POOLING AND SERVICING AGREEMENT

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                                Popular ABS, Inc.

                                    Depositor

                    Equity One, Inc., a Delaware corporation

                                   The Servicer

                           --------------------------
                           --------------------------
                           --------------------------
                                       and

                            --------------------------
                                     Sellers

                                       and

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

                                     Trustee

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


                         POOLING AND SERVICING AGREEMENT
                       Dated as of ________________, 20__

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


                MORTGAGE PASS-THROUGH CERTIFICATES, SERIES []-[]

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                                TABLE OF CONTENTS
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PRELIMINARY STATEMENT.............................................................................................1


ARTICLE I   DEFINITIONS............................................................................................5

    60+ DAY DELINQUENT LOAN.......................................................................................5
    ADJUSTED MORTGAGE RATE........................................................................................5
    ADJUSTED NET MORTGAGE RATE....................................................................................5
    ADVANCE.......................................................................................................5
    AGGREGATE CLASS [] EARLY DISTRIBUTION AMOUNT..................................................................5
    AGREEMENT.....................................................................................................5
    AMOUNT HELD FOR FUTURE DISTRIBUTION...........................................................................5
    APPLIED REALIZED LOSS AMOUNT..................................................................................5
    AVAILABLE FUNDS...............................................................................................6
    BALLOON LOANS.................................................................................................6
    BANKRUPTCY CODE...............................................................................................6
    BASIC PRINCIPAL DISTRIBUTION AMOUNT...........................................................................6
    BENEFICIAL OWNER..............................................................................................6
    BOOK-ENTRY CERTIFICATES.......................................................................................6
    BUSINESS DAY..................................................................................................6
    CAP AGREEMENT.................................................................................................6
    CAP CLASS []-[] REALIZED LOSS AMORTIZATION AMOUNT.............................................................6
    CAP CLASS []-[] REALIZED LOSS AMORTIZATION AMOUNT.............................................................7
    CAP CLASS []-[] REALIZED LOSS AMORTIZATION AMOUNT.............................................................7
    CAP CLASS []-[] REALIZED LOSS AMORTIZATION AMOUNT.............................................................7
    CAP CLASS []-[] REALIZED LOSS AMORTIZATION AMOUNT.............................................................7
    CAP CLASS []-[] REALIZED LOSS AMORTIZATION AMOUNT.............................................................7
    CAP CLASS []-[] REALIZED LOSS AMORTIZATION AMOUNT.............................................................7
    CAP CLASS []-[] REALIZED LOSS AMORTIZATION AMOUNT.............................................................7
    CAP CLASS []-[] REALIZED LOSS AMORTIZATION AMOUNT.............................................................7
    CAP DISTRIBUTION AMOUNT.......................................................................................8
    CAP EXTRA PRINCIPAL DISTRIBUTION AMOUNT.......................................................................8
    CAP NOTIONAL BALANCE..........................................................................................8
    CAP RESERVE FUND..............................................................................................8
    CAP STATED TERMINATION........................................................................................8
    CAP UNPAID REALIZED LOSS AMOUNT...............................................................................8
    CERTIFICATES..................................................................................................8
    CERTIFICATE ACCOUNT...........................................................................................8
    CERTIFICATE BALANCE...........................................................................................8
    CERTIFICATEHOLDER OR HOLDER...................................................................................8
    CERTIFICATE REGISTER..........................................................................................9
    CERTIFICATE REGISTRAR.........................................................................................9
    CLASS.........................................................................................................9
    CLASS []-[] CERTIFICATE.......................................................................................9
    CLASS []-[] CERTIFICATE.......................................................................................9
    CLASS []-[] CERTIFICATE.......................................................................................9
    CLASS []-[] CERTIFICATE.......................................................................................9
    CLASS []-[] APPLIED REALIZED LOSS AMOUNT......................................................................9
    CLASS []-[] CERTIFICATE.......................................................................................9
    CLASS []-[] PRINCIPAL DISTRIBUTION AMOUNT.....................................................................9
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    CLASS []-[] REALIZED LOSS AMORTIZATION AMOUNT................................................................10
    CLASS []-[] APPLIED REALIZED LOSS AMOUNT.....................................................................10
    CLASS []-[] CERTIFICATE......................................................................................10
    CLASS []-[] PRINCIPAL DISTRIBUTION AMOUNT....................................................................10
    CLASS []-[] REALIZED LOSS AMORTIZATION AMOUNT................................................................11
    CLASS []-[] APPLIED REALIZED LOSS AMOUNT.....................................................................11
    CLASS []-[] CERTIFICATE......................................................................................11
    CLASS []-[] PRINCIPAL DISTRIBUTION AMOUNT....................................................................11
    CLASS []-[] REALIZED LOSS AMORTIZATION AMOUNT................................................................11
    CLASS CERTIFICATE BALANCE....................................................................................12
    CLASS INTEREST SHORTFALL.....................................................................................12
    CLASS []-[] APPLIED REALIZED LOSS AMOUNT.....................................................................12
    CLASS []-[] CERTIFICATE......................................................................................12
    CLASS []-[] PRINCIPAL DISTRIBUTION AMOUNT....................................................................12
    CLASS []-[] REALIZED LOSS AMORTIZATION AMOUNT................................................................13
    CLASS []-[] APPLIED REALIZED LOSS AMOUNT.....................................................................13
    CLASS []-[] CERTIFICATE......................................................................................13
    CLASS []-[] PRINCIPAL DISTRIBUTION AMOUNT....................................................................13
    CLASS []-[] REALIZED LOSS AMORTIZATION AMOUNT................................................................13
    CLASS []-[] APPLIED REALIZED LOSS AMOUNT.....................................................................13
    CLASS []-[] CERTIFICATE......................................................................................13
    CLASS []-[] PRINCIPAL DISTRIBUTION AMOUNT....................................................................14
    CLASS []-[] REALIZED LOSS AMORTIZATION AMOUNT................................................................14
    CLASS []-[] APPLIED REALIZED LOSS AMOUNT.....................................................................14
    CLASS []-[] CERTIFICATE......................................................................................14
    CLASS []-[] PRINCIPAL DISTRIBUTION AMOUNT....................................................................14
    CLASS []-[] REALIZED LOSS AMORTIZATION AMOUNT................................................................14
    CLASS []-[] APPLIED REALIZED LOSS AMOUNT.....................................................................15
    CLASS []-[] CERTIFICATE......................................................................................15
    CLASS []-[] PRINCIPAL DISTRIBUTION AMOUNT....................................................................15
    CLASS []-[] REALIZED LOSS AMORTIZATION AMOUNT................................................................15
    CLASS []-[] APPLIED REALIZED LOSS AMOUNT.....................................................................15
    CLASS []-[] CERTIFICATE......................................................................................15
    CLASS []-[] PRINCIPAL DISTRIBUTION AMOUNT....................................................................16
    CLASS []-[] REALIZED LOSS AMORTIZATION AMOUNT................................................................16
    CLASS R CERTIFICATES.........................................................................................16
     CLASS UNPAID INTEREST AMOUNTS................................................................................16
    CLASS X CERTIFICATE..........................................................................................16
    CLOSING DATE.................................................................................................16
    CLOSING PLACE................................................................................................16
    CODE.........................................................................................................16
    COLLATERAL...................................................................................................16
    COLLATERAL VALUE.............................................................................................17
    COMBINED LOAN-TO-VALUE RATIO.................................................................................17
    COMMISSION...................................................................................................17
    CORPORATE TRUST OFFICE.......................................................................................17
    CORRESPONDING CLASS..........................................................................................17
    CORRIDOR AGREEMENT...........................................................................................17
    CORRIDOR DISTRIBUTION AMOUNT.................................................................................17
    CORRIDOR NOTIONAL BALANCE....................................................................................17
    CORRIDOR RESERVE FUND........................................................................................17
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    CORRIDOR STATED TERMINATION..................................................................................18
    COUNTERPARTY.................................................................................................18
    CUSTODIAL AGREEMENT..........................................................................................18
    CUSTODIAN....................................................................................................18
    CUT-OFF DATE.................................................................................................18
    CUT-OFF DATE POOL PRINCIPAL BALANCE..........................................................................18
    CUT-OFF DATE PRINCIPAL BALANCE...............................................................................18
    DEFECTIVE LOAN...............................................................................................18
    DEFICIENT VALUATION..........................................................................................18
    DEFINITIVE CERTIFICATES......................................................................................18
    DELETED LOAN.................................................................................................18
    DENOMINATION.................................................................................................18
    DEPOSITOR....................................................................................................18
    DEPOSITORY...................................................................................................19
    DEPOSITORY PARTICIPANT.......................................................................................19
    DETERMINATION DATE...........................................................................................19
    DISTRIBUTION ACCOUNT.........................................................................................19
    DISTRIBUTION ACCOUNT DEPOSIT DATE............................................................................19
    DISTRIBUTION DATE............................................................................................19
    DUE DATE.....................................................................................................19
    DUE PERIOD...................................................................................................19
    ELIGIBLE ACCOUNT.............................................................................................19
    EQUITY ONE-DELAWARE..........................................................................................20
    EQUITY ONE-MINNESOTA.........................................................................................20
    EQUITY ONE-PENNSYLVANIA......................................................................................20
    ERISA........................................................................................................20
    ERISA QUALIFYING UNDERWRITING................................................................................20
    ERISA-RESTRICTED CERTIFICATE.................................................................................20
    ESCROW ACCOUNT...............................................................................................20
    EVENT OF DEFAULT.............................................................................................20
    EXCESS CASHFLOW REALIZED LOSS AMORTIZATION AMOUNT............................................................20
    EXCHANGE ACT.................................................................................................20
    EXCESS PROCEEDS..............................................................................................21
    EXPENSE RATE.................................................................................................21
    EXTRA PRINCIPAL DISTRIBUTION AMOUNT..........................................................................21
    FDIC.........................................................................................................21
    FHLMC........................................................................................................21
    FIRREA.......................................................................................................21
    FNMA.........................................................................................................21
    INDIRECT PARTICIPANT.........................................................................................21
    INITIAL CERTIFICATE ACCOUNT DEPOSIT..........................................................................21
    INSURANCE POLICY.............................................................................................21
    INSURANCE PROCEEDS...........................................................................................21
     INSURED EXPENSES.............................................................................................22
    INTEREST ACCRUAL PERIOD......................................................................................22
    INTEREST DISTRIBUTION AMOUNT.................................................................................22
    INTEREST REMITTANCE AMOUNT...................................................................................22
    INVESTMENT LETTER............................................................................................22
    LATEST POSSIBLE MATURITY DATE................................................................................22
    LAST SCHEDULED DISTRIBUTION DATE.............................................................................22
    LIBOR........................................................................................................22
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    LIBOR DETERMINATION DATE.....................................................................................23
    LIQUIDATED LOAN..............................................................................................23
    LIQUIDATION PROCEEDS.........................................................................................23
    LOANS........................................................................................................23
    LOAN SCHEDULE................................................................................................23
    MAJORITY IN INTEREST.........................................................................................24
    MASTER AGREEMENT.............................................................................................24
    MERS (R).....................................................................................................24
    MERS (R) SYSTEM..............................................................................................24
    MIN..........................................................................................................24
    MOM LOAN.....................................................................................................24
    MONTHLY EXCESS CASHFLOW AMOUNT...............................................................................24
    MONTHLY EXCESS INTEREST AMOUNT...............................................................................24
    MONTHLY STATEMENT............................................................................................24
    MOODY'S......................................................................................................24
    MORTGAGE.....................................................................................................24
    MORTGAGED PROPERTY...........................................................................................25
    MORTGAGE FILE................................................................................................25
    MORTGAGE NOTE................................................................................................25
    MORTGAGE RATE................................................................................................25
    MORTGAGOR....................................................................................................25
    NET PREPAYMENT INTEREST SHORTFALLS...........................................................................25
    NET REALIZED LOSSES..........................................................................................25
    NET RECOVERY REALIZED LOSSES.................................................................................25
    NET WAC CAP..................................................................................................25
    NET WAC CAP ACCOUNT..........................................................................................25
    NET WAC CAP CARRYOVER........................................................................................25
    NET WAC RATE.................................................................................................26
    NONRECOVERABLE ADVANCE.......................................................................................26
    NOTICE OF FINAL DISTRIBUTION.................................................................................26
    OFFERED CERTIFICATES.........................................................................................26
    OFFICER'S CERTIFICATE........................................................................................26
    OPINION OF COUNSEL...........................................................................................26
    OPTIONAL TERMINATION DATE....................................................................................26
    OPTIONAL TERMINATION.........................................................................................26
    ORIGINAL LOAN................................................................................................26
    OTS..........................................................................................................27
    OUTSTANDING..................................................................................................27
    OUTSTANDING LOAN.............................................................................................27
    OVERCOLLATERALIZATION AMOUNT.................................................................................27
    OVERCOLLATERALIZATION DEFICIENCY.............................................................................27
    OVERCOLLATERALIZATION RELEASE AMOUNT.........................................................................27
    OWNERSHIP INTEREST...........................................................................................27
    PASS-THROUGH RATE............................................................................................27
    PAYING AGENT.................................................................................................27
    PERCENTAGE INTEREST..........................................................................................28
    PERMITTED INVESTMENTS........................................................................................28
    PERMITTED TRANSFEREE.........................................................................................29
    PERSON.......................................................................................................29
    PLAN.........................................................................................................29
    POOL PRINCIPAL BALANCE.......................................................................................29
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    POPULAR FINANCIAL............................................................................................29
    POPULAR FUNDING..............................................................................................29
    PRELIMINARY PROSPECTUS SUPPLEMENT............................................................................30
    POST-STEPDOWN REMAINING PRINCIPAL DISTRIBUTION AMOUNT........................................................30
     PRE-STEPDOWN REMAINING PRINCIPAL DISTRIBUTION AMOUNT.........................................................30
    PREPAYMENT INTEREST EXCESS...................................................................................30
    PREPAYMENT INTEREST SHORTFALL................................................................................30
    PREPAYMENT PERIOD............................................................................................30
    PRIMARY MORTGAGE INSURANCE POLICY............................................................................30
    PRINCIPAL DISTRIBUTION AMOUNT................................................................................30
    PRINCIPAL PREPAYMENT.........................................................................................30
    PRINCIPAL PREPAYMENT IN FULL.................................................................................30
    PRINCIPAL REMITTANCE AMOUNT..................................................................................30
    PROSPECTUS SUPPLEMENT........................................................................................31
    PUBLICLY OFFERED CERTIFICATES................................................................................31
    PURCHASE PRICE...............................................................................................31
    PTCE 95-60...................................................................................................31
    RATING AGENCY................................................................................................31
    REALIZED LOSS AMOUNT.........................................................................................31
    REALIZED LOSSES..............................................................................................31
    REALIZED LOSS AMORTIZATION AMOUNT............................................................................32
    RECORD DATE..................................................................................................32
    REFERENCE BANKS..............................................................................................32
    REGULATION AB................................................................................................32
    REFINANCE LOAN...............................................................................................32
    RELIEF ACT...................................................................................................32
    RELIEF ACT REDUCTIONS........................................................................................32
    REMAINING EXCESS INTEREST AMOUNT.............................................................................33
    REMAINING INTEREST REMITTANCE AMOUNT.........................................................................33
    REMAINING OVERCOLLATERALIZATION RELEASE AMOUNT...............................................................33
    REMAINING PRINCIPAL DISTRIBUTION AMOUNT......................................................................33
    REMIC........................................................................................................33
    REMIC 1......................................................................................................33
    REMIC 2......................................................................................................33
    REMIC 1 ACCRUAL CLASS........................................................................................33
    REMIC CHANGE OF LAW..........................................................................................33
    REMIC PROVISIONS.............................................................................................33
    REO PROPERTY.................................................................................................34
    REQUEST FOR RELEASE..........................................................................................34
    REQUIRED INSURANCE POLICY....................................................................................34
    RESPONSIBLE OFFICER..........................................................................................34
    RULE 144A LETTER.............................................................................................34
    SCHEDULED PAYMENT............................................................................................34
    SECOND LIEN LOAN.............................................................................................34
    SECURITIES ACT...............................................................................................34
    SELLERS......................................................................................................34
    SENIOR CERTIFICATES..........................................................................................34
    SENIOR ENHANCEMENT PERCENTAGE................................................................................34
    SENIOR PRINCIPAL DISTRIBUTION AMOUNT.........................................................................34
    SENIOR SPECIFIED ENHANCEMENT PERCENTAGE......................................................................35
    SERVICER.....................................................................................................35
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    SERVICER ADVANCE DATE........................................................................................35
    SERVICING ADVANCES...........................................................................................35
    SERVICING AMOUNT.............................................................................................35
    SERVICING CRITERIA...........................................................................................35
    SERVICING FEE................................................................................................35
    SERVICING FEE RATE...........................................................................................35
    SERVICING OFFICER............................................................................................35
    S&P..........................................................................................................36
    STARTUP DAY..................................................................................................36
    STATED PRINCIPAL BALANCE.....................................................................................36
    STEPDOWN DATE................................................................................................36
     SUBORDINATE CERTIFICATES.....................................................................................36
    SUBSERVICER..................................................................................................36
    SUBSTITUTE LOAN..............................................................................................36
    SUBSTITUTION ADJUSTMENT AMOUNT...............................................................................36
    TARGETED OVERCOLLATERALIZATION AMOUNT........................................................................36
    TAX MATTERS PERSON...........................................................................................37
    TAX MATTERS PERSON CERTIFICATE...............................................................................37
    TERMINATION PRICE............................................................................................37
    TRANSFER.....................................................................................................37
    TRANSFER AFFIDAVIT...........................................................................................37
    TRANSFEROR CERTIFICATE.......................................................................................37
    TRIGGER EVENT................................................................................................37
    TRUSTEE......................................................................................................38
    TRUSTEE FEE..................................................................................................38
    TRUSTEE FEE RATE.............................................................................................38
    TRUST FUND...................................................................................................38
    TRUSTEE PERMITTED WITHDRAWAL AMOUNT..........................................................................39
    UNPAID REALIZED LOSS AMOUNT..................................................................................39
    UNDERWRITER EXEMPTION........................................................................................39
    UNDERWRITERS.................................................................................................39
    VOTING RIGHTS................................................................................................39

ARTICLE II CONVEYANCE OF LOANS; REPRESENTATIONS AND WARRANTIES...................................................39

    SECTION 2.01.   CONVEYANCE OF LOANS...........................................................................39
    SECTION 2.02.   ACCEPTANCE BY TRUSTEE OF THE TRUST FUND.......................................................42
    SECTION 2.03.   REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLERS AND THE SERVICER.....................44
    SECTION 2.03A.   ADDITIONAL OBLIGATIONS OF EQUITY ONE-DELAWARE................................................46
    SECTION 2.04.   REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR AS TO THE LOANS...............................47
    SECTION 2.05.   DELIVERY OF OPINION OF COUNSEL IN CONNECTION WITH SUBSTITUTIONS...............................47
    SECTION 2.06.   EXECUTION AND DELIVERY OF CERTIFICATES........................................................47
    SECTION 2.07.   REMIC MATTERS.................................................................................47
    SECTION 2.08.   COVENANTS OF THE SERVICER.....................................................................48

ARTICLE III ADMINISTRATION AND SERVICING OF LOANS................................................................48

    SECTION 3.01.   SERVICER TO SERVICE LOANS.....................................................................48
    SECTION 3.02.   SUBSERVICING; ENFORCEMENT OF THE OBLIGATIONS OF SERVICERS.....................................49
    SECTION 3.03.   RIGHTS OF THE DEPOSITOR AND THE TRUSTEE IN RESPECT OF THE SERVICER............................50
    SECTION 3.04.   TRUSTEE TO ACT AS SERVICER....................................................................50
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    SECTION 3.05.   COLLECTION OF LOAN PAYMENTS; CERTIFICATE ACCOUNT; DISTRIBUTION ACCOUNT........................50
    SECTION 3.06.   PAYMENT OF TAXES, ASSESSMENTS, HAZARD INSURANCE PREMIUMS AND SIMILAR ITEMS; ESCROW ACCOUNTS...52
    SECTION 3.07.   ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING THE LOANS...........................53
    SECTION 3.08.   PERMITTED WITHDRAWALS FROM THE CERTIFICATE ACCOUNT AND DISTRIBUTION ACCOUNT...................53
    SECTION 3.09.   MAINTENANCE OF HAZARD INSURANCE; MAINTENANCE OF PRIMARY INSURANCE POLICIES....................55
    SECTION 3.10.   ENFORCEMENT OF DUE-ON-SALE CLAUSES; ASSUMPTION AGREEMENTS.....................................56
    SECTION 3.11.   REALIZATION UPON DEFAULTED LOANS; REPURCHASE AND SALE OF CERTAIN LOANS........................57
    SECTION 3.12.   DOCUMENTS, RECORDS AND FUNDS IN POSSESSION OF SERVICER TO BE HELD FOR THE TRUSTEE.............59
    SECTION 3.13.   SERVICING COMPENSATION........................................................................59
    SECTION 3.14.   ACCESS TO CERTAIN DOCUMENTATION...............................................................59
    SECTION 3.15.   ANNUAL STATEMENT AS TO COMPLIANCE.............................................................60
    SECTION 3.16.   SERVICER'S ANNUAL SERVICING STATEMENT; INDEPENDENT PUBLIC ACCOUNTANTS' ATTESTATION............60
    SECTION 3.17.   ERRORS AND OMISSIONS INSURANCE; FIDELITY BONDS................................................61
    SECTION 3.18.   ENGAGEMENT BY SERVICER OF AFFILIATES OR THIRD PARTY VENDORS...................................61
    SECTION 3.19.   DELINQUENT LOANS..............................................................................61

ARTICLE IIIA   RESERVE FUNDS AND net wac cap account..............................................................62

    SECTION 3A.01   CAP RESERVE FUND AND CAP AGREEMENT............................................................62
    SECTION 3A.02   CORRIDOR RESERVE FUND AND CORRIDOR AGREEMENT..................................................63
    SECTION 3A.03.   NET WAC CAP ACCOUNT..........................................................................64

ARTICLE IV DISTRIBUTIONS AND ADVANCES BY THE SERVICER............................................................65

    SECTION 4.01.   ADVANCES......................................................................................65
    SECTION 4.02.   PRIORITIES OF DISTRIBUTION AND ALLOCATION.....................................................65
    SECTION 4.02A.   RECOVERIES...................................................................................75
    SECTION 4.03.   MONTHLY STATEMENTS TO CERTIFICATEHOLDERS......................................................76
    SECTION 4.04. REPORTING......................................................................................79
    SECTION 5.01.   THE CERTIFICATES..............................................................................79
    SECTION 5.02.   CERTIFICATE REGISTER; REGISTRATION OF TRANSFER AND EXCHANGE OF CERTIFICATES...................80
    SECTION 5.03.   MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.............................................84
    SECTION 5.04.   PERSONS DEEMED OWNERS.........................................................................84
    SECTION 5.05.   ACCESS TO LIST OF CERTIFICATEHOLDERS' NAMES AND ADDRESSES.....................................84
    SECTION 5.06.   MAINTENANCE OF OFFICE OR AGENCY...............................................................85

ARTICLE VI THE DEPOSITOR AND THE SERVICER........................................................................85

    SECTION 6.01.   RESPECTIVE LIABILITIES OF THE DEPOSITOR AND THE SERVICER......................................85
    SECTION 6.02.   MERGER OR CONSOLIDATION OF THE DEPOSITOR OR THE SERVICER......................................85
    SECTION 6.03.   LIMITATION ON LIABILITY OF THE DEPOSITOR, THE SELLERS, THE SERVICER AND OTHERS................85
    SECTION 6.04.   LIMITATION ON RESIGNATION OF SERVICER.........................................................86
    SECTION 6.05.   INDEMNIFICATION...............................................................................86

ARTICLE VII DEFAULT..............................................................................................87
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    SECTION 7.01.   EVENTS OF DEFAULT.............................................................................87
    SECTION 7.02.   TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR......................................................89
    SECTION 7.03.   NOTIFICATION TO CERTIFICATEHOLDERS............................................................89
    SECTION 7.04. SURVIVABILITY OF SERVICER LIABILITIES..........................................................90

ARTICLE VIII   CONCERNING THE TRUSTEE.............................................................................90

    SECTION 8.01.   DUTIES OF TRUSTEE.............................................................................90
    SECTION 8.02   CERTAIN MATTERS AFFECTING THE TRUSTEE..........................................................91
    SECTION 8.03.   TRUSTEE NOT LIABLE FOR CERTIFICATES OR LOANS..................................................92
    SECTION 8.04.   TRUSTEE MAY OWN CERTIFICATES..................................................................93
    SECTION 8.05.   TRUSTEE'S FEES AND EXPENSES...................................................................93
    SECTION 8.06.   ELIGIBILITY REQUIREMENTS FOR TRUSTEE..........................................................93
    SECTION 8.07.   RESIGNATION AND REMOVAL OF TRUSTEE............................................................94
    SECTION 8.08.   SUCCESSOR TRUSTEE.............................................................................94
    SECTION 8.09.   MERGER OR CONSOLIDATION OF TRUSTEE............................................................95
    SECTION 8.10.   APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.................................................95
    SECTION 8.11.   TAX MATTERS...................................................................................96
    SECTION 8.12.   PERIODIC FILINGS..............................................................................98
    SECTION 8.13.   APPOINTMENT OF CUSTODIANS.....................................................................98
    SECTION 8.14.   TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF CERTIFICATES.................................98
    SECTION 8.15.   SUITS FOR ENFORCEMENT.........................................................................99
    SECTION 8.16.   TRUSTEE'S ANNUAL SERVICING STATEMENT; INDEPENDENT PUBLIC ACCOUNTANTS' ATTESTATION.............99
    SECTION 8.17.   ENGAGEMENT BY TRUSTEE OF AFFILIATES OR THIRD PARTIES.........................................100
     SECTION 8.18.   REPRESENTATIONS AND WARRANTIES OF THE TRUSTEE................................................100

ARTICLE IX TERMINATION..........................................................................................101

    SECTION 9.01.   TERMINATION UPON LIQUIDATION OR PURCHASE OF ALL LOANS........................................101
    SECTION 9.02.   FINAL DISTRIBUTION ON THE CERTIFICATES.......................................................101
    SECTION 9.03.   ADDITIONAL TERMINATION REQUIREMENTS..........................................................102

ARTICLE X MISCELLANEOUS PROVISIONS..............................................................................103

    SECTION 10.01.   AMENDMENT...................................................................................103
    SECTION 10.02.   RECORDATION OF AGREEMENT; COUNTERPARTS......................................................104
    SECTION 10.03.   GOVERNING LAW...............................................................................104
    SECTION 10.04.   INTENTION OF PARTIES........................................................................104
    SECTION 10.05.   NOTICES.....................................................................................106
     SECTION 10.06.   SEVERABILITY OF PROVISIONS..................................................................107
    SECTION 10.07.   ASSIGNMENT..................................................................................107
    SECTION 10.08.   LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS..................................................107
    SECTION 10.09.   INSPECTION AND AUDIT RIGHTS.................................................................108
    SECTION 10.10.   CERTIFICATES NONASSESSABLE AND FULLY PAID...................................................108
    SECTION 10.11.   THE CLOSING.................................................................................109
    SECTION 10.12.   INTERPRETATION..............................................................................109
    SECTION 10.13.   MATERIAL LITIGATION; AFFILIATIONS...........................................................109
    SECTION 10.14.   NO PARTNERSHIP..............................................................................109
    SECTION 10.15. PROTECTION OF ASSETS.........................................................................109
    SECTION 10.16. EXECUTION OF MASTER AGREEMENT................................................................110

      SCHEDULE I...............................................................................................S-I-1
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     SCHEDULE IIA...........................................................................................S-IIA-1

     SCHEDULE IIB...........................................................................................S-IIB-1

     SCHEDULE IIC...........................................................................................S-IIC-1

     SCHEDULE IID...........................................................................................S-IID-1

      SCHEDULE IIE...........................................................................................S-IIE-1

     SCHEDULE IIF...........................................................................................S-IIF-1

     SCHEDULE IIX...........................................................................................S-IIX-1

     SCHEDULE IIIA.........................................................................................S-IIIA-1

     SCHEDULE IIIB.........................................................................................S-IIIB-1

     SCHEDULE IIIC.........................................................................................S-IIIC-1

     SCHEDULE IIID.........................................................................................S-IIID-1

     SCHEDULE IIIE........................................................................................S-IIIE-1

     SCHEDULE IIIF.........................................................................................S-IIIF-1

     SCHEDULE IV...............................................................................................IV-1

     SCHEDULE V.................................................................................................V-1

     SCHEDULE VI...............................................................................................VI-1

     SCHEDULE VII.............................................................................................VII-1

     EXHIBIT A-1..............................................................................................A-1-1

     EXHIBIT A-2..............................................................................................A-2-1

     EXHIBIT A-3 .............................................................................................A-3-1

     EXHIBIT A-4 .............................................................................................A-4-1

     EXHIBIT B-1..............................................................................................B-1-1

     EXHIBIT B-2 .............................................................................................B-2-1

     EXHIBIT C..................................................................................................C-1

     EXHIBIT D..................................................................................................D-1

     EXHIBIT E..................................................................................................E-1
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<TABLE>

<S>                                                                                                             <C>

     EXHIBIT F..................................................................................................F-1

     EXHIBIT G..................................................................................................G-1

     EXHIBIT H..................................................................................................H-1

     EXHIBIT I..................................................................................................I-1

     EXHIBIT J..................................................................................................J-1

     EXHIBIT K..................................................................................................K-1

     EXHIBIT L..................................................................................................L-1

     EXHIBIT M..................................................................................................M-1

     EXHIBIT N..................................................................................................N-1
</TABLE>

                                         x

<PAGE>


THIS POOLING AND SERVICING AGREEMENT, dated as of ______________, 20__, by and
among Popular ABS, Inc., a Delaware corporation, as depositor (the "DEPOSITOR"),
Equity One, Inc., a Delaware corporation, as servicer (the "SERVICER"),
__________________, a ______________________, ___________________, a
__________________, ___________________, a ______________________,
___________________, a __________________ and, together with
__________________________, the "SELLERS"), and ____________________, a
________________________________________, as trustee (the "TRUSTEE").

                                 WITNESSETH THAT

         In consideration of the mutual agreements herein contained, the parties
hereto agree as follows:

                               PRELIMINARY STATEMENT

         The Depositor is the owner of the Trust Fund that is hereby conveyed to
the Trustee in return for the Certificates. The Trust Fund (exclusive of the Net
WAC Cap Account, the Master Agreement, the Cap Reserve Fund and the Corridor
Reserve Fund) for federal income tax purposes will consist of two REMICs ("REMIC
1" and "REMIC 2"). The Certificates will represent the entire beneficial
ownership interest in the Trust Fund. The assets of the Trust Fund (exclusive of
the Net WAC Cap Account, the Master Agreement, the Cap Reserve Fund and the
Corridor Reserve Fund) will constitute the assets of REMIC 1 and REMIC 1 will
issue fourteen uncertificated regular interests that will be held as the sole
assets of REMIC 2. The Class []-[], Class []-[], Class []-[], Class []-[], Class
[]-[], Class []-[], Class []-[], Class []-[], Class []-[], Class []-[], Class
[]-[], Class []-[] and Class []-[] Certificates (exclusive of any associated
rights to receive payments in the form of Net WAC Cap Carryover) and the Class X
Certificates (exclusive of any associated rights to receive payments from the
Net WAC Cap Account, the Cap Reserve Fund or the Corridor Reserve Fund) will
represent the "regular interests" in REMIC 2. The Class []-[], Class []-[],
Class []-[], Class []-[], Class []-[], Class []-[], Class []-[], Class []-[] and
Class []-[] Certificates are subordinate to and provide credit enhancement for
the Class []-[], Class []-[], Class []-[] and Class []-[] Certificates. The
Class []-[], Class []-[], Class []-[], Class []-[], Class []-[], Class []-[],
Class []-[] and Class []-[] Certificates are subordinate to and provide credit
enhancement for the Class []-[] Certificates. The Class []-[], Class []-[],
Class []-[], Class []-[], Class []-[], Class []-[] and Class []-[] Certificates
are subordinate to and provide credit enhancement for the Class []-[]
Certificates. The Class []-[], Class []-[], Class []-[], Class []-[], Class
[]-[] and Class []-[] Certificates are subordinate to and provide credit
enhancement for the Class []-[] Certificates. The Class []-[], Class []-[],
Class []-[], Class []-[] and Class []-[] Certificates are subordinate to and
provide credit enhancement for the Class []-[] Certificates. The Class []-[],
Class []-[], Class []-[] and Class []-[] Certificates are subordinate to and
provide credit enhancement for the Class []-[] Certificates. The Class []-[],
Class []-[] and Class []-[] Certificates are subordinate to and provide credit
enhancement for the Class []-[] Certificates. The Class []-[] and Class []-[]
Certificates are subordinate to and provide credit enhancement for the Class
[]-[] Certificates. The Class []-[] Certificates are subordinate to and provide
credit enhancement for the Class []-[] Certificates. The Class R-1 and Class R-2
Interests will be the residual interests in each of REMIC 1 and REMIC 2. All
interests created hereby will be retired on or before the Latest Possible
Maturity Date.

                                     REMIC 1

         REMIC 1 will be evidenced by a single uncertificated residual interest,
ownership of which shall be evidenced by the Class R Certificate, and by the
REMIC 1- Accrual Class, and the Class []-[], Class []-[], Class []-[], Class
[]-[], Class []-[], Class []-[], Class []-[], Class []-[], Class []-[], Class
[]-[], Class []-[], Class []-[] and Class []-[] Interests, which will be
uncertificated and non-transferable and are hereby designated as the "regular
interests" in REMIC 1 for federal income tax purposes and will have the


<PAGE>

following designations, initial principal balances, pass-through rates, and
corresponding Classes of REMIC 2 certificates ("CORRESPONDING CLASSES"):


<TABLE>
<CAPTION>
=======================================================================================================================
                                                                                  Pass-Through          Corresponding
      REMIC 1 Interests                     Initial Balance                              Rate                  Class
------------------------------ ------------------------------------------------ -------------------- ------------------
<S>                                 <C>                                           <C>                    <C>
          Class []-[]                (1/4 Corresponding Class' initial Class          Net WAC Rate             []-[]
                                            Certificate Balance)
------------------------------ ------------------------------------------------ -------------------- ------------------
         Class []-[]                (1/4 Corresponding Class' initial Class          Net WAC Rate             []-[]
                                             Certificate Balance)
------------------------------ ------------------------------------------------ -------------------- ------------------
         Class []-[]                (1/4 Corresponding Class' initial Class          Net WAC Rate             []-[]
                                            Certificate Balance)
------------------------------ ------------------------------------------------ -------------------- ------------------
         Class []-[]                (1/4 Corresponding Class' initial Class          Net WAC Rate             []-[]
                                             Certificate Balance)
------------------------------ ------------------------------------------------ -------------------- ------------------
         Class []-[]                (1/4 Corresponding Class' initial Class          Net WAC Rate             []-[]
                                            Certificate Balance)
------------------------------ ------------------------------------------------ -------------------- ------------------
         Class []-[]                (1/4 Corresponding Class' initial Class          Net WAC Rate             []-[]
                                            Certificate Balance)
------------------------------ ------------------------------------------------ -------------------- ------------------
          Class []-[]                (1/4 Corresponding Class' initial Class          Net WAC Rate             []-[]
                                            Certificate Balance)
------------------------------ ------------------------------------------------ -------------------- ------------------
         Class []-[]                (1/4 Corresponding Class' initial Class          Net WAC Rate             []-[]
                                            Certificate Balance)
------------------------------ ------------------------------------------------ -------------------- ------------------
         Class []-[]                (1/4 Corresponding Class' initial Class          Net WAC Rate             []-[]
                                            Certificate Balance)
------------------------------ ------------------------------------------------ -------------------- ------------------
         Class []-[]                (1/4 Corresponding Class' initial Class          Net WAC Rate             []-[]
                                             Certificate Balance)
------------------------------ ------------------------------------------------ -------------------- ------------------
         Class []-[]                (1/4 Corresponding Class' initial Class          Net WAC Rate             []-[]
                                            Certificate Balance)
------------------------------ ------------------------------------------------ -------------------- ------------------
         Class []-[]                (1/4 Corresponding Class' initial Class          Net WAC Rate             []-[]
                                            Certificate Balance)
------------------------------ ------------------------------------------------ -------------------- ------------------
         Class []-[]                (1/4 Corresponding Class' initial Class          Net WAC Rate             []-[]
                                            Certificate Balance)
------------------------------ ------------------------------------------------ -------------------- ------------------
    REMIC 1 Accrual                 (3/4 Cut-off Date Pool Principal Balance)        Net WAC Rate              N/A
         Class
=======================================================================================================================
</TABLE>

         On each Distribution Date, the Interest Remittance Amount shall be
distributed as interest on the regular interests in REMIC 1 at the Pass-Through
Rates shown above, provided, however, that interest that accrues on the REMIC 1
Accrual Class for any Interest Accrual Period shall be deferred and added to the
balance of the REMIC 1 Accrual Class in an amount equal to []% of the Extra
Principal Distribution Amount for the related Distribution Date.

         On each Distribution Date, Available Funds remaining after the
distributions described in the immediately preceding paragraph have been made,
shall be distributed in the following order and priority:

    1. Concurrently, to the Class []-[], Class []-[], Class []-[], Class []-[],
       Class []-[], Class []-[], Class []-[], Class []-[], Class []-[], Class
       []-[], Class []-[], Class []-[] and Class []-[] Interests until the
       balance of each such Interest equals []% of the Class Certificate Balance
       of the Corresponding Class of Certificates immediately after such
       Distribution Date; and

                                       2
<PAGE>


    2. To the REMIC 1 Accrual Class until its balance is reduced to zero.

         Realized Losses shall be allocated among the regular interests in REMIC
1 in the same manner in which principal is distributed.

                                     REMIC 2

         The following table sets forth characteristics of the Certificates,
each of which, except for the Class R Certificates, is hereby designated a
"regular interest" in REMIC 2, together with the minimum denominations and
integral multiples in excess thereof in which such Classes shall be issuable
(except that one Certificate of each Class of Certificates may be issued in a
different amount and, in addition, one Class R Certificate representing the Tax
Matters Person Certificate may be issued in a different amount):

<TABLE>
<CAPTION>
=======================================================================================================================
                        Initial Class            Pass-Through Rate(1)           Minimum         Integral Multiples in
                     Certificate Balance                                     Denomination         Excess of Minimum
------------------- ----------------------- ----------------------------- ----------------- ------------------------
<S>                   <C>                         <C>                         <C>                <C>

Class []-[]                    $[]                   LIBOR + []% (2)              $25,000                 $1
------------------- ----------------------- ----------------------------- ----------------- ------------------------
Class []-[]                   $[]                   LIBOR + []% (3)              $25,000                 $1
------------------- ----------------------- ----------------------------- ----------------- ------------------------
Class []-[]                   $[]                   LIBOR + []% (4)              $25,000                  $1
------------------- ----------------------- ----------------------------- ----------------- ------------------------
Class []-[]                   $[]                   LIBOR + []% (5)              $25,000                 $1
------------------- ----------------------- ----------------------------- ----------------- ------------------------
Class []-[]                   $[]                   LIBOR + []% (6)              $25,000                 $1
------------------- ----------------------- ----------------------------- ----------------- ------------------------
Class []-[]                   $[]                   LIBOR + []% (7)              $25,000                 $1
------------------- ----------------------- ----------------------------- ----------------- ------------------------
Class []-[]                   $[]                   LIBOR + []% (8)              $25,000                 $1
------------------- ----------------------- ----------------------------- ----------------- ------------------------
Class []-[]                   $[]                   LIBOR + []% (9)              $25,000                 $1
------------------- ----------------------- ----------------------------- ----------------- ------------------------
Class []-[]                   $[]                    LIBOR + []% (10)             $25,000                 $1
------------------- ----------------------- ----------------------------- ----------------- ------------------------
Class []-[]                   $[]                   LIBOR + []% (11)             $25,000                 $1
------------------- ----------------------- ----------------------------- ----------------- ------------------------
Class []-[]                   $[]                   LIBOR + []% (11)             $25,000                 $1
------------------- ----------------------- ----------------------------- ----------------- ------------------------
Class []-[]                   $[]                   LIBOR + []% (11)             $25,000                 $1
------------------- ----------------------- ----------------------------- ----------------- ------------------------
Class []-[]                   $[]                   LIBOR + []% (11)             $25,000                 $1
------------------- ----------------------- ----------------------------- ----------------- ------------------------
Class X                       (12)                        (13)                     N/A                  N/A
------------------- ----------------------- ----------------------------- ----------------- ------------------------
Class R                       $0                          N/A                      N/A                  N/A
=======================================================================================================================
</TABLE>


(1)       As to any Distribution Date, this rate shall equal the lesser of (a)
         the lesser of (i) the rate per annum set forth above and (ii) []%, and
         (b) the applicable Net WAC Cap.

                                       3
<PAGE>

(2)       After the Optional Termination Date, this rate will increase to LIBOR +
         []%.

(3)       After the Optional Termination Date, this rate will increase to LIBOR +
         []%.

(4)       After the Optional Termination Date, this rate will increase to LIBOR +
         []%.

(5)       After the Optional Termination Date, this rate will increase to LIBOR +
         []%.

(6)       After the Optional Termination Date, this rate will increase to LIBOR +
         []%.

(7)       After the Optional Termination Date, this rate will increase to LIBOR +
         []%.

(8)       After the Optional Termination Date, this rate will increase to LIBOR +
         []%.

(9)       After the Optional Termination Date, this rate will increase to LIBOR +
         []%.

(10)      After the Optional Termination Date, this rate will increase to LIBOR +
         []%.

(11)      After the Optional Termination Date, this rate will increase to LIBOR +
         []%.

(12)      On each Distribution Date, the Class X Certificates will have a
         notional balance equal to the Pool Principal Balance.

(13)      As to any Distribution Date, the Pass-Through Rate for the Class X
         Certificates shall equal the excess of: (a) the Net WAC Rate over (b)
         the product of: (i) four and (ii) the weighted average of the
         Pass-Through Rates of the REMIC 1 regular interests, where the REMIC 1
         Accrual Class is subject to a cap equal to zero and the Pass-Through
         Rate on each other regular interest in REMIC 1 is subject to a cap
          equal to the Pass-Through Rate on its Corresponding Class.

         All fixed interest rates set forth in this Agreement are calculated
based on a 360-day year consisting of twelve 30-day months (30/360). All
adjustable interest rates set forth in this Agreement are calculated based on a
360-day year and the actual number of days elapsed in the related Interest
Accrual Period.


                                       4
<PAGE>

                                    ARTICLE I

                                    DEFINITIONS

                  Whenever used in this Agreement, the following words and
phrases, unless the context otherwise requires, shall have the following
meanings:

                  60+ Day Delinquent Loan
                  As of any Distribution Date, each Loan with respect to which
any portion of a Scheduled Payment is, as of the last day of the calendar month
immediately preceding that Distribution Date, 60 days or more contractually past
due (assuming 30 day months), each Loan in foreclosure, all REO Property and
each Loan for which the Mortgagor has filed for bankruptcy after the Closing
Date.

                  Adjusted Mortgage Rate
                  As to each Loan, and at any time, the per annum rate equal to
the Mortgage Rate less the Servicing Fee Rate.

                  Adjusted Net Mortgage Rate
                  As to each Loan, and at any time, the per annum rate equal to
the Mortgage Rate less the related Expense Rate.

                  Advance
                  The payment required to be made by the Servicer with respect
to any Distribution Date pursuant to Section 4.01, the amount of any such
payment being equal to the aggregate of payments of principal and interest (net
of the Servicing Fee) on the Loans that were due on such Loans' respective Due
Dates in the related Due Period and not received as of the close of business on
the Determination Date in the month of such Distribution Date, other than the
aggregate amount of any such delinquent payments that the Servicer, in its good
faith judgment, has determined would not be recoverable out of Insurance
Proceeds, Liquidation Proceeds or otherwise from the related Loans.

                  Aggregate Class [] Early Distribution Amount
                  As of any Distribution Date, the aggregate sum of all amounts
paid to the Class []-[], Class []-[] and Class []-[] Certificates on prior
Distribution Dates pursuant to clauses (xxxii) through (xxxvii) of Section
4.02(d).

                  Agreement
                  This Pooling and Servicing Agreement, together with all of the
exhibits and schedules hereto, and all amendments or supplements of any of the
foregoing.

                  Amount Held for Future Distribution
                  As to any Distribution Date and the Offered Certificates, the
aggregate amount held in the Certificate Account at the close of business on the
related Determination Date on account of (a) Principal Prepayments, Liquidation
Proceeds and Recoveries received after the Prepayment Period corresponding to
such Distribution Date and (b) all Scheduled Payments due after the Loans'
respective Due Dates in the related Due Period.

                  Applied Realized Loss Amount
                  With respect to (a) the Class []-[] Certificates, the Class
[]-[] Applied Realized Loss Amount, (b) the Class []-[] Certificates, the Class
[]-[] Applied Realized Loss Amount, (c) the Class []-[] Certificates, the Class
[]-[] Applied Realized Loss Amount, (d) the Class []-[] Certificates, the Class
[]-[] Applied Realized Loss Amount, (e) the Class []-[] Certificates, the Class
[]-[] Applied Realized Loss

                                       5
<PAGE>

Amount, (f) the Class []-[] Certificates, the Class []-[] Applied Realized Loss
Amount,(g) the Class []-[] Certificates, the Class []-[] Applied Realized Loss
Amount, (h) the Class []-[] Certificates, the Class []-[] Applied Realized Loss
Amount and (i) the Class []-[] Certificates, the Class []-[] Applied Realized
Loss Amount.

                  Available Funds
                   As to any Distribution Date, the sum of (a) the aggregate
amount held in the Certificate Account at the close of business on the related
Determination Date net of the Amount Held for Future Distribution and net of
amounts permitted to be withdrawn from the Certificate Account pursuant to
clauses (i)-(viii), inclusive, of Section 3.08(a) and amounts permitted to be
withdrawn from the Distribution Account pursuant to clauses (i) and (ii) of
Section 3.08(b), (b) the amount of the related Advance, if any, and (c) the
aggregate of the Purchase Prices and Substitution Adjustment Amounts received on
or before the related Distribution Account Deposit Date and (d) with respect to
the initial Distribution Date, the Initial Certificate Account Deposit.

                   Balloon Loans
                  Loans with balloon payments.

                  Bankruptcy Code
                  The United States Bankruptcy Reform Act of 1978, as amended,
and related rules promulgated thereunder.

                  Basic Principal Distribution Amount
                  With respect to any Distribution Date, the amount by which (a)
the Principal Remittance Amount for that Distribution Date exceeds (b) the
Overcollateralization Release Amount, if any, for that Distribution Date.

                   Beneficial Owner
                  With respect to any Book-Entry Certificate, the Person who is
the beneficial owner of such Book-Entry Certificate.

                  Book-Entry Certificates
                  The Offered Certificates.

                   Business Day
                  Any day other than (a) a Saturday or a Sunday or (b) a day on
which banking institutions in New York City, or in the city where the chief
executive office of the Servicer is located, are authorized or obligated by law
or executive order to be closed.

                  Cap Agreement
                  The Confirmation (as defined in the Master Agreement) bearing
the reference number ______________, dated as of ___________, 20___, relating to
the Transaction (as defined in the Master Agreement) under the Master Agreement
evidenced thereby.

                  Cap Class []-[] Realized Loss Amortization Amount
                  As to the Class []-[] Certificates and as of any Distribution
Date, the lesser of (a) the Cap Unpaid Realized Loss Amount for the Class []-[]
Certificates as of that Distribution Date and (b) the excess of (i) the Cap
Distribution Amount over (ii) the sum of the amounts described in clauses (i)
through (xxviii) of the Section 4.02(e) for that Distribution Date.

                                       6
<PAGE>


                  Cap Class []-[] Realized Loss Amortization Amount
                  As to the Class []-[] Certificates and as of any Distribution
Date, the lesser of (a) the Cap Unpaid Realized Loss Amount for the Class []-[]
Certificates as of that Distribution Date and (b) the excess of (i) the Cap
Distribution Amount over (ii) the sum of the amounts described in clauses (i)
through (xxix) of Section 4.02(e) for that Distribution Date.

                  Cap Class []-[] Realized Loss Amortization Amount
                  As to the Class []-[] Certificates and as of any Distribution
Date, the lesser of (a) the Cap Unpaid Realized Loss Amount for the Class []-[]
Certificates as of that Distribution Date and (b) the excess of (i) the Cap
Distribution Amount over (ii) the sum of the amounts described in clauses (i)
through (xxx) of the Section 4.02(e) for that Distribution Date.

                  Cap Class []-[] Realized Loss Amortization Amount
                  As to the Class []-[] Certificates and as of any Distribution
Date, the lesser of (a) the Cap Unpaid Realized Loss Amount for the Class []-[]
Certificates as of that Distribution Date and (b) the excess of (i) the Cap
Distribution Amount over (ii) the sum of the amounts described in clauses (i)
through (xxii) of the Section 4.02(e) for that Distribution Date.

                  Cap Class []-[] Realized Loss Amortization Amount
                  As to the Class []-[] Certificates and as of any Distribution
Date, the lesser of (a) the Cap Unpaid Realized Loss Amount for the Class []-[]
Certificates as of that Distribution Date and (b) the excess of (i) the Cap
Distribution Amount over (ii) the sum of the amounts described in clauses (i)
through (xxiii) of the Section 4.02(e) for that Distribution Date.

                  Cap Class []-[] Realized Loss Amortization Amount
                  As to the Class []-[] Certificates and as of any Distribution
Date, the lesser of (a) the Cap Unpaid Realized Loss Amount for the Class []-[]
Certificates as of that Distribution Date and (b) the excess of (i) the Cap
Distribution Amount over (ii) the sum of the amounts described in clauses (i)
through (xxiv) of the Section 4.02(e) for that Distribution Date.

                  Cap Class []-[] Realized Loss Amortization Amount
                  As to the Class []-[] Certificates and as of any Distribution
Date, the lesser of (a) the Cap Unpaid Realized Loss Amount for the Class []-[]
Certificates as of that Distribution Date and (b) the excess of (i) the Cap
Distribution Amount over (ii) the sum of the amounts described in clauses (i)
through (xxv) of the Section 4.02(e) for that Distribution Date.

                  Cap Class []-[] Realized Loss Amortization Amount
                  As to the Class []-[] Certificates and as of any Distribution
Date, the lesser of (a) the Cap Unpaid Realized Loss Amount for the Class []-[]
Certificates as of that Distribution Date and (b) the excess of (i) the Cap
Distribution Amount over (ii) the sum of the amounts described in clauses (i)
through (xxvi) of the Section 4.02(e) for that Distribution Date.

                  Cap Class []-[] Realized Loss Amortization Amount
                  As to the Class []-[] Certificates and as of any Distribution
Date, the lesser of (a) the Cap Unpaid Realized Loss Amount for the Class []-[]
Certificates as of that Distribution Date and (b) the excess of (i) the Cap
Distribution Amount over (ii) the sum of the amounts described in clauses (i)
through (xxvii) of the Section 4.02(e) for that Distribution Date.

                                       7
<PAGE>

                  Cap Distribution Amount
                  As defined in Section 4.02(e).

                  Cap Extra Principal Distribution Amount
                  As of any Distribution Date, the lesser of (a) the remaining
Cap Distribution Amount after making all of the distributions in clauses (i)
through (xx) of Section 4.02(e) and (b) the Overcollateralization Deficiency for
that Distribution Date, calculated after giving effect to the funding of the
Extra Principal Distribution Amount pursuant to clause (iii) of Section 4.02(d).

                  Cap Notional Balance
                  As of any Distribution Date, the notional balance specified
under the Cap Agreement for that Distribution Date.

                  Cap Reserve Fund
                  The account established and maintained by the Trustee pursuant
to Section 3A.01.

                  Cap Stated Termination
                   ___________, 20___, subject to the Following Business Day
Convention (as such term is defined in the Cap Agreement).

                  Cap Unpaid Realized Loss Amount
                  For any class of Subordinate Certificates and as to any
Distribution Date, the excess of (a) the Unpaid Realized Loss Amount with
respect to that class for that Distribution Date over (b) the Excess Cashflow
Realized Loss Amortization Amount paid to that Class pursuant to Section 4.02(d)
on that Distribution Date.

                   Certificates
                  The Offered Certificates, the Class R Certificates and the
Class X Certificates.

                  Certificate Account
                  The separate Eligible Account created and maintained by the
Servicer pursuant to Section 3.05 with a depository institution in the name of
the Servicer for the benefit of the Trustee on behalf of the Certificateholders
and designated "Certificate Account, Equity One, Inc., as trustee for the
registered holders of Popular ABS, Inc., Mortgage Pass-Through Certificates
Series []-[]."

                  Certificate Balance
                  With respect to any Offered Certificate at any time, the
maximum dollar amount of principal to which the Holder thereof is then entitled
hereunder, such amount being equal to the Denomination thereof reduced by the
sum of (a) all amounts previously distributed to that Offered Certificate as
payments of principal, and (b) with respect to any Offered Certificate that is a
Class []-[], Class []-[], Class []-[], Class []-[], Class []-[], Class []-[],
Class []-[], Class []-[] or Class []-[] Certificate, that Offered Certificate's
pro rata share of the cumulative amount of Applied Realized Loss Amounts with
respect to such Class for all prior Distribution Dates.

                  Certificateholder or Holder
                  The person in whose name a Certificate is registered in the
Certificate Register, except that, solely for the purpose of giving any consent
pursuant to this Agreement, any Certificate registered in the name of the
Depositor or any affiliate of the Depositor shall be deemed not to be
Outstanding and the Percentage Interest evidenced thereby shall not be taken
into account in determining whether the requisite amount of Percentage Interests
necessary to effect such consent has been obtained; provided, however, that if
any such Person (including the Depositor) owns 100% of the Percentage Interests
evidenced by a

                                       8
<PAGE>

Class of Certificates, such Certificates shall be deemed to be
Outstanding for purposes of any provision hereof that requires the consent of
the Holders of Certificates of a particular Class as a condition to the taking
of any action hereunder. The Trustee is entitled to rely conclusively on a
certification of the Depositor or any affiliate of the Depositor in determining
which Certificates are registered in the name of an affiliate of the Depositor.

                  Certificate Register
                  The register maintained pursuant to Section 5.02.

                  Certificate Registrar
                  ______________________ and its successors and, if a successor
certificate registrar is appointed hereunder, such successor.

                  Class
                  All Certificates bearing the same class designation as set
forth in the Preliminary Statement.

                  Class []-[] Certificate
                  Any Certificate executed and authenticated by the Trustee
substantially in the form attached hereto as Exhibit A-1 and designated as a
Class []-[] Certificate.

                  Class []-[] Certificate
                  Any Certificate executed and authenticated by the Trustee
substantially in the form attached hereto as Exhibit A-1 and designated as a
Class []-[] Certificate.

                  Class []-[] Certificate
                  Any Certificate executed and authenticated by the Trustee
substantially in the form attached hereto as Exhibit A-1 and designated as a
Class []-[] Certificate.

                   Class []-[] Certificate
                  Any Certificate executed and authenticated by the Trustee
substantially in the form attached hereto as Exhibit A-1 and designated as a
Class []-[] Certificate.

                  Class []-[] Applied Realized Loss Amount
                  As to the Class []-[] Certificates and as of any Distribution
Date, the lesser of (a) the Class Certificate Balance thereof (after taking into
account the distribution of the Principal Distribution Amount on that
Distribution Date, but prior to the application of the Class []-[] Applied
Realized Loss Amount, if any, on that Distribution Date) and (b) the excess of
(i) the Realized Loss Amount as of that Distribution Date over (ii) the sum of
the Class []-[] Applied Realized Loss Amount and the Class []-[] Applied
Realized Loss Amount, in each case as of that Distribution Date.

                  Class []-[] Certificate
                  Any Certificate executed and authenticated by the Trustee
substantially in the form attached hereto as Exhibit A-4 and designated as a
Class []-[] Certificate.

                  Class []-[] Principal Distribution Amount
                  As of any Distribution Date on or after the Stepdown Date and
as long as a Trigger Event is not in effect, the excess of (a) the sum of (i)
the sum of the Class Certificate Balances of the Senior Certificates (after
taking into account the payment of the Senior Principal Distribution Amount on
that Distribution Date), (ii) the Class Certificate Balance of the Class []-[]
Certificates (after taking into account the payment of the Class []-[] Principal
Distribution Amount on that Distribution Date), (iii) the

                                       9
<PAGE>

Class Certificate Balance of the Class []-[] Certificates (after taking into
account the payment of the Class []-[] Principal Distribution Amount on that
Distribution Date), (iv) the Class Certificate Balance of the Class []-[]
Certificates (after taking into account the payment of the Class []-[] Principal
Distribution Amount on that Distribution Date), (v) the Class Certificate
Balance of the Class []-[] Certificates (after taking into account the payment
of the Class []-[] Principal Distribution Amount on that Distribution Date),
(vi) the Class Certificate Balance of the Class []-[] Certificates (after taking
into account the payment of the Class []-[] Principal Distribution Amount on
that Distribution Date), (vii) the Class Certificate Balance of the Class []-[]
Certificates (after taking into account the payment of the Class []-[] Principal
Distribution Amount on that Distribution Date) and (viii) the Class Certificate
Balance of the Class []-[] Certificates immediately prior to that Distribution
Date over (b) the lesser of (i) the product of (A) []% and (B) the Pool
Principal Balance as of the last day of the related Due Period and (ii) the Pool
Principal Balance as of the last day of the related Due Period minus the product
of (A) []% and (B) the Cut-off Date Pool Principal Balance.

                  Class []-[] Realized Loss Amortization Amount
                  As to the Class []-[] Certificates and as of any Distribution
Date, the lesser of (a) the Unpaid Realized Loss Amount for the Class []-[]
Certificates as of that Distribution Date and (b) the excess of (i) the Monthly
Excess Cashflow Amount over (ii) the sum of the amounts described in clauses (i)
through (xxiii) of Section 4.02(d) for that Distribution Date.

                  Class []-[] Applied Realized Loss Amount
                  As to the Class []-[] Certificates and as of any Distribution
Date, the lesser of (a) the Class Certificate Balance thereof (after taking into
account the distribution of the Principal Distribution Amount on that
Distribution Date, but prior to the application of the Class []-[] Applied
Realized Loss Amount, if any, on that Distribution Date) and (b) the excess of
(i) the Realized Loss Amount as of that Distribution Date over (ii) the Class
[]-[] Applied Realized Loss Amount as of that Distribution Date.

                  Class []-[] Certificate
                  Any Certificate executed and authenticated by the Trustee
substantially in the form attached hereto as Exhibit A-4 and designated as a
Class []-[] Certificate.

                  Class []-[] Principal Distribution Amount
                  As of any Distribution Date on or after the Stepdown Date and
as long as a Trigger Event is not in effect, the excess of (a) the sum of (i)
the sum of the Class Certificate Balances of the Senior Certificates (after
taking into account the payment of the Senior Principal Distribution Amount on
that Distribution Date), (ii) the Class Certificate Balance of the Class []-[]
Certificates (after taking into account the payment of the Class []-[] Principal
Distribution Amount on that Distribution Date), (iii) the Class Certificate
Balance of the Class []-[] Certificates (after taking into account the payment
of the Class []-[] Principal Distribution Amount on that Distribution Date),
(iv) the Class Certificate Balance of the Class []-[] Certificates (after taking
into account the payment of the Class []-[] Principal Distribution Amount on
that Distribution Date), (v) the Class Certificate Balance of the Class []-[]
Certificates (after taking into account the payment of the Class []-[] Principal
Distribution Amount on that Distribution Date), (vi) the Class Certificate
Balance of the Class []-[] Certificates (after taking into account the payment
of the Class []-[] Principal Distribution Amount on that Distribution Date),
(vii) the Class Certificate Balance of the Class []-[] Certificates (after
taking into account the payment of the Class []-[] Principal Distribution Amount
on that Distribution Date), (viii) the Class Certificate Balance of the Class
[]-[] Certificates (after taking into account the payment of the Class []-[]
Principal Distribution Amount on that Distribution Date) and (ix) the Class
Certificate Balance of the Class []-[] Certificates immediately prior to that
Distribution Date over (b) the lesser of (i) the product of (A) []% and (B) the
Pool Principal

                                       10
<PAGE>

Balance as of the last day of the related Due Period and (ii) the Pool Principal
Balance as of the last day of the related Due Period minus the product of (A)
[]% and (B) the Cut-off Date Pool Principal Balance.

                  Class []-[] Realized Loss Amortization Amount
                  As to the Class []-[] Certificates and as of any Distribution
Date, the lesser of (a) the Unpaid Realized Loss Amount for the Class []-[]
Certificates as of that Distribution Date and (b) the excess of (i) the Monthly
Excess Cashflow Amount over (ii) the sum of the amounts described in clauses (i)
through (xxvi) of Section 4.02(d) for that Distribution Date.

                  Class []-[] Applied Realized Loss Amount
                  As to the Class []-[] Certificates and as of any Distribution
Date, the lesser of (a) the Class Certificate Balance thereof (after taking into
account the distribution of the Principal Distribution Amount on that
Distribution Date, but prior to the application of the Class []-[] Applied
Realized Loss Amount, if any, on that Distribution Date) and (b) the Realized
Loss Amount as of that Distribution Date.

                  Class []-[] Certificate
                   Any Certificate executed and authenticated by the Trustee
substantially in the form attached hereto as Exhibit A-4 and designated as a
Class []-[] Certificate.

                  Class []-[] Principal Distribution Amount
                  As of any Distribution Date on or after the Stepdown Date and
as long as a Trigger Event is not in effect, the excess of (a) the sum of (i)
the sum of the Class Certificate Balances of the Senior Certificates (after
taking into account the payment of the Senior Principal Distribution Amount on
that Distribution Date), (ii) the Class Certificate Balance of the Class []-[]
Certificates (after taking into account the payment of the Class []-[] Principal
Distribution Amount on that Distribution Date), (iii) the Class Certificate
Balance of the Class []-[] Certificates (after taking into account the payment
of the Class []-[] Principal Distribution Amount on that Distribution Date),
(iv) the Class Certificate Balance of the Class []-[] Certificates (after taking
into account the payment of the Class []-[] Principal Distribution Amount on
that Distribution Date), (v) the Class Certificate Balance of the Class []-[]
Certificates (after taking into account the payment of the Class []-[] Principal
Distribution Amount on that Distribution Date), (vi) the Class Certificate
Balance of the Class []-[] Certificates (after taking into account the payment
of the Class []-[] Principal Distribution Amount on that Distribution Date),
(vii) the Class Certificate Balance of the Class []-[] Certificates (after
taking into account the payment of the Class []-[] Principal Distribution Amount
on that Distribution Date), (viii) the Class Certificate Balance of the Class
[]-[] Certificates (after taking into account the payment of the Class []-[]
Principal Distribution Amount on that Distribution Date), (ix) the Class
Certificate Balance of the Class []-[] Certificates (after taking into account
the payment of the Class []-[] Principal Distribution Amount on that
Distribution Date) and (x) the Class Certificate Balance of the Class []-[]
Certificates immediately prior to that Distribution Date over (b) the lesser of
(i) the product of (A) []% and (B) the Pool Principal Balance as of the last day
of the related Due Period and (ii) the Pool Principal Balance as of the last day
of the related Due Period minus the product of (A) []% and (B) the Cut-off Date
Pool Principal Balance.

                  Class []-[] Realized Loss Amortization Amount
                  As to the Class []-[] Certificates and as of any Distribution
Date, the lesser of (a) the Unpaid Realized Loss Amount for the Class []-[]
Certificates as of that Distribution Date and (b) the excess of (i) the Monthly
Excess Cashflow Amount over (ii) the sum of the amounts described in clauses (i)
through (xxix) of Section 4.02(d) for that Distribution Date.

                                       11
<PAGE>

                  Class Certificate Balance
                  With respect to any Class of Offered Certificates and as to
any Distribution Date, the aggregate of the Certificate Balances of all
Certificates of such Class as of such date. The Class Certificate Balance of the
Class R Certificates shall be zero.

                  Class Interest Shortfall
                  As to any Distribution Date and any Class of Offered
Certificates, the amount by which the amount described in the definition of
Interest Distribution Amount for such Class exceeds the amount of interest
actually distributed on such Class on such Distribution Date.

                  Class []-[] Applied Realized Loss Amount
                  As to the Class []-[] Certificates and as of any Distribution
Date, the lesser of (a) the Class Certificate Balance thereof (after taking into
account the distribution of the Principal Distribution Amount on that
Distribution Date, but prior to the application of the Class []-[] Applied
Realized Loss Amount, if any, on that Distribution Date) and (b) the excess of
(i) the Realized Loss Amount as of that Distribution Date over (ii) the sum of
the Class []-[] Applied Realized Loss Amount, the Class []-[] Applied Realized
Loss Amount, the Class []-[] Applied Realized Loss Amount, the Class []-[]
Applied Realized Loss Amount, the Class []-[] Applied Realized Loss Amount, the
Class []-[] Applied Realized Loss Amount, the Class []-[] Applied Realized Loss
Amount and the Class []-[] Applied Realized Loss Amount, in each case as of that
Distribution Date.

                  Class []-[] Certificate
                  Any Certificate executed and authenticated by the Trustee
substantially in the form attached hereto as Exhibit A-3 and designated as a
Class []-[] Certificate.

                  Class []-[] Principal Distribution Amount
                  As of any Distribution Date on or after the Stepdown Date and
as long as a Trigger Event is not in effect, the excess of (a) the sum of (i)
the sum of the Class Certificate Balances of the Senior Certificates (after
taking into account the payment of the Senior Principal Distribution Amount on
that Distribution Date) and (ii) the Class Certificate Balance of the Class
[]-[] Certificates immediately prior to that Distribution Date over (b) the
lesser of (i) the product of (A) []% and (B) the Pool Principal Balance as of
the last day of the related Due Period and (ii) the Pool Principal Balance as of
the last day of the related Due Period minus the product of (A) 0.50% and (B)
the Cut-off Date Pool Principal Balance.

                                       12
<PAGE>

                  Class []-[] Realized Loss Amortization Amount
                  As to the Class []-[] Certificates and as of any Distribution
Date, the lesser of (a) the Unpaid Realized Loss Amount for the Class []-[]
Certificates as of that Distribution Date and (b) the excess of (i) the Monthly
Excess Cashflow Amount over (ii) the sum of the amounts described in clauses (i)
through (v) of Section 4.02(d) for that Distribution Date.

                  Class []-[] Applied Realized Loss Amount
                  As to the Class []-[] Certificates and as of any Distribution
Date, the lesser of (a) the Class Certificate Balance thereof (after taking into
account the distribution of the Principal Distribution Amount on that
Distribution Date, but prior to the application of the Class []-[] Applied
Realized Loss Amount, if any, on that Distribution Date) and (b) the excess of
(i) the Realized Loss Amount as of that Distribution Date over (ii) the sum of
the Class []-[] Applied Realized Loss Amount, the Class []-[] Applied Realized
Loss Amount, the Class []-[] Applied Realized Loss Amount, the Class []-[]
Applied Realized Loss Amount, the Class []-[] Applied Realized Loss Amount, the
Class []-[] Applied Realized Loss Amount and the Class []-[] Applied Realized
Loss Amount, in each case as of that Distribution Date.

                   Class []-[] Certificate
                  Any Certificate executed and authenticated by the Trustee
substantially in the form attached hereto as Exhibit A-3 and designated as a
Class []-[] Certificate.

                  Class []-[] Principal Distribution Amount
                  As of any Distribution Date on or after the Stepdown Date and
as long as a Trigger Event is not in effect, the excess of (a) the sum of (i)
the sum of the Class Certificate Balances of the Senior Certificates (after
taking into account the payment of the Senior Principal Distribution Amount on
that Distribution Date), (ii) the Class Certificate Balance of the Class []-[]
Certificates (after taking into account the payment of the Class []-[] Principal
Distribution Amount on that Distribution Date) and (iii) the Class Certificate
Balance of the Class []-[] Certificates immediately prior to that Distribution
Date over (b) the lesser of (i) the product of (A) []% and (B) the Pool
Principal Balance as of the last day of the related Due Period and (ii) the Pool
Principal Balance as of the last day of the related Due Period minus the product
of (A) []% and (B) the Cut-off Date Pool Principal Balance.

                  Class []-[] Realized Loss Amortization Amount
                   As to the Class []-[] Certificates and as of any Distribution
Date, the lesser of (a) the Unpaid Realized Loss Amount for the Class []-[]
Certificates as of that Distribution Date and (b) the excess of (i) the Monthly
Excess Cashflow Amount over (ii) the sum of the amounts described in clauses (i)
through (viii) of Section 4.02(d) for that Distribution Date.

                  Class []-[] Applied Realized Loss Amount
                  As to the Class []-[] Certificates and as of any Distribution
Date, the lesser of (a) the Class Certificate Balance thereof (after taking into
account the distribution of the Principal Distribution Amount on that
Distribution Date, but prior to the application of the Class []-[] Applied
Realized Loss Amount, if any, on that Distribution Date) and (b) the excess of
(i) the Realized Loss Amount as of that Distribution Date over (ii) the sum of
the Class []-[] Applied Realized Loss Amount, the Class []-[] Applied Realized
Loss Amount, the Class []-[] Applied Realized Loss Amount, the Class []-[]
Applied Realized Loss Amount, the Class []-[] Applied Realized Loss Amount and
the Class []-[] Applied Realized Loss Amount, in each case as of that
Distribution Date.

                  Class []-[] Certificate
                  Any Certificate executed and authenticated by the Trustee
substantially in the form attached hereto as Exhibit A-3 and designated as a
Class []-[] Certificate.

                                       13
<PAGE>

                  Class []-[] Principal Distribution Amount
                  As of any Distribution Date on or after the Stepdown Date and
as long as a Trigger Event is not in effect, the excess of (a) the sum of (i)
the sum of the Class Certificate Balances of the Senior Certificates (after
taking into account the payment of the Senior Principal Distribution Amount on
that Distribution Date), (ii) the Class Certificate Balance of the Class []-[]
Certificates (after taking into account the payment of the Class []-[] Principal
Distribution Amount on that Distribution Date), (iii) the Class Certificate
Balance of the Class []-[] Certificates (after taking into account the payment
of the Class []-[] Principal Distribution Amount on that Distribution Date) and
(iv) the Class Certificate Balance of the Class []-[] Certificates immediately
prior to that Distribution Date over (b) the lesser of (i) the product of (A)
[]% and (B) the Pool Principal Balance as of the last day of the related Due
Period and (ii) the Pool Principal Balance as of the last day of the related Due
Period minus the product of (A) []% and (B) the Cut-off Date Pool Principal
Balance.

                  Class []-[] Realized Loss Amortization Amount
                  As to the Class []-[] Certificates and as of any Distribution
Date, the lesser of (a) the Unpaid Realized Loss Amount for the Class []-[]
Certificates as of that Distribution Date and (b) the excess of (i) the Monthly
Excess Cashflow Amount over (ii) the sum of the amounts described in clauses (i)
through (xi) of Section 4.02(d) for that Distribution Date.

                  Class []-[] Applied Realized Loss Amount
                  As to the Class []-[] Certificates and as of any Distribution
Date, the lesser of (a) the Class Certificate Balance thereof (after taking into
account the distribution of the Principal Distribution Amount on that
Distribution Date, but prior to the application of the Class []-[] Applied
Realized Loss Amount, if any, on that Distribution Date) and (b) the excess of
(i) the Realized Loss Amount as of that Distribution Date over (ii) the sum of
the Class []-[] Applied Realized Loss Amount, the Class []-[] Applied Realized
Loss Amount, the Class []-[] Applied Realized Loss Amount, the Class []-[]
Applied Realized Loss Amount and the Class []-[] Applied Realized Loss Amount,
in each case as of that Distribution Date.

                  Class []-[] Certificate
                  Any Certificate executed and authenticated by the Trustee
substantially in the form attached hereto as Exhibit A-3 and designated as a
Class []-[] Certificate.

                  Class []-[] Principal Distribution Amount
                  As of any Distribution Date on or after the Stepdown Date and
as long as a Trigger Event is not in effect, the excess of (a) the sum of (i)
the sum of the Class Certificate Balances of the Senior Certificates (after
taking into account the payment of the Senior Principal Distribution Amount on
that Distribution Date), (ii) the Class Certificate Balance of the Class []-[]
Certificates (after taking into account the payment of the Class []-[] Principal
Distribution Amount on that Distribution Date), (iii) the Class Certificate
Balance of the Class []-[] Certificates (after taking into account the payment
of the Class []-[] Principal Distribution Amount on that Distribution Date),
(iv) the Class Certificate Balance of the Class []-[] Certificates (after taking
into account the payment of the Class []-[] Principal Distribution Amount on
that Distribution Date) and (v) the Class Certificate Balance of the Class []-[]
Certificates immediately prior to that Distribution Date over (b) the lesser of
(i) the product of (A) []% and (B) the Pool Principal Balance as of the last day
of the related Due Period and (ii) the Pool Principal Balance as of the last day
of the related Due Period minus the product of (A) []% and (B) the Cut-off Date
Pool Principal Balance.

                  Class []-[] Realized Loss Amortization Amount
                  As to the Class []-[] Certificates and as of any Distribution
Date, the lesser of (a) the Unpaid Realized Loss Amount for the Class []-[]
Certificates as of that Distribution Date and (b) the

                                       14
<PAGE>

excess of (i) the Monthly Excess Cashflow Amount over (ii) the sum of the
amounts described in clauses (i) through (xiv) of Section 4.02(d) for that
Distribution Date.

                  Class []-[] Applied Realized Loss Amount
                  As to the Class []-[] Certificates and as of any Distribution
Date, the lesser of (a) the Class Certificate Balance thereof (after taking into
account the distribution of the Principal Distribution Amount on that
Distribution Date, but prior to the application of the Class []-[] Applied
Realized Loss Amount, if any, on that Distribution Date) and (b) the excess of
(i) the Realized Loss Amount as of that Distribution Date over (ii) the sum of
the Class []-[] Applied Realized Loss Amount, the Class []-[] Applied Realized
Loss Amount, the Class []-[] Applied Realized Loss Amount and the Class []-[]
Applied Realized Loss Amount, in each case as of that Distribution Date.

                  Class []-[] Certificate
                  Any Certificate executed and authenticated by the Trustee
substantially in the form attached hereto as Exhibit A-3 and designated as a
Class []-[] Certificate.

                  Class []-[] Principal Distribution Amount
                  As of any Distribution Date on or after the Stepdown Date and
as long as a Trigger Event is not in effect, the excess of (a) the sum of (i)
the sum of the Class Certificate Balances of the Senior Certificates (after
taking into account the payment of the Senior Principal Distribution Amount on
that Distribution Date), (ii) the Class Certificate Balance of the Class []-[]
Certificates (after taking into account the payment of the Class []-[] Principal
Distribution Amount on that Distribution Date), (iii) the Class Certificate
Balance of the Class []-[] Certificates (after taking into account the payment
of the Class []-[] Principal Distribution Amount on that Distribution Date),
(iv) the Class Certificate Balance of the Class []-[] Certificates (after taking
into account the payment of the Class []-[] Principal Distribution Amount on
that Distribution Date), (v) the Class Certificate Balance of the Class []-[]
Certificates (after taking into account the payment of the Class []-[] Principal
Distribution Amount on that Distribution Date) and (vi) the Class Certificate
Balance of the Class []-[] Certificates immediately prior to that Distribution
Date over (b) the lesser of (i) the product of (A) []% and (B) the Pool
Principal Balance as of the last day of the related Due Period and (ii) the Pool
Principal Balance as of the last day of the related Due Period minus the product
of (A) []% and (B) the Cut-off Date Pool Principal Balance.

                  Class []-[] Realized Loss Amortization Amount
                  As to the Class []-[] Certificates and as of any Distribution
Date, the lesser of (a) the Unpaid Realized Loss Amount for the Class []-[]
Certificates as of that Distribution Date and (b) the excess of (i) the Monthly
Excess Cashflow Amount over (ii) the sum of the amounts described in clauses (i)
through (xvii) of Section 4.02(d) for that Distribution Date.

                  Class []-[] Applied Realized Loss Amount
                  As to the Class []-[] Certificates and as of any Distribution
Date, the lesser of (a) the Class Certificate Balance thereof (after taking into
account the distribution of the Principal Distribution Amount on that
Distribution Date, but prior to the application of the Class []-[] Applied
Realized Loss Amount, if any, on that Distribution Date) and (b) the excess of
(i) the Realized Loss Amount as of that Distribution Date over (ii) the sum of
the Class []-[] Applied Realized Loss Amount, the Class []-[] Applied Realized
Loss Amount and the Class []-[] Applied Realized Loss Amount, in each case as of
that Distribution Date.

                  Class []-[] Certificate
                  Any Certificate executed and authenticated by the Trustee
substantially in the form attached hereto as Exhibit A-3 and designated as a
Class []-[] Certificate.

                                       15
<PAGE>

                  Class []-[] Principal Distribution Amount
                  As of any Distribution Date on or after the Stepdown Date and
as long as a Trigger Event is not in effect, the excess of (a) the sum of (i)
the sum of the Class Certificate Balances of the Senior Certificates (after
taking into account the payment of the Senior Principal Distribution Amount on
that Distribution Date), (ii) the Class Certificate Balance of the Class []-[]
Certificates (after taking into account the payment of the Class []-[] Principal
Distribution Amount on that Distribution Date), (iii) the Class Certificate
Balance of the Class []-[] Certificates (after taking into account the payment
of the Class []-[] Principal Distribution Amount on that Distribution Date),
(iv) the Class Certificate Balance of the Class []-[] Certificates (after taking
into account the payment of the Class []-[] Principal Distribution Amount on
that Distribution Date), (v) the Class Certificate Balance of the Class []-[]
Certificates (after taking into account the payment of the Class []-[] Principal
Distribution Amount on that Distribution Date), (vi) the Class Certificate
Balance of the Class []-[] Certificates (after taking into account the payment
of the Class []-[] Principal Distribution Amount on that Distribution Date) and
(vii) the Class Certificate Balance of the Class []-[] Certificates immediately
prior to that Distribution Date over (b) the lesser of (i) the product of (A)
[]% and (B) the Pool Principal Balance as of the last day of the related Due
Period and (ii) the Pool Principal Balance as of the last day of the related Due
Period minus the product of (A) []% and (B) the Cut-off Date Pool Principal
Balance.

                  Class []-[] Realized Loss Amortization Amount
                  As to the Class []-[] Certificates and as of any Distribution
Date, the lesser of (a) the Unpaid Realized Loss Amount for the Class []-[]
Certificates as of that Distribution Date and (b) the excess of (i) the Monthly
Excess Cashflow Amount over (ii) the sum of the amounts described in clauses (i)
through (xx) of Section 4.02(d) for that Distribution Date.

                  Class R Certificates
                  The certificates representing the single "residual interest"
in each of REMIC 1 and REMIC 2, substantially in the form attached hereto as
Exhibit B-1.

                  Class Unpaid Interest Amounts
                  As to any Distribution Date and any Class of Offered
Certificates, the amount by which the aggregate Class Interest Shortfalls for
such Class on prior Distribution Dates exceeds the amount of Class Unpaid
Interest Amounts distributed on such Class on prior Distribution Dates plus
interest on such amount at the related Pass-Through Rate.

                  Class X Certificate
                  Any Certificate executed and authenticated by the Trustee
substantially in the form attached hereto as Exhibit B-2 and designated as a
Class X Certificate.

                  Closing Date
                  ___________, 20___.

                  Closing Place
                  The offices of Stradley, Ronon, Stevens & Young, LLP, 2600 One
Commerce Square, Philadelphia, Pennsylvania 19103.

                  Code
                  The Internal Revenue Code of 1986, including any successor or
amendatory provisions.

                  Collateral
                  The assets constituting the Loans, Mortgage Files and the
Trust Fund, and any and all contractual, legal, equitable or other rights in
connection therewith, and all proceeds thereof (but not

                                       16
<PAGE>

including payments of interest and principal due and payable with respect to the
Loans on or before the Cut-off Date).

                  Collateral Value
                  With respect to any Loan, other than Refinance Loans, an
amount equal to the lesser of (a) the appraised value of the related Mortgaged
Property based on an appraisal obtained by the originator from an independent
fee appraiser at the time of the origination of such Loan, and (b) if the Loan
was originated either in connection with the acquisition of the Mortgaged
Property by the borrower or within one year after acquisition of the Mortgaged
Property by the borrower, the purchase price paid by such borrower for the
Mortgaged Property. In the case of Refinance Loans, the Collateral Value is the
appraised value of the Mortgaged Property based upon the appraisal obtained at
the time of refinancing.

                  Combined Loan-to-Value Ratio
                  With respect to any Loan and as to any date of determination,
the fraction, expressed as a percentage, the numerator of which is the principal
balance of such Loan at the date of origination plus, in the case of a Second
Lien Loan, the outstanding principal balance of the related first lien mortgage
loan on the date of origination of such Second Lien Loan, and the denominator of
which is the Collateral Value of the related Mortgaged Property.

                  Commission
                  The Securities and Exchange Commission.

                  Corporate Trust Office
                  The designated office of the Trustee in the State of New York
at which (a) its corporate trust business with respect to this Agreement shall
be administered is located at _____________________________, Attention:
_________________________, Popular ABS []-[] and (b) Certificates may be
presented for transfer and exchange and for purposes of presentment and
surrender for the final distributions thereon is located at
_________________________ Attention: _____________________________ Popular ABS
[]-[], or such other address as the Trustee shall notify the Depositor, the
Servicer, the Sellers and the Certificateholders.

                  Corresponding Class
                  As defined in the Preliminary Statement.

                  Corridor Agreement
                  The Confirmation (as defined in the Master Agreement) bearing
the reference number ________________, dated as of ________________, 20___,
relating to the Transaction (as defined in the Master Agreement) under the
Master Agreement evidenced thereby.

                  Corridor Distribution Amount
                  As defined in Section 4.02(g).

                  Corridor Notional Balance
                  As of any Distribution Date, the notional balance specified
under the Corridor Agreement for that Distribution Date.

                   Corridor Reserve Fund
                  The account established and maintained by the Trustee pursuant
to Section 3A.02.

                                       17
<PAGE>

                  Corridor Stated Termination
                  _________________, subject to the Following Business Day
Convention (as such term is defined in the Corridor Agreement).

                  Counterparty
                  _________________

                  Custodial Agreement
                  As defined in Section 8.13.

                  Custodian
                  As defined in Section 8.13.

                  Cut-off Date
                  ________________, 20___.

                  Cut-off Date Pool Principal Balance
                  $______________________.

                  Cut-off Date Principal Balance
                  As to any Loan, the Stated Principal Balance thereof as of the
close of business on _________________, 20___ giving effect to scheduled
payments of principal and interest due on _________________, 20___, whether or
not those scheduled payments have been made.

                  Defective Loan
                  Any Loan which is required to be repurchased pursuant to
Section 2.02 or 2.03.

                  Deficient Valuation
                   With respect to any Loan, a valuation of the related Mortgaged
Property by a court of competent jurisdiction in an amount less than the then
outstanding principal balance of the Loan, which valuation results from a
proceeding initiated under the Bankruptcy Code.

                  Definitive Certificates
                  Any Certificate issued in lieu of a Book-Entry Certificate
pursuant to Section 5.02(e).

                  Deleted Loan
                  As defined in Section 2.03(c).

                   Denomination
                  With respect to each Offered Certificate, Class X Certificate
or Class R Certificate, the amount set forth on the face thereof as the "Initial
Certificate Balance of this Certificate" or the "Percentage Interest."

                   Depositor
                  Popular ABS, Inc., a Delaware corporation, or its successor
                  in interest.

                                       18
<PAGE>

                  Depository
                  The initial Depository shall be The Depository Trust Company,
the nominee of which is Cede & Co., as the registered Holder of the Book-Entry
Certificates. The Depository shall at all times be a "clearing corporation" as
defined in Section 8-102(a)(5) of the Uniform Commercial Code of the State of
New York.

                  Depository Participant
                  A broker, dealer, bank or other financial institution or other
Person for whom from time to time a Depository effects book-entry transfers and
pledges of securities deposited with the Depository.

                  Determination Date
                  As to any Distribution Date, the 21st day of each month or, if
such day is not a Business Day, the next preceding Business Day; provided,
however, that the Determination Date in each month will be at least two Business
Days preceding the related Distribution Date.

                  Distribution Account
                  The separate Eligible Account created and maintained by the
Trustee pursuant to Section 3.05 in the name of the Trustee for the benefit of
the Certificateholders and designated "Distribution Account,
___________________, as trustee for the registered holders of Popular ABS, Inc.
Mortgage Pass-Through Certificates, Series []-[]." Funds in the Distribution
Account shall be held uninvested in trust for the Certificateholders for the
uses and purposes set forth in this Agreement.

                  Distribution Account Deposit Date
                  As to any Distribution Date, 9:00 a.m. New York City time on
the Business Day immediately preceding such Distribution Date.

                  Distribution Date
                  The 25th day of each calendar month after the initial issuance
of the Certificates, or if such day is not a Business Day, the next succeeding
Business Day, commencing on ________________, 20___.

                  Due Date
                  With respect to any Loan, the date on which scheduled payments
of interest and/or principal are due thereon, which date is a set day, but not
necessarily the first day, of each month.

                  Due Period
                  With respect to any Distribution Date, the period beginning on
the second day of the calendar month preceding the calendar month in which that
Distribution Date occurs and ending at the close of business on the first day of
the month in which that Distribution Date occurs.

                  Eligible Account
                  Any of (a) an account or accounts maintained with a federal or
state chartered depository institution or trust company, the short-term
unsecured debt obligations of which (or, in the case of a depository institution
or trust company that is the principal subsidiary of a holding company, the debt
obligations of such holding company) have the highest short-term ratings of each
Rating Agency at the time any amounts are held on deposit therein, or (b) an
account or accounts in a depository institution or trust company in which such
accounts are insured by the FDIC (to the limits established by the FDIC) and the
uninsured deposits in which accounts are otherwise secured such that, as
evidenced by an Opinion of Counsel delivered to the Trustee and to each Rating
Agency, the Certificateholders have a claim with respect to the funds in such
account or a perfected first priority security interest against any collateral
(which shall be limited to Permitted Investments) securing such funds that is
superior to claims of any

                                       19
<PAGE>

other depositors or creditors of the depository institution or trust company in
which such account is maintained, or (c) a trust account or accounts maintained
with (i) the trust department of a federal or state chartered depository
institution or (ii) a trust company, acting in its fiduciary capacity or (d) any
other account acceptable to each Rating Agency, as evidenced by a letter from
such Rating Agency to the Trustee, without reduction or withdrawal of the then
current ratings of the Certificates. Eligible Accounts may bear interest, and
may include, if otherwise qualified under this definition, accounts maintained
with the Trustee.

                  Equity One-Delaware
                  Equity One, Inc., a Delaware corporation.

                  Equity One-Minnesota
                  Equity One, Inc., a Minnesota corporation.

                  Equity One-Pennsylvania
                  Equity One, Incorporated, a Pennsylvania corporation.

                  ERISA
                  The Employee Retirement Income Security Act of 1974, as
                  amended.

                  ERISA Qualifying Underwriting
                  A best efforts or firm commitment underwriting or private
placement that meets the requirements (without regard to the ratings requirement
or other requirements that the securities or the investor must satisfy) of the
Underwriter Exemption, or any substantially similar administrative exemption
granted by the U.S. Department of Labor.

                  ERISA-Restricted Certificate
                  Any of the Class []-[] Certificates, Class []-[] Certificates,
Class []-[] Certificates, Class X Certificates or Class R Certificates; any
Certificate of a Class that ceases to satisfy the applicable rating requirements
of the Underwriter Exemption.

                  Escrow Account
                   The Eligible Account or Eligible Accounts established and
maintained by the Servicer pursuant to Section 3.06(a).

                  Event of Default
                  As defined in Section 7.01.

                  Excess Cashflow Realized Loss Amortization Amount
                  With respect to, (a) the Class []-[] Certificates, the Class
[]-[] Realized Loss Amortization Amount, (b) the Class []-[] Certificates, the
Class []-[] Realized Loss Amortization Amount, (c) the Class []-[] Certificates,
the Class []-[] Realized Loss Amortization Amount, (d) the Class []-[]
Certificates, the Class []-[] Realized Loss Amortization Amount, (e) the Class
[]-[] Certificates, the Class []-[] Realized Loss Amortization Amount, (f) the
Class []-[] Certificates, the Class []-[] Realized Loss Amortization Amount, (g)
the Class []-[] Certificates, the Class []-[] Realized Loss Amortization Amount,
(h) the Class []-[] Certificates, the Class []-[] Realized Loss Amortization
Amount and (h) the Class []-[] Certificates, the Class []-[] Realized Loss
Amortization Amount.

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

                                       20
<PAGE>

                  Excess Proceeds
                  With respect to any Liquidated Loan, the amount, if any, by
which the sum of any Liquidation Proceeds of such Loan received in the calendar
month in which such Loan became a Liquidated Loan, net of any amounts previously
reimbursed to the Servicer as Nonrecoverable Advance(s) with respect to such
Loan pursuant to Section 3.08(a)(iii), exceeds (a) the unpaid principal balance
of such Liquidated Loan as of the Due Date in the calendar month in which such
Loan became a Liquidated Loan plus (b) accrued interest at the Mortgage Rate
from the Due Date as to which interest was last paid or advanced (and not
reimbursed) to Certificateholders up to the Due Date in the calendar month in
which such Loan became a Liquidated Loan.

                  Expense Rate
                   As to each Loan, the sum of (a) the Servicing Fee Rate and (b)
the Trustee Fee Rate.

                  Extra Principal Distribution Amount
                  As of any Distribution Date, the lesser of (a) the Monthly
Excess Interest Amount for that Distribution Date and (b) the
Overcollateralization Deficiency for that Distribution Date.

                  FDIC
                  The Federal Deposit Insurance Corporation, or any successor
thereto.

                  FHLMC
                  The Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created and existing under Title III of the
Emergency Home Finance Act of 1970, as amended, or any successor thereto.

                  FIRREA
                  The Financial Institutions Reform, Recovery, and Enforcement
                  Act of 1989.

                  FNMA
                  Fannie Mae, a federally chartered and privately owned
corporation organized and existing under the Federal National Mortgage
Association Charter Act, or any successor thereto.

                  Indirect Participant
                  A broker, dealer, bank or other financial institution or other
Person that clears through or maintains a custodial relationship with a
Depository Participant.

                  Initial Certificate Account Deposit
                  As defined in Section 2.01(a).

                  Insurance Policy
                  With respect to any Loan included in the Trust Fund, any
insurance policy, and including all riders and endorsements thereto in effect,
including any replacement policy or policies for any Insurance Policies.

                  Insurance Proceeds
                  Proceeds paid by an insurer pursuant to any Insurance Policy,
in each case other than any amount included in such Insurance Proceeds in
respect of Insured Expenses.

                                       21
<PAGE>

                  Insured Expenses
                  Expenses covered by an Insurance Policy.

                  Interest Accrual Period
                  With respect to the Offered Certificates and with respect to
the interests in REMIC 1 and REMIC 2, and any Distribution Date, the period
commencing on the Distribution Date in the calendar month prior to the month of
such Distribution Date (or on the Closing Date with respect to the first
Distribution Date) and ending on the day preceding such Distribution Date.

                  Interest Distribution Amount
                  With respect to any Distribution Date and each Class of the
Offered Certificates, the amount of interest accrued during the related Interest
Accrual Period at the Pass-Through Rate for such Class on the related Class
Certificate Balance, reduced by such Class' pro rata share of the amount of (a)
Net Prepayment Interest Shortfalls and (b) Relief Act Reductions incurred on the
Loans during the related Due Period (each such Class' pro rata share to be based
on the amount of interest to which such Class would have been entitled
notwithstanding such Net Prepayment Interest Shortfalls and Relief Act
Reductions).

                  Interest Remittance Amount
                  With respect to any Determination Date, the sum, without
duplication, of (a) all interest collected or advanced on the Loans during the
related Due Period and (b) the portion of any Substitution Adjustment Amount,
Termination Price, Purchase Price, or Liquidation Proceeds, relating to interest
and received during the related Prepayment Period.


                  Investment Letter
                   As defined in Section 5.02(b).

                  Latest Possible Maturity Date
                  The Distribution Date following the third anniversary of the
scheduled maturity date of the Loan having the latest scheduled maturity date as
of the Cut-off Date.

                  Last Scheduled Distribution Date
                  The Distribution Date in _____________ 20___.

                  LIBOR
                  As of any LIBOR Determination Date, the London interbank
offered rate for one-month United States dollar deposits which appears in the
Moneyline Telerate Page 3750 as of 11:00 a.m., London time, on that date. If the
rate does not appear on Moneyline Telerate Page 3750, the rate for that day will
be determined on the basis of the rates at which deposits in United States
dollars are offered by the Reference Banks at approximately 11:00 a.m. (London
time), on that day to prime banks in the London interbank market. The Trustee
will request the principal London office of each of the Reference Banks to
provide a quotation of its rate. If at least two quotations are provided, the
rate for that day will be the arithmetic mean of the quotations (rounded upwards
if necessary to the nearest whole multiple of 1/16%). If fewer than two
quotations are provided as requested, the rate for that day will be the
arithmetic mean of the rates quoted by major banks in New York City, selected by
the Trustee in consultation with the Servicer, at approximately 11:00 a.m. (New
York City time) on that day for loans in United States dollars to leading
European banks.

                                       22
<PAGE>

                  LIBOR Determination Date
                  With respect to any Interest Accrual Period for the Offered
Certificates, the second London business day preceding the commencement of such
Interest Accrual Period. For purposes of determining LIBOR, a "London business
day" is any day on which dealings in deposits of United States dollars are
transacted in the London interbank market.

                   Liquidated Loan
                  With respect to any Distribution Date, a defaulted Loan
(including any REO Property) that was liquidated in the related Prepayment
Period Date and as to which the Servicer has determined (in accordance with this
Agreement) that it has received all amounts it expects to receive in connection
with the liquidation of such Loan, including the final disposition of an REO
Property.

                  Liquidation Proceeds
                  Amounts, including Insurance Proceeds, received in connection
with the partial or complete liquidation of defaulted Loans, whether through
trustee's sale, foreclosure sale or otherwise or amounts received in connection
with any condemnation or partial release of a Mortgaged Property and any other
proceeds received in connection with an REO Property other than Recoveries, less
the Servicing Amount applicable to such defaulted Loans.

                  Loans
                  The mortgage loans identified on the Loan Schedule as of the
Closing Date.

                  Loan Schedule
                  As of any date, the list of Loans included in the Trust Fund
on such date, attached hereto as Schedule I (as from time to time amended by the
Servicer to reflect the addition of Substitute Loans and the deletion of Deleted
Loans pursuant to the provisions of this Agreement), setting forth the following
information with respect to each Loan:

                  (a) the loan number;

                  (b) the Mortgagor's name and the state in which the Mortgaged
                      Property is located, including the zip code;

                  (c) the maturity date;

                  (d) the Cut-off Date Principal Balance;

                  (e) the first payment date of the Loan;

                  (f) lien position (either first or second);

                  (g) the Scheduled Payment in effect as of the Cut-off Date;

                  (h) the current Mortgage Rate;

                  (i) the principal balance of the Loan at origination; and

                   (j) if applicable, the MIN assigned to such Loan.

                                       23
<PAGE>

                  Majority in Interest
                  As to each Class of Offered Certificates, the Holders of
Certificates of such Class evidencing, in the aggregate, at least 51% of the
Percentage Interests evidenced by all Certificates of such Class.

                  Master Agreement
                  The Master Agreement (including the Schedule thereto and the
Transactions (as defined in the Master Agreement) thereunder evidenced by the
Cap Agreement and the Corridor Agreement) dated as of _______________, 20___, by
and between the Counterparty and the Trustee not in its individual capacity, but
solely as trustee for the benefit of the Certificateholders of the Popular ABS,
Inc. Mortgage Pass-Through Certificates, Series []-[].

                  MERS (R)
                  Mortgage Electronic Registration Systems, Inc., or its
successors in interest.

                  MERS (R) System
                   That certain electronic registry system maintained by
MERSCORP, Inc., or its successors in interest.

                  MIN
                  The Mortgage Identification Number assigned by MERS (R) to a
MOM Loan.

                  MOM Loan
                   Any Loan as to which MERS (R) is acting as mortgagee solely as
nominee for the originator of such Loan and its successors and assigns.

                  Monthly Excess Cashflow Amount
                  The sum of the Monthly Excess Interest Amount, the
Overcollateralization Release Amount and the Remaining Principal Distribution
Amount.

                  Monthly Excess Interest Amount
                  As to any Distribution Date, an amount equal to any Remaining
Interest Remittance Amount remaining after the distributions set forth in
clauses (ii)(A) through (ii)(I) of Section 4.02(a).

                  Monthly Statement
                  The statement prepared by the Trustee pursuant to Section
4.03.

                  Moody's
                   Moody's Investors Service, Inc., or any successor thereto. For
purposes of Section 10.05(b) the address for notices to Moody's shall be Moody's
Investors Service, Inc., 99 Church Street, New York, New York 10007, Attention:
Residential Mortgage Monitoring Department, or such other address as Moody's may
hereafter furnish to the Depositor or the Servicer.

                  Mortgage
                  The mortgage, deed of trust or other instrument creating a
first lien on an estate in fee simple or leasehold interest in real property
securing a Mortgage Note.

                                       24
<PAGE>

                  Mortgaged Property
                  The underlying property securing a Loan.

                  Mortgage File
                   The mortgage documents listed in Section 2.01 hereof
pertaining to a particular Loan and any additional documents delivered to the
Trustee to be added to the Mortgage File pursuant to this Agreement.

                  Mortgage Note
                  The original executed note or other evidence of indebtedness
evidencing the indebtedness of a Mortgagor under a Loan, together with any
amendment or modification thereto.

                  Mortgage Rate
                  The annual rate of interest borne by a Mortgage Note as set
forth therein.

                  Mortgagor
                  The obligor(s) on a Mortgage Note.

                  Net Prepayment Interest Shortfalls
                  As to any Distribution Date, the amount by which the aggregate
of Prepayment Interest Shortfalls during the related Prepayment Period exceeds
an amount equal to the aggregate Servicing Fee for such Distribution Date before
reduction of the Servicing Fee in respect of such Prepayment Interest
Shortfalls.

                   Net Realized Losses
                  For any Class of Subordinated Certificates and any
Distribution Date, the excess of (a) the amount of unreimbursed Realized Losses
previously allocated to that Class over (b) the sum of (i) the amount of any
increases to the Class Certificate Balance of that Class pursuant to Section
4.02A due to Recoveries and (ii) Realized Loss Amortization Amounts previously
distributed to such Class.

                  Net Recovery Realized Losses
                  For any Class of Subordinated Certificates and any
Distribution Date, the excess of Net Realized Losses for such Distribution Date
over the Realized Loss Amortization Amount distributed to that Class on that
Distribution Date.

                  Net WAC Cap
                   As to any Distribution Date, the per annum rate equal to the
weighted average Adjusted Net Mortgage Rate of the Loans as of the first day of
the Due Period relating to that Distribution Date, weighted on the basis of the
aggregate principal balance of the Loans as of the first day of the related Due
Period (calculated on the basis of a 360-day year and the actual number of days
elapsed in the related Interest Accrual Period).

                  Net WAC Cap Account
                  The account established and maintained pursuant to Section
3A.03.

                  Net WAC Cap Carryover
                  With respect to any Class of the Offered Certificates and any
Distribution Date, the sum of (a) the excess, if any, of the Interest
Distribution Amount for such Class for such Distribution Date, calculated at its
Pass-Through Rate (without regard to the applicable Net WAC Cap), over the
actual Interest Distribution Amount for such Class for such Distribution Date,
and (b) any related Net WAC Cap Carryover remaining unpaid from the prior
Distribution Date, together with interest accrued thereon at its

                                       25
<PAGE>

Pass-Through Rate (without regard to the applicable Net WAC Cap) during the
related Interest Accrual Period.

                  Net WAC Rate
                  As to any Distribution Date, a rate equal to the weighted
average of the Adjusted Net Mortgage Rates of all Outstanding Loans, such
weighted average to be calculated based on the principal balances of such
Outstanding Loans as of the first day of the related Due Period on the basis of
either (a) a 360-day year and the actual number of days elapsed in the related
Interest Accrual Period or (b) a 360-day year made up of twelve 30-day months,
as applicable.

                  Nonrecoverable Advance
                  Any portion of an Advance previously made or proposed to be
made by the Servicer that, in the good faith judgment of the Servicer, will not
be ultimately recoverable by the Servicer from the related Mortgagor, related
Liquidation Proceeds or otherwise.

                  Notice of Final Distribution
                  The notice to be provided pursuant to Section 9.02 to the
effect that final distribution on any of the Certificates shall be made only
upon presentation and surrender thereof.

                  Offered Certificates
                  The certificates representing "regular interests" in REMIC 2,
which are designated as the Senior Certificates and the Subordinate
Certificates.

                   Officer's Certificate
                  A certificate (a) signed by the Chairman of the Board, the
Vice Chairman of the Board, the President, a Managing Director, a Vice President
(however denominated), an Assistant Vice President, the Treasurer, the
Secretary, or one of the Assistant Treasurers or Assistant Secretaries of the
Depositor or the Servicer, or (b), if provided for in this Agreement, signed by
a Servicing Officer, as the case may be, and delivered to the Depositor and the
Trustee, as the case may be, as required by this Agreement.

                  Opinion of Counsel
                  A written opinion of counsel, who may be counsel for the
Depositor or the Servicer, including, in-house counsel, reasonably acceptable to
the Trustee; provided, however, that with respect to the interpretation or
application of the REMIC Provisions, such counsel must (a) in fact be
independent of the Depositor and the Servicer, (b) not have any direct financial
interest in the Depositor or the Servicer or in any affiliate of either, and (c)
not be connected with the Depositor or the Servicer as an officer, employee,
promoter, underwriter, trustee, partner, director or person performing similar
functions.

                  Optional Termination Date
                   The first Distribution Date following the date on which the
Optional Termination may be exercised by the Servicer.

                  Optional Termination
                  The termination of the trust created hereunder in connection
with the purchase of the Loans pursuant to Section 9.01(a) hereof.

                  Original Loan
                  The mortgage loan refinanced in connection with the
origination of a Refinance Loan.

                                       26
<PAGE>

                   OTS
                  The Office of Thrift Supervision.

                  Outstanding
                  With respect to the Certificates as of any date of
determination, all Certificates theretofore executed and authenticated under
this Agreement except (a) Certificates theretofore canceled by the Trustee or
delivered to the Trustee for cancellation; and (b) Certificates in exchange for
which or in lieu of which other Certificates have been executed and delivered by
the Trustee pursuant to this Agreement.

                  Outstanding Loan
                  As of any Due Date, a Loan with a Stated Principal Balance
greater than zero, which was not the subject of a Principal Prepayment in Full
prior to such Due Date and which did not become a Liquidated Loan prior to such
Due Date.

                  Overcollateralization Amount
                  As of any Distribution Date, (a) the Pool Principal Balance as
of the last day of the immediately preceding Due Period minus (b) the aggregate
Class Certificate Balance of all Classes of Offered Certificates (after taking
into account all distributions of principal on that Distribution Date).

                  Overcollateralization Deficiency
                  As of any Distribution Date, the excess, if any, of (a) the
Targeted Overcollateralization Amount for that Distribution Date over (b) the
Overcollateralization Amount for that Distribution Date, calculated for this
purpose after taking into account the reduction on that Distribution Date of the
Class Certificate Balances of all Classes of Offered Certificates resulting from
the distribution of the related Basic Principal Distribution Amount on that
Distribution Date, but prior to taking into account any Applied Realized Loss
Amounts on that Distribution Date.

                  Overcollateralization Release Amount
                  With respect to any Distribution Date on or after the Stepdown
Date on which a Trigger Event is not in effect, the lesser of (a) the Principal
Remittance Amount for that Distribution Date and (b) the excess, if any, of (i)
the Overcollateralization Amount for that Distribution Date, assuming that 100%
of the Principal Remittance Amount is applied as a principal payment on the
Certificates on that Distribution Date, over (ii) the Targeted
Overcollateralization Amount for that Distribution Date. With respect to any
Distribution Date before the Stepdown Date or on which a Trigger Event is in
effect, the Overcollateralization Release Amount will be zero.

                  Ownership Interest
                  As to any Class R Certificate, any ownership interest in such
Certificate including any interest in such Certificate as the Holder thereof and
any other interest therein, whether direct or indirect, legal or beneficial.

                   Pass-Through Rate
                  With respect to each Class of Certificates and each regular
interest in REMIC 1 and REMIC 2, as set forth in the Preliminary Statement.

                  Paying Agent
                  ________________________ and its successors and, if a
successor paying agent is appointed hereunder, such successor.

                                       27
<PAGE>

                  Percentage Interest
                  As to any Offered Certificate, the percentage interest
evidenced thereby in distributions required to be made to such Offered
Certificate, such percentage interest being set forth on the face thereof or
equal to the percentage obtained by dividing the Denomination of such
Certificate by the aggregate of the Denominations of all Certificates of the
same Class. With respect to the Class X Certificates and the Class R
Certificates, the "Percentage Interest" specified on the face thereof.

                  Permitted Investments
                  (a) obligations of the United States or any agency thereof,
provided such obligations are backed by the full faith and credit of the United
States; (b) general obligations of or obligations guaranteed by any state of the
United States or the District of Columbia receiving the highest long-term debt
rating of each Rating Agency rating the Offered Certificates, or such lower
rating as will not result in the downgrading or withdrawal of the ratings then
assigned to the Offered Certificates by each such Rating Agency; (c) commercial
or finance company paper which is then receiving the highest commercial or
finance company paper rating of each such Rating Agency, or such lower rating as
will not result in the downgrading or withdrawal of the ratings then assigned to
the Offered Certificates by each such Rating Agency; (d) certificates of
deposit, demand or time deposits, or bankers' acceptances issued by any
depository institution or trust company incorporated under the laws of the
United States or of any state thereof and subject to supervision and examination
by federal and/or state banking authorities, provided that the commercial paper
and/or long term unsecured debt obligations of such depository institution or
trust company (or in the case of the principal depository institution in a
holding company system, the commercial paper or long-term unsecured debt
obligations of such holding company, but only if Moody's is not a Rating Agency)
are then rated one of the two highest long-term and the highest short-term
ratings of each such Rating Agency for such securities, or such lower ratings as
will not result in the downgrading or withdrawal of the rating then assigned to
the Offered Certificates by any such Rating Agency; (e) demand or time deposits
or certificates of deposit issued by any bank or trust company or savings
institution to the extent that such deposits are fully insured by the FDIC; (f)
guaranteed reinvestment agreements issued by any bank, insurance company or
other corporation containing, at the time of the issuance of such agreements,
such terms and conditions as will not result in the downgrading or withdrawal of
the rating then assigned to the Offered Certificates by any such Rating Agency;
(g) repurchase obligations with respect to any security described in clauses (a)
and (b) above, in either case entered into with a depository institution or
trust company (acting as principal) described in clause (d) above; (h)
securities (other than stripped bonds, stripped coupons or instruments sold at a
purchase price in excess of 115% of the face amount thereof) bearing interest or
sold at a discount issued by any corporation incorporated under the laws of the
United States or any state thereof which, at the time of such investment, have
one of the two highest ratings of each such Rating Agency (except if the Rating
Agency is Moody's or S&P, the rating shall be the highest commercial paper
rating of Moody's or S&P, as applicable, for such securities), or such lower
rating as will not result in the downgrading or withdrawal of the rating then
assigned to the Offered Certificates by any such Rating Agency, as evidenced by
a signed writing delivered by each such Rating Agency; (i) interests in any
money market fund which at the date of acquisition of the interests in the fund
and throughout the time those interests are held in the fund has the highest
applicable rating of each such Rating Agency or such lower rating as will not
result in the downgrading or withdrawal of the ratings then assigned to the
Offered Certificates by each such Rating Agency; (j) short term investment funds
sponsored by any trust company or national banking association incorporated
under the laws of the United States or any state thereof which on the date of
acquisition has been rated by each such Rating Agency in its highest applicable
rating category or such lower rating as will not result in the downgrading or
withdrawal of the ratings then assigned to the Offered Certificates by each such
Rating Agency; and (k) such other investments having a specified stated maturity
and bearing interest or sold at a discount acceptable to each such Rating Agency
as will not result in the downgrading or withdrawal of the rating then assigned
to the Offered Certificates by any

                                       28
<PAGE>

Rating Agency, as evidenced by a signed writing to such effect delivered by each
such Rating Agency; provided that no such instrument shall be a Permitted
Investment if such instrument evidences the right to receive interest only
payments with respect to the obligations underlying such instrument.

                  Permitted Transferee
                  Any person other than (a) the United States, any State or
political subdivision thereof, or any agency or instrumentality of any of the
foregoing, (b) a foreign government, International Organization or any agency or
instrumentality of either of the foregoing, (c) an organization (except certain
farmers' cooperatives described in section 521 of the Code) which is exempt from
tax imposed by Chapter 1 of the Code (including the tax imposed by section 511
of the Code on unrelated business taxable income) on any excess inclusions (as
defined in section 860E(c)(l) of the Code) with respect to any Class R
Certificate, (d) rural electric and telephone cooperatives described in section
1381(a)(2)(C) of the Code, (e) a Person that is not (i) a citizen or resident of
the United States, (ii) a corporation or partnership (or other entity properly
treated as a corporation or partnership for U.S. federal income tax purposes)
created or organized in or under the laws of the United States or any political
subdivision thereof, (iii) an estate whose income from sources without the
United States is includible in gross income for United States federal income tax
purposes regardless of its connection with the conduct of a trade or business
within the United States, or (iv) a trust if a court within the United States is
able to exercise primary supervision over the administration of the trust and
one or more United States Persons have authority to control all substantial
decisions of the trust, unless such Person listed in clause (i), (ii), (iii) or
(iv) above has furnished the transferor and the Trustee with a duly completed
Internal Revenue Service Form W-8ECI and (f) any other Person so designated by
the Depositor based upon an Opinion of Counsel that the Transfer of an Ownership
Interest in a Class R Certificate to such Person may cause any REMIC hereunder
to fail to qualify as one or more REMICs at any time that the Certificates are
outstanding. The terms "United States," "State" and "International Organization"
shall have the meanings set forth in section 7701 of the Code or successor
provisions. A corporation will not be treated as an instrumentality of the
United States or of any State or political subdivision thereof for these
purposes if all of its activities are subject to tax and, with the exception of
the Federal Home Loan Mortgage Corporation, a majority of its board of directors
is not selected by such government unit.

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

                  Plan
                  As defined in Section 5.02(b)

                  Pool Principal Balance
                  With respect to any Distribution Date, the aggregate of the
Stated Principal Balances of the Loans that were Outstanding Loans (including
Loans in foreclosure and REO Properties) on their Due Dates in the related Due
Period.

                  Popular Financial
                  Popular Financial Services, LLC, a Delaware limited liability
company.

                  Popular Funding
                  Popular Financial Funding, LLC, a Delaware limited liability
company.

                                       29
<PAGE>

                  Preliminary Prospectus Supplement
                  The Preliminary Prospectus Supplement dated _____________,
20___, relating to the Publicly Offered Certificates.

                  Post-Stepdown Remaining Principal Distribution Amount
                  With respect to any Distribution Date is an amount equal to
the Principal Distribution Amount remaining after giving effect to the
distributions set forth in clause (i) of Section 4.02(c) hereof.

                  Pre-Stepdown Remaining Principal Distribution Amount
                  With respect to any Distribution Date is an amount equal to
the Principal Distribution Amount remaining after giving effect to the
distributions set forth in clause (i) of Section 4.02(b) hereof.

                  Prepayment Interest Excess
                  As to any Principal Prepayment on a Loan received by the
Servicer subsequent to its Due Date in the related Prepayment Period, all
amounts paid by the related Mortgagor in respect of interest on such Principal
Prepayment that are intended to cover the period on and after the Due Date. All
Prepayment Interest Excess shall be paid to the Servicer as additional servicing
compensation.

                  Prepayment Interest Shortfall
                  As to any Distribution Date and any Principal Prepayment on a
Loan received by the Servicer on or before its Due Date in the related
Prepayment Period, the amount, if any, by which one month's interest at the
related Adjusted Mortgage Rate on such Principal Prepayment, exceeds the amount
of interest paid in connection with such Principal Prepayment.

                  Prepayment Period
                  With respect to any Distribution Date, the calendar month
preceding the month of that Distribution Date.

                  Primary Mortgage Insurance Policy
                  Each policy of primary mortgage guaranty insurance or any
replacement policy therefor with respect to any Loan.

                  Principal Distribution Amount
                  With respect to any Distribution Date, the sum of (a) the
Basic Principal Distribution Amount for that Distribution Date, (b) the Extra
Principal Distribution Amount for that Distribution Date and (c) the Cap Extra
Principal Distribution Amount for that Distribution Date.

                  Principal Prepayment
                  Any payment of principal by a Mortgagor on a Loan that is
received in advance of its scheduled Due Date and is not accompanied by an
amount representing scheduled interest due on any date or dates in any month or
months subsequent to the month of prepayment. Partial Principal Prepayments
shall be applied by the Servicer in accordance with the terms of the related
Mortgage Note.

                  Principal Prepayment in Full
                  Any Principal Prepayment made by a Mortgagor of the entire
principal balance of a Loan.

                  Principal Remittance Amount
                  As to any Distribution Date, the sum of (a) the principal
portion of each Scheduled Payment due on each Loan on such Loan's Due Date in
the related Due Period and received by the Servicer on or prior to the related
Determination Date, including any Advances with respect thereto,

                                       30
<PAGE>

(b) the Stated Principal Balance of each Loan that was sold or repurchased by a
Seller or the Servicer pursuant to this Agreement as of such Distribution Date,
(c) the Substitution Adjustment Amount in connection with any Deleted Loan
received with respect to such Distribution Date, (d) any Insurance Proceeds or
Liquidation Proceeds allocable to recoveries of principal of the Loans that are
not yet Liquidated Loans received during the related Prepayment Period, (e) with
respect to each Loan that became a Liquidated Loan during the related Prepayment
Period, the amount of Liquidation Proceeds allocable to principal received
during the related Prepayment Period with respect to such Loan, (f) all
Principal Prepayments on the Loans received during the related Prepayment
Period, (g) on the Distribution Date on which the Trust Fund is to be terminated
in accordance with Section 9.01 hereof that portion of the Termination Price
allocable to principal of the Loans, and (h) all Recoveries relating to
Liquidated Loans received during the related Prepayment Period, if any.

                  Prospectus Supplement
                  The Prospectus Supplement dated ________________, 20___,
relating to the Publicly Offered Certificates.

                  Publicly Offered Certificates
                  The Senior Certificates and the Class []-[], Class []-[],
Class []-[], Class []-[], Class []-[] and Class []-[] Certificates.

                  Purchase Price
                  With respect to any Loan required to be repurchased by a
Seller pursuant to Section 2.02 or 2.03 hereof, or purchased at the option of
the Servicer pursuant to Section 3.11 hereof, an amount equal to the sum of (a)
100% of the Stated Principal Balance of the Loan on the date of such purchase,
(b) accrued interest thereon at the applicable Mortgage Rate (or at the
applicable Adjusted Mortgage Rate if (i) the purchaser is the Servicer or (ii)
the purchaser is a Seller and Equity One-Delaware is the Servicer) from the date
through which interest was last paid by the Mortgagor or advanced (and not
reimbursed) by the Servicer to the Determination Date in the month in which the
Purchase Price is to be distributed to Certificateholders, and (c) any costs and
damages incurred by the Trust Fund in connection with such Loan.

                  PTCE 95-60
                  As defined in Section 5.02(b).

                  Rating Agency
                  Moody's and S&P. If any of these organizations or a successor
thereof is no longer in existence, "Rating Agency" shall be such nationally
recognized statistical rating organization, or other comparable Person, as is
designated by the Depositor, notice of which designation shall be given to the
Trustee. References herein to a given rating category of a Rating Agency shall
mean such rating category without giving effect to any modifiers.

                  Realized Loss Amount
                  With respect to each Distribution Date, the excess, if any, of
(a) the aggregate of the Class Certificate Balances of the Offered Certificates
(after giving effect to all distributions on such Distribution Date) over (b)
the Pool Principal Balance at the end of the related Due Period.

                  Realized Losses
                  With respect to any Distribution Date, the sum of (a) the
aggregate amount, if any, by which (i) the outstanding principal balance of each
Loan that became a Liquidated Loan during the related Prepayment Period (such
principal balance determined immediately before such Loan became a Liquidated
Loan) exceeds (ii) the Liquidation Proceeds allocable to principal received
during the related

                                       31
<PAGE>

Prepayment Period in connection with the liquidation of such Loan which have not
theretofore been used to reduce the Stated Principal Balance of such Loan, and
(b) any Deficient Valuations.

                  Realized Loss Amortization Amount
                   With respect to (a) the Class []-[] Certificates, the sum of
the Class []-[] Realized Loss Amortization Amount and the Cap Class []-[]
Realized Loss Amortization Amount, (b) the Class []-[] Certificates, the sum of
the Class []-[] Realized Loss Amortization Amount and the Cap Class []-[]
Realized Loss Amortization Amount, (c) the Class []-[] Certificates, the sum of
the Class []-[] Realized Loss Amortization Amount and the Cap Class []-[]
Realized Loss Amortization Amount, (d) the Class []-[] Certificates, the sum of
the Class []-[] Realized Loss Amortization Amount and the Cap Class []-[]
Realized Loss Amortization Amount, (e) the Class []-[] Certificates, the sum of
the Class []-[] Realized Loss Amortization Amount and the Cap Class []-[]
Realized Loss Amortization Amount, (f) the Class []-[] Certificates, the sum of
the Class []-[] Realized Loss Amortization Amount and the Cap Class []-[]
Realized Loss Amortization Amount, (g) the Class []-[] Certificates, the sum of
the Class []-[] Realized Loss Amortization Amount and the Cap Class []-[]
Realized Loss Amortization Amount, (h) the Class []-[] Certificates, the sum of
the Class []-[] Realized Loss Amortization Amount and the Cap Class []-[]
Realized Loss Amortization Amount and (i) the Class []-[] Certificates, the sum
of the Class []-[] Realized Loss Amortization Amount and the Cap Class []-[]
Realized Loss Amortization Amount.

                  Record Date
                  With respect to the Offered Certificates and any Distribution
Date, the close of business on the Business Day immediately preceding such
Distribution Date.

                  Recovery
                  With respect to any Distribution Date and Loan that became a
Liquidated Loan in a month preceding the month prior to the Distribution Date,
an amount received in respect of principal on such Loan which has previously
been allocated as a Realized Loss to a Class or Classes of Certificates, net of
reimbursable expenses.

                  Reference Banks
                  Any three (3) major banks engaged in transactions in
Eurodollar deposits in the international Eurocurrency market selected by the
Trustee after consultation with the Servicer.

                  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.

                  Refinance Loan
                  Any Loan originated for the purpose of refinancing an existing
mortgage loan.

                  Relief Act
                  The Servicemembers Civil Relief Act, as amended.

                  Relief Act Reductions
                  With respect to any Distribution Date and any Loan as to which
there has been a reduction in the amount of interest collectible thereon for the
most recently ended calendar month as a result of the application of the Relief
Act, the amount, if any, by which (a) interest collectible on such

                                        32
<PAGE>

Loan for the most recently ended calendar month is less than (b) interest
accrued thereon for such month pursuant to the Mortgage Note without taking into
account the application of the Relief Act.

                  Remaining Excess Interest Amount
                  With respect to any Distribution Date, the Monthly Excess
Cashflow Amount remaining after giving effect to the distributions set forth in
clauses (i) through (xxxiv) of Section 4.02(d) for that Distribution Date.

                   Remaining Interest Remittance Amount
                  With respect to any Distribution Date, an amount equal to the
Interest Remittance Amount remaining after giving effect to the distributions
set forth in clause (i) of Section 4.02(a).

                   Remaining Overcollateralization Release Amount
                  With respect to any Distribution Date, (a) on or after the
Stepdown Date on which a Trigger Event is not in effect, the lesser of (i) the
Monthly Excess Cashflow Amount remaining after giving effect to the
distributions set forth in clauses (i) through (xxxi) of Section 4.02(d) for
that Distribution Date and (ii) the Overcollateralization Release Amount for
that Distribution Date or (b) before the Stepdown Date or on which a Trigger
Event is in effect, zero.

                  Remaining Principal Distribution Amount
                  With respect to any Distribution Date, the sum of (a) the
Pre-Stepdown Remaining Principal Distribution Amount remaining after the
distributions set forth in clause (ii)(A) through (ii)(I) of Section 4.02(b) and
(b) the Post-Stepdown Remaining Principal Distribution Amount remaining after
the distributions set forth in clauses (ii)(A) through (ii)(I) of Section
4.02(c), each for that Distribution Date.

                  REMIC
                  A "real estate mortgage investment conduit" within the meaning
of section 860D of the Code.

                  REMIC 1
                  As defined in the Preliminary Statement.

                  REMIC 2
                   As defined in the Preliminary Statement.

                  REMIC 1 Accrual Class
                  As defined in the Preliminary Statement.

                  REMIC Change of Law
                  Any proposed, temporary or final regulation, revenue ruling,
revenue procedure or other official announcement or interpretation relating to
REMICs and the REMIC Provisions issued after the Closing Date.

                  REMIC Provisions
                  Provisions of the federal income tax law relating to real
estate mortgage investment conduits, which appear at sections 860A through 860G
of part IV of subchapter M of chapter 1 of subtitle A of the Code, and related
provisions, and regulations promulgated thereunder, as the foregoing may be in
effect from time to time, as well as provisions of applicable state laws.

                                       33
<PAGE>

                  REO Property
                  A Mortgaged Property acquired by the Trust Fund through
foreclosure or deed-in-lieu of foreclosure in connection with a defaulted Loan.

                  Request for Release
                  The Request for Release submitted by the Servicer to the
Trustee, substantially in the form of Exhibit J.

                  Required Insurance Policy
                   With respect to any Loan, any insurance policy that is
required to be maintained from time to time under this Agreement.

                  Responsible Officer
                  When used with respect to the Trustee, any officer assigned to
the Corporate Trust Division of the Trustee (or any successor thereto),
including any Vice President, any Assistant Vice President, the Secretary, any
Assistant Secretary, any Trust Officer or any other officer of the Trustee
customarily performing functions similar to those performed by any of the above
designated officers and having direct responsibility for the administration of
this Agreement.

                  Rule 144A Letter
                  As defined in Section 5.02(b).

                  Scheduled Payment
                  The scheduled monthly payment on a Loan due on any Due Date
allocable to principal and/or interest on such Loan.

                  Second Lien Loan
                  Any Loan secured by a mortgage that is second in lien
priority.

                  Securities Act
                  The Securities Act of 1933, as amended.

                  Sellers
                  Collectively, the following entities, their successors and
assigns, each in its capacity as a Seller of the Loans to the Depositor:
_________________; __________________; ________________; _________________; and
____________________.

                  Senior Certificates
                  The Class []-[], Class []-[], Class []-[] and Class []-[]
Certificates.

                   Senior Enhancement Percentage
                  With respect to any Distribution Date, the percentage obtained
by dividing (a) the sum of (i) the aggregate Class Certificate Balance of the
Subordinate Certificates and (ii) the Overcollateralization Amount, in each case
before taking into account the distribution of the Principal Distribution Amount
on that Distribution Date by (b) the Pool Principal Balance as of the last day
of the related Due Period.

                  Senior Principal Distribution Amount
                  As of any Distribution Date on or after the Stepdown Date and
as long as a Trigger Event is not in effect, the lesser of (i) the Principal
Distribution Amount for that Distribution Date and (ii) the excess, if any, of
(A) the sum of the Class Certificate Balances of the Senior Certificates
immediately

                                       34
<PAGE>

prior to that Distribution Date over (B) the lesser of (1) the product of (x)
[]% and (y) the Pool Principal Balance as of the last day of the related Due
Period and (2) the Pool Principal Balance as of the last day of the related Due
Period minus the product of (x) []% and (y) the Cut-off Date Pool Principal
Balance.

                  Senior Specified Enhancement Percentage
                   As of any date of determination thereof, []%.

                  Servicer
                  Equity One, Inc., a Delaware corporation, and its successors
and assigns, in its capacity as servicer hereunder.

                  Servicer Advance Date
                  As to any Distribution Date, the 18th day of the month in
which such Distribution Date occurs, or if such day is not a Business Day, the
next succeeding Business Day.

                  Servicing Advances
                  All customary, reasonable and necessary "out of pocket" costs
and expenses incurred in the performance by the Servicer of its servicing
obligations, including, but not limited to, the cost of (a) the preservation,
restoration and protection of a Mortgaged Property, (b) the foreclosure,
trustee's sale, or other liquidation of any Mortgage or Mortgaged Property, (c)
any expenses reimbursable to the Servicer pursuant to Section 3.11 and any
enforcement or judicial proceedings, including foreclosures, (d) the management
and liquidation of any REO Property, (e) compliance with the obligations
described in Section 3.06 and (f) any payments made by the Servicer pursuant to
Section 3.09.

                  Servicing Amount
                  The sum of (a) the Servicing Fee, (b) unreimbursed Advances
and (c) unreimbursed Servicing Advances.

                  Servicing Criteria
                  The "servicing criteria" set forth in Item 1122(d) of
Regulation AB.

                  Servicing Fee
                  As to each Loan and any Distribution Date, an amount payable
out of each full payment of interest received on such Loan and equal to
one-twelfth of the Servicing Fee Rate multiplied by the Stated Principal Balance
of such Loan as of the Due Date in the month of such Distribution Date (prior to
giving effect to any Scheduled Payments due on such Loan on such Due Date),
subject to reduction as provided in Section 3.13.

                  Servicing Fee Rate
                  With respect to each Loan, []% per annum.

                   Servicing Officer
                  Any officer of the Servicer involved in, or responsible for,
the administration and servicing of the Loans whose name and facsimile signature
appear on a list of servicing officers furnished to the Trustee by the Servicer
on the Closing Date pursuant to this Agreement, as such list may from time to
time be amended.

                                       35
<PAGE>

                  S&P
                  Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc. For purposes of Section 10.05(b) the address for
notices to S&P shall be Standard & Poor's Ratings Services, 55 Water Street,
41st Floor, New York, New York 10041, Attention: Residential Mortgage
Surveillance, or such other address as S&P may hereafter furnish to the
Depositor and the Servicer.

                  Startup Day
                  The Closing Date.

                  Stated Principal Balance
                  As to any Loan, the unpaid principal balance of such Loan as
of its most recent Due Date as specified in the amortization schedule at the
time relating thereto (before any adjustment to such amortization schedule by
reason of any moratorium or similar waiver or grace period) after giving effect
to any previous partial Principal Prepayments and Liquidation Proceeds allocable
to principal (other than with respect to any Liquidated Loan) and to the payment
of principal due on such Due Date and irrespective of any delinquency in payment
by the related Mortgagor.

                   Stepdown Date
                  The earlier of (a) the Distribution Date on which the Class
Certificate Balances of the Senior Certificates have been reduced to zero or (b)
the later to occur of (i) the Distribution Date in ____________ 20___ (the 37th
Distribution Date) or (ii) the first Distribution Date on which the Senior
Enhancement Percentage is greater than or equal to the Senior Specified
Enhancement Percentage.

                  Subordinate Certificates
                  The Class []-[], Class []-[], Class []-[], Class []-[], Class
[]-[], Class []-[], Class []-[], Class []-[] and Class []-[] Certificates.

                  Subservicer
                  Any person to whom the Servicer has contracted for the
servicing of all or a portion of the Loans pursuant to Section 3.02.

                  Substitute Loan
                  A Loan substituted by a Seller for a Deleted Loan(s) which
must, on the date of such substitution, as confirmed in a Request for Release,
substantially in the form of Exhibit J, (a) have a Stated Principal Balance not
in excess of, and not more than 10% less than, the Stated Principal Balance(s)
of the Deleted Loans (such Stated Principal Balances to be measured as of the
respective Due Dates in the month of substitution); (b) have an interest rate
that is determined in the same manner as that of the Deleted Loans(s); (c) have
a Mortgage Rate not lower than, and not more than 1% per annum higher than, that
of the Deleted Loan(s); (d) have a Combined Loan-to-Value Ratio not higher than
that of the Deleted Loan(s); (e) have a debt to income ratio not higher than
that of the Deleted Loan(s); (f) have been originated pursuant to the same
underwriting standards as the Deleted Loan(s); (g) have a remaining term to
maturity not greater than, and not more than one year less than, that of the
Deleted Loan(s); and (h) comply, as of the date of substitution, with each
representation and warranty set forth or referred to in Section 2.03.

                  Substitution Adjustment Amount
                  The meaning ascribed to such term pursuant to Section 2.03.

                  Targeted Overcollateralization Amount
                  As of any Distribution Date, (a) prior to the Stepdown Date,
the sum of (i) []% of the Cut-off Date Pool Principal Balance and (ii) the
Aggregate Class [] Early Distribution Amount, and (b) on

                                       36
<PAGE>

and after the Stepdown Date, the lesser of (i) the sum of (A) []% of the Cut-off
Date Pool Principal Balance and (B) the Aggregate Class [] Early Distribution
Amount and (ii) the greater of (A) the excess of (I) []% of the Pool Principal
Balance as of the last day of the related Due Period over (II) the excess of (x)
the sum of the Class Certificate Balances of the Class []-[], Class []-[] and
Class []-[] Certificates as of the Closing Date over (y) the aggregate of
distributions made in respect of principal to the Class []-[], Class []-[] and
Class []-[] Certificates on all prior Distribution Dates and (B) []% of the
Cut-off Date Pool Principal Balance. With respect to any Distribution Date on
which a Trigger Event is in effect, the Targeted Overcollateralization Amount
will be equal to the Targeted Overcollateralization Amount for the immediately
preceding Distribution Date (after taking into account any distributions of the
Aggregate Class [] Early Distribution Amount on the immediately preceding
Distribution Date).

                  Tax Matters Person
                  The person designated as "tax matters person" in the manner
provided under Treasury regulation ss.1.860F-4(d) and temporary Treasury
regulation ss.301.6231(a)(7)-1T. Initially, the Tax Matters Person shall be the
Trustee.

                  Tax Matters Person Certificate
                  The Class R Certificate with a Denomination of .00001%.

                  Termination Price
                  As defined in Section 9.01.

                  Transfer
                  Any direct or indirect transfer or sale of any Ownership
Interest in a Class R Certificate.

                  Transfer Affidavit
                  As defined in Section 5.02(c).

                  Transferor Certificate
                  As defined in Section 5.02(b).

                  Trigger Event
                  With respect to any Distribution Date, if (a) the six-month
rolling average of 60+ Day Delinquent Loans equals or exceeds []% of the Senior
Enhancement Percentage or (b) the aggregate amount of Realized Losses incurred
since the Cut-off Date through the last day of the calendar month immediately
preceding that Distribution Date divided by the Cut-off Date Pool Principal
Balance exceeds the applicable percentages set forth below with respect to that
Distribution Date:

<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------------
      Distribution Date Occurring In                             Percentage
-------------------------------------------- --------------------------------------------------
<S>                                             <C>

      ________ 20___ - _______ 20___          []% (or []% if the Class Certificate Balances of
                                             the Class []-[], Class []-[] and Class []-[]
                                              Certificates have been reduced to zero and no
                                             part of that reduction was due to the
                                             application of Realized Losses) for the first
                                              month plus an additional 1/12th of []% for each
                                             month thereafter (or 1/12th of []% if the Class
                                             Certificate Balances of the Class []-[], Class
                                              []-[] and Class []-[] Certificates have been
                                             reduced to zero and no part of that reduction
                                             was due to the application of Realized Losses)
                                             for each month thereafter;
-------------------------------------------- --------------------------------------------------
      _________ 20__ - _________ 20__         []% (or []% if the Class Certificate Balances of
                                             the Class []-[], Class []-[] and Class []-[]
                                             Certificates have been reduced to zero and no
                                             part of that reduction was due to the
</TABLE>

                                       37
<PAGE>

<TABLE>
-------------------------------------------- --------------------------------------------------
<S>                                            <C>

                                              application of Realized Losses) for the first
                                             month plus an additional 1/12th of []% (or
                                             1/12th of []% if the Class Certificate Balances
                                              of the Class []-[], Class []-[] and Class []-[]
                                             Certificates have been reduced to zero and no
                                             part of that reduction was due to the
                                             application of Realized Losses) for each month
                                             thereafter;
-------------------------------------------- --------------------------------------------------
      ___________ 20__ - _______ 20__         []% (or []% if the Class Certificate Balances of
                                             the Class []-[], Class []-[] and Class []-[]
                                             Certificates have been reduced to zero and no
                                             part of that reduction was due to the
                                             application of Realized Losses) for the first
                                             month plus an additional 1/12th of []% (or
                                             1/12th of []% if the Class Certificate Balances
                                             of the Class []-[], Class []-[] and Class []-[]
                                             Certificates have been reduced to zero and no
                                             part of that reduction was due to the
                                             application of Realized Losses) for each month
                                              thereafter;
-------------------------------------------- --------------------------------------------------
      _________ 20__ - ________ 20___         []% (or []% if the Class Certificate Balances of
                                             the Class []-[], Class []-[] and Class []-[]
                                             Certificates have been reduced to zero and no
                                             part of that reduction was due to the
                                              application of Realized Losses) for the first
                                             month plus an additional 1/12th of []% (or
                                             1/12th of []% if the Class Certificate Balances
                                              of the Class []-[], Class []-[] and Class []-[]
                                             Certificates have been reduced to zero and no
                                             part of that reduction was due to the
                                              application of Realized Losses) for each month
                                             thereafter;
-------------------------------------------- --------------------------------------------------
  ________ 20__ - _________ 20__              []% (or []% if the Class Certificate Balances of
                                             the Class []-[], Class []-[] and Class []-[]
                                             Certificates have been reduced to zero and no
                                              part of that reduction was due to the
                                             application of Realized Losses) for the first
                                             month plus an additional 1/12th of []% (or
                                              1/12th of []% if the Class Certificate Balances
                                             of the Class []-[], Class []-[] and Class []-[]
                                             Certificates have been reduced to zero and no
                                             part of that reduction was due to the
                                             application of Realized Losses) for each month
                                             thereafter;
-------------------------------------------- --------------------------------------------------
____________ 20__ and thereafter              []% (or []% if the Class Certificate Balances of
                                             the Class []-[], Class []-[] and Class []-[]
                                             Certificates have been reduced to zero and no
                                             part of that reduction was due to the
                                             application of Realized Losses).
-------------------------------------------- --------------------------------------------------
</TABLE>

                  Trustee
                  ______________________ and its successors and, if a successor
trustee is appointed hereunder, such successor.

                  Trustee Fee
                  As to any Distribution Date, an amount equal to one-twelfth of
the Trustee Fee Rate multiplied by the Pool Principal Balance as of such
Distribution Date.

                  Trustee Fee Rate
                  With respect to each Loan, []% per annum.

                  Trust Fund
                  The corpus of the trust created hereunder and referred to in
the Prospectus Supplement as the "Issuing Entity" consisting of (a) the Loans
(including, without limitation, the Mortgage Files relating

                                       38
<PAGE>

thereto), and all interest, principal and other amounts received, or receivable,
on or with respect thereto on and after the Cut-off Date to the extent not
applied in computing the Cut-off Date Principal Balance thereof and all interest
and principal payments on such Loans received prior to the Cut-off Date in
respect of installments of interest and principal due thereafter; (b) the
Certificate Account, the Distribution Account, the Net WAC Cap Account, the Cap
Reserve Fund, the Corridor Reserve Fund and all amounts deposited therein
pursuant to the applicable provisions of this Agreement; (c) property that
secured a Loan and has been acquired by foreclosure, deed-in-lieu of foreclosure
or otherwise; (d) the Master Agreement; (e) such other rights and property as
are held in trust hereunder by the Trustee for the benefit of the
Certificateholders; and (f) all proceeds of the conversion, voluntary or
involuntary, of any of the foregoing.

                  Trustee Permitted Withdrawal Amount
                  Means an aggregate amount not to exceed (a) with respect to
costs associated with the transitioning of servicing, $75,000 per servicing
transition event and (b) with respect to amounts (other than the Trustee Fee)
which are payable to the Trustee pursuant to Section 8.05 hereof, $150,000 per
annum.

                  Unpaid Realized Loss Amount
                  For any Class of Subordinate Certificates and as to any
Distribution Date, the excess of (a) the cumulative amount of Applied Realized
Loss Amounts with respect to that Class for all prior Distribution Dates over
(b) the cumulative amount of Realized Loss Amortization Amounts with respect to
that Class for all prior Distribution Dates.

                  Underwriter Exemption
                  Prohibited Transaction Exemption 2002-41, 67 Fed Reg. 54487
(August 22, 2002), or any successor thereto.

                  Underwriters
                  ________________________ and ________________________

                  Voting Rights
                  The portion of the voting rights of all of the Certificates,
which is allocated to any Certificate. With respect to any date of
determination, the Offered Certificates shall be allocated 100% of all Voting
Rights. The Voting Rights allocated to each Class of the Offered Certificates
shall be the fraction, expressed as a percentage, the numerator of which is the
Class Certificate Balance of such Class then outstanding and the denominator of
which is the aggregate Stated Principal Balance of the Loans then outstanding.
The Voting Rights allocated to each Class of Certificates shall be allocated
among the Certificates of each such Class in accordance with their respective
Percentage Interests. The Class X and the Class R Certificates will not have any
Voting Rights.



                                   ARTICLE II
                              CONVEYANCE OF LOANS;
                         REPRESENTATIONS AND WARRANTIES

                  SECTION 2.01.   Conveyance of Loans.

                  (a) Subject to its substitution and repurchase obligations
hereunder, each Seller, concurrently with the execution and delivery hereof,
hereby irrevocably sells, transfers, grants, bargains, assigns, sets over and
otherwise conveys to the Depositor, without recourse, all the right, title and
interest

                                       39
<PAGE>

of such Seller in and to that portion of the Loans (including, without
limitation, the Mortgage Files relating thereto) listed on the Loan Schedule
that pertains to such Seller, including (i) all interest and principal received
or receivable by such Seller on or with respect to such Loans after the Cut-off
Date and all interest and principal payments on such Loans received on or prior
to the Cut-off Date in respect of installments of interest and principal due
thereafter, but not including payments of principal and interest due and payable
on such Loans on or before the Cut-off Date, and (ii) all Principal Prepayments,
Liquidation Proceeds and other unscheduled payments received or receivable on
the Loans on the Cut-off Date. On or prior to the Closing Date, each Seller
shall deliver to the Depositor or, at the Depositor's direction, to the Trustee
or other designee of the Depositor, the Mortgage File for each Loan listed in
that portion of the Loan Schedule that pertains to such Seller. Such delivery of
the Mortgage Files shall be made against payment by the Depositor of the
purchase price, previously agreed to by such Seller and the Depositor, for the
Loans listed on the Loan Schedule that pertain to such Seller. With respect to
any Loan that does not require the first payment of principal or interest
thereon to be made on or before such Loan's Due Date in the month prior to the
first Distribution Date, such Seller shall deposit into the Certificate Account
on the Closing Date, an amount equal to one month's interest at the related
Mortgage Rate on the Cut-off Date Principal Balance of such Loan (the "INITIAL
CERTIFICATE ACCOUNT DEPOSIT"). The Sellers, for the benefit of the Depositor,
shall, in connection with the conveyance described in this Section 2.01(a),
deliver to the Depositor on or prior to the Closing Date the financing
statements described in Schedule VI. The Sellers shall also arrange for the
delivery to the Depositor or its assignee, as applicable, of any appropriate
Uniform Commercial Code continuation statements as may be necessary in
connection with the financing statements referenced in the foregoing sentence.

                  (b) The Depositor, concurrently with the execution and
delivery hereof, hereby irrevocably sells, transfers, grants, bargains, assigns,
sets over and otherwise conveys to the Trustee for the benefit of the
Certificateholders, without recourse, all the right, title and interest of the
Depositor in and to the Trust Fund together with the Depositor's right to
require the Sellers (and Equity One-Delaware) to cure any breach of a
representation or warranty made herein by the Sellers or to repurchase or
substitute for any affected Loan in accordance with the provisions hereof. In
addition, the Depositor, for the benefit of the Trustee and the
Certificateholders, shall, in connection with the conveyance described in this
Section 2.01(b), deliver to the Trustee on or prior to the Closing Date the
financing statements described in Schedule VII. The Depositor shall also arrange
for the delivery to the Trustee of any appropriate Uniform Commercial Code
continuation statements as may be necessary in connection with the financing
statements referenced in the foregoing sentence.

                  (c) In connection with the sale, transfer and assignment set
forth in clause (b) above, the Depositor has delivered or caused to be delivered
to the Trustee or a Custodian for the Trustee on or before the Closing Date, or
shall deliver or cause to be delivered to the Trustee or a Custodian for the
Trustee on or before such later date as is set forth below, for the benefit of
the Certificateholders the following documents or instruments with respect to
each Loan so sold, transferred and assigned:

                           (i) the original Mortgage Note endorsed (by manual or
                  facsimile signature) as follows: "Pay to the order of
                  ______________________ as trustee for the benefit of the
                  Certificateholders of Popular ABS, Inc. Mortgage Pass-Through
                  Certificates Series []-[] without recourse," with all
                   intervening endorsements and all riders and modifications
                  showing a complete chain of endorsement from the originator to
                  the Person endorsing it to the Trustee (each such endorsement
                  being sufficient to transfer all right, title and interest of
                  the party so endorsing, as noteholder or assignee thereof, in
                  and to that Mortgage Note);

                           (ii) except as provided below, the original recorded
                  Mortgage;

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<PAGE>

                           (iii) an original recorded assignment of the Mortgage
                  (which may be included in a blanket assignment or
                  assignments), duly executed by the appropriate Seller and the
                  Depositor, which assignment will not be delivered on or before
                  the Closing Date, but shall be delivered within the time
                  period set forth in this Section 2.01, together with, except
                  as provided below, all interim recorded assignments of such
                  Mortgage, if any, all riders or modifications to such
                  Mortgage, if any, (each such assignment to be in recordable
                  form and sufficient to effect the assignment of and transfer
                  to the assignee thereof, under the Mortgage to which the
                  assignment relates, with the original to be recorded by the
                   Servicer as follows: the Servicer shall promptly send such
                  assignments for recording, and shall return the original
                  recorded assignment to the Trustee once returned as recorded
                  by the applicable recording office);

                           (iv) the original of each assumption, modification,
                  written assurance or substitution agreement, if any; and

                           (v) except as provided below, the original or
                   duplicate original lender's title policy and all riders
                  thereto.

                  Notwithstanding the foregoing, in lieu of providing the
documents described in clause (iii) above, the Depositor may at its discretion
provide evidence that the related Mortgage is held through the MERS (R) System.
With respect to any MOM Loan, the original recorded Mortgage that is provided
shall note the MIN of such MOM Loan. Certain Mortgages were or may be, at the
sole discretion of the Servicer, originally recorded in the name of MERS (R),
solely as nominee for the applicable Seller and its successors or assigns;
furthermore, subsequent assignments of such Mortgages were or may be, at the
sole discretion of the Servicer, registered electronically through the MERS (R)
System. For certain other Loans, (i) the Mortgage was recorded in the name of
the Seller, (ii) record ownership was later assigned to MERS (R), solely as
nominee for that Seller, and (iii) subsequent assignments of the Mortgage were
or may be, at the sole discretion of the Servicer, registered electronically
through the MERS (R) System. For each of these Loans, MERS (R) serves as
mortgagee of record on the Mortgage solely as a nominee in an administrative
capacity on behalf of the Trustee, and does not have any beneficial interest in
the Loan.

                  In the event that in connection with any Loan the Depositor
cannot deliver (a) the original recorded Mortgage, (b) all interim recorded
assignments, if any, or (c) the lender's title policy (together with all riders
thereto) satisfying the requirements of clause (ii), (iii) or (v) above,
respectively, concurrently with the execution and delivery hereof because such
document or documents have not been returned from the applicable public
recording office in the case of clause (ii) or (iii) above, or because the title
policy has not been delivered to either the Servicer or the Depositor by the
applicable title insurer in the case of clause (v) above, and, in the case of
the assignments, if any, of the Mortgage to the Trustee as required under (iii)
above, the Depositor shall promptly deliver to the Trustee, in the case of
clause (ii) or (iii) above, such original recorded Mortgage or such original
recorded assignment, if any, as the case may be, with evidence of recording
indicated thereon upon receipt thereof from the public recording office, or a
copy thereof, certified, if appropriate, by the relevant recording office, but
in no event shall any such delivery of the original recorded Mortgage and each
such original recorded assignment, if any, or a copy thereof, certified, if
appropriate, by the relevant recording office, and each title policy as required
by clause (v) above be made later than one year following the Closing Date;
provided, however, in the event the Depositor is unable to deliver within one
year following the Closing Date, each original recorded Mortgage, and each such
original recorded assignment, if any, or each such title policy by reason of the
fact that any such documents have not been returned by the appropriate recording
office, or, in the case of each such assignment, if any, because the related
original recorded Mortgage or any related interim

                                       41
<PAGE>

recorded assignment have not been returned by the appropriate recording office
or, in the case of each title policy, because the title insurer has not received
the recording information from the appropriate recording office for such
original recorded Mortgage or original recorded assignment, if any, has not been
returned by the appropriate recording office, the Depositor shall deliver such
documents to the Trustee as promptly as possible upon receipt thereof and, in
any event, within 720 days following the Closing Date. The Depositor shall
forward or cause to be forwarded to the Trustee (a) from time to time additional
original documents evidencing an assumption or modification of a Loan and (b)
any other documents required to be delivered by the Depositor or the Servicer to
the Trustee. In the event that the original recorded Mortgage is not delivered
and, in connection with the payment in full of the related Loan, the public
recording office requires the presentation of a "lost instruments affidavit and
indemnity" or any equivalent document, because only a copy of the Mortgage can
be delivered with the instrument of satisfaction or reconveyance, the Servicer
shall execute and deliver or cause to be executed and delivered such a document
to the public recording office. In the case where a public recording office
retains the original recorded Mortgage or in the case where an original recorded
Mortgage is lost after recordation in a public recording office, the appropriate
Seller shall deliver to the Trustee a copy of such Mortgage certified by such
public recording office to be a true and complete copy of the original recorded
Mortgage.

                  As promptly as practicable subsequent to such transfer and
assignment, and in any event, within thirty (30) days thereafter, the Servicer
shall (i) affix the Trustee's name to each assignment of Mortgage, if any, as
the assignee thereof as Trustee for the benefit of the Certificateholders, (ii)
cause such assignment, if any, to be in proper form for recording in the
appropriate public office for real property records and (iii) cause to be
delivered for recording in the appropriate public office for real property
records the assignments, if any, of the Mortgages to the Trustee, except that,
with respect to any assignments of Mortgages as to which the information
required to prepare such assignment in recordable form has not yet been
received, the Servicer's obligation to do so and to deliver the same for such
recording shall be as soon as practicable after receipt of such information and
in any event within thirty (30) days after receipt thereof.

                  In the case of Loans that have been prepaid in full as of the
Closing Date, the Depositor, in lieu of delivering the above documents to the
Trustee, will deposit in the Certificate Account the portion of such payment
that is required to be deposited in the Certificate Account pursuant to Section
3.05 hereof.

         (d) The Depositor, the Sellers, the Servicer and the Trustee understand
and agree that it is not intended that any Loan be included in the Trust Fund
that is a "High-Cost Home Loan" as defined by the Homeownership and Equity
Protection Act of 1994 or any other applicable predatory or abusive lending
laws.

                  SECTION 2.02.   Acceptance by Trustee of the Trust Fund.

                  The Trustee acknowledges receipt of the documents identified
in the initial certification in the form annexed hereto as Exhibit D and
declares that it holds and will hold such documents and the other documents
delivered to it constituting the Mortgage Files, and that it holds or will hold
such other assets as are included in the Trust Fund, in trust for the exclusive
use and benefit of all present and future Certificateholders. The Trustee
acknowledges that it will maintain possession of the Mortgage Notes in the State
of ___________, unless otherwise permitted by the Rating Agencies. In the event
that the Trustee desires to maintain possession of the Mortgage Notes in a state
(other than the State of ________) constituting one of the United States of
America, the Trustee shall, at least thirty (30) days prior to discontinuing
possession of the Mortgage Notes in the State of __________, provide (i) a
notice of such

                                       42
<PAGE>

intention to the Rating Agencies and the Sellers and (ii) an Opinion of Counsel
stating that such relocation of the Mortgage Notes and the possession by the
Trustee of the Mortgage Notes in such other state will not (a) destroy or impair
the perfection by the Trustee of the security interests assigned and granted to
the Trustee pursuant to the provisions of Section 10.04 or (b) subject any REMIC
to any state tax.

                  The Trustee agrees to execute and deliver on the Closing Date
to the Depositor, the Servicer and the Sellers an initial certification in the
form annexed hereto as Exhibit D. Based on its review and examination, and only
as to the documents identified in such initial certification, the Trustee shall
acknowledge that such documents appear regular on their face and relate to the
Loans listed in the Loan Schedule or shall indicate any noted deviations. The
Trustee, at the time of delivery of the initial certification, shall be under no
duty or obligation (i) to inspect, review or examine said documents,
instruments, certificates or other papers to determine that the same are
genuine, enforceable or appropriate for the represented purpose or that they
have actually been recorded in the real estate records or that they are other
than what they purport to be on their face or (ii) to determine whether the
Mortgage File shall include any of the documents listed in Section 2.01(c),
except for the Mortgage Note. Should there be any exceptions to the Trustee's
initial certification as to the Mortgage Notes, the appropriate Seller shall
have thirty (30) days from the Closing Date to cure such exception or deliver a
Mortgage File or Mortgage Files for a Substitute Loan or Substitute Loans in
accordance with Section 2.03(c). A Seller may cure an exception based on absence
of a Mortgage Note for a Loan by delivering an executed copy of an Affidavit of
Lost Note in the form attached as Annex I to Exhibit D hereto to the Trustee.

                  Not later than 90 days after the Closing Date, the Trustee
shall deliver to the Depositor, the Servicer and the Sellers a final
certification in the form annexed hereto as Exhibit E, with any applicable
exceptions noted thereon. At any time upon request (but not more frequently than
once per calendar month), the Trustee shall deliver to the Depositor, the
Servicer and the Sellers, an updated schedule of open exceptions in electronic
or written format.

                  If the Trustee finds any document constituting a part of a
Mortgage File which does not meet the requirements of Section 2.01, the Trustee
shall list such as an exception in the final certification; provided, however
that the Trustee shall not make any determination as to whether (i) any
endorsement is sufficient to transfer all right, title and interest of the party
so endorsing, as noteholder or assignee thereof, in and to that Mortgage Note or
(ii) any assignment is in recordable form or is sufficient to effect the
assignment of and transfer to the assignee thereof under the mortgage to which
the assignment relates. In performing any such review, the Trustee may
conclusively rely on the Depositor as to the purported genuineness of any such
document and any signature thereon. It is understood that the scope of the
Trustee's review of the Mortgage Files is limited solely to confirming that the
documents listed in Section 2.01(c) have been received and further confirming
that any and all documents delivered pursuant to Section 2.01(c) have been
executed and relate to the Loans identified in the Loan Schedule. The Trustee
shall have no responsibility for determining whether any document is valid and
binding, whether the text of any assignment or endorsement is in proper or
recordable form, whether any document has been recorded in accordance with the
requirements of any applicable jurisdiction, or whether a blanket assignment is
permitted in any applicable jurisdiction. The appropriate Seller shall promptly
correct or cure such defect within 90 days from the date it was so notified of
such defect and, if such Seller does not correct or cure such defect within such
period, such Seller shall either (a) substitute for the related Loan a
Substitute Loan, which substitution shall be accomplished in the manner and
subject to the conditions set forth in Section 2.03, or (b) purchase such Loan
from the Trustee within 90 days from the date such Seller was notified of such
defect in writing at the Purchase Price of such Loan; provided, however, that in
no event shall such substitution or purchase occur more than 540 days from the
Closing Date, except that if the substitution or purchase of a Loan pursuant to
this provision is required by reason of a delay in

                                       43
<PAGE>

delivery of any comments by the appropriate recording office, and there is a
dispute between either the Servicer or such Seller and the Trustee over the
location or status of the recorded document, then such substitution or purchase
shall occur within 720 days from the Closing Date; provided, that any Loan that
does not constitute a "qualified mortgage" within the meaning of Section
860G(a)(3) of the Code shall be subject to a substitution or repurchase as
provided in Section 2.05(b) of this Agreement. The Trustee shall deliver a
report to each Rating Agency within 720 days from the Closing Date indicating a
list of all documents in each Mortgage File in the possession of the Trustee.
Any such substitution pursuant to (a) above or purchase pursuant to (b) above
shall not be effected prior to the delivery to the Trustee of the Opinion of
Counsel required by Section 2.05 hereof, if any, and any substitution pursuant
to (a) above shall not be effected prior to the additional delivery to the
Trustee of a Request for Release substantially in the form of Exhibit J. No
substitution is permitted to be made in any calendar month after the
Determination Date for such month. The Purchase Price for any such Loan shall be
deposited by such Seller in the Certificate Account on or prior to the
Distribution Account Deposit Date for the Distribution Date in the month
following the month of repurchase and, upon receipt of such deposit and
certification with respect thereto in the form of Exhibit J, the Trustee shall
release the related Mortgage File to such Seller and shall execute and deliver
at such Seller's request such instruments of transfer or assignment prepared by
such Seller, in each case without recourse, as shall be necessary to vest in
such Seller, or a designee, the Trustee's interest in any Loan released pursuant
hereto.

                   If, pursuant to the foregoing provisions, a Seller repurchases
a Loan that is registered on the MERS (R) System, the Servicer shall cause MERS
(R) to execute and deliver an assignment of the related Mortgage in recordable
form to transfer the Mortgage from MERS (R) to such Seller and shall cause such
Mortgage to be removed from registration on the MERS (R) System in accordance
with MERS' (R) rules and regulations or (ii) cause MERS (R) to designate on the
MERS (R) System the Seller as the beneficial holder of such Loan.

                  The Trustee shall retain possession and custody of each
Mortgage File in accordance with and subject to the terms and conditions set
forth herein. The Servicer shall promptly deliver to the Trustee, upon the
execution or receipt thereof, the originals of such other documents or
instruments constituting the Mortgage File as come into the possession of the
Servicer from time to time.

                  It is understood and agreed that the obligation of the
appropriate Seller to substitute for or to purchase any Loan which does not meet
the requirements of Section 2.01 above shall constitute the sole and exclusive
remedy respecting such defect available to the Trustee, the Depositor and any
Certificateholder against any Seller.

                  SECTION 2.03. Representations, Warranties and Covenants of the
Sellers and the Servicer.

                  (a) (i) ____________________, _________________,
                  _______________, ________________ and ______________, in their
                  capacities as Sellers, hereby make the representations and
                  warranties set forth in Schedules IIA, IIB and IID through IIF
                  respectively, and by this reference incorporated herein, to
                   the Depositor and the Trustee, as of the Closing Date or if so
                  specified therein, as of the Cut-off Date; and

                           (ii) The Servicer hereby makes the representations
                  and warranties set forth in Schedule IIX, and by this
                  reference incorporated herein, to the Depositor and the
                  Trustee, as of the Closing Date or if so specified therein, as
                  of the Cut-off Date.

                                        44
<PAGE>

                  (b) _________________, ____________________, _____________,
_____________ and ______________, in their capacities as Sellers, hereby make
the representations and warranties set forth in Schedules IIIA, IIIB and IIID
through IIIF respectively, and by this reference incorporated herein, to the
Depositor and the Trustee, as of the Closing Date or if so specified therein, as
of the Cut-off Date.

                  (c) Upon discovery by any of the parties hereto of a breach of
a representation or warranty made pursuant to Section 2.03(b) that materially
and adversely affects the interests of the Certificateholders in any Loan, the
party discovering such breach shall give prompt notice thereof to the other
parties. Each Seller, for itself and not jointly and severally for all other
Sellers, hereby covenants that within 90 days of the earlier of its discovery or
its receipt of written notice from any party of a breach of any representation
or warranty made pursuant to Section 2.03(b) with respect to any Loan listed on
the Loan Schedule that pertains to such Seller, such Seller may, and if such
breach materially and adversely affects the interests of the Certificateholders
such Seller shall, cure such breach in all material respects, and if such breach
is not so cured, may or shall, as the case may be, (i) if such 90-day period
expires prior to the second anniversary of the Closing Date, remove such Loan (a
"DELETED LOAN") from the Trust Fund and substitute in its place a Substitute
Loan, in the manner and subject to the conditions set forth in this Section or
(ii) repurchase the affected Loan or Loans from the Trustee at the Purchase
Price in the manner set forth below; provided, however, that any such
substitution pursuant to (i) above shall not be effected prior to the delivery
to the Trustee of the Opinion of Counsel required by Section 2.05 hereof, if
any, and any such substitution pursuant to (i) above shall not be effected prior
to the additional delivery to the Trustee of a Request for Release substantially
in the form of Exhibit J and the Mortgage File for any such Substitute Loan.
Notwithstanding the preceding sentence, any Loan that does not constitute a
"qualified mortgage" within the meaning of Section 860G(a)(3) of the Code shall
be subject to substitution or repurchase as provided in Section 2.05(b) of this
Agreement. The appropriate Seller shall promptly reimburse the Servicer and the
Trustee for any expenses reasonably incurred by the Servicer or the Trustee in
respect of enforcing the remedies for such breach. With respect to the
representations and warranties described in this Section which are made to the
best of a Seller's knowledge, if it is discovered by either the Depositor, the
appropriate Seller or the Trustee that the substance of such representation and
warranty is inaccurate and such inaccuracy materially and adversely affects the
value of the related Loan or the interests of the Certificateholders therein,
notwithstanding such Seller's lack of knowledge with respect to the substance of
such representation or warranty, such inaccuracy shall be deemed a breach by
such Seller of the applicable representation or warranty.

                  With respect to any Substitute Loan or Loans, such Seller
shall deliver to the Trustee for the benefit of the Certificateholders, the
Mortgage Note, the Mortgage, the related assignment of the Mortgage, if any, and
such other documents and agreements as are required by Section 2.01, with the
Mortgage Note endorsed and the Mortgage assigned as required by Section 2.01. No
substitution is permitted to be made in any calendar month after the
Determination Date for such month. Scheduled Payments due with respect to
Substitute Loans in the month of substitution shall not be part of the Trust
Fund and will be retained by the appropriate Seller on the next succeeding
Distribution Date. For the month of substitution, distributions to the relevant
Class will include the monthly payment due on any Deleted Loan for such month
and thereafter the appropriate Seller shall be entitled to retain all amounts
received in respect of such Deleted Loan. The Servicer shall amend the Loan
Schedule for the benefit of the Certificateholders to reflect the removal of
such Deleted Loan and the substitution of the Substitute Loan or Loans and the
Servicer shall deliver the amended Loan Schedule to the Trustee. Upon such
substitution, the Substitute Loan or Loans shall be subject to the terms of this
Agreement in all respects, and the appropriate Seller shall be deemed to have
made with respect to such Substitute Loan or Loans, as of the date of
substitution, the representations and warranties made pursuant to Section
2.03(b). Upon any such substitution and the deposit to the Certificate Account
of the amount required to be deposited therein

                                       45
<PAGE>

in connection with such substitution as described in the following paragraph,
the Trustee shall release the Mortgage File held for the benefit of the
Certificateholders relating to such Deleted Loan to the appropriate Seller and
shall execute and deliver at the appropriate Seller's direction such instruments
of transfer or assignment prepared by such Seller, in each case without
recourse, as shall be necessary to vest title in such Seller, or its designee,
with respect to the Trustee's interest in any Deleted Loan substituted for
pursuant to this Section 2.03.

                  For any month in which the appropriate Seller substitutes one
or more Substitute Loans for one or more Deleted Loans, the Servicer will
determine the amount (if any) by which the aggregate Stated Principal Balance of
all such Substitute Loans is less than the aggregate Stated Principal Balance of
all such Deleted Loans (such Stated Principal Balances to be measured as of the
respective Due Dates in the month of substitution). The amount of such shortage
(the "SUBSTITUTION ADJUSTMENT AMOUNT") plus an amount equal to the sum of (a)
the aggregate of any unreimbursed Advances with respect to such Deleted Loans
and (b) any costs and damages incurred by the Trust Fund in connection with such
Deleted Loan prior to the date of such substitution shall be deposited in the
Certificate Account by such Seller on or before the Distribution Account Deposit
Date for the Distribution Date in the month following the month during which the
related Loan became required to be purchased or replaced hereunder.

                  In the event that the appropriate Seller shall have
repurchased a Loan, the Purchase Price therefor shall be deposited in the
Certificate Account pursuant to Section 3.05 on or before the Distribution
Account Deposit Date for the Distribution Date in the month following the month
during which such Seller became obligated hereunder to repurchase or replace
such Loan and upon such deposit of the Purchase Price, the delivery of the
Opinion of Counsel required by Section 2.05 and receipt of a Request for Release
in the form of Exhibit J, the Trustee shall release the related Mortgage File
held for the benefit of the Certificateholders to such Seller, and the Trustee
shall execute and deliver at such Seller's direction such instruments of
transfer or assignment prepared by such Seller, in each case without recourse,
as shall be necessary to transfer title from the Trustee. It is understood and
agreed that the obligation under this Agreement of any Seller to cure,
repurchase or replace any Loan as to which a breach of a representation or
warranty has occurred and is continuing shall constitute the sole and exclusive
remedy against such Sellers respecting such breach of a representation and
warranty available to Certificateholders, the Depositor or the Trustee on their
behalf.

                  (d) The representations and warranties made pursuant to this
Section 2.03 shall survive delivery of the respective Mortgage Files to the
Trustee for the benefit of the Certificateholders.

                  SECTION 2.03A.   Additional Obligations of Equity One-Delaware.

                  (a) In addition to the representations and warranties made by
Equity One-Delaware in its capacity as a Seller, as described in Section 2.03
and set forth in Schedules IIA and IIIA, Equity One-Delaware hereby represents
and warrants to the Depositor and the Trustee that all of the representations
and warranties of the other Sellers described in Section 2.03 and set forth in
Schedules IIB through IIF and IIIB through IIIF are true and accurate in all
respects.

                  (b) Equity One-Delaware hereby covenants that it shall comply
with the repurchase and substitution obligations described in Section 2.02 and
2.03 in the event that (i) a breach of any of the representations and warranties
set forth in Schedules IIIB through IIIF occurs and (ii) the related Seller
defaults on its repurchase and substitution obligations under Sections 2.02 and
2.03.

                                       46
<PAGE>

                  SECTION 2.04. Representations and Warranties of the Depositor
as to the Loans

                  The Depositor hereby represents and warrants to the Trustee
with respect to each Loan that as of the Closing Date, and following the
transfer of the Loans to it by the Sellers, the Depositor had good title to the
Loans and the Mortgage Notes were subject to no offsets, defenses or
counterclaims.

                  It is understood and agreed that the representations and
warranties set forth in this Section 2.04 shall survive delivery of the Mortgage
Files to the Trustee. Upon discovery by the Depositor or the Trustee of a breach
of any of the foregoing representations and warranties set forth in this Section
2.04, which breach materially and adversely affects the interest of the
Certificateholders, the party discovering such breach shall give prompt written
notice to the other parties and to each Rating Agency.

                  SECTION 2.05. Delivery of Opinion of Counsel in Connection
with Substitutions.

                  (a) Notwithstanding any contrary provision of this Agreement,
no substitution pursuant to Section 2.02 or Section 2.03 shall be made more than
90 days after the Closing Date unless the appropriate Seller delivers to the
Trustee an Opinion of Counsel, which Opinion of Counsel shall not be at the
expense of either the Trustee or the Trust Fund, addressed to the Trustee, to
the effect that such substitution will not (i) result in the imposition of the
tax on "prohibited transactions" on the Trust Fund or contributions after the
Startup Day, as defined in Sections 860F(a)(2) and 860G(d) of the Code,
respectively, and/or (ii) cause the Trust Fund to fail to qualify as one or more
REMICs at any time that any Certificates are outstanding.

                  (b) Upon discovery by the Depositor, the appropriate Seller,
the Servicer or the Trustee that any Loan does not constitute a "qualified
mortgage" within the meaning of Section 860G(a)(3) of the Code, the party
discovering such fact shall promptly (and in any event within five (5) Business
Days of discovery) give written notice thereof to the other parties. In
connection therewith, the Trustee shall require the appropriate Seller, at such
Seller's option, to either (i) substitute, if the conditions in Section 2.03(c)
with respect to substitutions are satisfied, a Substitute Loan for the affected
Loan within 90 days from the discovery or (ii) repurchase the affected Loan
within 90 days of such discovery in the same manner as it would repurchase a
Loan for a breach of representation or warranty made pursuant to Section 2.03.
The Trustee shall reconvey to such Seller the Loan to be released pursuant
hereto in the same manner, and on the same terms and conditions, as it would
release a Loan repurchased for breach of a representation or warranty contained
in Section 2.03.

                  SECTION 2.06.   Execution and Delivery of Certificates.

                  The Trustee acknowledges the transfer and assignment to it of
the Trust Fund and, concurrently with such transfer and assignment and in
payment therefor, has executed and delivered to or upon the order of the
Depositor, the Certificates in authorized denominations evidencing directly or
indirectly the entire ownership of the Trust Fund. The Trustee agrees to hold
the Trust Fund and exercise the rights referred to above for the benefit of all
present and future Certificateholders and to perform the duties set forth in
this Agreement to the best of its ability, to the end that the interests of the
Certificateholders may be adequately and effectively protected.

                  SECTION 2.07.   REMIC Matters.

                   The Preliminary Statement sets forth the designations and
"latest possible maturity date" for federal income tax purposes of all interests
created hereby. The "Startup Day" for purposes of the REMIC Provisions shall be
the Closing Date. The "tax matters person" with respect to each REMIC

                                       47
<PAGE>

created hereunder shall be the Trustee and the Trustee shall hold the Tax
Matters Person Certificate. The Trust Fund's fiscal year shall be the calendar
year and, for purposes of section 860C of the Code, the taxable income of each
REMIC created hereunder shall be computed under an accrual method of accounting.

                  The Trustee shall treat each of the Net WAC Cap Account, the
Cap Reserve Fund and the Corridor Reserve Fund as a separate and distinct
outside reserve fund within the meaning of ss.1.860G-2(h) of the Income Tax
Regulations. None of the Net WAC Cap Account, the Cap Reserve Fund, the Corridor
Reserve Fund or the Master Agreement shall be treated as an asset of any REMIC.
The Trustee shall treat the rights of the Holders of the Offered Certificates to
receive payments in respect of Net WAC Cap Carryover as rights in a limited
recourse interest rate cap contract. The Holders of the Class X Certificates
will own the Net WAC Cap Account. The Trustee will own the Cap Reserve Fund and
the Corridor Reserve Fund. The Offered Certificates shall be treated as
representing ownership of not only a regular interest in a REMIC but also
ownership of an interest in an interest rate cap contract.

                  The Trustee shall treat the payment of any Net WAC Cap
Carryover as paid first to the Trustee, deposited by the Trustee in the Net WAC
Cap Account and then paid from the Net WAC Cap Account to the relevant Offered
Certificates. The Trustee shall treat the Offered Certificates as "contractual
rights coupled with regular interests" within the meaning of ss.1.860G-2(i) of
the Income Tax Regulations. In determining the issue price of the regular
interests issued to Holders of Offered Certificates, the Trustee shall assume
that each interest rate cap contract has a value of $10,000.

                  SECTION 2.08.   Covenants of the Servicer.

                  The Servicer hereby covenants to the Depositor and the Trustee
as follows:

                  (a) the Servicer shall comply in the performance of its
obligations under this Agreement with all reasonable rules and requirements of
the insurer under each Required Insurance Policy; and

                  (b) no written information, certificate of an officer,
statement furnished in writing or written report delivered to the Depositor, any
affiliate of the Depositor or the Trustee and prepared by the Servicer pursuant
to this Agreement will contain any untrue statement of a material fact or omit
to state a material fact necessary to make such information, certificate,
statement or report not misleading.


                                   ARTICLE III
                          ADMINISTRATION AND SERVICING
                                     OF LOANS

                  SECTION 3.01.   Servicer to Service Loans.

                  For and on behalf of the Certificateholders, the Servicer
shall service and administer the Loans in accordance with the terms of this
Agreement and customary and usual standards of practice of prudent mortgage loan
servicers, and shall maintain all material licenses necessary for the conduct of
its business. In connection with such servicing and administration, the Servicer
shall have full power and authority, acting alone and/or through Subservicers as
provided in Section 3.02 hereof, to do or cause to be done any and all things
that it may deem necessary or desirable in connection with such servicing and
administration, including but not limited to, the power and authority, subject
to the terms hereof, (i) to execute and deliver, on behalf of the
Certificateholders and the Trustee, customary consents or waivers

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and other instruments and documents, (ii) to consent to transfers of any
Mortgaged Property and assumptions of the Mortgage Notes and related Mortgages
(but only in the manner provided in this Agreement), (iii) to collect any
Insurance Proceeds and other Liquidation Proceeds and Recoveries and (iv) to
effectuate foreclosure or other conversion of the ownership of the Mortgaged
Property securing any Loan; provided that the Servicer shall not take any action
that is inconsistent with or prejudices the interests of the Trust Fund or the
Certificateholders in any Loan or the rights and interests of the Depositor, the
Trustee and the Certificateholders under this Agreement. The Servicer shall
represent and protect the interests of the Trust Fund in the same manner as it
protects its own interests in mortgage loans in its own portfolio in any claim,
proceeding or litigation regarding a Loan, and shall not make or permit any
modification, waiver or amendment of any Loan which would cause the Trust Fund
to fail to qualify as one or more REMICs or result in the imposition of any tax
under Section 860F(a) or Section 860G(d) of the Code. Without limiting the
generality of the foregoing, the Servicer, in its own name or in the name of the
Depositor and the Trustee, is hereby authorized and empowered by the Depositor
and the Trustee, when the Servicer believes it appropriate in its reasonable
judgment, to execute and deliver, on behalf of the Trustee, the Depositor, the
Certificateholders or any of them, any and all instruments of satisfaction or
cancellation, or of partial or full release or discharge and all other
comparable instruments, with respect to the Loans, and with respect to the
Mortgaged Properties held for the benefit of the Certificateholders. The
Servicer shall prepare and deliver to the Depositor and/or the Trustee such
documents requiring execution and delivery by either or both of them as are
necessary or appropriate to enable the Servicer to service and administer the
Loans to the extent that the Servicer is not permitted to execute and deliver
such documents pursuant to the preceding sentence. Upon receipt of such
documents, the Depositor and/or the Trustee shall execute such documents and
deliver them to the Servicer. In addition, upon the request of the Servicer from
time to time the Trustee shall execute and deliver to the Servicer one or more
powers of attorney in the form attached hereto as Exhibit M.

                  SECTION 3.02. Subservicing; Enforcement of the Obligations of
Servicers.

                  (a) The Servicer may arrange for the subservicing of any Loan
by a Subservicer pursuant to a subservicing agreement; provided, however, that
such subservicing arrangement and the terms of the related subservicing
agreement must provide for the servicing of such Loans in a manner consistent
with the servicing arrangements contemplated hereunder. Unless the context
otherwise requires, references in this Agreement to actions taken or to be taken
by the Servicer in servicing the Loans include actions taken or to be taken by a
Subservicer on behalf of the Servicer. Notwithstanding the provisions of any
subservicing agreement, any of the provisions of this Agreement relating to
agreements or arrangements between the Servicer and a Subservicer or reference
to actions taken through a Subservicer or otherwise, the Servicer shall remain
obligated and liable to the Depositor, the Trustee and the Certificateholders
for the servicing and administration of the Loans in accordance with the
provisions of this Agreement without diminution of such obligation or liability
by virtue of such subservicing agreements or arrangements or by virtue of
indemnification from the Subservicer and to the same extent and under the same
terms and conditions as if the Servicer alone were servicing and administering
the Loans. All actions of each Subservicer performed pursuant to the related
subservicing agreement shall be performed as an agent of the Servicer with the
same force and effect as if performed directly by the Servicer. Each
subservicing agreement, if any, shall provide that any successor servicer
(including, without limitation, the Trustee acting in such capacity) shall have
the right to terminate such subservicing agreement without the payment of any
fees or other amounts to the subservicer.

                   (b) For purposes of this Agreement, the Servicer shall be
deemed to have received any collections, recoveries or payments with respect to
the Loans that are received by a Subservicer regardless of whether such payments
are remitted by the Subservicer to the Servicer.

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                  SECTION 3.03. Rights of the Depositor and the Trustee in
Respect of the Servicer.

                  The Depositor may, but is not obligated to, enforce the
obligations of the Servicer hereunder and may, but is not obligated to, perform,
or cause a designee to perform, any defaulted obligation of the Servicer
hereunder and in connection with any such defaulted obligation to exercise the
related rights of the Servicer hereunder; provided that the Servicer shall not
be relieved of any of its obligations hereunder by virtue of such performance by
the Depositor or its designee. Neither the Trustee nor the Depositor shall have
any responsibility or liability for any action or failure to act by the Servicer
nor shall the Trustee or the Depositor be obligated to supervise the performance
of the Servicer hereunder or otherwise.

                  SECTION 3.04.   Trustee to Act as Servicer.

                  In the event that the Servicer shall for any reason no longer
be the Servicer hereunder (including by reason of an Event of Default), the
Trustee or its successor shall thereupon assume all of the rights and
obligations of the Servicer hereunder arising thereafter (except that the
Trustee shall not be (i) liable for losses of the Servicer pursuant to Section
3.09 hereof or any acts or omissions of the predecessor Servicer hereunder, (ii)
obligated to make Advances if it is prohibited from doing so by applicable law,
(iii) obligated to effectuate repurchases or substitutions of Loans hereunder
including, but not limited to, repurchases or substitutions of Loans pursuant to
Section 2.02 or 2.03 hereof, (iv) responsible for expenses of the Servicer
pursuant to Section 2.03 or (v) deemed to have made any representations and
warranties of the Servicer hereunder). Any such assumption shall be subject to
Section 7.02 hereof. If the Servicer shall for any reason no longer be the
Servicer (including by reason of any Event of Default), the Trustee or its
successor shall succeed to any rights and obligations of the Servicer under each
subservicing agreement.

                  The Servicer shall, upon request of the Trustee, but at the
expense of the Servicer, deliver to the assuming party all documents and records
relating to each subservicing agreement or substitute subservicing agreement and
the Loans then being serviced thereunder and an accounting of amounts collected
or held by it and otherwise use its best efforts to effect the orderly and
efficient transfer of the substitute subservicing agreement to the assuming
party.

                  SECTION 3.05. Collection of Loan Payments; Certificate
Account; Distribution Account.

                  (a) The Servicer shall make reasonable efforts in accordance
with the customary and usual standards of practice of prudent mortgage servicers
to collect all payments called for under the terms and provisions of the Loans
to the extent such procedures shall be consistent with this Agreement and the
terms and provisions of any related Required Insurance Policy. Consistent with
the foregoing, the Servicer may in its discretion (i) waive any late payment
charge or any prepayment charge or penalty interest in connection with the
prepayment of a Loan and (ii) extend the due dates for payments due on a
Mortgage Note for a period not greater than 180 days; provided, however, that
the Servicer cannot extend the maturity of any such Loan past the date on which
the final payment is due on the latest maturing Loan as of the Cut-off Date. In
the event of any such arrangement, the Servicer shall make Advances on the
related Loan in accordance with the provisions of Section 4.01 during the
scheduled period in accordance with the amortization schedule of such Loan
without modification thereof by reason of such arrangements. The Servicer shall
not be required to institute or join in litigation with respect to collection of
any payment (whether under a Mortgage, Mortgage Note or otherwise or against any
public or governmental authority with respect to a taking or condemnation) if it
reasonably believes that enforcing

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the provision of the Mortgage or other instrument pursuant to which such payment
is required is prohibited by applicable law.

                  (b) The Servicer shall establish and maintain a Certificate
Account into which the Servicer shall deposit or cause to be deposited within
one Business Day of receipt, except as otherwise specifically provided herein,
the following payments and collections remitted by Subservicers or received by
it in respect of the Loans subsequent to the Cut-off Date (other than in respect
of principal and interest due on the Loans on or before the Cut-off Date) and
the following amounts required to be deposited hereunder:

                           (i) all payments on account of principal on the
         Loans, including Principal Prepayments;

                           (ii)      all payments on account of interest on the
         Loans, net of the related Servicing Fee;

                           (iii) all Insurance Proceeds and Liquidation
         Proceeds, other than proceeds to be applied to the restoration or
         repair of the Mortgaged Property or released to the Mortgagor in
         accordance with the Servicer's normal servicing procedures, and all
         Recoveries;

                           (iv) any amount required to be deposited by the
         Servicer pursuant to Section 3.05(d) in connection with any losses on
          Permitted Investments;

                           (v) any amounts required to be deposited by the
         Servicer pursuant to Section 3.09(c) and, in respect of net monthly
         rental income from REO Property, pursuant to Section 3.11 hereof;

                           (vi) all Substitution Adjustment Amounts;

                           (vii) all Advances made by the Servicer pursuant to
         Section 4.01;

                           (viii) all Principal Prepayments, Liquidation
          Proceeds and other unscheduled payments on the Loans received on the
         Cut-off Date; and

                           (ix) any other amounts required to be deposited
         hereunder.

                  The foregoing requirements for remittance by the Servicer
shall be exclusive, it being understood and agreed that, without limiting the
generality of the foregoing, payments in the nature of prepayment penalties,
late payment charges or assumption fees, if collected, need not be remitted by
the Servicer. In the event that the Servicer shall remit any amount not required
to be remitted, it may at any time withdraw or direct the institution
maintaining the Certificate Account to withdraw such amount from the Certificate
Account, any provision herein to the contrary notwithstanding. Such withdrawal
or direction may be accomplished by delivering written notice thereof to the
Trustee or such other institution maintaining the Certificate Account which
describes the amounts deposited in error in the Certificate Account. The
Servicer shall maintain adequate records with respect to all withdrawals made
pursuant to this Section. All funds deposited in the Certificate Account shall
be held in trust for the Certificateholders until withdrawn in accordance with
Section 3.08.

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<PAGE>

                  (c) The Trustee shall establish and maintain, for the benefit
of the Certificateholders, the Distribution Account. The Trustee shall, promptly
upon receipt, deposit in the Distribution Account and retain therein the
following:

                           (i) the aggregate amount remitted by the Servicer to
         the Trustee pursuant to Section 3.08(a)(ix); and

                           (ii) any other amounts deposited hereunder which are
         required to be deposited in the Distribution Account.

                  In the event that the Servicer shall remit any amount not
required to be remitted, it may at any time direct the Trustee to withdraw such
amount from the Distribution Account, any provision herein to the contrary
notwithstanding. Such direction may be accomplished by delivering an Officer's
Certificate to the Trustee which describes the amounts deposited in error in the
Distribution Account. All funds deposited in the Distribution Account shall be
held by the Trustee uninvested in trust for the Certificateholders until
disbursed in accordance with this Agreement or withdrawn in accordance with
Section 3.08. In no event shall the Trustee incur liability for withdrawals from
the Distribution Account at the direction of the Servicer.

                  (d) The Servicer may direct, in writing, each institution at
which the Certificate Account is maintained to invest the funds therein in
specified Permitted Investments, which shall mature not later than, the second
Business Day next preceding the Distribution Account Deposit Date (except that
if such Permitted Investment is an obligation of the institution that maintains
such account or a fund for which such institution or affiliate thereof serves as
an investment advisor, administrator, shareholder servicing agent and/or
custodian or subcustodian, then such Permitted Investment shall mature not later
than the Business Day next preceding such Distribution Account Deposit Date) and
shall not be sold or disposed of prior to its maturity. All such Permitted
Investments shall be made in the name of the Trustee, for the benefit of the
Certificateholders. So long as no Event of Default shall have occurred and be
continuing, all income earned on funds on deposit in the Certificate Account,
net of any losses realized from any Permitted Investments made with such funds,
shall be for the benefit of the Servicer as servicing compensation and shall be
remitted to it monthly as provided herein. If an Event of Default has occurred
and is continuing, all income earned on funds on deposit in the Certificate
Account, net of any losses realized from any Permitted Investments made with
such funds, shall be deposited into the Certificate Account without right of
reimbursement. The amount of any realized losses in the Certificate Account in
respect of any such Permitted Investments shall promptly be deposited by the
Servicer (from its own funds) in the Certificate Account. The Trustee in its
fiduciary capacity shall not be liable for the amount of any loss incurred in
respect of any investment or lack of investment of funds held in the Certificate
Account and made in accordance with this Section 3.05.

                  (e) The Servicer shall give notice to the Trustee, each
Seller, each Rating Agency and the Depositor of any proposed change of the
location of the Certificate Account prior to any change thereof. The Trustee
shall give notice to the Servicer, each Seller, each Rating Agency and the
Depositor of any proposed change of the location of the Distribution Account
prior to any change thereof.

                  SECTION 3.06. Payment of Taxes, Assessments, Hazard Insurance
Premiums and Similar Items; Escrow Accounts.

                  (a) The Servicer shall require Mortgagors to pay all taxes,
assessments, hazard insurance premiums, flood insurance premiums, condominium
association dues or comparable items for the account of the Mortgagors. To the
extent required by the Seller at the time the related Loan was

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<PAGE>

originated and not violative of current law, the Servicer shall establish and
maintain one or more accounts (each, an "ESCROW ACCOUNT") and deposit and retain
therein all collections from the Mortgagors (or advances by the Servicer) for
the payment of taxes, assessments, hazard insurance premiums, condominium
association dues or comparable items for the account of the Mortgagors. Nothing
herein shall require the Servicer to compel a Mortgagor to establish an Escrow
Account in violation of applicable law or if the Seller of the related Loan did
not require the establishment of an Escrow Account at the time the Loan was
originated.

                  Withdrawals of amounts so collected from the Escrow Accounts
may be made only to effect timely payment of taxes, assessments, hazard
insurance premiums, condominium association dues, or comparable items, to
reimburse the Servicer out of related collections for any payments made pursuant
to Sections 3.01 hereof (with respect to taxes and assessments and insurance
premiums) and 3.09 hereof (with respect to hazard insurance), to refund to any
Mortgagors any sums determined to be overages, to pay interest, if required by
law or the terms of the related Mortgage or Mortgage Note, to Mortgagors on
balances in the Escrow Account or to clear and terminate the Escrow Account at
the termination of this Agreement in accordance with Section 9.01 hereof. The
Escrow Accounts shall not be a part of the Trust Fund.

                  (b) The Servicer shall advance any payments referred to in
Section 3.06(a) that are not timely paid by the Mortgagors on the date when the
tax, premium or other cost for which such payment is intended is due, but the
Servicer shall be required so to advance only to the extent that such advances,
in the good faith judgment of the Servicer, are required to be made to protect
the lien of the Mortgage and will be recoverable by the Servicer out of
Insurance Proceeds, Liquidation Proceeds or otherwise. The amount of any such
advances made by the Servicer for the purpose of maintaining any hazard or flood
insurance shall not, for the purpose of calculating monthly distributions to the
Certificateholders or remittances to the Trustee for their benefit, be added to
the principal balance of the related Loan, notwithstanding that the terms of the
Loan so permit. Any advance made by the Servicer pursuant to this Section 3.06
shall be recoverable as a Servicing Advance to the extent permitted by Section
3.08.

                  SECTION 3.07. Access to Certain Documentation and Information
Regarding the Loans.

                  (a) The Servicer shall afford the Depositor, the Trustee and
each Rating Agency reasonable access to all records and documentation regarding
the Loans and all accounts, insurance information and other matters relating to
this Agreement, such access being afforded without charge, but only upon
reasonable request and during normal business hours at the office designated by
the Servicer.

                  (b) Upon reasonable advance notice in writing, the Servicer
will provide to each Certificateholder which is a savings and loan association,
bank or insurance company certain reports and reasonable access to information
and documentation regarding the Loans sufficient to permit such
Certificateholder to comply with applicable regulations of the OTS or other
regulatory authorities with respect to investment in the Certificates; provided
that the Servicer shall be entitled to be reimbursed by each such
Certificateholder for actual expenses incurred by the Servicer in providing such
reports and access.

                  SECTION 3.08. Permitted Withdrawals from the Certificate
Account and Distribution Account.

                  (a) The Servicer may from time to time make withdrawals from
the Certificate Account for the following purposes:

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<PAGE>

                           (i) to pay to the Servicer (to the extent not
         previously retained by the Servicer) the servicing compensation to
         which it is entitled pursuant to Section 3.13, and, subject to Section
         3.05(d), to pay to the Servicer, as additional servicing compensation,
         earnings on or investment income with respect to funds in or credited
         to the Certificate Account;

                           (ii) to reimburse the Servicer for unreimbursed
         Advances made by it, such right of reimbursement pursuant to this
         subclause (ii) being limited to amounts received on the Loan(s) in
         respect of which any such Advance was made, excluding any Purchase
         Price proceeds received from the Servicer pursuant to Section 3.11 and
         subject to Section 9.01;

                            (iii) to reimburse the Servicer for any
         Nonrecoverable Advance previously made, except that the Servicer shall
         no longer be entitled to reimbursement for any Nonrecoverable Advance
         on a Loan as of the date the Servicer purchases such Loan from the
         Trust Fund pursuant to Section 3.11 or Section 9.01;

                           (iv) to reimburse the Servicer for Insured Expenses
         from the related Insurance Proceeds;

                           (v) to reimburse the Servicer for (a) unreimbursed
         Servicing Advances, the Servicer's right to reimbursement pursuant to
         this clause (a) with respect to any Loan being limited to amounts
         received on such Loan(s) which represent late recoveries of the
         payments for which such Servicing Advances were made pursuant to
         Section 3.01 or Section 3.06 and (b) for unpaid Servicing Fees as
         provided in Section 3.11 hereof;

                           (vi) to pay to the purchaser, with respect to each
         Loan or property acquired in respect thereof that has been purchased
         pursuant to Section 2.02, 2.03 or 3.11, all amounts received thereon
         after the date of such purchase;

                           (vii) to (A) reimburse the Sellers, the Servicer or
         the Depositor for expenses incurred by any of them that are
         reimbursable pursuant to Section 6.03 hereof or (B) to pay to the
         Trustee any Trustee Permitted Withdrawal Amounts;

                            (viii) to withdraw any amount deposited in the
         Certificate Account and not required to be deposited therein;

                           (ix) on or prior to the Distribution Account Deposit
         Date, to withdraw an amount equal to the Available Funds for such
         Distribution Date and remit such amounts to the Trustee for deposit in
         the Distribution Account; and

                           (x) to clear and terminate the Certificate Account
         upon termination of this Agreement pursuant to Section 9.01 hereof.

                  The Servicer shall keep and maintain separate accounting, on a
Loan by Loan basis, for the purpose of justifying any withdrawal from the
Certificate Account pursuant to such subclauses (i), (ii), (iv), (v) and (vi).
Prior to making any withdrawal from the Certificate Account pursuant to
subclause (iii), the Servicer shall deliver to the Trustee an Officer's
Certificate of a Servicing Officer indicating the amount of any previous Advance
determined by the Servicer to be a Nonrecoverable Advance and identifying the
related Loans(s), and their respective portions of such Nonrecoverable Advance.

                                       54
<PAGE>

                  (b) The Trustee shall withdraw funds from the Distribution
Account to make the distributions specified in this Agreement (and to withhold
from the amounts so withdrawn, the amount of any taxes that it is authorized to
withhold pursuant to the last paragraph of Section 8.11). In addition, the
Trustee may from time to time make withdrawals from the Distribution Account for
the following purposes:

                           (i) to the extent not remitted by the Servicer
         pursuant to Section 3.08(a)(vii)(B) above within a reasonable period of
         time after request by the Trustee, to remit (prior to making any other
         distributions from amounts held in the Distribution Account) to itself
         any Trustee Permitted Withdrawal Amounts;

                           (ii) to withdraw and return to the Servicer any
         amount deposited in the Distribution Account and not required to be
         deposited therein; and

                           (iii) to clear and terminate the Distribution Account
         upon termination of the Agreement pursuant to Section 9.01 hereof.

                  SECTION 3.09. Maintenance of Hazard Insurance; Maintenance of
Primary Insurance Policies.

                  (a) The Servicer shall require Mortgagors to maintain, for
each Loan, hazard insurance with extended coverage (i) in the case of a Loan
secured by a Mortgage creating a first lien on the related Mortgaged Property,
in an amount that is at least equal to the original principal balance of such
Loan or the maximum insurable value of the improvements on such Mortgaged
Property, whichever is less, and (ii) in the case of a Second Lien Loan, in an
amount equal to the lesser of the combined principal balance of such Second Lien
Loan and the related first lien mortgage loan or the maximum insurable value of
the improvements on the related Mortgaged Property. Each such policy of standard
hazard insurance shall contain, or have an accompanying endorsement that
contains, a standard mortgagee clause. Any amounts collected by the Servicer
under any such policies (other than the amounts to be applied to the restoration
or repair of the improvements on the related Mortgaged Property or amounts
released to the Mortgagor in accordance with the Servicer's normal servicing
procedures) shall be deposited in the Certificate Account. It is understood and
agreed that no earthquake or other additional insurance is to be required of any
Mortgagor or maintained on property acquired in respect of a Mortgage other than
pursuant to such applicable laws and regulations as shall at any time be in
force and as shall require such additional insurance. If the Mortgaged Property
is located at the time of origination of the Loan in a federally designated
special flood hazard area and such area is participating in the national flood
insurance program, the Servicer shall require the related Mortgagor to maintain
flood insurance with respect to such Loan. Such flood insurance shall be in an
amount equal to the original principal balance of the related Loan.

                   (b) The Servicer shall not be required to have Mortgagors
maintain any Primary Mortgage Insurance Policy with respect to any Loan, but may
do so as allowed by law, and shall allow the cancellation of any such Primary
Mortgage Insurance Policy as required by law. The Servicer shall not take any
action which would result in non-coverage under any applicable Primary Mortgage
Insurance Policy of any loss which, but for the actions of the Servicer, would
have been covered thereunder. If any Mortgagor fails to pay the premiums for its
Primary Mortgage Insurance Policy, if any, the Servicer may, but shall not be
required to, pay such premiums. Any payment made by the Servicer pursuant to
this Section 3.09(b) shall be recoverable as a Servicing Advance to the extent
permitted by Section 3.08.

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<PAGE>

                  (c) In connection with its activities as Servicer of the
Loans, the Servicer agrees to present on behalf of itself, the Trustee and the
Certificateholders, claims to the insurer under any Primary Mortgage Insurance
Policies and, in this regard, to take such reasonable action as shall be
necessary to permit recovery under any Primary Mortgage Insurance Policies
respecting defaulted Loans. Any amounts collected by the Servicer under any
Primary Mortgage Insurance Policies shall be deposited in the Certificate
Account.

                  SECTION 3.10. Enforcement of Due-on-Sale Clauses; Assumption
Agreements.

                  (a) When any property subject to a Mortgage has been conveyed
by the Mortgagor, the Servicer, to the extent that it has knowledge of such
conveyance, may, at its discretion, but is not required to, enforce any
due-on-sale clause contained in any Mortgage Note or Mortgage, to the extent
permitted under applicable law and governmental regulations, but only to the
extent that such enforcement will not adversely affect or jeopardize coverage
under any Required Insurance Policy. The Servicer is authorized, subject to
Section 3.10(b), to take or enter into an assumption and modification agreement
from or with the Person to whom such property has been or is about to be
conveyed, pursuant to which such Person becomes liable under the Mortgage Note
and, unless prohibited by applicable state law, the Mortgagor remains liable
thereon, provided that the Loan shall continue to be covered (if so covered
before the Servicer enters such agreement) by the applicable Required Insurance
Policies. The Servicer, subject to Section 3.10(b), is also authorized with the
prior approval of the insurers under any Required Insurance Policies to enter
into a substitution of liability agreement with such Person, pursuant to which
the original Mortgagor is released from liability and such Person is substituted
as Mortgagor and becomes liable under the Mortgage Note. Notwithstanding the
foregoing, the Servicer shall not be deemed to be in default under this Section
by reason of any transfer or assumption which the Servicer reasonably believes
it is restricted by law from preventing, for any reason whatsoever.

                  (b) In any case in which a Mortgaged Property has been
conveyed to a Person by a Mortgagor, and such Person is to enter into an
assumption agreement or modification agreement or supplement to the Mortgage
Note or Mortgage that requires the signature of the Trustee, or if an instrument
of release signed by the Trustee is required releasing the Mortgagor from
liability on the Loan, the Servicer shall prepare and deliver or cause to be
prepared and delivered to the Trustee for signature and shall direct, in
writing, the Trustee to execute the assumption agreement with the Person to whom
the Mortgaged Property is to be conveyed and such modification agreement or
supplement to the Mortgage Note or Mortgage or other instruments as are
reasonable or necessary to carry out the terms of the Mortgage Note or Mortgage
or otherwise to comply with any applicable laws regarding assumptions or the
transfer of the Mortgaged Property to such Person. In connection with any such
assumption, no material term of the Mortgage Note may be changed. In addition,
the substitute Mortgagor and the Mortgaged Property must be acceptable to the
Servicer in accordance with its underwriting standards as then in effect.
Together with each such substitution, assumption or other agreement or
instrument delivered to the Trustee for execution by it, the Servicer shall
deliver an Officer's Certificate signed by a Servicing Officer stating that the
requirements of this subsection have been met in connection therewith. The
Servicer shall notify the Trustee that any such substitution or assumption
agreement has been completed by forwarding to the Trustee the original of such
substitution or assumption agreement, which in the case of the original shall be
added to the related Mortgage File and shall, for all purposes, be considered a
part of such Mortgage File to the same extent as all other documents and
instruments constituting a part thereof. Any fee collected by the Servicer for
entering into an assumption or substitution of liability agreement will be
retained by the Servicer as additional servicing compensation.

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                  SECTION 3.11. Realization Upon Defaulted Loans; Repurchase and
Sale of Certain Loans.

                  The Servicer shall use reasonable efforts to foreclose upon or
otherwise comparably convert the ownership of properties securing such of the
Loans as come into and continue in default and as to which no satisfactory
arrangements can be made for collection of delinquent payments. In connection
with such foreclosure or other conversion, the Servicer shall follow such
practices and procedures as it shall deem necessary or advisable and as shall be
normal and usual in its general mortgage servicing activities and meet the
requirements of the insurer under any Required Insurance Policy; provided,
however, that the Servicer shall not be required to expend its own funds in
connection with any foreclosure or towards the restoration of any property
unless it shall determine (i) that such restoration and/or foreclosure will
increase the proceeds of liquidation of the Loan after reimbursement to itself
of such expenses and (ii) that such expenses will be recoverable to it through
Liquidation Proceeds (respecting which it shall have priority for purposes of
withdrawals from the Certificate Account). The Servicer shall be responsible for
all other costs and expenses incurred by it in any such proceedings; provided,
however, that it shall be entitled to reimbursement thereof from the liquidation
proceeds with respect to the related Mortgaged Property, as provided in the
definition of Liquidation Proceeds. If the Servicer has knowledge that a
Mortgaged Property which the Servicer is contemplating acquiring in foreclosure
or by deed in lieu of foreclosure is located within a one mile radius of any
site with environmental or hazardous waste risks known to the Servicer, the
Servicer will, prior to acquiring the Mortgaged Property, consider such risks
and only take action in accordance with its established environmental review
procedures.

                  With respect to any REO Property, the deed or certificate of
sale shall be taken in the name of the Trustee for the benefit of the
Certificateholders, or its nominee, on behalf of the Certificateholders. The
Trustee's name shall be placed on the title to such REO Property solely as the
Trustee hereunder and not in its individual capacity. The Servicer shall ensure
that the title to such REO Property references this Agreement and the Trustee's
capacity thereunder. In order to facilitate sales of REO Properties by the
Servicer, upon the Servicer's request, the Trustee shall promptly provide the
Servicer with appropriate limited durable powers of attorney or such other
documentation as may reasonably be required by the Servicer or purchasers of REO
Properties to consummate such sales. Pursuant to its efforts to sell such REO
Property, the Servicer shall either itself or through an agent selected by the
Servicer protect and conserve such REO Property in the same manner and to such
extent as is customary in the locality where such REO Property is located and
may, incident to its conservation and protection of the interests of the
Certificateholders, rent the same, or any part thereof, as the Servicer deems to
be in the best interest of the Certificateholders for the period prior to the
sale of such REO Property. The Servicer shall prepare for and deliver to the
Trustee a statement with respect to each REO Property that has been rented
showing the aggregate rental income received and all expenses incurred in
connection with the management and maintenance of such REO Property at such
times as is necessary to enable the Trustee to comply with the reporting
requirements of the REMIC Provisions. The net monthly income, if any, from such
REO Property shall be deposited in the Certificate Account no later than the
close of business on each Determination Date. The Servicer shall perform the tax
reporting and withholding required by Sections 1445 and 6050J of the Code with
respect to foreclosures and abandonments, the tax reporting required by Section
6050H of the Code with respect to the receipt of mortgage interest from
individuals and any tax reporting required by Section 6050P of the Code with
respect to the cancellation of indebtedness by certain financial entities, by
preparing such tax and information returns as may be required, in the form
required, and delivering the same to the Trustee for filing.

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                  In the event that the Trust Fund acquires any Mortgaged
Property as aforesaid or otherwise in connection with a default or imminent
default on a Loan, the Servicer shall dispose of such Mortgaged Property prior
to the close of the third taxable year of the Trust Fund following the taxable
year of the Trust Fund in which the Trust Fund acquired such Mortgaged Property,
unless the Trustee shall have been supplied with an Opinion of Counsel (which
Opinion of Counsel shall not be at the expense of the Trustee) to the effect
that the holding by the Trust Fund of such Mortgaged Property subsequent to such
three-year period will not result in the imposition of taxes on "prohibited
transactions" of any REMIC hereunder as defined in section 860F of the Code or
cause any REMIC to fail to qualify as one or more REMICs at any time that any
Certificates are outstanding, in which case the Trust Fund may continue to hold
such Mortgaged Property (subject to any conditions contained in such Opinion of
Counsel). Notwithstanding any other provision of this Agreement, no Mortgaged
Property acquired by the Trust Fund shall be rented (or allowed to continue to
be rented) or otherwise used for the production of income by or on behalf of the
Trust Fund in such a manner or pursuant to any terms that would (i) cause such
Mortgaged Property to fail to qualify as "foreclosure property" within the
meaning of section 860G(a)(8) of the Code or (ii) subject any REMIC to the
imposition of any federal, state or local income taxes on the income earned from
such Mortgaged Property under Section 860G(c) of the Code or otherwise, unless
the Servicer has agreed to indemnify and hold harmless the Trust Fund with
respect to the imposition of any such taxes.

                  The decision of the Servicer to foreclose on a defaulted Loan
shall be subject to a determination by the Servicer that the proceeds of such
foreclosure would exceed the costs and expenses of bringing such a proceeding.

                  The proceeds from any liquidation of a Loan, as well as any
income from an REO Property, will be applied in the following order of priority:
first, to reimburse the Servicer for any related unreimbursed Servicing Advances
and Servicing Fees related to such Liquidated Loan; second, to reimburse the
Servicer for any unreimbursed Advances; third, to accrued and unpaid interest
(to the extent no Advance has been made for such amount or any such Advance has
been reimbursed) on the Loan or related REO Property, at the Adjusted Net
Mortgage Rate to the Due Date occurring in the calendar month preceding the
month in which such amounts are required to be distributed; and fourth, as a
recovery of principal of the Loan. Excess Proceeds, if any, from the liquidation
of a Liquidated Loan will be retained by the Servicer as additional servicing
compensation pursuant to Section 3.13.

                  During the first full calendar month (but excluding the last
Business Day thereof) following the calendar month in which a Loan became 91
days or more delinquent, the Servicer, in its sole discretion, shall have the
right, but not the obligation, to purchase for its own account or for resale as
set forth herein from the Trust Fund any Loan that is then still 91 days or more
delinquent at a price equal to the Purchase Price. The Purchase Price for any
Loan purchased hereunder shall be deposited in the Certificate Account and the
Trustee, upon receipt of a Request for Release from the Servicer substantially
in the form of Exhibit J, shall release or cause to be released to the Servicer
the related Mortgage File and shall execute and deliver such instruments of
transfer or assignment prepared by the purchaser, in each case without recourse,
as shall be necessary to vest in the purchaser any Loan released pursuant hereto
and the purchaser shall succeed to all the Trustee's right, title and interest
in and to such Loan and all security and documents related thereto. Such
assignment shall be a sale and assignment outright and not for security. The
purchaser shall thereupon own such Loan, and all security and documents, free of
any further obligation to the Trustee or the Certificateholders with respect
thereto.

                   If with respect to any delinquent Loan, the option of the
Servicer set forth in the preceding paragraph shall have arisen but the Servicer
shall have failed to exercise such option with respect to such Loan on or before
the Business Day preceding the last Business Day of the calendar month following
the calendar

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month during which such Loan first became 91 days or more delinquent, then such
option shall automatically expire with respect to such Loan; provided, however,
that if any such Loan shall cease to be 91 days or more delinquent but then
subsequently shall again become 91 days or more delinquent, then the Servicer
shall be entitled to another repurchase option with respect to such Loan as
provided in the preceding paragraph.

                   SECTION 3.12. Documents, Records and Funds in Possession of
Servicer to be Held for the Trustee.

                  Notwithstanding any other provisions of this Agreement, the
Servicer shall transmit to the Trustee as required by this Agreement all
documents and instruments in respect of a Loan coming into the possession of the
Servicer from time to time and shall account fully to the Trustee for any funds
received by the Servicer or which otherwise are collected by the Servicer as
Liquidation Proceeds, Insurance Proceeds or Recoveries in respect of any Loan.
All Mortgage Files and funds collected or held by, or under the control of, the
Servicer in respect of any Loans, whether from the collection of principal and
interest payments or from Liquidation Proceeds or Recoveries, including but not
limited to, any funds on deposit in the Certificate Account, shall be held by
the Servicer for and on behalf of the Trustee and shall be and remain the sole
and exclusive property of the Trustee, subject to the applicable provisions of
this Agreement. The Servicer also agrees that it shall not create, incur or
subject any Mortgage File or any funds that are deposited in the Certificate
Account, Distribution Account, or any funds that otherwise are or may become due
or payable to the Trustee for the benefit of the Certificateholders, to any
claim, lien, security interest, judgment, levy, writ of attachment or other
encumbrance, or assert by legal action or otherwise any claim or right of setoff
against any Mortgage File or any funds collected on, or in connection with, a
Loan, except, however, that the Servicer shall be entitled to set off against
and deduct from any such funds any amounts that are properly due and payable to
the Servicer under this Agreement.

                   SECTION 3.13.   Servicing Compensation.

                  As compensation for its activities hereunder, the Servicer
shall be entitled to retain or withdraw from the Certificate Account an amount
equal to the Servicing Fee for each Loan, provided that the aggregate Servicing
Fee for the Loans with respect to any Distribution Date shall be reduced (i) by
an amount equal to the aggregate of the Prepayment Interest Shortfalls, if any,
with respect to such Distribution Date, up to the full amount of the aggregate
Servicing Fee, and (ii) with respect to the first Distribution Date, an amount
equal to any amount to be deposited into the Certificate Account by the Sellers
pursuant to Section 2.01(a) and not so deposited.

                  Additional servicing compensation in the form of Excess
Proceeds, Prepayment Interest Excess, prepayment penalties, assumption fees,
late payment charges and all income earned on funds on deposit in the
Certificate Account, net of any losses realized from any Permitted Investments
made with such funds, shall be retained by the Servicer to the extent not
required to be deposited in the Certificate Account pursuant to Section 3.05
hereof. The Servicer shall be required to pay all expenses incurred by it in
connection with its servicing activities hereunder and shall not be entitled to
reimbursement therefor except as specifically provided in this Agreement.

                  SECTION 3.14.   Access to Certain Documentation.

                  The Servicer shall provide to the OTS and the FDIC and to
comparable regulatory authorities supervising certain Certificateholders and the
examiners and supervisory agents of the OTS, the FDIC and such other
authorities, access to the documentation regarding the Loans required by
applicable regulations of the OTS and the FDIC. Such access shall be afforded
without charge, but only

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upon reasonable and prior written request and during normal business hours at
the offices designated by the Servicer. Nothing in this Section shall limit the
obligation of the Servicer to observe any applicable law prohibiting disclosure
of information regarding the Mortgagors and the failure of the Servicer to
provide access as provided in this Section as a result of such obligation shall
not constitute a breach of this Section.

                  SECTION 3.15.   Annual Statement as to Compliance.

                  The Servicer shall deliver to the Depositor and the Trustee
not later than March 15 of each calendar year commencing with the calendar year
following the calendar year in which the Closing Date occurs, an annual
compliance certificate pursuant to Item 1123 of Regulation AB, signed by an
officer of the Servicer, stating that (i) a review of the activities of the
Servicer during the preceding calendar year and of the performance of the
Servicer under this Agreement has been made under such officer's supervision and
(ii) to the best of such officer's knowledge, based on such review, the Servicer
has fulfilled all its obligations under this Agreement in all material respects
throughout such calendar year, or, if there has been a failure to fulfill any
such obligation in any material respect, specifying each such failure known to
such officer and the nature and status thereof. The Trustee shall forward a copy
of each such statement to each Rating Agency. Copies of such compliance
certificates shall be provided by the Servicer to any Certificateholder, without
charge, upon the written request of such Certificateholder.

                  SECTION 3.16. Servicer's Annual Servicing Statement;
Independent Public Accountants' Attestation.

                  (a) The Servicer shall deliver to the Depositor and the
Trustee, not later than March 15 of each calendar year in which the Depositor is
required to file an annual report on Form 10-K with respect to the Trust Fund,
commencing with the calendar year following the calendar year in which the
Closing Date occurs, a report regarding the Servicer's assessment of its
compliance with the Servicing Criteria. Copies of such report shall be provided
by the Servicer, without charge, upon written request of such Certificateholder.
Such report shall contain the following statements (which statements shall be
based on the activities the Servicer performs with respect to asset-backed
securities transactions taken as a whole involving the Servicer that are backed
by the same asset type as the Loans):

                           (i) a statement by the Servicer of its responsibility
for assessing compliance with the Servicing Criteria applicable to the Servicer;

                           (ii) a statement by the Servicer that it used the
Servicing Criteria to assess compliance with the Servicing Criteria applicable
to the Servicer;

                           (iii) a statement by the Servicer as to which of the
Servicing Criteria, if any, are not applicable to the Servicer;

                           (iv) a statement by the Servicer assessing the
Servicer's compliance with the applicable Servicing Criteria as of the last day
of the immediately preceding calendar year and covering the period of the
preceding calendar year, which shall disclose any material instance of
noncompliance with respect thereto; and

                           (v) a statement by the Servicer that a registered
public accounting firm has issued an attestation report on the Servicer's
assessment of compliance with the applicable Servicing Criteria as of the last
day of the immediately preceding calendar year and covering the period of the
preceding calendar year.

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                  (b) Not later than March 15 of each calendar year in which the
Depositor is required to file an annual report on Form 10-K with respect to the
Trust Fund, commencing with the calendar year following the calendar year in
which the Closing Date occurs, the Servicer, at its expense, shall cause a
registered public accounting firm which is a member of the American Institute of
Certified Public Accountants to furnish to the Depositor and Trustee a report by
such accounting firm that attests to, and reports on, the assessment made by the
Servicer pursuant to Section 3.16(a) hereof, meeting the requirements of Item
1122(b) of Regulation AB. Such attestation shall be in accordance with the
Exchange Act and Regulation S-X under the Securities Act. Copies of such report
shall be provided by the Servicer to any Certificateholder, without charge, upon
the written request of such Certificateholder.

                   SECTION 3.17.   Errors and Omissions Insurance; Fidelity Bonds.

                  The Servicer shall, for so long as it acts as servicer under
this Agreement, obtain and maintain in force (a) a policy or policies of
insurance covering errors and omissions in the performance of its obligations as
Servicer hereunder and (b) a fidelity bond in respect of its officers, employees
and agents. Each such policy or policies and bond shall, together, comply with
the requirements from time to time of FNMA or FHLMC for persons performing
servicing for mortgage loans purchased by FNMA or FHLMC. In the event that any
such policy or bond ceases to be in effect, the Servicer shall obtain a
comparable replacement policy or bond from an insurer or issuer, meeting the
requirements set forth above as of the date of such replacement.

                  SECTION 3.18. Engagement by Servicer of Affiliates or Third
Party Vendors.

                  Notwithstanding anything herein to the contrary, for so long
as the Depositor is subject to Exchange Act reporting with respect to the Trust
Fund:

                  to the extent the Servicer engages any affiliate or third
party vendor, in connection with the performance of any of its material duties
under this Agreement, the Servicer shall immediately notify the Depositor in
writing of such engagement. To the extent the Depositor notifies the Servicer
that it has determined that such affiliates or third party vendors are
participating in the servicing function with respect to the Loans, within the
meaning of Item 1122 of Regulation AB, the Servicer shall cause such affiliates
or third party vendors to prepare a separate annual assessment and attestation
report, as contemplated by Section 3.16 of this Agreement, and deliver such
report to the Servicer in accordance with Section 3.16 of this Agreement. In
addition, to the extent that such affiliate or third party vendor meets the
criteria in Item 1108(a)(2)(i), (ii) or (iii) of Regulation AB and the Depositor
notifies the Servicer that it has determined that any such affiliate or third
party vendor would be a "servicer" within the meaning of Item 1101 of Regulation
AB, the Servicer shall cause such affiliate or third party vendor to prepare a
separate annual compliance statement as contemplated by Section 3.15 of this
Agreement and deliver such statement to the Servicer as set forth in Section
3.15 of this Agreement. Furthermore, if such affiliate or third party vendor
meets the criteria in Item 1108(a)(2)(i), (ii) or (iii) of Regulation AB and the
Depositor determines any such affiliate or third party vendor would be a
"servicer" within the meaning of Item 1101 of Regulation AB, the Servicer shall
cause such affiliate or third party vendor to provide the Servicer, the
Depositor and the Trustee the information required by Item 1108(b) and 1108(c)
of Regulation AB within two (2) Business Days following such engagement.

                  SECTION 3.19.   Delinquent Loans.

                  For all purposes in this Agreement and the Exhibits and
Schedules attached hereto, the determination as to whether a Loan is delinquent
shall be based on the number of days that payments on

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such Loan are contractually past due, assuming 30-day months. For example, a
payment due on the first day of a month is not 30 days delinquent until the
first day of the following month.

                                  ARTICLE IIIA
                      RESERVE FUNDS AND NET WAC CAP ACCOUNT

                  SECTION 3A.01   Cap Reserve Fund and Cap Agreement.

                  (a) On the Closing Date, the Trustee shall establish and
maintain in its name, in trust for the benefit of the Certificateholders, the
Cap Reserve Fund to cover certain payments to the Offered Certificates. The Cap
Reserve Fund shall be an Eligible Account, and funds on deposit in such fund
shall be held separate and apart from, and shall not be commingled with, any
other moneys, including without limitation, other moneys held by the Trustee
pursuant to this Agreement. The Cap Reserve Fund shall be treated as an "outside
reserve fund" under applicable Treasury regulations and will not be part of any
REMIC. Any investment earnings on funds on deposit in the Cap Reserve Fund will
be treated as owned by the Trustee and will be taxable to the Trustee.
Distributions made to the Cap Reserve Fund under this document shall be treated
as made to the Trustee.

                  (b) In addition, on the Closing Date, the Master Agreement
(including the Cap Agreement) will be entered into by the Counterparty and the
Trustee, for the benefit of the Certificateholders. On each Distribution Date,
the Trustee will deposit into the Cap Reserve Fund any amounts received pursuant
to the Cap Agreement. The Trustee shall collect payments