PROSPECTUS

                       BANC OF AMERICA FUNDING CORPORATION
                                    DEPOSITOR

                      BANK OF AMERICA, NATIONAL ASSOCIATION
                                     SPONSOR

                       MORTGAGE PASS-THROUGH CERTIFICATES
                              (ISSUABLE IN SERIES)

                                   ----------

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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.
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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.

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                                  JUNE 28, 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.................................................     40
   Mandatory Auction of Certificates.....................................     40
   Exchangeable REMIC and Exchangeable Certificates......................     41
   Reports To Certificateholders.........................................     43
CREDIT ENHANCEMENT.......................................................     45
   General...............................................................     45
   Subordination.........................................................     46
   Limited Guarantee.....................................................     46
   Financial Guaranty Insurance Policy or Surety Bond....................     47
   Letter of Credit......................................................     47
   Mortgage Pool Insurance Policy........................................     47
   Special Hazard Insurance Policy.......................................     48
   Mortgagor Bankruptcy Bond.............................................     49
   Reserve Fund..........................................................     49
   Cross-Collateralization...............................................     50
   Overcollateralization.................................................     50
   Excess Interest.......................................................     50
   Cash Flow Agreements..................................................     50
   Fraud Waiver..........................................................     51
   FHA Insurance or VA Guarantee.........................................     51
PREPAYMENT AND YIELD CONSIDERATIONS......................................     52
   Factors Affecting Prepayment..........................................     53
   Effect of Principal Prepayments.......................................     53
   Weighted Average Life of Certificates.................................     53
   Scheduled Delays In Distributions.....................................     54
THE SPONSOR..............................................................     54
THE DEPOSITOR............................................................     55
USE OF PROCEEDS..........................................................     56
MORTGAGE PURCHASE PROGRAM................................................     56
SERVICING OF THE MORTGAGE LOANS..........................................     57
   The Master Servicer...................................................     57
   The Servicers.........................................................     57
THE POOLING AND SERVICING AGREEMENT......................................     59


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                                TABLE OF CONTENTS

                                                                            PAGE
                                                                            ----
   Assignment of Mortgage Loans to the Trustee...........................     59
   Representations and Warranties........................................     61
   Special Servicing Agreements..........................................     62
   Payments on Mortgage Loans............................................     62
   Periodic Advances and Servicing Advances..............................     65
   Collection and Other Servicing Procedures.............................     66
   Enforcement of "Due-on-Sale" Clauses; Realization Upon Defaulted
   Mortgage Loans........................................................     66
   Insurance Policies....................................................     68
   Primary Mortgage Insurance............................................     69
   Recoveries Under Primary Mortgage Insurance Policies..................     69
   Fixed Retained Yield, Servicing Compensation and Payment of Expenses..     70
   Evidence as to Compliance.............................................     70
   Certain Matters Regarding the Depositor, the Sponsor and the Master
   Servicer..............................................................     71
   Events of Default.....................................................     72
   Rights Upon Event of Default..........................................     72
   Enforcement...........................................................     72
   Amendment.............................................................     73
   List of Certificateholders............................................     73
   Termination; Repurchase of Mortgage Loans and Mortgage Certificates...     74
   The Trustee...........................................................     75
CERTAIN LEGAL ASPECTS OF THE MORTGAGE LOANS..............................     76
   General...............................................................     76
   Condominiums..........................................................     76
   Cooperatives..........................................................     76
   Foreclosure...........................................................     77
   Rights of Redemption..................................................     79
   Anti-Deficiency Legislation, the Bankruptcy Code and Other Limitations
   On Lenders............................................................     79
   Texas Home Equity Loans...............................................     81
   "Due-on-Sale" Clauses.................................................     82
   Applicability of Usury Laws...........................................     83
   Forfeiture for Drug, RICO and Money Laundering Violations.............     83
   Homeowners Protection Act of 1998.....................................     83
   Servicemembers Civil Relief Act and Similar Laws......................     84
   Environmental Considerations..........................................     84
   Enforceability of Certain Provisions..................................     86
BENEFIT PLAN CONSIDERATIONS..............................................     87
   General...............................................................     87
   Certain ERISA and Code Requirements...................................     87
   ERISA Administrative Exemptions.......................................     88
   Non-ERISA Plans and Exempt Plans......................................     91
   Unrelated Business Taxable Income--Residual Certificates..............     91
LEGAL INVESTMENT CONSIDERATIONS..........................................     92
FEDERAL INCOME TAX CONSEQUENCES..........................................     93
   Federal Income Tax Consequences for REMIC Certificates................     94
   Taxation of Regular Certificates......................................     97
   Taxation of Residual Certificates.....................................    103
   Federal Income Tax Consequences for Certificates as to Which No REMIC
   Election Is Made......................................................    113
   Federal Income Tax Consequences for Exchangeable Certificates.........    119
STATE TAX CONSIDERATIONS.................................................    121
PLAN OF DISTRIBUTION.....................................................    121
USE OF PROCEEDS..........................................................    122
FINANCIAL INFORMATION....................................................    122
LEGAL MATTERS............................................................    122
RATING...................................................................    123
REPORTS TO CERTIFICATEHOLDERS............................................    123
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE........................    123
WHERE YOU CAN FIND MORE INFORMATION......................................    123


                                       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
125 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.


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                                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.

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          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;

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          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

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               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."

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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.

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          o    Ratings do not address the effect of prepayments on the yield you
               may anticipate when you purchase your certificates.

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                                        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 entitled 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

          Each Series of certificates will be issued by a separate common law
trust (each, a "TRUST"). The assets of each Trust (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


                                       17



     these converted Mortgage Loans at the price set forth in the applicable
     prospectus supplement. A Trust Estate 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 class balance (or, in the case of Interest
Only Certificates, the notional amount) of each class of Certificates entitled
to interest at the pass-through rate (which may be a fixed rate or a rate


                                       34



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 balance of that class is reduced
to zero or, in the case of a class of Certificates entitled only to
distributions allocable to interest, until the notional amount of that class is
reduced to zero or for the period of time designated in the related prospectus
supplement. The notional amount of an Interest Only 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 balance of each class of Accrual Certificates. Any class of Accrual
Certificates then will accrue interest on its outstanding class balance as
adjusted. For a description of Accrual Certificates, see "--Categories of
Classes of Certificates."

     PRINCIPAL

          The "CLASS BALANCE" of any class of Certificates entitled to
distributions of principal (other than any Exchangeable REMIC Certificates and
Exchangeable Certificates) will be the initial class balance of that class of
Certificates specified in the prospectus supplement or, in the case of a class
of Exchangeable REMIC Certificates or Exchangeable Certificates, the portion
then represented by the outstanding Certificates of such class of the initial
maximum class balance, 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 a class of Interest
Only 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 class
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               A class of Certificates that receives principal
CERTIFICATES                     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        A class of Certificates that receives principal
SUPPORT CERTIFICATES             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.

EXCHANGEABLE REMIC               A class of Certificates that may be exchanged
CERTIFICATES                     for proportionate interests in one or more
                                 other specified classes of Exchangeable
                                 Certificates in the same series, as described
                                 in the applicable prospectus supplement. Each
                                 class of Exchangeable REMIC Certificates may be
                                 identified as falling into one or more of the
                                 categories in this chart.

EXCHANGEABLE CERTIFICATES        A class of Certificates that may be exchanged
                                 for proportionate interests in one or more
                                 other specified classes of Exchangeable REMIC
                                 Certificates in the same series, as described
                                 in the applicable prospectus supplement. Each
                                 class of Exchangeable Certificates may be
                                 identified as falling into one or more of the
                                 categories in this chart.


                                       36



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 class 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 class 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.

PLANNED AMORTIZATION             A class of Certificates that is designed to
CERTIFICATES OR PAC              receive principal payments (or has a notional
CERTIFICATES                     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.


                                       37



SCHEDULED AMORTIZATION           A class of Certificates that is designed to
CERTIFICATES                     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.

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             A class of Senior Certificates that bears
CERTIFICATES                     certain losses that otherwise would have been
                                 allocated to a class of Super Senior
                                 Certificates.


                                       38



TARGETED AMORTIZATION            A class of Certificates that receives principal
CERTIFICATES OR TAC              payments (or has a notional amount that is
CERTIFICATES                     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 class 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.

FLOATING-RATE CERTIFICATES       A class of Certificates with an interest rate
                                 (or an effective rate as a result of a Cash
                                 Flow Agreement) that resets periodically based
                                 upon a designated index and that varies
                                 directly with changes in the index.

INTEREST ONLY 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 class balance or a notional amount. A
                                 nominal class 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            A class with an interest rate that resets
CERTIFICATES                     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      A class of Certificates that does not bear
                                 interest and is entitled to receive only
                                 distributions in respect of principal.


                                       39



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 class
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.

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


                                       40



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.

EXCHANGEABLE REMIC AND EXCHANGEABLE CERTIFICATES

          General. If specified in a prospectus supplement for a series, certain
classes of Certificates may be Exchangeable REMIC and Exchangeable Certificates.
In any of these series, the holders of one or more of the classes of
Exchangeable REMIC Certificates will be entitled, after notice and payment to
the Trustee or other entity identified in the related prospectus supplement of
an administrative fee, to exchange all or a portion of those classes of
Exchangeable REMIC Certificates for proportionate interests in one or more other
specified classes of Exchangeable Certificates in the same series and vice
versa.

          If a series includes Exchangeable REMIC and Exchangeable Certificates,
all of these classes of Exchangeable REMIC and Exchangeable Certificates will be
listed in the related prospectus supplement. The classes of Certificates that
are exchangeable for one another will be referred to in the related prospectus
supplement as "RELATED" to each other, each related grouping of Exchangeable
REMIC and Exchangeable Certificates will be referred to as a "COMBINATION," with
the classes of Exchangeable REMIC Certificates in the Combination referred to as
a "REMIC COMBINATION" and the classes of Exchangeable Certificates in the
Combination referred to as an "EXCHANGEABLE COMBINATION." The classes of
Exchangeable REMIC Certificates and Exchangeable Certificates constituting each
Combination will, in the aggregate, represent a distinct combination of
uncertificated interests in the related Trust. At any time after its initial
issuance, any class of Exchangeable REMIC Certificates may be exchanged for the
Related class or classes of Exchangeable Certificates provided the requirements
detailed below are met. In some cases, multiple classes of Exchangeable REMIC
Certificates may be exchanged for one or more classes of Related Exchangeable
Certificates and vice versa.

          The descriptions in the related prospectus supplement of the
Certificates of a series that includes Exchangeable REMIC Certificates and
Exchangeable Certificates, including descriptions of principal and interest
distributions, registration and denominations of Certificates, credit
enhancement, prepayment and yield considerations, tax and legal investment
considerations and ERISA considerations, also will apply to each class of
Exchangeable Certificates. The related prospectus supplement will separately
describe the prepayment and yield considerations applicable to, and the risks of
investment in, each class of Exchangeable Certificates. For example, separate
decrement tables and yield tables, if applicable, will be included for each
class of Exchangeable Certificates.

          Exchanges. If a holder of Exchangeable REMIC Certificates elects to
exchange its Exchangeable REMIC Certificates for Related Exchangeable
Certificates, then:

     o    the aggregate principal balance of the related Exchangeable
          Certificates received in the exchange, immediately after the exchange,
          will equal the aggregate principal balance, immediately prior to the
          exchange, of the Exchangeable REMIC Certificates so exchanged (for
          purposes of an exchange, Interest Only Certificates will have a
          principal balance of zero);

     o    the aggregate amount of interest payable on each Distribution Date
          with respect to the Related Exchangeable Certificates received in the
          exchange will equal the aggregate amount of interest payable on each
          Distribution Date with respect to the Exchangeable REMIC Certificates
          so exchanged; and

     o    the class or classes of Exchangeable REMIC and Exchangeable
          Certificates will be exchanged in the applicable proportions, if any,
          described in the related prospectus supplement.

          Different types of Combinations may exist. Any individual series of
Certificates may have multiple types of Combinations. Some examples of
Combinations of Exchangeable REMIC and Exchangeable Certificates that differ in
their interest characteristics include:


                                       41



     o    Floating-Rate Certificates and Inverse Floating-Rate Certificates that
          are Exchangeable REMIC Certificates may be exchangeable, together, for
          Related Fixed-Rate Certificates. In such a Combination, the
          Floating-Rate Certificates and Inverse Floating-Rate Certificates
          would produce, in the aggregate, an annual interest amount equal to
          that generated by the Related Fixed-Rate Certificates. In addition,
          the aggregate class balance of a class of Floating-Rate Certificates
          and a class of Inverse Floating-Rate Certificates would equal the
          aggregate class balance of the Related Fixed-Rate Certificates.

     o    Interest Only Certificates and Principal Only Certificates that are
          Exchangeable REMIC Certificates may be exchangeable, together, for
          Related Exchangeable Certificates that are entitled to both principal
          and interest payments. In such a Combination, the class balance of the
          class of Related Exchangeable Certificates would be equal to the class
          balance of the class of Principal Only Certificates, and the interest
          rate on the class of Related Exchangeable Certificates, when applied
          to the class balance of this Related class, would generate interest
          equal to the annual interest amount of the Interest Only Certificates.

     o    Two classes of Fixed-Rate Certificates that are Exchangeable REMIC
          Certificates with different interest rates may be exchangeable,
          together, for a single class of Related Exchangeable Certificates with
          a fixed interest rate. In such a Combination, the class balance of the
          single class of Related Exchangeable Certificates would be equal to
          the aggregate class balance of the two classes of Exchangeable REMIC
          Certificates, and the single class of Related Exchangeable
          Certificates would have a fixed interest rate that, when applied to
          the aggregate class balance of the two classes of Exchangeable REMIC
          Certificates, would generate interest equal to the aggregate annual
          interest amount of the two classes of Exchangeable REMIC Certificates.

          In some series, a Certificateholder may be able to exchange its
Exchangeable REMIC Certificates for Related Exchangeable Certificates that have
different principal payment characteristics. Some examples of Combinations that
have different principal payment characteristics include:

     o    A class of Exchangeable REMIC Certificates that is a class of Accrual
          Certificates, and a second class of Exchangeable REMIC Certificates
          that is a class of Accretion Directed Certificates and receives all of
          the interest accrued on the class of Accrual Certificates for so long
          as the Accrual Certificates are accreting, may be exchangeable,
          together, for a single class of Related Exchangeable Certificates that
          receives payments of interest continuously from the first Distribution
          Date on which it receives interest until it is retired.

     o    A class of Exchangeable REMIC Certificates that is a class of PAC,
          Scheduled Amortization or TAC Certificates, and a class of
          Exchangeable REMIC Certificates that is a class of Companion
          Certificates, may be exchangeable, together, for a class of Related
          Exchangeable Certificates that receives principal payments without
          regard to the amortization schedule for the class of PAC, Scheduled
          Amortization or TAC Certificates from the first Distribution Date on
          which it receives principal until it is retired.

          The holder of the class or classes of Exchangeable Certificates in any
of the example Combinations described above may also exchange its Exchangeable
Certificates for the Related Exchangeable REMIC Certificates and this process
may occur repeatedly in each direction.

          A number of factors may limit the ability of a holder of Exchangeable
REMIC or Exchangeable Certificates to effect an exchange. For example, the
Certificateholder must own, at the time of the proposed exchange, the class or
classes of Exchangeable REMIC or Exchangeable Certificates necessary to make the
exchange in the necessary proportions. If a Certificateholder does not own the
necessary classes of Exchangeable REMIC or Exchangeable Certificates or does not
own the necessary classes of Exchangeable REMIC or Exchangeable Certificates in
the proper proportions, the Certificateholder may not be able to obtain the
desired classes of Exchangeable REMIC or Exchangeable Certificates, as the case
may be. The Certificateholder desiring to make the exchange may not be able to
purchase the necessary class of Exchangeable REMIC or Exchangeable Certificates
from the then-current owner at a reasonable price, or the necessary proportion
of the needed class of Exchangeable REMIC or Exchangeable Certificates may no
longer be available due to principal payments or prepayments that have been
applied to that class of Exchangeable REMIC or Exchangeable Certificates.


                                       42



          Procedures. The related prospectus supplement will describe the
procedures that must be followed to make an exchange of Exchangeable REMIC and
Exchangeable Certificates. A Certificateholder will be required to provide
notice to the Trustee or such other entity identified in the related prospectus
supplement prior to the proposed exchange date within the time period specified
in the related prospectus supplement. The notice must include, among other
things, the outstanding principal balance or notional amount of the Exchangeable
Certificates to be exchanged and the Related Exchangeable Certificates to be
received, and the proposed exchange date. When the Trustee or such other entity
identified in the related prospectus supplement receives this notice, it will
provide instructions to the Certificateholder regarding delivery of the
Exchangeable REMIC or Exchangeable Certificates, as the case may be, and payment
of the administrative fee. A Certificateholder's notice to the Trustee or such
other entity identified in the related prospectus supplement will become
irrevocable on the second day prior to the proposed exchange date specified in
the related prospectus supplement. Any Exchangeable REMIC or Exchangeable
Certificates that are Book-Entry Certificates will be subject to DTC's Rules.

          If the related prospectus supplement describes exchange proportions
for a Combination of classes of Exchangeable REMIC and Exchangeable
Certificates, these proportions will be based on the original, rather than the
outstanding, principal balances or notional amounts of these classes.

          Distributions on an Exchangeable REMIC or Exchangeable Certificate
received in an exchange will be made as described in the related prospectus
supplement. Distributions will be made to the applicable Certificateholder of
record as of the applicable record date.

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;

               (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


                                       43



                    (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;

               (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; and

               (xix) whether any exchanges of Exchangeable REMIC and
          Exchangeable Certificates have taken place since the preceding
          Distribution Date and, if applicable, the class designations, class
          balances or notional amounts, pass-through rates, and any interest
          and/or principal paid, including any shortfalls allocated, of any
          classes of Certificates that were received by Certificateholders as a
          result of such exchange.

          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.


                                       44



          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.


                                       45



          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.
Section 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


                                       46



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.


                                       47



          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


                                       48



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.


                                       49



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. Section 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. Section
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.
Section 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


                                       50



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 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 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 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


                                       51



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


                                       52



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 class 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.


                                       53



          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


                                       54



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.

          The Depositor maintains its principal office at 214 North Tryon
Street, Charlotte, North Carolina 28255. Its telephone number is (704) 386-2400.


                                       55



          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 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.


                                       56



          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 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.


                                       57



          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. Section 229.1108), the applicable
prospectus supplement will provide the disclosure required by Items 1108(b) and
(c) of Regulation AB (17 C.F.R. Section 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 (for so long as the related
Issuing Entity is subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended).

          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
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


                                       58



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 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


                                       59



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.

          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



                                       60



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;

          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:


                                       61



          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; 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


                                       62



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.

          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:


                                       63



               (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 the Distribution
Account will be deposited by the Trustee out of its own funds to the
Distribution Account immediately as realized.


                                       64



          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 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


                                       65



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.

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


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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 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


                                       67



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, 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


                                       68



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.

          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


                                       69



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.

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


                                       70



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. Section
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 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


                                       71



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
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


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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 2/3% 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.

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.


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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 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.


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          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 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


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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. 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


                                       76



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 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.


                                       77



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.

          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


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          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. 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.


                                       79



          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.

          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.


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          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.

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.


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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 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


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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.

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.


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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;

          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


                                       84



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 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.


                                       85



          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.

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


                                       86



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.

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.


                                       87



          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 each class of equity interests is 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.

          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


                                       88



          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.

          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


                                       89



          (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.

     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.


                                       90



          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 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


                                       91



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 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.Section 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. Section 1.5 concerning "safety and soundness" and
retention of credit information), certain "Type IV securities," defined in 12
C.F.R. Section 1.2(m) to include certain "residential mortgage-related
securities." As so


                                       92



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. Section 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. Section 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
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


                                       93



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."

          If a series of Certificates includes Exchangeable Certificates, each
class of Exchangeable Certificates will represent beneficial ownership of one or
more interests in one or more REMIC regular interests. The related prospectus
supplement will specify whether each class of Exchangeable Certificates
represents a proportionate or disproportionate interest in each underlying REMIC
regular interest. The Exchangeable Certificates will be created, sold and
administered pursuant to an arrangement that will be treated as a grantor trust
under subpart E, Part 1 of subchapter J of the Code. The tax treatment of
Exchangeable Certificates is discussed under "--Federal Income Tax Consequences
for Exchangeable Certificates" below.

          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

          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


                                       94



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)(5)(B),
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)(5)(B), 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.

          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


                                       95



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.

          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


                                       96



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 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


                                       97



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 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


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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.

          The Treasury Department proposed regulations on August 24, 2004 that
create a special rule for accruing original issue discount on Regular
Certificates providing for a delay between record dates and Distribution Dates.
Under the proposed regulations, the period over which original issue discount
accrues would coincide with the period over which the right of Regular
Certificateholders to interest payments accrues under the pooling and servicing
agreement for a series or indenture for a series rather than over the period
between Distribution Dates. If the proposed regulations are adopted in the same
form as proposed, Regular Certificateholders would be required to accrue
interest from the closing date of the series to the first record date for such
series, but would not be required to accrue interest after the last record date
for such series. The proposed regulations are limited to Regular Certificates
with delayed payment for periods of fewer than 32 days. The proposed regulations
are proposed to apply to any Regular Certificate issued after the date the final
regulations are published in the Federal Register.

     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


                                       99



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
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


                                       100



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 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


                                       101



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 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.


                                       102



          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 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


                                       103



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 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


                                       104



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 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


                                       105



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.
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.


                                       106



          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,


                                       107



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) and may apply
to United States partnerships that have any non-U.S. Persons as partners, unless
that transferee's or that non-U.S. Person partner'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.


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          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 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


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          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 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,


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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
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. Under current law, the applicable
Code Section 68 reduction is reduced by one third for taxable years beginning in
2006 and 2007, and by two thirds in taxable years beginning in 2008 and 2009.
For taxable years beginning after December 31, 2009 the overall limitation on
itemized deductions is repealed. 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 (i) such interest is not effectively connected with the conduct of a trade
or business in the United States of the Certificateholder, and (ii) such
non-U.S. Person is not a "10-percent shareholder" within the meaning of Code
Section 871(h)(3)(B) or a controlled foreign corporation described in Code
Section 881(c)(3)(C). To avoid withholding tax, such Certificateholders must
provide certain documentation. 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.


                                       111



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 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 such statement, or any other required statement, is not provided, 30%
withholding will apply unless reduced or eliminated pursuant to an applicable
tax treaty or unless the interest on the Regular Certificate is effectively
connected with the conduct of a trade or business within the United States by
such non-U.S. Person. In the latter case, such non-U.S. Person will be subject
to United States federal income tax at regular rates. Investors who are non-U.S.
Persons should consult their own tax advisors regarding the specific tax
consequences to them of owning a Regular Certificate. 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


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          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
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


                                       113



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

          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


                                       114



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 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


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          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 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 because 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), or (iii) a series of
Certificates is issued in two or more classes or subclasses that represent 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


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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.

          Furthermore, Treasury regulations 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.

          In light of the application of Code Section 1286, a beneficial owner
of a Stripped Certificate generally will be required to compute accruals of
original issue discount based on its yield, possibly taking into account its own
prepayment assumption. The information necessary to perform the related
calculations for information reporting purposes, however, generally will not be
available to the Trustee. Accordingly, any information reporting provided by the
Trustee with respect to these Stripped Certificates, which information will be
based on pricing information as of the related closing date for the series, will
largely fail to reflect the accurate accruals of original issue discount for
these securities. Prospective investors therefore should be aware that the
timing of accruals of original issue discount applicable to a Stripped
Certificates generally will be different than that reported to
Certificateholders and the Internal Revenue Service. You should consult your own
tax advisor regarding your obligation to compute and include in income the
correct amount of original issue discount accruals and any possible tax
consequences to you if you should fail to do so.

     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


                                       117



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 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


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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 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."

          On January 24, 2006, the Internal Revenue Service published final
regulations which establish a reporting framework for interests in "widely held
fixed investment trusts" and place the responsibility of reporting on the person
in the ownership chain who holds an interest for a beneficial owner. A widely
held fixed investment trust is defined as an arrangement classified as a "trust"
under Treasury Regulation Section 301.7701-4(c) which is a U.S. Person and in
which any interest is held by a middleman, which includes, but is not limited to
(i) a custodian of a person's account, (ii) a nominee and (iii) a broker holding
an interest for a customer in street name. The Trustee, or its designated agent,
will be required to calculate and provide information to requesting persons with
respect to the related Trust in accordance with these new regulations beginning
with respect to the 2007 calendar year. The Trustee (or its designated agent),
or the applicable middleman (in the case of interests held through a middleman),
will be required to file information returns with the IRS and provide tax
information statements to Certificateholders in accordance with these new
regulations after December 31, 2007.

     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."

FEDERAL INCOME TAX CONSEQUENCES FOR EXCHANGEABLE CERTIFICATES

     TAX STATUS


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          The Exchangeable Certificates should be considered to represent "real
estate assets" within the meaning of Code Section 856(c)(5)(B) and assets
described in Code Section 7701(a)(19)(C) to the extent the underlying REMIC
regular interests represented by such Exchangeable Certificates would be
qualifying if held directly. Original Issue Discount and interest accruing on
Exchangeable Certificates should be considered to represent "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) to the extent income
on the underlying REMIC regular interests represented by such Exchangeable
Certificates would be qualifying if held directly. Exchangeable Certificates
will be "qualified mortgages" under Code Section 860G(a)(3) for a REMIC to the
extent the underlying REMIC regular interests represented by such Exchangeable
Securities would be qualifying if held directly. Prospective investors should
consult their own tax advisors regarding the proper treatment of Exchangeable
Certificates in respect of the above discussion.

     EXCHANGEABLE CERTIFICATES REPRESENTING PROPORTIONATE INTERESTS IN TWO OR
MORE REMIC REGULAR INTERESTS

          The related prospectus supplement for a series will specify whether an
Exchangeable Certificate represents beneficial ownership of a proportionate
interest in two or more REMIC regular interests corresponding to that
Exchangeable Certificate. Each beneficial owner of such an Exchangeable
Certificate should account for its ownership interest in each REMIC regular
interest underlying that Exchangeable Certificate as described under "-Federal
Income Tax Consequences for REMIC Certificates." The beneficial owner must
allocate its basis among the underlying REMIC regular interests in accordance
with their relative fair market values as of the time of acquisition. Similarly,
on the sale of such Exchangeable Certificate, the beneficial owner must allocate
the amount received on the sale among the underlying REMIC regular interests in
accordance with their relative fair market values as of the time of sale.

     EXCHANGEABLE CERTIFICATES REPRESENTING DISPROPORTIONATE INTERESTS IN REMIC
REGULAR INTERESTS

          The related prospectus supplement for a series will specify whether an
Exchangeable Certificate represents beneficial ownership of a disproportionate
interest in a REMIC regular interest corresponding to that Exchangeable
Certificate (a "DISPROPORTIONATE EXCHANGEABLE CERTIFICATE"). The beneficial
owner of such an Exchangeable Certificate will be treated as owning, pursuant to
Code Section 1286, "stripped bonds" to the extent of its share of principal
payments and "stripped coupons" to the extent of its share of interest payments
on such REMIC regular interest. Under Code Section 1286, each beneficial owner
of a Disproportionate Exchangeable Certificate must treat the Exchangeable
Certificate as a debt instrument originally issued on the date the owner
acquires it and having Original Issue Discount equal to the excess, if any, of
its "stated redemption price at maturity" over the price paid by the owner to
acquire it. The stated redemption price at maturity for a Disproportionate
Exchangeable Certificate is determined in the same manner as described with
respect to REMIC regular interests under "--Federal Income Tax Consequences for
REMIC Certificates--Taxation of Regular Certificates--Original Issue Discount."

          Each beneficial owner of a Disproportionate Exchangeable Certificate
should calculate Original Issue Discount and include it in ordinary income as it
accrues, which may be prior to the receipt of cash attributable to such income,
in accordance with a method analogous to that described with respect to a REMIC
regular interest under "--Federal Income Tax Consequences for REMIC
Certificates--Taxation of Regular Certificates-Original Issue Discount." A
beneficial owner should determine its yield to maturity based on the purchase
price for the Exchangeable Certificate and on a schedule of payments projected
using a prepayment assumption, and then make periodic adjustments to take into
account actual prepayment experience. It is not clear whether the prepayment
assumption a beneficial owner should use to calculate Original Issue Discount
would be one determined at the time the Exchangeable Certificate is acquired or
would be the original prepayment assumption with respect to the underlying REMIC
regular interest.

          While the matter is not free from doubt, if a beneficial owner
acquires a combination of Exchangeable Certificates in separate transactions
which in the aggregate represent a single REMIC regular interest, it appears
that the owner should account for each such Exchangeable Certificate separately,
even if it exchanges the Exchangeable Certificates for the underlying REMIC
regular interest. However, if a beneficial owner acquires such a combination in
a single transaction, it is possible that the beneficial owner's interests
should be aggregated, with the beneficial owner treated as owning the underlying
REMIC regular interest (regardless of whether it has exchanged the Exchangeable
Certificates for the underlying REMIC regular interest). Accounting separately
for the Exchangeable


                                       120



Certificates may lead to significantly different accruals of interest and
Original Issue Discount than would be the case if the owner aggregated such
interests. Prospective investors should consult their own tax advisors as to the
proper treatment of an Exchangeable Certificate in either of these
circumstances.

     SALES, EXCHANGES AND OTHER DISPOSITIONS OF EXCHANGEABLE CERTIFICATES

          If a beneficial owner exchanges one or more underlying REMIC regular
interests for one or more Exchangeable Certificates in the manner described
under "Description of the Certificates--Exchangeable REMIC and Exchangeable
Certificates" in this prospectus, the exchange will not be taxable. Likewise, if
a beneficial owner exchanges one or more Exchangeable Certificates for the
corresponding REMIC regular interest or interests, the exchange will not be
taxable.

          Upon the sale, exchange or other disposition of an Exchangeable
Certificate other than an exchange described in the preceding paragraph, a
beneficial owner generally will recognize gain or loss equal to the difference
between the amount realized and the beneficial owner's adjusted basis or bases
in the REMIC regular interest or interests underlying the Exchangeable
Certificate. The adjusted basis of each such REMIC regular interest will be
determined as described above under "--Federal Income Tax Consequences for REMIC
Certificates--Taxation of Regular Certificates--Sale or Exchange of 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.

          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


                                       121



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 LLP,
New York, New York or Hunton &Williams LLP, Charlotte, North Carolina, as
specified in the related prospectus supplement.


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                                     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. 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


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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.


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                                 INDEX OF TERMS

                                                                            PAGE
                                                                            ----
1986 Act.................................................................     96
Accretion Directed Certificates..........................................     36
Accrual Certificates.....................................................     39
Advances.................................................................     65
Assessment of Compliance.................................................     71
Asset Conservation Act...................................................     85
Attestation Report.......................................................     71
Auction Administrator....................................................     40
Auction Certificates.....................................................     40
Auction Distribution Date................................................     40
Balloon Loans............................................................     20
Balloon Period...........................................................     20
Bank of America..........................................................     54
Bankruptcy Code..........................................................     79
Beneficial Owners........................................................     29
Benefit Plans............................................................     87
Book-Entry Certificates..................................................     29
Buy Down Fund............................................................     20
Buy Down Loans...........................................................     20
Cash Flow Agreement......................................................     50
CERCLA...................................................................     84
CERCLA Secured-Creditor Exemption........................................     85
Certificates.............................................................     27
class balance............................................................     35
Code.....................................................................     94
Combination..............................................................     41
Commission...............................................................    123
Companion Certificates...................................................     36
Component Certificates...................................................     36
Cooperatives.............................................................     21
Cut-Off Date.............................................................     59
Deferred Interest........................................................     18
Definitive Certificates..................................................     28
Depositor................................................................     55
Disproportionate Exchangeable Certificate................................    120
Disqualified Organization................................................    107
Distribution Account.....................................................     27
Distribution Date........................................................     34
DOL......................................................................     87
DOL Regulations..........................................................     88
Due-on-Sale..............................................................     82
Electing Large Partnership...............................................    107
Eligible Custodial Account...............................................     62
Eligible Investments.....................................................     63
ERISA....................................................................     87
ERISA Plans..............................................................     87
Escrow Account...........................................................     66
Euroclear Operator.......................................................     31
European Depositaries....................................................     29
Exchangeable Certificates................................................     36
Exchangeable Combination.................................................     41
Exchangeable REMIC Certificates..........................................     36
Exempt Plans.............................................................     87
Fannie Mae Certificates..................................................     25
FHA......................................................................     23
FHA Loans................................................................     23
Financial Intermediary...................................................     29
Fitch....................................................................     89
Fixed Retained Yield.....................................................     70
Fixed-Rate Certificates..................................................     39
Floating-Rate Certificates...............................................     39
Foreign Persons..........................................................    119
Freddie Mac Act..........................................................     24
Freddie Mac Certificates.................................................     24
Garn Act.................................................................     82
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.....................................................................     83
Housing Act..............................................................     23
HUD......................................................................     23
Indirect Participants....................................................     29
Interest Only Certificates...............................................     39
Interest Only Mortgage Loans.............................................     19
Inverse Floating-Rate Certificates.......................................     39
IRA......................................................................     87
Liquidation Proceeds.....................................................     63
Lockout Certificates.....................................................     37
Mark-to-Market Regulations...............................................    109
Master Servicer..........................................................     57
Master Servicer Custodial Account........................................     63
MERS.....................................................................     60
Moody's..................................................................     89
Mortgage Assets..........................................................     17
Mortgage Certificates....................................................     17
Mortgage Loans...........................................................     17
NCUA.....................................................................     93
Non-ERISA Plans..........................................................     87
Non-Pro Rata Certificate.................................................     97
Nonrecoverable Advance...................................................     65
Non-SMMEA Certificates...................................................     92
Notional Amount Certificates.............................................     37
OCC......................................................................     55
OID Regulations..........................................................     97
Option ARM Mortgage Loans................................................     18
Original Issue Discount..................................................     97
PAC Certificates.........................................................     37
PAC I....................................................................     37
PAC II...................................................................     37
Par Price................................................................     40
Participants.............................................................     29
Pass-Through Certificates................................................     37
Pass-through Entity......................................................    107


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                                 INDEX OF TERMS

                                                                            PAGE
                                                                            ----
Paying Agent.............................................................     65
PC Agreement.............................................................     26
PC Servicer..............................................................     26
PC Sponsor...............................................................     26
PC Trustee...............................................................     26
Periodic Advance.........................................................     65
Periodic Reports.........................................................    123
Planned Amortization Certificates........................................     37
Prepayment Assumption....................................................     98
Principal Only Certificates..............................................     39
Private Certificates.....................................................     25
PTCE.....................................................................     87
Ratio Strip Certificates.................................................     37
RCRA.....................................................................     85
RCRA Secured-Creditor Exemption..........................................     85
Regular Certificateholder................................................     97
Regular Certificates.....................................................     94
Related..................................................................     41
Relevant Depositary......................................................     29
Relief Act...............................................................     84
REMIC....................................................................     94
REMIC Certificates.......................................................     94
REMIC Combination........................................................     41
REMIC Pool...............................................................     94
REO Property.............................................................     65
Residual Certificates....................................................     94
Residual Holders.........................................................    103
Restricted Group.........................................................     90
Rules....................................................................     29
S&P......................................................................     89
Scheduled Amortization Certificates......................................     38
Senior Certificates......................................................     38
Sequential Pay Certificates..............................................     38
Servicer.................................................................     57
Servicer Custodial Account...............................................     62
Servicing Advances.......................................................     65
SMMEA....................................................................     92
Sponsor..................................................................     54
Standard Hazard Insurance Policy.........................................     68
Startup Day..............................................................     95
Step Coupon Certificates.................................................     40
Stripped Certificateholder...............................................    117
Stripped Certificates....................................................    116
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.........................................................     39
Targeted Amortization Certificates.......................................     39
Texas Home Equity Laws...................................................     81
Tiered Payment Mortgage Loans............................................     19
Title V..................................................................     83
Trust....................................................................     17
Trust Estate.............................................................     17
Trustee..................................................................     17
U.S. Person..............................................................    109
UCC......................................................................     78
Underlying Loans.........................................................     25
Underlying Servicing Agreement...........................................     57
Underwriter's Exemption..................................................     89
VA.......................................................................     23
Variable Rate Certificates...............................................     40
Window Period............................................................     82
Window Period Loans......................................................     82
Window Period States.....................................................     82


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