depositor shall be indemnified by the Trust Estate and held harmless against any
loss, liability or expense incurred in connection with any legal action relating
to the pooling and servicing agreement or the Certificates, other than any loss,
liability or expense incurred by reason of willful misfeasance, bad faith or
gross negligence in the performance of its duties under the pooling and
servicing agreement or by reason of reckless disregard of its obligations and
duties under the pooling and servicing agreement.

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

                                 USE OF PROCEEDS

      The Depositor will use substantially all of the net proceeds received from
the sale of each series of Certificates either:

      o   to purchase the Mortgage Assets related to that series; or

      o   to return to itself the amounts previously used to effect a purchase
          of Mortgage Assets, the costs of carrying the Mortgage Assets until
          sale of the Certificates and other expenses connected with pooling the
          Mortgage Assets and issuing the Certificates.

The Depositor will use any remaining proceeds for its general corporate
purposes.

                            MORTGAGE PURCHASE PROGRAM

      Set forth below is a description of aspects of the Depositor's purchase
program for Mortgage Loans eligible for inclusion in a Trust Estate. The related
prospectus supplement will contain information regarding the origination of the
Mortgage Loans.

      The Depositor will purchase Mortgage Loans either directly or indirectly
from approved originators, which may be the Sponsor, other affiliates of the
Depositor, the Master Servicer or a Servicer. The Depositor has approved (or
will approve) individual institutions as eligible Originators by applying
certain criteria, including the Originator's depth of mortgage origination
experience, servicing experience and financial stability. From time to time,
however, the Depositor may purchase Mortgage Loans from Originators that, while
not meeting the generally applicable criteria, have been reviewed by the
Depositor and found to be acceptable as Originators of Mortgage Loans.

      If any originator or group of affiliated originators originated 10% or
more of the Mortgage Loans in a Trust Estate, the applicable prospectus
supplement will disclose the identity of the originator, and, if such originator
or group of affiliated originators originated 20% or more of the Mortgage Loans,
the applicable prospectus supplement will provide information about the
originator's form of organization and, to the extent material, a description of
the originator's origination program and how long it has been engaged in
originating mortgage loans of the same type.

      Each Mortgage Loan purchased by the Depositor must meet certain credit,
appraisal and underwriting standards, as described in the related prospectus
supplement.

      Underwriting standards are intended to evaluate the Mortgagor's credit
standing and repayment ability and the value and adequacy of the mortgaged
property as collateral. Underwriting standards are applied in a standard
procedure which complies with applicable federal and state laws and regulations.

      In determining the adequacy of the property as collateral, an appraisal is
generally made of each property considered for financing. The appraiser is
required to inspect the property and verify that it is in good condition and


                                       53



that construction, if new, has been completed. The appraisal is based on the
appraiser's judgment of values, giving appropriate weight to both the market
value of comparable properties and the cost of replacing the property.

      Certain states where the mortgaged properties may be located are
"anti-deficiency" states. This means, in general, that lenders providing credit
on one- to four-family properties in those states must look solely to the
property for repayment upon foreclosure. Underwriting standards in all states
(including anti-deficiency states) require that the underwriting officers be
satisfied that the value of the property being financed, as indicated by the
appraisal, currently supports and is anticipated to support in the future the
outstanding loan balance, and provides sufficient value to mitigate the effects
of adverse shifts in real estate values.

      The related prospectus supplement will provide a description of the
underwriting standards applied in originating the Mortgage Loans.

                         SERVICING OF THE MORTGAGE LOANS

      The servicing of the Mortgage Loans in the Trust underlying a series of
Certificates will be performed by one or more Servicers, which may include the
Sponsor or its affiliates. A master servicer, which may be the Sponsor or an
affiliate (the "Master Servicer"), may be engaged to supervise some or all of
the Servicers. The applicable prospectus supplement will identify (i) any Master
Servicer, (ii) each Servicer affiliated with the Sponsor, (iii) each Servicer
that services 10% or more of the Mortgage Loans and (iv) any other material
servicer that is responsible for performing an aspect of the servicing on which
the performance of the related Mortgage Loans or Certificates are materially
dependent.

      The following is a summary of the material servicing provisions of the
pooling and servicing agreements. A form of pooling and servicing agreement has
been filed as an exhibit to the registration statement of which this prospectus
forms a part. The pooling and servicing agreement for each series will be filed
with the Commission following the date of initial issuance of the related
Certificates.

THE MASTER SERVICER

      The Master Servicer generally will be responsible under each applicable
pooling and servicing agreement for, among other things, (i) administering and
supervising the performance by the Servicers of their duties and
responsibilities under the Underlying Servicing Agreements, (ii) oversight of
payments received on Mortgage Loans, (iii) preparation of periodic reports to
the Trustee regarding the foregoing matters, (iv) performing certain of the
servicing obligations of a terminated Servicer as described below under "--The
Servicers" and (v) making Periodic Advances of delinquent payments of principal
and interest on the Mortgage Loans to the limited extent described below under
the heading "The Pooling and Servicing Agreement--Periodic Advances and
Servicing Advances," if those amounts are not advanced by a Servicer. The Master
Servicer will also perform additional duties as described in the applicable
prospectus supplement. The Master Servicer will be entitled to receive a portion
of the interest payments on the Mortgage Loans included in the Trust Estate for
a series to cover its fees as Master Servicer or will be paid in another manner
specified in the applicable prospectus supplement. The Master Servicer may
subcontract with any other entity the obligations of the Master Servicer under
any pooling and servicing agreement. The Master Servicer will remain primarily
liable for the contractor's performance in accordance with the applicable
prospectus supplement. The Master Servicer may be released from its obligations
in certain circumstances. See "--The Servicers."

THE SERVICERS

      With respect to any series, one or more Servicers (each, a "Servicer")
specified in the applicable prospectus supplement, which may include the
Sponsor, will provide certain customary servicing functions for the Mortgage
Loans pursuant to the related pooling and servicing agreement or separate
underlying servicing agreements (each, an "Underlying Servicing Agreement") with
the Depositor or an affiliate of the Depositor. These Servicers may be the
originators of the Mortgage Loans or affiliates of the applicable originators or
third parties identified in the applicable prospectus supplement. The rights of
the Depositor or affiliate of the Depositor under the applicable Underlying
Servicing Agreements relating to the Mortgage Loans included in the Trust Estate
for a series will be


                                       54



assigned (directly or indirectly) to the Trustee for the benefit of
Certificateholders of that series. The Servicers may be entitled to withhold
their Servicing Fees and certain other fees and charges from remittances of
payments received on Mortgage Loans serviced by them.

      The duties to be performed by each Servicer include collection and
remittance of principal and interest payments on the Mortgage Loans,
administration of mortgage escrow accounts, collection of insurance claims,
foreclosure procedures, and, if necessary, the advance of funds to the extent
certain payments are not made by the mortgagor and have not been determined by
the Servicer to be not recoverable under the applicable insurance policies, from
proceeds of liquidation of those Mortgage Loans or otherwise. Each Servicer also
will provide necessary accounting and reporting services to provide required
information to the Trustee or to enable the Master Servicer to provide required
information to the Trustee for the Mortgage Loans included in the Trust Estate
for a series. Each Servicer is entitled to a periodic Servicing Fee equal to a
specified percentage of the outstanding principal balance of each Mortgage Loan
serviced by it. The obligations of a Servicer may be performed through
subservicers or vendors, provided that the Servicer remains primarily liable for
the servicing of the Mortgage Loans in the applicable Trust. In the event a
Servicer appoints a subservicer that meets the thresholds provided in Item
1108(a)(3) of Regulation AB (17 C.F.R. ss. 229.1108), the applicable prospectus
supplement will provide the disclosure required by Items 1108(b) and (c) of
Regulation AB (17 C.F.R. ss. 229.1108). In the event that such appointment
occurs after the issuance of the related series of Certificates, the Depositor
will report such appointment on Form 8-K.

      The Trustee, or if so provided in the applicable pooling and servicing
agreement, the Master Servicer, may terminate a Servicer who has failed to
comply with its covenants or breached one of its representations contained in
the applicable pooling and servicing agreement or Underlying Servicing Agreement
or in certain other circumstances. Upon termination of a Servicer by the Trustee
or the Master Servicer, the Trustee or the Master Servicer, as the case may be,
will assume certain servicing obligations of the terminated Servicer, or, at its
option, may appoint a substitute Servicer acceptable to the Trustee to assume
the servicing obligations of the terminated Servicer. Neither the Master
Servicer's nor the Trustee's obligations to act as substitute Servicer following
the termination of an Underlying Servicing Agreement or termination of the
Servicer under the applicable pooling and servicing agreement will, however,
require the Master Servicer or the Trustee, as applicable, to purchase a
Mortgage Loan from the Trust Estate due to a breach by the terminated Servicer
of a representation or warranty in respect of the Mortgage Loan.

      The Trustee or a successor servicer is entitled to be reimbursed for its
costs in effecting a servicing transfer from the predecessor servicer. In the
event that the predecessor servicer fails to reimburse the Trustee or successor
servicer, the Trustee or successor servicer will be entitled to reimbursement
from the assets of the related Trust.

      If a Servicer has executed the pooling and servicing agreement, the
pooling and servicing agreement will provide that the Servicer may not resign
from its obligations and duties under the pooling and servicing agreement for
that series, except upon its determination that its duties under the pooling and
servicing agreement are no longer permissible under applicable law. No
resignation will become effective until the Trustee for a series or a successor
servicer or Master Servicer has assumed the Servicer's obligations and duties
under the pooling and servicing agreement. If a Servicer resigns for the
foregoing reason and the Trustee is unable or unwilling to assume responsibility
for its duties under the pooling and servicing agreement, it may appoint another
institution to so act as described under "The Pooling and Servicing
Agreement--Rights Upon Event of Default" below.

      If a Servicer has executed the pooling and servicing agreement, the
pooling and servicing agreement will provide that neither the Servicer nor any
director, officer, employee or agent of the Servicer will be under any liability
to the Trust Estate or the Certificateholders, for the taking of any action or
for refraining from the taking of any action in good faith pursuant to the
pooling and servicing agreement, or for errors in judgment; provided, however,
that no Servicer nor any director, officer, employee or agent of any Servicer
will be protected against any liability that would otherwise be imposed by
reason of willful misfeasance, bad faith or gross negligence in the performance
of its duties or by reason of reckless disregard of its obligations and duties
under the pooling and servicing agreement. Each Servicer and any director,
officer, employee or agent of each Servicer shall be indemnified by the Trust
Estate and held harmless against any loss, liability or expense incurred in
connection with any legal action relating to the pooling and servicing agreement
or Underlying Servicing Agreement or the Certificates, other than any loss,
liability or expense related to any specific Mortgage Loan or Mortgage Loans and


                                       55



any loss, liability or expense incurred by reason of willful misfeasance, bad
faith or gross negligence in the performance of it duties under the pooling and
servicing agreement or Underlying Servicing Agreement or by reason of reckless
disregard of obligations and duties under the pooling and servicing agreement or
Underlying Servicing Agreement. In addition, the pooling and servicing agreement
will provide that no Servicer will be under any obligation to appear in,
prosecute or defend any legal action that is not incidental to its duties under
the pooling and servicing agreement and that in its opinion may involve it in
any expense or liability. A Servicer may, however, in its discretion, undertake
any action deemed by it necessary or desirable relating to the pooling and
servicing agreement and the rights and duties of the parties to the pooling and
servicing agreement and the interests of the Certificateholders. In this event,
the legal expenses and costs of the action and any liability resulting from it
will be expenses, costs and liabilities of the Trust and the Servicer will be
entitled to be reimbursed out of the Servicer Custodial Account, and any loss to
the Trust arising from this right of reimbursement will be allocated first to
the Subordinate Certificate of a series before being allocated to the related
Senior Certificates, or if the series does not contain Subordinate Certificates,
pro rata among the various classes of Certificates or in another manner
specified in the applicable prospectus supplement.

      Any person into which the Servicer may be merged or consolidated, or any
person resulting from any merger, conversion or consolidation to which the
Servicer is a party, or any person succeeding to the business through the
transfer of substantially all of its assets or all assets relating to the
business, or otherwise, of the Servicer will be the successor of the Servicer
under the terms of the pooling and servicing agreement for each series provided
that the successor or resulting entity is qualified to service mortgage loans
for Fannie Mae or Freddie Mac.

      The Servicer also has the right to assign its rights and delegate its
duties and obligations under the pooling and servicing agreement for each
series; provided that, if the Servicer desires to be released from its
obligations under the pooling and servicing agreement, (i) the purchaser or
transferee accepting the assignment or delegation is qualified to service
mortgage loans for Fannie Mae or Freddie Mac, (ii) the purchaser is satisfactory
to the Trustee for the series, in the reasonable exercise of its judgment, and
executes and delivers to the Trustee an agreement, in form and substance
reasonably satisfactory to the Trustee, which contains an assumption by the
purchaser or transferee of the due and punctual performance and observance of
each covenant and condition to be performed or observed by the Servicer under
the pooling and servicing agreement from and after the date of the agreement,
and (iii) each applicable Rating Agency's rating of any Certificates for the
series in effect immediately prior to the assignment, sale or transfer would not
be qualified, downgraded or withdrawn as a result of the assignment, sale or
transfer and the Certificates would not be placed on credit review status by any
Rating Agency. The Servicer will be released from its obligations under the
pooling and servicing agreement upon the assignment and delegation of its duties
and obligations, except that the Servicer will remain liable for all liabilities
and obligations incurred by it prior to the time that the conditions contained
in clauses (i), (ii) and (iii) above are met.

      In the event that there is a Master Servicer for a series, the provisions
described above will apply to the Master Servicer and substantially similar
provisions will apply to each Servicer under the Underlying Servicing
Agreements.

                       THE POOLING AND SERVICING AGREEMENT

      Set forth below is a summary of certain provisions of each pooling and
servicing agreement which are not described in other parts of this prospectus.
When particular provisions or terms used in a pooling and servicing agreement
are mentioned in this discussion, you should review those provisions in the form
of pooling and servicing agreement that was filed with the Securities and
Exchange Commission as part of the registration statement of which this
prospectus is a part.

ASSIGNMENT OF MORTGAGE LOANS TO THE TRUSTEE

   ASSIGNMENT OF MORTGAGE LOANS

      At the time of issuance of each series of Certificates, the Depositor will
cause the Mortgage Loans comprising the related Trust Estate to be assigned to
the Trustee, for the benefit of the certificateholders, together with all
principal and interest on the Mortgage Loans, except for principal and interest
due on or before the cut-off


                                       56



date set forth in the related prospectus supplement (the "CUT-OFF DATE"). The
Trustee, concurrently with that assignment, will authenticate and deliver the
Certificates to the Depositor or its designated agent in exchange for the
Mortgage Loans and other assets, if any. Each Mortgage Loan will be identified
in a schedule appearing as an exhibit to the pooling and servicing agreement.
The schedule will include the principal balance of each Mortgage Loan, the
mortgage rate, the maturity of each mortgage note and other information.

      The Depositor will deliver or cause to be delivered to the Trustee or a
custodian, as to each Mortgage Loan, all of the documents the Depositor is
required to deliver to the Trustee or a custodian under the pooling and
servicing agreement.

      Despite the requirements to deliver certain documents, a Trust Estate 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 has been lost or destroyed. With respect to these Mortgage
Loans, the Trustee may not be able to enforce the mortgage note against the
related borrower. The Depositor (or other representing party as specified in the
related prospectus supplement) will be required to agree to repurchase, or
substitute for, each Mortgage Loan that is subsequently in default if the
enforcement of the related mortgage is materially adversely affected by the
absence of the original mortgage note. The related pooling and servicing
agreement will generally require the Depositor or another party specified in the
related prospectus supplement to promptly cause the assignments of the related
loans to be delivered for recording in the appropriate public office for real
property records, except (1) in states in which, in the opinion of counsel
acceptable to the Trustee, the recording is not required to protect the
Trustee's interest in the loans against the claim of any subsequent transferee
or any successor to or creditor of the Depositor or the originator of the loans
or (2) in states where recordation is not required by the rating agencies rating
the series of Certificates.

      In lieu of the delivery requirement set forth above, with respect to any
mortgage which has been recorded in the name of Mortgage Electronic Registration
Systems, Inc. ("MERS") or its designee, no mortgage assignment in favor of the
Trustee will be required to be prepared or delivered. Instead, the Master
Servicer will be required to take all actions as are necessary to cause the
applicable Trust Estate to be shown as the owner of the related Mortgage Loan on
the records of MERS for purposes of the system of recording transfers of
beneficial ownership of mortgages maintained by MERS.

      With respect to any Mortgage Loans that are cooperative loans, the
Depositor will generally be required to cause to be delivered to the Trustee;

      o   the stock certificate;

      o   the stock power executed in blank;

      o   the executed proprietary lease;

      o   the executed recognition agreement;

      o   the executed assignment of recognition agreement, if any;

      o   an executed financing statement with evidence of recording thereon;

      o   the executed financing statements required by state law, evidencing a
          complete and unbroken line from the mortgagee to the Trustee with
          evidence of recording thereon (or in form suitable for recordation);
          and

      o   any other document specified in the related prospectus supplement.

      The Depositor will cause to be filed in the appropriate office an
assignment and a financing statement evidencing the Trustee's security interest
in each cooperative loan.


                                       57



      The Trustee or a custodian will review the mortgage loan documents within
a specified number of days of receipt to ascertain that all required documents
have been properly executed and received. The Trustee will hold the mortgage
loan documents for each series in trust for the benefit of holders of the
Certificates. If any document is found by the Trustee or custodian not to have
been properly executed or received or to be unrelated to the Mortgage Loans
identified in the pooling and servicing agreement, and any defect cannot be
cured within the permitted time period, the Sponsor or other party specified in
the prospectus supplement will replace the Mortgage Loan with an eligible
substitute Mortgage Loan (as described in the related prospectus supplement) or
repurchase the related Mortgage Loan from the Trustee at a price generally equal
to the principal balance thereof, plus accrued and unpaid interest thereon. Upon
receipt of the repurchase price, in the case of a repurchase, the Trustee will
reimburse any unreimbursed Advances of principal and interest by the Master
Servicer with respect to that Mortgage Loan or unreimbursed payments under any
form of credit support. The remaining portion of the repurchase price will then
be passed through to holders of the Certificates as liquidation proceeds in
accordance with the procedures specified under "Description of Certificates--
Distributions". This substitution/repurchase obligation constitutes the sole
remedy available to Certificateholders or the Trustee for a defect in a mortgage
loan document.

      Any restrictions on substitution or repurchase with respect to a series of
Certificates will be set forth in the related prospectus supplement.

   ASSIGNMENT OF MORTGAGE CERTIFICATES

      The Depositor will cause each Mortgage Certificate to be registered in the
name of the Trustee. The Trustee or a custodian will hold each Mortgage
Certificate in the manner described in the related prospectus supplement. The
Trustee will not be in possession of or be assignee of record of any underlying
assets for a Mortgage Certificate. Each Mortgage Certificate will be identified
in a schedule appearing as an exhibit to the pooling and servicing agreement,
which will specify the original principal amount, outstanding principal balance
as of the Cut-off Date, annual pass-through rate or interest rate and maturity
date and certain other pertinent information.

REPRESENTATIONS AND WARRANTIES

      As further described below, the Sponsor will make certain representations
and warranties concerning the Mortgage Loans in the related pooling and
servicing agreement or under the mortgage loan sale agreement between the
Sponsor and the Depositor. Under certain circumstances the Sponsor may be
required to repurchase or substitute for a Mortgage Loan as a result of a breach
of those representations or warranties. In addition, pursuant to the related
pooling and servicing agreement the Depositor will assign to the Trustee its
rights with respect to representations and warranties made by the Sponsor in the
mortgage loan sale agreement.

      The representations and warranties made or assigned to the Trust (whether
made by the Depositor or another party) will generally include the following
with respect to the Mortgage Loans, or each Mortgage Loan, as the case may be:

      o   the information set forth in the schedule of Mortgage Loans is true
          and correct in all material respects;

      o   at the time of transfer the Sponsor had good title to the Mortgage
          Loans and the mortgage notes were subject to no offsets, defenses or
          counterclaims, except if the buydown agreement for a Buydown Loan
          forgives certain indebtedness of a Mortgagor;

      o   as of the Cut-off Date, no Mortgage Loan was more than 30 days
          delinquent;

      o   a title policy (or other satisfactory evidence of title) was issued on
          the date of the origination of each Mortgage Loan and that policy or
          other evidence of title is valid and remains in full force and effect;

      o   if a primary mortgage insurance policy is required with respect to a
          Mortgage Loan, the policy is valid and remains in full force and
          effect as of the closing date for that series of Certificates;


                                       58



      o   as of the closing date for that series of Certificates, each Mortgage
          Loan is secured by a first lien mortgage, a first deed of trust or a
          land sale contract on the related mortgaged property free and clear of
          all liens, claims and encumbrances, other than the land sale contract,
          if applicable, subject only to:

          o   liens for current real property taxes and special assessments;

          o   covenants, conditions and restrictions, rights of way, easements
              and other matters of public record as of the date of recording of
              the Mortgage, those exceptions appearing of record being
              acceptable to mortgage lending institutions generally or
              specifically reflected in the mortgage originator's appraisal; and

          o   other matters to which like properties are commonly subject (which
              do not materially interfere with the benefits of the security
              intended to be provided by the Mortgage);

      o   as of the closing date for that series of Certificates, each mortgaged
          property is free of damage and is in good repair, ordinary wear and
          tear excepted; and

      o   any and all requirements of any federal, state or local law including,
          without limitation, usury, truth in lending, real estate settlement
          procedures, consumer credit protections, all applicable predatory and
          abusive lending laws, equal credit opportunity or disclosure laws
          applicable at the origination and servicing of the Mortgage Loans have
          been complied with.

      If the Sponsor (or other party specified in the prospectus supplement)
discovers a breach of any of its representations or warranties which materially
and adversely affects the interest of Certificateholders in the related Mortgage
Loan, or receives notice of a breach from the Trustee or the Master Servicer,
the Sponsor (or other party) will cure the breach within the time permitted by
the related pooling and servicing agreement or substitute a substantially
similar substitute mortgage loan for that Mortgage Loan or repurchase the
related Mortgage Loan, or any mortgaged property acquired in respect of a loan,
on the terms set forth above under "--Assignment of Mortgage Loans to the
Trustee" and in the related prospectus supplement. The proceeds of any
repurchase will be passed through to certificateholders as liquidation proceeds.

SPECIAL SERVICING AGREEMENTS

      The pooling and servicing agreement may permit each Servicer to enter into
a special servicing agreement with an unaffiliated holder of a class of
Subordinate Certificates or of a class of securities representing interests in
one or more classes of Subordinate Certificates alone or together with other
subordinated mortgage pass-through certificates. Pursuant to a special servicing
agreement, this holder may instruct the Servicer to commence or delay
foreclosure proceedings with respect to delinquent Mortgage Loans. In the event
that there is a Master Servicer for a series, the pooling and servicing
agreement may permit the Master Servicer to enter into an agreement with those
holders which will allow the Master Servicer to instruct the Servicers, to the
extent provided in the applicable Underlying Servicing Agreements, to commence
or delay foreclosure proceedings with respect to delinquent Mortgage Loans.

PAYMENTS ON MORTGAGE LOANS

      Pursuant to the applicable pooling and servicing agreement or the
Underlying Servicing Agreements, if any, for a series, each Servicer will be
required to establish and maintain one or more accounts (collectively, the
"SERVICER CUSTODIAL ACCOUNT") into which the Servicer will be required to
deposit on a daily basis amounts received relating to the Mortgage Loans
serviced by the Servicer included in the Trust Estate for a series, as more
fully described below. Each Servicer Custodial Account must be a separate
custodial account insured to the available limits by the FDIC or otherwise
acceptable to the applicable Rating Agencies (an acceptable account, an
"ELIGIBLE CUSTODIAL ACCOUNT") and other than in the case of a Servicer Custodial
Account established by the Sponsor as Servicer, will generally be limited to
funds held relating to a particular series. A Servicer Custodial Account
established by the Sponsor as Servicer will serve as a unitary Servicer
Custodial Account both for the particular series and for other series of
Certificates as well as other Mortgage Loans serviced by the Sponsor;


                                       59



provided, however, that commingling of funds will not be permitted at any time
during which the senior long-term unsecured debt rating of the Sponsor falls
below certain levels established by each Rating Agency. Notwithstanding any
commingling of funds, the Sponsor is required to keep records that accurately
reflect the funds on deposit in the Servicer Custodial Account that have been
identified by it as being attributable to funds relating to a particular series.

      Funds credited to a Servicer Custodial Account may be invested for the
benefit and at the risk of the Servicer in certain investments acceptable to the
Rating Agencies ("ELIGIBLE INVESTMENTS") maturing in general not later than the
business day preceding the next Distribution Date. All losses from investments
of funds in a Servicer Custodial Account are required to be deposited by the
applicable Servicer out of its own funds to the Servicer Custodial Account
immediately as realized.

      Each Servicer will be required to remit to the Trustee for deposit to the
Distribution Account for each series of Certificates on the date the
Certificates are issued any amounts representing scheduled payments of principal
and interest on the Mortgage Loans serviced by it due after the applicable
Cut-off Date but received on or prior thereto. Each Servicer will be required to
remit to the Master Servicer for deposit in an Eligible Custodial Account
maintained by the Master Servicer in the name of the Trustee (the "MASTER
SERVICER CUSTODIAL ACCOUNT") or, if there is no Master Servicer, to remit to the
Trustee for deposit in the Distribution Account, the following payments and
collections received or made by it relating to the Mortgage Loans serviced by it
subsequent to the applicable Cut-off Date (other than (a) payments due on or
before the Cut-off Date and (b) amounts held for future distribution):

            (i)   all payments on account of principal, including prepayments, .
      and interest;

            (ii)  all amounts received by the Servicer in connection with the
      liquidation of defaulted Mortgage Loans or property acquired relating to
      the defaulted Mortgage Loan, whether through foreclosure sale or
      otherwise, including payments in connection with defaulted Mortgage Loans
      received from the mortgagor other than amounts required to be paid to the
      mortgagor pursuant to the terms of the applicable Mortgage Loan or
      otherwise pursuant to law ("LIQUIDATION PROCEEDS") less, to the extent
      permitted under the applicable pooling and servicing agreement or
      Underlying Servicing Agreement, the amount of any expenses incurred in
      connection with the liquidation of the applicable Mortgage Loans;

            (iii) all proceeds received by the Servicer under any title, hazard
      or other insurance policy covering any Mortgage Loan, other than proceeds
      to be applied to the restoration or repair of the property subject to the
      related Mortgage or released to the mortgagor in accordance with the
      applicable pooling and servicing agreement or Underlying Servicing
      Agreement;

            (iv)  all Periodic Advances made by the Servicer;

            (v)   all amounts withdrawn from Buy-Down Funds or Subsidy Funds, if
      any, with respect to the Mortgage Loans, in accordance with the terms of
      the applicable agreements;

            (vi)  all proceeds of any Mortgage Loans or property acquired
      relating to the Mortgage Loan purchased or repurchased pursuant to the
      pooling and servicing agreement or the Underlying Servicing Agreement; and

            (vii) all other amounts required to be deposited to the Distribution
      Account pursuant to the applicable pooling and servicing agreement or the
      Underlying Servicing Agreement.

      Notwithstanding the foregoing, each Servicer will be entitled, at its
election, either (a) to withhold and pay itself the applicable Servicing Fee
from any payment or other recovery on account of interest as received and prior
to deposit in the Servicer Custodial Account or (b) to withdraw from the
Servicer Custodial Account the applicable Servicing Fee after the entire payment
or recovery has been deposited.


                                       60



      Each Servicer is also permitted, from time to time, to make withdrawals
from the applicable Servicer Custodial Account for the following purposes, to
the extent permitted in the applicable pooling and servicing agreement or
Underlying Servicing Agreement:

            (i)     to pay to itself, to the extent not previously retained, the
      servicing compensation to which it is entitled;

            (ii)    to reimburse itself for Advances, to the extent of amounts
      received on the Mortgage Loan(s) relating to which the Advances were made;

            (iii)   to reimburse itself for any Nonrecoverable Advance
      previously made, to the extent of amounts received on the Mortgage Loans
      in the same loan group as the Mortgage Loan(s) relating to which the
      Nonrecoverable Advances were made;

            (iv)    to reimburse itself for expenses covered by insurance
      policies from proceeds of those policies;

            (v)     to pay itself or the Depositor any indemnification payments
      described under "The Depositor" and "Servicing of the Mortgage Loans--The
      Servicers";

            (vi)    to pay to the Depositor, itself or the Master Servicer with
      respect to each Mortgage Loan or property acquired in respect thereof that
      has been repurchased by the Depositor or purchased by it or the Master
      Servicer all amounts received after the date of repurchase or purchase;

            (vii)   to withdraw from the Servicer Custodial Account any amount
      deposited in that account that was not required to be deposited therein;
      and

            (viii)  to clear and terminate the Servicer Custodial Account.

      If there is a Master Servicer for a series of Certificates, the Master
Servicer will be permitted by the pooling and servicing agreement to make
withdrawals from the Master Servicer Custodial Account to the extent described
above for a Servicer, to the extent permitted in the applicable pooling and
servicing agreement. The Master Servicer or Trustee will be required to deposit
in the Distribution Account any Periodic Advances made by the Master Servicer or
Trustee, as applicable, in the event of a Servicer default not later than the
Distribution Date on which the Periodic Advances are required to be distributed.
All other amounts deposited in the Master Servicer Custodial Account (other than
Master Servicing Fees and, to the extent the Master Servicer is entitled thereto
under the applicable pooling and servicing agreement, interest on amounts in the
Master Servicer Custodial Account) are required to be remitted by the Master
Servicer to the Trustee for deposit in the Distribution Account not later than
the applicable Distribution Date. On each Distribution Date, the Trustee will
withdraw from the Distribution Account and remit to Certificateholders all
amounts constituting the available funds for that Distribution Date.

      If a Servicer, the Master Servicer or the Trustee deposits in the
Distribution Account for a series any amount not required to be deposited, the
Trustee may at any time withdraw the amount from the Distribution Account for
itself or for remittance to the applicable Servicer or the Master Servicer, as
applicable. Funds on deposit in the Distribution Account may be invested in
Eligible Investments maturing in general not later than the business day
preceding the next Distribution Date (except that if the Eligible Investment is
an obligation of the institution that maintains the Distribution Account, then
the Eligible Investment may mature not later than the next Distribution Date).
In the event that one or more elections has been made to treat the Trust Estate
(or one or more segregated pools of assets therein) with respect to a series as
one or more REMICs, no Eligible Investments will be sold or disposed of at a
gain prior to maturity unless the Trustee has received an opinion of counsel or
other evidence satisfactory to it that the sale or disposition will not cause
the Trust Estate (or segregated pool of assets) to be subject to the tax on
"prohibited transactions" imposed by Code Section 860F(a)(1), otherwise subject
the Trust Estate (or segregated pool of assets) to tax, or cause any REMIC to
fail to qualify as a REMIC while any Certificates of the series are outstanding.
All income and gain realized from any investment of funds in the Distribution
Account will generally be for the account of the Trustee as additional
compensation and all losses from investments of funds in


                                       61



the Distribution Account will be deposited by the Trustee out of its own funds
to the Distribution Account immediately as realized.

      The Trustee is permitted, from time to time, to make withdrawals from the
Distribution Account for the following purposes, to the extent permitted in the
applicable pooling and servicing agreement:

            (i)   to pay itself the applicable trustee fee and to pay to the
owner thereof any Fixed Retained Yield;

            (ii)  to reimburse itself for certain expenses and to pay itself any
      amounts representing indemnification, each as described under "--The
      Trustee";

            (iii) to pay to itself any interest earned on or investment income
      earned with respect to funds in the Distribution Account (all of this
      interest or income to be withdrawn not later than the next Distribution
      Date);

            (iv)  to withdraw from the Distribution Account any amount deposited
      in that account that was not required to be deposited therein; and

            (v)   to clear and terminate the Distribution Account.

      The Trustee will be authorized to appoint a paying agent (the "PAYING
AGENT") to make distributions, as agent for the Trustee, to Certificateholders
of a series. If the Paying Agent for a series is not the Trustee for that
series, the Trustee will, on each Distribution Date, deposit in immediately
available funds in an account designated by the Paying Agent the amount required
to be distributed to the Certificateholders on that Distribution Date.

      The Trustee will cause any Paying Agent to execute and deliver to the
Trustee an instrument in which the Paying Agent agrees with the Trustee that the
Paying Agent will hold all amounts deposited with it by the Trustee for
distribution to Certificateholders in trust for the benefit of
Certificateholders until the amounts are distributed to Certificateholders or
otherwise disposed of as provided in the applicable pooling and servicing
agreement.

PERIODIC ADVANCES AND SERVICING ADVANCES

      Generally each Servicer will be required to make (i) an advance prior to
each Distribution Date of an amount equal to the payment of principal and
interest on each Mortgage Loan (net of the related Servicing Fee) which was due
on the related Due Date on the Mortgage Loans and which was delinquent on the
related Determination Date (a "PERIODIC ADVANCE") and (ii) other advances of
cash ("SERVICING ADVANCES" and, collectively with Periodic Advances, "ADVANCES")
to cover (a) delinquent payments of taxes, insurance premiums, and other
escrowed items and (b) rehabilitation expenses and foreclosure costs, including
reasonable attorneys' fees, in either case unless the Servicer has determined
that any subsequent payments on that Mortgage Loan or from the borrower will
ultimately not be available to reimburse it for those amounts.

      Advances by each Servicer will be made from its own funds or funds in the
applicable Servicer Custodial Account that do not constitute a portion of the
applicable available funds for that Distribution Date. The obligation to make an
Advance with respect to any Mortgage Loan will continue until the ultimate
disposition of the REO Property or Mortgaged Property relating to the Mortgage
Loan unless the Servicer determines, based on its estimation of the value of the
Mortgaged Property in relation to the sum of the unpaid principal balance of the
related Mortgage Loan, accrued interest, the amount of previously unreimbursed
Advances and anticipated disposition expenses, that the advance (a
"NONRECOVERABLE ADVANCE") would not ultimately be recoverable under any
applicable insurance policies, from proceeds of liquidation of the Mortgage Loan
or otherwise. An "REO PROPERTY" is a Mortgaged Property that has been acquired
by a Servicer on behalf of the Trust through foreclosure or grant of a deed in
lieu of foreclosure.

      The failure of a Servicer to make any required Periodic Advances or
Servicing Advances under an Underlying Servicing Agreement or a pooling and
servicing agreement constitutes a default for which the Servicer


                                       62



will be subject to termination. Upon default by a Servicer, the Master Servicer,
if any, or the Trustee will be required to make Periodic Advances to the extent
necessary to make required distributions on certain Certificates or certain
Servicing Advances, provided that the Master Servicer or Trustee, as applicable,
determines that funds will ultimately be available to reimburse it from proceeds
of the related Mortgaged Property. In the case of Certificates of any series for
which credit enhancement is provided in the form of a mortgage pool insurance
policy, the Depositor may obtain an endorsement to the mortgage pool insurance
policy which obligates the pool insurer to advance delinquent payments of
principal and interest. The pool insurer would only be obligated under the
endorsement to the extent the mortgagor fails to make his or her payment and the
Master Servicer or Trustee fails to make a required advance.

      Any Periodic Advances made by the Servicers, the Master Servicer or
Trustee must be deposited into the applicable Servicer Custodial Account, Master
Servicer Custodial Account or the Distribution Account and will be due no later
than the business day before the Distribution Date to which the delinquent
payment relates. Advances by the Servicers, the Master Servicer or Trustee will
be reimbursable out of insurance proceeds or Liquidation Proceeds of, or, except
for Servicing Advances, future payments on, the Mortgage Loans for which the
amounts were advanced. If an Advance made by a Servicer, the Master Servicer or
the Trustee later proves, or is deemed by the Servicer, the Master Servicer or
the Trustee, to be unrecoverable, the Servicer, the Master Servicer or the
Trustee will be entitled to reimbursement from funds in the applicable Servicer
Custodial Account, the Master Servicer Custodial Account or the Distribution
Account prior to the distribution of payments to the Certificateholders to the
extent provided in the Underlying Servicing Agreement or pooling and servicing
agreement.

      Any Periodic Advances made by a Servicer, the Master Servicer or the
Trustee relating to Mortgage Loans included in the Trust Estate for any series
are intended to enable the Trustee to make timely payment of the scheduled
distributions of principal and interest on the Certificates of the series.
However, none of the Master Servicer, the Trustee or any Servicer will insure or
guarantee the Certificates of any series or the Mortgage Loans included in the
Trust Estate for any Certificates.

COLLECTION AND OTHER SERVICING PROCEDURES

      Each Servicer will be required by the related Underlying Servicing
Agreement or pooling and servicing agreement to make reasonable efforts to
collect all payments called for under the Mortgage Loans and, consistent with
the applicable Underlying Servicing Agreement or the pooling and servicing
agreement and any applicable agreement governing any form of credit enhancement,
to follow the collection procedures as it follows for mortgage loans serviced by
it that are comparable to the Mortgage Loans. Consistent with the above, the
Servicer may, in its discretion, (i) waive any prepayment premiums, assumption
fee, late payment charge or any other charge in connection with the prepayment
of a Mortgage Loan and (ii) arrange with a mortgagor a schedule for the
liquidation of deficiencies running for not more than 120 days (or any longer
period to which the Master Servicer, if any, and any applicable pool insurer or
primary mortgage insurer have consented) after the applicable Due Date.

      Under each Underlying Servicing Agreement or the pooling and servicing
agreement, each Servicer, to the extent permitted by law, will establish and
maintain one or more escrow accounts (each account, an "ESCROW ACCOUNT") in
which it will be required to deposit any payments made by mortgagors in advance
for taxes, assessments, primary mortgage (if applicable) and hazard insurance
premiums and other similar items. Withdrawals from the Escrow Account may be
made to make timely payment of taxes, assessments, mortgage and hazard
insurance, to refund to mortgagors amounts determined to be overages, to pay
interest to mortgagors on balances in the Escrow Account, if required, and to
clear and terminate the Escrow Account. Each Servicer will be responsible for
the administration of its Escrow Account. A Servicer will be obligated to
advance certain tax and insurance amounts which are not timely paid by the
mortgagors, to the extent that it determines, in good faith, that they will be
recoverable out of insurance proceeds, liquidation proceeds, or otherwise.
Alternatively, in lieu of establishing a Escrow Account, a Servicer may procure
a performance bond or other form of insurance coverage, in an amount acceptable
to the Master Servicer and each Rating Agency rating the related series of
Certificates, covering loss occasioned by the failure to escrow amounts.


                                       63



ENFORCEMENT OF "DUE-ON-SALE" CLAUSES; REALIZATION UPON DEFAULTED MORTGAGE LOANS

      With respect to each Mortgage Loan having a fixed interest rate, the
applicable Underlying Servicing Agreement or pooling and servicing agreement
will generally provide that, when any Mortgaged Property is about to be conveyed
by the mortgagor, the Servicer will, to the extent it has knowledge of the
prospective conveyance, exercise its rights to accelerate the maturity of the
Mortgage Loan under the "due-on-sale" clause in the Mortgage Note, if any,
unless it is not exercisable under applicable law or if the exercise would
result in loss of insurance coverage relating to the Mortgage Loan or would, in
the Servicer's judgment, be reasonably likely to result in litigation by the
mortgagor and the Servicer, if applicable, has not obtained the Master
Servicer's consent to the exercise of the clause. In either case, the Servicer
is authorized to take or enter into an assumption and modification agreement
from or with the person to whom the Mortgaged Property has been or is about to
be conveyed, pursuant to which the person becomes liable under the Mortgage Note
and, unless prohibited by applicable state law, the mortgagor also remains
liable under the Mortgage Note, provided that the Mortgage Loan will continue to
be covered by any pool insurance policy and any related primary mortgage
insurance policy and the mortgage interest rate relating to the Mortgage Loan
and the payment terms shall remain unchanged. The Servicer will also be
authorized, with the prior approval of the pool insurer and the primary mortgage
insurer, if any, to enter into a substitution of liability agreement with the
person to whom the Mortgaged Property has been or is about to be conveyed, under
which the original mortgagor is released from liability and the person is
substituted as mortgagor and becomes liable under the Mortgage Note.

      Each Underlying Servicing Agreement and pooling and servicing agreement
with respect to a series will require the Servicer or the Master Servicer, as
the case may be, to present claims to the insurer under any insurance policy
applicable to the Mortgage Loans included in the Trust Estate for the series and
to take reasonable steps as are necessary to permit recovery under the insurance
policies relating to defaulted Mortgage Loans, or losses on the Mortgaged
Property securing the Mortgage Loans.

      Each Servicer is obligated to realize upon defaulted Mortgage Loans in
accordance with its normal servicing practices, which will conform generally to
those of prudent mortgage lending institutions which service mortgage loans of
the same type in the same jurisdictions. Notwithstanding the foregoing, each
Servicer is authorized to permit the assumption of a defaulted Mortgage Loan
rather than to foreclose or accept a deed-in-lieu of foreclosure if, in the
Servicer's judgment, the default is unlikely to be cured and the assuming
borrower meets the applicable underwriting guidelines. In connection with any
assumption, the mortgage interest rate and the payment terms of the related
Mortgage Note will not be changed. Each Servicer may also, with the consent of
the Master Servicer, if any, modify the payment terms of Mortgage Loans that are
in default, or as to which default is reasonably foreseeable, that remain in the
Trust Estate rather than foreclose on those Mortgage Loans; provided that no
modification shall forgive principal owing under a Mortgage Loan or permanently
reduce the interest rate on a Mortgage Loan. Further, a Servicer may encourage
the refinancing of defaulted Mortgage Loans, including Mortgage Loans that would
permit creditworthy borrowers to assume the outstanding indebtedness.

      In the case of foreclosure or of damage to a Mortgaged Property from an
uninsured cause, the Servicer will not be required to expend its own funds to
foreclose or restore any damaged property, unless it reasonably determines (i)
that the foreclosure or restoration will increase the proceeds to
Certificateholders of the series of liquidation of the Mortgage Loan after
reimbursement to the related Servicer for its expenses and (ii) that its
expenses will be recoverable to it through Liquidation Proceeds or any
applicable insurance policy relating to the Mortgage Loan. In the event that a
Servicer has expended its own funds for foreclosure or to restore damaged
property, it will be entitled to be reimbursed from the applicable Servicer
Custodial Account an amount equal to all costs and expenses incurred by it.

      No Servicer will be obligated to foreclose on any Mortgaged Property which
it believes may be contaminated with or affected by hazardous wastes or
hazardous substances. See "Certain Legal Aspects of the Mortgage
Loans--Environmental Considerations." If a Servicer does not foreclose on a
Mortgaged Property, the Certificateholders of the related series may experience
a loss on the related Mortgage Loan. A Servicer will not be liable to the
Certificateholders if it fails to foreclose on a Mortgaged Property which it
believes may be so contaminated or affected, even if the Mortgaged Property is,
in fact, not so contaminated or affected. Conversely, a Servicer will not be
liable to the Certificateholders if, based on its belief that no contamination
or effect exists, the


                                       64



Servicer forecloses on a Mortgaged Property and takes title to the Mortgaged
Property, and thereafter the Mortgaged Property is determined to be so
contaminated or affected.

      The Servicer may foreclose against property securing a defaulted Mortgage
Loan either by foreclosure, by sale or by strict foreclosure and in the event a
deficiency judgment is available against the mortgagor or other person (see
"Certain Legal Aspects of the Mortgage Loans--Anti-Deficiency Legislation, the
Bankruptcy Code and Other Limitations on Lenders" for a discussion of the
availability of deficiency judgments), may proceed for the deficiency. It is
anticipated that in most cases the Servicer will not seek deficiency judgments,
and will not be required under the applicable Underlying Servicing Agreement or
the pooling and servicing agreement to seek deficiency judgments. In lieu of
foreclosure, each Servicer may arrange for the sale by the borrower of the
Mortgaged Property related to a defaulted Mortgage Loan to a third party, rather
than foreclosing upon and selling the Mortgaged Property.

      With respect to a Trust Estate (or any segregated pool of assets within a
Trust Estate) as to which one or more REMIC elections has been made, if the
Trustee acquires ownership of any Mortgaged Property as a result of a default or
reasonably foreseeable default of any Mortgage Loan secured by the Mortgaged
Property, the Trustee or Master Servicer will be required to dispose of the
property prior to the close of the third calendar year following the year the
Trust Estate acquired the property (or any shorter period as is provided in the
applicable Underlying Servicing Agreement or pooling and servicing agreement)
unless the Trustee (a) receives an opinion of counsel to the effect that the
holding of the Mortgaged Property by the Trust Estate will not cause the Trust
Estate to be subject to the tax on "prohibited transactions" imposed by Code
Section 860F(a)(1) or cause any REMIC to fail to qualify as a REMIC or (b)
applies for and is granted an extension of the applicable period in the manner
contemplated by Code Section 856(e)(3). The Servicer also will be required to
administer the Mortgaged Property in a manner which does not cause the Mortgaged
Property to fail to qualify as "foreclosure property" within the meaning of Code
Section 860G(a)(8) or result in the receipt by the Trust Estate of any "net
income from foreclosure property" within the meaning of Code Section 860G(c)(2),
respectively. In general, this would preclude the holding of the Mortgaged
Property by a party acting as a dealer in property or the receipt of rental
income based on the profits of the lessee of the property. See "Federal Income
Tax Consequences."

INSURANCE POLICIES

      Each Servicer will generally be required to cause to be maintained for
each Mortgage Loan (other than Mortgage Loans secured by cooperative shares and
condominium apartments) a standard hazard insurance policy issued by a generally
acceptable insurer insuring the improvements on the Mortgaged Property
underlying each Mortgage Loan against loss by fire, with extended coverage (a
"STANDARD HAZARD INSURANCE POLICY"). A Standard Hazard Insurance Policy will be
required to be in an amount at least equal to the lesser of 100% of the
insurable value of the improvements on the Mortgaged Property or the principal
balance of the Mortgage Loan; provided, however, that the amount may not be less
than the minimum amount required to avoid the application of any coinsurance
clause. Each Servicer will also generally maintain on property acquired upon
foreclosure, or deed in lieu of foreclosure, of any Mortgage Loan, a Standard
Hazard Insurance Policy in an amount that is at least equal to the lesser of
100% of the insurable value of the improvements which are a part of the property
plus liability insurance and, if applicable, flood insurance as described below.
Any amounts collected under any of these insurance policies (other than amounts
to be applied to the restoration or repair of the Mortgaged Property or released
to the borrower in accordance with normal servicing procedures) will be
deposited in the Servicer Custodial Account for remittance to the Distribution
Account by the applicable Servicer.

      The Standard Hazard Insurance Policies covering the Mortgage Loans
generally will cover physical damage to, or destruction of, the improvements on
the Mortgaged Property caused by fire, lightning, explosion, smoke, windstorm,
hail, riot, strike and civil commotion, subject to the conditions and exclusions
particularized in each policy. Because the Standard Hazard Insurance Policies
relating to the Mortgage Loans will be underwritten by different insurers and
will cover Mortgaged Properties located in various states, the policies will not
contain identical terms and conditions. The most significant terms of these
policies, however, generally will be determined by state law and generally will
be similar. Most of these policies typically will 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 mudflows), nuclear reaction, wet or dry rot, vermin, rodents,


                                       65



insects or domestic animals, hazardous wastes or hazardous substances, theft
and, in certain cases, vandalism. The foregoing list is merely indicative of
certain kinds of uninsured risks and is not all-inclusive.

      In general, if the improvements on a Mortgaged Property are located in an
area identified in the Federal Register by the Federal Emergency Management
Agency as having special flood hazards (and flood insurance has been made
available) each Underlying Servicing Agreement or the pooling and servicing
agreement, as applicable, will require the related Servicer to cause to be
maintained a flood insurance policy meeting the requirements of the current
guidelines of the Federal Insurance Administration and the requirements of
Fannie Mae or Freddie Mac with a generally acceptable insurance carrier.

      Each Servicer may maintain a blanket policy insuring against hazard losses
on all of the Mortgaged Properties in lieu of maintaining the required Standard
Hazard Insurance Policies and may maintain a blanket policy insuring against
special hazards in lieu of maintaining any required flood insurance. Each
Servicer will be liable for the amount of any deductible under a blanket policy
if that amount would have been covered by a required Standard Hazard Insurance
Policy or flood insurance, had it been maintained.

      Any losses incurred relating to Mortgage Loans due to uninsured risks
(including earthquakes, mudflows, floods and hazardous wastes or hazardous
substances) or insufficient hazard insurance proceeds will adversely affect
distributions to the Certificateholders.

PRIMARY MORTGAGE INSURANCE

      If specified in the related prospectus supplement, a Mortgage Loan secured
by a mortgaged property having an loan-to-value ratio in excess of 80% may have
a primary mortgage insurance policy insuring against default on all or a
specified portion of the principal amount thereof in excess of that percentage
of the value of the mortgaged property, as specified in the related prospectus
supplement.

      Evidence of each primary mortgage insurance policy will be provided to the
Trustee simultaneously with the transfer to the Trustee of the related Mortgage
Loan. Each Servicer, on behalf of the Trust Estate, is required to present
claims to the insurer under any primary mortgage insurance policy or mortgage
pool insurance policy and to take the reasonable steps that are necessary to
permit recovery with respect to defaulted Mortgage Loans. Amounts collected by
each Servicer on behalf of the Trust Estate will be deposited in the Servicer
Custodial Account for distribution as set forth above. Each Servicer will not
cancel or refuse to renew any primary mortgage insurance policy required to be
kept in force by the pooling and servicing agreement.

RECOVERIES UNDER PRIMARY MORTGAGE INSURANCE POLICIES

      Each Servicer will exercise its reasonable efforts to keep each primary
mortgage insurance policy in full force and effect at least until the
outstanding principal balance of the related Mortgage Loan is equal to the
percentage of the appraised value of the mortgaged property specified in the
related prospectus supplement. Each Servicer will generally be required to pay
the premium for each primary mortgage insurance policy on a timely basis if the
mortgagor does not make the required payments.

      Each Servicer, on behalf of the Trust Estate, will present claims to the
insurer under any applicable primary mortgage insurance policy and will take
necessary reasonable steps to permit recovery under those insurance policies
respecting defaulted Mortgage Loans. If any property securing a defaulted
Mortgage Loan is damaged and proceeds, if any, from the related hazard insurance
policy are insufficient to restore the damaged property to a condition
sufficient to permit recovery under any applicable primary mortgage insurance
policy, each Servicer will not be required to expend its own funds to restore
the damaged property unless the applicable Servicer determines:

      o   that restoration will increase the proceeds to Certificateholders upon
          liquidation of the Mortgage Loan after reimbursement of the Servicer
          for its expenses; and

      o   that those expenses will be recoverable to it through liquidation
          proceeds.


                                       66



      Regardless of whether recovery under any primary mortgage insurance policy
is available or any further amount is payable under the credit support for a
series of Certificates, each Servicer is obligated to follow the normal
practices and procedures as it deems necessary or advisable to realize upon the
defaulted Mortgage Loan. If at any time no further amount is payable under the
credit support for a series of Certificates, and if the proceeds of any
liquidation of the property securing the defaulted Mortgage Loan are less than
the principal balance of the defaulted Mortgage Loans plus accrued interest,
certificateholders will realize a loss in the amount of that difference plus the
aggregate of unreimbursed Advances of the Servicer with respect to that Mortgage
Loan and expenses incurred by the Servicer in connection with those proceedings
and which are reimbursable under the pooling and servicing agreement.

FIXED RETAINED YIELD, SERVICING COMPENSATION AND PAYMENT OF EXPENSES

      "FIXED RETAINED YIELD" for any Mortgage Loan is that portion, if any, of
interest at the mortgage interest rate that is not included in the related Trust
Estate and is retained by the Depositor or the Sponsor. The prospectus
supplement for a series will describe the Fixed Retained Yield, if any, relating
to the Mortgage Loans of the series. Any Fixed Retained Yield will be
established on a loan-by-loan basis and will be specified in the schedule of
Mortgage Loans attached as an exhibit to the applicable pooling and servicing
agreement. If the Sponsor or the Depositor retains Fixed Retained Yield, the
Sponsor, if it is the Servicer, may deduct the Fixed Retained Yield from
mortgagor payments as received and retain or remit the Fixed Retained Yield to
the Depositor, as the case may be. Otherwise, the Servicer will deposit the
Fixed Retained Yield in the Master Servicer Custodial Account or Distribution
Account, and the Master Servicer or the Trustee will withdraw and remit the
Fixed Retained Yield to the owner thereof. Notwithstanding the foregoing, with
respect to any payment of interest received relating to a Mortgage Loan (whether
paid by the mortgagor or received as Liquidation Proceeds, insurance proceeds or
otherwise) which is less than the full amount of interest then due with respect
to the Mortgage Loan, the owner of the Fixed Retained Yield for the Mortgage
Loan will bear a ratable share of the interest shortfall.

      For each series of Certificates, each Servicer will be entitled to be paid
the Servicing Fee on the related Mortgage Loans serviced by it until termination
of the applicable Underlying Servicing Agreement or the pooling and servicing
agreement. A Servicer, at its election, will pay itself the Servicing Fee for a
series relating to each Mortgage Loan by (a) withholding the Servicing Fee from
any scheduled payment of interest prior to deposit of the payment in the
Servicer Custodial Account for the series or (b) withdrawing the Servicing Fee
from the Servicer Custodial Account after the entire interest payment has been
deposited. A Servicer may also pay itself out of the Liquidation Proceeds or
other recoveries of a Mortgage Loan. The Servicing Fee or the range of Servicing
Fees relating to the Mortgage Loans underlying the Certificates of a series will
be set forth in an expense table in the applicable prospectus supplement.
Additional servicing compensation in the form of prepayment premiums, assumption
fees, late payment charges, Foreclosure Profits or otherwise will be retained by
the Servicers.

      Each Servicer will pay all expenses incurred in connection with the
servicing of the Mortgage Loans serviced by it underlying a series, including,
without limitation, payment of the Standard Hazard Insurance Policy premiums.
The Servicer will be entitled, in certain circumstances, to reimbursement from
the Servicer Custodial Account of Periodic Advances, of Servicing Advances made
by it to pay taxes, insurance premiums and similar items with respect to any
Mortgaged Property or for expenditures incurred by it in connection with the
restoration, foreclosure or liquidation of any Mortgaged Property (to the extent
of Liquidation Proceeds or insurance policy proceeds in respect of the related
Mortgaged Property) and of certain losses against which it is indemnified by the
Trust Estate as described above under "Servicing of the Mortgage Loans--The
Servicers."

      As set forth in the preceding paragraph, a Servicer may be entitled to
reimbursement for certain expenses incurred by it, and payment of additional
fees for certain extraordinary services rendered by it (provided that those fees
do not exceed those which would be charged by third parties for similar
services) in connection with the liquidation of defaulted Mortgage Loans and
related Mortgaged Properties. In the event that claims are either not made or
are not fully paid from any applicable form of credit enhancement, the related
Trust Estate will suffer a loss to the extent that Liquidation Proceeds, after
reimbursement of the Servicing Fee and the expenses of the Servicer, are less
than the principal balance of the related Mortgage Loan.


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EVIDENCE AS TO COMPLIANCE

      Each Servicer and Master Servicer will deliver annually to the Trustee or
Master Servicer, as applicable, on or before the date specified in the
applicable pooling and servicing agreement or Underlying Servicing Agreement, an
officer's certificate stating that (i) a review of the Servicer's or Master
Servicer's activities during the preceding calendar year and of performance
under the applicable pooling and servicing agreement or Underlying Servicing
Agreement has been made under the supervision of the officer, and (ii) to the
best of the officer's knowledge, based on the review, the Servicer or Master
Servicer has fulfilled all its obligations under the applicable pooling and
servicing agreement or Underlying Servicing Agreement in all material respects
throughout the year, or, if there has been a failure to fulfill any of these
obligations in any material respect, specifying each failure known to the
officer and the nature and status of the failure.

      In addition, each party that participates in the servicing and
administration of more than 5% of the Mortgage Loans and other assets comprising
a Trust will deliver annually to the Depositor and the Trustee, a report (an
"ASSESSMENT OF COMPLIANCE") that assesses compliance by that party with the
servicing criteria set forth in Item 1122(d) of Regulation AB (17 C.F.R. ss.
229.1122) and that contains the following:

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

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

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

      o   a statement that a registered public accounting firm has issued an
          Attestation Report on the party's Assessment of Compliance with the
          applicable servicing criteria during and as of the end of the prior
          calendar year.

      Each party which is required to deliver an Assessment of Compliance will
also be required to simultaneously deliver a report (an "ATTESTATION REPORT") of
a registered public accounting firm, prepared in accordance with the standards
for attestation engagements issued or adopted by the Public Company Accounting
Oversight Board, that expresses an opinion, or states that an opinion cannot be
expressed, concerning the party's assessment of compliance with the applicable
servicing criteria.

CERTAIN MATTERS REGARDING THE DEPOSITOR, THE SPONSOR AND THE MASTER SERVICER

      The pooling and servicing agreement for each series of Certificates backed
in whole or in part by Mortgage Loans will generally provide that the Master
Servicer may not resign from its obligations and duties as Master Servicer,
except upon a determination that its duties are no longer permissible under
applicable law. No resignation under this clause is effective until the Trustee
or a successor has assumed the Master Servicer's obligations and duties under
the pooling and servicing agreement.

      The pooling and servicing agreement will also provide that none of the
Depositor, the Master Servicer or the Sponsor, or any directors, officers,
employees or agents of any of them will be under any liability to the Trust
Estate or certificateholders or the Trustee, any subservicer or others for any
action taken or not taken by any of those parties, any subservicer or the
Trustee in good faith pursuant to the pooling and servicing agreement, or for
errors in judgment. However, none of the Depositor, the Sponsor, the Master
Servicer or any of the parties described above will be protected against any
liability that otherwise would be imposed on one of those parties by reason of
willful misfeasance, bad faith or gross negligence in the performance of duties
or by reason of reckless disregard of its obligations and duties. The pooling
and servicing agreement will provide that each of the parties described above is
entitled to indemnification by the Trust Estate and will be held harmless
against any loss, liability or expense incurred in connection with any legal
action relating to the pooling and servicing agreement or the Certificates for a
series, other than any loss, liability or expense related to any specific
Mortgage Loan (except any loss, liability or


                                       68



expense otherwise reimbursable pursuant to the pooling and servicing agreement)
and any loss, liability or expense incurred by reason of willful misfeasance,
bad faith or gross negligence in the performance of that party's duties or by
reason of reckless disregard by that party of its obligations and duties. In
addition, the pooling and servicing agreement will provide that none of the
Depositor, the Sponsor or the Master Servicer is under any obligation to appear
in, prosecute or defend any legal action which is not incidental to, in the case
of the Depositor, the Sponsor or the Master Servicer, its duties under the
pooling and servicing agreement and which in its opinion may involve it in any
expense or liability. Each of the Depositor, the Sponsor and the Master Servicer
may, however, in its discretion, undertake any action that it deems necessary or
desirable with respect to the pooling and servicing agreement and the rights and
duties of the parties to the pooling and servicing agreement and the interests
of certificateholders. In that event, the legal expenses and costs of that
action and any liability resulting therefrom will be expenses, costs and
liabilities of the Trust Estate, and the Depositor, the Sponsor and the Master
Servicer will be entitled to be reimbursed from the Master Servicer Custodial
Account or Servicer Custodial Account, as applicable.

EVENTS OF DEFAULT

      Events of default by the Master Servicer or a Servicer under the pooling
and servicing agreement for each series of Certificates evidencing an interest
in Mortgage Loans will consist of:

      o   any failure by the Master Servicer or, if a Servicer has executed the
          pooling and servicing agreement, that Servicer, to deposit amounts in
          the Distribution Account, Master Servicer Custodial Account or
          Servicer Custodial Account, as applicable, in the amount and manner
          provided in the pooling and servicing agreement so as to enable the
          Trustee to distribute to Certificateholders any required payment
          (other than Periodic Advances) which continues unremedied for a
          specified time period;

      o   any failure by the Master Servicer or a Servicer that has executed the
          pooling and servicing agreement duly to observe or perform in any
          material respects any other of its covenants or agreements in the
          Certificates or the pooling and servicing agreement which continues
          unremedied for a specified number of days after the giving of written
          notice of the failure to the Master Servicer or Servicer by the
          Trustee or the Depositor, or, if specified in the pooling and
          servicing agreement, to the Master Servicer or the Servicer and the
          Trustee by holders of Certificates evidencing not less than 25% of the
          aggregate voting rights of all the Certificates affected thereby;

      o   certain events of insolvency, readjustment of debt, marshalling of
          assets and liabilities or similar proceedings and certain actions by
          the Master Servicer or a Servicer that has executed the pooling and
          servicing agreement indicating insolvency, reorganization or inability
          to pay its obligations; and

      o   the failure of the Master Servicer or a Servicer to remit any Periodic
          Advance required to be remitted by it which failure continues
          unremedied at 3:00 p.m. on the related Distributed Date.

RIGHTS UPON EVENT OF DEFAULT

      As long as an event of default under the pooling and servicing agreement
remains unremedied, the Trustee may, and upon direction of holders of
Certificates evidencing not less than 51% of the aggregate voting rights, will
be required to terminate all of the rights and obligations of the Master
Servicer or Servicer under the pooling and servicing agreement. Upon a
termination, the Trustee will succeed to all the responsibilities, duties and
liabilities of the Master Servicer or Servicer under the pooling and servicing
agreement and will be entitled to similar compensation arrangements and
limitations on liability. If the Trustee is unwilling or unable to act, it may
appoint or petition a court of competent jurisdiction for the appointment of an
institution with a net worth of at least $10,000,000 to act as successor Master
Servicer or Servicer; provided, however, that the appointment not adversely
affect the rating then assigned to any class of Certificates and that until a
successor Master Servicer or Servicer is appointed and has assumed the
responsibilities, duties and liabilities of the Master Servicer or the Servicer
under the pooling and servicing agreement, unless prohibited by law, the Trustee
will continue as the successor to the Master Servicer or the Servicer as
described above. Pending any appointment, the Trustee is obligated to act as
successor Master Servicer or Servicer. The Trustee and the successor may agree
upon the servicing compensation to be paid, which will not be greater than the
compensation of the Master Servicer or Servicer under the pooling and servicing


                                       69



agreement. The Trustee or the successor Master Servicer or Servicer will be
entitled to be reimbursed from the predecessor Master Servicer or Servicer (or
the Trust if the predecessor Master Servicer or Servicer is unable to fulfill
its obligations under the pooling and servicing agreement) for all costs
associated with the transfer of servicing.

ENFORCEMENT

      No certificateholder of any series will have any right under a pooling and
servicing agreement to institute any proceeding with respect to the pooling and
servicing agreement unless the certificateholder previously has given to the
Trustee written notice of default and the continuance thereof and unless holders
of Certificates evidencing not less than 25% of each class of certificates
affected thereby have made written requests to the Trustee to institute a
proceeding in its own name as Trustee and have offered and provided to the
Trustee reasonable indemnity and the Trustee for 60 days has neglected or
refused to institute the proceeding. However, the Trustee is under no obligation
to exercise any of the trusts or powers vested in it by the pooling and
servicing agreement for any series or to make any investigation of matters
arising under the pooling and servicing agreement or to institute, conduct or
defend any litigation under the pooling and servicing agreement at the request,
order or direction of any certificateholders, unless those certificateholders
have offered and provided to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which may be incurred.

AMENDMENT

      The pooling and servicing agreement for each series may be amended by the
Depositor, the Sponsor (if a party thereto), the Master Servicer, the Servicer
and the Trustee, without notice to or the consent of any certificateholder to,
among other things:

      o   cure any ambiguity or mistake;

      o   correct or supplement any provision that may be inconsistent with any
          other provision of the pooling and servicing agreement or the related
          prospectus supplement;

      o   comply with any requirements imposed by the Code or any tax
          regulation; or

      o   make any other provisions with respect to matters or questions arising
          under the pooling and servicing agreement which are not inconsistent
          with the provisions of the pooling and servicing agreement;

provided that the amendment will not adversely affect in any material respect
the interests of any certificateholder of that series.

      Any amendment should be deemed not to adversely affect in any material
respect the interests of any certificateholders if the Trustee receives written
confirmation from the rating agency rating the certificates that the amendment
will not cause that rating agency to reduce its then-current rating of the
Certificates. The pooling and servicing agreement for each series may also be
amended by the Depositor, the Sponsor (if a party thereto), the Master Servicer
and the Trustee with the consent of holders of Certificates evidencing not less
than 66?% of the aggregate voting rights of each class affected by the amendment
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of the pooling and servicing agreement or of
modifying in any manner the rights of holders of Certificates of that series.
However, no amendment of this type may:

      o   reduce in any manner the amount of, or delay the timing of, payments
          received on Mortgage Loans or distributions that are required to be
          made in respect of any Certificate without the consent of the holder
          of the Certificate; or

      o   with respect to any series of Certificates, reduce the percentage of
          Certificates the holders of which are required to consent to any
          amendment without the consent of the holders of all outstanding
          Certificates of the series.


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LIST OF CERTIFICATEHOLDERS

      If the Trustee is not the certificate registrar for a series of
Certificates, upon written request of the Trustee, the certificate registrar
will provide to the Trustee within 30 days after the receipt of that request a
list of the names and addresses of all certificateholders of record of a series
as of the most recent record date. Upon written request of three or more
certificateholders of record of a series of Certificates, for purposes of
communicating with other certificateholders with respect to their rights under
the pooling and servicing agreement for that series, the Trustee will afford
those certificateholders access during business hours to the most recent list of
certificateholders of that series held by the Trustee.

TERMINATION; REPURCHASE OF MORTGAGE LOANS AND MORTGAGE CERTIFICATES

      The obligations of the Depositor, the Sponsor (if a party thereto), the
Master Servicer, the Servicer and the Trustee created by the pooling and
servicing agreement will terminate upon the earlier of:

      o   the maturity or other liquidation of the last Mortgage Loan or
          Mortgage Certificate in the related Trust Estate and the disposition
          of all property acquired upon foreclosure of any Mortgage Loan; and

      o   the payment to certificateholders of that series of all amounts
          required to be paid to them pursuant to the pooling and servicing
          agreement.

In no event, however, will the Trust Estate created by any pooling and servicing
agreement continue beyond the expiration of 21 years from the death of the
survivor of the persons named in the pooling and servicing agreement. For each
series of Certificates, the Trustee will give written notice of termination of
the pooling and servicing agreement to each Certificateholder, and the final
distribution will be made only upon surrender and cancellation of the
Certificates at an office or agency appointed by the Depositor and specified in
the notice of termination. The termination of the Trust is required to be
effected in a manner consistent with applicable federal income tax regulations
and the REMIC status of any REMIC.

      The pooling and servicing agreement for each series may permit the Master
Servicer or any other entity specified in the related prospectus supplement to
repurchase, or permit or require the Trustee to auction, all or a portion of the
remaining Mortgage Loans or Mortgage Certificates and property acquired in
respect of a Mortgage Loan, at a purchase price generally equal to the unpaid
principal balance of the Mortgage Loans in the applicable group or groups plus
the fair market value of any related mortgaged properties acquired upon
foreclosure of the related Mortgage Loans, together with accrued and unpaid
interest at the applicable mortgage interest rate on the related Mortgage Loans.
However, if the pooling and servicing agreement for a series permits the
Depositor to exercise the purchase option, for so long as the Depositor is
subject to regulation by the OCC, the FDIC, the Federal Reserve or the OTS, the
Depositor may exercise its purchase option only if the aggregate fair market
value of the Mortgage Loans and REO Properties is greater than or equal to the
purchase price described in the preceding sentence. The exercise of this right
will effect early retirement of the Certificates of that series, but the Master
Servicer's or other party's right so to repurchase is subject to the aggregate
principal balances of the Mortgage Loans at the time of repurchase being less
than the percentage of the aggregate initial principal amount of all
Certificates of that series at the Cut-off Date specified in the related
prospectus supplement.

      Distributions in respect of an optional purchase described above will be
paid to Certificateholders (or in the case of the optional purchase of one or
more, but less than all, groups of Mortgage Loans, to Certificateholders
entitled to distributions from that group or groups) in order of their priority
of distribution as described in the applicable prospectus supplement. The
proceeds from an optional purchase may not be sufficient to distribute the full
amount to which each class of Certificates is entitled if the purchase price is
based in part on the fair market value of the REO Property and this fair market
value is less than the unpaid principal balance of the related Mortgage Loan.

      The holders of the Residual Certificates of a series of REMIC Certificates
may have the option to purchase the remaining Mortgage Assets included in the
Trust Estate. This option will be exercisable, in the case of holders of
Residual Certificates, at the time and under the circumstances specified in the
related prospectus supplement. For


                                       71



this type of purchase to take place, the Trustee must receive an opinion of
counsel that the repurchase and related distributions to certificateholders:

      o   will be part of a "qualified liquidation" as defined in Code Section
          860F(a)(4)(A);

      o   will not cause the REMIC to be treated as an association taxable as a
          corporation; and

      o   will not otherwise subject the REMIC to tax.

      For each series, the Trustee will give written notice of termination of
the pooling and servicing agreement to each certificateholder, and the final
distribution will be made only upon surrender and cancellation of the
Certificates at an office or agency of the Trustee specified in the notice of
termination.

THE TRUSTEE

      The Trustee for each series of Certificates will be named in the related
prospectus supplement. The Trustee may have normal banking relationships with
the Depositor, any Originator, any Master Servicer, any Servicer and/or any
subservicer. With respect to certain series of Certificates, a securities
administrator or other entity specified in the related prospectus supplement may
perform certain duties and functions normally performed by the Trustee. Any
securities administrator or other such entity will be a party to the pooling and
servicing agreement and will be named in the applicable prospectus supplement.
Any securities administrator or other such entity will have obligations and
rights similar to the Trustee as described herein.

      The Trustee generally will be responsible under each pooling and servicing
agreement for providing general administrative services for the Trust Estate for
any series, including, among other things, (i) establishing and maintaining the
Distribution Account; (ii) calculation of the amounts payable to
certificateholders on each Distribution Date; (iii) making distributions to
certificateholders; (iv) preparation of federal and applicable state and local
tax and information returns; (v) preparation of reports, if any, required under
the Securities Exchange Act of 1934, as amended; (vi) maintaining any mortgage
pool insurance policy, mortgagor bankruptcy bond, special hazard insurance
policy or other form of credit enhancement that may be required with respect to
any series; and (vii) making Periodic Advances on the Mortgage Loans to the
limited extent described under "The Pooling and Servicing Agreement--Periodic
Advances and Servicing Advances," if those amounts are not advanced by a
Servicer or the Master Servicer.

      The Trustee and any director, officer, employee or agent of the Trustee
shall be entitled to indemnification by the Trust Estate and held harmless
against any loss, liability or expense (including reasonable attorney's fees)
(a) incurred in connection with any claim or legal action relating to (i) the
pooling and servicing agreement, (ii) the Certificates, or (iii) the performance
of any of the Trustee's duties under the pooling and servicing agreement, unless
the loss, liability or expense was incurred by reason of willful misfeasance,
bad faith or gross negligence in the performance of any of the Trustee's duties
under the pooling and servicing agreement, (b) resulting from any tax or
information return which was prepared by, or should have been prepared by, the
applicable Servicer, Master Servicer or securities administrator and (c) arising
out of the transfer of any Certificate not in compliance with ERISA.

      The Trustee generally shall not be entitled to payment or reimbursement
for any routine ongoing expenses incurred by it in the ordinary course of its
duties as Trustee under the pooling and servicing agreement or for any other
expenses. If, however, one or more REMIC elections have been made, the expense
is unanticipated and did not arise from the Trustee's gross negligence, bad
faith or willful misconduct, the Trustee shall be entitled to reimbursement from
the Trust Estate for all reasonable expenses, disbursements and advances
incurred or made it in accordance with any of the provisions of the pooling and
servicing agreement to the extent permitted by Treasury regulations Section
1.860G-1(b)(3)(ii), which allows reimbursement for "unanticipated expenses."

      The Trustee may resign at any time, in which event the Master Servicer or,
if there is no Master Servicer, the Servicer(s) will be obligated to appoint a
successor trustee. The Master Servicer or, if there is no Master Servicer, the
Servicer(s) may also remove the Trustee if the Trustee ceases to be eligible to
act as Trustee under the


                                       72



pooling and servicing agreement, is incapable of acting or if the Trustee
becomes insolvent. Upon becoming aware of these circumstances, the Master
Servicer or, if there is no Master Servicer, the Servicer(s) will become
obligated to appoint a successor trustee. The Trustee may also be removed at any
time by the certificateholders evidencing not less than 50% of the voting rights
in the Trust Estate, except that any Certificate registered in the name of the
Depositor or any affiliate thereof will not be taken into account in determining
whether the requisite Voting Rights in the Trust Estate necessary to effect this
removal have been obtained. Any resignation and removal of the Trustee, and the
appointment of a successor trustee, will not become effective until acceptance
of the appointment by the successor trustee. The Trustee, and any successor
trustee, must be (a) an institution the deposits of which are fully insured by
the FDIC and (b) a corporation or banking association organized and doing
business under the laws of the United States of America or of any State,
authorized under those laws to exercise corporate trust powers, having a
combined capital and surplus of not less than $50,000,000 and subject to
supervision or examination by Federal or State authority and (c) with respect to
every successor trustee, either an institution (i) the long term unsecured debt
obligations meet certain minimum ratings of the applicable rating agencies or
(ii) whose serving as Trustee would not result in the lowering of the ratings
originally assigned to any class of Certificates.

      Any costs associated with the appointment of a successor trustee are
required to be paid by the predecessor trustee and, if not paid, will be
reimbursed to the person incurring such costs from the assets of the related
Trust. Notwithstanding the foregoing, if the predecessor Trustee has been
removed by a vote of the holders of the Certificates as provided in the
paragraph above, any costs associated with the appointment of a successor
trustee will be reimbursed to the party incurring such costs from the assets of
the related Trust.

                   CERTAIN LEGAL ASPECTS OF THE MORTGAGE LOANS

      The following discussion contains summaries, which are general in nature,
of certain legal aspects of mortgage loans. Because these legal aspects are
governed by applicable state law, which laws may differ substantially, the
summaries are not exhaustive, do not reflect the laws of any particular state
and do not 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.

GENERAL

      The Mortgages Loans will be secured by either deeds of trust, mortgages,
security deeds or deeds to secure debt creating a first lien, depending upon the
prevailing practice in the state in which the mortgaged property is located. A
mortgage creates a lien upon the real property encumbered by the mortgage. It is
not prior to the lien for real estate taxes and assessments. Priority between
mortgages depends on their terms and generally on the order of recording in a
county or municipal office. There are two parties to a mortgage: the mortgagor,
who is the borrower and homeowner, and the mortgagee, who is the lender. Under
the mortgage instrument, the mortgagor delivers to the mortgagee a note or bond
and the mortgage. Although a deed of trust is similar to a mortgage, a deed of
trust formally has three parties: the borrower-homeowner, called the trustor
(similar to a mortgagor), a lender (similar to a mortgagee), called the
beneficiary, and a third-party grantee, called the trustee. Under a deed of
trust, the borrower grants the property, irrevocably until the debt is paid, in
trust, generally with a power of sale, to the trustee to secure payment of the
obligation. A security deed and a deed to secure debt are special types of deeds
that indicate on their face that they are granted to secure an underlying debt.
By executing a security deed or deed to secure debt, the grantor conveys title
to, as opposed to merely creating a lien upon, the subject property to the
grantee until the time the underlying debt is repaid. The trustee's authority
under a deed of trust, the mortgagee's authority under a mortgage and the
grantee's authority under a security deed or deed to secure debt are governed by
law, by the express provisions of the document and, in some cases, with respect
to some deeds of trust, by the directions of the beneficiary.

CONDOMINIUMS

      Certain of the Mortgage Loans may be loans secured by condominium units.
The condominium building may be a multi-unit building or buildings, or a group
of buildings whether or not attached to each other, located on property subject
to condominium ownership. Condominium ownership is a form of ownership of real
property as to which each owner is entitled to the exclusive ownership and
possession of his or her individual condominium unit.


                                       73



The owner also owns a proportionate undivided interest in all parts of the
condominium building (other than the other individual condominium units) and all
areas or facilities, if any, for the common use of the condominium units. The
condominium unit owners appoint or elect the condominium association to govern
the affairs of the condominium.

COOPERATIVES

      Certain of the Mortgage Loans may be cooperative loans. The Cooperative
either owns all the real property that comprises the project, including the land
and the apartment building comprised of separate dwelling units and common areas
or leases the land generally by a long term ground lease and owns the apartment
building. The Cooperative is directly responsible for project management and, in
most cases, payment of real estate taxes and hazard and liability insurance. If
there is a blanket mortgage on the property and/or underlying land, as is
generally the case, the Cooperative, as project mortgagor, is also responsible
for meeting these mortgage obligations. Ordinarily, the Cooperative incurs a
blanket mortgage in connection with the construction or purchase of the
Cooperative's apartment building. The interest of the occupants under
proprietary leases or occupancy agreements to which the Cooperative is a party
are generally subordinate to the interest of the holder of the blanket mortgage
in that building.

      The Cooperative is owned by tenant stockholders who, through ownership of
stock, shares or membership certificates in the corporation, receive proprietary
leases or occupancy agreements which confer exclusive rights to occupy specific
units. Generally, a tenant stockholder of a Cooperative must make a monthly
payment to the Cooperative representing 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. In a cooperative
loan, an ownership interest in a Cooperative and accompanying rights is financed
through a cooperative share loan evidenced by a promissory note and secured by a
security interest in the occupancy agreement or proprietary lease and in the
related cooperative shares. The lender takes possession of the share certificate
and a counterpart of the proprietary lease or occupancy agreement, and typically
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 "Risk Factors--Collateral Securing Cooperative Loans May Diminish in
Value" in this prospectus.

FORECLOSURE

   MORTGAGES AND DEEDS OF TRUST

      Foreclosure of a mortgage is generally accomplished by judicial action.
Generally, the action is initiated by the service of legal pleadings upon all
parties having an interest in the real property. Delays in completion of the
foreclosure may occasionally result from difficulties in locating necessary
parties. Judicial foreclosure proceedings sometimes are not contested by any of
the parties. However, when the mortgagee's right to foreclosure is contested,
the legal proceedings necessary to resolve the issue can be time consuming.
After the completion of judicial foreclosure, the court may issue a judgment of
foreclosure and appoint a referee or other court officer to conduct the sale of
the property. In some states, mortgages may also be foreclosed by advertisement,
pursuant to a power of sale provided in the mortgage. Foreclosure of a mortgage
by advertisement is essentially similar to foreclosure of a deed of trust by
non-judicial power of sale.

      Foreclosure of a deed of trust is generally accomplished by non-judicial
trustee's sale under a specific provision in the deed of trust which authorizes
the trustee to sell the property to a third party upon any default by the
borrower under the terms of the note or deed of trust. In some states, the
trustee must record a notice of default and send a copy to the borrower or any
person who has recorded a request for a copy of a notice of default and notice
of sale. In addition, the trustee must provide notice in some states to any
other individual having an interest in the real property, including any junior
lienholders. The borrower, or any other person having a junior encumbrance on
the real estate, may, during a reinstatement period, cure the default by paying
the entire amount in arrears, plus the costs


                                       74



and expenses incurred in enforcing the obligation. Generally, state law controls
the amount of foreclosure expenses and costs, including limiting attorneys'
fees, which may be recovered by a lender. If the deed of trust is not
reinstated, a notice of sale must be posted in a public place and, in most
states, published for a specified period of time in one or more newspapers. In
addition, some state laws require that a copy of the notice of sale be posted on
the property and sent to all parties having an interest of record in the real
property.

      In case of foreclosure under either a mortgage or a deed of trust, the
sale by the receiver or other designated officer or by the trustee is a public
sale. However, because of the difficulty a potential buyer at the sale would
have in determining the exact status of title and because the physical condition
of the property may have deteriorated during the foreclosure proceedings, it is
uncommon for a third party to purchase the property at a foreclosure sale.
Rather, it is common for the lender to purchase the property from the trustee or
receiver for an amount equal to the unpaid principal amount of the note, accrued
and unpaid interest and the expenses of foreclosure. Subject to the right of the
borrower in some states to remain in possession during the redemption period,
the lender then will assume the burdens of ownership, including obtaining
casualty insurance and making repairs at its expense that are necessary to
render the property suitable for sale. The lender will commonly obtain the
services of a real estate broker and pay the broker's commission in connection
with the sale of the property. Depending upon market conditions, the ultimate
proceeds of the sale of the property may not equal the lender's investment in
the property. Any loss may be reduced by the receipt of mortgage insurance
proceeds, if any, or by judicial action against the borrower for the deficiency.
See "--Anti-Deficiency Legislation, the Bankruptcy Code and Other Limitations on
Lenders" below.

   COOPERATIVES

      The cooperative shares owned by the tenant-stockholder and pledged to the
lender are, in almost all cases, subject to restrictions on transfer as set
forth in the Cooperative's certificate of incorporation and bylaws, as well as
in the proprietary lease or occupancy agreement, and may be cancelled by the
Cooperative for failure by the tenant-stockholder to pay rent or other
obligations or charges owed by the tenant-stockholder, including mechanics'
liens against the cooperative apartment building incurred by the
tenant-stockholder. The proprietary lease or occupancy agreement generally
permits the Cooperative to terminate the lease or agreement in the event an
obligor fails to make payments or defaults in the performance of covenants
required thereunder. Typically, the lender and the Cooperative enter into a
recognition agreement which establishes the rights and obligations of both
parties in the event of a default by the tenant-stockholder on its obligations
under the proprietary lease or occupancy agreement. A default by the
tenant-stockholder under the proprietary lease or occupancy agreement will
usually constitute a default under the security agreement between the lender and
the tenant-stockholder.

      The recognition agreement generally provides that, if the
tenant-stockholder has defaulted under the proprietary lease or occupancy
agreement, the Cooperative will take no action to terminate the lease or
agreement until the lender has been provided with an opportunity to cure the
default. The recognition agreement typically provides that if the proprietary
lease or occupancy agreement is terminated, the Cooperative will recognize the
lender's lien against proceeds from a sale of the cooperative apartment,
subject, however, to the Cooperative's right to sums due under the proprietary
lease or occupancy agreement. The total amount owed to the Cooperative by the
tenant-stockholder, which the lender generally cannot restrict and does not
monitor, could reduce the value of the collateral below the outstanding
principal balance of the cooperative loan and accrued and unpaid interest.

      Recognition agreements also provide that upon 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.

      Foreclosure on cooperative shares is accomplished by a sale in accordance
with the provisions of Article 9 of the Uniform Commercial Code (the "UCC") and
the security agreement relating to those shares. Article 9 of the UCC requires
that a sale be conducted in a "commercially reasonable" manner. Whether a
foreclosure sale has been conducted in a "commercially reasonable" manner will
depend on the facts in each case. In determining commercial reasonableness, a
court will look to the notice given the debtor and the method, manner, time,
place and terms of the foreclosure. Generally, a sale conducted according to the
usual practice of banks selling similar collateral will be considered reasonably
conducted.


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      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 the
reimbursement is subject to the right of the cooperative corporation to receive
sums due under the proprietary lease or occupancy agreement. If there are
proceeds remaining, the lender must account to the tenant-stockholder for the
surplus. Conversely, if a portion of the indebtedness remains unpaid, the
tenant-stockholder is generally responsible for the deficiency. See
"--Anti-Deficiency Legislation, the Bankruptcy Code and Other Limitations on
Lenders" below.

   LEASEHOLDS

      Mortgage Loans may be secured by a mortgage on a ground lease. Leasehold
mortgages are subject to certain considerations not associated with mortgage
loans secured by the fee estate of the mortgagor. The most significant of these
considerations is that the ground lease creating the leasehold estate could
terminate, leaving the leasehold mortgagee without its security. The ground
lease may terminate if, among other reasons, the ground lessee breaches or
defaults in its obligations under the ground lease or there is a bankruptcy of
the ground lessee or the ground lessor. This possibility may be minimized if the
ground lease contains certain provisions protective of the mortgagee, but the
ground leases that secure Mortgage Loans may not contain all of these protective
provisions, and mortgages may not contain the other protection discussed in the
next paragraph. Protective ground lease provisions include the right of the
leasehold mortgagee to receive notices from the ground lessor of any defaults by
the mortgagor; the right to cure those defaults, with adequate cure periods; if
a default is not susceptible of cure by the leasehold mortgagee, the right to
acquire the leasehold estate through foreclosure or otherwise; the ability of
the ground lease to be assigned to and by the leasehold mortgagee or purchaser
at a foreclosure sale and for the simultaneous release of the ground lessee's
liabilities under the new lease; and the right of the leasehold mortgagee to
enter into a new ground lease with the ground lessor on the same terms and
conditions as the old ground lease upon a termination.

      In addition to the preceding protections, a leasehold mortgagee may
require that the ground lease or leasehold mortgage prohibit the ground lessee
from treating the ground lease as terminated in the event of the ground lessor's
bankruptcy and rejection of the ground lease by the trustee for the
debtor-ground lessor. As further protection, a leasehold mortgage may provide
for the assignment of the debtor-ground lessee's right to reject a lease
pursuant to Section 365 of the Bankruptcy Reform Act of 1978, as amended (11
U.S.C.) (the "BANKRUPTCY CODE"), although the enforceability of that clause has
not been established. Without the protections described in the preceding
paragraph, a leasehold mortgagee may lose the collateral securing its leasehold
mortgage. In addition, terms and conditions of a leasehold mortgage are subject
to the terms and conditions of the ground lease. Although certain rights given
to a ground lessee can be limited by the terms of a leasehold mortgage, the
rights of a ground lessee or a leasehold mortgagee with respect to, among other
things, insurance, casualty and condemnation will be governed by the provisions
of the ground lease.

RIGHTS OF REDEMPTION

      In some states, after sale pursuant to a deed of trust or foreclosure of
the mortgage, the borrower and foreclosed junior lienors are given a statutory
period in which to redeem the property from the foreclosure sale. The right of
redemption should be distinguished from the equity of redemption, which is a
nonstatutory right that must be exercised prior to the foreclosure sale. In some
states where the right of redemption is available, redemption may occur only
upon payment of the foreclosure purchase price, expenses of foreclosure, accrued
interest and taxes. In other states, redemption may be authorized if the former
borrower pays only a portion of the sums due. The effect of a statutory right of
redemption is to delay the ability of the lender to sell the foreclosed
property. The exercise of a right of redemption would defeat the title of any
purchaser at a foreclosure sale, or of any purchaser from the lender subsequent
to foreclosure 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 run.

ANTI-DEFICIENCY LEGISLATION, THE BANKRUPTCY CODE AND OTHER LIMITATIONS ON
LENDERS

      Certain states have imposed statutory prohibitions that restrict or
eliminate the remedies of a beneficiary under a deed of trust or a mortgagee
under a mortgage. In some states, statutes limit the right of the beneficiary or
mortgagee to obtain a deficiency judgment against the borrower following
foreclosure or sale under a deed of trust.


                                       76



A deficiency judgment would be a personal judgment against the former borrower
equal in most cases to the difference between the net amount realized upon the
public sale of the real property and the amount due to the lender. Other
statutes may require the beneficiary or mortgagee to exhaust the security
afforded under a deed of trust or mortgage by foreclosure in an attempt to
satisfy the full debt before bringing a personal action against the borrower.
Finally, other statutory provisions may limit any deficiency judgment against
the former borrower following a judicial sale to the excess of the outstanding
debt over the fair market value of the property at the time of the public sale.
The purpose of these statutes is to prevent a beneficiary or a mortgagee from
obtaining a large deficiency judgment against the former mortgagor as a result
of low or no bids at the foreclosure sale.

      Generally, Article 9 of the UCC governs foreclosure on cooperative shares
and the related proprietary lease or occupancy agreement and foreclosure on the
beneficial interest in a land trust. Some courts have interpreted Section 9-610
of the UCC to prohibit a deficiency award unless the creditor establishes that
the sale of the collateral (which, in the case of a Mortgage Loan secured by
shares of a cooperative, would be the shares and the related proprietary lease
or occupancy agreement) was conducted in a commercially reasonable manner.

      The Master Servicer generally will not be required under the pooling and
servicing agreement to pursue deficiency judgments on the Mortgage Loans even if
permitted by law.

      In addition to anti-deficiency and related legislation, numerous other
federal and state statutory provisions, including the Bankruptcy Code, and state
laws affording relief to debtors may interfere with or affect the ability of a
secured mortgage lender to obtain payment of a mortgage loan, to realize upon
collateral and/or enforce a deficiency judgment. For example, under the
Bankruptcy Code, virtually all actions (including foreclosure actions and
deficiency judgment proceedings) are automatically stayed upon the filing of a
bankruptcy petition and, usually, no interest or principal payments are made
during the course of the bankruptcy case. Foreclosure of an interest in real
property of a debtor in a case under the Bankruptcy Code can typically occur
only if the bankruptcy court vacates the stay, which is an action the court may
be reluctant to take, particularly if the debtor has the prospect of
restructuring his or her debts and the mortgage collateral is not deteriorating
in value. The delay and the consequences thereof caused by the automatic stay
can be significant. Also, under the Bankruptcy Code, the filing of a petition in
bankruptcy by or on behalf of a junior lienor may stay a senior lender from
taking action to foreclose.

      A homeowner may file for relief under the Bankruptcy Code under any of
three different chapters of the Bankruptcy Code.

      o   Under Chapter 7, the assets of the debtor are liquidated and a lender
          secured by a lien may "bid in" (i.e., bid up to the amount of the
          debt) at the sale of the asset. See "--Foreclosure."

      o   Under Chapter 11, a homeowner can reorganize his or her debts through
          his or her reorganization plan.

      o   Under Chapter 13, a homeowner can address his or her debts in a
          rehabilitation plan. Chapter 13 is often referred to as the "wage
          earner chapter" or "consumer chapter" because most individuals seeking
          to restructure their debts file for relief under Chapter 13 rather
          than Chapter 11.

      The Bankruptcy Code permits a mortgage loan that is secured by property
that does not consist solely of the debtor's principal residence to be modified
without the consent of the lender provided certain substantive and procedural
safeguards are met. Under the Bankruptcy Code, the lender's security interest
may be reduced to the then-current value of the property as determined by the
court if the value is less than the amount due on the loan, thereby leaving the
lender as a general unsecured creditor for the difference between the value of
the collateral and the outstanding balance of the mortgage loan. A borrower's
unsecured indebtedness will typically be discharged in full upon payment of a
substantially reduced amount. Other modifications to a mortgage loan may include
a reduction in the amount of each scheduled payment, which reduction may result
from a reduction in the rate of interest, an alteration of the repayment
schedule, an extension of the final maturity date, and/or a reduction in the
outstanding balance of the secured portion of the loan. In certain
circumstances, subject to the court's approval, a debtor in a case under Chapter
11 of the Bankruptcy Code may have the power to grant liens senior to the lien
of a mortgage.


                                       77



      A reorganization plan under Chapter 11 and a rehabilitation plan under
Chapter 13 of the Bankruptcy Code may each allow a debtor to cure a default with
respect to a mortgage loan on the debtor's residence by paying arrearages over a
period of time and to deaccelerate and reinstate the original mortgage loan
payment schedule, even though the lender accelerated the loan and a final
judgment of foreclosure had been entered in state court (provided no sale of the
property had yet occurred) prior to the filing of the debtor's petition under
the Bankruptcy Code. Under a Chapter 13 plan, curing of defaults must be
accomplished within the five year maximum term permitted for repayment plans,
with the term commencing when the repayment plan becomes effective, while
defaults may be cured over a longer period of time under a Chapter 11 plan of
reorganization.

      Generally, a repayment plan in a case under Chapter 13 and a plan of
reorganization under Chapter 11 may not modify the claim of a mortgage lender if
the borrower elects to retain the property, the property is the borrower's
principal residence and the property is the lender's only collateral. Certain
courts have allowed modifications when the mortgage loan is secured both by the
debtor's principal residence and by collateral that is not "inextricably bound"
to the real property, such as appliances, machinery, or furniture.

      The general protection for mortgages secured only by the debtor's
principal residence is not applicable in a case under Chapter 13 if the last
payment on the original payment schedule is due before the final date for
payment under the debtor's Chapter 13 plan (which date could be up to five years
after the debtor emerges from bankruptcy). Under several recently decided cases,
the terms of this type of loan can be modified in the manner described above.
While these decisions are contrary to the holding in a prior case by a senior
appellate court, it is possible that the later decisions will become the
accepted interpretation in view of the language of the applicable statutory
provision. If this interpretation is adopted by a court considering the
treatment in a Chapter 13 repayment plan of a Mortgage Loan, it is possible that
the Mortgage Loan could be modified.

      State statutes and general principles of equity may also provide a
mortgagor with a means to halt a foreclosure proceeding or sale and to force a
restructuring of a mortgage loan on terms a lender would not otherwise accept.

      In a bankruptcy or similar proceeding of a mortgagor, action may be taken
seeking the recovery, as a preferential transfer or on other grounds, of any
payments made by the mortgagor under the related mortgage loan prior to the
bankruptcy or similar proceeding. Payments on long-term debt may be protected
from recovery as preferences if they are payments in the ordinary course of
business made on debts incurred in the ordinary course of business or if the
value of the collateral exceeds the debt at the time of payment. Whether any
particular payment would be protected depends upon the facts specific to a
particular transaction.

      A trustee in bankruptcy, in some cases, may be entitled to collect its
costs and expenses in preserving or selling the mortgaged property ahead of a
payment to the lender. Moreover, the laws of certain states also give priority
to certain tax and mechanics liens over the lien of a mortgage. Under the
Bankruptcy Code, if the court finds that actions of the mortgagee have been
unreasonable and inequitable, the lien of the related mortgage may be
subordinated to the claims of unsecured creditors.

      The Code provides priority to certain tax liens over the lien of the
mortgage. 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 applicable laws. In some cases, this liability may affect assignees of
the Mortgage Loans.


                                       78



TEXAS HOME EQUITY LOANS

      Generally, any "cash-out" refinance or other non-purchase money
transaction (except for certain rate or term refinance loans and certain other
narrow exceptions) secured by a Texas resident's principal residence is subject
to the provisions set forth in Section 50(a)(6) of Article XVI of the
Constitution of Texas and its implementing statutes and regulations (the "TEXAS
HOME EQUITY LAWS"). The Texas Home Equity Laws provide for:

      o   certain disclosure requirements,

      o   caps on allowable fees,

      o   required loan closing procedures and

      o   certain other restrictions.

Failure, inadvertent or otherwise, to comply with any requirement may render a
Mortgage Loan unenforceable and/or the lien on a mortgaged property voidable
unless cured within 60 days after the borrower provides notice of the defect to
the lender. Because mortgage loans which are subject to the Texas Home Equity
Laws can be foreclosed only pursuant to court order, rather than non-judicial
foreclosures as is available for other types of mortgage loans in Texas, delays
and increased losses may result in connection with foreclosures of those loans.
If a court were to find that any requirement of the Texas Home Equity Laws was
not satisfied, the court could:

      o   refuse to allow foreclosure to proceed,

      o   declare the lien on a mortgaged property to be void, and/or

      o   require the originating lender or the holder of the note to forfeit
          some or all principal and interest of the related Mortgage Loan.

Title insurance generally available on those Mortgage Loans may exclude coverage
for some of the risks described in this paragraph.

"DUE-ON-SALE" CLAUSES

      The forms of note, mortgage and deed of trust relating to Mortgage Loans
may contain a "due-on-sale" clause permitting acceleration of the maturity of a
loan if the borrower transfers its interest in the property. Court decisions and
legislative actions placed substantial restrictions on the right of lenders to
enforce these clauses in many states. However, effective October 15, 1982,
Congress enacted the Garn-St Germain Depository Institutions Act of 1982 (the
"GARN ACT") which purports to preempt state laws which prohibit the enforcement
of "due-on-sale" clauses by providing, among other matters, that "due-on-sale"
clauses in certain loans (which loans may include the Mortgage Loans) made after
the effective date of the Garn Act are enforceable, within certain limitations
as set forth in the Garn Act and the regulations promulgated thereunder.
"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 OTS, as successor to the Federal Home Loan Bank Board, which
preempt state law restrictions on the enforcement of these clauses. Similarly,
"due-on-sale" clauses in mortgage loans made by national banks and federal
credit unions are now fully enforceable pursuant to preemptive regulations of
the Comptroller of the Currency and the National Credit Union Administration,
respectively.

      The Garn Act created a limited exemption from its general rule of
enforceability for "due-on-sale" clauses in certain mortgage loans ("WINDOW
PERIOD LOANS") which were originated by non-federal lenders and made or assumed
in certain states ("WINDOW PERIOD STATES") during the period, prior to October
15, 1982, in which that state prohibited the enforcement of "due-on-sale"
clauses by constitutional provision, statute or statewide court decision (the
"WINDOW PERIOD"). Though neither the Garn Act nor the OTS regulations actually
names the Window Period States, Freddie Mac has taken the position, in
prescribing mortgage loan servicing standards with respect to


                                       79



mortgage loans which it has purchased, that the Window Period States were:
Arizona, Arkansas, California, Colorado, Georgia, Iowa, Michigan, Minnesota, New
Mexico, Utah and Washington. Under the Garn Act, unless a Window Period State
took action by October 15, 1985, the end of the Window Period, to further
regulate enforcement of "due-on sale" clauses in Window Period Loans,
"due-on-sale" clauses would become enforceable even in Window Period Loans. Five
of the Window Period States (Arizona, Minnesota, Michigan, New Mexico and Utah)
have taken actions which restrict the enforceability of "due-on-sale" clauses in
Window Period Loans beyond October 15, 1985. The actions taken vary among these
states.

      By virtue of the Garn Act, a Servicer may generally be permitted to
accelerate any Mortgage Loan which contains a "due-on-sale" clause upon transfer
of an interest in the property subject to the mortgage or deed of trust. With
respect to any Mortgage Loan secured by a residence occupied or to be occupied
by the borrower, this ability to accelerate will not apply to certain types of
transfers, including (i) the granting of a leasehold interest which has a term
of three years or less and which does not contain an option to purchase; (ii) a
transfer to a relative resulting from the death of a borrower, or a transfer
where the spouse or children become an owner of the property in each case where
the transferee(s) will occupy the property; (iii) a transfer resulting from a
decree of dissolution of marriage, legal separation agreement or from an
incidental property settlement agreement by which the spouse becomes an owner of
the property; (iv) the creation of a lien or other encumbrance subordinate to
the lender's security instrument which does not relate to a transfer of rights
of occupancy in the property (provided that the lien or encumbrance is not
created pursuant to a contract for deed); (v) a transfer by devise, descent or
operation of law on the death of a joint tenant or tenant by the entirety; (vi)
a transfer into an inter vivos trust in which the borrower is the beneficiary
and which does not relate to a transfer of rights of occupancy; and (vii) other
transfers as set forth in the Garn Act and the regulations thereunder.
Regulations promulgated under the Garn Act also prohibit the imposition of a
prepayment penalty upon the acceleration of a loan pursuant to a due-on-sale
clause. The extent of the effect of the Garn Act on the average lives and
delinquency rates of the Mortgage Loans cannot be predicted. See "Prepayment and
Yield Considerations."

APPLICABILITY OF USURY LAWS

      Title V of the Depository Institutions Deregulation and Monetary Control
Act of 1980, enacted in March 1980 ("TITLE V"), provides that state usury
limitations shall not apply to certain types of residential first mortgage loans
originated by certain lenders after March 31, 1980. The OTS, as successor to the
Federal Home Loan Bank Board, is authorized to issue rules and regulations and
to publish interpretations governing implementation of Title V. The statute
authorized any state to reimpose interest rate limits by adopting, before April
1, 1983, a law or constitutional provision which expressly rejects application
of the federal law. Currently, fifteen states have adopted laws reimposing or
reserving the right to reimpose interest rate limits. 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.

FORFEITURE FOR DRUG, RICO AND MONEY LAUNDERING VIOLATIONS

      Federal law provides that property purchased or improved with assets
derived from criminal activity or otherwise tainted, or used in the commission
of certain offenses, can be seized and ordered forfeited to the United States of
America. The offenses which can trigger 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 thereunder, as well as
the narcotic drug laws. In many instances, the United States may seize the
property even before a conviction occurs.

      In the event of a forfeiture proceeding, a lender may be able to establish
its interest in the property by proving that (i) 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 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 can be no assurance that
this defense will be successful.


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HOMEOWNERS PROTECTION ACT OF 1998

      The Homeowners Protection Act of 1998 ("HOPA") provides for certain
disclosure and termination requirements for primary mortgage insurance. The
termination provisions of HOPA apply only to mortgage loans relating to
single-family primary residences originated on or after July 29, 1999. The
termination provisions govern when a mortgagor may cancel the requirement to
maintain primary mortgage insurance and when the requirement to maintain primary
mortgage insurance is automatically terminated. In general, voluntary
termination is permitted when the principal balance of a mortgage loan is
reduced to 80% of the original property value and automatic termination occurs
when the principal balance of a mortgage loan is reduced to 78% of the original
property value. The disclosure requirements of HOPA vary depending on whether
the mortgage loan was originated before or after July 29, 1999. These disclosure
requirements include notification of the circumstances under which a mortgagor
may cancel primary mortgage insurance, the date when primary mortgage insurance
automatically terminates and servicer contact information. In addition, HOPA
provides that no later than 30 days after cancellation or termination of primary
mortgage insurance, the servicer shall provide written notification that primary
mortgage insurance is terminated and no further payments are due or payable. Any
servicer, mortgagee or mortgage insurer that violates provisions of HOPA is
subject to possible liability which includes, but is not limited to, actual
damages, statutory damages and reasonable attorney's fees.

SERVICEMEMBERS CIVIL RELIEF ACT AND SIMILAR LAWS

      Generally, under the terms of the Servicemembers Civil Relief Act (the
"RELIEF ACT"), a borrower who enters military service after the origination of
their Mortgage Loan (including a borrower who is a member of the National Guard
or is in reserve status at the time of the origination of the Mortgage Loan and
is later called to active duty) may not be charged interest, including fees and
charges, in excess of 6% per annum during the period of the borrower's active
duty status. In addition to adjusting the interest, the lender must forgive this
interest in excess of 6% per annum, unless a court or administrative agency
orders otherwise upon the application of the lender. It is possible that the
Relief Act could have an effect, for an indeterminate period of time, on the
ability of the Servicer to collect full amounts of interest on certain of the
Mortgage Loans in a Trust Estate. Any shortfall in interest collections
resulting from the application of the Relief Act or any amendment thereto could
result in losses to the holders of the Certificates of the related series.
Further, the Relief Act imposes limitations which would impair the ability of
the Servicer to foreclose on an affected Mortgage Loan during the borrower's
period of active duty status. Thus, in the event that an affected Mortgage Loan
goes into default, there may be delays and losses occasioned by the inability to
realize upon the Mortgaged Property in a timely fashion. In addition, the Relief
Act provides broad discretion for a court to modify a mortgage loan upon
application of the mortgagor. Certain states have enacted comparable legislation
which may lead to the modification of a mortgage loan or interfere with or
affect the ability of the Servicer to timely collect payments of principal and
interest on, or to foreclose on, Mortgage Loans of borrowers in these states who
are active or reserve members of the armed services or national guard. For
example, California has extended legislation providing protection equivalent to
that provided by the Relief Act to California national guard members called up
for active service by the Governor or President and reservists called to active
duty.

ENVIRONMENTAL CONSIDERATIONS

      A lender may be subject to unforeseen environmental risks when taking a
security interest in real or personal property. Property subject to a security
interest may be subject to federal, state, and local laws and regulations
relating to environmental protection. These laws may regulate, among other
things:

      o   emissions of air pollutants;

      o   discharges of wastewater or storm water;

      o   generation, transport, storage or disposal of hazardous waste or
          hazardous substances;

      o   operation, closure and removal of underground storage tanks;


                                       81



      o   removal and disposal of asbestos-containing materials; and/or

      o   management of electrical or other equipment containing polychlorinated
          biphenyls.

      Failure to comply with these laws and regulations may result in
significant penalties, including civil and criminal fines. Under the laws of
certain states, environmental contamination on a property may give rise to a
lien on the property to ensure the availability and/or reimbursement of cleanup
costs. Generally all subsequent liens on a property are subordinated to these
environmental liens and, in some states, even prior recorded liens are
subordinated to these liens. In the latter states, the security interest of the
Trustee in a property that is subject to this type of lien could be adversely
affected. Environmental contamination on a property is likely to have a negative
impact on the value of the property, which may lead to losses on the related
series of Certificates.

      Under the federal Comprehensive Environmental Response Compensation and
Liability Act, as amended ("CERCLA"), and under state law in certain states, a
secured party that takes a deed in lieu of foreclosure, purchases a mortgaged
property at a foreclosure sale, operates a mortgaged property or undertakes
certain types of activities that may constitute management of the mortgaged
property may become liable in certain circumstances for the costs of remedial
action or cleanup costs if hazardous wastes or hazardous substances have been
released or disposed of on the property. The cleanup costs may be substantial.
CERCLA imposes strict, as well as joint and several, liability for environmental
remediation and/or damage costs on several classes of "potentially responsible
parties," including current "owners and/or operators" of property, irrespective
of whether those owners or operators caused or contributed to contamination on
the property. In addition, owners and operators of properties that generate
hazardous substances that are disposed of at other "off-site" locations may be
held strictly, as well as jointly and severally, liable for environmental
remediation and/or damages at those off-site locations. Many states also have
laws that are similar to CERCLA. Liability under CERCLA or under similar state
law could exceed the value of the property itself as well as the aggregate
assets of the property owner.

      The law is unclear as to whether and under what precise circumstances
cleanup costs, or the obligation to take remedial actions, could be imposed on a
secured lender like a Trust Estate. Under the laws of some states and under
CERCLA, a lender may be liable as an "owner or operator" for costs of addressing
releases or threatened releases of hazardous substances on a mortgaged property
if the lender or its agents or employees have "participated in the management"
of the operations of the borrower, even though the environmental damage or
threat was caused by a prior owner or current owner or operator or other third
party. Excluded from CERCLA's definition of "owner or operator," is a person
"who without participating in the management of . . . [the] facility, holds
indicia of ownership primarily to protect his security interest" (the "CERCLA
SECURED-CREDITOR EXEMPTION"). This exemption for holders of a security interest
like a secured lender applies only if a lender seeks to protect its security
interest in the contaminated facility or property. Accordingly, if a lender's
activities begin to encroach on the actual management of a facility or property,
the lender faces potential liability as an "owner or operator" under CERCLA.
Similarly, when a lender forecloses and takes title to a contaminated facility
or property, the lender may incur potential CERCLA liability in various
circumstances, including among others, when it holds the facility or property as
an investment (including leasing the facility or property to a third party),
fails to market the property in a timely fashion or fails to properly address
environmental conditions at the property or facility.

      The Resource Conservation and Recovery Act, as amended ("RCRA"), contains
an exemption similar to the CERCLA Secured-Creditor Exemption (the "RCRA
SECURED-CREDITOR EXEMPTION")for those lenders who hold a security interest in a
petroleum underground storage tank or in real estate containing an underground
storage tank, or that acquire title to a petroleum underground storage tank or
facility or property on which a underground storage tank is located. As under
CERCLA, a lender may lose its RCRA Secured-Creditor Exemption and be held liable
under RCRA as a underground storage tank owner or operator if the lender or its
employees or agents participate in the management of the underground storage
tank. In addition, if the lender takes title to or possession of the underground
storage tank or the real estate containing the underground storage tank, under
certain circumstances the RCRA Secured-Creditor Exemption may be deemed to be
unavailable.

      A decision in May 1990 of the United States Court of Appeals for the
Eleventh Circuit in United States v. Fleet Factors Corp. very narrowly construed
the CERCLA Secured-Creditor Exemption. The court's opinion suggested that a
lender need not have involved itself in the day-to-day operations of the
facility or participated in


                                       82



decisions relating to hazardous waste to be liable under CERCLA; rather,
liability could attach to a lender if its involvement with the management of the
facility were broad enough to support the inference that the lender had the
capacity to influence the borrower's treatment of hazardous waste. The court
added that a lender's capacity to influence those decisions could be inferred
from the extent of its involvement in the facility's financial management. A
subsequent decision by the United States Court of Appeals for the Ninth Circuit
in In re Bergsoe Metal Corp., apparently disagreeing with, but not expressly
contradicting, the Fleet Factors court, held that a secured lender had no
liability absent "some actual management of the facility" on the part of the
lender.

      The Asset Conservation, Lender Liability and Deposit Insurance Protection
Act of 1996 (the "ASSET CONSERVATION ACT") was intended to clarify the scope of
the secured creditor exemption under both CERCLA and RCRA. The Asset
Conservation Act more clearly defined the kinds of "participation in management"
that would trigger liability under CERCLA and specified certain activities that
would not constitute "participation in management" or otherwise result in a
forfeiture of the CERCLA Secured-Creditor Exemption prior to foreclosure or
during a workout period. The Asset Conservation Act also clarified the extent of
protection against liability under CERCLA in the event of foreclosure and
authorized certain regulatory clarifications of the scope of the RCRA
Secured-Creditor Exemption for purposes of RCRA, similar to the statutory
protections under CERCLA. However, since the courts have not yet had the
opportunity to interpret the new statutory provisions, the scope of the
additional protections offered by the Asset Conservation Act is not fully
defined. It also is important to note that the Asset Conservation Act does not
offer complete protection to lenders and that the risk of liability remains.

      If a secured lender does become liable, it may be entitled to bring an
action for contribution against the owner or operator who created the
environmental contamination or against some other liable party, but that person
or entity may be bankrupt or otherwise judgment-proof. As a result, it is
possible that cleanup or other environmental liability costs could become a
liability of a Trust Estate and occasion a loss to a Trust Estate and to
certificateholders in certain circumstances. The new secured creditor amendments
to CERCLA, also, would not necessarily affect the potential for liability in
actions by either a state or a private party under other federal or state laws
which may impose liability on "owners or operators" but do not incorporate the
CERCLA Secured-Creditor Exemption.

      Traditionally, residential mortgage lenders have not taken steps to
evaluate whether hazardous wastes or hazardous substances are present with
respect to any mortgaged property prior to the origination of the mortgage loan
or prior to foreclosure or accepting a deed-in-lieu of foreclosure. Accordingly,
at the time the Mortgage Loans were originated these evaluations were not
required, nor are these evaluations required prior to foreclosure or accepting a
deed-in-lieu of foreclosure. Neither the Depositor nor any other entity makes
any representations or warranties or assumes any liability with respect to:

      o   the environmental condition of a mortgaged property;

      o   the absence, presence or effect of hazardous wastes or hazardous
          substances on any mortgaged property;

      o   any casualty resulting from the presence or effect of hazardous wastes
          or hazardous substances on, near or emanating from a mortgaged
          property;

      o   the impact on certificateholders of any environmental condition or
          presence of any substance on or near a mortgaged property; or

      o   the compliance of any mortgaged property with any environmental laws.

      In addition, no agent, person or entity otherwise affiliated with the
Depositor is authorized or able to make any similar representation, warranty or
assumption or liability relative to any Mortgaged Property. See "The Trust
Estates--The Mortgage Loans" and "--'Due-on-Sale' Clauses" above.


                                       83



ENFORCEABILITY OF CERTAIN PROVISIONS

      Standard forms of note, mortgage and deed of trust generally contain
provisions obligating the borrower to pay a late charge if payments are not
timely made and in some circumstances may provide for prepayment fees or
penalties if the obligation is paid prior to maturity. In certain states, there
are or may be specific limitations upon late charges which a lender may collect
from a borrower for delinquent payments. Certain states also limit the amounts
that a lender may collect from a borrower as an additional charge if the loan is
prepaid. Under the pooling and servicing agreement, late charges and prepayment
fees (to the extent permitted by law and not waived by the Servicer) will be
retained by the Servicer as additional servicing compensation.

      Courts have imposed general equitable principles upon foreclosure. These
equitable principles are generally designed to relieve the borrower from the
legal effect of defaults under the loan documents. Examples of judicial remedies
that may be fashioned include judicial requirements that the lender undertake
affirmative and expensive actions to determine the causes for the borrower's
default and the likelihood that the borrower will be able to reinstate the loan.
In some cases, courts have substituted their judgment for the lender's judgment
and have required lenders to reinstate loans or recast payment schedules to
accommodate borrowers who are suffering from temporary financial disability. In
some cases, courts have limited the right of lenders to foreclose if the default
under the mortgage instrument is not monetary, such as the borrower failing to
adequately maintain the property or the borrower executing a second mortgage or
deed of trust affecting the property. In other cases, some courts have been
faced with the issue of whether federal or state constitutional provisions
reflecting due process concerns for adequate notice require that borrowers under
the deeds of trust receive notices in addition to the statutorily prescribed
minimum requirements. For the most part, these cases have upheld the notice
provisions as being reasonable or found that the sale by a trustee under a deed
of trust or under a mortgage having a power of sale does not involve sufficient
state action to afford constitutional protections to the borrower.

                           BENEFIT PLAN CONSIDERATIONS

GENERAL

      The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
and Code Section 4975 impose certain requirements on those employee benefit
plans and arrangements to which they apply and on those persons who are
fiduciaries with respect to these employee benefit plans and arrangements. The
following is a general discussion of these requirements, and certain applicable
exceptions to and administrative exemptions from these requirements.

      For purposes of this discussion, employee benefit plans and arrangements
to which both Title I of ERISA and the Code apply are referred to as "ERISA
PLANS." An individual retirement account established under Code Section 408 (an
"IRA") is an ERISA Plan if the IRA is endorsed by or contributed to by the IRA
participant's employer or employee organization. Other IRAs, as well as certain
employee benefit plans covering only self-employed individuals (collectively,
"NON-ERISA PLANS"), are not considered ERISA Plans, but these Non-ERISA Plans
are subject to ERISA-like requirements as well as the prohibited transaction
provisions of Code Section 4975. Employee benefit plans that are governmental
plans (as defined in Section 3(32) of ERISA) and certain church plans (as
defined in Section 3(33) of ERISA) (collectively, "EXEMPT PLANS") are exempt
from the provisions of Title I of ERISA and the prohibited transaction
provisions of Code Section 4975. Accordingly, Exempt Plans also are not
considered ERISA Plans, but these Exempt Plans may be subject to the provisions
and special requirements of other applicable federal, state and local law.
Exempt Plans, ERISA Plans and Non-ERISA Plans are collectively referred to as
"BENEFIT PLANS."

      Before purchasing any Certificates, an ERISA Plan fiduciary should consult
with its counsel and determine whether any prohibition to its purchase exists
under the requirements of ERISA or the Code, whether any prohibited transaction
exemption such as U.S. Department of Labor ("DOL") Prohibited Transaction Class
Exemption ("PTCE") 83-1 or any individual administrative exemption (as described
below) applies to its purchase, including whether the required conditions for
the exemption would be met, or whether any statutory prohibited transaction
exemption is applicable to that purchase. In addition, an ERISA Plan fiduciary
should consult the discussion relating to Benefit Plans in the prospectus
supplement relating to a series of Certificates.


                                       84



CERTAIN ERISA AND CODE REQUIREMENTS

   GENERAL

      In accordance with ERISA's general fiduciary standards, before investing
in a Certificate, an ERISA Plan fiduciary should determine whether such an
investment is permitted under the governing instruments of the ERISA Plan and is
appropriate for the ERISA Plan in view of its overall investment policy and the
composition and diversification of its portfolio. An ERISA Plan fiduciary should
especially consider the ERISA requirement of investment prudence and the
sensitivity of the return on the Certificates to the rate of principal payments
(including prepayments) on the Mortgage Loans, as discussed under "Prepayment
and Yield Considerations".

   PARTIES IN INTEREST/DISQUALIFIED PERSONS

      The provisions of Section 406 of ERISA (and corresponding provisions of
Code Section 4975) prohibit certain transactions involving the assets of an
ERISA Plan and persons who have certain specified relationships to the ERISA
Plan (so-called "parties in interest" within the meaning of ERISA or
"disqualified persons" within the meaning of the Code). The Depositor, an
Originator, the Sponsor, a Master Servicer, a Servicer or the Trustee or certain
of their affiliates might be or might become "parties in interest" or
"disqualified persons" with respect to an ERISA Plan. As a result, the
acquisition or holding of Certificates by or on behalf of an ERISA Plan could
give rise to a "prohibited transaction" within the meaning of ERISA and Code
Section 4975 unless an administrative exemption described below or some other
exemption is available.

      Special caution should be exercised before the assets of an ERISA Plan
(including assets that may be held in an insurance company's separate or general
accounts where assets in those accounts may be deemed plan assets for purposes
of ERISA) are used to purchase a Certificate if, with respect to those assets,
the Depositor, an Originator, the Sponsor, a Master Servicer, a Servicer or the
Trustee or one of their affiliates either (a) has investment discretion with
respect to the investment of the assets of the ERISA Plan; or (b) has authority
or responsibility to give, or regularly gives, investment advice with respect to
the assets for a fee and pursuant to an agreement or understanding that the
advice will serve as a primary basis for investment decisions with respect to
the assets and will be based on the particular investment needs of the ERISA
Plan.

   DELEGATION OF FIDUCIARY DUTY

      If an investing ERISA Plan's assets were deemed to include an undivided
ownership interest in the assets included in a Trust Estate, an ERISA Plan's
investment in the Certificates might be deemed to constitute a delegation under
ERISA of the duty to manage plan assets by the fiduciary deciding to invest in
the Certificates, and certain transactions involved in the operation of the
Trust Estate might be deemed to constitute prohibited transactions under ERISA
and Code Section 4975. Neither ERISA nor the Code define the term "plan assets."

      The DOL has published regulations (the "DOL REGULATIONS") concerning
whether an ERISA Plan's assets would be deemed to include an interest in the
underlying assets of an entity (such as a Trust Estate) for purposes of the
reporting, disclosure and fiduciary responsibility provisions of ERISA, as well
as for the prohibited transaction provisions of ERISA and Code Section 4975, if
the ERISA Plan acquires an "equity interest" (such as a Certificate) in the
entity.

      Certain exceptions are provided in the DOL Regulations whereby an
investing ERISA Plan's assets would be deemed merely to include its interest in
the Certificates instead of being deemed to include an interest in the
underlying assets of the related Trust Estate. However, it cannot be predicted
in advance, nor can there be any continuing assurance whether the exceptions may
be met, because of the factual nature of certain of the rules set forth in the
DOL Regulations. For example, one of the exceptions in the DOL Regulations
states that the underlying assets of an entity will not be considered "plan
assets" if less than 25% of the value of all classes of equity interests are
held by "benefit plan investors," which term is defined to include ERISA Plans,
Non-ERISA Plans and Exempt Plans and any entity whose assets include "plan
assets" by reason of benefit plan investments in that entity, but this exception
is tested immediately after each acquisition of an equity interest in the entity
whether upon initial issuance or in the secondary market.


                                       85



      The Regulations provide that where an ERISA Plan acquires a "guaranteed
governmental mortgage pool certificate," the ERISA Plan's assets include that
certificate, but do not, solely by reason of the ERISA Plan's holdings of that
certificate, include any of the mortgage loans underlying that certificate. The
Regulations include in the definition of a "guaranteed governmental mortgage
pool certificate" the types of Freddie Mac Certificates, Ginnie Mae Certificates
and Fannie Mae Certificates that may be included in a Trust Estate underlying a
series of Certificates. Accordingly, even if a "guaranteed governmental mortgage
pool certificates" included in a Trust Estate were deemed to be assets of Plan
investors, the mortgage loans underlying those "guaranteed governmental mortgage
pool certificates" would not be treated as plan assets of those ERISA Plans.
Private Certificates are not "guaranteed governmental mortgage pool
certificates." Potential ERISA Plan investors should consult the discussion
relating to Benefit Plans in the related prospectus supplement before purchasing
any those Certificates.

   APPLICABILITY TO NON-ERISA PLANS

      Since Non-ERISA Plans are subject to the prohibited transaction provisions
of the Code, the discussion above with respect to "disqualified persons,"
prohibited transactions, delegation of fiduciary duty and plan assets applies to
Non-ERISA Plans as well as ERISA Plans.

ERISA ADMINISTRATIVE EXEMPTIONS

   INDIVIDUAL ADMINISTRATIVE EXEMPTIONS

      Several underwriters of mortgage-backed securities have received
individual administrative exemptions (each, an "UNDERWRITER'S EXEMPTION") from
certain of the prohibited transaction provisions of ERISA and Code Section 4975.
These Underwriter's Exemptions are broader in some respects than PTCE 83-1,
which is discussed below. These Underwriter's Exemptions apply only to
mortgage-backed securities that, among other conditions, are sold in an offering
for which the applicable underwriter serves as the sole or a managing
underwriter, or as a selling or placement agent. If an Underwriter's Exemption
might be applicable to a series of Certificates, the related prospectus
supplement will discuss that possibility.

      Among the conditions that must be satisfied for an Underwriter's Exemption
to apply are the following:

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

      o   the Certificates acquired by the ERISA Plan have received a rating at
          the time of acquisition that is one of the four highest generic rating
          categories from Standard & Poor's, a division of The McGraw-Hill
          Companies, Inc. ("S&P"), Moody's Investors Service, Inc. ("MOODY'S")
          or Fitch Ratings, Inc. ("FITCH");

      o   the Trustee must not be an affiliate of any other member of the
          Restricted Group (as described below) other than an underwriter;

      o   the sum of all payments made to and retained by the underwriters in
          connection with the distribution of the Certificates represents not
          more than reasonable compensation for underwriting the Certificates;
          the sum of all payments made to and retained by the Depositor pursuant
          to the assignment of the Mortgage Loans to the Trust Estate represents
          not more than the fair market value of the Mortgage Loans; the sum of
          all payments made to and retained by the Master Servicer or any
          Servicer represents not more than reasonable compensation for the
          person's services under the agreement pursuant to which the loans are
          pooled and reimbursements of the person's reasonable expenses; and

      o   the ERISA Plan investing in the Certificates is an "accredited
          investor" as defined in Rule 501(a)(1) of Regulation D of the
          Commission under the Securities Act of 1933, as amended.


                                       86



      The Trust Estate must also meet the following requirements:

      o   the corpus of the Trust Estate must consist solely of assets of the
          type that have been included in other investment pools in the
          marketplace;

      o   certificates in those other investment pools must have been rated in
          one of the four highest rating categories of S&P, Moody's or Fitch for
          at least one year prior to the ERISA Plan's acquisition of the
          Certificates; and

      o   certificates evidencing interests in those other investment pools must
          have been purchased by investors other than ERISA Plans for at least
          one year prior to any ERISA Plan's acquisition of the Certificates.

      Notwithstanding the discussion above, special rules apply for the
application of an Underwriter's Exemption in the case of certificates backed by
pools containing residential or home equity loans with loan-to-value ratios in
excess of 100%.

      (a) The rights and interests evidenced by the certificates acquired by
          ERISA Plans cannot be subordinated to the rights and interests
          evidenced by other certificates of the same trust;

      (b) The certificates acquired by ERISA Plans must have received a rating
          from S&P, Moody's or Fitch at the time of the acquisition that is in
          one of the two highest generic rating categories; and

      (c) The loan-to-value ratio (where the loan amount equals the sum of (i)
          the outstanding principal balance due under any obligation which is
          held by the issuing entity and (ii) the outstanding principal
          balance(s) of any other obligation(s) of higher priority (whether or
          not held by the issuing entity) which are secured by the same
          collateral) of the loans does not exceed 125%.

      Moreover, an Underwriter's Exemption generally can provide relief from
certain self-dealing/conflict of interest prohibited transactions that may occur
when an ERISA Plan fiduciary causes an ERISA Plan to acquire and hold
Certificates in a Trust Estate as to which the fiduciary (or its affiliate) is
an obligor on the Mortgage Assets held in the Trust Estate; provided that, among
other requirements:

      o   in the case of an acquisition in connection with the initial issuance
          of Certificates, at least 50% of each class of Certificates in which
          ERISA Plans have invested is acquired by persons independent of the
          Restricted Group and at least 50% of the aggregate interest in the
          Trust Estate is acquired by persons independent of the Restricted
          Group;

      o   the fiduciary (or its affiliate) is an obligor with respect to 5% or
          less of the fair market value of the obligations contained in the
          Trust Estate;

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

      o   immediately after the acquisition, no more than 25% of the assets of
          the ERISA Plan with respect to which that person is a fiduciary is
          invested in Certificates representing an interest in one or more
          trusts containing assets sold or serviced by the same entity.

      An Underwriter's Exemption does not apply to ERISA Plans sponsored by the
Depositor, the related underwriter, the Trustee, any Master Servicer, any
insurer with respect to the Mortgage Assets, any obligor with respect to
Mortgage Assets included in the Trust Estate constituting more than 5% of the
aggregate unamortized principal balance of the assets in the Trust Estate, or
any affiliate of those parties (collectively, the "RESTRICTED GROUP").

      The prospectus supplement for each series of Certificates will indicate
the classes of Certificates, if any, as to which an Underwriter's Exemption
should apply.


                                       87



   OTHER EXEMPTIONS

      In addition to making its own determination as to the availability of the
exemptive relief provided in the Underwriter's Exemptions, an ERISA Plan
fiduciary should consider the possible availability of any other prohibited
transaction exemptions and, in particular, PTCE 83-1 for Certain Transactions
Involving Mortgage Pool Investment Trusts. PTCE 83-1 permits certain
transactions involving the creation, maintenance and termination of certain
residential mortgage pools and the acquisition and holding of certain
residential mortgage pool pass-through certificates by ERISA Plans, whether or
not the ERISA Plan's assets would be deemed to include an ownership interest in
the mortgage loans in the mortgage pool, and whether or not the transactions
would otherwise be prohibited under ERISA or Code Section 4975.

      The term "mortgage pool pass-through certificate" is defined in PTCE 83-1
as "a certificate representing a beneficial undivided fractional interest in a
mortgage pool and entitling the holder of the certificate to pass-through
payment of principal and interest from the pooled mortgage loans, less any fees
retained by the pool sponsor." It appears that, for purposes of PTCE 83-1, the
term "mortgage pool pass-through certificate" would include Certificates issued
in a single class or in multiple classes that evidence the beneficial ownership
of both a specified percentage of future interest payments (after permitted
deductions) and a specified percentage of future principal payments on a Trust
Estate.

      However, it appears that PTCE 83-1 does not or might not apply to the
purchase and holding of:

      o   Certificates that evidence the beneficial ownership only of a
          specified percentage of future interest payments (after permitted
          deductions) from a Trust Estate or only of a specified percentage of
          future principal payments from a Trust Estate;

      o   Residual Certificates;

      o   Certificates evidencing ownership interests in a Trust Estate that
          includes Mortgage Loans secured by multifamily residential properties
          or shares issued by cooperative housing corporations;

      o   Subordinate Certificates;

      o   Certificates evidencing ownership interests in a Trust Estate
          containing Mortgage Certificates; or

      o   Certificates evidencing ownership interests in the reinvestment income
          of funds on deposit in the related Servicer Custodial Account, Master
          Servicer Custodial Account or Distribution Account.

      PTCE 83-1 sets forth "general conditions" and "specific conditions" to its
applicability. Section II of PTCE 83-1 sets forth the following general
conditions to the application of the exemption:

            (i) the maintenance of a system of insurance or other protection
      for the pooled mortgage loans and the property securing the loans, and for
      indemnifying certificateholders against reductions in pass-through
      payments due to property damage or defaults in loan payments;

            (ii) the existence of a pool trustee who is not an affiliate of the
      pool sponsor; and

            (iii) a requirement that the sum of all payments made to and
      retained by the pool sponsor, and all funds inuring to the benefit of the
      pool sponsor as a result of the administration of the mortgage pool, must
      represent not more than adequate consideration for selling the mortgage
      loans plus reasonable compensation for services provided by the pool
      sponsor to the pool.

      The system of insurance or protection referred to in clause (i) above must
provide protection and indemnification up to an amount not less than the greater
of one percent of the aggregate unpaid principal balance of the pooled mortgages
or the unpaid principal balance of the largest mortgage in the pool. It should
be noted that in


                                       88



promulgating PTCE 83-1 (and a predecessor exemption), the DOL did not have under
its consideration interests in pools of the exact nature as some of the
Certificates described herein.

NON-ERISA PLANS AND EXEMPT PLANS

      Although Non-ERISA Plans and Exempt Plans are not considered ERISA Plans
for purposes of the preceding discussion, Non-ERISA Plans are subject to the
prohibited transaction provisions of Code Section 4975, and both Non-ERISA Plans
and Exempt Plans may be subject to certain other ERISA-like requirements of
applicable law. As a result, before purchasing any Certificates by or on behalf
of a Non-ERISA Plan or any Exempt Plan, the prospective purchaser should
exercise special caution and should consult with its legal counsel concerning
the propriety and implications of its investment under the Code or other
applicable law.

UNRELATED BUSINESS TAXABLE INCOME--RESIDUAL CERTIFICATES

      The purchase of a Residual Certificate by an IRA or any employee benefit
plan qualified under Code Section 401(a) and exempt from taxation under Code
Section 501(a), including most varieties of Benefit Plans, may give rise to
"unrelated business taxable income" as described in Code Sections 511 through
515 and Code Section 860E. Further, prior to the purchase of Residual
Certificates, a prospective transferee may be required to provide an affidavit
to the transferor, the Trustee and the Depositor that it is not, nor is it
purchasing a Residential Certificate on behalf of, a "disqualified
organization," which term as defined herein includes certain tax-exempt entities
not subject to Code Section 511, including certain governmental plans. In
addition, prior to the transfer of a Residual Certificate, the Trustee may
require an opinion of counsel to the effect that the transferee is not a
Disqualified Organization and that the transfer will not subject the Trustee,
the Depositor, the Master Servicer or any Servicer to additional obligations
imposed by ERISA or the Code.

      DUE TO THE COMPLEXITY OF THESE RULES AND THE PENALTIES IMPOSED UPON
PERSONS INVOLVED IN PROHIBITED TRANSACTIONS, IT IS PARTICULARLY IMPORTANT THAT
POTENTIAL INVESTORS WHO ARE ACTING ON BEHALF OF A BENEFIT PLAN OR ANY OTHER
EMPLOYEE BENEFIT PLAN OR ARRANGEMENT CONSULT WITH THEIR LEGAL COUNSEL REGARDING
THE CONSEQUENCES UNDER ERISA, THE CODE AND OTHER APPLICABLE LAW OF THEIR
ACQUISITION AND OWNERSHIP OF CERTIFICATES.

      THE SALE OF CERTIFICATES TO A BENEFIT PLAN OR ANY OTHER EMPLOYEE BENEFIT
PLAN OR ARRANGEMENT IS IN NO RESPECT A REPRESENTATION BY THE DEPOSITOR OR THE
APPLICABLE UNDERWRITER THAT THIS INVESTMENT MEETS ALL RELEVANT LEGAL
REQUIREMENTS WITH RESPECT TO INVESTMENTS BY EMPLOYEE BENEFIT PLANS GENERALLY OR
ANY PARTICULAR PLAN OR ARRANGEMENT, OR THAT THIS INVESTMENT IS APPROPRIATE FOR
EMPLOYEE BENEFIT PLANS GENERALLY OR ANY PARTICULAR PLAN OR ARRANGEMENT.

                         LEGAL INVESTMENT CONSIDERATIONS

      If so specified in the related prospectus supplement, certain classes of
Certificates will constitute "mortgage related securities" for purposes of the
Secondary Mortgage Market Enhancement Act of 1984, as amended ("SMMEA").
Generally, the only classes of Offered Certificates which will qualify as
"mortgage related securities" will be those that (i) are rated in one of the two
highest rating categories by at least one nationally-recognized statistical
rating organization and (ii) are part of a series representing interests in a
Trust Estate consisting of Mortgage Loans originated by certain types of
originators specified in SMMEA and secured by first liens on real estate. The
appropriate characterization of those Certificates not qualifying as "mortgage
related securities" for purposes of SMMEA ("NON-SMMEA CERTIFICATES") under
various legal investment restrictions, and thus the ability of investors subject
to these restrictions to purchase those Certificates, may be subject to
significant interpretive uncertainties. Accordingly, all investors whose
investment activities are subject to legal investment laws and regulations,
regulatory capital requirements, or review by regulatory authorities should
consult with their own legal advisors in determining whether and to what extent
the Non-SMMEA Certificates constitute legal investments for them.

      Those classes of Certificates qualifying as "mortgage related securities"
will constitute legal investments for persons, trusts, corporations,
partnerships, associations, business trusts and business entities (including
state-chartered depository institutions, insurance companies, trustees and
pension funds) created pursuant to or existing


                                       89



under the laws of the United States or of any state (including the District of
Columbia and Puerto Rico) whose authorized investments are subject to state
regulation, to the same extent that, under applicable law, obligations issued by
or guaranteed as to principal and interest by the United States or any of its
agencies or instrumentalities constitute legal investments for those entities.

      Under SMMEA, a number of states enacted legislation, on or before the
October 3, 1991 cut-off for those enactments, limiting to varying extents the
ability of certain entities (in particular, insurance companies) to invest in
"mortgage related securities" secured by liens on residential, or mixed
residential and commercial properties in most cases by requiring the affected
investors to rely solely upon existing state law, and not SMMEA.

      SMMEA also amended the legal investment authority of federally-chartered
depository institutions as follows: federal savings and loan associations and
federal savings banks may invest in, sell or otherwise deal in "mortgage related
securities" without limitation as to the percentage of their assets represented
thereby, federal credit unions may invest in those securities, and national
banks may purchase those securities for their own account without regard to the
limitations generally applicable to investment securities set forth in 12
U.S.C.ss. 24 (Seventh), subject in each case to regulations the applicable
federal regulatory authority may prescribe. In this connection, the OCC has
amended 12 C.F.R. Part 1 to authorize national banks to purchase and sell for
their own account, without limitation as to a percentage of the bank's capital
and surplus (but subject to compliance with certain general standards in 12
C.F.R.ss. 1.5 concerning "safety and soundness" and retention of credit
information), certain "Type IV securities," defined in 12 C.F.R. ss. 1.2(m) to
include certain "residential mortgage-related securities." As so defined,
"residential mortgage-related security" means, in relevant part, "mortgage
related security" within the meaning of SMMEA. The National Credit Union
Administration ("NCUA") has adopted rules, codified at 12 C.F.R. Part 703, which
permit federal credit unions to invest in "mortgage related securities," other
than stripped mortgage related securities (unless the credit union complies with
the requirements of 12 C.F.R. ss. 703.16(e) for investing in those securities)
and residual interests in mortgage related securities, subject to compliance
with general rules governing investment policies and practices; however, credit
unions approved for the NCUA's "investment pilot program" under 12 C.F.R. ss.
703.19 may be able to invest in those prohibited forms of securities. The OTS
has issued Thrift Bulletin 13a (December 1, 1998), "Management of Interest Rate
Risk, Investment Securities, and Derivatives Activities," and Thrift Bulletin
73a (December 18, 2001), "Investing in Complex Securities" which thrift
institutions subject to the jurisdiction of the OTS should consider before
investing in any Certificates.

      All depository institutions considering an investment in the Certificates
should review the "Supervisory Policy Statement on Investment Securities and
End-User Derivatives Activities" of the Federal Financial Institutions
Examination Council, which has been adopted by the Board of Governors of the
Federal Reserve System, the Federal Deposit Insurance Corporation, the OCC and
the OTS, effective May 26, 1998, and by the NCUA, effective October 1, 1998.
This policy statement sets forth general guidelines which depository
institutions must follow in managing risks (including market, credit, liquidity,
operational (transaction), and legal risks) applicable to all securities
(including mortgage pass-through securities and mortgage-derivative products)
used for investment purposes.

      Institutions whose investment activities are subject to regulation by
federal or state authorities should review rules, policies and guidelines
adopted from time to time by those authorities before purchasing any of the
Certificates, as certain classes may be deemed unsuitable investments, or may
otherwise be restricted, under those rules, policies or guidelines (in certain
instances irrespective of SMMEA).

      The preceding discussion does not take into consideration the
applicability of statutes, rules, regulations, orders, guidelines, or agreements
generally governing investments made by a particular investor, including, but
not limited to, "prudent investor" provisions, percentage-of-assets limits,
provisions which may restrict or prohibit investment in securities which are not
"interest-bearing" or "income-paying," and, with regard to any Certificates
issued in book-entry form, provisions which may restrict or prohibit investments
in securities which are issued in book-entry form.

      Except as to the status of certain classes of the Certificates as
"mortgage related securities," no representations are made as to the proper
characterization of the Certificates for legal investment purposes, financial
institution regulatory purposes, or other purposes, or as to the ability of
particular investors to purchase Certificates under applicable legal investment
restrictions. The uncertainties described above (and any unfavorable future


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determinations concerning legal investment or financial institution regulatory
characteristics of the Certificates) may adversely affect the liquidity of the
Certificates.

      Accordingly, all investors whose investment activities are subject to
legal investment laws and regulations, regulatory capital requirements, or
review by regulatory authorities should consult with their own legal advisors in
determining whether and to what extent the Certificates constitute legal
investments or are subject to investment, capital or other restrictions and, if
applicable, whether SMMEA has been overridden in any jurisdiction relevant to
that investor.

                         FEDERAL INCOME TAX CONSEQUENCES

      The following discussion is based on the advice of Orrick, Herrington &
Sutcliffe LLP, Cadwalader, Wickersham & Taft LLP or Hunton & Williams LLP as to
the anticipated material federal income tax consequences of the purchase,
ownership and disposition of the Securities offered hereunder. As to any
Securities offered pursuant hereto, Orrick, Herrington & Sutcliffe LLP,
Cadwalader, Wickersham & Taft LLP or Hunton & Williams LLP is of the opinion
that the following discussion, as supplemented by the discussion under the
heading "Federal Income Tax Consequences", if any, in the prospectus supplement
accompanying this prospectus with respect to those Securities, is correct in all
material respects as of the date of such prospectus supplement. Except as
specifically set forth elsewhere herein, the opinion set forth in the preceding
sentence is the only opinion being rendered with respect to tax matters
affecting the Securities offered hereunder by Orrick, Herrington & Sutcliffe
LLP, Cadwalader, Wickersham & Taft LLP or Hunton & Williams LLP. The opinion
stated above and the opinions specifically identified as such in the following
discussion are the only opinions that Orrick, Herrington & Sutcliffe LLP,
Cadwalader, Wickersham & Taft LLP or Hunton & Williams LLP has been asked to
render with respect to the tax consequences of the purchase, ownership and
dispositions of the securities offered under this prospectus and prospectus
supplement. This discussion is directed solely to Securityholders that hold the
Securities as capital assets within the meaning of Section 1221 of the Internal
Revenue Code of 1986, as amended (the "CODE") and does not purport to discuss
all federal income tax consequences that may be applicable to particular
categories of investors, some of which (such as banks, insurance companies and
foreign investors) may be subject to special rules.

      The authorities on which this discussion and the opinion referred to below
are based are subject to change or differing interpretations which could apply
retroactively. Prospective investors should note that no rulings have been or
will be sought from the IRS with respect to any of the federal income tax
consequences discussed below, and no assurance can be given that the IRS will
not take contrary positions. Taxpayers and preparers of tax returns, including
those filed by any REMIC or other issuer, should be aware that under applicable
Treasury regulations a provider of advice on specific issues of law is not
considered an income tax return preparer unless the advice (1) is given with
respect to events that have occurred at the time the advice is rendered and is
not given with respect to the consequences of contemplated actions, and (2) is
directly relevant to the determination of an entry on a tax return. If penalties
were asserted against purchasers of the Securities offered hereunder in respect
of their treatment of the Securities for tax purposes, the summary of tax
considerations contained, or the opinions stated, herein and in the prospectus
supplement may not meet the conditions necessary for purchasers' reliance on
that summary, or those opinions, to exculpate them from the asserted penalties.
Accordingly, taxpayers should consult their own tax advisors and tax return
preparers regarding the preparation of any item on a tax return, even where the
anticipated tax treatment has been discussed in this prospectus. In addition to
the federal income tax consequences described in this prospectus, potential
investors should consider the state and local tax consequences, if any, of the
purchase, ownership and disposition of the securities. See "State Tax
Considerations."

      For purposes of this discussion, where the applicable prospectus
supplement provides for a Fixed Retained Yield on the Mortgage Loans of a series
of Certificates, references to the Mortgage Loans will be deemed to refer to
that portion of the Mortgage Loans held by the Trust Estate that does not
include the Fixed Retained Yield. References to a "holder" or
"certificateholder" in this discussion generally mean the beneficial owner of a
Certificate.

FEDERAL INCOME TAX CONSEQUENCES FOR REMIC CERTIFICATES

   GENERAL


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      With respect to a series of Certificates, an election may be made to treat
the Trust Estate or one or more segregated pools of assets in the Trust Estate
as one or more real estate mortgage investment conduits (each, a "REMIC") within
the meaning of Code Section 860D. A Trust Estate or a portion or portions of a
Trust Estate as to which one or more REMIC elections will be made will be
referred to as a "REMIC POOL" For purposes of this discussion, Certificates of a
series as to which one or more REMIC elections are made are referred to as
"REMIC CERTIFICATES" and will consist of one or more classes of "REGULAR
CERTIFICATES" and one class of "RESIDUAL CERTIFICATES" in the case of each REMIC
Pool. Qualification as a REMIC requires ongoing compliance with certain
conditions. For each series of REMIC Certificates, Orrick, Herrington &
Sutcliffe LLP, Cadwalader, Wickersham & Taft LLP or Hunton & Williams LLP, each
as counsel to the Depositor, has advised the Depositor that in the firm's
opinion, assuming (i) the making of an appropriate election, (ii) compliance
with the pooling and servicing agreement, and (iii) compliance with any changes
in the law, including any amendments to the Code or applicable Treasury
regulations, each REMIC Pool will qualify as a REMIC. In that case, the Regular
Certificates will be considered to be "regular interests" in the REMIC Pool and
generally will be treated for federal income tax purposes as if they were newly
originated debt instruments, and the Residual Certificates will be considered to
be "residual interests" in the REMIC Pool. The prospectus supplement for each
series of Certificates will indicate whether one or more REMIC elections with
respect to the related Trust Estate will be made, in which event references to
"REMIC" or "REMIC POOL" in this prospectus shall be deemed to refer to each
REMIC Pool.

   STATUS OF REMIC CERTIFICATES

      REMIC Certificates held by a domestic building and loan association will
constitute "a regular or residual interest in a REMIC" within the meaning of
Code Section 7701(a)(19)(C)(xi) in the same proportion that the assets of the
REMIC Pool would be treated as "loans . . . secured by an interest in real
property which is . . . residential real property" within the meaning of Code
Section 7701(a)(19)(C)(v) or as other assets described in Code Section
7701(a)(19)(C). REMIC Certificates held by a real estate investment trust will
constitute "real estate assets" within the meaning of Code Section 856(c)(4)(A),
and interest on the Regular Certificates and income with respect to Residual
Certificates will be considered "interest on obligations secured by mortgages on
real property or on interests in real property" within the meaning of Code
Section 856(c)(3)(B) in the same proportion that, for both purposes, the assets
of the REMIC Pool would be so treated. If at all times 95% or more of the assets
of the REMIC Pool qualify for each of the foregoing treatments, the REMIC
Certificates will qualify for the corresponding status in their entirety. For
purposes of Code Section 856(c)(4)(A), payments of principal and interest on the
Mortgage Loans that are reinvested pending distribution to holders of REMIC
Certificates qualify for that treatment.

      Where two REMIC Pools are a part of a tiered structure they will be
treated as one REMIC for purposes of the tests described above respecting asset
ownership of more or less than 95%. In addition, if the assets of the REMIC
include Buy-Down Loans, it is possible that the percentage of the assets
constituting "loans . . . secured by an interest in real property which is . . .
residential real property" for purposes of Code Section 7701(a)(19)(C)(v), may
be required to be reduced by the amount of the related Buydown Funds. REMIC
Certificates held by a regulated investment company will not constitute
"Government securities" within the meaning of Code Section 851(b)(3)(A)(i).

   QUALIFICATION AS A REMIC

      For the REMIC Pool to qualify as a REMIC, there must be ongoing compliance
on the part of the REMIC Pool with the requirements set forth in the Code. The
REMIC Pool must fulfill an asset test, which requires that no more than a de
minimis portion of the assets of the REMIC Pool, as of the close of the third
calendar month beginning after the "STARTUP DAY" (which for purposes of this
discussion is the date of issuance of the REMIC Certificates) and at all times
thereafter, may consist of assets other than "qualified mortgages" and
"permitted investments." The REMIC Regulations provide a safe harbor under which
the de minimis requirement will be met if at all times the aggregate adjusted
basis of the nonqualified assets is less than 1% of the aggregate adjusted basis
of all the REMIC Pool's assets. An entity that fails to meet the safe harbor may
nevertheless demonstrate that it holds no more than a de minimis amount of
nonqualified assets. A REMIC Pool also must provide "reasonable arrangements" to
prevent its residual interests from being held by "disqualified organizations"
or agents thereof and must furnish applicable tax information to transferors or
agents that violate this requirement. See "--Taxation of Residual
Certificates--Tax-Related Restrictions on Transfer of Residual
Certificates--Disqualified Organizations" below.


                                       92



      A qualified mortgage is any obligation that is principally secured by an
interest in real property and that is either transferred to the REMIC Pool on
the Startup Day or is purchased by the REMIC Pool within a three-month period
thereafter or represents an increase in the loan advanced to the obligor under
its original terms, in each case pursuant to a fixed price contract in effect on
the Startup Day. Qualified mortgages include whole mortgage loans, such as the
Mortgage Loans, and, generally, certificates of beneficial interest in a grantor
trust that holds mortgage loans and regular interests in another REMIC, such as
lower-tier regular interests in a tiered REMIC. The REMIC Regulations specify
that loans secured by timeshare interests and shares held by a tenant
stockholder in a cooperative housing corporation can be qualified mortgages. A
qualified mortgage includes a qualified replacement mortgage, which is any
property that would have been treated as a qualified mortgage if it were
transferred to the REMIC Pool on the Startup Day and that is received either (i)
in exchange for any qualified mortgage within a three-month period thereafter or
(ii) in exchange for a "defective obligation" within a two-year period
thereafter. A "defective obligation" includes (i) a mortgage in default or as to
which default is reasonably foreseeable, (ii) a mortgage as to which a customary
representation or warranty made at the time of transfer to the REMIC Pool has
been breached, (iii) a mortgage that was fraudulently procured by the mortgagor,
and (iv) a mortgage that was not in fact principally secured by real property
(but only if the mortgage is disposed of within 90 days of discovery). A
Mortgage Loan that is "defective" as described in clause (iv) that is not sold
or, if within two years of the Startup Day, exchanged, within 90 days of
discovery, ceases to be a qualified mortgage after that 90-day period.

      Permitted investments include cash flow investments, qualified reserve
assets, and foreclosure property. A cash flow investment is an investment,
earning a return in the nature of interest, of amounts received on or with
respect to qualified mortgages for a temporary period, not exceeding 13 months,
until the next scheduled distribution to holders of interests in the REMIC Pool.
A qualified reserve asset is any intangible property held for investment that is
part of any reasonably required reserve maintained by the REMIC Pool (i) to
provide for payments of expenses of the REMIC Pool or amounts due on the regular
or residual interests in the event of defaults (including delinquencies) on the
qualified mortgages, lower than expected reinvestment returns, prepayment
interest shortfalls and certain other contingencies or (ii) to provide a source
of funding for the purchase of additional mortgage loans pursuant to a
qualifying fixed price or additional draws made by mortgagors under the terms of
loans held by the related REMIC. The aggregate fair market of that reserve
cannot exceed 50% of the aggregate fair market value of all assets of the REMIC
on the Startup Day. The reserve fund will be disqualified if more than 30% of
the gross income from the assets in that fund for the year is derived from the
sale or other disposition of property held for less than three months, unless
required to prevent a default on the regular interests caused by a default on
one or more qualified mortgages. A reserve fund must be reduced "promptly and
appropriately" to the extent no longer required. Foreclosure property is real
property acquired by the REMIC Pool in connection with the default or imminent
default of a qualified mortgage and generally not held beyond the close of the
third calendar year following the year in which the property is acquired with an
extension that may be granted by the Internal Revenue Service.

      In addition to requirements described above, the various interests in a
REMIC Pool also must meet certain requirements. All of the interests in a REMIC
Pool must be either of the following: (i) one or more classes of regular
interests or (ii) a single class of residual interests on which distributions,
if any, are made pro rata. A regular interest is an interest in a REMIC Pool
that is issued on the Startup Day with fixed terms, is designated as a regular
interest, and unconditionally entitles the holder to receive a specified
principal amount (or other similar amount), and provides that interest payments
(or other similar amounts), if any, at or before maturity either are payable
based on a fixed rate or a qualified variable rate, or consist of a specified,
nonvarying portion of the interest payments on qualified mortgages. A specified
portion may consist of a fixed number of basis points, a fixed percentage of the
total interest, or a qualified variable rate, inverse variable rate or
difference between two fixed or qualified variable rates on some or all of the
qualified mortgages. The specified principal amount of a regular interest that
provides for interest payments consisting of a specified, nonvarying portion of
interest payments on qualified mortgages may be zero. A residual interest is an
interest in a REMIC Pool other than a regular interest that is issued on the
Startup Day and that is designated as a residual interest. An interest in a
REMIC Pool may be treated as a regular interest even if payments of principal on
the interest are subordinated to payments on other regular interests or the
residual interest in the REMIC Pool, and are dependent on the absence of
defaults or delinquencies on qualified mortgages or permitted investments, lower
than reasonably expected returns on permitted investments, unanticipated
expenses incurred by the REMIC Pool or prepayment interest shortfalls.
Accordingly, the Regular Certificates of a series will constitute one or more
classes of regular interests, and the Residual Certificates with respect to that
series will constitute a single class of residual interests on which
distributions are made pro rata.


                                       93



      If an entity, such as the REMIC Pool, fails to comply with one or more of
the ongoing requirements of the Code for REMIC status during any taxable year,
the Code provides that the entity will not be treated as a REMIC for that year
and any following year. In this event, an entity with multiple classes of
ownership interests may be treated as a separate association taxable as a
corporation under Treasury regulations, and the Regular Certificates may be
treated as equity interests in that corporation. The Code, however, authorizes
the Treasury Department to issue regulations that address situations where
failure to meet one or more of the requirements for REMIC status occurs
inadvertently and in good faith, and disqualification of the REMIC Pool would
occur absent regulatory relief. Investors should be aware, however, that the
Conference Committee Report to the Tax Reform Act of 1986 (the "1986 ACT")
indicates that the relief may be accompanied by sanctions, such as the
imposition of a corporate tax on all or a portion of the REMIC Pool's income for
the period of time in which the requirements for REMIC status are not satisfied.

TAXATION OF REGULAR CERTIFICATES

   GENERAL

      In general, interest, Original Issue Discount, and market discount on a
Regular Certificate will be treated as ordinary income to a holder of the
Regular Certificate (the "REGULAR CERTIFICATEHOLDER"), and principal payments on
a Regular Certificate will be treated as a return of capital to the extent of
the Regular Certificateholder's basis in the Regular Certificate allocable
thereto (other than accrued market discount not previously reported as income).
Regular Certificateholders must use the accrual method of accounting with regard
to Regular Certificates, regardless of the method of accounting they otherwise
use.

   ORIGINAL ISSUE DISCOUNT

      Accrual Certificates will be, and other classes of Regular Certificates
may be, issued with "ORIGINAL ISSUE DISCOUNT" within the meaning of Code Section
1273(a). Holders of any class of Regular Certificates having Original Issue
Discount generally must include Original Issue Discount in 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 that income. The following discussion is
based in part on temporary and final Treasury regulations (the "OID
REGULATIONS") under Code Sections 1271 through 1273 and 1275 and in part on the
provisions of the 1986 Act. Regular Certificateholders should be aware, however,
that the OID Regulations do not adequately address certain issues relevant to
prepayable securities, such as the Regular Certificates. To the extent these
issues are not addressed in the OID Regulations, it is anticipated that the
Trustee will apply the methodology described in the Conference Committee Report
to the 1986 Act. No assurance can be provided that the Internal Revenue Service
will not take a different position as to those matters not currently addressed
by the OID Regulations. Moreover, the OID Regulations include an antiabuse rule
allowing the Internal Revenue Service to apply or depart from the OID
Regulations where necessary or appropriate to ensure a reasonable tax result in
light of the applicable statutory provisions. A tax result will not be
considered unreasonable under the anti-abuse rule in the absence of a
substantial effect on the present value of a taxpayer's tax liability. Investors
are advised to consult their own tax advisors as to this discussion and the
appropriate method for reporting interest and Original Issue Discount for the
Regular Certificates.

      Each Regular Certificate (except to the extent described below for a
Regular Certificate on which principal is distributed in a single installment or
by lots of specified principal amounts upon the request of a Certificateholder
or by random lot (a "NON-PRO RATA CERTIFICATE")) will be treated as a single
installment obligation for purposes of determining the Original Issue Discount
includible in a Regular Certificateholder's income. The total amount of Original
Issue Discount on a Regular Certificate is the excess of the "stated redemption
price at maturity" of the Regular Certificate over its "issue price." The issue
price of a class of Regular Certificates offered pursuant to this prospectus
generally is the first price at which a substantial amount of the class is sold
to the public (excluding bond houses, brokers and underwriters). Although
unclear under the OID Regulations, it is anticipated that the Trustee will treat
the issue price of a class as to which there is no substantial sale as of the
issue date or that is retained by the Depositor as the fair market value of that
class as of the issue date. The issue price of a Regular Certificate also
includes any amount paid by an initial Regular Certificateholder for accrued
interest that relates to a period prior to the issue date of the Regular
Certificate, unless the Regular Certificateholder elects on its federal income
tax return to exclude that amount from the issue price and to recover it on the
first Distribution Date. The stated redemption


                                       94



price at maturity of a Regular Certificate always includes the original
principal amount of the Regular Certificate, but generally will not include
distributions of interest if those distributions constitute "qualified stated
interest." Under the OID Regulations, qualified stated interest generally means
interest payable at a single fixed rate or a qualified variable rate (as
described below) provided that those interest payments are unconditionally
payable at intervals of one year or less during the entire term of the Regular
Certificate. Because there is no penalty or default remedy in the case of
nonpayment of interest for a Regular Certificate, it is possible that no
interest on any class of Regular Certificates will be treated as qualified
stated interest. However, except as provided in the following three sentences or
in the applicable prospectus supplement, because the underlying Mortgage Loans
provide for remedies in the event of default, it is anticipated that the Trustee
will treat interest on the Regular Certificates as qualified stated interest.
Distributions of interest on a Accrual Certificate, or on other Regular
Certificates for which deferred interest will accrue, will not constitute
qualified stated interest, in which case the stated redemption price at maturity
of the Regular Certificates includes all distributions of interest as well as
principal. Likewise, it is anticipated that the Trustee will treat an
interest-only class or a class on which interest is substantially
disproportionate to its principal amount (a so-called "super-premium" class) as
having no qualified stated interest. Where the interval between the issue date
and the first Distribution Date on a Regular Certificate is shorter than the
interval between subsequent Distribution Dates, the interest attributable to the
additional days will be included in the stated redemption price at maturity.

      Under a de minimis rule, Original Issue Discount on a Regular Certificate
will be considered to be zero if the Original Issue Discount is less than 0.25%
of the stated redemption price at maturity of the Regular Certificate multiplied
by the weighted average maturity of the Regular Certificate. For this purpose,
the weighted average maturity of the 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 Regular Certificate and the
denominator of which is the stated redemption price at maturity of the Regular
Certificate. The Conference Committee Report to the 1986 Act provides that the
schedule of those distributions should be determined in accordance with the
assumed rate of prepayment of the Mortgage Loans (the "PREPAYMENT ASSUMPTION")
and the anticipated reinvestment rate, if any, relating to the Regular
Certificates. The Prepayment Assumption with respect to a series of Regular
Certificates will be set forth in the applicable prospectus supplement. Holders
generally must report de minimis Original Issue Discount pro rata as principal
payments are received, and that income will be capital gain if the Regular
Certificate is held as a capital asset. Under the OID Regulations, however,
Regular Certificateholders may elect to accrue all de minimis Original Issue
Discount as well as market discount and market premium, under the constant yield
method. See "--Election to Treat All Interest Under the Constant Yield Method"
below.

      A Regular Certificateholder generally must include in gross income for any
taxable year the sum of the "daily portions," as defined below, of the Original
Issue Discount on the Regular Certificate accrued during an accrual period for
each day on which it holds the Regular Certificate, including the date of
purchase but excluding the date of disposition. The Trustee will treat the
monthly period ending on the day before each Distribution Date as the accrual
period. For each Regular Certificate, a calculation will be made of the Original
Issue Discount that accrues during each successive full accrual period (or
shorter period from the date of original issue) that ends on the day before the
related Distribution Date on the Regular Certificate. The Conference Committee
Report to the 1986 Act states that the rate of accrual of Original Issue
Discount is intended to be based on the Prepayment Assumption. Other than as
discussed below for a Non-Pro Rata Certificate, the Original Issue Discount
accruing in a full accrual period would be the excess, if any, of (i) the sum of
(a) the present value of all of the remaining distributions to be made on the
Regular Certificate as of the end of that accrual period, and (b) the
distributions made on the Regular Certificate during the accrual period that are
included in the Regular Certificate's stated redemption price at maturity, over
(ii) the adjusted issue price of the Regular Certificate at the beginning of the
accrual period. The present value of the remaining distributions referred to in
the preceding sentence is calculated based on (i) the yield to maturity of the
Regular Certificate at the issue date, (ii) events (including actual
prepayments) that have occurred prior to the end of the accrual period, and
(iii) the Prepayment Assumption. For these purposes, the adjusted issue price of
a Regular Certificate at the beginning of any accrual period equals the issue
price of the Regular Certificate, increased by the aggregate amount of Original
Issue Discount for the Regular Certificate that accrued in all prior accrual
periods and reduced by the amount of distributions included in the Regular
Certificate's stated redemption price at maturity that were made on the Regular
Certificate in those prior periods. The Original Issue Discount accruing during
any accrual period (as determined in this paragraph) will then be divided by the
number of days in


                                       95



the period to determine the daily portion of Original Issue Discount for each
day in the period. If an initial accrual period is shorter than a full accrual
period, the daily portions of Original Issue Discount must be determined
according to an appropriate allocation under any reasonable method.

      Under the method described above, the daily portions of Original Issue
Discount required to be included in income by a Regular Certificateholder
generally will increase to take into account prepayments on the Regular
Certificates as a result of prepayments on the Mortgage Loans that exceed the
Prepayment Assumption, and generally will decrease (but not below zero for any
period) if the prepayments are slower than the Prepayment Assumption. An
increase in prepayments on the Mortgage Loans for a series of Regular
Certificates can result in both a change in the priority of principal payments
for certain classes of Regular Certificates and either an increase or decrease
in the daily portions of Original Issue Discount for the Regular Certificates.

      In the case of a Non-Pro Rata Certificate, it is anticipated that the
Trustee will determine the yield to maturity of that Certificate based upon the
anticipated payment characteristics of the class as a whole under the Prepayment
Assumption. In general, the Original Issue Discount accruing on each Non-Pro
Rata Certificate in a full accrual period would be its allocable share of the
Original Issue Discount for the entire class, as determined in accordance with
the preceding paragraph. However, in the case of a distribution in retirement of
the entire unpaid principal balance of any Non-Pro Rata Certificate (or portion
of this unpaid principal balance), (a) the remaining unaccrued Original Issue
Discount allocable to the Certificate (or to the portion) will accrue at the
time of that distribution, and (b) the accrual of Original Issue Discount
allocable to each remaining Certificate of that class (or the remaining unpaid
principal balance of a partially redeemed Non-Pro Rata Certificate after a
distribution of principal has been received) will be adjusted by reducing the
present value of the remaining payments on that class and the adjusted issue
price of that class to the extent attributable to the portion of the unpaid
principal balance thereof that was distributed. The Depositor believes that the
foregoing treatment is consistent with the "pro rata prepayment" rules of the
OID Regulations, but with the rate of accrual of Original Issue Discount
determined based on the Prepayment Assumption for the class as a whole.
Investors are advised to consult their tax advisors as to this treatment.

   ACQUISITION PREMIUM

      A purchaser of a Regular Certificate at a price greater than its adjusted
issue price but less than its stated redemption price at maturity will be
required to include in gross income the daily portions of the Original Issue
Discount on the Regular Certificate reduced pro rata by a fraction, the
numerator of which is the excess of its purchase price over the adjusted issue
price and the denominator of which is the excess of the remaining stated
redemption price at maturity over the adjusted issue price. Alternatively, a
subsequent purchaser may elect to treat all acquisition premium under the
constant yield method, as described below under the heading "--Election to Treat
All Interest Under the Constant Yield Method" below.

   VARIABLE RATE REGULAR CERTIFICATES

      Regular Certificates may provide for interest based on a variable rate.
Under the OID Regulations, interest is treated as payable at a variable rate if,
generally, (i) the issue price does not exceed the original principal balance by
more than a specified amount and (ii) the interest compounds or is payable at
least annually at current values of (a) one or more "qualified floating rates,"
(b) a single fixed rate and one or more qualified floating rates, (c) a single
"objective rate," or (d) a single fixed rate and a single objective rate that is
a "qualified inverse floating rate." A floating rate is a qualified floating
rate if variations in the rate can reasonably be expected to measure
contemporaneous variations in the cost of newly borrowed funds, where the rate
is subject to a fixed multiple that is greater than 0.65 but not more than 1.35.
The rate may also be increased or decreased by a fixed spread or subject to a
fixed cap or floor, or a cap or floor that is not reasonably expected as of the
issue date to affect the yield of the instrument significantly. An objective
rate is any rate (other than a qualified floating rate) that is determined using
a single fixed formula and that is based on objective financial or economic
information, provided that the information is not (i) within the control of the
issuing entity or a related party or (ii) unique to the circumstances of the
issuing entity or a related party. A qualified inverse floating rate is a rate
equal to a fixed rate minus a qualified floating rate that inversely reflects
contemporaneous variations in the cost of newly borrowed funds; an inverse
floating rate that is not a qualified inverse floating rate may nevertheless be
an objective rate. A class of Regular Certificates may be issued under this
prospectus that does not have a variable rate under the foregoing rules, for
example, a class that


                                       96



bears different rates at different times during the period it is outstanding so
that it is considered significantly "front-loaded" or "back-loaded" within the
meaning of the OID Regulations. It is possible that a class like this may be
considered to bear "contingent interest" within the meaning of the OID
Regulations. The OID Regulations, as they relate to the treatment of contingent
interest, are by their terms not applicable to Regular Certificates. However, if
final regulations dealing with contingent interest with respect to Regular
Certificates apply the same principles as the OID Regulations, these regulations
may lead to different timing of income inclusion than would be the case under
the OID Regulations for non-contingent debt instruments. Furthermore,
application of these principles could lead to the characterization of gain on
the sale of contingent interest Regular Certificates as ordinary income.
Investors should consult their tax advisors regarding the appropriate treatment
of any Regular Certificate that does not pay interest at a fixed rate or
variable rate as described in this paragraph.

      Under the REMIC Regulations, a Regular Certificate (i) bearing a rate that
qualifies as a variable rate under the OID Regulations that is tied to current
values of a variable rate (or the highest, lowest or average of two or more
variable rates, including a rate based on the average cost of funds of one or
more financial institutions), or a positive or negative multiple of such a rate
(plus or minus a specified number of basis points), or that represents a
weighted average of rates on some or all of the Mortgage Loans, including such a
rate that is subject to one or more caps or floors, or (ii) bearing one or more
of these variable rates for one or more periods, or one or more fixed rates for
one or more periods, and a different variable rate or fixed rate for other
periods, qualifies as a regular interest in a REMIC. Accordingly, it is
anticipated that the Trustee will treat Regular Certificates that qualify as
regular interests under this rule in the same manner as obligations bearing a
variable rate for Original Issue Discount reporting purposes.

      The amount of Original Issue Discount for a Regular Certificate bearing a
variable rate of interest will accrue in the manner described above under
"--Original Issue Discount," with the yield to maturity and future payments on
the Regular Certificate generally to be determined by assuming that interest
will be payable for the life of the Regular Certificate based on the initial
rate (or, if different, the value of the applicable variable rate as of the
pricing date) for the relevant class. Unless required otherwise by applicable
final regulations, it is anticipated that the Trustee will treat this interest
as qualified stated interest, except for variable interest on an interest-only
or super-premium class, which will be treated as non-qualified stated interest
includible in the stated redemption price at maturity. Ordinary income
reportable for any period will be adjusted based on subsequent changes in the
applicable interest rate index.

      It is anticipated that the Trustee will treat Regular Certificates bearing
an interest rate that is a weighted average of the net interest rates on
Mortgage Loans as having qualified stated interest, except if initial "teaser"
rates cause sufficiently "back-loaded" interest to create more than de minimis
Original Issue Discount. The yield on these Regular Certificates for purposes of
accruing Original Issue Discount will be a hypothetical fixed rate based on the
fixed rates, in the case of fixed rate Mortgage Loans, and initial "teaser
rates" followed by fully indexed rates, in the case of adjustable-rate Mortgage
Loans. In the case of adjustable-rate Mortgage Loans, the applicable index used
to compute interest on the Mortgage Loans in effect on the pricing date (or
possibly the issue date) will be deemed to be in effect beginning with the
period in which the first weighted average adjustment date occurring after the
issue date occurs. Adjustments will be made in each accrual period either
increasing or decreasing the amount of ordinary income reportable to reflect the
actual pass-through rate on these Regular Certificates.

   MARKET DISCOUNT

      A purchaser of a Regular Certificate also may be subject to the market
discount rules of Code Sections 1276 through 1278. Under these sections and the
principles applied by the OID Regulations in the context of Original Issue
Discount, "market discount" is the amount by which the purchaser's original
basis in the Regular Certificate (i) is exceeded by the then-current principal
amount of the Regular Certificate, or (ii) in the case of a Regular Certificate
having Original Issue Discount, is exceeded by the adjusted issue price of the
Regular Certificate at the time of purchase. That purchaser generally will be
required to recognize ordinary income to the extent of accrued market discount
on the Regular Certificate as distributions includible in the stated redemption
price at maturity thereof are received, in an amount not exceeding that
distribution. This market discount would accrue in a manner to be provided in
Treasury regulations and should take into account the Prepayment Assumption. The
Conference Committee Report to the 1986 Act provides that until those
regulations are issued, this market discount would accrue either (i) on the
basis of a constant interest rate, or (ii) in the ratio of stated interest
allocable to the


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relevant period to the sum of the interest for that period plus the remaining
interest as of the end of that period, or in the case of a Regular Certificate
issued with Original Issue Discount, in the ratio of Original Issue Discount
accrued for the relevant period to the sum of the Original Issue Discount
accrued for the period plus the remaining Original Issue Discount as of the end
of the period. That purchaser also generally will be required to treat a portion
of any gain on a sale or exchange of the Regular Certificate as ordinary income
to the extent of the market discount accrued to the date of disposition under
one of the foregoing methods, less any accrued market discount previously
reported as ordinary income as partial distributions in reduction of the stated
redemption price at maturity were received. That purchaser will be required to
defer deduction of a portion of the excess of the interest paid or accrued on
indebtedness incurred to purchase or carry a Regular Certificate over the
interest distributable thereon. The deferred portion of that interest expense in
any taxable year generally will not exceed the accrued market discount on the
Regular Certificate for that year. Any deferred interest expense is, in general,
allowed as a deduction not later than the year in which the related market
discount income is recognized or the Regular Certificate is disposed of. As an
alternative to the inclusion of market discount in income on the foregoing
basis, the Regular Certificateholder may elect to include market discount in
income currently as it accrues on all market discount instruments acquired by
the Regular Certificateholder in that taxable year or following taxable years,
in which case the interest deferral rule will not apply. See "-- Election to
Treat All Interest Under the Constant Yield Method" below regarding an
alternative manner in which this election may be deemed to be made.

      By analogy to the OID Regulations, market discount on a Regular
Certificate will be considered to be zero if that market discount is less than
0.25% of the remaining stated redemption price at maturity of the Regular
Certificate multiplied by the weighted average maturity of the Regular
Certificate (determined as described above in the third paragraph under
"--Original Issue Discount") remaining after the date of purchase. It appears
that de minimis market discount would be reported in a manner similar to de
minimis Original Issue Discount. See "--Original Issue Discount" above. Treasury
regulations implementing the market discount rules have not yet been issued and,
as a result, investors should consult their own tax advisors regarding the
application of these rules. Investors should also consult Revenue Procedure
92-67 concerning the elections to include market discount in income currently
and to accrue market discount on the basis of the constant yield method.

   PREMIUM

      A Regular Certificate purchased at a cost greater than its remaining
stated redemption price at maturity generally is considered to be purchased at a
premium. If the Regular Certificateholder holds its Regular Certificate as a
"capital asset" within the meaning of Code Section 1221, the Regular
Certificateholder may elect under Code Section 171 to amortize its premium under
the constant yield method. This election will apply to all debt obligations
acquired by the Regular Certificateholder at a premium held in that taxable year
or following taxable years, unless revoked with the permission of the Internal
Revenue Service. The Conference Committee Report to the 1986 Act indicates a
Congressional intent that the same rules that apply to the accrual of market
discount on installment obligations will also apply to amortizing bond premium
under Code Section 171 on installment obligations such as the Regular
Certificates, although it is unclear whether the alternatives to the constant
interest method described above under "--Market Discount" are available.
Amortizable bond premium will be treated as an offset to interest income on a
Regular Certificate, rather than as a separate deduction item. See "--Election
to Treat All Interest Under the Constant Yield Method" below regarding an
alternative manner in which the Code Section 171 election may be deemed to be
made.

   ELECTION TO TREAT ALL INTEREST UNDER THE CONSTANT YIELD METHOD

      A holder of a debt instrument such as a Regular Certificate may elect to
treat all interest that accrues on the instrument using the constant yield
method, with none of the interest being treated as qualified stated interest.
For purposes of applying the constant yield method to a debt instrument subject
to such an election, (i) "interest" includes stated interest, Original Issue
Discount, de minimis Original Issue Discount, market discount and de minimis
market discount, as adjusted by any amortizable bond premium or acquisition
premium and (ii) the debt instrument is treated as if the instrument were issued
on the holder's acquisition date in the amount of the holder's adjusted basis
immediately after acquisition. It is unclear whether, for this purpose, the
initial Prepayment Assumption would continue to apply or if a new prepayment
assumption as of the date of the holder's acquisition would apply. A holder
generally may make this an election on an instrument by instrument basis or for
a class or group of debt instruments. However, if the holder makes this election
for a debt instrument with amortizable bond


                                       98



premium or with market discount, the holder is deemed to have made elections to
amortize bond premium or to report market discount income currently as it
accrues under the constant yield method, respectively, for all premium bonds
held or market discount bonds acquired by the holder in the same taxable year or
following taxable years. The election is made on the holder's federal income tax
return for the year in which the debt instrument is acquired and is irrevocable
except with the approval of the Internal Revenue Service. Investors should
consult their tax advisors regarding the advisability of making this election.

   TREATMENT OF LOSSES

      Regular Certificateholders will be required to report income on Regular
Certificates using the accrual method of accounting, without giving effect to
delays or reductions in distributions attributable to defaults or delinquencies
on the Mortgage Loans, except to the extent it can be established that those
amounts are uncollectible. Accordingly, the holder of a Regular Certificate,
particularly a Subordinate Certificate, may have income, or may incur a
diminution in cash flow as a result of a default or delinquency, but may not be
able to take a deduction (subject to the discussion below) for the corresponding
loss until a subsequent taxable year. In this regard, investors are cautioned
that, while they may generally cease to accrue interest income if it reasonably
appears that the interest will be uncollectible, the Internal Revenue Service
may take the position that Original Issue Discount must continue to be accrued
in spite of its uncollectibility until the debt instrument is disposed of in a
taxable transaction or becomes worthless in accordance with the rules of Code
Section 166. To the extent the rules of Code Section 166 regarding bad debts are
applicable, it appears that Regular Certificateholders that are corporations or
that otherwise hold the Regular Certificates in connection with a trade or
business should in general be allowed to deduct as an ordinary loss that loss
with respect to principal sustained during the taxable year on account of any of
their Regular Certificates becoming wholly or partially worthless, and that, in
general, Regular Certificateholders that are not corporations and do not hold
the Regular Certificates in connection with a trade or business should be
allowed to deduct as a short-term capital loss any loss sustained during the
taxable year on account of a portion of any Regular Certificates becoming wholly
worthless. Although the matter is not free from doubt, non-corporate Regular
Certificateholders should be allowed a bad debt deduction at the time the
principal balance of their Regular Certificates is reduced to reflect losses
resulting from any liquidated Mortgage Loans. The Internal Revenue Service,
however, could take the position that non-corporate holders will be allowed a
bad debt deduction to reflect those losses only after all the Mortgage Loans
remaining in the Trust Estate have been liquidated or the applicable class of
Regular Certificates has been otherwise retired. The Internal Revenue Service
could also assert that losses on the Regular Certificates are deductible based
on some other method that may defer these deductions for all holders, such as
reducing future cash flow for purposes of computing Original Issue Discount this
may have the effect of creating "negative" Original Issue Discount which would
be deductible only against future positive Original Issue Discount or otherwise
upon termination of the class. Regular Certificateholders are urged to consult
their tax advisors regarding the appropriate timing, amount and character of any
loss sustained with respect to the Regular Certificates. While losses
attributable to interest previously reported as income should be deductible as
ordinary losses by both corporate and non-corporate holders, the Internal
Revenue Service may take the position that losses attributable to accrued
Original Issue Discount may only be deducted as capital losses in the case of
non-corporate holders who do not hold the Regular Certificates in connection
with a trade or business. Special loss rules are applicable to banks and thrift
institutions, including rules regarding reserves for bad debts. These taxpayers
are advised to consult their tax advisors regarding the treatment of losses on
Regular Certificates.

   SALE OR EXCHANGE OF REGULAR CERTIFICATES

      If a Regular Certificateholder sells or exchanges a Regular Certificate,
the Regular Certificateholder will recognize gain or loss equal to the
difference, if any, between the amount received and its adjusted basis in the
Regular Certificate. The adjusted basis of a Regular Certificate generally will
equal the cost of the Regular Certificate to the seller, increased by any
Original Issue Discount or market discount previously included in the seller's
gross income for the Regular Certificate and reduced by amounts included in the
stated redemption price at maturity of the Regular Certificate that were
previously received by the seller, by any amortized premium and by any
recognized losses.

      Except as described above relating to market discount, and except as
provided in this paragraph, any gain or loss on the sale or exchange of a
Regular Certificate realized by an investor who holds the Regular


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Certificate as a capital asset will be capital gain or loss and will be
long-term or short-term depending on whether the Regular Certificate has been
held for the applicable holding period (as described below). This gain will be
treated as ordinary income (i) if a Regular Certificate is held as part of a
"conversion transaction" as defined in Code Section 1258(c), up to the amount of
interest that would have accrued on the Regular Certificateholder's net
investment in the conversion transaction at 120% of the appropriate applicable
federal rate under Code Section 1274(d) in effect at the time the taxpayer
entered into the transaction minus any amount previously treated as ordinary
income with respect to any prior disposition of property that was held as part
of the transaction, (ii) in the case of a non-corporate taxpayer, if the
taxpayer has made an election under Code Section 163(d)(4) to have net capital
gains taxed as investment income at ordinary income rates, or (iii) if the gain
does not exceed the excess, if any, of (a) the amount that would have been
includible in the gross income of the holder if its yield on its Regular
Certificate were 110% of the applicable federal rate as of the date of purchase,
over (b) the amount of income actually includible in the gross income of the
holder with respect to its Regular Certificate. In addition, gain or loss
recognized from the sale of a Regular Certificate by certain banks or thrift
institutions will be treated as ordinary income or loss under Code Section
582(c). Long-term capital gains of certain non-corporate taxpayers generally are
subject to a lower maximum tax rate than ordinary income or short-term capital
gains of those taxpayers for property held for more than one year. The maximum
tax rate for corporations is the same with respect to both ordinary income and
capital gains.

TAXATION OF RESIDUAL CERTIFICATES

   TAXATION OF REMIC INCOME

      Generally, the "daily portions" of REMIC taxable income or net loss will
be includible as ordinary income or loss in determining the federal taxable
income of holders of Residual Certificates ("RESIDUAL HOLDERS"), and will not be
taxed separately to the REMIC Pool. The daily portions of REMIC taxable income
or net loss of a Residual Holder are determined by allocating the REMIC Pool's
taxable income or net loss for each calendar quarter ratably to each day in the
quarter and by allocating the daily portion among the Residual Holders in
proportion to their respective holdings of Residual Certificates in the REMIC
Pool on that day. REMIC taxable income is generally determined in the same
manner as the taxable income of an individual using the accrual method of
accounting, except, in addition to certain other adjustments, 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 limitation on the deductibility of interest and
expenses related to tax-exempt income will apply.

      The REMIC Pool'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 from amortization
of issue premium, if any, on the Regular Certificates, plus income on
reinvestment of cash flows and reserve assets, plus any cancellation of
indebtedness income upon allocation of realized losses to the Regular
Certificates. The REMIC Pool's deductions include interest and Original Issue
Discount expense on the Regular Certificates, servicing fees on the Mortgage
Loans, other administrative expenses of the REMIC Pool and realized losses on
the Mortgage Loans. The requirement that Residual Holders report their pro rata
share of taxable income or net loss of the REMIC Pool will continue until there
are no Certificates of any class of the related series outstanding.

      The taxable income recognized by a Residual Holder in any taxable year
will be affected by, among other factors, the relationship between the timing of
recognition of interest and Original Issue Discount or market discount income or
amortization of premium on the Mortgage Loans, on the one hand, and the timing
of deductions for interest (including Original Issue Discount) or income from
amortization of issue premium on the Regular Certificates on the other hand. If
an interest in the Mortgage Loans is acquired by the REMIC Pool at a discount,
and one or more Mortgage Loans is prepaid, the Residual Holder may recognize
taxable income without being entitled to receive a corresponding amount of cash
because (i) the prepayment may be used in whole or in part to make distributions
in reduction of principal on the Regular Certificates and (ii) the discount on
the Mortgage Loans which is includible in income may exceed the deduction
allowed upon distributions of principal on those Regular Certificates on account
of any unaccrued Original Issue Discount relating to those Regular Certificates.
When there is more than one class of Regular Certificates that distribute
principal sequentially, this mismatching of income and deductions is
particularly likely to occur in the early years following issuance of the
Regular Certificates when distributions in reduction of principal are being made
in respect of earlier classes of Regular Certificates if those classes are not
issued with substantial discount or are issued at a premium. If taxable income
attributable to such a


                                       100



mismatching is realized, in general, losses would be allowed in later years as
distributions on the later maturing classes of Regular Certificates are made.
Taxable income may also be greater in earlier years than in later years because
interest expense deductions, expressed as a percentage of the outstanding
principal amount of such a series of Regular Certificates, may increase over
time as distributions in reduction of principal are made on the lower yielding
classes of Regular Certificates, whereas, to the extent the REMIC Pool consists
of fixed-rate Mortgage Loans, interest income with respect to any given Mortgage
Loan will remain constant over time as a percentage of the outstanding principal
amount of that loan. Consequently, Residual Holders must have sufficient other
sources of cash to pay any federal, state or local income taxes due as a result
of this mismatching or unrelated deductions against which to offset that income,
subject to the discussion of "excess inclusions" below under "-- Limitations on
Offset or Exemption of REMIC Income." The timing of mismatching of income and
deductions described in this paragraph, may have a significant adverse effect
upon a Residual Holder's after-tax rate of return. In addition, a Residual
Holder's taxable income during certain periods may exceed the income reflected
by the Residual Holder for those periods in accordance with generally accepted
accounting principles. Investors should consult their accountants concerning the
accounting treatment of their investment in Residual Certificates.

   BASIS AND LOSSES

      The amount of any net loss of the REMIC Pool that may be taken into
account by the Residual Holder is limited to the adjusted basis of the Residual
Certificate as of the close of the quarter (or time of disposition of the
Residual Certificate if earlier), determined without taking into account the net
loss for the quarter. The initial basis of a purchaser of a Residual Certificate
is the amount paid for the Residual Certificate. This basis will be increased by
the amount of taxable income of the REMIC Pool reportable by the Residual Holder
and will be decreased (but not below zero), first, by a cash distribution from
the REMIC Pool and, second, by the amount of loss of the REMIC Pool reportable
by the Residual Holder. Any loss that is disallowed on account of this
limitation may be carried over indefinitely for a Residual Holder as to whom a
loss was disallowed and may be used by that Residual Holder only to offset any
income generated by the same REMIC Pool.

      A Residual Holder will not be permitted to amortize directly the cost of
its Residual Certificate as an offset to its share of the taxable income of the
related REMIC Pool. However, that taxable income will not include cash received
by the REMIC Pool that represents a recovery of the REMIC Pool's basis in its
assets. This recovery of basis by the REMIC Pool will have the effect of
amortization of the issue price of the Residual Certificates over their life.
However, in view of the possible acceleration of the income of Residual Holders
described above under "--Taxation of REMIC Income," the period of time over
which the issue price is effectively amortized may be longer than the economic
life of the Residual Certificates.

      A Residual Certificate may have a negative value if the net present value
of anticipated tax liabilities exceeds the present value of anticipated cash
flows. The REMIC Regulations appear to treat the issue price for this type of
residual interest as zero rather than the negative amount for purposes of
determining the REMIC Pool's basis in its assets. Regulations have been issued
regarding the federal income tax treatment of "inducement fees" received by
transferees of noneconomic REMIC residual interests. These regulations require
inducement fees to be included in income over a period reasonably related to the
period in which a Residual Certificate is expected to generate taxable income or
net loss to its holder. Under two safe harbor methods, inducement fees are
permitted to be included in income: (i) in the same amounts and over the same
period that the Residual Holder uses for financial reporting purposes, provided
that this period is not shorter than the period the related REMIC is expected to
generate taxable income or (ii) ratably over the remaining anticipated weighted
average life of all the regular and residual interests issued by the related
REMIC, determined based on actual distributions projected as remaining to be
made on those interests under the applicable prepayment assumption. If the
Residual Holder sells or otherwise disposes of the residual interest, any
unrecognized portion of the inducement fee generally is required to be taken
into account at the time of the sale or disposition. A prospective purchaser of
a Residual Certificate should consult with its tax counsel regarding the effect
of these regulations.

      Further, if the initial adjusted basis of a Residual Holder (other than an
original holder) in the Residual Certificate is greater than the corresponding
portion of the REMIC Pool's basis in the Mortgage Loans, the Residual Holder
will not recover a portion of its basis until termination of the REMIC Pool
unless future Treasury regulations provide for periodic adjustments to the REMIC
income otherwise reportable by the holder. The REMIC Regulations currently in
effect do not provide for that outcome. See "--Treatment of Certain Items of
REMIC Income and


                                       101



Expense--Market Discount" below regarding the basis of Mortgage Loans to the
REMIC Pool and "--Sale or Exchange of a Residual Certificate" below regarding
possible treatment of a loss upon termination of the REMIC Pool as a capital
loss.

   TREATMENT OF CERTAIN ITEMS OF REMIC INCOME AND EXPENSE

      Although the Depositor intends to compute REMIC income and expense in
accordance with the Code and applicable regulations, the authorities regarding
the determination of specific items of income and expense are subject to
differing interpretations. The Depositor makes no representation as to the
specific method that it will use for reporting income for the Mortgage Loans and
expenses with respect to the Regular Certificates and different methods could
result in different timing of reporting of taxable income or net loss to
Residual Holders or differences in capital gain versus ordinary income.

      Original Issue Discount and Premium. Generally, the REMIC Pool's
deductions for Original Issue Discount and income from amortization of issue
premium will be determined in the same manner as Original Issue Discount income
on Regular Certificates as described above under "--Taxation of Regular
Certificates--Original Issue Discount" and "--Variable Rate Regular
Certificates," without regard to the de minimis rule described therein, and
"--Premium."

      Market Discount. The REMIC Pool will have market discount income on the
Mortgage Loans if, in general, the basis of the REMIC Pool in those Mortgage
Loans is exceeded by their unpaid principal balances. The REMIC Pool's basis in
Mortgage Loans is generally the fair market value of the Mortgage Loans
immediately after their transfer to the REMIC Pool. The REMIC Regulations
provide that this basis is equal in the aggregate to the issue prices of all
regular and residual interests in the REMIC Pool. The accrued portion of the
market discount would be recognized currently as an item of ordinary income in a
manner similar to Original Issue Discount. Market discount income generally
should accrue in the manner described above under "--Taxation of Regular
Certificates--Market Discount."

      Premium. Generally, if the basis of the REMIC Pool in the Mortgage Loans
exceeds their unpaid principal balances, the REMIC Pool will be considered to
have acquired the Mortgage Loans at a premium equal to the amount of the excess.
As stated above, the REMIC Pool's basis in Mortgage Loans is the fair market
value of the Mortgage Loans, based on the aggregate of the issue prices of the
regular and residual interests in the REMIC Pool immediately after the transfer
thereof to the REMIC Pool. In a manner analogous to the discussion above under
"--Taxation of Regular Certificates--Premium," a person that holds a Mortgage
Loan as a capital asset under Code Section 1221 may elect under Code Section 171
to amortize premium on Mortgage Loans originated after September 27, 1985 under
the constant yield method. Amortizable bond premium will be treated as an offset
to interest income on the Mortgage Loans, rather than as a separate deduction
item. Because substantially all of the mortgagors on the Mortgage Loans are
expected to be individuals, Code Section 171 will not be available for premium
on Mortgage Loans originated on or prior to September 27, 1985. Premium on those
Mortgage Loans may be deductible in accordance with a reasonable method
regularly employed by their holder. The allocation of this premium pro rata
among principal payments should be considered a reasonable method; however, the
Internal Revenue Service may argue that this premium should be allocated in a
different manner, such as allocating this premium entirely to the final payment
of principal.

   LIMITATIONS ON OFFSET OR EXEMPTION OF REMIC INCOME

      A portion (or all) of the REMIC taxable income includible in determining
the federal income tax liability of a Residual Holder will be subject to special
treatment. That portion, referred to as the "excess inclusion," is equal to the
excess of REMIC taxable income for the calendar quarter allocable to a Residual
Certificate over the daily accruals for that quarterly period of (i) 120% of the
long-term applicable federal rate that would have applied to the Residual
Certificate (if it were a debt instrument) on the Startup Day under Code Section
1274(d), multiplied by (ii) the adjusted issue price of the Residual Certificate
at the beginning of the quarterly period. For this purpose, the adjusted issue
price of a Residual Certificate at the beginning of a quarter is the issue price
of the Residual Certificate, plus the amount of daily accruals of REMIC income
described in this paragraph for all prior quarters, decreased by any
distributions made on the Residual Certificate prior to the beginning of the
quarterly period.


                                       102



Accordingly, the portion of the REMIC Pool's taxable income that will be treated
as excess inclusions will be a larger portion of that income as the adjusted
issue price of the Residual Certificates diminishes.

      The portion of a Residual Holder's REMIC taxable income consisting of the
excess inclusions generally may not be offset by other deductions, including net
operating loss carryforwards, on the Residual Holder's return. However, net
operating loss carryovers are determined without regard to excess inclusion
income. Further, if the Residual Holder is an organization subject to the tax on
unrelated business income imposed by Code Section 511, the Residual Holder's
excess inclusions will be treated as unrelated business taxable income of the
Residual Holder for purposes of Code Section 511. In addition, REMIC taxable
income is subject to 30% withholding tax for certain persons who are not U.S.
Persons (as defined below under "--Tax-Related Restrictions on Transfer of
Residual Certificates--Foreign Investors"), and the portion of REMIC taxable
income attributable to excess inclusions is not eligible for any reduction in
the rate of withholding tax (by treaty or otherwise). See "--Taxation of Certain
Foreign Investors--Residual Certificates" below. Finally, if a real estate
investment trust or a regulated investment company owns a Residual Certificate,
a portion (allocated under Treasury regulations yet to be issued) of dividends
paid by the real estate investment trust or regulated investment company could
not be offset by net operating losses of its shareholders, would constitute
unrelated business taxable income for tax-exempt shareholders, and would be
ineligible for reduction of withholding to certain persons who are not U.S.
Persons.

      There are three rules for determining the effect of excess inclusions on
the alternative minimum taxable income of a Residual Holder. First, alternative
minimum taxable income for a Residual Holder is determined without regard to the
special rule, discussed above, that taxable income cannot be less than excess
inclusions. Second, a Residual Holder's alternative minimum taxable income for a
taxable year cannot be less than the excess inclusions for the year. Third, the
amount of any alternative minimum tax net operating loss deduction must be
computed without regard to any excess inclusions.

   TAX-RELATED RESTRICTIONS ON TRANSFER OF RESIDUAL CERTIFICATES

      Disqualified Organizations. If any legal or beneficial interest in a
Residual Certificate is transferred to a Disqualified Organization (as defined
below), a tax would be imposed in an amount equal to the product of (i) the
present value of the total anticipated excess inclusions for that Residual
Certificate for periods after the transfer and (ii) the highest marginal federal
income tax rate applicable to corporations. The REMIC Regulations provide that
the anticipated excess inclusions are based on actual prepayment experience to
the date of the transfer and projected payments based on the Prepayment
Assumption. The present value rate equals the applicable federal rate under Code
Section 1274(d) as of the date of the transfer for a term ending with the last
calendar quarter in which excess inclusions are expected to accrue. This rate is
applied to the anticipated excess inclusions from the end of the remaining
calendar quarters in which they arise to the date of the transfer. Such a tax
generally would be imposed on the transferor of the Residual Certificate, except
that where the transfer is through an agent (including a broker, nominee or
other middleman) for a Disqualified Organization, the tax would instead be
imposed on the agent. However, a transferor of a Residual Certificate would in
no event be liable for the tax for a transfer if the transferee furnishes to the
transferor an affidavit stating that the transferee is not a Disqualified
Organization and, as of the time of the transfer, the transferor does not have
actual knowledge that the affidavit is false. The tax also may be waived by the
Internal Revenue Service if the Disqualified Organization promptly disposes of
the Residual Certificate and the transferor pays income tax at the highest
corporate rate on the excess inclusion for the period the Residual Certificate
is actually held by the Disqualified Organization.

      In addition, if a Pass-Through Entity (as defined below) has excess
inclusion income on a Residual Certificate during a taxable year and a
Disqualified Organization is the record holder of an equity interest in that
entity, then a tax is imposed on the entity equal to the product of (i) the
amount of excess inclusions that are allocable to the interest in the
Pass-Through Entity during the period the interest is held by that Disqualified
Organization, and (ii) the highest marginal federal corporate income tax rate.
The tax would be deductible from the ordinary gross income of the Pass-Through
Entity for the taxable year. The Pass-Through Entity would not be liable for the
tax if it has received an affidavit from the record holder that it is not a
Disqualified Organization or stating the holder's taxpayer identification number
and, during the period that person is the record holder of the Residual
Certificate, the Pass-Through Entity does not have actual knowledge that the
affidavit is false.


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      If an Electing Large Partnership" holds a Residual Certificate, all
interests in the Electing Large Partnership are treated as held by Disqualified
Organizations for purposes of the tax imposed upon a Pass-Through Entity by Code
Section 860E(c). An exception to this tax, otherwise available to a Pass-Through
Entity that is furnished certain affidavits by record holders of interests in
the entity and that does not know the affidavits are false, is not available to
an Electing Large Partnership.

      For these purposes, (i) "DISQUALIFIED ORGANIZATION" means the United
States, any state or political subdivision thereof, any foreign government, any
international organization, any agency or instrumentality of any of the
foregoing (provided, that this term does not include an instrumentality if all
of its activities are subject to tax and a majority of its board of directors is
not selected by any similar governmental entity), any cooperative organization
furnishing electric energy or providing telephone service to persons in rural
areas as described in Code Section 1381(a)(2)(C), and any organization (other
than a farmers' cooperative described in Code Section 521) that is exempt from
taxation under the Code unless the organization is subject to the tax on
unrelated business income imposed by Code Section 511, (ii) "PASS-THROUGH
ENTITY" means any regulated investment company, real estate investment trust,
common trust fund, partnership, trust or estate and certain corporations
operating on a cooperative basis, and (iii) an "ELECTING LARGE PARTNERSHIP"
means any partnership having more than 100 members during the preceding tax year
(other than certain service partnerships and commodity pools), which elect to
apply simplified reporting provisions under the Code. Except as may be provided
in Treasury regulations, any person holding an interest in a Pass-Through Entity
as a nominee for another will, with respect to that interest, be treated as a
Pass-Through Entity.

      The pooling and servicing agreement for a series will provide that no
legal or beneficial interest in a Residual Certificate may be transferred or
registered unless (i) the proposed transferee furnishes to the Trustee an
affidavit providing its taxpayer identification number and stating that the
transferee is the beneficial owner of the Residual Certificate and is not a
Disqualified Organization and is not purchasing the Residual Certificate on
behalf of a Disqualified Organization (i.e., as a broker, nominee or middleman
thereof) and (ii) the transferor provides a statement in writing to the Trustee
that it has no actual knowledge that the affidavit is false. Moreover, the
pooling and servicing agreement will provide that any attempted or purported
transfer in violation of these transfer restrictions will be null and void and
will vest no rights in any purported transferee. Each Residual Certificate with
respect to a series will bear a legend referring to these restrictions on
transfer, and each Residual Holder will be deemed to have agreed, as a condition
of ownership thereof, to any amendments to the related pooling and servicing
agreement required under the Code or applicable Treasury regulations to
effectuate the foregoing restrictions. Information necessary to compute an
applicable excise tax must be furnished to the Internal Revenue Service and to
the requesting party within 60 days of the request, and the Sponsor or the
Trustee may charge a fee for computing and providing this information.

      Noneconomic Residual Interests. The REMIC Regulations would disregard
certain transfers of Residual Certificates, in which case the transferor would
continue to be treated as the owner of the Residual Certificates and thus would
continue to be subject to tax on its allocable portion of the net income of the
REMIC Pool. Under the REMIC Regulations, a transfer of a noneconomic residual
interest (as defined below) to a Residual Holder (other than a Residual Holder
who is not a U.S. Person, as defined below under "--Foreign Investors") is
disregarded for all federal income tax purposes if a significant purpose of the
transferor is to impede the assessment or collection of tax. A residual interest
in a REMIC (including a residual interest with a positive value at issuance) is
a "noneconomic residual interest" unless, at the time of the transfer, (i) the
present value of the expected future distributions on the residual interest at
least equals the product of the present value of the anticipated excess
inclusions and the highest federal 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 on each excess inclusion. The
anticipated excess inclusions and the present value rate are determined in the
same manner as set forth above under "--Disqualified Organizations." The REMIC
Regulations explain that a significant purpose to impede the assessment or
collection of tax exists if the transferor, at the time of the transfer, either
knew or should have known that the transferee would be unwilling or unable to
pay taxes due on its share of the taxable income of the REMIC. A safe harbor is
provided if (i) the transferor conducted, at the time of the transfer, a
reasonable investigation of the financial condition of the transferee and found
that the transferee historically had paid its debts as they came due and found
no significant evidence to indicate that the transferee would not continue to
pay its debts as they came due in the future, (ii) the transferee represents to
the transferor that it understands that,


                                       104



as the holder of the non-economic residual interest, the transferee may incur
tax liabilities in excess of any cash flows generated by the interest and that
the transferee intends to pay taxes associated with holding the residual
interest as they become due, (iii) the transferee represents to the transferor
that it will not cause income from the 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 of any other person, and (iv)
one of the two following tests is satisfied: either

      (a)   the present value of the anticipated tax liabilities associated with
            holding the noneconomic residual interest will not exceed the sum
            of:

            (1)   the present value of any consideration given to the transferee
                  to acquire the residual interest;

            (2)   the present value of the expected future distributions on the
                  residual interest; and

            (3)   the present value of the anticipated tax savings associated
                  with holding the residual interest as the REMIC generates
                  losses; or

      (b)   (1)   the transferee must be a domestic "C" corporation (other than
                  a corporation exempt from taxation or a regulated investment
                  company or real estate investment trust) (generally, $100
                  million of gross assets and $10 million of net assets for the
                  current year and the two preceding fiscal years);

            (2)   the transferee must agree in writing that any subsequent
                  transfer of the residual interest would be to an eligible "C"
                  corporation and would meet the requirement for a safe harbor
                  transfer; and

            (3)   the facts and circumstances known to the transferor on or
                  before the date of the transfer must not reasonably indicate
                  that the taxes associated with ownership of the residual
                  interest will not be paid by the transferee.

      For purposes of the computation in clause (a), the transferee is assumed
to pay tax at the highest corporate rate of tax specified in the Code or, in
certain circumstances, the alternative minimum tax rate. Further, present values
generally are computed using a discount rate equal to the short-term Federal
rate set forth in Code Section 1274(d) for the month of the transfer and the
compounding period used by the transferee.

      The pooling and servicing agreement for each series of Certificates will
require the transferee of a Residual Certificate to certify to the matters in
requirements (i) through (iii) above as part of the affidavit described above
under "--Disqualified Organizations." The pooling and servicing agreement will
not require that transfers of the Residual Certificates meet requirement (iv)
above. Consequently, those transfers may not meet the safe harbor. Persons
considering the purchase of the Residual Certificates of a series should consult
their advisors regarding the advisability of meeting the safe harbor in any
transfer of the Residual Certificates.

      Foreign Investors. The REMIC Regulations provide that the transfer of a
Residual Certificate that has "tax avoidance potential" to a Foreign Person will
be disregarded for all federal tax purposes. This rule appears intended to apply
to a transferee who is not a U.S. Person (as defined below), unless that
transferee's income is effectively connected with the conduct of a trade or
business within the United States. A Residual Certificate is deemed to have tax
avoidance potential unless, at the time of the transfer, (i) the future value of
expected distributions equals at least 30% of the anticipated excess inclusions
after the transfer, and (ii) the transferor reasonably expects that the
transferee will receive sufficient distributions from the REMIC Pool at or after
the time at which the excess inclusions accrue and prior to the end of the next
succeeding taxable year for the accumulated withholding tax liability to be
paid. If the non-U.S. Person transfers the Residual Certificate back to a U.S.
Person, the transfer will be disregarded and the foreign transferor will
continue to be treated as the owner unless arrangements are made so that the
transfer does not have the effect of allowing the transferor to avoid tax on
accrued excess inclusions.

      The prospectus supplement relating to the Certificates of a series may
provide that a Residual Certificate may not be purchased by or transferred to
any person that is not a U.S. Person or may describe the circumstances and
restrictions pursuant to which such a transfer may be made. The term "U.S.
PERSON" means a citizen or resident


                                       105



of the United States, a corporation or partnership (except to the extent
provided in applicable Treasury regulations) created or organized in or under
the laws of the United States, any state or the District of Columbia, including
any entity treated as a corporation or partnership for federal income tax
purposes, or any political subdivision thereof, an estate that is subject to
U.S. federal income tax regardless of the source of its income, or a trust if a
court within the United States is able to exercise primary supervision over the
administration of the trust, and one or more U.S. Persons have the authority to
control all substantial decisions of the trust (or, to the extent provided in
applicable Treasury regulations, certain trusts in existence on August 20, 1996
which are eligible to elect to be treated as U.S. Persons).

   SALE OR EXCHANGE OF A RESIDUAL CERTIFICATE

      Upon the sale or exchange of a Residual Certificate, the Residual Holder
will recognize gain or loss equal to the excess, if any, of the amount realized
over the adjusted basis (as described above under "--Basis and Losses") of the
Residual Holder in its Residual Certificate at the time of the sale or exchange.
In addition to reporting the taxable income of the REMIC Pool, a Residual Holder
will have taxable income if any cash distribution to it from the REMIC Pool
exceeds the adjusted basis on that Distribution Date. That income will be
treated as gain from the sale or exchange of the Residual Certificate. It is
possible that the termination of the REMIC Pool may be treated as a sale or
exchange of a Residual Holder's Residual Certificate, in which case, if the
Residual Holder has an adjusted basis in its Residual Certificate remaining when
its interest in the REMIC Pool terminates, and if it holds its Residual
Certificate as a capital asset under Code Section 1221, then it will recognize a
capital loss at that time in the amount of its remaining adjusted basis.

      Any gain on the sale of a Residual Certificate will be treated as ordinary
income (i) if a Residual Certificate is held as part of a "conversion
transaction" as defined in Code Section 1258(c), up to the amount of interest
that would have accrued on the Residual Certificateholder's net investment in
the conversion transaction at 120% of the appropriate applicable Federal rate in
effect at the time the taxpayer entered into the transaction minus any amount
previously treated as ordinary income with respect to any prior disposition of
property that was held as a part of that transaction or (ii) in the case of a
non-corporate taxpayer, if the taxpayer has made an election under Code Section
163(d)(4) to have net capital gains taxed as investment income at ordinary
income rates. In addition, gain or loss recognized from the sale of a Residual
Certificate or termination of the REMIC Pool by certain banks or thrift
institutions will be treated as ordinary income or loss under Code Section
582(c).

      The Conference Committee Report to the 1986 Act provides that, except as
provided in Treasury regulations yet to be issued, the wash sale rules of Code
Section 1091 will apply to dispositions of Residual Certificates where the
seller of the Residual Certificate, during the period beginning six months
before the sale or disposition of the Residual Certificate and ending six months
after that sale or disposition, acquires (or enters into any other transaction
that results in the application of Code Section 1091) any residual interest in
any REMIC or any interest in a "taxable mortgage pool" (such as a non-REMIC
owner trust) that is economically comparable to a Residual Certificate.

   MARK-TO-MARKET REGULATIONS

      The Internal Revenue Service has issued final regulations (the
"MARK-TO-MARKET REGULATIONS") under Code Section 475 relating to the requirement
that a securities dealer mark to market securities held for sale to customers.
This mark-to-market requirement applies to all securities of a dealer, except to
the extent that the dealer has specifically identified a security as held for
investment. The Mark-to-Market Regulations provide that, for purposes of this
mark-to-market requirement, a Residual Certificate is not treated as a security
and thus may not be marked to market.

   TAXES THAT MAY BE IMPOSED ON THE REMIC POOL

   PROHIBITED TRANSACTIONS

      Income from certain transactions by the REMIC Pool, called prohibited
transactions, will not be part of the calculation of income or loss includible
in the federal income tax returns of Residual Holders, but rather will be


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taxed directly to the REMIC Pool at a 100% rate. Prohibited transactions
generally include (i) the disposition of a qualified mortgage other than for (a)
substitution within two years of the Startup Day for a defective (including a
defaulted) obligation (or repurchase in lieu of substitution of a defective
(including a defaulted) obligation at any time) or for any qualified mortgage
within three months of the Startup Day, (b) foreclosure, default, or imminent
default of a qualified mortgage, (c) bankruptcy or insolvency of the REMIC Pool,
or (d) a qualified (complete) liquidation, (ii) the receipt of income from
assets that are not the type of mortgages or investments that the REMIC Pool is
permitted to hold, (iii) the receipt of compensation for services, or (iv) the
receipt of gain from disposition of cash flow investments other than pursuant to
a qualified liquidation. Notwithstanding (i) and (iv) of the preceding sentence,
it is not a prohibited transaction to sell REMIC Pool property to prevent a
default on Regular Certificates as a result of a default on qualified mortgages
or to facilitate a clean-up call (generally, an optional prepayment of the
remaining principal balance of a class of Regular Certificates to save
administrative costs when no more than a small percentage of the Certificates is
outstanding). The REMIC Regulations indicate that the modification of a
qualified mortgage generally will not be treated as a disposition if it is
occasioned by a default or reasonably foreseeable default, an assumption of the
Mortgage Loan, the waiver of a due-on-sale or due-on-encumbrance clause, or the
conversion of an interest rate by a mortgagor pursuant to the terms of a
convertible adjustable-rate Mortgage Loan.

   CONTRIBUTIONS TO THE REMIC POOL AFTER THE STARTUP DAY

      In general, the REMIC Pool will be subject to a tax at a 100% rate on the
value of any property contributed to the REMIC Pool after the Startup Day.
Exceptions are provided for cash contributions to the REMIC Pool (i) during the
three months following the Startup Day, (ii) made to a qualified reserve fund by
a Residual Holder, (iii) in the nature of a guarantee, (iv) made to facilitate a
qualified liquidation or cleanup call, and (v) as otherwise permitted in
Treasury regulations yet to be issued. It is not anticipated that there will be
any contributions to the REMIC Pool after the Startup Day.

   NET INCOME FROM FORECLOSURE PROPERTY

      The REMIC Pool will 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. Generally,
property acquired by deed in lieu of foreclosure would be treated as
"foreclosure property" for a period not exceeding the close of the third
calendar year after the year in which the REMIC Pool acquired the property, with
a possible extension. Net income from foreclosure property generally means gain
from the sale of a foreclosure property that is inventory property and gross
income from foreclosure property other than qualifying rents and other
qualifying income for a real estate investment trust. It is not anticipated that
the REMIC Pool will have any taxable net income from foreclosure property.

   LIQUIDATION OF THE REMIC POOL

      If a REMIC Pool 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 Pool's final tax return a date on which the adoption is deemed to
occur, and sells all of its assets (other than cash) within a 90-day period
beginning on that date, the REMIC Pool will not be subject to the prohibited
transaction rules on the sale of its assets, provided that the REMIC Pool
credits or distributes in liquidation all of the sale proceeds plus its cash
(other than amounts retained to meet claims) to holders of Regular Certificates
and Residual Holders within the 90-day period.

   ADMINISTRATIVE MATTERS

      The REMIC Pool will be required to maintain its books on a calendar year
basis and to file federal income tax returns for federal income tax purposes in
a manner similar to a partnership. The form for this income tax return is Form
1066, U.S. Real Estate Mortgage Investment Conduit Income Tax Return. The
Trustee will be required to sign the REMIC Pool's returns. Treasury regulations
provide that, except where there is a single Residual Holder for an entire
taxable year, the REMIC Pool will be subject to the procedural and
administrative rules of the Code applicable to partnerships, including the
determination by the Internal Revenue Service of any adjustments to, among other
things, items of REMIC income, gain, loss, deduction, or credit in a unified
administrative proceeding. The Master Servicer or the Trustee, as specified in
the related pooling and servicing agreement, will be obligated to


                                       107



act as "tax matters person," as defined in applicable Treasury regulations, with
respect to the REMIC Pool, in its capacity as either Residual Holder or agent of
the Residual Holders. If the Code or applicable Treasury regulations do not
permit the Master Servicer or the Trustee to act as tax matters person in its
capacity as agent of the Residual Holders, the Residual Holder chosen by the
Residual Holders or such other person specified pursuant to Treasury regulations
will be required to act as tax matters person.

   LIMITATIONS ON DEDUCTION OF CERTAIN EXPENSES

      An investor who is an individual, estate or trust will be subject to
limitation on certain itemized deductions described in Code Section 67, if those
itemized deductions, in the aggregate, do not exceed 2% of the investor's
adjusted gross income. In addition, Code Section 68 provides that itemized
deductions otherwise allowable for a taxable year of an individual taxpayer will
be reduced by the lesser of (i) 3% of the excess, if any, of adjusted gross
income over a statutory threshold amount or (ii) 80% of the amount of itemized
deductions otherwise allowable for that year. These limitations will be phased
out and eliminated by 2010. In the case of a REMIC Pool, these deductions may
include deductions under Code Section 212 for the servicing fee and all
administrative and other expenses relating to the REMIC Pool, or any similar
expenses allocated to the REMIC Pool for a regular interest it holds in another
REMIC. Investors who hold REMIC Certificates either directly or indirectly
through certain pass-through entities may have their pro rata share of these
expenses allocated to them as additional gross income, but may be subject to the
limitation on deductions. In addition, these expenses are not deductible at all
for purposes of computing the alternative minimum tax, and may cause these
investors to be subject to significant additional tax liability. Temporary
Treasury regulations provide that the additional gross income and corresponding
amount of expenses generally are to be allocated entirely to the holders of
Residual Certificates in the case of a REMIC Pool that would not qualify as a
fixed investment trust in the absence of a REMIC election. However, the
additional gross income and limitation on deductions will apply to the allocable
portion of those expenses to holders of Regular Certificates, as well as holders
of Residual Certificates, where the Regular Certificates are issued in a manner
that is similar to pass-through certificates in a fixed investment trust. All of
those expenses generally will be allocable to the Residual Certificates. In
general, the allocable portion will be determined based on the ratio that a
REMIC Certificateholder's income, determined on a daily basis, bears to the
income of all holders of Regular Certificates and Residual Certificates for a
REMIC Pool. As a result, individuals, estates or trusts holding REMIC
Certificates (either directly or indirectly through a grantor trust,
partnership, S corporation, REMIC or certain other pass-through entities
described in the foregoing temporary Treasury regulations) may have taxable
income in excess of the interest income at the pass-through rate on Regular
Certificates that are issued in a single class or otherwise consistently with
fixed investment trust status or in excess of cash distributions for the related
period on Residual Certificates.

   TAXATION OF CERTAIN FOREIGN INVESTORS

   REGULAR CERTIFICATES

      Interest, including Original Issue Discount, distributable to Regular
Certificateholders who are non-resident aliens, foreign corporations, or other
non-U.S. Persons, will be considered "portfolio interest" and, therefore,
generally will not be subject to 30% United States withholding tax, provided
that such non-U.S. Person (i) is not a "10-percent shareholder" (within the
meaning of Code Section 871(h)(3)(B)) of, or a controlled foreign corporation
(described in Code Section 881(c)(3)(C)) related to, the REMIC (or possibly one
or more mortgagors) and (ii) provides the Trustee, or the person who would
otherwise be required to withhold tax from such distributions under Code Section
1441 or 1442 with appropriate documentation, signed under penalties of perjury,
establishing an exemption from withholding. The appropriate documentation
includes IRS Form W-8BEN, if the non-U.S. Person is a corporation or individual
eligible for the benefits of the portfolio interest exemption or an exemption
based on a treaty; IRS Form W-8ECI if the non-U.S. Person is eligible for an
exemption on the basis of its income from the Regular Certificate being
effectively connected to a United States trade or business; IRS Form W-8BEN or
IRS Form W-8IMY, if the non-U.S. Person is a trust, depending on whether such
trust is classified as the beneficial owner of the Regular Certificate; and IRS
Form W-8IMY, with supporting documentation as specified in the Treasury
regulations, required to substantiate exemptions from withholding, on behalf of
its partners, if the non-U.S. Person is a partnership. An intermediary (other
than a partnership) must provide IRS Form W-8IMY, revealing all required
information, including its name, address, taxpayer identification number, the
country under the laws of which it is created, and certification that it is not
acting for its own account. A "qualified intermediary" must certify


                                       108



that it has provided, or will provide, a withholding statement as required under
Treasury regulations Section 1.1441-1(e)(5)(v), but need not disclose the
identity of its account holders on its Form W-8IMY, and may certify its account
holders' status without including each beneficial owner's certificate. A
non-"qualified intermediary" must additionally certify that it has provided, or
will provide, a withholding statement that is associated with the appropriate
IRS Forms W-8 and W-9 required to substantiate exemptions from withholding on
behalf of its beneficial owners. If any of the foregoing forms, or any other
required documentation is not provided, 30% withholding will apply. The term
"intermediary" means a person acting as a custodian, a broker, nominee or
otherwise as an agent for the beneficial owner of a Regular Certificate. A
"qualified intermediary" is generally a foreign financial institution or
clearing organization or a non-U.S. branch or office of a U.S. financial
institution or clearing organization that is a party to a withholding agreement
with the IRS.

   RESIDUAL CERTIFICATES

      The Conference Committee Report to the 1986 Act indicates that amounts
paid to Residual Holders who are non-U.S. Persons generally should be treated as
interest for purposes of the 30% (or lower treaty rate) United States
withholding tax. Treasury regulations provide that amounts distributed to
Residual Holders may qualify as "portfolio interest," subject to the conditions
described in "--Regular Certificates" above, but only if (i) the Mortgage Loans
were issued after July 18, 1984 and (ii) the Trust Estate or segregated pool of
assets in the Trust Estate (as to which a separate REMIC election will be made),
to which the Residual Certificate relates, consists of obligations issued in
"registered form" within the meaning of Code Section 163(f)(1). Generally,
Mortgage Loans will not be, but regular interests in another REMIC Pool will be,
considered obligations issued in registered form. Furthermore, a Residual Holder
will not be entitled to any exemption from the 30% withholding tax (or lower
treaty rate) to the extent of that portion of REMIC taxable income that
constitutes an "excess inclusion." See "--Taxation of Residual Certificates--
Limitations on Offset or Exemption of REMIC Income" above. If the amounts paid
to Residual Holders who are non-U.S. Persons are effectively connected with the
conduct of a trade or business within the United States by those non-U.S.
Persons, 30% (or lower treaty rate) withholding will not apply. Instead, the
amounts paid to the non-U.S. Persons will be subject to United States federal
income tax at regular rates. If 30% (or lower treaty rate) withholding is
applicable, those amounts generally will be taken into account for purposes of
withholding only when paid or otherwise distributed (or when the Residual
Certificate is disposed of) under rules similar to withholding upon disposition
of debt instruments that have Original Issue Discount. See "--Taxation of
Residual Certificates--Tax-Related Restrictions on Transfer of Residual
Certificates--Foreign Investors" above concerning the disregard of certain
transfers having "tax avoidance potential." Investors who are Non-U.S. Persons
should consult their tax advisors regarding the specific tax consequences to
them of owning Residual Certificates.

   BACKUP WITHHOLDING

      Distributions made on the Regular Certificates, and proceeds from the sale
of the Regular Certificates to or through certain brokers, may be subject to a
"backup" withholding tax under Code Section 3406 at the rate of 28% (increasing
to 31% after 2010) on "reportable payments" (including interest distributions,
Original Issue Discount, and, under certain circumstances, principal
distributions) unless the Regular Certificateholder is a U.S. Person and
provides IRS Form W-9 with the correct taxpayer identification number; is a
non-U.S. Person and provides IRS Form W-8BEN identifying the non-U.S. Person and
stating that the beneficial owner is not a U.S. Person; or can be treated as an
exempt recipient within the meaning of Treasury regulations Section
1.6049-4(c)(1)(ii). Any amounts to be withheld from distribution on the Regular
Certificates would be refunded by the IRS or allowed as a credit against the
Regular Certificateholder's federal income tax liability. Information reporting
requirements may also apply regardless of whether withholding is required.
Prospective investors are encouraged to consult their own tax advisors regarding
the application to them of information reporting.

   REPORTING REQUIREMENTS

      Reports of accrued interest, Original Issue Discount and information
necessary to compute the accrual of market discount will be made annually to the
Internal Revenue Service and to individuals, estates, nonexempt and
non-charitable trusts, and partnerships who are either holders of record of
Regular Certificates or beneficial owners who own Regular Certificates through a
broker or middleman as nominee. All brokers, nominees and all other non-exempt
holders of record of Regular Certificates (including corporations, non-calendar
year taxpayers, securities or commodities dealers, real estate investment
trusts, investment companies, common trust funds, thrift institutions and


                                       109



charitable trusts) may request this information for any calendar quarter by
telephone or in writing by contacting the person designated in Internal Revenue
Service Publication 938 with respect to a particular series of Regular
Certificates. Holders through nominees must request this information from the
nominee.

      The Internal Revenue Service's Form 1066 has an accompanying Schedule Q,
Quarterly Notice to Residual Interest Holders of REMIC Taxable Income or Net
Loss Allocation. Treasury regulations require that Schedule Q be furnished by
the REMIC Pool to each Residual Holder by the end of the month following the
close of each calendar quarter (41 days after the end of a quarter under
proposed Treasury regulations) in which the REMIC Pool is in existence.

      Treasury regulations require that, in addition to the foregoing
requirements, information must be furnished quarterly to Residual Holders,
furnished annually, if applicable, to holders of Regular Certificates, and filed
annually with the Internal Revenue Service concerning Code Section 67 expenses
(see "--Limitations on Deduction of Certain Expenses" above) allocable to these
holders. Furthermore, under the Treasury regulations, information must be
furnished quarterly to Residual Holders, furnished annually to holders of
Regular Certificates and filed annually with the Internal Revenue Service
concerning the percentage of the REMIC Pool's assets meeting the qualified asset
tests described above under "--Status of REMIC Certificates."

FEDERAL INCOME TAX CONSEQUENCES FOR CERTIFICATES AS TO WHICH NO REMIC ELECTION
IS MADE

   GENERAL

      If no election is made to treat a Trust Estate (or a segregated pool of
assets in the Trust Estate) with respect to a series of Certificates as a REMIC,
the Trust Estate will be classified as a grantor trust under subpart E, Part 1
of subchapter J of the Code and not as an association taxable as a corporation
or a "taxable mortgage pool" within the meaning of Code Section 7701(i). Where
there is no Fixed Retained Yield on the Mortgage Loans underlying the
Certificates of a series, and where those Certificates are not designated as
Stripped Certificates, the holder of each Certificate in that series will be
treated as the owner of a pro rata undivided interest in the ordinary income and
corpus portions of the Trust Estate represented by its Certificate and will be
considered the beneficial owner of a pro rata undivided interest in each of the
Mortgage Loans, subject to the discussion below under "--Recharacterization of
Servicing Fees." Accordingly, the holder of a Certificate of a particular series
will be required to report on its federal income tax return its pro rata share
of the entire income from the Mortgage Loans represented by its Certificate,
including interest at the mortgage interest rate on the Mortgage Loans, Original
Issue Discount (if any), prepayment fees, assumption fees, and late payment
charges received by the Master Servicer, in accordance with that
certificateholder's method of accounting. A certificateholder generally will be
able to deduct its share of the servicing fee and all administrative and other
expenses of the Trust Estate in accordance with its method of accounting,
provided that those amounts are reasonable compensation for services rendered to
that Trust Estate. However, investors who are individuals, estates or trusts who
own Certificates, either directly or indirectly through certain pass-through
entities, will be subject to limitation with respect to certain itemized
deductions described in Code Section 67, including deductions under Code Section
212 for the servicing fee and all administrative and other expenses of the Trust
Estate, to the extent that the deductions, in the aggregate, do not exceed two
percent of an investor's adjusted gross income. In addition, Code Section 68
provides that itemized deductions otherwise allowable for a taxable year of an
individual taxpayer will be reduced by the lesser of (i) 3% of the excess, if
any, of adjusted gross income over a statutory threshold amount or (ii) 80% of
the amount of itemized deductions otherwise allowable for that year. These
limitations will be phased out and eliminated by 2010. As a result, investors
holding Certificates, directly or indirectly through a pass-through entity, may
have aggregate taxable income in excess of the aggregate amount of cash received
on their Certificates relating to interest at the pass-through rate or as
discount income on their Certificates. In addition, these expenses are not
deductible at all for purposes of computing the alternative minimum tax, and may
cause investors to be subject to significant additional tax liability. Moreover,
where there is Fixed Retained Yield on the Mortgage Loans underlying a series of
Certificates or where the servicing fees are in excess of reasonable servicing
compensation, the transaction will be subject to the application of the
"stripped bond" and "stripped coupon" rules of the Code, as described below
under "--Stripped Certificates" and "--Recharacterization of Servicing Fees."

   TAX STATUS


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      Each of Orrick, Herrington & Sutcliffe LLP, Cadwalader, Wickersham & Taft
LLP and Hunton & Williams LLP has advised the Depositor that, except as
described below with respect to Stripped Certificates:

            (i) A Certificate owned by a "domestic building and loan
      association" within the meaning of Code Section 7701(a)(19) will be
      considered to represent "loans . . . secured by an interest in real
      property which is . . . residential real property" within the meaning of
      Code Section 7701(a)(19)(C)(v), provided that the real property securing
      the Mortgage Loans represented by that Certificate is of the type
      described in that section of the Code.

            (ii) A Certificate owned by a real estate investment trust will be
      considered to represent "real estate assets" within the meaning of Code
      Section 856(c)(4)(A) to the extent the assets of the related Trust Estate
      consist of qualified assets, and interest income on those assets will be
      considered "interest on obligations secured by mortgages on real property"
      to that extent within the meaning of Code Section 856(c)(3)(B).

            (iii) A Certificate owned by a REMIC will be considered to represent
      an "obligation (including any participation or certificate of beneficial
      ownership therein) which is principally secured by an interest in real
      property" within the meaning of Code Section 860G(a)(3)(A) to the extent
      the assets of the related Trust Estate consist of "qualified mortgages"
      within the meaning of Code Section 860G(a)(3).

      An issue arises as to whether Buydown Loans may be characterized in their
entirety under the Code provisions cited in clauses (i) and (ii) of the
immediately preceding paragraph. There is indirect authority supporting
treatment of an investment in a Buydown Loan as entirely secured by real
property if the fair market value of the real property securing the loan exceeds
the principal amount of the loan at the time of issuance or acquisition, as the
case may be. There is no assurance that the treatment described above is
correct. Accordingly, Certificateholders are urged to consult their tax advisors
concerning the effects of these arrangements on the characterization of their
investment for federal income tax purposes.

   PREMIUM AND DISCOUNT

      Certificateholders are advised to consult with their tax advisors as to
the federal income tax treatment of premium and discount arising either upon
initial acquisition of Certificates or afterwards.

   PREMIUM

      The treatment of premium incurred upon the purchase of a Certificate will
be determined generally as described above under "--Federal Income Tax
Consequences for REMIC Certificates--Taxation of Residual
Certificates--Treatment of Certain Items of REMIC Income and Expense--Premium."

   ORIGINAL ISSUE DISCOUNT

      The Original Issue Discount rules of Code Sections 1271 through 1275 will
be applicable to a Certificateholder's interest in those Mortgage Loans as to
which the conditions for the application of those sections are met. Rules
regarding periodic inclusion of Original Issue Discount 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, Original Issue Discount could arise by the charging of points by
the originator of the mortgages 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 Loans. See "--Stripped
Certificates" below regarding Original Issue Discount on Stripped Certificates.

      Original Issue Discount generally must be reported as ordinary gross
income as it accrues under a constant interest method that takes into account
the compounding of interest, in advance of the cash attributable to that income.
Generally, no Prepayment Assumption will be assumed for purposes of this
accrual. However, Code


                                       111



Section 1272 provides for a reduction in the amount of Original Issue Discount
includible in the income of a holder of an obligation that acquires the
obligation after its initial issuance at a price greater than the sum of the
original issue price and the previously accrued Original Issue Discount, less
prior payments of principal. Accordingly, if Mortgage Loans acquired by a
Certificateholder are purchased at a price equal to the then unpaid principal
amount of those Mortgage Loans, no Original Issue Discount attributable to the
difference between the issue price and the original principal amount of those
Mortgage Loans (i.e., points) will be includible by the holder.

   MARKET DISCOUNT

      Certificateholders also will be subject to the market discount rules if
the conditions for application of those sections are met. Market discount on the
Mortgage Loans will be determined and will be reported as ordinary income
generally in the manner described above under "--Federal Income Tax Consequences
for REMIC Certificates--Taxation of Regular Certificates--Market Discount,"
except that the ratable accrual methods described in those sections will not
apply. Rather, the holder will accrue market discount pro rata over the life of
the Mortgage Loans, unless the constant yield method is elected. Generally, no
Prepayment Assumption will be assumed for purposes of that accrual.

   RECHARACTERIZATION OF SERVICING FEES

      If the servicing fees paid to a Master Servicer were deemed to exceed
reasonable servicing compensation, the amount of any excess would represent
neither income nor a deduction to certificateholders. In this regard, there are
no authoritative guidelines for federal income tax purposes as to either the
maximum amount of servicing compensation that may be considered reasonable in
the context of this or similar transactions or whether, in the case of the
Certificate, the reasonableness of servicing compensation should be determined
on a weighted average or loan-by-loan basis. If a loan-by-loan basis is
appropriate, the likelihood that the amount would exceed reasonable servicing
compensation as to some of the Mortgage Loans would be increased. Internal
Revenue Service guidance indicates that a servicing fee in excess of reasonable
compensation ("EXCESS SERVICING") will cause the Mortgage Loans to be treated
under the "stripped bond" rules. This guidance provides safe harbors for
servicing deemed to be reasonable and requires taxpayers to demonstrate that the
value of servicing fees in excess of those amounts is not greater than the value
of the services provided.

      Accordingly, if the Internal Revenue Service's approach is upheld, a
Master Servicer who receives a servicing fee in excess of those amounts would be
viewed as retaining an ownership interest in a portion of the interest payments
on the Mortgage Loans. Under the rules of Code Section 1286, the separation of
ownership of the right to receive some or all of the interest payments on an
obligation from the right to receive some or all of the principal payments on
the obligation would result in treatment of the Mortgage Loans as "stripped
coupons" and "stripped bonds." Subject to the de minimis rule discussed below
under "--Stripped Certificates," each stripped bond or stripped coupon could be
considered for this purpose as a non-interest bearing obligation issued on the
date of issue of the Certificates, and the Original Issue Discount rules of the
Code would apply to its holder. While certificateholders would still be treated
as owners of beneficial interests in a grantor trust for federal income tax
purposes, the corpus of the grantor trust could be viewed as excluding the
portion of the Mortgage Loans the ownership of which is attributed to the Master
Servicer, or as including this portion as a second class of equitable interest.
Applicable Treasury regulations treat this arrangement as a fixed investment
trust, since the multiple classes of trust interests should be treated as merely
facilitating direct investments in the trust assets and the existence of
multiple classes of ownership interests is incidental to that purpose. In
general, this recharacterization should not have any significant effect upon the
timing or amount of income reported by a certificateholder, except that the
income reported by a cash method holder may be slightly accelerated. See
"--Stripped Certificates" below for a further description of the federal income
tax treatment of stripped bonds and stripped coupons.

   SALE OR EXCHANGE OF CERTIFICATES

      Upon sale or exchange of a Certificate, a certificateholder will recognize
gain or loss equal to the difference between the amount realized on the sale and
its aggregate adjusted basis in the Mortgage Loans and other assets represented
by the Certificate. In general, the aggregate adjusted basis will equal the
certificateholder's cost for the Certificate, increased by the amount of any
income previously reported relating to the Certificate and decreased by the
amount of any losses previously reported for the Certificate and the amount of
any distributions received on the


                                       112



certificate. Except as provided above relating to market discount on any
Mortgage Loans, and except for certain financial institutions subject to the
provisions of Code Section 582(c), any gain or loss generally would be capital
gain or loss if the Certificate was held as a capital asset. However, gain on
the sale of a Certificate will be treated as ordinary income (i) if a
Certificate is held as part of a "conversion transaction" as defined in Code
Section 1258(c), up to the amount of interest that would have accrued on the
certificateholder's net investment in the conversion transaction at 120% of the
appropriate applicable Federal rate in effect at the time the taxpayer entered
into the transaction minus any amount previously treated as ordinary income with
respect to any prior disposition of property that was held as a part of that
transaction or (ii) in the case of a non-corporate taxpayer, if the taxpayer has
made an election under Code Section 163(d)(4) to have net capital gains taxed as
investment income at ordinary income rates. Long-term capital gains of certain
noncorporate taxpayers generally are subject to a lower maximum tax rate than
ordinary income or short-term capital gains of those taxpayers for property held
more than one year. The maximum tax rate for corporations is the same with
respect to both ordinary income and capital gains.

   STRIPPED CERTIFICATES

   GENERAL

      Pursuant to Code Section 1286, the separation of ownership of the right to
receive some or all of the principal payments on an obligation from ownership of
the right to receive some or all of the interest payments results in the
creation of "stripped bonds" with respect to principal payments and "stripped
coupons" with respect to interest payments. For purposes of this discussion,
Certificates that are subject to those rules will be referred to as "STRIPPED
CERTIFICATES." The Certificates will be subject to those rules if (i) the
Depositor or any of its affiliates retains (for its own account or for purposes
of resale), in the form of Fixed Retained Yield or otherwise, an ownership
interest in a portion of the payments on the Mortgage Loans, (ii) the Depositor
or any of its affiliates is treated as having an ownership interest in the
Mortgage Loans if it is paid (or retains) servicing compensation in an amount
greater than reasonable consideration for servicing the Mortgage Loans (see
"--Recharacterization of Servicing Fees" above), and (iii) a class of
Certificates issued in two or more classes or subclasses representing the right
to non-pro-rata percentages of the interest and principal payments on the
Mortgage Loans.

      In general, a holder of a Stripped Certificate will be considered to own
"stripped bonds" for its pro rata share of all or a portion of the principal
payments on each Mortgage Loan and/or "stripped coupons" relating to its pro
rata share of all or a portion of the interest payments on each Mortgage Loan,
including the Stripped Certificate's allocable share of the servicing fees paid
to a Master Servicer, if these fees represent reasonable compensation for
services rendered. See the discussion above under "--Recharacterization of
Servicing Fees." Although not free from doubt, for purposes of reporting to
Stripped Certificateholders, the servicing fees will be allocated to the
Stripped Certificates in proportion to the respective entitlements to
distributions of each class of Stripped Certificates for the related period or
periods. The holder of a Stripped Certificate generally will be entitled to a
deduction each year in respect of the servicing fees, as described above under
"--General," subject to the limitation described in that section.

      Code Section 1286 treats a stripped bond or a stripped coupon generally as
an obligation issued at an Original Issue Discount on the date that the stripped
interest is purchased. Although the treatment of Stripped Certificates for
federal income tax purposes is not clear in certain respects at this time,
particularly where those Stripped Certificates are issued with respect to a
Mortgage Pool containing variable-rate Mortgage Loans, the Depositor has been
advised by counsel that (i) the Trust Estate will be treated as a grantor trust
under subpart E, Part I of subchapter J of the Code and not as an association
taxable as a corporation or a "taxable mortgage pool" within the meaning of Code
Section 7701(i), and (ii) each Stripped Certificate should be treated as a
single installment obligation for purposes of calculating Original Issue
Discount and gain or loss on disposition. This treatment is based on the
interrelationship of Code Section 1286, Code Sections 1272 through 1275, and the
OID Regulations. Although it is possible that computations with respect to
Stripped Certificates could be made in one of the ways described below under
"--Taxation of Stripped Certificates--Possible Alternative Characterizations,"
the OID Regulations state, in general, that two or more debt instruments issued
by a single issuer to a single investor in a single transaction should be
treated as a single debt instrument. Accordingly, for OID purposes, all payments
on any Stripped Certificates should be aggregated and treated as though they
were made on a single debt instrument. The pooling and servicing agreement will
require that the Trustee make and report all computations described below using
this aggregate approach, unless substantial legal authority requires otherwise.


                                       113



      Furthermore, Treasury regulations issued December 28, 1992 provide for
treatment of a Stripped Certificate as a single debt instrument issued on the
date it is purchased for purposes of calculating any Original Issue Discount. In
addition, under these regulations, a Stripped Certificate that represents a
right to payments of both interest and principal may be viewed either as issued
with Original Issue Discount or market discount (as described below), at a de
minimis Original Issue Discount, or, presumably, at a premium. This treatment
indicates that the interest component of this type of Stripped Certificate would
be treated as qualified stated interest under the OID Regulations, assuming it
is not an interest-only or super-premium Stripped Certificate. Further, these
final regulations provide that the purchaser of this type of Stripped
Certificate will be required to account for any discount as market discount
rather than Original Issue Discount if either (i) the initial discount with
respect to the Stripped Certificate was treated as zero under the de minimis
rule, or (ii) no more than 100 basis points in excess of reasonable servicing is
stripped off the related Mortgage Loans. Any of this market discount would be
reportable as described above under "Federal Income Tax Consequences for REMIC
Certificates--Taxation of Regular Certificates--Market Discount," without regard
to the de minimis rule discussed in that section, assuming that a prepayment
assumption is employed in the computation.

   STATUS OF STRIPPED CERTIFICATES

      No specific legal authority exists as to whether the character of the
Stripped Certificates, for federal income tax purposes, will be the same as that
of the Mortgage Loans. Although the issue is not free from doubt, counsel has
advised the Depositor that Stripped Certificates owned by applicable holders
should be considered to represent "real estate assets" within the meaning of
Code Section 856(c)(4)(A), "obligation[s] . . . principally secured by an
interest in real property" within the meaning of Code Section 860G(a)(3)(A), and
"loans . . . secured by an interest in real property" within the meaning of Code
Section 7701(a)(19)(C)(v), and interest (including Original Issue Discount)
income attributable to Stripped 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 Mortgage
Loans and interest on the Mortgage Loans qualify for that treatment. The
application of these Code provisions to Buy-Down Loans is uncertain. See "--Tax
Status" above.

   TAXATION OF STRIPPED CERTIFICATES

      Original Issue Discount. Except as described above under "--General," each
Stripped Certificate will be considered to have been issued at an Original Issue
Discount for Federal income tax purposes. Original Issue Discount with respect
to a Stripped Certificate must be included in ordinary income as it accrues, in
accordance with a constant interest method that takes into account the
compounding of interest, which may be prior to the receipt of the cash
attributable to the related income. Based in part on the OID Regulations and the
amendments to the Original Issue Discount sections of the Code made by the 1986
Act, the amount of Original Issue Discount required to be included in the income
of a holder of a Stripped Certificate (referred to in this discussion as a
"STRIPPED CERTIFICATEHOLDER") in any taxable year likely will be computed
generally as described above under "--Federal Income Tax Consequences for REMIC
Certificates--Taxation of Regular Certificates--Original Issue Discount" and
"--Variable Rate Regular Certificates." However, with the apparent exception of
a Stripped Certificate qualifying as a market discount obligation as described
above under "--General," the issue price of a Stripped Certificate will be the
purchase price paid by each holder, and the stated redemption price at maturity
will include the aggregate amount of the payments to be made on the Stripped
Certificate to the Stripped Certificateholder, presumably under the Prepayment
Assumption, other than qualified stated interest.

      If the Mortgage Loans prepay at a rate either faster or slower than that
under the Prepayment Assumption, a Stripped Certificateholder's recognition of
Original Issue Discount will be either accelerated or decelerated and the amount
of the Original Issue Discount will be either increased or decreased depending
on the relative interests in principal and interest on each Mortgage Loan
represented by the Stripped Certificateholder's Stripped Certificate. While the
matter is not free from doubt, the holder of a Stripped Certificate should be
entitled in the year that it becomes certain (assuming no further prepayments)
that the holder will not recover a portion of its adjusted basis in the Stripped
Certificate to recognize a loss (which may be a capital loss) equal to that
portion of unrecoverable basis.

      As an alternative to the method described above, the fact that some or all
of the interest payments with respect to the Stripped Certificates will not be
made if the Mortgage Loans are prepaid could lead to the interpretation that the
interest payments are "contingent" within the meaning of the OID Regulations.
The OID


                                       114



Regulations, as they relate to the treatment of contingent interest, are by
their terms not applicable to prepayable securities like as the Stripped
Certificates. However, if final regulations dealing with contingent interest
with respect to the Stripped Certificates apply the same principles as the OID
Regulations, those regulations may lead to different timing of income inclusion
than would be the case under the OID Regulations for non-contingent debt
instruments. Furthermore, application of these principles could lead to the
characterization of gain on the sale of contingent interest Stripped
Certificates as ordinary income. Investors should consult their tax advisors
regarding the appropriate tax treatment of Stripped Certificates.

      Sale or Exchange of Stripped Certificates. Sale or exchange of a Stripped
Certificate prior to its maturity will result in gain or loss equal to the
difference, if any, between the amount received and the Stripped
Certificateholder's adjusted basis in the Stripped Certificate, as described
above under "--Federal Income Tax Consequences for REMIC Certificates--Taxation
of Regular Certificates--Sale or Exchange of Regular Certificates." If a
subsequent purchaser's purchase price is exceeded by the remaining payments on
the Stripped Certificates, the subsequent purchaser will be required for federal
income tax purposes to accrue and report that excess as if it were Original
Issue Discount in the manner described above. It is not clear for this purpose
whether the assumed prepayment rate that is to be used in the case of a Stripped
Certificateholder other than an original Stripped Certificateholder should be
the Prepayment Assumption or a new rate based on the circumstances at the date
of subsequent purchase.

      Purchase of More Than One Class of Stripped Certificates. When an investor
purchases more than one class of Stripped Certificates, it is unclear whether
for federal income tax purposes those classes of Stripped Certificates should be
treated separately or aggregated for purposes of the rules described above.

      Possible Alternative Characterizations. The characterizations of the
Stripped Certificates discussed above are not the only possible interpretations
of the applicable Code provisions. For example, the Stripped Certificateholder
may be treated as the owner of (i) one installment obligation consisting of the
Stripped Certificate's pro rata share of the payments attributable to principal
on each Mortgage Loan and a second installment obligation consisting of the
Stripped Certificate's pro rata share of the payments attributable to interest
on each Mortgage Loan, (ii) as many stripped bonds or stripped coupons as there
are scheduled payments of principal and/or interest on each Mortgage Loan, or
(iii) a separate installment obligation for each Mortgage Loan, representing the
Stripped Certificate's pro rata share of payments of principal and/or interest
to be made on the Mortgage Loan. Alternatively, the holder of one or more
classes of Stripped Certificates may be treated as the owner of a pro rata
fractional undivided interest in each Mortgage Loan to the extent that the
Stripped Certificate, or classes of Stripped Certificates in the aggregate,
represent the same pro rata portion of principal and interest on each Mortgage
Loan, and a stripped bond or stripped coupon (as the case may be), treated as an
installment obligation or contingent payment obligation, as to the remainder.
Regulations regarding Original Issue Discount on stripped obligations make the
foregoing interpretations less likely to be applicable. The preamble to those
regulations states that they are premised on the assumption that an aggregation
approach is appropriate for determining whether Original Issue Discount on a
stripped bond or stripped coupon is de minimis, and solicits comments on
appropriate rules for aggregating stripped bonds and stripped coupons under Code
Section 1286.

      Because of these possible varying characterizations of Stripped
Certificates and the resultant differing treatment of income recognition,
Stripped Certificateholders are urged to consult their tax advisors regarding
the proper treatment of Stripped Certificates for federal income tax purposes.

   REPORTING REQUIREMENTS AND BACKUP WITHHOLDING

      The Master Servicer or the Trustee, as specified in the related prospectus
supplement, will furnish, within a reasonable time after the end of each
calendar year, to each Certificateholder or Stripped Certificateholder at any
time during that year, the information (prepared on the basis described above)
as is necessary to enable those certificateholders to prepare their federal
income tax returns. This information will include the amount of Original Issue
Discount accrued on Certificates held by persons other than certificateholders
exempted from the reporting requirements. The amount required to be reported by
the Master Servicer or the Trustee may not be equal to the proper amount of
Original Issue Discount required to be reported as taxable income by a
certificateholder, other than an original certificateholder that purchased at
the issue price. In particular, in the case of Stripped Certificates, this
reporting will be based upon a representative initial offering price of each
class of Stripped Certificates. The Master


                                       115



Servicer or the Trustee will also file the Original Issue Discount information
with the Internal Revenue Service. If a certificateholder fails to supply an
accurate taxpayer identification number or if the Secretary of the Treasury
determines that a certificateholder has not reported all interest and dividend
income required to be shown on its federal income tax return, backup withholding
may be required in respect of any reportable payments, as described above under
"--Federal Income Tax Consequences for REMIC Certificates--Backup Withholding."

   TAXATION OF CERTAIN FOREIGN INVESTORS

      If a Certificate evidences ownership in Mortgage Loans that are issued on
or before July 18, 1984, interest or Original Issue Discount paid by the person
required to withhold tax under Code Section 1441 or 1442 to nonresident aliens,
foreign corporations, or other non-U.S. persons ("FOREIGN PERSONS") generally
will be subject to 30% United States withholding tax, or any lower rate as may
be provided for interest by an applicable tax treaty. Accrued Original Issue
Discount recognized by the certificateholder on the sale or exchange of a
Certificate also will be subject to federal income tax at the same rate.

      Treasury regulations provide that interest or Original Issue Discount paid
by the Trustee or other withholding agent to a Foreign Person evidencing
ownership interest in Mortgage Loans issued after July 18, 1984 will be
"portfolio interest" and will be treated in the manner, and those persons will
be subject to the same certification requirements, described above under
"--Federal Income Tax Consequences for REMIC Certificates--Taxation of Certain
Foreign Investors--Regular Certificates."

                            STATE TAX CONSIDERATIONS

      In addition to the federal income tax consequences described in "Federal
Income Tax Consequences," potential investors should consider the state income
tax consequences of the acquisition, ownership, and disposition of the
Certificates. State 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. Potential investors should consult
their tax advisors with respect to the various tax consequences of investments
in the Certificates.

                              PLAN OF DISTRIBUTION

      The Certificates are being offered by this prospectus and the applicable
prospectus supplement through one or more of the various methods described
below. The applicable prospectus supplement for each series will describe the
method of offering being used for that series. The prospectus supplement will
state the public offering or purchase price of each class of Certificates of
that series, or the method by which the price is to be determined, and the net
proceeds to the Depositor from the sale of the Certificates.

      The Certificates will be offered through the following methods from time
to time and offerings may be made concurrently through more than one of these
methods or an offering of a series of Certificates may be made through a
combination of two or more of the following methods:

      o   by negotiated firm commitment underwriting and public offering by an
          underwriter specified in the related prospectus supplement;

      o   by placements by the Depositor with institutional investors through
          dealers;

      o   by direct placements by the Depositor with investors, in which event
          the Depositor will be an underwriter with respect to the Certificates;
          and

      o   by inclusion as underlying securities backing another series of
          mortgage pass-through certificates issued by an entity of which the
          Depositor or an affiliate of the Depositor may act as the depositor.
          In the event that the Depositor or an affiliate of the Depositor acts
          as depositor with respect to the other series of mortgage pass-through
          certificates, the Depositor or its affiliate will be an underwriter
          with respect to the underlying securities.


                                       116



      If underwriters are used in a sale of any Certificates, these Certificates
will be acquired by the underwriters for their own account and may be resold
from time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices to be
determined at the time of sale or at the time of commitment for sale. Firm
commitment underwriting and public reoffering by underwriters may be done
through underwriting syndicates or through one or more firms acting alone. The
specific managing underwriter or underwriters, if any, for the offer and sale of
a series of Certificates will be set forth on the cover of the prospectus
supplement applicable to that series and members of the underwriting syndicate,
if any, will be named in that prospectus supplement. The prospectus supplement
will describe any discounts and commissions to be allowed or paid by the
Depositor to the underwriters, any other items constituting underwriting
compensation and any discounts and commissions to be allowed or paid to the
dealers. The obligations of the underwriters will be subject to certain
conditions precedent. The underwriters with respect to a sale of any class of
Certificates will be obligated to purchase all of those Certificates if any are
purchased. The Depositor and, if specified in the applicable prospectus
supplement, an affiliate of the Depositor, will indemnify the applicable
underwriters against certain civil liabilities, including liabilities under the
Securities Act of 1933, as amended.

      The prospectus supplement for any series of Certificates offered other
than through underwriters will contain information regarding the nature of that
offering and any agreements to be entered into between the Depositor and dealers
and/or the Depositor and purchasers of Certificates.

      Purchasers of Certificates, including dealers, may, depending on the facts
and circumstances of the purchases, be deemed to be "underwriters" within the
meaning of the Securities Act of 1933, as amended, in connection with reoffers
and sales by them of Certificates. Certificateholders should consult with their
legal advisors in this regard prior to any reoffer or sale.

      If specified in the prospectus supplement relating to a series of
Certificates, the Depositor or any affiliate thereof may purchase some or all of
one or more classes of Certificates of that series from the underwriter or
underwriters at a price specified or described in the prospectus supplement.
That purchaser may then from time to time offer and sell, pursuant to this
prospectus, some or all of the Certificates purchased directly, through one or
more underwriters to be designated at the time of the offering of the
Certificates or through dealers acting as agent and/or principal. Any of these
offerings may be restricted in the manner specified in the applicable prospectus
supplement. These transactions may be effected at market prices prevailing at
the time of sale, at negotiated prices or at fixed prices. The underwriters and
dealers participating in a purchaser's offering of Certificates may receive
compensation in the form of underwriting discounts or commissions from the
purchaser and the dealers may receive commissions from the investors purchasing
Certificates for whom they may act as agent (which discounts or commissions will
not exceed those customary in those types of transactions involved). Any dealer
that participates in the distribution of Certificates will be an "underwriter"
within the meaning of the Securities Act of 1933, as amended, and any
commissions and discounts received by that dealer and any profit on the resale
of Certificates by that dealer will be underwriting discounts and commissions
under the Securities Act of 1933, as amended.

                                 USE OF PROCEEDS

      The Depositor will apply the net proceeds from the sale of each series of
Certificates for the purchase of the Mortgage Assets serving as security for
those Certificates.

                              FINANCIAL INFORMATION

      A new Trust will be formed by the Depositor for each series of
Certificates. As a result, no Trust will engage in any business activity or have
any assets or obligations prior to the issuance of the related series of
Certificates. Accordingly, no financial statements for any Trust will be
included in this prospectus or in the related prospectus supplement.

                                  LEGAL MATTERS

      The legality of, and certain federal income tax matters related to, the
Certificates of a series will be passed upon for the Depositor by Orrick,
Herrington & Sutcliffe LLP, Washington, D.C., Cadwalader, Wickersham & Taft


                                       117



LLP, New York, New York or Hunton &Williams LLP, Charlotte, North Carolina, as
specified in the related prospectus supplement.

                                     RATING

      The Certificates of any series offered pursuant to this prospectus and a
prospectus supplement will be rated in one of the four highest categories by one
or more nationally-recognized statistical rating agencies listed in the related
prospectus supplement.

      A securities rating is not a recommendation to buy, sell or hold
securities and may be subject to revision or withdrawal at any time by the
assigning rating agency.

                          REPORTS TO CERTIFICATEHOLDERS

      The Trustee or the Master Servicer will prepare and make available to the
certificateholders of each series statements containing information with respect
to principal and interest payments and the related Trust Estate, as described
under "Description of Certificates--Reports to Certificateholders." Copies of
these statements will be filed with the Commission through its EDGAR system
located at http://www.sec.gov under the name of the Trust as an exhibit to the
Trust's monthly distribution reports on Form 10-D for each series of
Certificates for so long as the Trust is subject to the reporting requirements
of the Securities Exchange Act of 1934, as amended. Monthly distribution reports
on Form 10-D are generally due within 15 days after each Distribution Date,
unless such due date falls on a weekend or holiday, in which case the due date
extends to the first business day following. In addition, each party to the
servicing function, for a series of Certificates (generally the Trustee and the
Servicer (any Master Servicer)) will furnish to the Trustee or Master Servicer,
as applicable, the compliance statements, Assessments of Compliance and
Attestation Reports detailed under "The Pooling and Servicing
Agreement--Evidence as to Compliance." Copies of these statements and reports
will be filed with the SEC under the name of the Trust as an exhibit to the
Trust's annual statement on Form 10-K for each series of Certificates.

                INCORPORATION OF CERTAIN INFORMATION BY REFERENCE

      The Securities and Exchange Commission (the "COMMISSION") allows the
Depositor to "incorporate by reference" information it files with the
Commission, which means that the Depositor can disclose important information to
you by referring you to documents which contain that information. Information
incorporated by reference is considered to be part of this prospectus. Certain
information that the Depositor will file with the Commission in the future will
automatically update the information in this prospectus. In all cases, you
should rely on the later information over different information included in this
prospectus or the prospectus supplement. The Depositor incorporates by reference
any future annual, monthly and current Commission reports filed by or on behalf
of the issuing entity until the Depositor terminates the offering of the related
Certificates.

      At your request, the Depositor will send copies of these documents and
reports to you at no charge. You may contact the Depositor by writing or calling
it at the address and phone number listed under "Where You Can Find More
Information."

                       WHERE YOU CAN FIND MORE INFORMATION

      The Depositor has filed a registration statement relating to the
Certificates with the Commission. This prospectus is part of the registration
statement, but the registration statement contains additional information.

      Copies of the registration statement and any other materials the Depositor
files with the Commission, including distribution reports on Form 10-D, annual
reports, on Form 10-K, current reports on Form 8-K and amendments to these
reports (collectively, "PERIODIC REPORTS"), may be read and copied at the
Commission's Public Reference Room at 100 F Street, N.E., Washington, D.C.
20549. Information concerning the operation of the Commission's Public Reference
Room may be obtained by calling the Commission at (800) SEC-0330. The Commission
also maintains an Internet Web site at http://www.sec.gov at which you can view
and download copies of reports, proxy and information statements and other
information filed electronically through the EDGAR system.


                                       118



Our SEC filings may be located by using the SEC Central Index Key (CIK) for the
depositor, 0000934377. For purposes of any electronic version of this
prospectus, the preceding uniform resource locator, or URL, is an inactive
textual reference only. We have taken steps to ensure that this URL was inactive
at the time we created any electronic version of this prospectus. The Depositor
has filed the registration statement, including all exhibits, through the EDGAR
system and therefore those materials should be available by logging onto the
Commission's Web site. The Commission maintains computer terminals providing
access to the EDGAR system at the office referred to above. Copies of any
documents incorporated to this prospectus by reference will be provided to each
person to whom a prospectus is delivered upon written or oral request directed
to Banc of America Funding Corporation, 214 North Tryon Street, Charlotte, North
Carolina 28255, Attention: Secretary, telephone number (704) 386-2400.

      Copies of filed Periodic Reports relating to an issuing entity will also
be available on the applicable Trustee's website promptly after they are filed
through the EDGAR system (which may not be the same day) as described in the
related prospectus supplement.

      At such time as may be required under relevant SEC rules and regulations,
we may provide static pool information otherwise required to be set forth in
this prospectus through an Internet Web site. If we determine to do so, the
prospectus supplement accompanying this prospectus will disclose the specific
Internet address where the information is posted.


                                       119



                                 INDEX OF TERMS

                                                                            PAGE
                                                                            ----

1986 Act......................................................................94
Accretion Directed Certificates...............................................36
Accrual Certificates..........................................................38
Advances......................................................................62
Assessment of Compliance......................................................68
Asset Conservation Act........................................................83
Attestation Report............................................................68
Auction Administrator.........................................................40
Auction Certificates..........................................................40
Auction Distribution Date.....................................................40
Balloon Loans.................................................................20
Balloon Period................................................................20
Bank of America...............................................................51
Bankruptcy Code...............................................................76
Beneficial Owners.............................................................29
Benefit Plans.................................................................84
Book-Entry Certificates.......................................................29
Buy Down Fund.................................................................20
Buy Down Loans................................................................20
Cash Flow Agreement...........................................................47
CERCLA........................................................................82
CERCLA Secured-Creditor Exemption.............................................82
Certificates..................................................................27
Code..........................................................................91
Commission...................................................................118
Companion Certificates........................................................36
Component Certificates........................................................36
Cooperatives..................................................................21
Cut-Off Date..................................................................57
Deferred Interest.............................................................18
Definitive Certificates.......................................................28
Depositor.....................................................................52
Disqualified Organization....................................................104
Distribution Account..........................................................27
Distribution Date.............................................................34
DOL...........................................................................85
DOL Regulations...............................................................85
Due-on-Sale...................................................................79
Electing Large Partnership...................................................104
Eligible Custodial Account....................................................59
Eligible Investments..........................................................60
ERISA.........................................................................84
ERISA Plans...................................................................84
Escrow Account................................................................63
Euroclear Operator............................................................31
European Depositaries.........................................................29
Exempt Plans..................................................................84
Fannie Mae Certificates.......................................................25
FHA...........................................................................23
FHA Loans.....................................................................23
Financial Intermediary........................................................29
Fitch.........................................................................86
Fixed Retained Yield..........................................................67
Fixed-Rate Certificates.......................................................38
Floating-Rate Certificates....................................................38
Foreign Persons..............................................................116
Freddie Mac Act...............................................................24
Freddie Mac Certificates......................................................24
Garn Act......................................................................79
Ginnie Mae Certificates.......................................................23
Ginnie Mae I Certificates.....................................................23
Ginnie Mae II Certificates....................................................23
Graduated Pay Mortgage Loans..................................................19
Gross Margin..................................................................18
Growing Equity Mortgage Loans.................................................19
HOPA..........................................................................81
Housing Act...................................................................23
HUD...........................................................................23
Indirect Participants.........................................................29
Interest Only Mortgage Loans..................................................19
Interest-Only Certificates....................................................39
Inverse Floating-Rate Certificates............................................39
IO Certificates...............................................................39
IRA...........................................................................84
Liquidation Proceeds..........................................................60
Lockout Certificates..........................................................36
Mark-to-Market Regulations...................................................106
Master Servicer...............................................................54
Master Servicer Custodial Account.............................................60
MERS..........................................................................57
Moody's.......................................................................86
Mortgage Assets...............................................................17
Mortgage Certificates.........................................................17
Mortgage Loans................................................................17
NCUA..........................................................................90
Non-ERISA Plans...............................................................84
Non-Pro Rata Certificate......................................................95
Nonrecoverable Advance........................................................62
Non-SMMEA Certificates........................................................89
Notional Amount Certificates..................................................36
OCC...........................................................................52
OID Regulations...............................................................94
Option ARM Mortgage Loans.....................................................18
Original Issue Discount.......................................................94
PAC Certificates..............................................................37
PAC I.........................................................................37
PAC II........................................................................37
Par Price.....................................................................40
Participants..................................................................29
Pass-Through Certificates.....................................................36
Pass-through Entity..........................................................104
Paying Agent..................................................................62
PC Agreement..................................................................26
PC Servicer...................................................................26
PC Sponsor....................................................................26
PC Trustee....................................................................26


                                       120



                                 INDEX OF TERMS

                                                                            PAGE
                                                                            ----

Periodic Advance..............................................................62
Periodic Reports.............................................................119
Planned Amortization Certificates.............................................37
PO Certificates...............................................................39
Prepayment Assumption.........................................................95
Principal-Only Certificates...................................................39
Private Certificates..........................................................26
PTCE..........................................................................85
Ratio Strip Certificates......................................................37
RCRA..........................................................................82
RCRA Secured-Creditor Exemption...............................................82
Regular Certificateholder.....................................................94
Regular Certificates..........................................................92
Relevant Depositary...........................................................29
Relief Act....................................................................81
REMIC.........................................................................92
REMIC Certificates............................................................92
REMIC Pool....................................................................92
REO Property..................................................................62
Residual Certificates.........................................................92
Residual Holders.............................................................100
Restricted Group..............................................................88
Rules.........................................................................29
S&P...........................................................................86
Scheduled Amortization Certificates...........................................37
Senior Certificates...........................................................37
Sequential Pay Certificates...................................................38
Servicer......................................................................54
Servicer Custodial Account....................................................59
Servicing Advances............................................................62
SMMEA.........................................................................89
Sponsor.......................................................................51
Standard Hazard Insurance Policy..............................................65
Startup Day...................................................................93
Step Coupon Certificates......................................................39
Stripped Certificateholder...................................................114
Stripped Certificates........................................................113
Subordinate Certificates......................................................38
Subsidy Account...............................................................19
Subsidy Loans.................................................................19
Subsidy Payments..............................................................19
Super Senior Certificates.....................................................38
Super Senior Support Certificates.............................................38
Support Certificates..........................................................36
TAC Certificates..............................................................38
Targeted Amortization Certificates............................................38
Texas Home Equity Laws........................................................79
Tiered Payment Mortgage Loans.................................................19
Title V.......................................................................80
Trust Estate..................................................................17
Trustee.......................................................................17
U.S. Person..................................................................106
UCC...........................................................................75
Underlying Loans..............................................................26
Underlying Servicing Agreement................................................54
Underwriter's Exemption.......................................................86
VA ...........................................................................23
Variable Rate Certificates....................................................39
Window Period.................................................................79
Window Period Loans...........................................................79
Window Period States..........................................................79


                                       121



                         [BANC OF AMERICA LOGO OMITTED]


                       BANC OF AMERICA FUNDING CORPORATION
                                    DEPOSITOR


                      BANK OF AMERICA, NATIONAL ASSOCIATION
                              SPONSOR AND SERVICER


                      BANC OF AMERICA FUNDING 2006-E TRUST
                                 ISSUING ENTITY


                                  $632,313,100
                                  (APPROXIMATE)


                              MORTGAGE PASS-THROUGH
                           CERTIFICATES, SERIES 2006-E


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

                              PROSPECTUS SUPPLEMENT

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


The Offered Certificates are not being offered in any state where the offer is
not permitted.

The Depositor does not claim the accuracy of the information in this prospectus
supplement and the accompanying prospectus as of any date other than the dates
stated on their respective covers.

Dealers will deliver a prospectus supplement and prospectus when acting as
underwriters of the Offered Certificates and with respect to their unsold
allotments or subscriptions. Such delivery obligation may be satisfied by filing
the prospectus supplement and prospectus with the Securities and Exchange
Commission. In addition, all dealers selling the Offered Certificates will
deliver a prospectus supplement and prospectus until ninety days following the
date of this prospectus supplement.


                         BANC OF AMERICA SECURITIES LLC
                                  MAY 30, 2006