THIRD AMENDED AND RESTATED MORTGAGE LOAN FLOW PURCHASE, SALE & SERVICING AGREEMENT

Exhibit 99.11(b)


EXECUTION COPY


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THIRD AMENDED AND RESTATED MORTGAGE
LOAN FLOW PURCHASE,
SALE & SERVICING AGREEMENT


dated as of January 1, 2006


between


MORGAN STANLEY MORTGAGE CAPITAL INC.,


Purchaser


and


PHH MORTGAGE CORPORATION
(formerly known as
CENDANT MORTGAGE CORPORATION),


and


BISHOP'S GATE RESIDENTIAL MORTGAGE TRUST
(formerly known as
CENDANT RESIDENTIAL MORTGAGE TRUST),
Sellers





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TABLE OF CONTENTS

Page
----



ARTICLE I

DEFINITIONS

Section 1.01 Defined Terms..................................................1


ARTICLE II

SALE AND CONVEYANCE OF MORTGAGE LOANS; POSSESSION OF MORTGAGE FILES; BOOKS
AND RECORDS; DELIVERY OF MORTGAGE LOAN DOCUMENTS

Section 2.01 Sale and Conveyance of Mortgage Loans.........................20
Section 2.02 Possession of Mortgage Files..................................22
Section 2.03 Books and Records.............................................22
Section 2.04 Defective Documents; Delivery of Mortgage Loan
Documents....................................................22
Section 2.05 Transfer of Mortgage Loans....................................24


ARTICLE III

REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLER; REPURCHASE AND
SUBSTITUTION; REVIEW OF MORTGAGE LOANS

Section 3.01 Representations and Warranties of each Seller.................25
Section 3.02 Representations and Warranties of the Servicer................28
Section 3.03 Representations and Warranties as to Individual
Mortgage Loans...............................................29
Section 3.04 Repurchase and Substitution...................................45
Section 3.05 Removal of Mortgage Loans from Inclusion Under this
Agreement Upon an Agency Transfer, Whole-Loan
Transfer or a Securitization Transaction on One or
More Reconstitution Dates....................................47
Section 3.06 Review of Mortgage Loans......................................50


ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE
PURCHASER AND CONDITIONS PRECEDENT TO FUNDING

Section 4.01 Representations and Warranties................................51
Section 4.02 Conditions Precedent to Closing...............................53


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ARTICLE V

ADMINISTRATION AND SERVICING OF MORTGAGE LOANS

Section 5.01 PHH Mortgage to Act as Servicer; Servicing Standards;
Additional Documents; Consent of the Purchaser...............55
Section 5.02 Collection of Mortgage Loan Payments..........................57
Section 5.03 Notice of Specially Serviced Mortgage Loans and
Foreclosure Sale.............................................57
Section 5.04 Establishment of Collection Account; Deposits in
Collection Account...........................................58
Section 5.05 Permitted Withdrawals from the Collection Account.............59
Section 5.06 Establishment of Escrow Accounts; Deposits in Escrow..........60
Section 5.07 Permitted Withdrawals From Escrow Accounts....................60
Section 5.08 Payment of Taxes, Insurance and Other Charges;
Maintenance of Primary Insurance Policies;
Collections Thereunder.......................................61
Section 5.09 Transfer of Accounts..........................................62
Section 5.10 Maintenance of Hazard Insurance...............................62
Section 5.11 Maintenance of Mortgage Impairment Insurance Policy...........64
Section 5.12 Fidelity Bond; Errors and Omissions Insurance.................64
Section 5.13 Management of REO Properties..................................65
Section 5.14 Sale of Specially Serviced Mortgage Loans and REO
Properties...................................................67
Section 5.15 Realization Upon Specially Serviced Mortgage Loans and
REO Properties...............................................67
Section 5.16 Investment of Funds in the Collection Account.................69
Section 5.17 MERS..........................................................70
Section 5.18 Pledged Asset Mortgage Loans..................................70
Section 5.19 Inspections...................................................74
Section 5.20 Transfer of Servicing.........................................74
Section 5.21 Fair Credit Reporting Act.....................................76


ARTICLE VI

REPORTS; REMITTANCES; ADVANCES

Section 6.01 Remittances...................................................76
Section 6.02 Reporting.....................................................77
Section 6.03 Monthly Advances by the Servicer..............................78
Section 6.04 Non-recoverable Advances......................................78
Section 6.05 Itemization of Servicing Advances.............................78
Section 6.06 Officers' Certificate.........................................78
Section 6.07 Compliance with REMIC Provisions..............................78


ARTICLE VII

GENERAL SERVICING PROCEDURES

Section 7.01 Enforcement of Due-on-Sale Clauses, Assumption
Agreements...................................................79


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Section 7.02 Satisfaction of Mortgages and Release of Mortgage Files.......80
Section 7.03 Servicing Compensation........................................80
Section 7.04 Annual Statement as to Compliance.............................81
Section 7.05 Annual Independent Certified Public Accountants'
Servicing Report or Attestation..............................81
Section 7.06 Purchaser's Right to Examine Servicer Records.................81


ARTICLE VIII

REPORTS TO BE PREPARED BY THE SERVICER

Section 8.01 The Servicer's Reporting Requirements.........................82
Section 8.02 Financial Statements..........................................82


ARTICLE IX

THE SELLERS

Section 9.01 Indemnification; Third Party Claims...........................82
Section 9.02 Merger or Consolidation of the Seller.........................83
Section 9.03 Limitation on Liability of the Sellers and Others.............84
Section 9.04 Servicer Not to Resign........................................84


ARTICLE X

DEFAULT

Section 10.01 Events of Default.............................................85


ARTICLE XI

TERMINATION

Section 11.01 Term and Termination..........................................87
Section 11.02 Survival......................................................87


ARTICLE XII

GENERAL PROVISIONS

Section 12.01 Successor to the Servicer.....................................88
Section 12.02 Governing Law; Jurisdiction; Consent to Service of
Process......................................................88
Section 12.03 Notices.......................................................89
Section 12.04 Severability of Provisions....................................90
Section 12.05 Schedules and Exhibits........................................90
Section 12.06 General Interpretive Principles...............................90


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Section 12.07 Waivers and Amendments, Noncontractual Remedies;
Preservation of Remedies.....................................91
Section 12.08 Captions......................................................91
Section 12.09 Counterparts; Effectiveness...................................91
Section 12.10 Entire Agreement; Amendment...................................91
Section 12.11 Further Assurances............................................91
Section 12.12 Intention of the Seller.......................................92
Section 12.13 Waiver of Trial by Jury.......................................92


ARTICLE XIII
COMPLIANCE WITH REGULATION AB

Section 13.01 Intent of the Parties; Reasonableness.........................92
Section 13.02 Additional Representations and Warranties of the
Sellers and the Servicer.....................................93
Section 13.03 Information to Be Provided by each Seller or the
Servicer.....................................................94
Section 13.04 Servicer Compliance Statement.................................98
Section 13.05 Report on Assessment of Compliance and Attestation............98
Section 13.06 Use of Subservicers and Subcontractors........................99
Section 13.07 Indemnification; Remedies....................................101




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Schedules
---------

A. Mortgage Loan Schedule
B. Contents of Mortgage File
B-1 Collateral File
B-2 Credit Documents
C. PHH Guide

Exhibits
--------

Exhibit 2.05 Form of Assignment, Assumption and Recognition Agreement
Exhibit 5.01 Workout Compensation
Exhibit 5.03(a) Report P4DL Notice for Specially Serviced Mortgage Loans
Exhibit 5.03(b) Form of Notice of Foreclosure
Exhibit 5.04-1 Form of Collection Account Certification
Exhibit 5.04-2 Form of Collection Account Letter Agreement
Exhibit 5.06-1 Form of Escrow Account Certification
Exhibit 5.06-2 Form of Escrow Account Letter Agreement
Exhibit 6.02(a) Report P-139 - Monthly Statement of Mortgage Accounts
Exhibit 6.02(b) Report S-50Y - Private Pool Detail Report
Exhibit 6.02(c) Report S-213 - Summary of Curtailments Made Remittance
Report
Exhibit 6.02(d) Report S-214 - Summary of Paid in Full Remittance Report
Exhibit 6.02(e) Report S-215 - Consolidation of Remittance Report
Exhibit 6.02(f) Report T-62C - Monthly Accounting Report
Exhibit 6.02(g) Report T-62E - Liquidation Report
Exhibit 8.01 Report P-195 - Delinquency Report
Exhibit 9 Form of Officer's Certificate
Exhibit 10 Form of Warranty Bill of Sale
Exhibit 11 Form of Sarbanes-Oxley Certification
Exhibit 12 Process Guidelines
Exhibit 13 Form of Indemnification and Contribution Agreement
Exhibit 14 Servicing Criteria to be Addressed in Assessment of
Compliance



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THIRD AMENDED AND RESTATED MORTGAGE LOAN FLOW
PURCHASE, SALE & SERVICING AGREEMENT

This Third Amended and Restated Mortgage Loan Flow Purchase, Sale
& Servicing Agreement, dated as of January 1, 2006, among Morgan Stanley
Mortgage Capital Inc., (the "Purchaser"), PHH Mortgage Corporation (formerly
known as Cendant Mortgage Corporation) ("PHH Mortgage") and Bishop's Gate
Residential Mortgage Trust (formerly known as Cendant Residential Mortgage
Trust) (the "Trust," together with Cendant Mortgage, the "Sellers" and
individually, each a "Seller").

PRELIMINARY STATEMENT

WHEREAS, the Purchaser and the Sellers are parties to that
certain Second Amended and Restated Mortgage Loan Flow Purchase, Sale &
Servicing Agreement, dated as of September 1, 2005 (the "Original Purchase
Agreement"), pursuant to which the Sellers may sell, from time to time, to
the Purchaser, and the Purchaser may purchase, from time to time, from the
Sellers, certain adjustable and fixed rate residential first lien mortgage
loans (the "Mortgage Loans") on a servicing retained basis as described
therein, and which shall be delivered in pools of whole loans on various
dates as provided therein (each, a "Closing Date");

WHEREAS, at the present time, the Purchaser and the Sellers
desire to amend the Original Purchase Agreement to make certain modifications
as set forth herein;

WHEREAS, each of the Sellers and the Purchaser intend, and have
agreed that, each purchase and sale of Mortgage Loans between the Seller and
the Purchaser on or after January 1, 2005, shall be governed by the terms and
conditions of this Agreement;

NOW, THEREFORE, in consideration of the premises and mutual
agreements set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Purchaser
and the Sellers agree as follows

NOW, THEREFORE, in consideration of the mutual agreements
hereinafter set forth, the Purchaser and the Sellers agree as follows:


ARTICLE I

DEFINITIONS

Section 1.01 Defined Terms. Whenever used in this
Agreement, the following words and phrases shall have the following meaning
specified in this Article:

"Acceptance of Assignment and Assumption of Lease Agreement":
The specific agreement creating a first lien on and pledge of the Cooperative
Shares and the appurtenant Proprietary Lease securing a Cooperative Loan.


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"Accepted Servicing Practices": With respect to any Mortgage
Loan, those customary mortgage servicing practices of prudent mortgage
lending institutions which service mortgage loans of the same type as such
Mortgage Loan in the jurisdiction where the related Mortgaged Property is
located.

"Adjustable Rate Mortgage Loan": A Mortgage Loan purchased
pursuant to this Agreement, the Note Rate of which is adjusted from time to
time in accordance with the terms of the related Mortgage Note.

"Affiliate": When used with reference to a specified Person, any
Person that (i) directly or indirectly controls or is controlled by or is
under common control with the specified Person, (ii) is an officer of,
partner in or trustee of, or serves in a similar capacity with respect to,
the specified person or of which the specified Person is an officer, partner
or trustee, or with respect to which the specified Person serves in a similar
capacity, or (iii) directly or indirectly is the beneficial owner of 10% or
more of any class of equity securities of the specified Person or of which
the specified person is directly or indirectly the owner of 10% or more of
any class of equity securities.

"Agency Transfer": The sale or transfer by Purchaser of some or
all of the Mortgage Loans to Fannie Mae under its "Cash Purchase Program" or
its "MBS Swap Program" (Special Servicing Option) or to Freddie Mac under its
"Freddie Mac Cash Program" or "Gold PC Program", retaining the Servicer as
"servicer thereunder."

"Agreement": This Third Amended and Restated Mortgage Loan Flow
Purchase, Sale & Servicing Agreement between the Purchaser and the Sellers.

"ALTA": The American Land Title Association.

"Appraised Value": With respect to any Mortgaged Property, the
lesser of: (i) the value thereof as determined by an appraisal or a PHH
Mortgage approved AVM (as defined in the PHH Guide) made for the originator
of the Mortgage Loan at the time of origination of the Mortgage Loan by an
appraiser who met the minimum requirements of Fannie Mae and Freddie Mac; or
(ii) the purchase price paid for the related Mortgaged Property by the
Mortgagor with the proceeds of the Mortgage Loan; provided that, in the case
of a Refinanced Mortgage Loan, such value of the Mortgaged Property shall be
based solely upon the value determined by an appraisal made for the
originator of such Refinanced Mortgage Loan at the time of origination of
such Refinanced Mortgage Loan by an appraiser who met the minimum
requirements of Fannie Mae and Freddie Mac.

"ARM Loan": An "adjustable rate" Mortgage Loan, the Note Rate of
which is subject to periodic adjustment in accordance with the terms of the
Mortgage Note.

"Assignment": An individual assignment of a Mortgage, notice of
transfer or equivalent instrument in recordable form, sufficient under the
laws of the jurisdiction wherein the related Mortgaged Property is located to
reflect of record the sale or transfer of the Mortgage Loan to the Purchaser
or, in the case of a MERS Mortgage Loan, an electronic transmission to MERS,
identifying a transfer of ownership of the related Mortgage to the Purchaser
or its designee.


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"Assignment of Proprietary Lease": With respect to a Cooperative
Loan, an assignment of the Proprietary Lease sufficient under the laws of the
jurisdiction wherein the related Cooperative Unit is located to reflect the
assignment of such Proprietary Lease.

"Assignment of Recognition Agreement": With respect to a
Cooperative Loan, an assignment of the Recognition Agreement sufficient under
the laws of the jurisdiction wherein the related Cooperative Unit is located
to reflect the assignment of such Recognition Agreement.

"AVM": Automated Value Model. Electronic system to calculate
the property value from a provider that has been approved by the Seller.

"Bankruptcy Code": The Bankruptcy Reform Act of 1978 (11 U.S.C.
ss.ss. 101-1330), as amended, modified, or supplemented from time to time, and
any successor statute, and all rules and regulations issued or promulgated in
connection therewith.

"BPO": A broker's price opinion with respect to a Mortgaged
Property.

"Business Day": Any day other than (i) a Saturday or Sunday, or
(ii) a day on which the Federal Reserve is closed.

"PHH Guide": Shall have the meaning set forth in paragraph 3 of
the Preliminary Statement to this Agreement.

"Closing Date": The date or dates on which the Purchaser from
time to time shall purchase, and the Seller from time to time shall sell, the
Mortgage Loans listed on the related Mortgage Loan Schedule.

"Code": The Internal Revenue Code of 1986, as amended, or any
successor statute thereto.

"Collection Account": The separate trust account or accounts
created and maintained pursuant to Section 5.04 which shall be entitled "PHH
Mortgage Corporation, as servicer and custodian for the Purchaser of Mortgage
Loans under the Third Amended and Restated Mortgage Loan Flow Purchase, Sale
& Servicing Agreement, dated as of January 1, 2006."

"Commission": The United States Securities and Exchange
Commission.

"Condemnation Proceeds": All awards or settlements in respect of
a taking of an entire Mortgaged Property or a part thereof by exercise of the
power of eminent domain or condemnation.

"Consent": A document executed by the Cooperative Corporation
(i) consenting to the sale of the Cooperative Unit to the Mortgagor and
(ii) certifying that all maintenance charges relating to the Cooperative Unit
have been paid.


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"Control Agreement": With respect to each Pledged Asset Mortgage
Loan, the Pledged Collateral Account Control Agreement between the guarantor
or mortgagor, as applicable, and the related Pledged Asset Servicer, pursuant
to which the guarantor or mortgagor, as applicable, has granted a security
interest in a Securities Account.

"Convertible Mortgage Loan": Any ARM Loan purchased pursuant to
this Agreement as to which the related Mortgage Note permits the Mortgagor to
convert the Note Rate on such Mortgage Loan to a fixed note rate.

"Cooperative Corporation": With respect to any Cooperative Loan,
the cooperative apartment corporation that holds legal title to the related
Cooperative Project and grants occupancy rights to units therein to
stockholders through Proprietary Leases or similar arrangements.

"Cooperative Lease": With respect to a Cooperative Loan, the
lease with respect to a dwelling unit occupied by the Mortgagor and relating
to the stock allocated to the related dwelling unit.

"Cooperative Lien Search": A search for (a) federal tax liens,
mechanics' liens, lis pendens, judgments of record or otherwise against
(i) the Cooperative Corporation and (ii) the seller of the Cooperative Unit,
(b) filings of Financing Statements and (c) the deed of the Cooperative
Project into the Cooperative Corporation.

"Cooperative Loan": A Mortgage Loan that is secured by a first
lien on and a perfected security interest in Cooperative Shares and the
related Proprietary Lease granting exclusive rights to occupy the related
Cooperative Unit in the building owned by the related Cooperative Corporation.

"Cooperative Project": With respect to any Cooperative Loan, all
real property and improvements thereto and rights therein and thereto owned
by a Cooperative Corporation including without limitation the land, separate
dwelling units and all common elements.

"Cooperative Shares": With respect to any Cooperative Loan, the
shares of stock issued by a Cooperative Corporation and allocated to a
Cooperative Unit and represented by a stock certificates.

"Cooperative Unit": With respect to any Cooperative Loan, a
specific unit in a Cooperative Project.

"Covered Loan": A Mortgage Loan categorized as Covered pursuant
to Appendix E of Standard & Poor's Glossary.

"Credit Documents": Those documents, comprising part of the
Mortgage File, required of the Mortgagor, as described in Section 2 (Specific
Loan Program Guidelines) of the PHH Guide. The Credit Documents are
specified on Schedule B-2 hereto.

"Custodial Agreement": With respect to each Mortgage Loan
purchase hereunder, the applicable Custodial Agreement, among the Purchaser,
the Servicer and the Custodian.


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"Custodian": With respect to each Mortgage Loan purchase, the
Custodian named in the applicable Custodial Agreement, or its successor in
interest or assigns or any successor to the Custodian under such Custodial
Agreement as provided therein.

"Cut-off Date" : The first day of the month in which the
respective Funding Date occurs.

Deemed Material and Adverse Representation: Each representation
and warranty identified as such in Section 3.03 of this Agreement.

"Defect": Shall have the meaning set forth in Section 2.04.

"Defective Mortgage Loan": Shall have the meaning set forth in
Section 3.04.

"Deleted Mortgage Loan": A Mortgage Loan replaced or to be
replaced with a Qualified Substitute Mortgage Loan.

"Delinquent Mortgage Loan": Shall have the meaning set forth in
Section 11.01.

"Depositor": The depositor, as such term is defined in
Regulation AB, with respect to any Securitization Transaction.

"Determination Date": The 15th day of each calendar month,
commencing on the 15th day of the month following the Funding Date, or, if
such 15th day is not a Business Day, the Business Day immediately preceding
such 15th day.

"Due Date": With respect to any Mortgage Loan, the day of the
month on which each Monthly Payment is due thereon, exclusive of any days of
grace.

"Due Period": With respect to each Remittance Date, the period
commencing on the second day of the month immediately preceding the month of
such Remittance Date and ending on the first day of the month of such
Remittance Date.

"Eligible Account": One or more accounts (i) that are maintained
with a depository institution the long-term unsecured debt obligations of
which have been rated by each Rating Agency in one of its two highest rating
categories at the time of any deposit therein, (ii) that are trust accounts
with any depository institution held by the depository institution in its
capacity as a corporate trustee, the deposits in which are insured by the
FDIC (to the limits established by the FDIC) and the uninsured deposits in
which are otherwise secured such that the Purchaser has a claim with respect
to the funds in such accounts or a perfected first security interest against
any collateral securing such funds that is superior to claims of any other
depositors or creditors of the depository institution with which such
accounts are maintained. In addition, solely with respect to Mortgage Loans
which are not part of a Securitization Transaction, "Eligible Account" shall
include any accounts that meet the standards established from time to time by
Fannie Mae or Freddie Mac, as applicable, for eligible custodial
depositories. In the event that the Mortgage Loans are subject to a
Securitization Transaction, the Servicer agrees that the definition of
Eligible Account shall satisfy the rating requirements


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established by each Rating Agency which rates any of the securities issued as
part of such Securitization Transaction.

"Environmental Assessment": A "Phase I" environmental assessment
of a Mortgaged Property prepared by an Independent Person who regularly
conducts environmental assessments and who has any necessary license(s)
required by applicable law and has at least five years experience conducting
environmental assessments.

"Environmental Conditions Precedent to Foreclosure": Shall have
the meaning set forth in Section 5.15.

"Environmental Laws": All federal, state, and local statutes,
laws, regulations, ordinances, rules, judgments, orders, decrees or other
governmental restrictions relating to the environment or to emissions,
discharges or releases of pollutants, contaminants or industrial, toxic or
hazardous substances or wastes into the environment, including ambient air,
surface water, ground water, or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants or industrial, toxic or
hazardous substances or wastes or the cleanup or other remediation thereof.

"Escrow Account": The separate trust account or accounts created
and maintained pursuant to Section 5.06 which shall be entitled "PHH Mortgage
Corporation, as servicer for the Purchaser under the Third Amended and
Restated Mortgage Loan Flow Purchase, Sale & Servicing Agreement, dated as of
January 1, 2006, and various mortgagors."

"Escrow Payments": The amounts constituting ground rents, taxes,
assessments, water rates, mortgage insurance premiums, fire and hazard
insurance premiums and other payments required to be escrowed by the
Mortgagor with the mortgagee pursuant to any Mortgage Loan.

"Estoppel Letter": A document executed by the Cooperative
Corporation certifying, with respect to a Cooperative Unit, (i) the
appurtenant Proprietary Lease will be in full force and effect as of the date
of issuance thereof, (ii) the related Stock Certificate was registered in the
Mortgagor's name and the Cooperative Corporation has not been notified of any
lien upon, pledge of, levy of execution on or disposition of such Stock
Certificate, and (iii) the Mortgagor is not in default under the appurtenant
Proprietary Lease and all charges due the Cooperative Corporation have been
paid.

"Event of Default": Any one of the conditions or circumstances
enumerated in Section 10.01.

"Exchange Act": The Securities Exchange Act of 1934, as amended.

"Fannie Mae": The Federal National Mortgage Association or any
successor organization.

"Fannie Mae Guide": The Fannie Mae Selling Guide and the
Servicing Guide, collectively, in effect on and after the Funding Date.


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"FDIC": The Federal Deposit Insurance Corporation or any
successor organization.

"Fidelity Bond": A fidelity bond to be maintained by the
Servicer pursuant to Section 5.12.

"Financing Statement": A financing statement in the form of a
UCC-1 filed pursuant to the relevant state Uniform Commercial Code to perfect
a security interest in the Cooperative Shares and Pledge Instruments.

"Financing Statement Change": A financing statement in the form
of a UCC-3 filed to continue, terminate, release, assign or amend an existing
Financing Statement.

"Foreclosure Profits": As to any Distribution Date or related
Determination Date and any Mortgage Loan, the excess, if any, of Liquidation
Proceeds, Insurance Proceeds and proceeds from any REO Disposition (net of
all amounts reimbursable therefrom pursuant to Section 5.13, Section 5.14 and
Section 5.15) in respect of each Mortgage Loan or REO Property for which a
Cash Liquidation or REO Disposition occurred in the related prepayment period
over the sum of the Unpaid Principal Balance of such Mortgage Loan or REO
Property (determined, in the case of an REO Disposition, in accordance with
Section 5.13, Section 5.14 and Section 5.15) plus accrued and unpaid interest
at the Mortgage Rate on such Unpaid Principal Balance from the Due Date to
which interest was last paid by the Mortgagor to the first day of the month
following the month in which such Cash Liquidation or REO Disposition
occurred.

"Freddie Mac": The Federal Home Loan Mortgage Corporation or any
successor organization.

"Freddie Mac Servicing Guide": The Freddie Mac/ Freddie Mac
Sellers' and Servicers' Guide in effect on and after the Funding Date.

"Funding Date": Each date (up to four per month) that Purchaser
purchases Mortgage Loans from the Sellers hereunder.

"Gross Margin": With respect to each ARM Loan, the fixed
percentage added to the Index on each Rate Adjustment Date, as specified in
each related Mortgage Note and listed in the Mortgage Loan Schedule.

"High Cost Loan": A Mortgage Loan (a) covered by the Home
Ownership and Equity Protection Act of 1994, (b) classified as a "high cost
home," "threshold," "covered," (excluding New Jersey "Covered Home Loans" as
that term was defined in clause (1) of the definition of that term in the New
Jersey Home Ownership Security Act of 2002 that were originated between
November 26, 2003 and July 7, 2004), "high risk home," "predatory" or similar
loan under any other applicable state, federal or local law (or a similarly
classified loan using different terminology under a law imposing heightened
regulatory scrutiny or additional legal liability for residential mortgage
loans having high interest rates, points and/or fees) or (c) a Mortgage Loan
categorized as High Cost pursuant to Appendix E of Standard & Poor's
Glossary. For avoidance of doubt, the parties agree that this definition
shall apply to any law


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regardless of whether such law is presently, or in the future becomes, the
subject of judicial review or litigation.

"HUD": The United States Department of Housing and Urban
Development, or any successor thereto.

"Indemnified Party": Each of the Purchaser and any Successor
Servicer and each of their present and former directors, officers, agents,
employees, Affiliates and assignees and each Person, if any, that controls
the Purchaser or Successor Servicer or such Affiliate within the meaning of
either the Securities Act or the Exchange Act.

"Independent": With respect to any specified Person, such Person
who: (i) does not have any direct financial interest or any material
indirect financial interest in the applicable Mortgagor, the Sellers, the
Purchaser, or their Affiliates; and (b) is not connected with the applicable
Mortgagor, the Sellers, the Purchaser, or their respective Affiliates as an
officer, employee, promoter, underwriter, trustee, member, partner,
shareholder, director, or Person performing similar functions.

"Index": With respect to each ARM Loan, the applicable rate
index set forth on the related Mortgage Note.

"Insolvency Proceeding": With respect to any Person: (i) any
case, action, or proceeding with respect to such Person before any court or
other governmental authority relating to bankruptcy, reorganization,
insolvency, liquidation, receivership, dissolution, winding up, or relief of
debtors; or (ii) any general assignment for the benefit of creditors,
composition, marshaling of assets for creditors, or other, similar
arrangement in respect of the creditors generally of such Person or any
substantial portion of such Person's creditors; in any case undertaken under
federal, state or foreign law, including the Bankruptcy Code.

"Insurance Proceeds": Proceeds of any Primary Insurance Policy,
title policy, hazard policy or other insurance policy insuring a Mortgage
Loan or the related Mortgaged Property.

"Legal Documents": Those documents, comprising part of the
Mortgage File, set forth in Schedule B-1 of this Agreement.

"Lender-Paid Mortgage Insurance Rate": With respect to any
Mortgage Loan, the Lender-Paid Mortgage Insurance Rate for any "lender-paid"
Primary Insurance Policy shall be a per annum rate equal to the percentage
indicated on the Mortgage Loan Schedule.

"Lifetime Rate Cap": The provision of each Mortgage Note related
to an Adjustable Rate Mortgage Loan which provides for an absolute maximum
Note Rate thereunder. The Note Rate during the terms of each Adjustable Rate
Mortgage Loan shall not at any time exceed the Note Rate at the time of
origination of such Adjustable Rate Mortgage Loan by more than the amount per
annum set forth on the related Mortgage Loan Schedule.

"Liquidation Proceeds": Amounts, other than Insurance Proceeds
and Condemnation Proceeds, received by the Servicer in connection with the
liquidation of a


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defaulted Mortgage Loan through trustee's sale, foreclosure sale or
otherwise, other than amounts received following the acquisition of an REO
Property in accordance with the provisions hereof.

"Loan-to-Value Ratio" or "LTV": With respect to any Mortgage
Loan, the original principal balance of such Mortgage Loan divided by the
lesser of the Appraised Value of the related Mortgaged Property or the
purchase price. The Loan-to-Value Ratio of any Pledged Asset Mortgage Loan
shall be calculated by reducing the principal balance of such Pledged Asset
Mortgage Loan by the amount of the Original Pledged Asset Requirement with
respect to such Mortgage Loan. This is referred to in the PHH Guide as the
effective loan-to- value.

"Losses": Shall have the meaning set forth in Section 9.01.

"MAI Appraiser": With respect to any real property, a member of
the American Institute of Real Estate Appraisers with a minimum of 5 years of
experience appraising real property of a type similar to the real property
being appraised and located in the same geographical area as the real
property being appraised.

"Maximum Rate": With respect to each ARM Loan, the rate per annum
set forth in the related Mortgage Note as the maximum Note Rate thereunder.
The Maximum Rate as to each ARM Loan is set forth on the related Mortgage
Loan Schedule.

"MERS": Mortgage Electronic Registration Systems, Inc., a
Delaware corporation, or any successor in interest thereto.

"MERS Eligible Mortgage Loan": Any Mortgage Loan that under
applicable law and investor requirements is recordable in the name of MERS in
the jurisdiction in which the related Mortgaged Property is located.

"MERS Mortgage Loan": Any Mortgage Loan as to which the related
Mortgage, or an Assignment, has been recorded in the name of MERS, as agent
for the holder from time to time of the Mortgage Note.

"Minimum Rate": With respect to each ARM Loan, the rate per annum
set forth in the related Mortgage Note as the minimum Note Rate thereunder.
The Minimum Rate as to each ARM Loan is set forth on the related Mortgage
Loan Schedule.

"Monthly Advance": The aggregate amount of the advances made by
the Servicer on any Remittance Date pursuant to and as more fully described
in Section 6.03.

"Monthly Payment": The scheduled monthly payment of principal
and interest on a Mortgage Loan which is payable by a Mortgagor under the
related Mortgage Note on each Due Date.

"Monthly Period": Initially, the period from the Funding Date
through to and including the first Record Date during the term hereof, and,
thereafter, the period commencing on the day after each Record Date during
the term hereof and ending on the next succeeding Record Date during the term
hereof (or, if earlier, the date on which this Agreement terminates).


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<PAGE>


"Mortgage": The mortgage, deed of trust or other instrument
securing a Mortgage Note, which creates a first lien on either (i) with
respect to a Mortgage Loan other than a Cooperative Loan, an unsubordinated
estate in fee simple in real property or (ii) with respect to a Cooperative
Loan, the Proprietary Lease and related Cooperative Shares, which in either
case secures the Mortgage Note.

"Mortgage File": With respect to a particular Mortgage Loan,
those origination and servicing documents, escrow documents, and other
documents as are specified on Schedule B-1 and B-2 to this Agreement and any
additional documents required to be added to the Mortgage File pursuant to
the related Purchase Price and Terms Letter. These documents shall be stored
in a secure manner using paper or electronic storage.

"Mortgage Loan": Each individual mortgage loan or Cooperative
Loan (including all documents included in the Mortgage File evidencing the
same, all Monthly Payments, Principal Prepayments, Insurance Proceeds,
Condemnation Proceeds, Liquidation Proceeds, and other proceeds relating
thereto, and any and all rights, benefits, proceeds and obligations arising
therefrom or in connection therewith) which is the subject of this Agreement
and the related Purchase Price and Terms Letter. The Mortgage Loans subject
to this Agreement shall be identified on Mortgage Loan Schedules prepared in
connection with each Funding Date.

"Mortgage Loan Schedule": The list of Mortgage Loans identified
on each Funding Date that sets forth the information with respect to each
Mortgage Loan that is specified on Schedule A hereto (as amended from time to
time to reflect the addition of any Qualified Substitute Mortgage Loans and
the withdrawal of any Deleted Mortgage Loans). A Mortgage Loan Schedule will
be prepared for each Funding Date.

"Mortgage Note": The note or other evidence of the indebtedness
of a Mortgagor secured by a Mortgage.

"Mortgaged Property": With respect to a Mortgage Loan, the
underlying property securing repayment of a Mortgage Note.

"Mortgagor": The obligor on a Mortgage Note.

"Negative Amortization": That portion of interest accrued at the
Note Rate in any month which exceeds the Monthly Payment on the related
Mortgage Loan for such month and which, pursuant to the terms of the Mortgage
Note, is added to the principal balance of the Mortgage Loan.

"Non-recoverable Advance": As of any date of determination, any
Monthly Advance or Servicing Advance previously made or any Monthly Advance
or Servicing Advance proposed to be made in respect of a Mortgage Loan which,
in the good faith judgment of the Servicer and in accordance with the
servicing standard set forth in Section 5.01, will not or, in the case of a
proposed advance, would not be ultimately recoverable pursuant to
Section 5.05 (3) or (4) hereof. The determination by the Servicer that it has
made a Non-recoverable Advance or that any proposed advance would constitute
a Non-recoverable Advance shall be evidenced by an Officers' Certificate
satisfying the requirements of Section 6.04 hereof and delivered to the
Purchaser on or before the Determination Date in any month.


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<PAGE>


"Note Rate": With respect to any Mortgage Loan at any time any
determination thereof is to be made, the annual rate at which interest
accrues thereon.

OCC: Office of the Comptroller of the Currency, or any successor
thereto.

"Offering Materials": All documents, tapes, or other materials
relating to the Mortgage Loans provided by Seller to Purchaser prior to
Purchaser submitting its bid to purchase the Mortgage loans.

"Officers' Certificate": A certificate signed by (i) the
President or a Vice President and (ii) the Treasurer or the Secretary or one
of the Assistant Treasurers or Assistant Secretaries of the Servicer, and
delivered by the Servicer to the Purchaser as required by this Agreement.

"Original Pledged Asset Requirement": With respect to any Pledged
Asset Mortgage Loan, an amount equal to the Pledged Assets required at the
time of the origination of such Pledged Asset Mortgage Loan. Even though for
other purposes the Original Pledged Asset Requirement may actually exceed
thirty percent (30%) of the original principal balance of a Pledged Asset
Mortgage Loan, solely for purposes of the Required Surety Payment, the
Original Pledged Asset Requirement for a Pledged Asset Mortgage Loan will be
deemed not to exceed thirty percent (30%) of its original principal balance.

"OTS": The Office of Thrift Supervision or any successor thereto.

"Payment Adjustment Date": The date on which Monthly Payments
shall be adjusted. Payment Adjustment Date shall occur on the date which is
eleven months from the first payment date for the Mortgage Loan, unless
otherwise specified in the Mortgage Note, and on each anniversary of such
first Payment Adjustment Date.

"Payoff": With respect to any Mortgage Loan, any payment or
recovery received in advance of the last scheduled Due Date of such Mortgage
Loan, which payment or recovery consists of principal in an amount equal to
the outstanding principal balance of such Mortgage Loan, all accrued and
unpaid prepayment penalties, premiums, and/or interest with respect thereto,
and all other unpaid sums due with respect to such Mortgage Loan.

"Periodic Rate Cap": With respect to each ARM Loan and any Rate
Adjustment Date therefor, the number of basis points that is set forth in the
related Mortgage Loan Schedule and in the related Mortgage Note, which is the
maximum amount by which the Note Rate for such Mortgage Loan may increase or
decrease on such Rate Adjustment Date.

"Periodic Rate Floor": With respect to each Adjustable Rate
Mortgage Loan, the provision of each Mortgage Note which provides for an
absolute maximum amount by which the Mortgage Interest Rate therein may
decrease on an Rate Adjustment Date below the Mortgage Interest Rate
previously in effect.

"Permitted Investments": Investments that mature, unless payable
on demand, not later than the Business Day preceding the related Remittance
Date; provided that such investments shall only consist of the following:


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<PAGE>


(i) direct obligations of, or obligations fully
guaranteed as to principal and interest by, the United States or any
agency or instrumentality thereof, provided such obligations are backed
by the full faith and credit of the United States;

(ii) repurchase obligations (the collateral for which is
held by a third party) with respect to any security described in clause
(i) above, provided that the long-term unsecured obligations of the
party agreeing to repurchase such obligations are at the time rated by
each Rating Agency in one of its two highest rating categories;

(iii) certificates of deposit, time deposits and bankers'
acceptances of any bank or trust company incorporated under the laws of
the United States or any state, provided that the long-term unsecured
debt obligations of such bank or trust company (or, in the case of the
principal depository institution of a depository institution holding
company, the long-term unsecured debt obligations of the depository
institution holding company) at the date of acquisition thereof have
been rated by each Rating Agency in one of its two highest rating
categories;

(iv) commercial paper (having original maturities of not
more than 365 days) of any corporation incorporated under the laws of
the United States or any state thereof which on the date of acquisition
has been rated by each Rating Agency in its highest rating category; and

(v) any other demand, money market or time deposit
account or obligation, or interest-bearing or other security or
investment, acceptable to the Purchaser (such acceptance evidenced in
writing);

provided further that "Permitted Investments" shall not include any
instrument described hereunder which evidences either the right to receive
(a) only interest with respect to the obligations underlying such instrument
or (b) both principal and interest payments derived from obligations
underlying such instrument and the interest and principal payments with
respect to such instrument provide a yield to maturity at par greater than
120% of the yield to maturity at par of the underlying obligations.

"Person": Any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.

"Pledge Agreements": Each Control Agreement and Pledged Asset
Agreement for each Pledged Asset Mortgage Loan.

"Pledge Instruments": With respect to each Cooperative Loan, the
Stock Power, the Assignment of the Proprietary Lease, the Assignment of the
Mortgage Note and the Acceptance of Assignment and Assumption of Lease
Agreement.

"Pledged Asset Agreement": With respect to each Pledged Asset
Mortgage Loan, the Pledge Agreement for Securities Account between the
related mortgagor and the related Pledged Asset Servicer pursuant to which
such mortgagor granted a security interest in the related securities and
other financial assets held therein.


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<PAGE>


"Pledged Asset Mortgage Loan": Each Mortgage Loan as to which
Pledged Assets, in the form of a security interest in the Securities Account
and the financial assets held therein and having a value, as of the date of
origination of such Mortgage Loan, of at least equal to the related Original
Pledged Asset Requirement, were required to be provided at the closing
thereof, which is subject to the terms of this Agreement from time to time.

"Pledged Asset Servicer": The entity responsible for
administering and servicing the Pledged Assets with respect to a Pledged
Asset Mortgage Loan.

"Pledged Asset Servicing Agreement": With respect to each
Pledged Asset Mortgage Loan, the Agreement between the related Pledged Asset
Servicer and PHH Mortgage, including any exhibits thereto, pursuant to which
such Pledged Asset Servicer shall service and administer the related Pledged
Assets.

"Pledged Assets": With respect to any Pledged Asset Mortgage
Loan, the related Securities Account and the financial assets held therein
subject to a security interest pursuant to the related Pledged Asset
Agreement.

"Prepaid Monthly Payment": Any Monthly Payment received prior to
its scheduled Due Date and which is intended to be applied to a Mortgage Loan
on its scheduled Due Date.

"Prepayment Interest Shortfall Amount": With respect to any
Mortgage Loan that was subject to a voluntary (not including discounted
payoffs) Principal Prepayment in full or in part during any Due Period, which
Principal Prepayment was applied to such Mortgage Loan prior to such Mortgage
Loan's Due Date in such Due Period, the amount of interest (net of the
related Servicing Fee for Principal Prepayments in full only) that would have
accrued on the amount of such Principal Prepayment during the period
commencing on the date as of which such Principal Prepayment was applied to
such Mortgage Loan and ending on the day immediately preceding such Due Date,
inclusive.

"Primary Insurance Policy": A policy of primary mortgage
guaranty insurance issued by an insurer acceptable under the Underwriting
Guidelines and qualified to do business in the jurisdiction where the
Mortgaged Property is located, in effect with respect to a Mortgage Loan and
as so indicated on the Mortgage Loan Schedule, or any replacement policy
therefor obtained by the Servicer pursuant to Section 5.08.

"Principal Prepayment": Any payment or other recovery of
principal on a Mortgage Loan (including a Payoff), other than a Monthly
Payment or a Prepaid Monthly Payment which is received in advance of its
scheduled Due Date, including any prepayment penalty or premium thereon,
which is not accompanied by an amount of interest representing scheduled
interest due on any date or dates in any month or months subsequent to the
month of prepayment and which is intended to reduce the principal balance of
the Mortgage Loan.

"Principal Prepayment Period": The Due Period preceding the
related Remittance Date occurs.


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<PAGE>


"Proprietary Lease": The lease on a Cooperative Unit evidencing
the possessory interest of the owner of the Cooperative Shares in such
Cooperative Unit.

"PUD": Shall have the meaning set forth in Section 3.03.

"Purchase Price": As to each Mortgage Loan to be sold hereunder,
the price set forth in the Mortgage Loan Schedule and the related Purchase
Price and Terms Letter.

"Purchase Price and Terms Letter": With respect to any pool of
Mortgage Loans purchased and sold on any Funding Date, the letter agreement
or the electronic loan confirmation between the Purchaser and Seller
(including any exhibits, schedules and attachments thereto), setting forth
the terms and conditions of such transaction and describing the Mortgage
Loans to be purchased by the Purchaser on such Funding Date. A Purchase
Price and Terms Letter may relate to more than one pool of Mortgage Loans to
be purchased on one or more Funding Dates hereunder.

"Purchase Price Percentage": Shall have the meaning set forth in
the related Purchase Price and Terms Letter.

"Purchaser": Morgan Stanley Mortgage Capital Inc., or its
successor in interest or any successor under this Agreement appointed as
herein provided.

"Purchaser's Account": The account of the Purchaser at a bank or
other entity most recently designated in a written notice by the Purchaser to
the Sellers as the "Purchaser's Account."

"Qualified Appraiser": An appraiser, duly appointed by the
Seller, who had no interest, direct or indirect in the Mortgaged Property or
in any loan made on the security thereof, and whose compensation was not
affected by the approval or disapproval of the Mortgage Loan, and such
appraiser and the appraisal made by such appraiser both satisfied the
requirements of Title XI of FIRREA and the regulations promulgated
thereunder, all as in effect on the date the Mortgage Loan was originated.

"Qualified Correspondent": Any Person from which a Seller
purchased Mortgage Loans, provided that the following conditions are
satisfied: (i) such Mortgage Loans were originated pursuant to an agreement
between the related Seller and such Person that contemplated that such Person
would underwrite mortgage loans from time to time, for sale to the related
Seller, in accordance with underwriting guidelines designated by the related
Seller ("Designated Guidelines") or guidelines that do not vary materially
from such Designated Guidelines; (ii) such Mortgage Loans were in fact
underwritten as described in clause (i) above and were acquired by the
related Seller within 180 days after origination; (iii) either (x) the
Designated Guidelines were, at the time such Mortgage Loans were originated,
used by the related Seller in origination of mortgage loans of the same type
as the Mortgage Loans for the related Seller's own account or (y) the
Designated Guidelines were, at the time such Mortgage Loans were
underwritten, designated by the related Seller on a consistent basis for use
by lenders in originating mortgage loans to be purchased by the related
Seller; and (iv) the related Seller employed, at the time such Mortgage Loans
were acquired by the related Seller, pre-purchase or post-purchase quality
assurance procedures (which may involve, among other things, review of a


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<PAGE>


sample of mortgage loans purchased during a particular time period or through
particular channels) designed to ensure that Persons from which it purchased
mortgage loans properly applied the underwriting criteria designated by the
related Seller.

"Qualified Mortgage Insurer": American Guaranty Corporation,
Commonwealth Mortgage Assurance Company, General Electric Mortgage Insurance
Companies, Mortgage Guaranty Insurance Corporation, PMI Mortgage Insurance
Company, Republic Mortgage Insurance Company or United Guaranty Residential
Insurance Corporation.

"Qualified Substitute Mortgage Loan": A Mortgage Loan substituted
by a Seller for a Deleted Mortgage Loan which must, on the date of such
substitution, (i) have an outstanding principal balance, after deduction of
all scheduled payments due and received in the month of substitution (or in
the case of a substitution of more than one Mortgage Loan for a Deleted
Mortgage Loan, an aggregate principal balance), not in excess of the Unpaid
Principal Balance of the Deleted Mortgage Loan and not less than ninety
percent (90%) of the Unpaid Principal Balance of the Deleted Mortgage Loan
(the amount of any shortfall to be distributed by the applicable Seller to
the Purchaser in the month of substitution), (ii) have a remaining term to
maturity not greater than (and not more than one year less than) that of the
Deleted Mortgage Loan, (iii) have a Note Rate not less than (and not more
than one percentage point greater than) the Note Rate of the Deleted Mortgage
Loan, (iv) with respect to each ARM Loan, have a Minimum Rate not less than
that of the Deleted Mortgage Loan, (v) with respect to each ARM Loan, have a
Maximum Rate not less than that of the Deleted Mortgage Loan and not more
than two (2) percentage points above that of the Deleted Mortgage Loan,
(vi) with respect to each ARM Loan, have a Gross Margin not less than that of
the Deleted Mortgage Loan, (vii) with respect to each ARM Loan, have a
Periodic Rate Cap equal to that of the Deleted Mortgage Loan, (viii) have a
Loan-to-Value Ratio at the time of substitution equal to or less than the
Loan-to-Value Ratio of the Deleted Mortgage Loan at the time of substitution,
(ix) with respect to each ARM Loan, have the same Rate Adjustment Date as
that of the Deleted Mortgage Loan, (x) with respect to each ARM Loan, have an
Index as provided herein for all ARM Loans subject to this Agreement,
(xi) comply as of the date of substitution with each representation and
warranty set forth in Sections 3.01, 3.02 and 3.03, (xii) be in the same
credit grade category as the Deleted Mortgage Loan, (xiii) have the same
prepayment penalty term, (xiv) be current in the payment of principal and
interest; (xv) be secured by a Mortgaged Property of the same type and
occupancy status as secured the Deleted Mortgage Loan; and (xvi) have payment
terms that do not vary in any material respect from those of the Deleted
Mortgage Loan.

"Rate Adjustment Date": With respect to each ARM Loan, the date
on which the Note Rate adjusts.

"Rating Agency": Standard & Poor's Ratings Services, a division
of The McGraw-Hill Companies, Moody's Investors Service, Inc., and Fitch,
Inc.

"Recognition Agreement": An agreement among a Cooperative
Corporation, a lender and a Mortgagor with respect to a Cooperative Loan
whereby such parties (i) acknowledge that such lender may make, or intends to
make, such Cooperative Loan, and (ii) make certain agreements with respect to
such Cooperative Loan.


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<PAGE>


"Reconstitution": Any Securitization Transaction or Whole Loan
Transfer.

"Reconstitution Agreements": The agreement or agreements entered
into by the Purchaser, the Servicer, and/or certain third parties on any
Reconstitution Date with respect to any or all of the Mortgage Loans in
connection with a Securitization Transaction, Whole-Loan Transfer or an
Agency Transfer, including, but not limited to, (i) an Assignment, Assumption
and Recognition Agreement in substantially the form of Exhibit 2.05 hereof,
(ii) a Fannie Mae Mortgage Selling and Servicing Contract, a Pool Purchase
Contract, and any and all servicing agreements and tri-party agreements
reasonably required by Fannie Mae with respect to a Fannie Mae Transfer,
(iii) a Purchase Contract and all purchase documents associated therewith as
set forth in the Freddie Mac Sellers' & Servicers' Guide, and any and all
servicing agreements and tri-party agreements reasonably required by Freddie
Mac with respect to a Freddie Mac Transfer, and (iv) a Pooling and Servicing
Agreement, trust agreement, assignment and assumption agreements, and/or a
subservicing/master servicing agreement and any related custodial agreement,
officers' certificates, and correspondence and related documents related to a
Securitization Transaction.

"Reconstitution Date": The date or dates on which any or all of
the Mortgage Loans serviced under this Agreement shall be subject to an
Agency Transfer, a Whole Loan Transfer or a Securitization Transaction.

"Record Date": The close of business of the first Business Day
of the month of the related Remittance Date.

"Refinanced Mortgage Loan": A Mortgage Loan that was made to a
Mortgagor who owned the Mortgaged Property prior to the origination of such
Mortgage Loan and the proceeds of which were used in whole or part to satisfy
an existing mortgage.

"Regulation AB": Subpart 229.1100 - Asset Backed Securities
(Regulation AB), 17 C.F.R. ss.ss.229.1100-229.1123, as such may be amended from
time to time, and subject to such clarification and interpretation as have
been provided by the Commission in the adopting release (Asset-Backed
Securities, Securities Act Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531
(Jan. 7, 2005)) or by the staff of the Commission, or as may be provided by
the Commission or its staff from time to time.

"REMIC": A "real estate mortgage investment conduit" within the
meaning of Section 860D of the Internal Revenue Code or any similar tax
vehicle providing for the pooling of assets (such as a Financial Asset
Security Investment Trust).

"Remittance Date": The 18th day of each calendar month,
commencing on the 18th day of the month following the Funding Date, or, if
such 18th day is not a Business Day, then the next Business Day immediately
preceding such 18th day.

"Remittance Rate": With respect to each Mortgage Loan, the
related Note Rate minus the Servicing Fee Rate.

"REO Disposition": The final sale by the Servicer of any REO
Property.


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<PAGE>


"REO Disposition Proceeds": All amounts received with respect to
any REO Disposition.

"REO Property": A Mortgaged Property acquired by the Servicer on
behalf of the Purchaser as described in Section 5.13.

"Repurchase Price": With respect to any Defective Mortgage Loan,
the price for such repurchase shall be calculated as follows: (a) during the
first year immediately following the Closing Date, an amount equal to the sum
of (i) the product of (x) the Purchase Price Percentage (as adjusted pursuant
the Purchase Price and Terms Letter) and (y) the then outstanding principal
balance of such Defective Mortgage Loan as of the date of such repurchase,
plus (ii) accrued interest on such Defective Mortgage Loan at the applicable
mortgage interest rate from the date to which interest had last been paid
through the date of such repurchase, plus (iii) the amount of any outstanding
advances owed to the Servicer, and (b) thereafter, an amount equal to the sum
of (i) then outstanding principal balance of such Defective Mortgage Loan as
of the date of such repurchase plus (ii) accrued interest thereon at the
mortgage interest rate from the date to which interest had last been paid
through the date of such repurchase, plus (iii) the amount of any outstanding
advances owed to the Servicer. In the event the Purchaser has securitized or
sold the Mortgage Loans, the price for such repurchase shall be as set forth
in clause (b) hereof.

"Required Surety Payment": With respect to any defaulted Pledged
Asset Mortgage Loan for which a claim is payable under the related Surety
Bond under the procedures referred to herein, the lesser of (i) the principal
portion of the realized loss with respect to such Mortgage Loan and (ii) the
excess, if any, of (a) the amount of Pledged Assets required at origination
with respect to such Mortgage Loan (but not more than 30% of the original
principal balance of such Mortgage Loan) over (b) the net proceeds realized
by the related Pledged Asset Servicer from the related Pledged Assets.

"Sale": Shall have the meaning set forth in Section 3.05.

"Scheduled Principal Balance": With respect to any Mortgage
Loan, (i) the outstanding principal balance as of the Funding Date after
application of principal payments due on or before such date whether or not
received, minus (ii) all amounts previously remitted to the Purchaser with
respect to such Mortgage Loan representing (a) payments or other recoveries
of principal, or (b) advances of principal made pursuant to Section 6.03.

"Securities Account": With respect to any Pledged Asset Mortgage
Loans, the account, together with the financial assets held therein, that is
the subject of the related Pledged Asset Agreement.

"Securities Act": The federal Securities Act of 1933, as amended.

"Securitization Transaction": Any transaction involving either
(1) a sale or other transfer of some or all of the Mortgage Loans directly or
indirectly to an issuing entity in connection with an issuance of publicly
offered or privately placed, rated or unrated mortgage-backed securities or
(2) an issuance of publicly offered or privately placed, rated or unrated
securities, the payments on which are determined primarily by reference to
one or more


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<PAGE>


portfolios of residential mortgage loans consisting, in whole or in part, of
some or all of the Mortgage Loans.

"Security Agreement": The agreement creating a security interest
in the stock allocated to a dwelling unit in the residential cooperative
housing corporation that was pledged to secure such Cooperative Loan and the
related Cooperative Lease.

"Sellers": PHH Mortgage Corporation (formerly known as Cendant
Mortgage Corporation), a New Jersey corporation and Bishop's Gate Residential
Mortgage Trust (formerly known as Cendant Residential Mortgage Trust), a
Delaware statutory trust, or their successors in interest or any successor
under this Agreement appointed as herein provided.

"Seller Information": As defined in Section 13.07(a).

"Servicer": PHH Mortgage Corporation, a New Jersey corporation,
or with respect to Subsection 13.03(c), as defined therein.

"Servicing Advances": All "out of pocket" costs and expenses
that are customary, reasonable and necessary which are incurred by the
Servicer in the performance of its servicing obligations hereunder, including
(without duplication) (i) reasonable attorneys' fees and (ii) the cost of
(a) the preservation, restoration and protection of the Mortgaged Property,
(b) any enforcement or judicial proceedings, including foreclosures, (c) the
servicing, management and liquidation of any Specially Serviced Mortgaged
Loans and/or any REO Property, and (d) compliance with the Servicer's
obligations under Section 5.08.

"Servicing Criteria": The "servicing criteria" set forth in Item
1122(d) of Regulation AB, as such may be amended from time to time.

"Servicing Event": Any of the following events with respect to
any Mortgage Loan: (i) any Monthly Payment being more than 60 days
delinquent; (ii) any filing of an Insolvency Proceeding by or on behalf of
the related Mortgagor, any consent by or on behalf of the related Mortgagor
to the filing of an Insolvency Proceeding against such Mortgagor, or any
admission by or on behalf of such Mortgagor of its inability to pay such
Person's debts generally as the same become due; (iii) any filing of an
Insolvency Proceeding against the related Mortgagor that remains undismissed
or unstayed for a period of 60 days after the filing thereof; (iv) any
issuance of any attachment or execution against, or any appointment of a
conservator, receiver or liquidator with respect to, all or substantially all
of the assets of the related Mortgagor or with respect to any Mortgaged
Property; (v) any receipt by the Servicer of notice of the foreclosure or
proposed foreclosure of any other lien on the related Mortgaged Property;
(vi) any proposal of a material modification (as reasonably determined by the
Seller) to such Mortgage Loan due to a default or imminent default under such
Mortgage Loan; or (vii) in the reasonable judgment of the Servicer, the
occurrence, or likely occurrence within 60 days, of a payment default with
respect to such Mortgage Loan that is likely to remain uncured by the related
Mortgagor within 60 days thereafter.

"Servicing Fee": The annual fee, payable monthly to the Servicer
out of the interest portion of the Monthly Payment actually received on each
Mortgage Loan. The Servicing Fee with respect to each Mortgage Loan for any
calendar month (or a portion thereof)


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<PAGE>


shall be 1/12 of the product of (i) the Unpaid Principal Balance of the
Mortgage Loan and (ii) the Servicing Fee Rate applicable to such Mortgage
Loan.

"Servicing Fee Rate": Unless otherwise specified on the Mortgage
Loan Schedule, (i) with respect to any ARM Loan, 0.375% per annum; provided
that, prior to the first Rate Adjustment Date with respect to any such
Mortgage Loan, such rate may be, at the Servicer's option, not less than
0.25% per annum; and (ii) with respect to any Mortgage Loan other than an ARM
Loan, 0.25% per annum.

"Servicing Officer": Any officer of the Servicer involved in, or
responsible for, the administration and servicing of the Mortgage Loans whose
name appears on a written list of servicing officers furnished by the
Servicer to the Purchaser upon request therefor by the Purchaser, as such
list may from time to time be amended.

"Specially Serviced Mortgage Loan": A Mortgage Loan as to which
a Servicing Event has occurred and is continuing.

"Sponsor": The sponsor, as such term is defined in Regulation
AB, with respect to any Securitization Transaction.

"Standard & Poor's": Standard & Poor's Ratings Services, a
division of The McGraw Hill Companies Inc., and any successor thereto.

"Standard & Poor's Glossary": The Standard & Poor's LEVELS(R)
Glossary, as may be in effect from time to time.

"Static Pool Information": Static pool information as described
in Item 1105(a)(1)-(3) and 1105(c) of Regulation AB.

"Subcontractor": Any vendor, subcontractor or other Person that
is not responsible for the overall servicing (as "servicing" is commonly
understood by participants in the mortgage-backed securities market) of
Mortgage Loans but performs one or more discrete functions identified in Item
1122(d) of Regulation AB with respect to Mortgage Loans under the direction
or authority of the Servicer or a Subservicer.

"Subservicer": Any Person that services Mortgage Loans on behalf
of the Servicer or any Subservicer and is responsible for the performance
(whether directly or through Subservicers or Subcontractors) of a substantial
portion of the material servicing functions required to be performed by the
Seller under this Agreement or any Reconstitution Agreement that are
identified in Item 1122(d) of Regulation AB.

"Stock Certificate": With respect to a Cooperative Loan, the
certificates evidencing ownership of the Cooperative Shares issued by the
Cooperative Corporation.

"Stock Power": With respect to a Cooperative Loan, an assignment
of the Stock Certificate or an assignment of the Cooperative Shares issued by
the Cooperative Corporation.


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<PAGE>


"Surety Bond": With respect to each Pledged Asset Mortgage Loan,
the surety bond issued by the related Surety Bond Issuer covering such
Pledged Asset Mortgage Loan.

"Surety Bond Issuer": With respect to each Pledged Asset Mortgage
Loan, the surety bond issuer for the related Surety Bond covering such
Pledged Asset Mortgage Loan.

"Third-Party Originator": Each Person, other than a Qualified
Correspondent, that originated Mortgage Loans acquired by the Seller.

"Transaction Servicer": As defined in Section 13.03(c).

"Transfer Date": In the event the Servicer is terminated as
servicer of a Mortgage Loan, the date on which the Purchaser, or its
designee, shall receive the transfer of servicing responsibilities with
respect to such Mortgage Loan and begin to perform the servicing of such
Mortgage Loans and the Servicer shall cease all servicing responsibilities.

"Trust Financials": Shall have the meaning set forth in
Section 3.01

"Underwriting Guidelines": The underwriting guidelines of the
Seller, a copy of which shall be attached as an exhibit to the related
Assignment and Conveyance.

"Uniform Commercial Code": The Uniform Commercial Code as in
effect on the date hereof in the State of New York; provided that if by
reason of mandatory provisions of law, the perfection or the effect of
perfection or non perfection of the security interest in any collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than New York, "Uniform Commercial Code" shall mean the Uniform Commercial
Code as in effect in such other jurisdiction for purposes of the provisions
hereof relating to such perfection or effect of perfection or non perfection.

"Unpaid Principal Balance": With respect to any Mortgage Loan,
at any time, the actual outstanding principal balance then payable by the
Mortgagor under the terms of the related Mortgage Note including any
cumulative Negative Amortization.

"Warranty Bill of Sale": A warranty bill of sale with respect to
the Mortgage Loans purchased on a Funding Date in the form annexed hereto as
Exhibit 10.

"Whole Loan Transfer": Any sale or transfer of some or all of
the Mortgage Loans, other than a Securitization Transaction.


ARTICLE II

SALE AND CONVEYANCE OF MORTGAGE LOANS; POSSESSION OF MORTGAGE FILES; BOOKS
AND RECORDS; DELIVERY OF MORTGAGE LOAN DOCUMENTS

Section 2.01 Sale and Conveyance of Mortgage Loans. Seller
agrees to sell and Purchaser agrees to purchase, from time to time, those
certain Mortgage Loans identified in a Mortgage Loan Schedule, at the price
and on the terms set forth herein and in the related Purchase Price and Terms
Letter. Purchaser, on any Funding Date, shall be obligated to


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purchase only such Mortgage Loans set forth in the applicable Mortgage Loan
Schedule, subject to the terms and conditions of this Agreement and the
related Purchase Price and Terms Letter.

Purchaser will purchase Mortgage Loans from Seller, up to four
(4) times per month on such Funding Dates as may be agreed upon by Purchaser
and Seller. The closing shall, at Purchaser's option be either: by
telephone, confirmed by letter or wire as the parties shall agree, or
conducted in person at such place as the parties shall agree. On the Funding
Date and subject to the terms and conditions of this Agreement, each Seller
will sell, transfer, assign, set over and convey to the Purchaser, without
recourse except as set forth in this Agreement, and the Purchaser will
purchase, all of the right, title and interest of the applicable Seller in
and to the Mortgage Loans being conveyed by it hereunder, as identified on
the Mortgage Loan Schedule.

Examination of the Mortgage Files may be made by Purchaser or its
designee as follows. No later than 5 Business Days prior to the Funding
Date, Seller will deliver to Purchaser or its custodian, Legal Documents
required pursuant to Schedule B-1. Upon Purchaser's request, Seller shall
make the Credit Documents available in either original paper form or
electronic imaged format to Purchaser for review, at Seller's place of
business and during reasonable business hours. If Purchaser makes such
examination prior to the Funding Date and identifies any Mortgage Loans that
do not conform to the PHH Guide, such Mortgage Loans will be deleted from the
Mortgage Loan Schedule at Purchaser's discretion. Purchaser may, at its
option and without notice to Seller, purchase all or part of the Mortgage
Loans without conducting any partial or complete examination. The fact that
Purchaser has conducted or has failed to conduct any partial or complete
examination of the Mortgage Files shall not affect Purchaser's rights to
demand repurchase, substitution or other relief as provided herein.

On the Funding Date and in accordance with the terms herein,
Purchaser will pay to Seller by 2:00 p.m. Eastern Standard Time, by wire
transfer of immediately available funds, the Purchase Price for the Mortgage
Loans, which shall be calculated in accordance with the terms of the related
Purchase Price and Terms Letter and paid by the Purchaser to the Sellers in
accordance with the instructions to be provided, respectively, by PHH
Mortgage and the Trust. Seller, simultaneously with the payment of the
Purchase Price, shall execute and deliver to Purchaser a Warranty Bill of
Sale with respect to the Mortgage Loans in the form annexed hereto as Exhibit
10.

Purchaser shall be entitled to all scheduled principal due on and
after the Cut-off Date, all other recoveries of principal collected after the
Cut-off Date and all payments of interest on the Mortgage Loans (minus that
portion of any such payment which is allocable to the period prior to the
Cut-off Date). Notwithstanding the foregoing, on the first Remittance Date
after the Funding Date the Purchaser shall be entitled to receive the
interest accrued from and including the Cut-off Date through and including
the day immediately preceding the Funding Date. The principal balance of
each Mortgage Loan as of the Cut-off Date is determined after application of
payments of principal due on or before the Cut-off Date whether or not
collected. Therefore, payments of scheduled principal and interest prepaid
for a due date beyond the Cut-off Date shall not be applied to the principal
balance as of the Cut-off Date. Such prepaid amounts shall be the property
of Purchaser. Seller shall hold any such prepaid amounts for the benefit of
Purchaser for subsequent remittance by Seller to Purchaser. All scheduled
payments of principal due on or before the Cut-off Date and collected by
Servicer after the Cut-off Date shall belong to Seller.


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Section 2.02 Possession of Mortgage Files. Upon the sale of
any Mortgage Loan, the ownership of such Mortgage Loan, including the
Mortgage Note, the Mortgage, the contents of the related Mortgage File and
all rights, benefits, payments, proceeds and obligations arising therefrom or
in connection therewith, shall then be vested in the Purchaser, and the
ownership of all records and documents with respect to such Mortgage Loan
prepared by or which come into the possession of the Seller shall immediately
vest in the Purchaser and, to the extent retained by the Seller, shall be
retained and maintained, in trust, by the Seller at the will of the Purchaser
in a custodial capacity only. The contents of such Mortgage File not
delivered to the Purchaser are and shall be held in trust by the Seller for
the benefit of the Purchaser as the owner thereof and the Sellers' possession
of the contents of each Mortgage File so retained is at the will of the
Purchaser for the sole purpose of servicing the related Mortgage Loan, and
such retention and possession by the Seller shall be in a custodial capacity
only. Mortgage Files shall be maintained by the Seller and shall be marked
to clearly reflect the sale of the related Mortgage Loan to the Purchaser.
Each Seller shall release from its custody of the contents of any Mortgage
File only in accordance with written instructions from the Purchaser, except
where such release is required as incidental to the Servicer's servicing of
the Mortgage Loans or is in connection with a repurchase or substitution of
any such Mortgage Loan pursuant to Section 3.04.

Any documents released to a Seller or the Servicer in connection
with the foreclosure or servicing of any Mortgage Loan shall be held by such
Person in trust for the benefit of the Purchaser in accordance with this
Section 2.02. Such Person shall return to the Purchaser such documents when
such Person's need therefor in connection with such foreclosure or servicing
no longer exists (unless sooner requested by the Purchaser); provided that,
if such Mortgage Loan is liquidated, then, upon the delivery by a Seller or
the Servicer to the Purchaser of a request for the release of such documents
and a certificate certifying as to such liquidation, the Purchaser shall
promptly release and, to the extent necessary, deliver to such Person such
documents.

Section 2.03 Books and Records. The sale of each of its
Mortgage Loans shall be reflected on the applicable Seller's balance sheet
and other financial statements as a sale of assets by the applicable Seller.
Each Seller shall be responsible for maintaining, and shall maintain, a
complete set of books and records for the Mortgage Loans it conveyed to the
Purchaser which shall be clearly marked to reflect the sale of each Mortgage
Loan to the Purchaser and the ownership of each Mortgage Loan by the
Purchaser.

Section 2.04 Defective Documents; Delivery of Mortgage Loan
Documents. If, subsequent to the related Funding Date, the Purchaser or
either Seller finds any document or documents constituting a part of a
Mortgage File to be defective or missing in any material respect (in this
Section 2.04, a "Defect"), the party discovering such Defect shall promptly
so notify the other parties. If the Defect pertains to the Mortgage Note or
the Mortgage, then the applicable Seller shall have a period of 60 days
within which to correct or cure any such defect after the earlier of such
Seller's discovery of same or such Seller being notified of same. If such
Defect can ultimately be cured but is not reasonably expected to be cured
within such 60-day period, such Seller shall have such additional time as is
reasonably determined by the Purchaser to cure or correct such Defect,
provided that such Seller has commenced curing or correcting such Defect and
is diligently pursuing same; and provided, however, that in no event shall
the


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cure period be extended beyond 90 days after notice or discovery of such
Defect. If the Defect pertains to any other document constituting a part of
a Mortgage File, then such Seller shall have a period of 60 days within which
to correct or cure any such Defect after the earlier of such Seller's
discovery of same or such Seller being notified of same. If such Defect can
ultimately be cured but is not reasonably expected to be cured within the
60-day period, then such Seller shall have such additional time as is
reasonably determined by the Purchaser to cure or correct such Defect
provided such Seller has commenced curing or correcting such Defect and is
diligently pursuing same; and provided, however, that in no event shall the
cure period be extended beyond 90 days after notice or discovery of such
Defect. PHH Mortgage hereby covenants and agrees that, if any material
Defect cannot be corrected or cured, the related Mortgage Loan shall
automatically constitute, upon the expiration of the applicable cure period
described above and without any further action by any other party, a
Defective Mortgage Loan, whereupon PHH Mortgage shall repurchase such
Mortgage Loan by paying to the Purchaser the Repurchase Price therefor in
accordance with Section 3.04.

The applicable Seller will, with respect to each Mortgage Loan to
be purchased by the Purchaser, deliver and release to the Purchaser on the
related Funding Date (or on such earlier date as may be specified in the
related Purchase Price and Terms Letter), the Legal Documents as set forth in
Section 2.01. If the applicable Seller cannot deliver an original Mortgage
with evidence of recording thereon, original assumption, modification and
substitution agreements with evidence of recording thereon or an original
intervening assignment with evidence of recording thereon within the time
periods specified in the preceding sentence, then such Seller shall promptly
deliver to the Purchaser such original Mortgages and original intervening
assignments with evidence of recording indicated thereon upon receipt thereof
from the public recording official, except in cases where the original
Mortgage or original intervening assignments are retained permanently by the
recording office, in which case, such Seller shall deliver a copy of such
Mortgage or intervening assignment, as the case may be, certified to be a
true and complete copy of the recorded original thereof. If the applicable
Seller cannot deliver the original security instrument or if an original
intervening assignment has been lost, then the applicable Seller will deliver
a copy of such security instrument or intervening assignment, certified by
the local public recording official. If the original title policy has been
lost, the applicable Seller will deliver a duplicate original title policy.

If the original Mortgage was not delivered pursuant to the
preceding paragraph, then the applicable Seller shall use its best efforts to
promptly secure the delivery of such originals and shall cause such originals
to be delivered to the Purchaser promptly upon receipt thereof.
Notwithstanding the foregoing, if the original Mortgage, original assumption,
modification, and substitution agreements, the original of any intervening
assignment or the original policy of title insurance is not so delivered to
the Purchaser within 180 days following the Funding Date, then, upon written
notice by the Purchaser to PHH Mortgage, the Purchaser may, in its sole
discretion, then elect (by providing written notice to PHH Mortgage) to treat
such Mortgage Loan as a Defective Mortgage Loan, whereupon PHH Mortgage shall
repurchase such Mortgage Loan by paying to the Purchaser the Repurchase Price
therefor in accordance with Section 3.04. It is understood that from time to
time certain local recorder offices become backlogged with document volume.
It is agreed that the Seller will provide an Officers' Certificate to
document that the Seller has performed all necessary tasks to ensure delivery
of the required documentation within 180 days and the delay beyond 180 is
caused by the backlog. If


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the delay exceeds 240 days, regardless of the backlog the Purchaser may elect
to collect the documents with its own resources with the reasonable cost and
expense to be borne by the Seller. The fact that the Purchaser has conducted
or failed to conduct any partial or complete examination of the Mortgage
Files shall not affect its right to demand repurchase or any other remedies
provided in this Agreement.

At the Purchaser's request, the Assignments shall be promptly
recorded in the name of the Purchaser or in the name of a Person designated
by the Purchaser in all appropriate public offices for real property
records. If any such Assignment is lost or returned unrecorded because of a
defect therein, then the applicable Seller shall promptly prepare a
substitute Assignment to cure such defect and thereafter cause each such
Assignment to be duly recorded. All recording fees related to such a
one-time recordation of the Assignments to or by a Seller shall be paid by
the applicable Seller.

Section 2.05 Transfer of Mortgage Loans. Subject to the
provisions of this Section 2.05, the Purchaser shall have the right, without
the consent of the Sellers, at any time and from time to time, to assign any
of the Mortgage Loans and all or any part of its interest in this Agreement
and designate any person to exercise any rights of the Purchaser hereunder,
and the assignees or designees shall accede to the rights and obligations
hereunder of the Purchaser with respect to such Mortgage Loans. The Sellers
recognize that the Mortgage Loans may be divided into "packages" for resale.

All of the provisions of this Agreement shall inure to the
benefit of the Purchaser and any of its assignees or designees. All
references to the Purchaser shall be deemed to include its assignees or
designees. Utilizing resources reasonably available to the Seller without
incurring any cost except the Seller's overhead and employees' salaries, the
applicable Seller shall cooperate in any such assignment of the Mortgage
Loans and this Agreement; provided that the Purchaser shall bear all costs
associated with any such assignment of the Mortgage Loans and this Agreement
other than such Seller's overhead or employees' salaries.

The Servicer and Purchaser agree that the Servicer shall continue
to remit funds and make available via Servicer's website remittance reports
to no more than four (4) Persons (not including the Servicer or any Affiliate
or transferee thereof) at any given time with respect to any Mortgage Loans
sold on a particular Funding Date.

The Servicer and the Purchaser acknowledge that the Servicer
shall continue to remit payments to the Purchaser on the Remittance Date
after the transfer of the Mortgage Loans, unless the Servicer was notified in
writing of the new record owner of the Mortgage Loans prior to the
immediately preceding Record Date, in which case, the Servicer shall remit to
the new record owner (or trustee or master servicer, as the case may be) of
the Mortgage Loans.

Any prospective assignees of the Purchaser who have entered into
a commitment to purchase any of the Mortgage Loans may review and underwrite
the Servicer's servicing and origination operations, upon reasonable prior
notice to the Servicer, and the Servicer shall cooperate with such review and
underwriting to the extent such prospective assignees request information or
documents that are reasonably available and can be produced without
unreasonable expense or effort. The Servicer shall make the Mortgage Files
related to the


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<PAGE>


Mortgage Loans held by the Servicer available at the Servicer's principal
operations center for review by any such prospective assignees during normal
business hours upon reasonable prior notice to the Servicer (in no event less
than 10 Business Days prior notice). The Servicer may, in its sole
discretion, require that such prospective assignees sign a confidentiality
agreement with respect to such information disclosed to the prospective
assignee which is not available to the public at large and a release
agreement with respect to its activities on the Servicer's premises.

The Servicer shall keep at its servicing office books and records
in which, subject to such reasonable regulations as it may prescribe, the
Servicer shall note transfers of Mortgage Loans. The Purchaser may, subject
to the terms of this Agreement, sell and transfer, in whole or in part, any
or all of the Mortgage Loans; provided that no such sale and transfer shall
be binding upon the Servicer unless such transferee shall agree in writing to
an Assignment, Assumption and Recognition Agreement, in substantially the
form of Exhibit 2.05 attached hereto, and an executed copy of such
Assignment, Assumption and Recognition Agreement shall have been delivered to
the Servicer. The Servicer shall evidence its acknowledgment of any
transfers of the Mortgage Loans to any assignees of the Purchaser by
executing such Assignment, Assumption and Recognition Agreement. The
Servicer shall mark its books and records to reflect the ownership of the
Mortgage Loans by any such assignees, and the previous Purchaser shall be
released from its obligations hereunder accruing after the date of transfer
to the extent such obligations relate to Mortgage Loans sold by the
Purchaser. This Agreement shall be binding upon and inure to the benefit of
the Purchaser and the Servicer and their permitted successors, assignees and
designees.


ARTICLE III

REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLER; REPURCHASE AND
SUBSTITUTION; REVIEW OF MORTGAGE LOANS

Section 3.01 Representations and Warranties of each Seller.
Each Seller, as to itself, represents, warrants and covenants to the
Purchaser that as of each Funding Date or as of such date specifically
provided herein:

(1) Due Organization and Authority. The Seller is a New Jersey
corporation, validly existing, and in good standing under the laws of its
jurisdiction of incorporation or formation and has all licenses necessary to
carry on its business as now being conducted and is licensed, qualified and
in good standing in the states where the Mortgaged Property is located if the
laws of such state require licensing or qualification in order to conduct
business of the type conducted by the Seller. The Seller has corporate power
and authority to execute and deliver this Agreement and to perform its
obligations hereunder; the execution, delivery and performance of this
Agreement (including all instruments of transfer to be delivered pursuant to
this Agreement) by the Seller and the consummation of the transactions
contemplated hereby have been duly and validly authorized; this Agreement has
been duly executed and delivered and constitutes the valid, legal, binding
and enforceable obligation of the Seller, except as enforceability may be
limited by (i) bankruptcy, insolvency, liquidation, receivership, moratorium,
reorganization or other similar laws affecting the enforcement of the rights
of creditors and (ii) general principles of equity, whether enforcement is
sought in a proceeding in equity or at law. All requisite


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corporate action has been taken by the Seller to make this Agreement valid
and binding upon the Seller in accordance with its terms;

(2) No Conflicts. Neither the execution and delivery of this
Agreement, the acquisition or origination of the Mortgage Loans by the
Seller, the sale of the Mortgage Loans to the Purchaser, the consummation of
the transactions contemplated hereby, nor the fulfillment of or compliance
with the terms and conditions of this Agreement, will conflict with or result
in a breach of any of the terms, conditions or provisions of the Seller's
charter or by-laws or any legal restriction or any agreement or instrument to
which the Seller is now a party or by which it is bound, or constitute a
default or result in an acceleration under any of the foregoing, or result in
the violation of any law, rule, regulation, order, judgment or decree to
which the Seller or its property is subject, or result in the creation or
imposition of any lien, charge or encumbrance that would have an adverse
effect upon any of its properties pursuant to the terms of any mortgage,
contract, deed of trust or other instrument, or impair the ability of the
Purchaser to realize on the Mortgage Loans, impair the value of the Mortgage
Loans, or impair the ability of the Purchaser to realize the full amount of
any insurance benefits accruing pursuant to this Agreement;

(3) Ability to Perform; Solvency. The Seller does not believe,
nor does it have any reason or cause to believe, that it cannot perform each
and every covenant contained in this Agreement. The Seller is solvent and
the sale of the Mortgage Loans will not cause the Seller to become
insolvent. The sale of the Mortgage Loans is not undertaken with the intent
to hinder, delay or defraud any of Seller's creditors;

(4) No Material Default. Neither the Seller nor any of its
Affiliates is in material default under any agreement, contract, instrument
or indenture of any nature whatsoever to which the Seller or any of its
Affiliates is a party or by which it (or any of its assets) is bound, which
default would have a material adverse effect on the ability of the Seller to
perform under this Agreement, nor, to the best of the Seller's knowledge, has
any event occurred which, with notice, lapse of time or both, would
constitute a default under any such agreement, contract, instrument or
indenture and have a material adverse effect on the ability of the Seller to
perform its obligations under this Agreement;

(5) Financial Statements. The Seller has delivered to the
Purchaser financial statements as to its last three complete fiscal years and
any later quarter ended more than 60 days prior to the execution of this
Agreement. All such financial statements fairly present the pertinent
results of operations and changes in financial position for each of such
periods and the financial position at the end of each such period of the
Seller and its subsidiaries and have been prepared in accordance with
generally accepted accounting principles consistently applied throughout the
periods involved, except as set forth in the notes thereto. In addition, the
Seller has delivered information as to its loan gain and loss experience in
respect of foreclosures and its loan delinquency experience for the
immediately preceding three year period, in each case with respect to
mortgage loans owned by it and such mortgage loans serviced for others during
such period, and all such information so delivered shall be true and correct
in all material respects. There has been no change in the business,
operations, financial condition, properties or assets of the Seller since the
date of the Seller's financial statements that would have a material adverse
effect on its ability to perform its obligations under this Agreement. The
Seller has completed


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<PAGE>


any forms requested by the Purchaser in a timely manner and in accordance
with the provided instructions;

(6) No Change in Business. There has been no change in the
business, operations, financial condition, properties or assets of the
applicable Seller since (i) in the case of PHH Mortgage, the date of its
financial statements and (ii) in the case of the Trust, the date of delivery
of the Trust Financials, that would have a material adverse effect on the
ability of the applicable Seller to perform its obligations under this
Agreement;

(7) No Litigation Pending. There is no action, suit,
proceeding or investigation pending or threatened against the Seller, before
any court, administrative agency or other tribunal asserting the invalidity
of this Agreement, seeking to prevent the consummation of any of the
transactions contemplated by this Agreement or which, either in any one
instance or in the aggregate, may result in any material adverse change in
the business, operations, financial condition, properties or assets of the
Seller, or in any material impairment of the right or ability of the Seller
to carry on its business substantially as now conducted, or in any material
liability on the part of the Seller, or which would draw into question the
validity of this Agreement or the Mortgage Loans or of any action taken or to
be taken in connection with the obligations of the Seller contemplated
herein, or which would be likely to impair materially the ability of the
Seller to perform under the terms of this Agreement;

(8) No Consent Required. No consent, approval, authorization or
order is required for the transactions contemplated by this Agreement from
any court, governmental agency or body, or federal or state regulatory
authority having jurisdiction over the Seller is required or, if required,
such consent, approval, authorization or order has been or will, prior to the
related Closing Date, be obtained;

(9) Ordinary Course of Business. The consummation of the
transactions contemplated by this Agreement are in the ordinary course of
business of the Seller, and the transfer, assignment and conveyance of the
Mortgage Notes and the Mortgages by the Seller pursuant to this Agreement are
not subject to the bulk transfer or any similar statutory provisions in
effect in any applicable jurisdiction;

(10) No Brokers. The Seller has not dealt with any broker,
investment banker, agent or other person that may be entitled to any
commission or compensation in connection with the sale of the Mortgage Loans;

(11) No Untrue Information. Neither this Agreement nor any
information, statement, tape, diskette, report, form, or other document
furnished or to be furnished pursuant to this Agreement or any Reconstitution
Agreement or in connection with the transactions contemplated hereby
(including any Securitization Transaction or Whole Loan Transfer) contains or
will contain any untrue statement of fact or omits or will omit to state a
fact necessary to make the statements contained herein or therein not
misleading;

(12) Non-solicitation. The Seller agrees that it shall not
solicit any Mortgagors (in writing or otherwise) to refinance any of the
Mortgage Loans; provided that mass advertising or mailings (such as placing
advertisements on television, on radio, in magazines or in


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newspapers or including messages in billing statements) that are not
exclusively directed towards the Mortgagors shall not constitute solicitation
and shall not violate this covenant;

(13) Privacy. The Seller agrees and acknowledges that as to all
nonpublic personal information received or obtained by it with respect to any
Mortgagor: (a) such information is and shall be held by Seller in accordance
with all applicable law, including but not limited to the privacy provisions
of the Gramm-Leach Bliley Act, as may be amended from time to time; (b) such
information is in connection with a proposed or actual secondary market sale
related to a transaction of the Mortgagor for purposes of 16 C.F.R.
ss.313.14(a)(3); and (c) Seller is hereby prohibited from disclosing or using
any such information other than to carry out the express provisions of this
Agreement, or as otherwise permitted by applicable law;

(14) Seller's Origination. The Seller's decision to originate
any mortgage loan or to deny any mortgage loan application is an independent
decision based upon the Underwriting Guidelines, and is in no way made as a
result of Purchaser's decision to purchase, or not to purchase, or the price
Purchaser may offer to pay for, any such mortgage loan, if originated; and

(15) Fair Consideration. The consideration received by the
Seller upon the sale of the Mortgage Loans under this Agreement constitutes
fair consideration and reasonably equivalent value for the Mortgage Loans.

Section 3.02 Representations and Warranties of the
Servicer. The Servicer represents, warrants and covenants to the Purchaser
that as of the Funding Date or as of such date specifically provided herein:

(1) Ability to Service. Servicer has the facilities,
procedures, and experienced personnel necessary for the sound servicing of
mortgage loans of the same type as the Mortgage Loans. The Servicer is duly
qualified, licensed, registered and otherwise authorized under all applicable
federal, state and local laws, and regulations, if applicable, meets the
minimum capital requirements set forth by HUD, the OTS, the OCC or the FDIC,
if applicable, and is in good standing to enforce, originate, sell mortgage
loans to, and service mortgage loans in the jurisdiction wherein the
Mortgaged Properties are located;

(2) No Litigation Pending. There is no action, suit,
proceeding or investigation pending or threatened against the Servicer,
before any court, administrative agency or other tribunal asserting the
invalidity of this Agreement, seeking to prevent the consummation of any of
the transactions contemplated by this Agreement or which, either in any one
instance or in the aggregate, may result in any material adverse change in
the business, operations, financial condition, properties or assets of the
Servicer, or in any material impairment of the right or ability of the
Servicer to carry on its business substantially as now conducted, or in any
material liability on the part of the Servicer, or which would draw into
question the validity of this Agreement or the Mortgage Loans or of any
action taken or to be taken in connection with the obligations of the
Servicer contemplated herein, or which would be likely to impair materially
the ability of the Servicer to perform under the terms of this Agreement;


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(3) Collection Practices. The collection practices used by the
Servicer with respect to each Mortgage Note and Mortgage have been in all
respects legal, proper and prudent in the mortgage servicing business;

(4) MERS. The Servicer is a member of MERS in good standing,
and will comply in all material respects with the rules and procedures of
MERS in connection with the servicing of the MERS Mortgage Loans for as long
as such Mortgage Loans are registered with MERS;

(5) Non-solicitation. The Servicer agrees that it shall not
solicit any Mortgagors (in writing or otherwise) to refinance any of the
Mortgage Loans; provided that mass advertising or mailings (such as placing
advertisements on television, on radio, in magazines or in newspapers or
including messages in billing statements) that are not exclusively directed
towards the Mortgagors shall not constitute solicitation and shall not
violate this covenant;

(6) Privacy. The Servicer agrees and acknowledges that as to
all nonpublic personal information received or obtained by it with respect to
any Mortgagor: (a) such information is and shall be held by Servicer in
accordance with all applicable law, including but not limited to the privacy
provisions of the Gramm-Leach Bliley Act, as may be amended from time to
time; (b) such information is in connection with a proposed or actual
secondary market sale related to a transaction of the Mortgagor for purposes
of 16 C.F.R.ss. 313.14(a)(3); and (c) Servicer is hereby prohibited from
disclosing or using any such information other than to carry out the express
provisions of this Agreement, or as otherwise permitted by applicable law; and

(7) Reasonable Servicing Fee. The Servicer acknowledges and
agrees that the Servicing Fee represents reasonable compensation for
performing such services and that the entire Servicing Fee shall be treated
by the Servicer, for accounting and tax purposes, as compensation for the
servicing and administration of the Mortgage Loans pursuant to this Agreement.

Section 3.03 Representations and Warranties as to Individual
Mortgage Loans. With respect to each Mortgage Loan, the applicable Seller
hereby makes the following representations and warranties to the Purchaser on
which the Purchaser specifically relies in purchasing such Mortgage Loan.
Such representations and warranties speak as of the Funding Date unless
otherwise indicated, but shall survive any subsequent transfer, assignment or
conveyance of such Mortgage Loans:

(1) Mortgage Loans as Described. Such Mortgage Loan complies
with the terms and conditions set forth herein, and all of the information
set forth in the related Mortgage Loan Schedule is complete, true and correct;

(2) Delivery to the Custodian. The Mortgage Note, the
Mortgage, the Assignment and any other documents required to be delivered
with respect to each Mortgage Loan pursuant to the Custodial Agreement, shall
be delivered to the Custodian all in compliance with the specific
requirements of the Custodial Agreement. With respect to each Mortgage


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Loan, the Seller will be in possession of a complete Mortgage File in
compliance with Exhibit 2 hereto, except for such documents as will be
delivered to the Custodian;

(3) Owner of Record. The Seller is the owner of record of each
Mortgage and the indebtedness evidenced by each Mortgage Note, except for the
Assignments of Mortgage which have been sent for recording, and upon
recordation the Seller will be the owner of record of each Mortgage and the
indebtedness evidenced by each Mortgage Note, and upon the sale of the
Mortgage Loans to the Purchaser, the Seller will retain the Mortgage Files
with respect thereto in trust only for the purpose of servicing and
supervising the servicing of each Mortgage Loan;

(4) Payments Current. All payments required to be made up to
the related Closing Date for the Mortgage Loan under the terms of the
Mortgage Note have been made and credited. No payment required under the
Mortgage Loan is 30 days or more delinquent nor has any payment under the
Mortgage Loan been 30 days or more delinquent at any time since the
origination of the Mortgage Loan;

(5) No Outstanding Charges. There are no defaults in complying
with the terms of the Mortgage, and all taxes, governmental assessments,
insurance premiums, water, sewer and municipal charges, leasehold payments or
ground rents which previously became due and owing have been paid, or an
escrow of funds has been established in an amount sufficient to pay for every
such item which remains unpaid and which has been assessed but is not yet due
and payable. The Seller has not advanced funds, or induced, solicited or
knowingly received any advance of funds by a party other than the Mortgagor,
directly or indirectly, for the payment of any amount required under the
Mortgage Loan, except for interest accruing from the date of the Mortgage
Note or date of disbursement of the Mortgage Loan proceeds, whichever is
earlier, to the day which precedes by one month the related Due Date of the
first installment of principal and interest;

(6) Original Terms Unmodified. The terms of the Mortgage Note
and Mortgage have not been impaired, waived, altered or modified in any
respect, from the date of origination except by a written instrument which
has been recorded, if necessary to protect the interests of the Purchaser,
and which has been delivered to the Custodian or to such other Person as the
Purchaser shall designate in writing, and the terms of which are reflected in
the related Mortgage Loan Schedule. The substance of any such waiver,
alteration or modification has been approved by the issuer of any related
Primary Insurance Policy and the title insurer, if any, to the extent
required by the policy, and its terms are reflected on the related Mortgage
Loan Schedule, if applicable. No Mortgagor has been released, in whole or in
part, except in connection with an assumption agreement, approved by the
issuer of any related Primary Insurance Policy and the title insurer, to the
extent required by the policy, and which assumption agreement is part of the
Mortgage File delivered to the Custodian or to such other Person as the
Purchaser shall designate in writing and the terms of which are reflected in
the related Mortgage Loan Schedule;

(7) No Defenses. The Mortgage Loan is not subject to any right
of rescission, set-off, counterclaim or defense, including without limitation
the defense of usury, nor will the operation of any of the terms of the
Mortgage Note or the Mortgage, or the exercise of any right thereunder,
render either the Mortgage Note or the Mortgage unenforceable, in whole or in
part,


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or subject to any right of rescission, set-off, counterclaim or defense,
including without limitation the defense of usury, and no such right of
rescission, set-off, counterclaim or defense has been asserted with respect
thereto;

(8) Hazard Insurance. Pursuant to the terms of the Mortgage,
all buildings or other improvements upon the Mortgaged Property are insured
by a generally acceptable insurer against loss by fire, hazards of extended
coverage and such other hazards as are provided for in the Underwriting
Guidelines. If required by the National Flood Insurance Act of 1968, as
amended, each Mortgage Loan is covered by a flood insurance policy meeting
the requirements of the current guidelines of the Federal Insurance
Administration as in effect which policy conforms with the Underwriting
Guidelines. All individual insurance policies contain a standard mortgagee
clause naming the Seller and its successors and assigns as mortgagee, and all
premiums thereon have been paid. The Mortgage obligates the Mortgagor
thereunder to maintain the hazard insurance policy at the Mortgagor's cost
and expense, and on the Mortgagor's failure to do so, authorizes the holder
of the Mortgage to obtain and maintain such insurance at such Mortgagor's
cost and expense, and to seek reimbursement therefor from the Mortgagor.
Where required by state law or regulation, the Mortgagor has been given an
opportunity to choose the carrier of the required hazard insurance, provided
the policy is not a "master" or "blanket" hazard insurance policy covering a
condominium, or any hazard insurance policy covering the common facilities of
a planned unit development. The hazard insurance policy is the valid and
binding obligation of the insurer, is in full force and effect, and will be
in full force and effect and inure to the benefit of the Purchaser upon the
consummation of the transactions contemplated by this Agreement. The Seller
has not engaged in, and has no knowledge of the Mortgagor's having engaged
in, any act or omission which would impair the coverage of any such policy,
the benefits of the endorsement provided for herein, or the validity and
binding effect of either including, without limitation, no unlawful fee,
commission, kickback or other unlawful compensation or value of any kind has
been or will be received, retained or realized by any attorney, firm or other
person or entity, and no such unlawful items have been received, retained or
realized by the Seller;

(9) Compliance with Applicable Laws. Any and all requirements
of any federal, state or local law including, without limitation, usury,
truth-in-lending, real estate settlement procedures, consumer credit
protection, predatory and abusive lending, equal credit opportunity and
disclosure laws applicable to the Mortgage Loan, including, without
limitation, any provisions relating to a Prepayment Penalty, have been
complied with, the consummation of the transactions contemplated hereby will
not involve the violation of any such laws or regulations, and the Seller
shall maintain in its possession, available for the Purchaser's inspection,
and shall deliver to the Purchaser upon demand, evidence of compliance with
all such requirements. This representation and warranty is a Deemed Material
and Adverse Representation;

(10) No Satisfaction of Mortgage. The Mortgage has not been
satisfied, canceled, subordinated or rescinded, in whole or in part, and the
Mortgaged Property has not been released from the lien of the Mortgage, in
whole or in part, nor has any instrument been executed that would effect any
such release, cancellation, subordination or rescission. The Seller has not
waived the performance by the Mortgagor of any action, if the Mortgagor's
failure to


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perform such action would cause the Mortgage Loan to be in default, nor has
the Seller waived any default resulting from any action or inaction by the
Mortgagor;

(11) Valid First Lien. The Mortgage is a valid, subsisting,
enforceable and perfected, first lien on the Mortgaged Property, including
all buildings and improvements on the Mortgaged Property and all
installations and mechanical, electrical, plumbing, heating and air
conditioning systems located in or annexed to such buildings, and all
additions, alterations and replacements made at any time with respect to the
foregoing. The lien of the Mortgage is subject only to:

(a) the lien of current real property taxes and assessments
not yet due and payable;

(b) covenants, conditions and restrictions, rights of way,
easements and other matters of the public record as of the date of
recording acceptable to prudent mortgage lending institutions generally
and specifically referred to in the lender's title insurance policy
delivered to the originator of the Mortgage Loan and (a) specifically
referred to or otherwise considered in the appraisal made for the
originator of the Mortgage Loan or (b) which do not adversely affect
the Appraised Value of the Mortgaged Property set forth in such
appraisal; and

(c) 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 or the use, enjoyment,
value or marketability of the related Mortgaged Property.

Any security agreement, chattel mortgage or equivalent document
related to and delivered in connection with the Mortgage Loan establishes and
creates a valid, subsisting, enforceable and perfected first lien and first
priority security interest on the property described therein and the Seller
has full right to sell and assign the same to the Purchaser.

With respect to any Cooperative Loan, the related Mortgage is a
valid, subsisting and enforceable first priority security interest on the
related cooperative shares securing the Mortgage Note, subject only to (a)
liens of the related residential cooperative housing corporation for unpaid
assessments representing the Mortgagor's pro rata share of the related
residential cooperative housing corporation's payments for its blanket
mortgage, current and future real property taxes, insurance premiums,
maintenance fees and other assessments to which like collateral is commonly
subject and (b) other matters to which like collateral is commonly subject
which do not materially interfere with the benefits of the security interest
intended to be provided by the related Security Agreement;

(12) Validity of Mortgage Documents. The Mortgage Note and the
Mortgage and any other agreement executed and delivered by a Mortgagor in
connection with a Mortgage Loan are genuine, and each is the legal, valid and
binding obligation of the maker thereof enforceable in accordance with its
terms. All parties to the Mortgage Note, the Mortgage and any other such
related agreement had legal capacity to enter into the Mortgage Loan and to
execute and deliver the Mortgage Note, the Mortgage and any such agreement,
and the Mortgage


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Note, the Mortgage and any other such related agreement have been duly and
properly executed by other such related parties. No fraud, error, omission,
misrepresentation, negligence or similar occurrence with respect to a
Mortgage Loan has taken place on the part of the Seller in connection with
the origination of the Mortgage Loan or in the application of any insurance
in relation to such Mortgage Loan. The documents, instruments and agreements
submitted for loan underwriting were not falsified and contain no untrue
statement of material fact or omit to state a material fact required to be
stated therein or necessary to make the information and statements therein
not misleading. No fraud, error, omission, misrepresentation, negligence or
similar occurrence with respect to a Mortgage Loan has taken place on the
part of any Person, including without limitation, the Mortgagor, any
appraiser, any builder or developer, or any other party involved in the
origination of the Mortgage Loan or in the application for any insurance in
relation to such Mortgage Loan. The Seller has reviewed all of the documents
constituting the Servicing File and has made such inquiries as it deems
necessary to make and confirm the accuracy of the representations set forth
herein;


(13) Valid Execution of Documents. All parties to the Mortgage
Note and the Mortgage related to such Mortgage Loan had legal capacity to
enter into such Mortgage Loan and to execute and deliver the related Mortgage
Note and the related Mortgage and the related Mortgage Note and the related
Mortgage have been duly and properly executed by such parties; with respect
to each Cooperative Loan, all parties to the Mortgage Note and the Mortgage
Loan had legal capacity to execute and deliver the Mortgage Note, the
Acceptance of Assignment and Assumption of Lease Agreement, the Proprietary
Lease, the Stock Power, the Recognition Agreement, the Financing Statement
and the Assignment of Proprietary Lease and such documents have been duly and
properly executed by such parties; each Stock Power (i) has all signatures
guaranteed or (ii) if all signatures are not guaranteed, then such
Cooperative Shares will be transferred by the stock transfer agent of the
Cooperative Corporation if the Seller undertakes to convert the ownership of
the collateral securing the related Cooperative Loan;

(14) Full Disbursement of Proceeds. The Mortgage Loan has been
closed and the proceeds of the Mortgage Loan have been fully disbursed and
there is no requirement for future advances thereunder, and any and all
requirements as to completion of any on-site or off-site improvement and as
to disbursements of any escrow funds therefor have been complied with. All
costs, fees and expenses incurred in making or closing the Mortgage Loan and
the recording of the Mortgage were paid, and the Mortgagor is not entitled to
any refund of any amounts paid or due under the Mortgage Note or Mortgage;

(15) Ownership. The Seller is the sole owner of record and
holder of the Mortgage Loan and the indebtedness evidenced by each Mortgage
Note and upon the sale of the Mortgage Loans to the Purchaser, the Seller
will retain the Mortgage Files or any part thereof with respect thereto not
delivered to the Custodian, the Purchaser or the Purchaser's designee, in
trust only for the purpose of servicing and supervising the servicing of each
Mortgage Loan. The Mortgage Loan is not assigned or pledged, and the Seller
has good, indefeasible and marketable title thereto, and has full right to
transfer and sell the Mortgage Loan to the Purchaser free and clear of any
encumbrance, equity, participation interest, lien, pledge, charge, claim or
security interest, and has full right and authority subject to no interest or
participation of, or agreement with, any other party, to sell and assign each
Mortgage Loan pursuant to this Agreement and following the sale of each
Mortgage Loan, the Purchaser will own such Mortgage Loan free and


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<PAGE>


clear of any encumbrance, equity, participation interest, lien, pledge,
charge, claim or security interest. The Seller intends to relinquish all
rights to possess, control and monitor the Mortgage Loan. After the related
Closing Date, the Seller will have no right to modify or alter the terms of
the sale of the Mortgage Loan and the Seller will have no obligation or right
to repurchase the Mortgage Loan or substitute another Mortgage Loan, except
as provided in this Agreement;

(16) Doing Business. All parties which have had any interest in
the Mortgage Loan, whether as mortgagee, assignee, pledgee or otherwise, are
(or, during the period in which they held and disposed of such interest,
were) (1) in compliance with any and all applicable licensing requirements of
the laws of the state wherein the Mortgaged Property is located, and
(2) either (i) organized under the laws of such state, or (ii) qualified to do
business in such state, or (iii) a federal savings and loan association, a
savings bank or a national bank having a principal office in such state, or
(3) not doing business in such state;

(17) Title Insurance. With respect to a Mortgage Loan which is
not a Cooperative Loan, the Mortgage Loan is covered by an ALTA lender's
title insurance policy or other generally acceptable form of policy or
insurance acceptable under the Underwriting Guidelines and each such title
insurance policy is issued by a title insurer acceptable under the
Underwriting Guidelines and qualified to do business in the jurisdiction
where the Mortgaged Property is located, insuring the Seller, its successors
and assigns, as to the first priority lien of the Mortgage in the original
principal amount of the Mortgage Loan (or to the extent a Mortgage Note
provides for negative amortization, the maximum amount of negative
amortization in accordance with the Mortgage), subject only to the exceptions
contained in clauses (a) and (b) of paragraph (11) of this Subsection 3.03,
and in the case of Adjustable Rate Mortgage Loans, against any loss by reason
of the invalidity or unenforceability of the lien resulting from the
provisions of the Mortgage providing for adjustment to the Note Rate and
Monthly Payment. Where required by state law or regulation, the Mortgagor
has been given the opportunity to choose the carrier of the required mortgage
title insurance. Additionally, such lender's title insurance policy
affirmatively insures ingress and egress, and against encroachments by or
upon the Mortgaged Property or any interest therein. The Seller, its
successor and assigns, are the sole insureds of such lender's title insurance
policy, and such lender's title insurance policy is valid and remains in full
force and effect and will be in force and effect upon the consummation of the
transactions contemplated by this Agreement. No claims have been made under
such lender's title insurance policy, and no prior holder of the related
Mortgage, including the Seller, has done, by act or omission, anything which
would impair the coverage of such lender's title insurance policy, including
without limitation, no unlawful fee, commission, kickback or other unlawful
compensation or value of any kind has been or will be received, retained or
realized by any attorney, firm or other person or entity, and no such
unlawful items have been received, retained or realized by the Seller;

(18) No Defaults. Other than payments due but not yet 30 days
or more delinquent, there is no default, breach, violation or event which
would permit acceleration existing under the Mortgage or the Mortgage Note
and no event which, with the passage of time or with notice and the
expiration of any grace or cure period, would constitute a default, breach,
violation or event which would permit acceleration, and neither the Seller
nor any of its affiliates nor any of their respective predecessors, have
waived any default, breach, violation or event which would permit
acceleration;


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(19) No Mechanics' Liens. There are no mechanics' or similar
liens or claims which have been filed for work, labor or material (and no
rights are outstanding that under law could give rise to such liens)
affecting the related Mortgaged Property which are or may be liens prior to,
or equal or coordinate with, the lien of the related Mortgage;

(20) Location of Improvements; No Encroachments. All
improvements which were considered in determining the Appraised Value of the
Mortgaged Property lay wholly within the boundaries and building restriction
lines of the Mortgaged Property, and no improvements on adjoining properties
encroach upon the Mortgaged Property. No improvement located on or being
part of the Mortgaged Property is in violation of any applicable zoning law
or regulation;

(21) Origination; Payment Terms. The Mortgage Loan was
originated by a mortgagee approved by the Secretary of Housing and Urban
Development pursuant to Sections 203 and 211 of the National Housing Act, a
savings and loan association, a savings bank, a commercial bank, credit
union, insurance company or other similar institution which is supervised and
examined by a federal or state authority. Principal payments on the Mortgage
Loan commenced no more than seventy days after funds were disbursed in
connection with the Mortgage Loan. The Note Rate as well as, in the case of
an Adjustable Rate Mortgage Loan, the Lifetime Rate Cap and the Periodic Rate
Cap and the Periodic Rate Floor are as set forth on the related Mortgage Loan
Schedule. The Note Rate is adjusted, with respect to Adjustable Rate
Mortgage Loans, on each Rate Adjustment Date to equal the Index plus the
Gross Margin (rounded up or down to the nearest 0.125%), subject to the
Periodic Rate Cap. The Mortgage Note is payable in equal monthly
installments of principal and interest, which installments of interest, with
respect to Adjustable Rate Mortgage Loans, are subject to change due to the
adjustments to the Note Rate on each Rate Adjustment Date, with interest
calculated and payable in arrears, sufficient to amortize the Mortgage Loan
fully by the stated maturity date, over an original term of not more than
fifteen years from commencement of amortization. Unless otherwise specified
on the related Mortgage Loan Schedule, the Mortgage Loan is payable on the
first day of each month. The Mortgage Loan by its original terms or any
modification thereof, does not provide for amortization beyond its scheduled
maturity date;

(22) Due-On-Sale. With respect to each Fixed Rate Mortgage
Loan, the Mortgage contains an enforceable provision for the acceleration of
the payment of the unpaid principal balance of the Mortgage Loan in the event
that the Mortgaged Property is sold or transferred without the prior written
consent of the mortgagee thereunder;

(23) Prepayment Penalty. No Mortgage Loan is subject to any
prepayment penalty. This representation and warranty is a Deemed Material
and Adverse Representation;

(24) Mortgaged Property Undamaged; No Condemnation Proceedings.
There is no proceeding pending or threatened for the total or partial
condemnation of the Mortgaged Property. The Mortgaged Property is undamaged
by waste, fire, earthquake or earth movement, windstorm, flood, tornado or
other casualty so as to affect adversely the value of the Mortgaged Property
as security for the Mortgage Loan or the use for which the premises were
intended and each Mortgaged Property is in good repair. There have not been
any condemnation proceedings


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<PAGE>


with respect to the Mortgaged Property and the Seller has no knowledge of any
such proceedings in the future;

(25) Customary Provisions. The Mortgage contains customary and
enforceable provisions such as to render the rights and remedies of the
holder thereof adequate for the realization against the Mortgaged Property of
the benefits of the security provided thereby, including, (i) in the case of
a Mortgage designated as a deed of trust, by trustee's sale, and
(ii) otherwise by judicial foreclosure. Upon default by a Mortgagor on a
Mortgage Loan and foreclosure on, or trustee's sale of, the Mortgaged
Property pursuant to the proper procedures, the holder of the Mortgage Loan
will be able to deliver good and merchantable title to the Mortgaged
Property. There is no homestead or other exemption available to a Mortgagor
which would interfere with the right to sell the Mortgaged Property at a
trustee's sale or the right to foreclose the Mortgage, subject to applicable
federal and state laws and judicial precedent with respect to bankruptcy and
right of redemption or similar law;

(26) Conformance with Agency and Underwriting Guidelines. The
Mortgage Loan was underwritten in accordance with the Underwriting Guidelines
(a copy of which is attached to the related Assignment and Conveyance as
Exhibit C). The Mortgage Note and Mortgage are on forms acceptable to
Freddie Mac or Fannie Mae and no representations have been made to a
Mortgagor that are inconsistent with the mortgage instruments used;

(27) Appraisal. The Mortgage File contains an appraisal of the
related Mortgaged Property signed prior to the approval of the Mortgage Loan
application by a Qualified Appraiser, duly appointed by the Seller, who had
no interest, direct or indirect in the Mortgaged Property or in any loan made
on the security thereof, and whose compensation is not affected by the
approval or disapproval of the Mortgage Loan, and the appraisal and appraiser
both satisfy the requirements of Fannie Mae or Freddie Mac and Title XI of
the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 and
the regulations promulgated thereunder, all as in effect on the date the
Mortgage Loan was originated;

(28) Deeds of Trust. In the event the Mortgage constitutes a
deed of trust, a trustee, authorized and duly qualified under applicable law
to serve as such, has been properly designated and currently so serves and is
named in the Mortgage, and no fees or expenses are or will become payable by
the Purchaser to the trustee under the deed of trust, except in connection
with a trustee's sale after default by the Mortgagor;

(29) LTV, Primary Insurance Policy. No Mortgage Loan has an LTV
greater than 100%. Any Mortgage Loan that had at the time of origination an
LTV in excess of 80% is insured as to payment defaults by a Primary Insurance
Policy. Any Primary Insurance Policy in effect covers the related Mortgage
Loan for the life of such Mortgage Loan. All provisions of such Primary
Insurance Policy have been and are being complied with, such policy is in
full force and effect, and all premiums due thereunder have been paid. No
action, inaction, or event has occurred and no state of facts exists that
has, or will result in the exclusion from, denial of, or defense to
coverage. Any Mortgage Loan subject to a Primary Insurance Policy obligates
the Mortgagor thereunder to maintain the Primary Insurance Policy and to pay
all premiums and charges in connection therewith. The Note Rate for the
Mortgage Loan as set forth on the related Mortgage Loan Schedule is net of
any such insurance premium;


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<PAGE>


(30) Occupancy of the Mortgaged Property. As of the related
Closing Date the Mortgaged Property is lawfully occupied under applicable
law. All inspections, licenses and certificates required to be made or
issued with respect to all occupied portions of the Mortgaged Property and,
with respect to the use and occupancy of the same, including but not limited
to certificates of occupancy and fire underwriting certificates, have been
made or obtained from the appropriate authorities. Unless otherwise
specified on the related Mortgage Loan Schedule, the Mortgagor represented at
the time of origination of the Mortgage Loan that the Mortgagor would occupy
the Mortgaged Property as the Mortgagor's primary residence;

(31) Supervision and Examination by a Federal or State
Authority. Each Mortgage Loan either was (a) closed in the name of the PHH
Mortgage, or (b) closed in the name of another entity that is either a
savings and loan association, a savings bank, a commercial bank, credit
union, insurance company or an institution which is supervised and examined
by a federal or state authority, or a mortgagee approved by the Secretary of
Housing and Urban Development pursuant to Sections 203 and 211 of the
National Housing Act (a "HUD Approved Mortgagee"), and was so at the time
such Mortgage Loan was originated (PHH Mortgage or such other entity, the
"Originator") or (c) closed in the name of a loan broker under the
circumstances described in the following sentence. If such Mortgage Loan was
originated through a loan broker, such Mortgage Loan met the Originator's
underwriting criteria at the time of origination and was originated in
accordance with the Originator's policies and procedures and the Originator
acquired such Mortgage Loan from the loan broker contemporaneously with the
origination thereof. The Mortgage Loans that the Trust is selling to
Purchaser were originated by or on behalf of PHH Mortgage and subsequently
assigned to the Trust;

(32) Adjustments. All of the terms of the related Mortgage Note
pertaining to interest rate adjustments, payment adjustments and adjustments
of the outstanding principal balance, if any, are enforceable and such
adjustments will not affect the priority of the lien of the related Mortgage;
all such adjustments on such Mortgage Loan have been made properly and in
accordance with the provisions of such Mortgage Loan;

(33) Insolvency Proceedings; Servicemembers Civil Relief Act.
To the best of the Seller's knowledge, the related Mortgagor is not the
subject of any Insolvency Proceeding;

(34) Servicemembers Civil Relief Act. The Mortgagor has not
notified the Seller, and the Seller has no knowledge of any relief requested
or allowed to the Mortgagor under the Servicemembers Civil Relief Act or
other similar state statute;

(35) Fannie Mae/Freddie Mac Documents. Such Mortgage Loan was
closed on standard Fannie Mae or Freddie Mac documents or on such documents
otherwise acceptable to them;

(36) No Buydown Provisions; No Graduated Payments or Contingent
Interests. The Mortgage Loan does not contain provisions pursuant to which
Monthly Payments are paid or partially paid with funds deposited in any
separate account established by the Seller, the Mortgagor, or anyone on
behalf of the Mortgagor, or paid by any source other than the Mortgagor nor
does it contain any other similar provisions which may constitute a "buydown"


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<PAGE>


provision. The Mortgage Loan is not a graduated payment mortgage loan and
the Mortgage Loan does not have a shared appreciation or other contingent
interest feature;

(37) Recordation. Each original Mortgage was recorded and all
subsequent assignments of the original Mortgage (other than the assignment to
the Purchaser) have been recorded in the appropriate jurisdictions wherein
such recordation is necessary to perfect the lien thereof as against
creditors of the Seller, or is in the process of being recorded;

(38) Consolidation of Future Advances. Any future advances made
to the Mortgagor prior to the applicable Cut-off Date have been consolidated
with the outstanding principal amount secured by the Mortgage, and the
secured principal amount, as consolidated, bears a single interest rate and
single repayment term. The lien of the Mortgage securing the consolidated
principal amount is expressly insured as having first lien priority by a
title insurance policy, an endorsement to the policy insuring the mortgagee's
consolidated interest or by other title evidence acceptable to Fannie Mae and
Freddie Mac. The consolidated principal amount does not exceed the original
principal amount of the Mortgage Loan;

(39) Balloon Loans. Unless otherwise disclosed in the Offering
Materials or the Mortgage Loan Schedule, no Mortgage Loan has a balloon
payment feature. With respect to any Mortgage Loan with a balloon payment
feature, the Mortgage Note is payable in Monthly Payments based on a thirty
year amortization schedule and has a final Monthly Payment substantially
greater than the proceeding Monthly Payment which is sufficient to amortize
the remaining principal balance of the Mortgage Loan;

(40) Condominium Units/PUDs. If the residential dwelling on the
Mortgaged Property is a condominium unit or a unit in a planned unit
development (other than a de minimis planned unit development) such
condominium or planned unit development project meets the eligibility
requirements of the PHH Guide;

(41) Predatory Lending Regulations. No Mortgage Loan is a High
Cost Loan. No Mortgage Loan is covered by the Home Ownership and Equity
Protection Act of 1994 and no Mortgage Loan is in violation of any comparable
state or local law. The Mortgaged Property is not located in a jurisdiction
where a breach of this representation with respect to the related Mortgage
Loan may result in additional assignee liability to the Purchaser, as
determined by Purchaser in its reasonable discretion. This representation
and warranty is a Deemed Material and Adverse Representation;

(42) No Rehabilitation Loan. Unless otherwise disclosed in the
Offering Materials or the Mortgage Loan Schedule, no Mortgage Loan was made
in connection with (a) the construction or rehabilitation of a Mortgaged
Property or (b) facilitating the trade-in or exchange of a Mortgaged Property;

(43) No Adverse Conditions. The Seller has no knowledge of any
circumstances or condition with respect to the Mortgage, the Mortgage
Property (or with respect to a Cooperative Loan, the Acceptance of Assignment
and Assumption of Lease Agreement, the Cooperative Unit or the Cooperative
Project), the Mortgagor or the Mortgagor's credit standing that can
reasonably be expected to cause the Mortgage Loan to be an unacceptable
investment,


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<PAGE>


cause the Mortgage Loan to become delinquent, or adversely affect the value
of the Mortgage Loan;

(44) Scheduled Interest. Interest on each Mortgage Loan is
calculated on the basis of a 360-day year consisting of twelve 30-day months;

(45) No Violation of Environmental Laws. To the best of the
Seller's knowledge, there is no pending action or proceeding directly
involving the Mortgaged Property in which compliance with any environmental
law, rule or regulation is an issue; there is no violation of any
environmental law, rule or regulation with respect to the Mortgage Property;
and nothing further remains to be done to satisfy in full all requirements of
each such law, rule or regulation constituting a prerequisite to use and
enjoyment of said property;

(46) Negative Amortization. Unless otherwise disclosed in the
Offering Materials or the Mortgage Loan Schedule, no Mortgage Loan is subject
to negative amortization;

(47) Cooperative Lien Search. With respect to each Cooperative
Loan, a Cooperative Lien Search has been made by a company competent to make
the same which company is acceptable to Fannie Mae and qualified to do
business in the jurisdiction where the Cooperative Unit is located;

(48) Cooperative Loan - Proprietary Lease. With respect to each
Cooperative Loan, (i) the terms of the related Proprietary Lease is longer
than the terms of the Cooperative Loan, (ii) there is no provision in any
Proprietary Lease which requires the Mortgagor to offer for sale the
Cooperative Shares owned by such Mortgagor first to the Cooperative
Corporation, (iii) there is no prohibition in any Proprietary Lease against
pledging the Cooperative Shares or assigning the Proprietary Lease and
(iv) the Recognition Agreement is on a form of agreement published by the
Aztech Document Systems, Inc. or includes provisions which are no less
favorable to the lender than those contained in such agreement;

(49) Cooperative Loan - UCC Financing Statement. With respect
to each Cooperative Loan, each original UCC financing statement, continuation
statement or other governmental filing or recordation necessary to create or
preserve the perfection and priority of the first priority lien and security
interest in the Cooperative Shares and Proprietary Lease has been timely and
properly made. Any security agreement, chattel mortgage or equivalent
document related to the Cooperative Loan and delivered to the Mortgagor or
its designee establishes in the Mortgagor a valid and subsisting perfected
first lien on and security interest in the Mortgaged Property described
therein, and the Mortgagor has full right to sell and assign the same;

(50) Cooperative Loan- Acceptance of Assignment and Assumption
of Lease Agreement. With respect to each Cooperative Loan, each Acceptance
of Assignment and Assumption of Lease Agreement contains enforceable
provisions such as to render the rights and remedies of the holder thereof
adequate for the realization of the benefits of the security provided
thereby. The Acceptance of Assignment and Assumption of Lease Agreement
contains an enforceable provision for the acceleration of the payment of the
Unpaid Principal Balance of the


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Mortgage Note in the event the Cooperative Unit is transferred or sold
without the consent of the holder thereof;

(51) Imaging. Each imaged document represents a true, complete,
and correct copy of the original document in all respects, including, but not
limited to, all signatures conforming with signatures contained in the
original document, no information having been added or deleted, and no imaged
document having been manipulated or altered in any manner. Each imaged
document is clear and legible, including, but not limited to, accurate
reproductions of photographs. No original documents have been or will be
altered in any manner;

(52) Qualified Mortgage. The Mortgage Loan is a qualified
mortgage under Section 860G(a)(3) of the Code;

(53) No Adverse Selection. The Seller used no adverse selection
procedures in selecting the Mortgage Loans among the outstanding first lien
residential mortgagee loans owned by it which were available for inclusion in
the Mortgage Loans;

(54) Leaseholds. If the Mortgage Loan is secured by a long-term
residential lease, (1) the lessor under the lease holds a fee simple interest
in the land; (2) the terms of such lease expressly permit the mortgaging of
the leasehold estate, the assignment of the lease without the lessor's
consent and the acquisition by the holder of the Mortgage of the rights of
the lessee upon foreclosure or assignment in lieu of foreclosure or provide
the holder of the Mortgage with substantially similar protections; (3) the
terms of such lease do not (a) allow the termination thereof upon the
lessee's default without the holder of the Mortgage being entitled to receive
written notice of, and opportunity to cure, such default, (b) allow the
termination of the lease in the event of damage or destruction as long as the
Mortgage is in existence, (c) prohibit the holder of the Mortgage from being
insured (or receiving proceeds of insurance) under the hazard insurance
policy or policies relating to the Mortgaged Property or (d) permit any
increase in rent other than pre-established increases set forth in the lease;
(4) the original term of such lease is not less than 15 years; (5) the term
of such lease does not terminate earlier than five years after the maturity
date of the Mortgage Note; and (6) the Mortgaged Property is located in a
jurisdiction in which the use of leasehold estates in transferring ownership
in residential properties is a widely accepted practice;

(55) Assumability. With respect to each Adjustable Rate
Mortgage Loan, the Mortgage Loan Documents provide that after the related
first Rate Adjustment Date, a related Mortgage Loan may only be assumed if
the party assuming such Mortgage Loan meets certain credit requirements
stated in the Mortgage Loan Documents;

(56) Disclosure Materials. The Mortgagor has executed a
statement to the effect that the Mortgagor has received all disclosure
materials required by, and the Seller has complied with, all applicable law
with respect to the making of the Mortgage Loans. The Seller shall maintain
such statement in the Mortgage File;

(57) No Defense to Insurance Coverage. No action has been taken
or failed to be taken, no event has occurred and no state of facts exists or
has existed on or prior to the related Funding Date (whether or not known to
the Seller on or prior to such date) which has


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resulted or will result in an exclusion from, denial of, or defense to
coverage under any primary mortgage insurance (including, without limitation,
any exclusions, denials or defenses which would limit or reduce the
availability of the timely payment of the full amount of the loss otherwise
due thereunder to the insured), provided this shall not include the failure
of such insurer to pay by reason of such insurer's breach of such insurance
policy or such insurer's financial inability to pay;

(58) Prior Servicing. Each Mortgage Loan has been serviced in
compliance with Accepted Servicing Practices;

(59) Credit Information. As to each consumer report (as defined
in the Fair Credit Reporting Act, Public Law 91-508) or other credit
information furnished by the Seller to the Purchaser, that Seller has full
right and authority and is not precluded by law or contract from furnishing
such information to the Purchaser and the Purchaser is not precluded from
furnishing the same to any subsequent or prospective purchaser of such
Mortgage. The Seller has and shall in its capacity as servicer, for each
Mortgage Loan, fully furnished, in accordance with the Fair Credit Reporting
Act and its implementing regulations, accurate and complete information
(e.g., favorable and unfavorable) on its borrower credit files to Equifax,
Experian and Trans Union Credit Information Company (three of the credit
repositories), on a monthly basis. This representation and warranty is a
Deemed Material and Adverse Representation;

(60) Convertible Loans. With respect to ARM Loans, unless
otherwise set forth in the Mortgage Loan Schedule, the Mortgage Loan is not a
Convertible Mortgage Loan;

(61) Type of Mortgaged Property. With respect to a Mortgage
Loan that is not a Cooperative Loan and is not secured by an interest in a
leasehold estate, the Mortgaged Property is a fee simple estate that consists
of a single parcel of real property with a detached single family residence
erected thereon, or a two- to four-family dwelling, or an individual
residential condominium unit in a condominium project, or an individual unit
in a planned unit development, or an individual unit in a residential
cooperative housing corporation; provided, however, that any condominium
unit, planned unit development or residential cooperative housing corporation
shall conform with the Underwriting Guidelines. No portion of the Mortgaged
Property (or underlying Mortgaged Property, in the case of a Cooperative
Loan) is used for commercial purposes, and since the date of origination, no
portion of the Mortgaged Property has been used for commercial purposes;
provided, that Mortgaged Properties which contain a home office shall not be
considered as being used for commercial purposes as long as the Mortgaged
Property has not been altered for commercial purposes and is not storing any
chemicals or raw materials other than those commonly used for homeowner
repair, maintenance and/or household purposes. None of the Mortgaged
Properties are Manufactured Homes, log homes, mobile homes, geodesic domes or
other unique property types. This representation and warranty is a Deemed
Material and Adverse Representation;

(62) No Additional Collateral. The Mortgage Note is not and has
not been secured by any collateral except the lien of the corresponding
Mortgage and the security interest of any applicable security agreement or
chattel mortgage referred to in clause (j) above;


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(63) Acceptable Investment. There are no circumstances or
conditions with respect to the Mortgage, the Mortgaged Property, the
Mortgagor, the Mortgage File or the Mortgagor's credit standing that can
reasonably be expected to cause private institutional investors who invest in
prime mortgage loans similar to the Mortgage Loan to regard the Mortgage Loan
as an unacceptable investment, cause the Mortgage Loan to become delinquent,
or adversely affect the value or marketability of the Mortgage Loan, or cause
the Mortgage Loan to prepay during any period materially faster or slower
than the mortgage loans originated by the Seller generally. No Mortgaged
Property is located in a state, city, county or other local jurisdiction
which the Buyer has determined in its sole good faith discretion would cause
the related Mortgage Loan to be ineligible for whole loan sale or
securitization in a transaction consistent with the prevailing sale and
securitization industry (including, without limitation, the practice of the
rating agencies) with respect to substantially similar mortgage loans;

(64) Transfer of Mortgage Loans. The Assignment (except with
respect to any Mortgage that has been recorded in the name of MERS or its
designee) with respect to each Mortgage Loan is in recordable form and is
acceptable for recording under the laws of the jurisdiction in which the
Mortgaged Property is located;

(65) Collection Practices; Escrow Deposits; Interest Rate
Adjustments. The origination, servicing and collection practices used by the
Seller with respect to the Mortgage Loan have been in all respects in
compliance with Accepted Servicing Practices, applicable laws and
regulations, and have been in all respects legal and proper. With respect to
escrow deposits and Escrow Payments, all such payments are in the possession
of, or under the control of, the Seller and there exist no deficiencies in
connection therewith for which customary arrangements for repayment thereof
have not been made. All Escrow Payments have been collected in full
compliance with state and federal law and the provisions of the related
Mortgage Note and Mortgage. An escrow of funds is not prohibited by
applicable law and has been established in an amount sufficient to pay for
every item that remains unpaid and has been assessed but is not yet due and
payable. No escrow deposits or Escrow Payments or other charges or payments
due the Seller have been capitalized under the Mortgage or the Mortgage
Note. All Note Rate adjustments have been made in strict compliance with
state and federal law and the terms of the related Mortgage and Mortgage Note
on the related Rate Adjustment Date. If, pursuant to the terms of the
Mortgage Note, another index was selected for determining the Note Rate, the
same index was used with respect to each Mortgage Note which required a new
index to be selected, and such selection did not conflict with the terms of
the related Mortgage Note. The Seller executed and delivered any and all
notices required under applicable law and the terms of the related Mortgage
Note and Mortgage regarding the Note Rate and the Monthly Payment
adjustments. Any interest required to be paid pursuant to state, federal and
local law has been properly paid and credited;

(66) Conversion to Fixed Interest Rate. The Mortgage Loan does
not contain a provision whereby the Mortgagor is permitted to convert the
Note Rate from an adjustable rate to a fixed rate;

(67) Other Insurance Policies; No Defense to Coverage. No
action, inaction or event has occurred and no state of facts exists or has
existed on or prior to the Closing Date that has resulted or will result in
the exclusion from, denial of, or defense to coverage under any


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applicable hazard insurance policy, Primary Insurance Policy or bankruptcy
bond (including, without limitation, any exclusions, denials or defenses
which would limit or reduce the availability of the timely payment of the
full amount of the loss otherwise due thereunder to the insured),
irrespective of the cause of such failure of coverage. The Seller has caused
or will cause to be performed any and all acts required to preserve the
rights and remedies of the Purchaser in any insurance policies applicable to
the Mortgage Loans including, without limitation, any necessary notifications
of insurers, assignments of policies or interests therein, and establishments
of coinsured, joint loss payee and mortgagee rights in favor of the
Purchaser. In connection with the placement of any such insurance, no
commission, fee, or other compensation has been or will be received by the
Seller or by any officer, director, or employee of the Seller or any designee
of the Seller or any corporation in which the Seller or any officer,
director, or employee had a financial interest at the time of placement of
such insurance;

(68) Construction or Rehabilitation of Mortgaged Property. No
Mortgage Loan was made in connection with the construction (other than a
"construct-to-perm" loan) or rehabilitation of a Mortgaged Property or
facilitating the trade-in or exchange of a Mortgaged Property;

(69) Escrow Analysis. If applicable, with respect to each
Mortgage, the Seller has within the last twelve months (unless such Mortgage
was originated within such twelve month period) analyzed the required Escrow
Payments for each Mortgage and adjusted the amount of such payments so that,
assuming all required payments are timely made, any deficiency will be
eliminated on or before the first anniversary of such analysis, or any
overage will be refunded to the Mortgagor, in accordance with RESPA and any
other applicable law;

(70) Leaseholds. If the Mortgage Loan is secured by a leasehold
estate, (1) the ground lease is assignable or transferable; (2) the ground
lease will not terminate earlier than five years after the maturity date of
the Mortgage Loan; (3) the ground lease does not provide for termination of
the lease in the event of lessee's default without the mortgagee being
entitled to receive written notice of, and a reasonable opportunity to cure
the default; (4) the ground lease permits the mortgaging of the related
Mortgaged Property; (5) the ground lease protects the mortgagee's interests
in the event of a property condemnation; (6) all ground lease rents, other
payments, or assessments that have become due have been paid; and (7) the use
of leasehold estates for residential properties is a widely accepted practice
in the jurisdiction in which the Mortgaged Property is located;

(71) Single-premium credit life insurance policy. No Mortgagor
was required to purchase any single premium credit insurance policy (e.g.,
life, mortgage, disability, property, accident, unemployment or health
insurance product) or debt cancellation agreement as a condition of obtaining
the extension of credit. No Mortgagor obtained a prepaid single premium
credit insurance policy (e.g., life, mortgage, disability, property,
accident, unemployment, mortgage or health insurance) in connection with the
origination of the Mortgage Loan. No proceeds from any Mortgage Loan were
used to purchase single premium credit insurance policies or debt
cancellation agreements as part of the origination of, or as a condition to
closing, such Mortgage Loan. This representation and warranty is a Deemed
Material and Adverse Representation;


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(72) Tax Service Contract. Each Mortgage Loan is covered by a
paid in full, life of loan, tax service contract issued by First American
Real Estate Tax Service, and such contract is transferable;

(73) Origination. No predatory or deceptive lending practices,
including, without limitation, the extension of credit without regard to the
ability of the Mortgagor to repay and the extension of credit which has no
apparent benefit to the Mortgagor, were employed in the origination of the
Mortgage Loan;

(74) Cooperative Loans. With respect to a Mortgage Loan that is
a Cooperative Loan, the stock that is pledged as security for the Mortgage
Loan is held by a person as a tenant-stockholder (as defined in Section 216
of the Code) in a cooperative housing corporation (as defined in Section 216
of the Code);

(75) Mortgagor Bankruptcy. On or prior to the date 60 days
after the related Closing Date, the Mortgagor has not filed and will not file
a bankruptcy petition or has not become the subject and will not become the
subject of involuntary bankruptcy proceedings or has not consented to or will
not consent to the filing of a bankruptcy proceeding against it or to a
receiver being appointed in respect of the related Mortgaged Property;

(76) No Prior Offer. The Mortgage Loan has not previously been
offered for sale;

(77) Georgia Fair Lending Act. There is no Mortgage Loan that
was originated (or modified) on or after October 1, 2002 and before March 7,
2003 which is secured by property located in the State of Georgia. There is
no Mortgage Loan that was originated on or after March 7, 2003 that is a
"high cost home loan" as defined under the Georgia Fair Lending Act. This
representation and warranty is a Deemed Material and Adverse Representation;

(78) No Arbitration. No Mortgagor with respect to any Mortgage
Loan originated on or after August 1, 2004 agreed to submit to arbitration to
resolve any dispute arising out of or relating in any way to the mortgage
loan transaction. This representation and warranty is a Deemed Material and
Adverse Representation;

(79) Flood Service Contract. Each Mortgage Loan is covered by
a paid in full, life of loan, flood service contract issued by First American
Real Estate Tax Service or Fidelity, and such contract is transferable;

(80) Origination Practices/No Steering. No Mortgagor was
encouraged or required to select a mortgage loan product offered by the
Mortgage Loan's originator which is a higher cost product designed for less
creditworthy borrowers, unless at the time of the Mortgage Loan's
origination, such Mortgagor did not qualify taking into account credit
history and debt-to-income ratios for a lower-cost credit product then
offered by the Mortgage Loan's originator or any affiliate of the Mortgage
Loan's originator. If, at the time of loan application, the Mortgagor may
have qualified for a lower-cost credit product then offered by any mortgage
lending affiliate of the Mortgage Loan's originator, the Mortgage Loan's
originator referred the Mortgagor's application to such affiliate for
underwriting consideration. This representation and warranty is a Deemed
Material and Adverse Representation;


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(81) Underwriting Methodology. The methodology used in
underwriting the extension of credit for each Mortgage Loan employs, in part,
objective mathematical principles which relate the Mortgagor's income, assets
and liabilities to the proposed payment and such underwriting methodology
does not rely on the extent of the Mortgagor's equity in the collateral as
the principal determining factor in approving such credit extension. Such
underwriting methodology confirmed that at the time of origination
(application/approval) the Mortgagor had a reasonable ability to make timely
payments on the Mortgage Loan. This representation and warranty is a Deemed
Material and Adverse Representation;

(82) Points and Fees. No Mortgagor was charged "points and
fees" (whether or not financed) in an amount greater than (i) $1,000, or
(ii) 5% of the principal amount of such Mortgage Loan, whichever is greater.
For purposes of this representation, such 5% limitation is calculated in
accordance with Fannie Mae's anti-predatory lending requirements as set forth
in the Fannie Mae Guides and "points and fees" (x) include origination,
underwriting, broker and finder fees and charges that the mortgagee imposed
as a condition of making the Mortgage Loan, whether they are paid to the
mortgagee or a third party; and (y) exclude bona fide discount points, fees
paid for actual services rendered in connection with the origination of the
Mortgage Loan (such as attorneys' fees, notaries fees and fees paid for
property appraisals, credit reports, surveys, title examinations and
extracts, flood and tax certifications, and home inspections), the cost of
mortgage insurance or credit-risk price adjustments, the costs of title,
hazard, and flood insurance policies, state and local transfer taxes or fees,
escrow deposits for the future payment of taxes and insurance premiums, and
other miscellaneous fees and charges that, in total, do not exceed 0.25% of
the principal amount of such Mortgage Loan. This representation and warranty
is a Deemed Material and Adverse Representation; and

(83) Fees Charges. All points, fees and charges (including
finance charges) and whether or not financed, assessed, collected or to be
collected in connection with the origination and servicing of each Mortgage
Loan have been disclosed in writing to the Mortgagor in accordance with
applicable state and federal law and regulation. This representation and
warranty is a Deemed Material and Adverse Representation.

Section 3.04 Repurchase and Substitution. It is understood
and agreed that the representations and warranties set forth in Sections
3.01, 3.02 and 3.03 shall survive the sale of the Mortgage Loans to the
Purchaser and shall inure to the benefit of the Purchaser, notwithstanding
any restrictive or qualified endorsement on any Mortgage Note or Assignment
or the examination of any Mortgage File.

Upon discovery by either of the Sellers or the Purchaser of a
breach of any of the representations and warranties contained in Sections
3.01, 3.02 or 3.03 that materially and adversely affects the interest of the
Purchaser (or that materially and adversely affects the interests of the
Purchaser in the related Mortgage Loan, in the case of a representation or
warranty relating to a particular Mortgage Loan), the party discovering such
breach shall give prompt written notice to the other.

Unless permitted a greater period of time to cure as set forth in
Section 2.04, the applicable Seller shall have a period of 60 days from the
earlier of either discovery by or receipt of written notice from the
Purchaser to the Seller of any breach of any of the representations and


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<PAGE>


warranties contained in Sections 3.01, 3.02 or 3.03 that materially and
adversely affects the interest of the Purchaser (or that materially and
adversely affects the interests of the Purchaser in the related Mortgage
Loan, in the case of a representation or warranty relating to a particular
Mortgage Loan) (a "Defective Mortgage Loan"; provided that "Defective
Mortgage Loan" shall also include (a) any Mortgage Loan treated or designated
as such in accordance with Section 2.04 and (b) any Mortgage Loan regarding
which the Mortgagor fails to make the first regularly scheduled payment of
principal and interest within 30 days of its Due Date) within which to
correct or cure such breach. If such breach can ultimately be cured but is
not reasonably expected to be cured within the 60-day period, then the
applicable Seller shall have such additional time, if any, as is reasonably
determined by the Purchaser to cure such breach, provided that the Seller has
commenced curing or correcting such breach and is diligently pursuing same.
Notwithstanding anything to the contrary contained herein, (i) within sixty
(60) days after the earlier of either discovery by, or notice to, the Seller
of any breach of the representation and warranty set forth in clause (52) of
Subsection 3.03, the Seller shall repurchase such Mortgage Loan at the
Repurchase Price and (ii) any breach of a Deemed Material and Adverse
Representation shall automatically be deemed to materially and adversely
affect the value of the Mortgage Loans or the interest of the Purchaser
therein. Each Seller hereby covenants and agrees with respect to each
Mortgage Loan conveyed by it that, if any breach relating thereto cannot be
corrected or cured within the applicable cure period or such additional time,
if any, as is reasonably determined by the Purchaser, then such Seller shall,
at the direction of the Purchaser, repurchase the Defective Mortgage Loan at
the applicable Repurchase Price. Notwithstanding anything to the contrary
contained herein, if the first regularly scheduled payment of principal and
interest due under any Mortgage Loan has been delinquent more than 30 days,
the Purchaser may, by written notice to the applicable Seller, require that
the Seller repurchase the related Mortgage Loan. However, if the Seller
provides evidence that the delinquency was due to a servicing setup error, no
repurchase shall be required. Within 10 Business Days following the delivery
of any such written notice from the Purchaser, the applicable Seller shall
repurchase the specified Mortgage Loan by paying the Repurchase Price
therefor by wire transfer of immediately available funds directly to the
Purchaser's Account.

Except with respect to any breach of the representation and
warranty set forth in clause (52) of Subsection 3.03, the applicable Seller
may, at its option and assuming that such Seller has a Qualified Substitute
Mortgage Loan or Qualified Substitute Mortgage Loans, rather than repurchase
the Mortgage Loan as provided above, remove such Mortgage Loan ("Deleted
Mortgage Loan") and substitute in its place a Qualified Substitute Mortgage
Loan or Qualified Substitute Mortgage Loans, provided that no such
substitution shall be effected after the Mortgage Loan has been conveyed as
part of a Sale transaction as described in Section 3.05 hereof and no such
substitution shall be effected more than 180 days after the related Funding
Date. If the applicable Seller has no Qualified Substitute Mortgage Loan, it
shall repurchase the Defective Mortgage Loan.

As to any Deleted Mortgage Loan for which the applicable Seller
substitutes a Qualified Substitute Mortgage Loan or Qualified Substitute
Mortgage Loans, the applicable Seller shall effect such substitution by
delivering to the Purchaser or its designee for such Qualified Substitute
Mortgage Loan or Qualified Substitute Mortgage Loans the Legal Documents as
are required by Section 2. In the event of a repurchase or substitution, the
Seller


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shall, simultaneously with such reassignment, give written notice (by
telecopier, electronically or otherwise) to the Purchaser that such
repurchase or substitution has taken place, amend the related Mortgage Loan
Schedule to reflect the withdrawal of the Deleted Mortgage Loan from this
Agreement, and, in the case of substitution, identify the Qualified
Substitute Mortgage Loan or Qualified Substitute Mortgage Loans and amend the
related Mortgage Loan Schedule to reflect the addition of such Qualified
Substitute Mortgage Loan or Qualified Substitute Mortgage Loans to this
Agreement. Upon such substitution, such Qualified Substitute Mortgage Loan
or Qualified Substitute Mortgage Loans shall be subject to the terms of this
Agreement in all respects, and the applicable Seller shall be deemed to have
made with respect to such Qualified Substitute Mortgage Loan or Qualified
Substitute Mortgage Loans, as of the date of substitution, the covenants,
representations and warranties set forth in Sections 3.01, 3.02 and 3.03.
The Seller shall effect such substitution by delivering to the Custodian for
such Qualified Substitute Mortgage Loan the documents required by
Section 2.03, with the Mortgage Note endorsed as required by Section 2.03. No
substitution will be made in any calendar month after the Determination Date
for such month.

For any month in which the applicable Seller substitutes one or
more Qualified Substitute Mortgage Loans for one or more Deleted Mortgage
Loans, the applicable Seller will determine the amount (if any) by which the
aggregate principal balance of all such Qualified Substitute Mortgage Loans
as of the date of substitution (after application of scheduled principal
payments due in the month of substitution which have been received or as to
which an advance has been made) is less than the aggregate outstanding
principal balance of all such Deleted Mortgage Loans. The amount of such
shortfall shall be paid by the applicable Seller on the date of such
substitution) by wire transfer of immediately available funds directly to the
Purchaser's Account.

Any repurchase of a Defective Mortgage Loan required hereunder
shall be accomplished by payment of the applicable Repurchase Price within 3
Business Days of expiration of the applicable time period referred to above
in paragraph 3.04 by wire transfer of immediately available funds directly to
the Purchaser's Account. It is understood and agreed that the obligations of
a Seller (a) set forth in this Section 3.04 to cure any breach of such
Seller's representations and warranties contained in Sections 3.01, 3.02 and
3.03 or to repurchase the Defective Mortgage Loan or Defective Mortgage Loans
and (b) set forth in Section 9.01 to indemnify the Indemnified Parties in
connection with any breach of a Seller's representations and warranties
contained in Sections 3.01, 3.02 and 3.03 shall constitute the sole remedies
of the Purchaser respecting a breach of such representations and warranties.

The parties further agree that, in recognition of the Trust's
rights against PHH Mortgage with respect to the Mortgage Loans acquired by it
from PHH