POOLING AND SERVICING AGREEMENT

EXHIBIT 4

MORGAN STANLEY ABS CAPITAL I INC.,

Depositor,

CHASE HOME FINANCE LLC,

Servicer,

HOMEQ SERVICING CORPORATION,

Servicer,

FIRST NLC FINANCIAL SERVICES, LLC,

Responsible Party,

MILA, INC.,

Responsible Party,

and

DEUTSCHE BANK NATIONAL TRUST COMPANY,

Trustee

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

POOLING AND SERVICING AGREEMENT

Dated as of January 1, 2005

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

MORGAN STANLEY HOME EQUITY LOAN TRUST 2005-1

MORTGAGE PASS-THROUGH CERTIFICATES,

SERIES 2005-1

<PAGE>

TABLE OF CONTENTS

Page

ARTICLE I

DEFINITIONS

ARTICLE II

CONVEYANCE OF MORTGAGE LOANS;

REPRESENTATIONS AND WARRANTIES

Section 2.01 Conveyance of Mortgage Loans.................................

Section 2.02 Acceptance by the Trustee of the Mortgage Loans..............

Section 2.03 Representations and Warranties; Remedies for Breaches of

Representations and Warranties with Respect to the Mortgage

Loans........................................................

Section 2.04 Execution and Delivery of Certificates.......................

Section 2.05 REMIC Matters................................................

Section 2.06 Representations and Warranties of the Depositor..............

ARTICLE III

ADMINISTRATION AND SERVICING

OF MORTGAGE LOANS

Section 3.01 Servicers to Service Mortgage Loans..........................

Section 3.02 Subservicing Agreements between a Servicer and

Subservicers.................................................

Section 3.03 Successor Subservicers.......................................

Section 3.04 Liability of the Servicers...................................

Section 3.05 No Contractual Relationship between Subservicers and the

Trustee......................................................

Section 3.06 Assumption or Termination of Subservicing Agreements by

Trustee......................................................

Section 3.07 Collection of Certain Mortgage Loan Payments.................

Section 3.08 Subservicing Accounts........................................

Section 3.09 Collection of Taxes, Assessments and Similar Items;

Escrow Accounts..............................................

Section 3.10 Collection Accounts..........................................

Section 3.11 Withdrawals from the Collection Accounts.....................

Section 3.12 Investment of Funds in the Collection Accounts and the

Distribution Account.........................................

Section 3.13 Maintenance of Hazard Insurance and Errors and Omissions

and Fidelity Coverage........................................

Section 3.14 Enforcement of Due-on-Sale Clauses; Assumption Agreements....

Section 3.15 Realization upon Defaulted Mortgage Loans....................

Section 3.16 Release of Mortgage Files....................................

Section 3.17 Title, Conservation and Disposition of REO Property..........

Section 3.18 Notification of Adjustments..................................

Section 3.19 Access to Certain Documentation and Information Regarding

the Mortgage Loans...........................................

Section 3.20 Documents, Records and Funds in Possession of the

Servicers to Be Held for the Trustee.........................

Section 3.21 Servicing Compensation.......................................

Section 3.22 Annual Statement as to Compliance............................

Section 3.23 Annual Independent Public Accountants' Servicing

Statement; Financial Statements..............................

Section 3.24 Trustee to Act as Servicer...................................

Section 3.25 Compensating Interest........................................

Section 3.26 Credit Reporting; Gramm-Leach-Bliley Act.....................

ARTICLE IV

DISTRIBUTIONS AND

ADVANCES BY THE SERVICERS

Section 4.01 Advances.....................................................

Section 4.02 Priorities of Distribution...................................

Section 4.03 Monthly Statements to Certificateholders.....................

Section 4.04 Certain Matters Relating to the Determination of LIBOR.......

Section 4.05 Allocation of Applied Realized Loss Amounts..................

ARTICLE V

THE CERTIFICATES

Section 5.01 The Certificates.............................................

Section 5.02 Certificate Register; Registration of Transfer and

Exchange of Certificates.....................................

Section 5.03 Mutilated, Destroyed, Lost or Stolen Certificates............

Section 5.04 Persons Deemed Owners........................................

Section 5.05 Access to List of Certificateholders' Names and Addresses....

Section 5.06 Maintenance of Office or Agency..............................

ARTICLE VI

THE DEPOSITOR AND THE SERVICERS

Section 6.01 Respective Liabilities of the Depositor and the Servicers....

Section 6.02 Merger or Consolidation of the Depositor or a Servicer.......

Section 6.03 Limitation on Liability of the Depositor, the Servicers

and Others...................................................

Section 6.04 Limitation on Resignation of a Servicer......................

Section 6.05 Additional Indemnification by the Servicers; Third Party

Claims.......................................................

ARTICLE VII

DEFAULT

Section 7.01 Events of Default............................................

Section 7.02 Trustee to Act; Appointment of Successor.....................

Section 7.03 Notification to Certificateholders...........................

ARTICLE VIII

CONCERNING THE TRUSTEE

Section 8.01 Duties of the Trustee........................................

Section 8.02 Certain Matters Affecting the Trustee........................

Section 8.03 Trustee Not Liable for Certificates or Mortgage Loans........

Section 8.04 Trustee May Own Certificates.................................

Section 8.05 Trustee's Fees and Expenses..................................

Section 8.06 Eligibility Requirements for the Trustee.....................

Section 8.07 Resignation and Removal of the Trustee.......................

Section 8.08 Successor Trustee............................................

Section 8.09 Merger or Consolidation of the Trustee.......................

Section 8.10 Appointment of Co-Trustee or Separate Trustee................

Section 8.11 Tax Matters..................................................

Section 8.12 Periodic Filings.............................................

Section 8.13 Tax Classification of the Excess Reserve Fund Account and

the Interest Rate Cap Agreements.............................

ARTICLE IX

TERMINATION

Section 9.01 Termination upon Liquidation or Purchase of the Mortgage

Loans........................................................

Section 9.02 Final Distribution on the Certificates.......................

Section 9.03 Additional Termination Requirements..........................

ARTICLE X

MISCELLANEOUS PROVISIONS

Section 10.01 Amendment....................................................

Section 10.02 Recordation of Agreement; Counterparts.......................

Section 10.03 Governing Law................................................

Section 10.04 Intention of Parties.........................................

Section 10.05 Notices......................................................

Section 10.06 Severability of Provisions...................................

Section 10.07 Assignment; Sales; Advance Facilities........................

Section 10.08 Limitation on Rights of Certificateholders...................

Section 10.09 Inspection and Audit Rights..................................

Section 10.10 Certificates Nonassessable and Fully Paid....................

Section 10.11 Rule of Construction.........................................

Section 10.12 Waiver of Jury Trial.........................................

SCHEDULES

Schedule I Mortgage Loan Schedule

Schedule II Representations and Warranties of Chase, as Servicer

Schedule III Representations and Warranties of HomEq, as Servicer

Schedule IV Representations and Warranties of the Depositor as to the

Mortgage Loans

Schedule V Representations and Warranties of First NLC as to the First NLC

Mortgage Loans

Schedule VI Representations and Warranties of MILA as to the MILA Mortgage

Loans

EXHIBITS

Exhibit A Form of Class A, Class M and Class B Certificate

Exhibit B Form of Class P Certificate

Exhibit C Form of Class R Certificate

Exhibit D Form of Class X Certificate

Exhibit E Form of Initial Certification of Trustee

Exhibit F Form of Document Certification and Exception Report of Trustee

Exhibit G Form of Residual Transfer Affidavit

Exhibit H Form of Transferor Certificate

Exhibit I Form of Rule 144A Letter

Exhibit J Form of Request for Release

Exhibit K Form of Contents for Each Mortgage File

Exhibit L Form of Certification to be provided with Form 10-K

Exhibit M Form of Certification to be provided by the Trustee to Depositor

Exhibit N Form of Certification to be provided by the applicable Servicer

to Depositor

Exhibit O Form of Servicer Power of Attorney

<PAGE>

THIS POOLING AND SERVICING AGREEMENT, dated as of January 1, 2005,

among MORGAN STANLEY ABS CAPITAL I INC., a Delaware corporation (the

"Depositor"), CHASE HOME FINANCE LLC, a Delaware limited liability company

("Chase"), HOMEQ SERVICING CORPORATION, a New Jersey corporation ("HomEq" and,

together with Chase, the "Servicers"), FIRST NLC FINANCIAL SERVICES, LLC ("First

NLC"), a Florida limited liability company, MILA, INC., a Washington corporation

("MILA" and, together with First NLC, the "Responsible Parties"), and DEUTSCHE

BANK NATIONAL TRUST COMPANY, a national banking association, as trustee (the

"Trustee").

W I T N E S S E T H:

In consideration of the mutual agreements herein contained, the

parties hereto agree as follows:

PRELIMINARY STATEMENT

The Trustee shall elect that two segregated asset pools within the

Trust Fund be treated for federal income tax purposes as comprising two REMICs

(each, a "REMIC" or, in the alternative, the Lower Tier REMIC and the Upper Tier

REMIC, respectively). Each Class of Certificates (other than the Class P and

Class R Certificates), other than the right of each Class of LIBOR Certificates

to receive Basis Risk CarryForward Amounts and the right of the Class X

Certificates to receive payments from the Interest Rate Cap Agreements,

represents ownership of a regular interest in the Upper Tier REMIC for purposes

of the REMIC Provisions. The Class R Certificate represents ownership of the

sole class of residual interest in each of the Lower Tier REMIC and the Upper

Tier REMIC for purposes of the REMIC Provisions. The Startup Day for each REMIC

described herein is the Closing Date. The latest possible maturity date for each

Certificate is the latest date referenced in Section 2.05. The Upper Tier REMIC

shall hold as assets the several classes of uncertificated Lower Tier Regular

Interests, set out below. Each such Lower Tier Regular Interest is hereby

designated as a regular interest in the Lower Tier REMIC. The Class LT-A-1ss,

Class LT-A-1mz, Class LT-A-2a, Class LT-A-2b, Class LT-A-2c, Class LT-M-1, Class

LT-M-2, Class LT-M-3, Class LT-M-4, Class LT-M-5, Class LT-M-6, Class LT-B-1,

Class LT-B-2 and Class LT-B-3 Interests are hereby designated the LT-Accretion

Directed Classes (the "LT-Accretion Directed Classes"). The Class P Certificates

represent beneficial ownership of the Prepayment Charges, each Class of LIBOR

Certificates represents beneficial ownership of a regular interest in the Upper

Tier REMIC and the right to receive Basis Risk CarryForward Amounts and the

Class X Certificates represent beneficial ownership of a regular interest in the

Upper Tier REMIC, the Excess Reserve Fund Account and the Interest Rate Cap

Agreements, which portions of the Trust Fund shall be treated as a grantor

trust.

<TABLE>

<CAPTION>

Lower Tier Lower Tier Interest Initial Lower Tier Corresponding Upper

Class Designation Rate Principal Amount Tier REMIC Class

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

<S> <C> <C> <C>

Class LT-A-1ss (1) 1/2 initial Corresponding Upper Tier REMIC A-1ss

Class initial Class Certificate Balance

Class LT-A-1mz (1) 1/2 initial Corresponding Upper Tier REMIC A-1mz

Class initial Class Certificate Balance

Class LT-A-2a (1) 1/2 initial Corresponding Upper Tier REMIC A-2a

Class initial Class Certificate Balance

Class LT-A-2b (1) 1/2 initial Corresponding Upper Tier REMIC A-2b

Class initial Class Certificate Balance

Class LT-A-2c (1) 1/2 initial Corresponding Upper Tier REMIC A-2c

Class initial Class Certificate Balance

Class LT-M-1 (1) 1/2 initial Corresponding Upper Tier REMIC M-1

Class initial Class Certificate Balance

Class LT-M-2 (1) 1/2 initial Corresponding Upper Tier REMIC M-2

Class initial Class Certificate Balance

Class LT-M-3 (1) 1/2 initial Corresponding Upper Tier REMIC M-3

Class initial Class Certificate Balance

Class LT-M-4 (1) 1/2 initial Corresponding Upper Tier REMIC M-4

Class initial Class Certificate Balance

Class LT-M-5 (1) 1/2 initial Corresponding Upper Tier REMIC M-5

Class initial Class Certificate Balance

Class LT-M-6 (1) 1/2 initial Corresponding Upper Tier REMIC M-6

Class initial Class Certificate Balance

Class LT-B-1 (1) 1/2 initial Corresponding Upper Tier REMIC B-1

Class initial Class Certificate Balance

Class LT-B-2 (1) 1/2 initial Corresponding Upper Tier REMIC B-2

Class initial Class Certificate Balance

Class LT-B-3 (1) 1/2 initial Corresponding Upper Tier REMIC B-3

Class initial Class Certificate Balance

Class LT-Accrual (1) 1/2 Pool Stated Principal Balance plus 1/2

Subordinated Amount, less aggregate

initial Lower Tier Principal Amount of

Class LT-Group I and Class LT-Group II

Interests

Class LT-Group I (2) 0.001% aggregate Stated Principal Balance

of Group I Mortgage Loans(4)

Class LT-Group II (3) 0.001% aggregate Stated Principal Balance

of Group II Mortgage Loans(4)

Class LT-R (5) (5)

</TABLE>

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(1) The interest rate with respect to any Distribution Date for these

interests is a per annum variable rate equal to the WAC Cap.

(2) The interest rate with respect to any Distribution Date for the Class

LT-Group I Interest is a per annum variable rate (expressed as a

percentage rounded to eight decimal places) equal to the Loan Group I Cap.

(3) The interest rate with respect to any Distribution Date for the Class

LT-Group II Interest is a per annum variable rate (expressed as a

percentage rounded to eight decimal places) equal to the Loan Group II

Cap.

(4) For all Distribution Dates, the Lower Tier Principal Amount of these Lower

Tier Regular Interests shall be rounded to eight decimal places.

(5) The Class LT-R Interest is the sole class of residual interest in the

Lower Tier REMIC and it does not have a principal amount or an interest

rate.

The Lower Tier REMIC shall hold as assets all of the assets included

in the Trust Fund other than Prepayment Charges, the Interest Rate Cap

Agreements, the Excess Reserve Fund Account, and the Lower Tier Regular

Interests.

On each Distribution Date, 50% of the increase in the Subordinated

Amount will be payable as a reduction of the Lower Tier Principal Amounts of the

LT-Accretion Directed Classes (each such Class will be reduced by an amount

equal to 50% of any increase in the Subordinated Amount that is attributable to

a reduction in the Class Certificate Balance of its Corresponding Class) and

will be accrued and added to the Lower Tier Principal Amount of the Class

LT-Accrual Interest. On each Distribution Date, the increase in the Lower Tier

Principal Amount of the Class LT-Accrual Interest may not exceed interest

accruals for such Distribution Date for the Class LT-Accrual Interest. In the

event that: (i) 50% of the increase in the Subordinated Amount exceeds (ii)

interest accruals on the Class LT-Accrual Interest for such Distribution Date,

the excess for such Distribution Date (accumulated with all such excesses for

all prior Distribution Dates) will be added to any increase in the Subordinated

Amount for purposes of determining the amount of interest accrual on the Class

LT-Accrual Interest payable as principal on the LT-Accretion Directed Classes on

the next Distribution Date pursuant to the first sentence of this paragraph. All

payments of scheduled principal and prepayments of principal generated by the

Mortgage Loans shall be allocated (i) 50% to the Class LT-Accrual Interest, the

Class LT-Group I Interest and the Class LT-Group II Interest (and further

allocated among these Lower Tier Regular Interests in the manner described

below) and (ii) 50% to the LT-Accretion Directed Classes (principal payments

shall be allocated among such LT-Accretion Directed Classes in an amount equal

to 50% of the principal amounts allocated to their respective Corresponding

Classes), until paid in full. Notwithstanding the above, principal payments

allocated to the Class X Certificates that result in the reduction in the

Subordinated Amount shall be allocated to the Class LT-Accrual Interest (until

paid in full). Realized Losses shall be applied so that after all distributions

have been made on each Distribution Date (i) the Lower Tier Principal Amount of

each LT-Accretion Directed Class is equal to 50% of the Class Certificate

Balance of its Corresponding Class, and (ii) the Class LT-Accrual Interest, the

Class LT-Group I Interest and the Class LT-Group II Interest (and further

allocated among these Lower Tier Regular Interests in the manner described

below) is equal to 50% of the aggregate Stated Principal Balance of the Mortgage

Loans plus 50% of the Subordinated Amount. As among the Class LT-Accrual

Interest, the Class LT-Group I Interest and the Class LT-Group II Interest, all

payments of scheduled principal and prepayments of principal generated by the

Mortgage Loans, and all Realized Losses, allocable to such Lower Tier Regular

Interests shall be allocated (i) to the Class LT-Group I Interest and the Class

LT-Group II Interest, each from the related Loan Group so that their respective

Lower Tier Principal Amounts (computed to at least eight decimal places) are

equal to 0.001% of the aggregate Stated Principal Balance of the Mortgage Loans

in the related Loan Group and (ii) the remainder to the Class LT-Accrual

Interest.

The Upper Tier REMIC shall issue the following classes of Upper Tier

Regular Interests and each such interest, other than the Class UT-R Interest, is

hereby designated as a regular interest in the Upper Tier REMIC.

<TABLE>

<CAPTION>

Upper Tier Interest Initial Upper Tier

Rate and Principal Amount and

Corresponding Corresponding

Upper Tier Class Pass-Through Class Certificate Corresponding

Class Designation Rate Balance Certificate Class

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

<S> <C> <C> <C>

Class A-1ss (1) $ 293,823,000 Class A-1ss(9)

Class A-1mz (2) $ 73,456,000 Class A-1mz(9)

Class A-2a (3) $ 161,866,000 Class A-2a(9)

Class A-2b (4) $ 180,000,000 Class A-2b(9)

Class A-2c (5) $ 35,000,000 Class A-2c(9)

Class M-1 (6) $ 30,569,000 Class M-1(9)

Class M-2 (6) $ 27,831,000 Class M-2(9)

Class M-3 (6) $ 17,794,000 Class M-3(9)

Class M-4 (6) $ 15,512,000 Class M-4(9)

Class M-5 (6) $ 14,600,000 Class M-5(9)

Class M-6 (6) $ 13,232,000 Class M-6(9)

Class B-1 (6) $ 11,862,000 Class B-1(9)

Class B-2 (6) $ 7,756,000 Class B-2(9)

Class B-3 (6) $ 9,126,000 Class B-3(9)

Class X (7) $ 0(7) Class X(7)

Class UT-R (8) $ 0 Class R

</TABLE>

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

(1) The Class A-1ss Interest will bear interest during each Interest Accrual

Period at a per annum rate equal to (a) on or prior to the Optional

Termination Date, the least of (i) LIBOR plus 0.270%, (ii) the Loan Group

I Cap and (iii) the WAC Cap or (b) after the Optional Termination Date,

the least of (i) LIBOR plus 0.540%, (ii) the Loan Group I Cap and (iii)

the WAC Cap.

(2) The Class A-1mz Interest will bear interest during each Interest Accrual

Period at a per annum rate equal to (a) on or prior to the Optional

Termination Date, the least of (i) LIBOR plus 0.290%, (ii) the Loan Group

I Cap and (iii) the WAC Cap or (b) after the Optional Termination Date,

the least of (i) LIBOR plus 0.580%, (ii) the Loan Group I Cap and (iii)

the WAC Cap.

(3) The Class A-2a Interest will bear interest during each Interest Accrual

Period at a per annum rate equal to (a) on or prior to the Optional

Termination Date, the least of (i) LIBOR plus 0.120%, (ii) the Loan Group

II Cap and (iii) the WAC Cap or (b) after the Optional Termination Date,

the least of (i) LIBOR plus 0.240%, (ii) the Loan Group II Cap and (iii)

the WAC Cap.

(4) The Class A-2b Interest will bear interest during each Interest Accrual

Period at a per annum rate equal to (a) on or prior to the Optional

Termination Date, the least of (i) LIBOR plus 0.210%, (ii) the Loan Group

II Cap and (iii) the WAC Cap or (b) after the Optional Termination Date,

the least of (i) LIBOR plus 0.420%, (ii) the Loan Group II Cap and (iii)

the WAC Cap.

(5) The Class A-2c Interest will bear interest during each Interest Accrual

Period at a per annum rate equal to (a) on or prior to the Optional

Termination Date, the least of (i) LIBOR plus 0.350%, (ii) the Loan Group

II Cap and (iii) the WAC Cap or (b) after the Optional Termination Date,

the least of (i) LIBOR plus 0.700%, (ii) the Loan Group II Cap and (iii)

the WAC Cap.

(6) The Class M-1, Class M-2, Class M-3, Class M-4, Class M-5, Class M-6,

Class B-1, Class B-2 and Class B-3 Interests will bear interest during

each Interest Accrual Period at a per annum rate equal to (a) on or prior

to the Optional Termination Date, the lesser of (i) LIBOR plus 0.450%,

0.470%, 0.520%, 0.700%, 0.750%, 0.850%, 1.300%, 1.420% and 2.300%,

respectively, and (ii) the WAC Cap or (b) after the Optional Termination

Date, the lesser of (i) LIBOR plus 0.675%, 0.705%, 0.780%, 1.050%, 1.125%,

1.275%, 1.950%, 2.130% and 3.450%, respectively, and (ii) the WAC Cap.

(7) The Class X Interest has an initial principal balance of $20,075,053 but

it will not accrue interest on such balance but will accrue interest on a

notional principal balance. As of any Distribution Date, the Class X

Interest shall have a notional principal balance equal to the aggregate of

the principal balances of the Lower Tier Regular Interests as of the first

day of the related Interest Accrual Period. With respect to any Interest

Accrual Period, the Class X Interest shall bear interest at a rate equal

to the excess, if any, of the WAC Cap over the product of (i) 2 and (ii)

the weighted average Lower Tier Interest Rates of the Lower Tier Regular

Interests, where the Lower Tier Interest Rate on each of the Class

LT-Accrual Interest, Class LT-Group I Interest and Class LT-Group II

Interest is subject to a cap equal to zero and each LT Accretion Directed

Class is subject to a cap equal to the Pass-Through Rate on its

Corresponding Class. With respect to any Distribution Date, interest that

so accrues on the notional principal balance of the Class X Interest shall

be deferred in an amount equal to any increase in the Subordinated Amount

on such Distribution Date. Such deferred interest shall not itself bear

interest. The Class X Certificates will represent beneficial ownership of

the Class X Interest, the Interest Rate Cap Agreements, and amounts in the

Excess Reserve Fund Account, subject to the obligation to make payments

from the Excess Reserve Fund Account in respect of Basis Risk CarryForward

Amounts. For federal income tax purposes, the Trustee will treat a Class X

Certificateholder's obligation to make payments from the Excess Reserve

Fund Account as payments made pursuant to an interest rate cap contract

written by the Class X Certificateholders in favor of each Class of LIBOR

Certificates. Such rights of the Class X Certificateholders and LIBOR

Certificateholders shall be treated as held in a portion of the Trust Fund

that is treated as a grantor trust under subpart E, Part I of subchapter J

of the Code.

(8) The Class UT-R Interest is the sole class of residual interest in the

Upper Tier REMIC. The Class UT-R Interest does not have an interest rate.

(9) Each of these Certificates will represent not only the ownership of the

Corresponding Class of Upper Tier Regular Interest but also the right to

receive payments from the Excess Reserve Fund Account in respect of any

Basis Risk CarryForward Amounts. For federal income tax purposes, the

Trustee will treat a Certificateholder's right to receive payments from

the Excess Reserve Fund Account as payments made pursuant to an interest

rate cap contract written by the Class X Certificateholders.

The minimum denomination for each Class of Certificates, other than

the Class P, Class R and the Class X Certificates, will be $25,000 with integral

multiples of $1 in excess thereof. The minimum demomonination for the Class P

and the Class X Certificates will each be a 1% Percentage Interest in such

Class. The Class R Certificates will represent a 100% Percentage Interest in

such Class.

It is expected that each Class of Certificates will receive its

final distribution of principal and interest on or prior to the Final Scheduled

Distribution Date.

Set forth below are designations of Classes of Certificates to the

categories used herein:

Book-Entry Certificates....... All Classes of Certificates other than the

Physical Certificates.

Class A Certificates.......... Class A-1ss, Class A-1mz, Class A-2a,

Class A-2b and Class A-2c Certificates.

Delay Certificates............ None.

ERISA-Restricted

Certificates.................. Class R Certificates, Class P Certificates

and Class X Certificates; any certificate

with a rating below the lowest applicable

permitted rating under the Underwriters'

Exemption.

LIBOR Certificates............ Class A and Subordinated Certificates.

Non-Delay Certificates........ Class A, Class X and Subordinated

Certificates.

Offered Certificates.......... All Classes of Certificates other than the

Private Certificates.

Physical Certificates......... Class P, Class X and Class R Certificates.

Private Certificates.......... Class P, Class X and Class R Certificates.

Rating Agencies............... DBRS, Moody's and Standard & Poor's.

Regular Certificates.......... All Classes of Certificates other than the

Class P and Class R Certificates.

Residual Certificates......... Class R Certificates.

Subordinated Certificates..... Class M-1, Class M-2, Class M-3, Class

M-4, Class M-5, Class M-6, Class B-1,

Class B-2 and Class B-3 Certificates.

ARTICLE I

DEFINITIONS

Whenever used in this Agreement, the following words and phrases,

unless the context otherwise requires, shall have the following meanings:

Accepted Servicing Practices: With respect to any Mortgage Loan,

those mortgage servicing practices set forth in Section 3.01(a) of this

Agreement.

Account: Any of the Collection Accounts, the Distribution Account,

any Escrow Account or the Excess Reserve Fund Account. Each Account shall be an

Eligible Account.

Accrued Certificate Interest Distribution Amount: With respect to

any Distribution Date for each Class of LIBOR Certificates, the amount of

interest accrued during the related Interest Accrual Period at the applicable

Pass-Through Rate on the related Class Certificate Balance immediately prior to

such Distribution Date, as reduced by such Class's share of Net Prepayment

Interest Shortfalls and Relief Act Interest Shortfalls for such Distribution

Date allocated to such Class pursuant to Section 4.02.

Adjustable Rate Mortgage Loan: An adjustable rate Mortgage Loan.

Adjusted Net Mortgage Rate: As to each Mortgage Loan and at any

time, the per annum rate equal to the Mortgage Rate less the Expense Fee Rate.

Adjustment Date: As to any Mortgage Loan, the first Due Date on

which the related Mortgage Rate adjusts as set forth in the related Mortgage

Note and each Due Date thereafter on which the Mortgage Rate adjusts as set

forth in the related Mortgage Note.

Advance: Any P&I Advance or Servicing Advance.

Advance Facility: A financing or other facility as described in

Section 10.07.

Advancing Person: The Person to whom any Servicer's rights under

this Agreement to be reimbursed for any P&I Advances or Servicing Advances have

been assigned pursuant to Section 10.07.

Affiliate: With respect to any Person, any other Person controlling,

controlled by or under common control with such first Person. For the purposes

of this definition, "control" means the power to direct the management and

policies of such Person, directly or indirectly, whether through the ownership

of voting securities, by contract or otherwise; and the terms "controlling" and

"controlled" have meanings correlative to the foregoing.

Agreement: This Pooling and Servicing Agreement and all amendments

or supplements hereto.

Amount Held for Future Distribution: As to the Certificates on any

Distribution Date, the aggregate amount held in each Collection Account at the

close of business on the related Determination Date on account of (i) Principal

Prepayments, Insurance Proceeds, Condemnation Proceeds and Liquidation Proceeds

on the Mortgage Loans received after the end of the related Prepayment Period

and (ii) all Scheduled Payments on the Mortgage Loans due after the end of the

related Due Period.

Applied Realized Loss Amount: With respect to any Distribution Date,

the amount, if any, by which the aggregate Class Certificate Balance of the

LIBOR Certificates after distributions of principal on such Distribution Date

exceeds the aggregate Stated Principal Balance of the Mortgage Loans for such

Distribution Date.

Appraised Value: The value set forth in an appraisal made in

connection with the origination of the related Mortgage Loan as the value of the

Mortgaged Property.

Assignment of Mortgage: An assignment of the Mortgage, notice of

transfer or equivalent instrument in recordable form (other than the assignee's

name and recording information not yet returned from the recording office),

reflecting the sale of the Mortgage to the Trustee.

Available Funds: With respect to any Distribution Date and the

Mortgage Loans to the extent received by the Trustee (x) the sum of (i) all

scheduled installments of interest (net of the related Expense Fees) and

principal due on the Due Date on such Mortgage Loans in the related Due Period

and received by the Servicers on or prior to the related Determination Date,

together with any P&I Advances in respect thereof; (ii) all Condemnation

Proceeds, Insurance Proceeds and Liquidation Proceeds received by the Servicers

during the related Prepayment Period (in each case, net of unreimbursed expenses

incurred in connection with a liquidation or foreclosure and unreimbursed

Advances, if any); (iii) all partial or full prepayments on the Mortgage Loans

received by the Servicers during the related Prepayment Period together with all

Compensating Interest, if applicable, thereon (excluding any Prepayment

Charges); (iv) all Substitution Adjustment Amounts with respect to the

substitutions of Mortgage Loans that occur during the month in which such

Distribution Date occurs; (v) amounts received with respect to such Distribution

Date as the Repurchase Price in respect of a Mortgage Loan repurchased by the

Depositor or any of the Originators, as applicable, during the related

Prepayment Period; (vi) the proceeds received with respect to the termination of

the Trust Fund pursuant to clause (a) of Section 9.01; and (vii) the Closing

Date Deposit Amount; reduced by (y) amounts in reimbursement for Advances

previously made with respect to the Mortgage Loans and other amounts as to which

the Servicers, the Depositor or the Trustee are entitled to be paid or

reimbursed pursuant to this Agreement.

Balloon Loan: Any Mortgage Loan that requires only payments of

interest until the stated maturity date of the Mortgage Loan or Scheduled

Payments of principal which (not including the payment due on its stated

maturity date) are based on an amortization schedule that would be insufficient

to fully amortize the principal thereof by the stated maturity date of the

Mortgage Loan.

Basic Principal Distribution Amount: With respect to any

Distribution Date, the excess of (i) the Principal Remittance Amount for such

Distribution Date over (ii) the Excess Subordinated Amount, if any, for such

Distribution Date.

Basis Risk CarryForward Amount: With respect to each Class of LIBOR

Certificates, as of any Distribution Date, the sum of (A) if on such

Distribution Date the Pass-Through Rate for any Class of LIBOR Certificates is

based upon a Loan Group Cap or the WAC Cap, the excess of (i) the amount of

interest such Class of Certificates would otherwise be entitled to receive on

such Distribution Date had such rate been calculated as the sum of LIBOR and the

applicable Pass-Through Margin on such Class of Certificates for such

Distribution Date, over (ii) the amount of interest payable on such Class of

Certificates at, with respect to the Group I Class A Certificates, the lesser of

the Loan Group I Cap or the WAC Cap, with respect to the Group II Class A

Certificates, the lesser of the Loan Group II Cap or the WAC Cap, and with

respect to each other Class of LIBOR Certificates, the WAC Cap, as applicable,

for such Distribution Date and (B) the Basis Risk CarryForward Amount for such

Class of Certificates for all previous Distribution Dates not previously paid,

together with interest thereon at a rate equal to the sum of LIBOR and the

applicable Pass-Through Margin for such Class of Certificates for such

Distribution Date.

Basis Risk Payment: For any Distribution Date, an amount equal to

the lesser of (i) the aggregate of the Basis Risk CarryForward Amounts for such

Distribution Date and (ii) the Class X Distributable Amount (prior to any

reduction for Basis Risk Payments).

Best's: Best's Key Rating Guide, as the same shall be amended from

time to time.

Book-Entry Certificates: As specified in the Preliminary Statement.

Business Day: Any day other than (i) Saturday or Sunday, or (ii) a

day on which banking and savings and loan institutions, in (a) the States of

Arizona, New York, New Jersey, California or Delaware, (b) a State in which any

Servicer's servicing operations are located, or (c) the State in which the

Trustee's operations are located, are authorized or obligated by law or

executive order to be closed.

Cap Provider: Morgan Stanley Capital Services, Inc., a Delaware

corporation, and its successors in interest.

Certificate: Any one of the Certificates executed by the Trustee in

substantially the forms attached hereto as exhibits.

Certificate Balance: With respect to any Class of Certificates,

other than the Class X, Class P or Class R Certificates, at any date, the

maximum dollar amount of principal to which the Holder thereof is then entitled

hereunder, such amount being equal to the Denomination thereof minus all

distributions of principal previously made with respect thereto and in the case

of any Subordinated Certificates, reduced by any Applied Realized Loss Amounts

applicable to such Class of Subordinated Certificates; provided, however, that

immediately following the Distribution Date on which a Subsequent Recovery is

distributed, the Class Certificate Balances of any Class or Classes of

Subordinated Certificates that have been previously reduced by Applied Realized

Loss Amounts will be increased, in order of seniority, by the amount of the

Subsequent Recovery distributed on such Distribution Date (up to the amount of

Applied Realized Loss Amounts allocated to such Class or Classes). The Class X,

Class P and Class R Certificates have no Certificate Balance.

Certificate Owner: With respect to a Book-Entry Certificate, the

Person who is the beneficial owner of such Book-Entry Certificate.

Certificate Register: The register maintained pursuant to Section

5.02.

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 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.

Certification: As defined in Section 8.12.

Chase: Chase Home Finance LLC, a Delaware limited liability company,

and its successors in interest.

Class: All Certificates bearing the same class designation as set

forth in the Preliminary Statement.

Class A Certificate Group: The Group I Class A Certificates or the

Group II Class A Certificates, as applicable.

Class A Certificates: The Group I Class A Certificates and the Group

II Class A Certificates.

Class A Principal Allocation Percentage: With respect to any

Distribution Date, the percentage equivalent of a fraction, determined as

follows: (A) with respect to the Group I Class A Certificates, a fraction, the

numerator of which is (x) the portion of the Principal Remittance Amount for

such Distribution Date that is attributable to the principal received or

advanced on the Group I Mortgage Loans and the denominator of which is (y) the

Principal Remittance Amount for such Distribution Date; and (B) with respect to

the Group II Class A Certificates, a fraction, the numerator of which is (x) the

portion of the Principal Remittance Amount for such Distribution Date that is

attributable to the principal received or advanced on the Group II Mortgage

Loans and the denominator of which is (y) the Principal Remittance Amount for

such Distribution Date.

Class A Principal Distribution Amount: With respect to any

Distribution Date, the excess of (i) the aggregate Class Certificate Balances of

the Class A Certificates immediately prior to such Distribution Date over (ii)

the lesser of (A) 63.10% of the aggregate Stated Principal Balance of the

Mortgage Loans for such Distribution Date and (B) the excess, if any, of the

aggregate Stated Principal Balance of the Mortgage Loans for such Distribution

Date over $4,562,510.

Class A-1mz Certificates: All Certificates bearing the class

designation of "Class A-1mz".

Class A-1ss Certificates: All Certificates bearing the class

designation of "Class A-1ss".

Class A-2a Certificates: All Certificates bearing the class

designation of "Class A-2a".

Class A-2b Certificates: All Certificates bearing the class

designation of "Class A-2b".

Class A-2c Certificates: All Certificates bearing the class

designation of "Class A-2c".

Class B Cap Agreement: The interest rate cap agreement, dated

January 28, 2005, between Morgan Stanley Capital Services Inc. and the Trustee,

relating to the Class B Certificates.

Class B Certificates: The Class B-1, Class B-2 and Class B-3

Certificates.

Class B-1 Certificates: All Certificates bearing the class

designation of "Class B-1".

Class B-1 Principal Distribution Amount: With respect to any

Distribution Date, the excess of (i) the sum of (A) the aggregate Class

Certificate Balances of the Class A Certificates (after taking into account the

allocation of the Class A Principal Distribution Amount for such Distribution

Date), (B) the Class Certificate Balance of the Class M-1 Certificates (after

taking into account the allocation of the Class M-1 Principal Distribution

Amount for such Distribution Date), (C) the Class Certificate Balance of the

Class M-2 Certificates (after taking into account the allocation of the Class

M-2 Principal Distribution Amount for such Distribution Date), (D) the Class

Certificate Balance of the Class M-3 Certificates (after taking into account the

allocation of the Class M-3 Principal Distribution Amount for such Distribution

Date), (E) the Class Certificate Balance of the Class M-4 Certificates (after

taking into account the allocation of the Class M-4 Principal Distribution

Amount for such Distribution Date), (F) the Class Certificate Balance of the

Class M-5 Certificates (after taking into account the allocation of the Class

M-5 Principal Distribution Amount for such Distribution Date), (G) the Class

Certificate Balance of the Class M-6 Certificates (after taking into account the

allocation of the Class M-6 Principal Distribution Amount for such Distribution

Date) and (H) the Class Certificate Balance of the Class B-1 Certificates

immediately prior to such Distribution Date over (ii) the lesser of (A) 91.90%

of the aggregate Stated Principal Balance of the Mortgage Loans for such

Distribution Date and (B) the excess, if any, of the aggregate Stated Principal

Balance of the Mortgage Loans for such Distribution Date over $4,562,510.

Class B-2 Certificates: All Certificates bearing the class

designation of "Class B-2".

Class B-2 Principal Distribution Amount: With respect to any

Distribution Date, the excess of (i) the sum of (A) the aggregate Class

Certificate Balances of the Class A Certificates (after taking into account the

allocation of the Class A Principal Distribution Amount for such Distribution

Date), (B) the Class Certificate Balance of the Class M-1 Certificates (after

taking into account the allocation of the Class M-1 Principal Distribution

Amount for such Distribution Date), (C) the Class Certificate Balance of the

Class M-2 Certificates (after taking into account the allocation of the Class

M-2 Principal Distribution Amount for such Distribution Date), (D) the Class

Certificate Balance of the Class M-3 Certificates (after taking into account the

allocation of the Class M-3 Principal Distribution Amount for such Distribution

Date), (E) the Class Certificate Balance of the Class M-4 Certificates (after

taking into account the allocation of the Class M-4 Principal Distribution

Amount for such Distribution Date), (F) the Class Certificate Balance of the

Class M-5 Certificates (after taking into account the allocation of the Class

M-5 Principal Distribution Amount for such Distribution Date), (G) the Class

Certificate Balance of the Class M-6 Certificates (after taking into account the

allocation of the Class M-6 Principal Distribution Amount for such Distribution

Date), (H) the Class Certificate Balance of the Class B-1 Certificates (after

taking into account the allocation of the Class B-1 Principal Distribution

Amount for such Distribution Date), and (I) the Class Certificate Balance of the

Class B-2 Certificates immediately prior to such Distribution Date over (ii) the

lesser of (A) 93.60% of the aggregate Stated Principal Balance of the Mortgage

Loans for such Distribution Date and (B) the excess, if any, of the aggregate

Stated Principal Balance of the Mortgage Loans for such Distribution Date over

$4,562,510.

Class B-3 Certificates: All Certificates bearing the class

designation of "Class B-3".

Class B-3 Principal Distribution Amount: With respect to any

Distribution Date, the excess of (i) the sum of (A) the aggregate Class

Certificate Balances of the Class A Certificates (after taking into account the

allocation of the Class A Principal Distribution Amount for such Distribution

Date), (B) the Class Certificate Balance of the Class M-1 Certificates (after

taking into account the allocation of the Class M-1 Principal Distribution

Amount for such Distribution Date), (C) the Class Certificate Balance of the

Class M-2 Certificates (after taking into account the allocation of the Class

M-2 Principal Distribution Amount for such Distribution Date), (D) the Class

Certificate Balance of the Class M-3 Certificates (after taking into account the

allocation of the Class M-3 Principal Distribution Amount for such Distribution

Date), (E) the Class Certificate Balance of the Class M-4 Certificates (after

taking into account the allocation of the Class M-4 Principal Distribution

Amount for such Distribution Date), (F) the Class Certificate Balance of the

Class M-5 Certificates (after taking into account the allocation of the Class

M-5 Principal Distribution Amount for such Distribution Date), (G) the Class

Certificate Balance of the Class M-6 Certificates (after taking into account the

allocation of the Class M-6 Principal Distribution Amount for such Distribution

Date), (H) the Class Certificate Balance of the Class B-1 Certificates (after

taking into account the allocation of the Class B-1 Principal Distribution

Amount for such Distribution Date), (I) the Class Certificate Balance of the

Class B-2 Certificates (after taking into account the allocation of the Class

B-2 Principal Distribution Amount for such Distribution Date) and (J) the Class

Certificate Balance of the Class B-3 Certificates immediately prior to such

Distribution Date over (ii) the lesser of (A) 95.60% of the aggregate Stated

Principal Balance of the Mortgage Loans for such Distribution Date and (B) the

excess, if any, of the aggregate Stated Principal Balance of the Mortgage Loans

for such Distribution Date over $4,562,510.

Class Certificate Balance: With respect to any Class and as to any

date of determination, the aggregate of the Certificate Balances of all

Certificates of such Class as of such date.

Class M Cap Agreement: The interest rate cap agreement, dated

January 28, 2005, between Morgan Stanley Capital Services Inc. and the Trustee,

relating to the Class M Certificates.

Class M Certificates: The Class M-1, Class M-2, Class M-3, Class

M-4, Class M-5 and Class M-6 Certificates.

Class M-1 Certificates: All Certificates bearing the class

designation of "Class M-1".

Class M-1 Principal Distribution Amount: With respect to any

Distribution Date, the excess of (i) the sum of (A) the aggregate Class

Certificate Balances of the Class A Certificates (after taking into account the

allocation of the Class A Principal Distribution Amount for such Distribution

Date), and (B) the Class Certificate Balance of the Class M-1 Certificates

immediately prior to such Distribution Date over (ii) the lesser of (A) 69.80%

of the aggregate Stated Principal Balance of the Mortgage Loans for such

Distribution Date and (B) the excess, if any, of the aggregate Stated Principal

Balance of the Mortgage Loans for such Distribution Date over $4,562,510.

Class M-2 Certificates: All Certificates bearing the class

designation of "Class M-2".

Class M-2 Principal Distribution Amount: With respect to any

Distribution Date, the excess of (i) the sum of (A) the aggregate Class

Certificate Balances of the Class A Certificates (after taking into account the

allocation of the Class A Principal Distribution Amount for such Distribution

Date), (B) the Class Certificate Balance of the Class M-1 Certificates (after

taking into account the allocation of the Class M-1 Principal Distribution

Amount for such Distribution Date) and (C) the Class Certificate Balance of the

Class M-2 Certificates immediately prior to such Distribution Date over (ii) the

lesser of (A) 75.90% of the aggregate Stated Principal Balance of the Mortgage

Loans for such Distribution Date and (B) the excess, if any, of the aggregate

Stated Principal Balance of the Mortgage Loans for such Distribution Date over

$4,562,510.

Class M-3 Certificates: All Certificates bearing the class

designation of "Class M-3".

Class M-3 Principal Distribution Amount: With respect to any

Distribution Date, the excess of (i) the sum of (A) the aggregate Class

Certificate Balances of the Class A Certificates (after taking into account the

allocation of the Class A Principal Distribution Amount for such Distribution

Date), (B) the Class Certificate Balance of the Class M-1 Certificates (after

taking into account the allocation of the Class M-1 Principal Distribution

Amount for such Distribution Date), (C) the Class Certificate Balance of the

Class M-2 Certificates (after taking into account the allocation of the Class

M-2 Principal Distribution Amount for such Distribution Date) and (D) the Class

Certificate Balance of the Class M-3 Certificates immediately prior to such

Distribution Date over (ii) the lesser of (A) 79.80% of the aggregate Stated

Principal Balance of the Mortgage Loans for such Distribution Date and (B) the

excess, if any, of the aggregate Stated Principal Balance of the Mortgage Loans

for such Distribution Date over $4,562,510.

Class M-4 Certificates: All Certificates bearing the class

designation of "Class M-4".

Class M-4 Principal Distribution Amount: With respect to any

Distribution Date, the excess of (i) the sum of (A) the aggregate Class

Certificate Balances of the Class A Certificates (after taking into account the

allocation of the Class A Principal Distribution Amount for such Distribution

Date), (B) the Class Certificate Balance of the Class M-1 Certificates (after

taking into account the allocation of the Class M-1 Principal Distribution

Amount for such Distribution Date), (C) the Class Certificate Balance of the

Class M-2 Certificates (after taking into account the allocation of the Class

M-2 Principal Distribution Amount for such Distribution Date), (D) the Class

Certificate Balance of the Class M-3 Certificates (after taking into account the

allocation of the Class M-3 Principal Distribution Amount for such Distribution

Date), and (E) the Class Certificate Balance of the Class M-4 Certificates

immediately prior to such Distribution Date over (ii) the lesser of (A) 83.20%

of the aggregate Stated Principal Balance of the Mortgage Loans for such

Distribution Date and (B) the excess, if any, of the aggregate Stated Principal

Balance of the Mortgage Loans for such Distribution Date over $4,562,510.

Class M-5 Certificates: All Certificates bearing the class

designation of "Class M-5".

Class M-5 Principal Distribution Amount: With respect to any

Distribution Date, the excess of (i) the sum of (A) the aggregate Class

Certificate Balances of the Class A Certificates (after taking into account the

allocation of the Class A Principal Distribution Amount for such Distribution

Date), (B) the Class Certificate Balance of the Class M-1 Certificates (after

taking into account the allocation of the Class M-1 Principal Distribution

Amount for such Distribution Date), (C) the Class Certificate Balance of the

Class M-2 Certificates (after taking into account the allocation of the Class

M-2 Principal Distribution Amount for such Distribution Date), (D) the Class

Certificate Balance of the Class M-3 Certificates (after taking into account the

allocation of the Class M-3 Principal Distribution Amount for such Distribution

Date), (E) the Class Certificate Balance of the Class M-4 Certificates (after

taking into account the allocation of the Class M-4 Principal Distribution

Amount for such Distribution Date) and (F) the Class Certificate Balance of the

Class M-5 Certificates immediately prior to such Distribution Date over (ii) the

lesser of (A) 86.40% of the aggregate Stated Principal Balance of the Mortgage

Loans for such Distribution Date and (B) the excess, if any, of the aggregate

Stated Principal Balance of the Mortgage Loans for such Distribution Date over

$4,562,510.

Class M-6 Certificates: All Certificates bearing the class

designation of "Class M-6".

Class M-6 Principal Distribution Amount: With respect to any

Distribution Date, the excess of (i) the sum of (A) the aggregate Class

Certificate Balances of the Class A Certificates (after taking into account the

allocation of the Class A Principal Distribution Amount for such Distribution

Date), (B) the Class Certificate Balance of the Class M-1 Certificates (after

taking into account the allocation of the Class M-1 Principal Distribution

Amount for such Distribution Date), (C) the Class Certificate Balance of the

Class M-2 Certificates (after taking into account the allocation of the Class

M-2 Principal Distribution Amount for such Distribution Date), (D) the Class

Certificate Balance of the Class M-3 Certificates (after taking into account the

allocation of the Class M-3 Principal Distribution Amount for such Distribution

Date), (E) the Class Certificate Balance of the Class M-4 Certificates (after

taking into account the allocation of the Class M-4 Principal Distribution

Amount for such Distribution Date), (F) the Class Certificate Balance of the

Class M-5 Certificates (after taking into account the allocation of the Class

M-5 Principal Distribution Amount for such Distribution Date) and (G) the Class

Certificate Balance of the Class M-6 Certificates immediately prior to such

Distribution Date over (ii) the lesser of (A) 89.30% of the aggregate Stated

Principal Balance of the Mortgage Loans for such Distribution Date and (B) the

excess, if any, of the aggregate Stated Principal Balance of the Mortgage Loans

for such Distribution Date over $4,562,510.

Class P Certificates: All Certificates bearing the class designation

of "Class P".

Class R Certificates: All Certificates bearing the class designation

of "Class R".

Class X Certificates: All Certificates bearing the class designation

of "Class X".

Class X Distributable Amount: On any Distribution Date, the sum of

(i) as a distribution in respect of interest, the amount of interest that has

accrued on the Class X Interest and not applied as an Extra Principal

Distribution Amount on such Distribution Date, plus any such accrued interest

remaining undistributed from prior Distribution Dates, plus, without

duplication, (ii) as a distribution in respect of principal, any portion of the

principal balance of the Class X Interest which is distributable as a

Subordination Reduction Amount, minus (iii) any amounts paid as a Basis Risk

Payment.

Class X Interest: The Upper Tier Regular Interest represented by the

Class X Certificates as specified and described in the Preliminary Statement and

the related footnote thereto.

Closing Date: January 28, 2005.

Closing Date Deposit Amount: $659,793.93 (all of which is allocable

to principal) deposited by the Depositor into the Distribution Account on the

Closing Date. $527,568.39 of the Closing Date Deposit Amount shall be

attributable to the Group I Mortgage Loans and $132,225.54 of the Closing Date

Deposit Amount shall be attributable to the Group II Mortgage Loans.

Code: The Internal Revenue Code of 1986, including any successor or

amendatory provisions.

Collection Account: As defined in Section 3.10(a).

Combined Loan to Value Ratio or CLTV: As of any date and as to any

Second Lien Mortgage Loan, the ratio, expressed as a percentage, of the (a) sum

of (i) the outstanding principal balance of the Second Lien Mortgage Loan and

(ii) the outstanding principal balance as of such date of any mortgage loan or

mortgage loans that are senior or equal in priority to the Second Lien Mortgage

Loan and which are secured by the same Mortgaged Property to (b) the Appraised

Value as determined pursuant to the Underwriting Guidelines of the related

Mortgaged Property as of the origination of the Second Lien Mortgage Loan.

Compensating Interest: For any Distribution Date, the lesser of (a)

the Prepayment Interest Shortfall, if any, for such Distribution Date, with

respect to voluntary Principal Prepayments in Full (excluding any payments made

upon liquidation of the Mortgage Loan) (or, in the case of HomEq, the amount by

which such Prepayment Interest Shortfall exceeds all Prepayment Interest

Excesses for such Distribution Date) and (b) the amount of the Servicing Fee

payable to the applicable Servicer for such Distribution Date.

Condemnation Proceeds: All awards of settlements in respect of a

Mortgaged Property, whether permanent or temporary, partial or entire, by

exercise of the power of eminent domain or condemnation.

Convertible Mortgage Loan: Any individual Adjustable Rate Mortgage

Loan which contains a provision whereby the Mortgagor is permitted to convert

the Adjustable Rate Mortgage Loan to a Fixed Rate Mortgage Loan in accordance

with the terms of the related Mortgage Note.

Corporate Trust Office: The designated office of the Trustee in the

State of California at which at any particular time its corporate trust business

with respect to this Agreement is administered, which office at the date of the

execution of this Agreement is located at 1761 East St. Andrew Place, Santa Ana,

California 92705, Attn: Trust Administration-MS05X1, facsimile no. (714)

247-6329 and which is the address to which notices to and correspondence with

the Trustee should be directed.

Corresponding Class: The class of interests in any REMIC created

under this Agreement that corresponds to the class of interests in another such

REMIC or to a Class of Certificates in the manner set out below:

Corresponding Lower Tier Corresponding Upper Tier Corresponding Class

Class Designation Regular Interest of Certificates

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

Class LT-A-1ss Class A-1ss Class A-1ss

Class LT-A-1mz Class A-1mz Class A-1mz

Class LT-A-2a Class A-2a Class A-2a

Class LT-A-2b Class A-2b Class A-2b

Class LT-A-2c Class A-2c Class A-2c

Class LT-M-1 Class M-1 Class M-1

Class LT-M-2 Class M-2 Class M-2

Class LT-M-3 Class M-3 Class M-3

Class LT-M-4 Class M-4 Class M-4

Class LT-M-5 Class M-5 Class M-5

Class LT-M-6 Class M-6 Class M-6

Class LT-B-1 Class B-1 Class B-1

Class LT-B-2 Class B-2 Class B-2

Class LT-B-3 Class B-3 Class B-3

N/A Class X Class X

Cumulative Loss Percentage: With respect to any Distribution Date,

the percentage equivalent of a fraction, the numerator of which is the aggregate

amount of Realized Losses incurred from the Cut-off Date to the last day of the

calendar month preceding the month in which such Distribution Date occurs and

the denominator of which is the Cut-off Date Pool Principal Balance of the

Mortgage Loans.

Cumulative Loss Trigger Event: With respect to any Distribution

Date, a Cumulative Loss Trigger Event exists if the quotient (expressed as a

percentage) of (x) the aggregate amount of Realized Losses incurred since the

Cut-off Date through the last day of the related Prepayment Period divided by

(y) the Cut-off Date Pool Principal Balance exceeds the applicable cumulative

loss percentages set forth below with respect to such Distribution Date:

<TABLE>

<CAPTION>

Distribution Date Occurring In Cumulative Loss Percentage

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

<S> <C>

February 2008 through January 2009 3.000% for the first month, plus an additional 1/12th of 1.500% for

each month thereafter (e.g., 3.750% in August 2008)

February 2009 through January 2010 4.500% for the first month, plus an additional 1/12th of 1.250% for

each month thereafter (e.g., 5.125% in August 2009)

February 2010 through January 2011 5.750% for the first month, plus an additional 1/12th of 0.750% for

each month thereafter (e.g., 6.125% in August 2010)

February 2011 and thereafter 6.500%

</TABLE>

Custodial File: With respect to each Mortgage Loan, the file

retained by the Trustee consisting of items (i) - (viii) as listed on Exhibit K

hereto.

Cut-off Date: January 1, 2005.

Cut-off Date Pool Principal Balance: The aggregate Stated Principal

Balances of all Mortgage Loans as of the Cut-off Date plus the portion of the

Closing Date Deposit Amount allocable to principal.

Cut-off Date Principal Balance: As to any Mortgage Loan, the Stated

Principal Balance thereof as of the close of business on the Cut-off Date (after

giving effect to payments of principal due on that date, whether or not

received).

Data Tape Information: The information provided by the Originators

as of the Cut-off Date to the Depositor or the Purchaser setting forth the

following information with respect to each Mortgage Loan: (1) the Mortgagor's

name; (2) as to each Mortgage Loan, the Scheduled Principal Balance as of the

Cut-off Date; (3) the Mortgage Rate Cap; (4) the Index; (5) a code indicating

whether the Mortgaged Property is owner occupied; (6) the type of Mortgaged

Property; (7) the first date on which the Scheduled Payment was due on the

Mortgage Loan and, if such date is not consistent with the Due Date currently in

effect, such Due Date; (8) the "paid through date" based on payments received

from the related Mortgagor; (9) the original principal amount of the Mortgage

Loan; (10) with respect to Adjustable Rate Mortgage Loans, the Maximum Mortgage

Rate; (11) the type of Mortgage Loan (i.e., Fixed Rate or Adjustable Rate

Mortgage Loan); (12) a code indicating the purpose of the loan (i.e., purchase,

rate and term refinance, equity take out refinance); (13) a code indicating the

documentation style (i.e., full, asset verification, income verification and no

documentation); (14) the credit risk score (FICO score); (15) the loan credit

grade classification (as described in the underwriting guidelines); (16) with

respect to each Adjustable Rate Mortgage Loan, the Minimum Mortgage Rate; (17)

the Mortgage Rate at origination; (18) with respect to each Adjustable Rate

Mortgage Loan, the first Adjustment Date immediately following the Cut-off Date;

(19) the value of the Mortgaged Property; (20) a code indicating the type of

Prepayment Charges applicable to such Mortgage Loan (including any prepayment

penalty term), if any; (21) with respect to each Adjustable Rate Mortgage Loan,

the Periodic Mortgage Rate Cap; (22) the applicable Originator of such Mortgage

Loan; (23) with respect to each First Lien Mortgage Loan, the LTV at

origination, and with respect to each Second Lien Mortgage Loan, the CLTV at

origination; and (24) if such Mortgage Loan is covered by a primary mortgage

insurance policy or a lender-paid primary mortgage insurance policy, the primary

mortgage insurance rate. With respect to the Mortgage Loans in the aggregate,

the Data Tape Information shall set forth the following information, as of the

Cut-off Date: (1) the number of Mortgage Loans; (2) the current aggregate

outstanding principal balance of the Mortgage Loans; (3) the weighted average

Mortgage Rate of the Mortgage Loans; and (4) the weighted average maturity of

the Mortgage Loans.

DBRS: Dominion Bond Rating Service, Inc., and its successors in

interest. If DBRS is designated as a Rating Agency in the Preliminary Statement,

for purposes of Section 10.05(b) the address for notices to DBRS shall be

Dominion Bond Rating Service, Inc., 55 Broadway, 15th Floor, New York, NY 10006,

or such other address as DBRS may hereafter furnish to the Depositor and the

Servicers.

Debt Service Reduction: With respect to any Mortgage Loan, a

reduction by a court of competent jurisdiction in a proceeding under the United

States Bankruptcy Code in the Scheduled Payment for such Mortgage Loan which

became final and non-appealable, except such a reduction resulting from a

Deficient Valuation or any reduction that results in a permanent forgiveness of

principal.

Deficient Valuation: With respect to any Mortgage 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 Mortgage Loan,

which valuation results from a proceeding initiated under the United States

Bankruptcy Code.

Definitive Certificates: Any Certificate evidenced by a Physical

Certificate and any Certificate issued in lieu of a Book-Entry Certificate

pursuant to Section 5.02(e).

Delay Certificates: As specified in the Preliminary Statement.

Deleted Mortgage Loan: As defined in Section 2.03.

Delinquency Trigger Event: With respect to any Distribution Date, a

Delinquency Trigger Event exists if the quotient (expressed as a percentage) of

(x) the rolling three month average of the Stated Principal Balances of 60+ Day

Delinquent Mortgage Loans for such Distribution Date, divided by (y) the

aggregate Stated Principal Balance of the Mortgage Loans for such Distribution

Date equals or exceeds 38.00% of the prior period's Senior Enhancement

Percentage.

Denomination: With respect to each Certificate, the amount set forth

on the face thereof as the "Initial Certificate Balance of this Certificate" or

the Percentage Interest appearing on the face thereof.

Depositor: Morgan Stanley ABS Capital I Inc., a Delaware

corporation, and its successors in interest.

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 Institution: Any depository institution or trust company,

including the Trustee, that (a) is incorporated under the laws of the United

States of America or any State thereof, (b) is subject to supervision and

examination by federal or state banking authorities and (c) has outstanding

unsecured commercial paper or other short-term unsecured debt obligations that

are rated "P-1" by Moody's, "F1+" by Fitch and "A-1" by Standard & Poor's.

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: With respect to each Distribution Date, the 18th

day (or if such day is not a Business Day, the immediately preceding Business

Day) in the calendar month in which such Distribution Date occurs.

Distribution Account: The separate Eligible Account created and

maintained by the Trustee pursuant to Section 3.07(d) in the name of the Trustee

for the benefit of the Certificateholders and designated "Deutsche Bank National

Trust Company in trust for registered holders of Morgan Stanley Home Equity Loan

Trust 2005-1 Mortgage Pass-Through Certificates, Series 2005-1." Funds in the

Distribution Account shall be held in trust for the Certificateholders for the

uses and purposes set forth in this Agreement.

Distribution Account Deposit Date: As to any Distribution Date,

12:00 noon New York City time on the third Business Day immediately preceding

such Distribution Date.

Distribution Date: The 25th day of each calendar month, or if such

day is not a Business Day in New York City, the next succeeding Business Day in

New York City, commencing in February 2005.

Document Certification and Exception Report: The report attached to

Exhibit F hereto.

Due Date: The day of the month on which the Scheduled Payment is due

on a Mortgage Loan, exclusive of any days of grace.

Due Period: With respect to any Distribution Date, the period

commencing on the second day of the calendar month preceding the month in which

such Distribution Date occurs and ending on the first day of the calendar month

in which such Distribution Date occurs.

Eligible Account: Either (i) an account 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 a subsidiary of a holding company, the short-term unsecured debt

obligations of such holding company) are rated "A-1+" by Standard & Poor's,

"F-1" by Fitch, "R-1" by DBRS and "P-1" by Moody's (or a comparable rating if

another Rating Agency is specified by the Depositor by written notice to each

Servicer) at the time any amounts are held on deposit therein, (ii) an account

or accounts the deposits in which are fully insured by the FDIC, (iii) a trust

account or accounts maintained with a federal or state chartered depository

institution or trust company acting in its fiduciary capacity or (iv) any other

account acceptable to each Rating Agency. Eligible Accounts may bear interest,

and may include, if otherwise qualified under this definition, accounts

maintained with the Trustee.

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 of Prohibited

Transaction Exemption ("PTE") 2002-41, 67 Fed. Reg. 54487 (2002) (or any

successor thereto), or any substantially similar administrative exemption

granted by the U.S. Department of Labor.

ERISA-Restricted Certificate: As specified in the Preliminary

Statement.

Escrow Account: The Eligible Account or Accounts established and

maintained pursuant to Section 3.09(b).

Escrow Payments: As defined in Section 3.09(b).

Event of Default: As defined in Section 7.01.

Excess Reserve Fund Account: The separate Eligible Account created

and maintained by the Trustee pursuant to Sections 3.07(b) and 3.07(c) in the

name of the Trustee for the benefit of the Regular Certificateholders and

designated "Deutsche Bank National Trust Company in trust for registered holders

of Morgan Stanley Home Equity Loan Trust 2005-1, Mortgage Pass-Through

Certificates, Series 2005-1." Funds in the Excess Reserve Fund Account shall be

held in trust for the Regular Certificateholders for the uses and purposes set

forth in this Agreement. Amounts on deposit in the Excess Reserve Fund Account

shall not be invested.

Excess Subordinated Amount: With respect to any Distribution Date,

the excess, if any, of (a) the Subordinated Amount on such Distribution Date

over (b) the Specified Subordinated Amount for such Distribution Date.

Exchange Act: As defined in Section 8.12(a).

Expense Fee Rate: As to each Mortgage Loan, a per-annum rate equal

to the sum of the Servicing Fee Rate, the Trustee Fee Rate and any lender-paid

primary mortgage insurance fee rate, if applicable.

Expense Fees: As to each Mortgage Loan, the sum of the Servicing

Fee, the Trustee Fee and any lender-paid primary mortgage insurance fee, if

applicable.

Extra Principal Distribution Amount: As of any Distribution Date,

the lesser of (x) the related Total Monthly Excess Spread for such Distribution

Date and (y) the related Subordination Deficiency for such Distribution Date.

Fannie Mae: The Federal National Mortgage Association, or any

successor thereto.

Fannie Mae Guides: The Fannie Mae Sellers' Guide and the Fannie Mae

Servicers' Guide and all amendments or additions thereto.

FDIC: The Federal Deposit Insurance Corporation, or any successor

thereto.

Final Recovery Determination: With respect to any defaulted Mortgage

Loan or any REO Property (other than a Mortgage Loan or REO Property purchased

by the applicable Responsible Party, Meritage, Wilmington Finance or the

Depositor, as applicable, as contemplated by this Agreement, the Meritage

Agreements or the Wilmington Finance Agreements, as applicable), a determination

made by the applicable Servicer that all Insurance Proceeds, Condemnation

Proceeds, Liquidation Proceeds and other payments or recoveries which the

applicable Servicer, in its reasonable good faith judgment, expects to be

finally recoverable in respect thereof have been so recovered. Each Servicer

shall maintain records, prepared by a Servicing Officer, of each Final Recovery

Determination made thereby.

Final Scheduled Distribution Date: The Final Scheduled Distribution

Date for each Class of Certificates is the Distribution Date in each of the

following months:

Month of Final

Scheduled

Distribution Date

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

Class A-1ss Certificates.................................. December 2034

Class A-1mz Certificates.................................. December 2034

Class A-2a Certificates................................... December 2034

Class A-2b Certificates................................... December 2034

Class A-2c Certificates................................... December 2034

Class M-1 Certificates.................................... December 2034

Class M-2 Certificates.................................... December 2034

Class M-3 Certificates.................................... December 2034

Class M-4 Certificates.................................... December 2034

Class M-5 Certificates.................................... December 2034

Class M-6 Certificates.................................... December 2034

Class B-1 Certificates.................................... December 2034

Class B-2 Certificates.................................... December 2034

Class B-3 Certificates.................................... December 2034

Class X Certificates...................................... December 2034

Class P Certificates...................................... December 2034

Class R Certificates...................................... December 2034

First Lien Mortgage Loan: A Mortgage Loan secured by a first lien

Mortgage on the related Mortgaged Property.

First NLC: First NLC Financial Services, LLC, a Florida limited

liability company, and its successors in interest.

First NLC Mortgage Loans: The Mortgage Loans purchased by the

Purchaser pursuant to the First NLC Purchase Agreement for which First NLC is

identified as Originator on the Mortgage Loan Schedule.

First NLC Purchase Agreement: The Mortgage Loan Purchase and

Warranties Agreement, dated as of September 1, 2004, by and between First NLC

and the Purchaser.

Fitch: Fitch, Inc., or any successor thereto.

Fixed Rate Mortgage Loan: A fixed rate Mortgage Loan.

Freddie Mac: 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.

Gross Margin: With respect to each Adjustable Rate Mortgage Loan,

the fixed percentage amount set forth in the related Mortgage Note to be added

to the applicable Index to determine the Mortgage Rate.

Group I Class A Cap Agreement: The interest rate cap agreement,

dated January 28, 2005, between Morgan Stanley Capital Services Inc. and the

Trustee, relating to the Group I Class A Certificates.

Group I Class A Certificates: The Class A-1ss and Class A-1mz

Certificates.

Group I Mortgage Loans: The Mortgage Loans identified on the

Mortgage Loan Schedule as Group I Mortgage Loans.

Group I Sequential Trigger Event: (a) With respect to any

Distribution Date occurring before February 2008, the circumstances in which the

aggregate amount of Realized Losses incurred since the Cut-off Date through the

last day of the related Prepayment Period divided by the aggregate Stated

Principal Balance of the Mortgage Loans as of the Cut-off Date exceeds 3.00%,

and (b) with respect to any Distribution Date occurring in or after February

2008, a Trigger Event.

Group II Class A Certificates: The Class A-2a, Class A-2b and Class

A-2c Certificates.

Group II Class A Cap Agreement: The interest rate cap agreement,

dated January 28, 2005, between Morgan Stanley Capital Services Inc. and the

Trustee, relating to the Group II Class A Certificates.

Group II Mortgage Loans: The Mortgage Loans identified on the

Mortgage Loan Schedule as Group II Mortgage Loans.

HomEq: HomEq Servicing Corporation, a New Jersey corporation, and

its successors in interest.

Index: As to each Adjustable Rate Mortgage Loan, the index from time

to time in effect for the adjustment of the Mortgage Rate set forth as such on

the related Mortgage Note.

Insurance Policy: With respect to any Mortgage Loan included in the

Trust Fund, any insurance policy, including all riders and endorsements thereto

in effect, including any replacement policy or policies for any Insurance

Policies.

Insurance Proceeds: With respect to each Mortgage Loan, proceeds of

insurance policies insuring the Mortgage Loan or the related Mortgaged Property.

Interest Accrual Period: With respect to each Class of Non-Delay

Certificates and the Corresponding Class of Lower Tier Regular Interests and any

Distribution Date, the period commencing on the Distribution Date occurring in

the month preceding the month in which the current Distribution Date occurs and

ending on the day immediately preceding the current Distribution Date (or, in

the case of the first Distribution Date, the period from and including the

Closing Date to but excluding such first Distribution Date). For purposes of

computing interest accruals on each Class of Non-Delay Certificates, each

Interest Accrual Period has the actual number of days in such month and each

year is assumed to have 360 days.

Interest Rate Adjustment Date: With respect to each Adjustable Rate

Mortgage Loan, the date, specified in the related Mortgage Note and the Mortgage

Loan Schedule, on which the Mortgage Rate is adjusted.

Interest Rate Cap Agreements: The Group I Class A Cap Agreement, the

Group II Class A Cap Agreement, the Class M Cap Agreement and the Class B Cap

Agreement.

Interest Rate Cap Payment: (a) With respect to the Group I Class A

Certificates and the first 32 Distribution Dates, the amount, if any, equal to

the product, determined on an "actual/360" basis, of (i) the excess, if any, of

the lesser of (A) the one-month LIBOR rate as of the related reset date under

the Group I Class A Cap Agreement and (B) the applicable cap ceiling rate set

forth on Schedule A to such Interest Rate Cap Agreement for such Distribution

Date over the applicable cap strike rate set forth on Schedule A to such

Interest Rate Cap Agreement for such Distribution Date, (ii) the applicable

Group I Class A notional amount set forth on Schedule A to the Group I Class A

Cap Agreement for such Distribution Date and (iii) the multiplier set forth on

Schedule A to such Interest Rate Cap Agreement; (b) with respect to the Group II

Class A Certificates and the first 32 Distribution Dates, the amount, if any,

equal to the product, determined on an "actual/360" basis, of (i) the excess, if

any, of the lesser of (A) the one-month LIBOR rate as of the related reset date

under the Group II Class A Cap Agreement and (B) the applicable cap ceiling rate

set forth on Schedule A to such Interest Rate Cap Agreement for such

Distribution Date over the applicable cap strike rate set forth on Schedule A to

such Interest Rate Cap Agreement for such Distribution Date, (ii) the applicable

Group II Class A notional amount set forth on Schedule A to the Group II Class A

Cap Agreement for such Distribution Date and (iii) the multiplier set forth on

Schedule A to such Interest Rate Cap Agreement; (c) with respect to the Class M

Certificates and the first 32 Distribution Dates, the amount, if any, equal to

the product, determined on an "actual/360" basis, of (i) the excess, if any, of

the lesser of (A) the one-month LIBOR rate as of the related reset date under

the Class M Cap Agreement and (B) the applicable cap ceiling rate set forth on

Schedule A to such Interest Rate Cap Agreement for such Distribution Date over

the applicable cap strike rate set forth on Schedule A to such Interest Rate Cap

Agreement for such Distribution Date, (ii) the applicable Class M notional

amount set forth on Schedule A to the Class M Cap Agreement for such

Distribution Date and (iii) the multiplier set forth on Schedule A to such

Interest Rate Cap Agreement; and (d) with respect to the Class B Certificates

and the first 32 Distribution Dates, the amount, if any, equal to the product,

determined on an "actual/360" basis, of (i) the excess, if any, of the lesser of

(A) the one-month LIBOR rate as of the related reset date under the Class B Cap

Agreement and (B) the applicable cap ceiling rate set forth on Schedule A to

such Interest Rate Cap Agreement for such Distribution Date over the applicable

cap strike rate set forth on Schedule A to such Interest Rate Cap Agreement for

such Distribution Date, (ii) the applicable Class B notional amount set forth on

Schedule A to the Class B Cap Agreement for such Distribution Date and (iii) the

multiplier set forth on Schedule A to such Interest Rate Cap Agreement.

Interest Remittance Amount: With respect to any Distribution Date

and the Mortgage Loans in a Loan Group, that portion of Available Funds

attributable to interest relating to Mortgage Loans in that Loan Group.

Investment Account: As defined in Section 3.12(a).

Investor: With respect to each MERS Designated Mortgage Loan, the

Person named on the MERS System as the investor pursuant to the MERS Procedures

Manual.

Late Collections: With respect to any Mortgage Loan and any Due

Period, all amounts received after the Determination Date immediately following

such Due Period, whether as late payments of Scheduled Payments or as Insurance

Proceeds, Condemnation Proceeds, Liquidation Proceeds or otherwise, which

represent late payments or collections of principal and/or interest due (without

regard to any acceleration of payments under the related Mortgage and Mortgage

Note) but delinquent for such Due Period and not previously recovered.

LIBOR: With respect to any Interest Accrual Period for the LIBOR

Certificates, the rate determined by the Trustee on the related LIBOR

Determination Date on the basis of the offered rate for one-month U.S. dollar

deposits as such rate appears on Telerate Page 3750 as of 11:00 a.m. (London

time) on such date; provided that if such rate does not appear on Telerate Page

3750, the rate for such date will be determined on the basis of the rates at

which one-month U.S. dollar deposits are offered by the Reference Banks at

approximately 11:00 a.m. (London time) on such date to prime banks in the London

interbank market. In such event, the Trustee shall request the principal London

office of each of the Reference Banks to provide a quotation of its rate. If at

least two such quotations are provided, the rate for that date 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 date will be the arithmetic mean of the rates

quoted by major banks in New York City, selected by the Trustee (after

consultation with the Depositor), at approximately 11:00 a.m. (New York City

time) on such date for one-month U.S. dollar loans to leading European banks.

LIBOR Certificates: As specified in the Preliminary Statement.

LIBOR Determination Date: With respect to any Interest Accrual

Period for the LIBOR Certificates, the second London Business Day preceding the

commencement of such Interest Accrual Period.

Liquidated Mortgage Loan: With respect to any Distribution Date, a

defaulted Mortgage Loan (including any REO Property) which either (a) was

liquidated in the calendar month preceding the month of such Distribution Date

and as to which the applicable Servicer has certified to the Trustee that it has

received all amounts it expects to receive in connection with the liquidation of

such Mortgage Loan including the final disposition of an REO Property, or (b) is

a Second Lien Mortgage Loan (1) that is delinquent 180 days or longer, (2) for

which the related first lien mortgage loan is not a Mortgage Loan, and (3) as to

which the applicable Servicer has certified to the Trustee that it does not

believe there is a reasonable likelihood that any further net proceeds will be

received or recovered with respect to such Second Lien Mortgage Loan.

Liquidation Proceeds: Cash received in connection with the

liquidation of a Liquidated Mortgage Loan, whether through a trustee's sale,

foreclosure sale or otherwise, including any Subsequent Recoveries.

Loan Group: The Group I Mortgage Loans or the Group II Mortgage

Loans, as applicable.

Loan Group Cap: The Loan Group I Cap or the Loan Group II Cap, as

applicable.

Loan Group I Cap: With respect to the Group I Mortgage Loans as of

any Distribution Date, the product of (i) the weighted average of the Adjusted

Net Mortgage Rates then in effect on the beginning of the related Due Period on

the Group I Mortgage Loans and (ii) a fraction, the numerator of which is 30 and

the denominator of which is the actual number of days in the Interest Accrual

Period related to such Distribution Date.

Loan Group II Cap: With respect to the Group II Mortgage Loans as of

any Distribution Date, the product of (i) the weighted average of the Adjusted

Net Mortgage Rates then in effect on the beginning of the related Due Period on

the Group II Mortgage Loans and (ii) a fraction, the numerator of which is 30

and the denominator of which is the actual number of days in the Interest

Accrual Period related to such Distribution Date.

Loan-to-Value Ratio or LTV: With respect to any First Lien Mortgage

Loan, the ratio (expressed as a percentage) of the original outstanding

principal amount of the First Lien Mortgage Loan as of the Cut-off Date (unless

otherwise indicated), to the lesser of (a) the Appraised Value of the Mortgaged

Property at origination, and (b) if the First Lien Mortgage Loan was made to

finance the acquisition of the related Mortgaged Property, the purchase price of

the Mortgaged Property.

London Business Day: Any day on which dealings in deposits of United

States dollars are transacted in the London interbank market.

Lower Tier Interest Rate: As described in the Preliminary Statement.

Lower Tier Principal Amount: As described in the Preliminary

Statement.

Lower Tier Regular Interest: Each of the Class LT-A-1ss, Class

LT-A-1mz, Class LT-A-2a, Class LT-A-2b, Class LT-A-2c, Class LT-M-1, Class

LT-M-2, Class LT-M-3, Class LT-M-4, Class LT-M-5, Class LT-M-6, Class LT-B-1,

Class LT-B-2, Class LT-B-3, Class LT-Group I, Class LT-Group II and Class

LT-Accrual Interests as described in the Preliminary Statement.

Lower Tier REMIC: As described in the Preliminary Statement.

Maximum Mortgage Rate: With respect to each Adjustable Rate Mortgage

Loan, a rate that (i) is set forth on the Data Tape Information and in the

related Mortgage Note and (ii) is the maximum interest rate to which the

Mortgage Rate on such Adjustable Rate Mortgage Loan may be increased during the

lifetime of such Adjustable Rate Mortgage Loan.

Meritage: Meritage Mortgage Corporation, an Oregon corporation, and

its successors in interest.

Meritage Agreements: The Meritage Purchase Agreement and the

Meritage Assignment Agreement.

Meritage Assignment Agreement: The Assignment and Recognition

Agreement, dated as of the Closing Date, among the Purchaser, the Depositor and

Meritage.

Meritage Mortgage Loans: The Mortgage Loans purchased by the

Purchaser pursuant to the Meritage Purchase Agreement for which Meritage is

identified as Originator on the Mortgage Loan Schedule.

Meritage Purchase Agreement: The Mortgage Loan Purchase and

Warranties Agreement, dated as of August 1, 2004, by and between Meritage and

the Purchaser, solely insofar as such agreement relates to the Meritage Mortgage

Loans.

MERS: Mortgage Electronic Registration System, Inc.

MERS Designated Mortgage Loan: Mortgage Loans for which (a) the

Originators have designated or will designate MERS as, and have taken or will

take such action as is necessary to cause MERS to be, the mortgagee of record,

as nominee for the Originators, in accordance with MERS Procedure Manual and (b)

the Originators have designated or will designate the Trustee as the Investor on

the MERS(R) System.

MERS Procedures Manual: The MERS Procedures Manual, as it may be

amended, supplemented or otherwise modified from time to time.

MERS(R) System: MERS mortgage electronic registry system, as more

particularly described in the MERS Procedures Manual.

MILA: MILA, Inc., a Washington corporation, and its successors in

interest.

MILA Mortgage Loans: The Mortgage Loans purchased by the Purchaser

pursuant to the MILA Purchase Agreement for which MILA is identified as

Originator on the Mortgage Loan Schedule.

MILA Purchase Agreement: The Morgan Stanley Seller Agreement, dated

September 10, 2003, by and between the Purchaser and MILA, Inc.

Minimum Mortgage Rate: With respect to each Adjustable Rate Mortgage

Loan, a rate that (i) is set forth on the Data Tape Information and in the

related Mortgage Note and (ii) is the minimum interest rate to which the

Mortgage Rate on such Adjustable Rate Mortgage Loan may be decreased during the

lifetime of such Adjustable Rate Mortgage Loan.

Monthly Statement: The statement delivered to the Certificateholders

pursuant to Section 4.03.

Moody's: Moody's Investors Service, Inc., and its successors in

interest. If Moody's is designated as a Rating Agency in the Preliminary

Statement, 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 Pass-Through Group, or such other address

as Moody's may hereafter furnish to the Depositor and the Servicers.

Mortgage: The mortgage, deed of trust or other instrument identified

on the Mortgage Loan Schedule as securing a Mortgage Note.

Mortgage File: The items pertaining to a particular Mortgage Loan

contained in either the Servicing File or Custodial File.

Mortgage Loan: An individual Mortgage Loan which is the subject of

this Agreement, each Mortgage Loan originally sold and subject to this Agreement

being identified on the Mortgage Loan Schedule, which Mortgage Loan includes,

without limitation, the Mortgage File, the Scheduled Payments, Principal

Prepayments, Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds,

REO Disposition proceeds, Prepayment Charges, and all other rights, benefits,

proceeds and obligations arising from or in connection with such Mortgage Loan,

excluding replaced or repurchased Mortgage Loans.

Mortgage Loan Schedule: A schedule of Mortgage Loans annexed hereto

as Schedule I, such schedule setting forth the following information with

respect to each Mortgage Loan: (1) the Mortgage Loan number; (2) the city, state

and zip code of the Mortgaged Property; (3) the number and type of residential

units constituting the Mortgaged Property; (4) the current Mortgage Rate; (5)

the current net Mortgage Rate; (6) the current Scheduled Payment; (7) with

respect to each Adjustable Rate Mortgage Loan, the Gross Margin; (8) the

original term to maturity; (9) the scheduled maturity date; (10) the principal

balance of the Mortgage Loan as of the Cut-off Date after deduction of payments

of principal due on or before the Cut-off Date whether or not collected; (11)

with respect to each Adjustable Rate Mortgage Loan, the next Interest Rate

Adjustment Date; (12) with respect to each Adjustable Rate Mortgage Loan, the

lifetime Mortgage Interest Rate Cap; (13) whether the Mortgage Loan is

convertible or not; (14) the Servicing Fee; (15) whether such Mortgage Loan is a

Group I Mortgage Loan or a Group II Mortgage Loan; (16) the applicable

Originator's name, (17) the date such Mortgage Loan was sold by the applicable

Originator to the Purchaser, (18) whether such Mortgage Loan provides for a

Prepayment Charge as well as the term and amount of such Prepayment Charge, if

any; (19) with respect to each First Lien Mortgage Loan, the LTV at origination,

and with respect to each Second Lien Mortgage Loan, the CLTV at origination;

(20) the applicable Servicer's name; and (21) the date on which servicing of the

mortgage loan was transferred to the applicable Servicer.

Mortgage Note: The note or other evidence of the indebtedness of a

Mortgagor under a Mortgage Loan.

Mortgage Rate: The annual rate of interest borne on a Mortgage Note,

which shall be adjusted from time to time in the case of an Adjustable Rate

Mortgage Loan.

Mortgage Rate Caps: With respect to an Adjustable Rate Mortgage

Loan, the Periodic Mortgage Rate Cap, the Maximum Mortgage Rate, and the Minimum

Mortgage Rate for such Mortgage Loan.

Mortgaged Property: With respect to each Mortgage Loan, the real

property (or leasehold estate, if applicable) identified on the Mortgage Loan

Schedule as securing repayment of the debt evidenced by the related Mortgage

Note.

Mortgagor: The obligor(s) on a Mortgage Note.

Net Monthly Excess Cash Flow: For any Distribution Date the amount

remaining for distribution pursuant to subsection 4.02(a)(iii) (before giving

effect to distributions pursuant to such subsection).

Net Prepayment Interest Shortfall: For any Distribution Date, the

amount by which the sum of the Prepayment Interest Shortfalls for such

Distribution Date exceeds the sum of (i) the Compensating Interest payments made

with respect to such Distribution Date and (ii) in the case of HomEq, all

Prepayment Interest Excesses for such Distribution Date.

NIM Issuer: The entity established as the issuer of the NIM

Securities.

NIM Securities: Any debt securities secured or otherwise backed by

some or all of the Class X and Class P Certificates that are rated by one or

more Rating Agencies.

NIM Trustee: The trustee for the NIM Securities.

Non-Delay Certificates: As specified in the Preliminary Statement.

Non-Permitted Transferee: A Person other than a Permitted

Transferee.

Nonrecoverable P&I Advance: Any P&I Advance previously made or

proposed to be made in respect of a Mortgage Loan or REO Property that, in the

good faith business judgment of the applicable Servicer, will not or, in the

case of a proposed P&I Advance, would not be ultimately recoverable from related

late payments, Insurance Proceeds, Condemnation Proceeds, or Liquidation

Proceeds on such Mortgage Loan or REO Property as provided herein.

Nonrecoverable Servicing Advance: Any Servicing Advances previously

made or proposed to be made in respect of a Mortgage Loan or REO Property,

which, in accordance with Accepted Servicing Practices, will not or, in the case

of a proposed Servicing Advance, would not be ultimately recoverable from

related Insurance Proceeds, Condemnation Proceeds, Liquidation Proceeds or

otherwise. The determination by a Servicer that it has made a Nonrecoverable

Servicing Advance or that any proposed Servicing Advances, if made, would

constitute a Nonrecoverable Servicing Advance, shall be evidenced by an

Officer's Certificate delivered to the Trustee.

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: As specified in the Preliminary Statement.

Officer's Certificate: A certificate signed by an officer of the

Servicer with responsibility for the servicing of the Mortgage Loans required to

be serviced by the Servicer and listed on a list delivered to the Trustee

pursuant to this Agreement.

Opinion of Counsel: A written opinion of counsel, who may be

in-house counsel for a Servicer or a Subservicer, reasonably acceptable to the

Trustee, provided that any Opinion of Counsel relating to (a) qualification of

either the Lower Tier REMIC or Upper Tier REMIC or (b) compliance with the REMIC

Provisions, must be (unless otherwise stated in such Opinion of Counsel) an

opinion of counsel who (i) is in fact independent of such Servicer of the

Mortgage Loans, (ii) does not have any material direct or indirect financial

interest in such Servicer of the Mortgage Loans or in an affiliate of either and

(iii) is not connected with such Servicer of the Mortgage Loans as an officer,

employee, director or person performing similar functions.

Optional Termination Date: The Distribution Date on which the

aggregate Stated Principal Balance of the Mortgage Loans, as of the last day of

the related Due Period, is equal to 10% or less of the Cut-off Date Pool

Principal Balance.

Originators: Each of Meritage, Wilmington Finance, First NLC and

MILA.

OTS: Office of Thrift Supervision, and any successor thereto.

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 Mortgage Loan: As of any Due Date, a Mortgage 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 Mortgage Loan prior to such Due Date.

Ownership Interest: As to any Residual 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.

P&I Advance: As to any Mortgage Loan or REO Property, any advance

made by the applicable Servicer in respect of any Remittance Date representing

the aggregate of all payments of principal and interest, net of the Servicing

Fee, that were due during the related Due Period on the Mortgage Loans and that

were delinquent on the related Determination Date, plus certain amounts

representing assumed payments not covered by any current net income on the

Mortgaged Properties acquired by foreclosure or deed in lieu of foreclosure as

determined pursuant to Section 4.01.

Pass-Through Margin: With respect to each Class of Regular

Certificates, the following percentages: Class A-1ss Certificates, 0.270%; Class

A-1mz Certificates, 0.290%; Class A-2a Certificates, 0.120%; Class A-2b

Certificates, 0.210%; Class A-2c Certificates, 0.350%; Class M-1 Certificates,

0.450%; Class M-2 Certificates, 0.470%; Class M-3 Certificates, 0.520%; Class

M-4 Certificates, 0.700%; Class M-5 Certificates, 0.750%; Class M-6

Certificates, 0.850%; Class B-1 Certificates, 1.300%; Class B-2 Certificates,

1.420% and Class B-3 Certificates, 2.300%. On the first Distribution Date after

the Optional Termination Date, the Pass-Through Margins shall increase to: Class

A-1ss Certificates, 0.540%; Class A-1mz Certificates, 0.580%; Class A-2a

Certificates, 0.240%; Class A-2b Certificates, 0.420%; Class A-2c Certificates,

0.700%; Class M-1 Certificates, 0.675%; Class M-2 Certificates, 0.705%; Class

M-3 Certificates, 0.780%; Class M-4 Certificates, 1.050%; Class M-5

Certificates, 1.125%; Class M-6 Certificates, 1.275%; Class B-1 Certificates,

1.950%; Class B-2 Certificates, 2.130%; and Class B-3 Certificates, 3.450%.

Pass-Through Rate: For each Class of Certificates and each Lower

Tier Regular Interest, the per annum rate set forth or calculated in the manner

described in the Preliminary Statement.

Percentage Interest: As to any Certificate, the percentage interest

evidenced thereby in distributions required to be made on the related Class,

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.

Periodic Mortgage Rate Cap: With respect to an Adjustable Rate

Mortgage Loan, the periodic limit on each Mortgage Rate adjustment as set forth

in the related Mortgage Note.

Permitted Investments: Any one or more of the following obligations

or securities acquired at a purchase price of not greater than par, regardless

of whether issued by the Servicer, the Trustee or any of their respective

Affiliates:

(i) direct obligations of, or obligations fully guaranteed as

to timely payment of principal and interest by, the United States or

any agency or instrumentality thereof, provided such obligations are

backed by the full faith and credit of the United States;

(ii) demand and time deposits in, certificates of deposit of,

or bankers' acceptances (which shall each have an original maturity

of not more than 90 days and, in the case of bankers' acceptances,

shall in no event have an original maturity of more than 365 days or

a remaining maturity of more than 30 days) denominated in United

States dollars and issued by, any Depository Institution and rated

"P-1" by Moody's, "F1+" by Fitch and "A-1+" by Standard & Poor's (to

the extent they are Rating Agencies hereunder);

(iii) repurchase obligations with respect to any security

described in clause (i) above entered into with a Depository

Institution (acting as principal);

(iv) securities bearing interest or sold at a discount that

are issued by any corporation incorporated under the laws of the

United States of America or any State thereof and that are rated by

each Rating Agency that rates such securities in its highest

long-term unsecured rating categories at the time of such investment

or contractual commitment providing for such investment;

(v) commercial paper (including both non-interest-bearing

discount obligations and interest-bearing obligations payable on

demand or on a specified date not more than 30 days after the date

of acquisition thereof) that is rated by each Rating Agency that

rates such securities in its highest short-term unsecured debt

rating available at the time of such investment;

(vi) units of money market funds, including money market funds

advised by the Depositor or an Affiliate thereof, that have been

rated "Aaa" by Moody's, "AAA" by Standard & Poor's and at least "AA"

by Fitch (to the extent they are Rating Agencies hereunder); and

(vii) if previously confirmed in writing to the Trustee, any

other demand, money market or time deposit, or any other obligation,

security or investment, as may be acceptable to the Rating Agencies

as a permitted investment of funds backing "Aaa" or "AAA" rated

securities;

provided, however, that no instrument described hereunder shall evidence either

the right to receive (a) only interest with respect to the obligations

underlying such instrument or (b) both principal and interest payments derived

from obligations underlying such instrument and the interest and principal

payments with respect to such instrument provide a yield to maturity at par

greater than 120% of the yield to maturity at par of the underlying obligations.

Permitted Transferee: Any Person other than (i) the United States,

any State or political subdivision thereof, or any agency or instrumentality of

any of the foregoing, (ii) a foreign government, international organization or

any agency or instrumentality of either of the foregoing, (iii) 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)(1) of the Code) with respect to

any Residual Certificate, (iv) rural electric and telephone cooperatives

described in Section 1381(a)(2)(C) of the Code, (v) a Person that is not a U.S.

Person or a U.S. Person with respect to whom income from a Residual Certificate

is attributable to a foreign permanent establishment or fixed base, within the

meaning of an applicable income tax treaty of such Person or any other U.S.

Person, (vi) an "electing large partnership" within the meaning of Section 775

of the Code and (vii) any other Person so designated by the Depositor based upon

an Opinion of Counsel that the Transfer of an Ownership Interest in a Residual

Certificate to such Person may cause either the Lower Tier REMIC or the Upper

Tier REMIC to fail to qualify as a REMIC 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

Freddie Mac, a majority of its board of directors is not selected by such

government unit.

Person: Any individual, corporation, partnership, joint venture,

association, limited liability company, joint-stock company, trust,

unincorporated organization or government, or any agency or political

subdivision thereof.

Physical Certificates: As specified in the Preliminary Statement.

Pool Stated Principal Balance: As to any Distribution Date, the

aggregate of the Stated Principal Balances of the Mortgage Loans for such

Distribution Date that were Outstanding Mortgage Loans on the Due Date in the

related Due Period.

Prepayment Charge: Any prepayment premium, penalty or charge

collected by any Servicer with respect to a Mortgage Loan from a Mortgagor in

connection with any voluntary Principal Prepayment in Full pursuant to the terms

of the related Mortgage Note.

Prepayment Interest Excess: With respect to any Distribution Date,

any interest collected by HomEq with respect to any Mortgage Loan serviced by

HomEq as to which a Principal Prepayment in Full occurs from the 1st day of the

month through the 15th day of the month in which such Distribution Date occurs

and that represents interest that accrues from the 1st day of such month to the

date of such Principal Prepayment in Full.

Prepayment Interest Shortfall: With respect to any Distribution

Date, the sum of, for each Mortgage Loan that was, during the related Prepayment

Period (in the case of any Mortgage Loan serviced by Chase) or during the

portion of the Prepayment Period from and including the 16th day of the month

preceding the month in which such Distribution Date occurs (or from the day

following the Cut-off Date, in the case of the first Distribution Date) through

the last day of such month (in the case of any Mortgage Loan serviced by HomEq),

the subject of a Principal Prepayment which is not accompanied by an amount

equal to one month of interest that would have been due on such Mortgage Loan on

the Due Date in the following month and which was applied by the applicable

Servicer to reduce the outstanding principal balance of such Mortgage Loan on a

date preceding such Due Date an amount equal to the product of (a) the Mortgage

Rate net of the Servicing Fee Rate for such Mortgage Loan, (b) the amount of the

Principal Prepayment for such Mortgage Loan, (c) 1/360 and (d) the number of

days commencing on the date on which such Principal Prepayment was applied and

ending on the last day of the calendar month in which the related Prepayment

Period begins.

Prepayment Period: With respect to any Distribution Date, either (a)

in the case of any Mortgage Loan serviced by Chase, the calendar month preceding

the month in which such Distribution Date occurs, or (b) in the case of any

Mortgage Loan serviced by HomEq, either (i) with respect to any Principal

Prepayments (including all unscheduled receipts of principal on the Mortgage

Loans other than voluntary partial Principal Prepayments), the period from and

including the 16th day of the month preceding the month in which such

Distribution Date occurs (or, in the case of the first Distribution Date, from

and including the Cut-off Date) to and including the 15th day of the month in

which such Distribution Date occurs, or (ii) with respect to any voluntary

partial Principal Prepayments, the calendar month preceding the month in which

such Distribution Date occurs.

Principal Distribution Amount: For any Distribution Date, the sum of

(i) the Basic Principal Distribution Amount for such Distribution Date and (ii)

the Extra Principal Distribution Amount for such Distribution Date.

Principal Prepayment: Any full or partial payment or other recovery

of principal on a Mortgage Loan (including upon liquidation of a Mortgage Loan)

which is received in advance of its scheduled Due Date, excluding any Prepayment

Charge thereon.

Principal Prepayment in Full: Any Principal Prepayment made by a

Mortgagor of the entire principal balance of a Mortgage Loan.

Principal Remittance Amount: With respect to any Distribution Date,

the amount equal to the sum of the following amounts (without duplication) with

respect to the related Due Period: (i) each scheduled payment of principal on a

Mortgage Loan due during such Due Period and received by the Servicers on or

prior to the related Determination Date or advanced by the applicable Servicer

for the related Remittance Date, and all Principal Prepayments received during

the related Prepayment Period; (ii) all Liquidation Proceeds, Condemnation

Proceeds and Insurance Proceeds on the Mortgage Loans allocable to principal

actually collected by the Servicers during the related Prepayment Period; (iii)

the portion of the Repurchase Price allocable to principal with respect to each

Mortgage Loan repurchased during the related Prepayment Period; (iv) all

Substitution Adjustment Amounts allocable to principal with respect to the

substitutions of Mortgage Loans that occur during the month in which such

Distribution Date occurs; (v) with respect to the Distribution Date in February

2005 only, the portion of the Closing Date Deposit Amount allocable to

principal; and (vi) the allocable portion of the proceeds received with respect

to the termination of the Trust Fund pursuant to clause (a) of Section 9.01 (to

the extent such proceeds relate to principal).

Private Certificates: As specified in the Preliminary Statement.

Prospectus Supplement: The Prospectus Supplement, dated January 24,

2005, relating to the Offered Certificates.

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

Purchase Agreements: Collectively, the Wilmington Finance Purchase

Agreement, the Meritage Purchase Agreement, the First NLC Purchase Agreement and

the MILA Purchase Agreement.

Purchaser: Morgan Stanley Mortgage Capital Inc., a New York

corporation, and its successors in interest, as purchaser of the Mortgage Loans

under each of the Purchase Agreements.

Rating Agency: Each of the Rating Agencies specified in the

Preliminary Statement. If such organization or a successor 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 or rating category of a Rating Agency shall mean such

rating category without giving effect to any modifiers. For purposes of Section

10.05(b), the addresses for notices to each Rating Agency shall be the address

specified therefor in the definition corresponding to the name of such Rating

Agency, or such other address as either such Rating Agency may hereafter furnish

to the Depositor and the Servicers.

Realized Losses: With respect to any date of determination and any

Liquidated Mortgage Loan, the amount, if any, by which (a) the unpaid principal

balance of such Liquidated Mortgage Loan together with accrued and unpaid

interest thereon exceeds (b) the Liquidation Proceeds with respect thereto net

of the expenses incurred by the applicable Servicer in connection with the

liquidation of such Liquidated Mortgage Loan and net of the amount of

unreimbursed Servicing Advances with respect to such Liquidated Mortgage Loan.

Record Date: With respect to any Distribution Date, the close of

business on the Business Day immediately preceding such Distribution Date;

provided, however, that for any Certificate issued in definitive form, the

Record Date shall be the close of business on the last Business Day of the month

preceding the month in which such applicable Distribution Date occurs.

Reference Bank: As defined in Section 4.04.

Regular Certificates: As specified in the Preliminary Statement.

Relief Act Interest Shortfall: With respect to any Distribution Date

and any Mortgage Loan, any reduction in the amount of interest collectible on

such Mortgage Loan for the most recently ended Due Period as a result of the

application of the Servicemembers Civil Relief Act or any similar state

statutes.

REMIC: A "real estate mortgage investment conduit" within the

meaning of Section 860D of the Code.

REMIC Provisions: Provisions of the federal income tax law relating

to real estate mortgage investment conduits, which appear at Sections 860A

through 860G of Subchapter M of Chapter 1 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.

Remittance Date: With respect to any Distribution Date, the second

Business Day immediately preceding such Distribution Date.

REO Disposition: The final sale by the applicable Servicer of any

REO Property.

REO Imputed Interest: As to any REO Property, for any period, an

amount equivalent to interest (at the Mortgage Rate net of the Servicing Fee

Rate that would have been applicable to the related Mortgage Loan had it been

outstanding) on the unpaid principal balance of the Mortgage Loan as of the date

of acquisition thereof (as such balance is reduced pursuant to Section 3.17 by

any income from the REO Property treated as a recovery of principal).

REO Mortgage Loan: A Mortgage Loan where title to the related

Mortgaged Property has been obtained by the applicable Servicer in the name of

the Trustee on behalf of the Certificateholders.

REO Property: A Mortgaged Property acquired by the Trust Fund

through foreclosure or deed-in-lieu of foreclosure in connection with a

defaulted Mortgage Loan.

Repurchase Price: With respect to any Mortgage Loan, (a) in the case

of any Mortgage Loan repurchased by the Depositor or a Responsible Party, an

amount equal to the sum of (i) the unpaid principal balance of such Mortgage

Loan as of the date of repurchase, (ii) interest on such unpaid principal

balance of such Mortgage Loan at the Mortgage Rate from the last date through

which interest has been paid and distributed to the Trustee to the date of

repurchase, (iii) all unreimbursed Servicing Advances and (iv) all costs and

expenses incurred by the Trustee arising out of or based upon such breach,

including without limitation, costs and expenses relating to the Trustee's

enforcement of the repurchase obligation of the Depositor or such Responsible

Party hereunder, and (b) in the case of any Mortgage Loan repurchased by

Meritage or Wilmington Finance, the repurchase price specified in the Meritage

Agreements or the Wilmington Finance Agreements, as applicable. In addition to

the Repurchase Price, each of First NLC and MILA is obligated to make certain

indemnification payments for material breaches of representations and warranties

as further set forth in Section 2.03(n) in this Agreement, and each of Meritage

and Wilmington Finance is obligated to make certain indemnification payments for

material breaches of representations and warranties as further set forth in the

Meritage Agreements and the Wilmington Finance Agreements, as applicable.

Request for Release: The Request for Release submitted by the

applicable Servicer to the Trustee, substantially in the form of Exhibit J.

Residual Certificates: As specified in the Preliminary Statement.

Responsible Officer: When used with respect to the Trustee, any vice

president, any assistant vice president, any assistant secretary, any assistant

treasurer, any associate, or any other officer of the Trustee customarily

performing functions similar to those performed by any of the above designated

officers who at such time shall be officers to whom, with respect to a

particular matter, such matter is referred because of such officer's knowledge

of and familiarity with the particular subject and who shall have direct

responsibility for the administration of this Agreement.

Responsible Parties: First NLC and MILA.

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

Scheduled Payment: The scheduled monthly payment on a Mortgage Loan

due on any Due Date allocable to principal and/or interest on such Mortgage Loan

which, unless otherwise specified herein, shall give effect to any related Debt

Service Reduction and any Deficient Valuation that affects the amount of the

monthly payment due on such Mortgage Loan.

Second Lien Mortgage Loan: A Mortgage Loan secured by a second lien

Mortgage on the related Mortgaged Property.

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

Senior Enhancement Percentage: With respect to any Distribution

Date, the percentage obtained by dividing (x) the sum of (i) the aggregate Class

Certificate Balance of the Subordinated Certificates and (ii) the Subordinated

Amount (in each case after taking into account the allocation of the Principal

Distribution Amount for such Distribution Date) by (y) the aggregate Stated

Principal Balance of the Mortgage Loans for such Distribution Date.

Senior Specified Enhancement Percentage: As of any date of

determination, 36.90%.

Servicer: Chase or HomEq, and if a successor to any Servicer is

appointed hereunder, such successor. When the term "Servicer" is used in this

Agreement in connection with the administration of servicing obligations with

respect to any Mortgage Loan, Mortgaged Property, REO Property or Mortgage File,

"Servicer" shall mean (i) in connection with the Mortgage Loans for which Chase

is identified on the Mortgage Loan Schedule as the Servicer, Chase and (ii) in

connection with the Mortgage Loans for which HomEq is identified on the Mortgage

Loan Schedule as the Servicer, HomEq.

Servicer Remittance Report: As defined in Section 4.03(d).

Servicing Advances: The reasonable "out-of-pocket" costs and

expenses (including legal fees) incurred by the applicable Servicer in the

performance of its servicing obligations in connection with a default,

delinquency or other unanticipated event, including, but not limited to, the

cost of (i) the preservation, restoration, inspection and protection of a

Mortgaged Property, (ii) any enforcement, administrative or judicial

proceedings, including foreclosures and litigation, in respect of a particular

Mortgage Loan, (iii) the management (including reasonable fees in connection

therewith) and liquidation of any REO Property and (iv) the performance of its

obligations under Sections 3.01, 3.09, 3.13 and 3.15. The Servicing Advances

shall also include any reasonable "out-of-pocket" costs and expenses (including

legal fees) incurred by the applicable Servicer in connection with executing and

recording instruments of satisfaction, deeds of reconveyance or Assignments of

Mortgage in connection with any foreclosure in respect of any Mortgage Loan to

the extent not recovered from the Mortgagor or otherwise payable under this

Agreement. None of the Servicers shall be required to make any Nonrecoverable

Servicing Advances.

Servicing Fee: With respect to a Servicer, each Mortgage Loan

serviced by such Servicer and for any calendar month, an amount equal to one

month's interest (or in the event of any payment of interest which accompanies a

Principal Prepayment in Full made by the Mortgagor during such calendar month,

interest for the number of days covered by such payment of interest) at the

Servicing Fee Rate on the applicable Stated Principal Balance of such Mortgage

Loan as of the first day of such calendar month. Such fee shall be payable

monthly, and shall be pro rated for any portion of a month during which the

Mortgage Loan is serviced by such Servicer under this Agreement. The Servicing

Fee is payable solely from the interest portion (including recoveries with

respect to interest from Liquidation Proceeds, Insurance Proceeds, Condemnation

Proceeds and proceeds received with respect to REO Properties, to the extent

permitted by Section 3.11) of such Scheduled Payment collected by such Servicer,

or as otherwise provided under Section 3.11.

Servicing Fee Rate: With respect to each Mortgage Loan, 0.50% per

annum.

Servicing File: With respect to each Mortgage Loan, the file

retained by the applicable Servicer consisting of originals or copies of all

documents in the Mortgage File which are not delivered to the Trustee in the

Custodial File and copies of the Mortgage Loan Documents set forth in Exhibit K

hereto.

Servicing Officer: Any officer of any Servicer involved in, or

responsible for, the administration and servicing of the Mortgage Loans whose

name and facsimile signature appear on a list of servicing officers furnished to

the Trustee by such Servicer on the Closing Date pursuant to this Agreement, as

such list may from time to time be amended.

Similar Law: As defined in Section 5.02(b).

60+ Day Delinquent Mortgage Loan: Each Mortgage Loan with respect to

which any portion of a Scheduled Payment is, as of the last day of the prior Due

Period, two months or more past due (without giving effect to any grace period),

each Mortgage Loan in foreclosure and all REO Property.

Specified Subordinated Amount: Prior to the Stepdown Date, an amount

equal to 2.20% of the Cut-off Date Pool Principal Balance. On and after the

Stepdown Date, an amount equal to 4.40% of the aggregate Stated Principal

Balance of the Mortgage Loans for such Distribution Date, subject, until the

Class Certificate Balance of each Class of LIBOR Certificates has been reduced

to zero, to a minimum amount equal to 0.50 % of the aggregate Stated Principal

Balance of the Mortgage Loans as of the Cut-off Date; provided, however, that

if, on any Distribution Date, a Trigger Event exists, the Specified Subordinated

Amount shall not be reduced to the applicable percentage of the then current

aggregate Stated Principal Balance of the Mortgage Loans until the Distribution

Date on which a Trigger Event no longer exists. When the Class Certificate

Balance of each Class of LIBOR Certificates has been reduced to zero, the

Specified Subordinated Amount will thereafter equal zero.

Standard & Poor's: Standard & Poor's Ratings Services, a division of

The McGraw-Hill Companies, Inc., and its successors in interest. If Standard &

Poor's is designated as a Rating Agency in the Preliminary Statement, for

purposes of Section 10.05(b) the address for notices to Standard & Poor's shall

be Standard & Poor's, 55 Water Street, New York, New York 10041, Attention:

Residential Mortgage Surveillance Group - Morgan Stanley Home Equity Loan Trust

2005-1, or such other address as Standard & Poor's may hereafter furnish to the

Depositor and the Servicers.

Standard & Poor's Glossary: The Standard & Poor's LEVELS(R)

Glossary, as may be in effect from time to time.

Startup Day: The Closing Date.

Stated Principal Balance: As to each Mortgage Loan and as of any

date of determination, (i) the principal balance of the Mortgage Loan at the

Cut-off Date after giving effect to payments of principal due on or before such

date, minus (ii) all amounts previously remitted to the Trustee with respect to

the related Mortgage Loan representing payments or recoveries of principal

including advances in respect of scheduled payments of principal. For purposes

of any Distribution Date, the Stated Principal Balance of any Mortgage Loan will

give effect to any scheduled payments of principal received by the related

Servicer on or prior to the related Determination Date or advanced by the

related Servicer for the related Remittance Date and any unscheduled principal

payments and other unscheduled principal collections received during the related

Prepayment Period, and the Stated Principal Balance of any Mortgage Loan that

has prepaid in full or has become a Liquidated Mortgage Loan during the related

Prepayment Period shall be zero.

Stepdown Date: The later to occur of (i) the earlier to occur of (a)

the Distribution Date in February 2008 and (b) the Distribution Date following

the Distribution Date on which the aggregate Class Certificate Balances of the

Class A Certificates have been reduced to zero and (ii) the first Distribution

Date on which the Senior Enhancement Percentage (calculated for this purpose

only after taking into account payments of principal on the Mortgage Loans

applied to reduce the Stated Principal Balance of the Mortgage Loans for the

applicable Distribution Date but prior to any allocation of the Principal

Distribution Amount to the Certificates on such Distribution Date) is greater

than or equal to the Senior Specified Enhancement Percentage.

Subordinated Amount: As of any Distribution Date, the excess, if

any, of (a) the aggregate Stated Principal Balance of the Mortgage Loans for

such Distribution Date over (b) the aggregate of the Class Certificate Balances

of the LIBOR Certificates as of such Distribution Date (after giving effect to

the payment of the Principal Remittance Amount on such Certificates on such

Distribution Date).

Subordinated Certificates: As specified in the Preliminary

Statement.

Subordination Deficiency: With respect to any Distribution Date, the

excess, if any, of (a) the Specified Subordinated Amount applicable to such

Distribution Date over (b) the Subordinated Amount applicable to such

Distribution Date.

Subordination Reduction Amount: With respect to any Distribution

Date, on or after the Stepdown Date on which no Trigger Event exists, an amount

equal to the lesser of (a) the Excess Subordinated Amount and (b) the Net

Monthly Excess Cash Flow.

Subsequent Recovery: With respect to any Mortgage Loan or related

Mortgaged Property that became a Liquidated Mortgage Loan or was otherwise

disposed of, all amounts received in respect of such Liquidated Mortgage Loan

after an Applied Realized Loss Amount related to such Mortgage Loan or Mortgaged

Property is allocated to reduce the Class Certificate Balance of any Class of

Subordinated Certificates. Any Subsequent Recovery that is received during a

Prepayment Period will be treated as Liquidation Proceeds and included as part

of the Principal Remittance Amount for the related Distribution Date.

Subservicer: As defined in Section 3.02(a).

Subservicing Account: As defined in Section 3.08.

Subservicing Agreements: As defined in Section 3.02(a).

Substitute Mortgage Loan: A Mortgage Loan (i) substituted by First

NLC, Meritage or Wilmington Finance for a Deleted Mortgage Loan that satisfies

the criteria set forth in the definition of "Qualified Substitute Mortgage Loan"

in the applicable Purchase Agreement or (ii) substituted by the Depositor for a

Deleted Mortgage Loan, which, if substituted by the Depositor, 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, after deduction of

the principal portion of the Scheduled Payment due in the month of substitution,

not in excess of, and not more than 10% less than, the Stated Principal Balance

of the Deleted Mortgage Loan; (b) be accruing interest at a rate no lower than

and not more than 1% per annum higher than, that of the Deleted Mortgage Loan;

(c) have a Loan-to-Value Ratio no higher than that of the Deleted Mortgage Loan;

(d) have a remaining term to maturity no greater than (and not more than one

year less than that of) the Deleted Mortgage Loan; and (e) comply with each

representation and warranty set forth in Section 2.03.

Substitution Adjustment Amount: As defined in Section 2.03.

Tax Service Contract: As defined in Section 3.09(a).

Telerate Page 3750: The display page currently so designated on the

Bridge Telerate Service (or such other page as may replace that page on that

service for displaying comparable rates or prices).

Total Monthly Excess Spread: As to any Distribution Date, an amount

equal to the excess if any, of (i) the interest on the Mortgage Loans (other

than Prepayment Interest Excesses) received by the Servicers on or prior to the

related Determination Date or advanced by the Servicers for the related

Remittance Date (net of Expense Fees) over (ii) the sum of the amounts payable

to the Certificates pursuant to Section 4.02(a)(i) on such Distribution Date.

Transfer: Any direct or indirect transfer or sale of any Ownership

Interest in a Residual Certificate.

Transfer Affidavit: As defined in Section 5.02(c).

Transferor Certificate: As defined in Section 5.02(b).

Trigger Event: Either a Cumulative Loss Trigger Event or a

Delinquency Trigger Event.

Trust: The express trust created hereunder in Section 2.01(c).

Trust Fund: The corpus of the trust created hereunder consisting of

(i) the Mortgage Loans and all interest and principal with respect thereto

received on or after the related Cut-off Date, other than such amounts which

were due on the Mortgage Loans on or prior to the related Cut-off Date; (ii) the

Collection Accounts, Excess Reserve Fund Account, the Distribution Account, and

all amounts deposited therein pursuant to the applicable provisions of this

Agreement; (iii) property that secured a Mortgage Loan and has been acquired by

foreclosure, deed-in-lieu of foreclosure or otherwise; (iv) the Meritage

Agreements and the Wilmington Finance Agreements (solely insofar as such

agreements relate to the Meritage Mortgage Loans or the Wilmington Finance

Mortgage Loans, as applicable); (v) the Interest Rate Cap Agreements; (vi) the

Closing Date Deposit Amount; and (vii) all proceeds of the conversion, voluntary

or involuntary, of any of the foregoing.

Trustee: Deutsche Bank National Trust Company, a national banking

association, and its successors in interest and, if a successor trustee is

appointed hereunder, such successor.

Trustee Fee: As to any Distribution Date, an amount equal to the

product of (a) one-twelfth of the Trustee Fee Rate and (b) (i) the aggregate

Stated Principal Balance of the Mortgage Loans as of the first day of the

related Interest Accrual Period and (ii) with respect to the Distribution Date

in February 2005 only, the portion of the Closing Date Deposit Amount allocable

to principal.

Trustee Fee Rate: With respect to each Mortgage Loan, 0.0050% per

annum.

Trustee Float Period: With respect to the Distribution Date and the

related amounts in the Distribution Account, the period commencing on the

Business Day immediately preceding such Distribution Date and ending on such

Distribution Date.

Underwriters' Exemption: Any exemption listed under footnote 1 of,

and amended by, Prohibited Transaction Exemption 2002-41, 67 Fed. Reg. 54487

(2002), or any successor exemption.

Unpaid Interest Amount: As of any Distribution Date and any Class of

Certificates, the sum of (a) the portion of the Accrued Certificate Interest

Distribution Amount from Distribution Dates prior to the current Distribution

Date remaining unpaid immediately prior to the current Distribution Date and (b)

interest on the amount in clause (a) above at the applicable Pass-Through Rate

(to the extent permitted by applicable law).

Unpaid Realized Loss Amount: With respect to any Class of

Subordinated Certificates and as to any Distribution Date, is the excess of (i)

the Applied Realized Loss Amount with respect to such Class over (ii) the sum of

(a) all distributions in reduction of such Applied Realized Loss Amounts on all

previous Distribution Dates, and (b) the amount by which the Class Certificate

Balance of such Class has been increased due to the distribution of any

Subsequent Recovery on all previous Distribution Dates. Any amounts distributed

to a Class of Subordinated Certificates in respect of any Unpaid Realized Loss

Amount will not be applied to reduce the Class Certificate Balance of such

Class.

Upper Tier Regular Interest: As described in the Preliminary

Statement.

Upper Tier REMIC: As described in the Preliminary Statement.

U.S. Person: (i) A citizen or resident of the United States; (ii) a

corporation (or entity treated as a corporation for tax purposes) created or

organized in the United States or under the laws of the United States or of any

State thereof, including, for this purpose, the District of Columbia; (iii) a

partnership (or entity treated as a partnership for tax purposes) organized in

the United States or under the laws of the United States or of any State

thereof, including, for this purpose, the District of Columbia (unless provided

otherwise by future Treasury regulations); (iv) an estate whose income is

includible in gross income for United States income tax purposes regardless of

its source; or (v) a trust, if a court within the United States is able to

exercise primary supervision over the administration of the trust and one or

more U.S. Persons have authority to control substantial decisions of the trust.

Notwithstanding the last clause of the preceding sentence, to the extent

provided in Treasury regulations, certain trusts in existence on August 20,

1996, and treated as U.S. Persons prior to such date, may elect to continue to

be U.S. Persons.

Voting Rights: The portion of the voting rights of all of the

Certificates which is allocated to any Certificate. As of any date of

determination, (a) 1% of all Voting Rights shall be allocated to the Class X

Certificates, if any (such Voting Rights to be allocated among the holders of

Certificates of each such Class in accordance with their respective Percentage

Interests), (b) 1% of all Voting Rights shall be allocated to the Class P

Certificates, if any, and (c) the remaining Voting Rights shall be allocated

among Holders of the remaining Classes of Certificates in proportion to the

Certificate Balances of their respective Certificates on such date.

WAC Cap: With respect to the Mortgage Loans as of any Distribution

Date, the product of (i) the weighted average of the Adjusted Net Mortgage Rates

then in effect on the beginning of the related Due Period on the Mortgage Loans

and (ii) a fraction, the numerator of which is 30 and the denominator of which

is the actual number of days in the Interest Accrual Period related to such

Distribution Date.

Wilmington Finance: Collectively, Wilmington Finance Inc., a

Delaware corporation, and its successors in interest, and Wilmington Finance, a

division of AIG Federal Savings Bank, a federally chartered savings bank, and

its successors in interest.

Wilmington Finance Agreements: The Wilmington Finance Purchase

Agreement and the Wilmington Finance Assignment Agreement.

Wilmington Finance Assignment Agreement: The Assignment and

Recognition Agreement, dated as of the Closing Date, among the Purchaser, the

Depositor and Wilmington Finance.

Wilmington Finance Mortgage Loans: The Mortgage Loans purchased by

the Purchaser pursuant to the Wilmington Finance Purchase Agreement for which

Wilmington Finance is identified as Originator on the Mortgage Loan Schedule.

Wilmington Finance Purchase Agreement: The Mortgage Loan Purchase

and Warranties Agreement, dated as of August 1, 2004, as amended by Amendment to

Mortgage Loan Purchase and Warranties Agreement, dated as of January 27, 2005,

each by and between Wilmington Finance and the Purchaser, solely insofar as such

agreement relates to the Wilmington Finance Mortgage Loans.

ARTICLE II

CONVEYANCE OF MORTGAGE LOANS;

REPRESENTATIONS AND WARRANTIES

Section 2.01 Conveyance of Mortgage Loans. (a) The Depositor,

concurrently with the execution and delivery hereof, hereby sells, transfers,

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, and the Trustee, on behalf of the Trust,

hereby accepts the Trust Fund.

(b) In connection with the transfer and assignment of each Mortgage

Loan, the Depositor has delivered or caused to be delivered to the Trustee for

the benefit of the Certificateholders the following documents or instruments

with respect to each Mortgage Loan so assigned:

(i) the original Mortgage Note bearing all intervening endorsements,

endorsed "Pay to the order of _____________, without recourse" and signed

(which may be by facsimile signature) in the name of the last endorsee by

an authorized officer. To the extent that there is no room on the face of

the Mortgage Notes for endorsements, the endorsement may be contained on

an allonge, unless the Trustee is advised in writing by the applicable

Originator (pursuant to the applicable Purchase Agreement) that state law

does not so allow;

(ii) the original of any guaranty executed in connection with the

Mortgage Note;

(iii) the original Mortgage with evidence of recording thereon or a

certified true copy of such Mortgage submitted for recording. If, in

connection with any Mortgage Loan, the original Mortgage cannot be

delivered with evidence of recording thereon on or prior to the Closing

Date because of a delay caused by the public recording office where such

Mortgage has been delivered for recordation or because such Mortgage has

been lost or because such public recording office retains the original

recorded Mortgage, the Trustee shall notify the applicable Originator to

deliver or cause to be delivered to the Trustee, as required under the

applicable Purchase Agreement, a photocopy of such Mortgage, together with

(i) in the case of a delay caused by the public recording office, an

Officer's Certificate of the applicable Originator (delivered pursuant to

the applicable Purchase Agreement) or a certificate from an escrow

company, a title company or closing attorney stating that such Mortgage

has been dispatched to the appropriate public recording office for

recordation and that the original recorded Mortgage or a copy of such

Mortgage certified by such public recording office to be a true and

complete copy of the original recorded Mortgage will be promptly delivered

to the Trustee upon receipt thereof by the applicable Originator; or (ii)

in the case of a Mortgage where a public recording office retains the

original recorded Mortgage or in the case where a Mortgage is lost after

recordation in a public recording office, a copy of such Mortgage

certified by such public recording office to be a true and complete copy

of the original recorded Mortgage;

(iv) the originals of all assumption, modification, consolidation or

extension agreements, with evidence of recording thereon;

(v) the original Assignment of Mortgage for each Mortgage Loan

endorsed in blank (except with respect to MERS Designated Mortgage Loans);

(vi) the originals of all intervening assignments of Mortgage (if

any) evidencing a complete chain of assignment from the applicable

originator (or MERS with respect to each MERS Designated Mortgage Loan) to

the last endorsee with evidence of recording thereon, or if any such

intervening assignment has not been returned from the applicable recording

office or has been lost or if such public recording office retains the

original recorded assignments of Mortgage, the Trustee shall notify the

applicable Originator, to deliver, as required under the applicable

Purchase Agreement, a photocopy of such intervening assignment, together

with (A) in the case of a delay caused by the public recording office, an

Officer's Certificate of the applicable Originator or a certificate from

an escrow company, a title company or a closing attorney stating that such

intervening assignment of Mortgage has been dispatched to the appropriate

public recording office for recordation and that such original recorded

intervening assignment of Mortgage or a copy of such intervening

assignment of Mortgage certified by the appropriate public recording

office to be a true and complete copy of the original recorded intervening

assignment of Mortgage will be promptly delivered to the Trustee upon

receipt thereof by the applicable Originator; or (B) in the case of an

intervening assignment where a public recording office retains the

original recorded intervening assignment or in the case where an

intervening assignment is lost after recordation in a public recording

office, a copy of such intervening assignment certified by such public

recording office to be a true and complete copy of the original recorded

intervening assignment;

(vii) the original mortgagee title insurance policy or attorney's

opinion of title and abstract of title, or, in the event such original

title policy is unavailable, a certified true copy of the related policy

binder or commitment for title certified to be true and complete by the

title insurance company; and

(viii) the original of any security agreement, chattel mortgage or

equivalent document executed in connection with the Mortgage (if

provided).

The Depositor will use its reasonable efforts to assist the Trustee

and the Servicers in enforcing the obligations of each Responsible Party under

this Agreement, the obligations of Meritage under the Meritage Agreements and

the obligations of Wilmington Finance under the Wilmington Finance Agreements.

The Depositor shall cause to be delivered to the Trustee the

applicable recorded document promptly upon receipt from the respective recording

office but in no event later than 180 days from the Closing Date.

If any Mortgage has been recorded in the name of Mortgage Electronic

Registration System, Inc. ("MERS") or its designee, no Assignment of Mortgage in

favor of the Trustee will be required to be prepared or delivered and instead,

the applicable Servicer shall take all reasonable actions as are necessary at

the expense of the applicable Originator to the extent permitted under the

related Purchase Agreement and otherwise at the expense of the Depositor to

cause the Trust to be shown as the owner of the related Mortgage Loan on the

records of MERS for the purpose of the system of recording transfers of

beneficial ownership of mortgages maintained by MERS.

From time to time, the Depositor or the applicable Servicer, as

applicable, shall forward to the Trustee additional original documents,

additional documents evidencing an assumption, modification, consolidation or

extension of a Mortgage Loan in accordance with the terms of this Agreement upon

receipt of such documents. All such mortgage documents held by the Trustee as to

each Mortgage Loan shall constitute the "Custodial File".

No later than thirty (30) Business Days following the later of the

Closing Date and the date of receipt by the applicable Servicer of the complete

recording information for a Mortgage, the applicable Servicer shall promptly

submit or cause to be submitted for recording, at the expense of the applicable

Originator as required pursuant to the related Purchase Agreement and at no

expense to the Trust Fund, the Trustee, the applicable Servicer, or the

Depositor, in the appropriate public office for real property records, each

Assignment of Mortgage referred to in Section 2.01(b)(v). Notwithstanding the

foregoing, however, for administrative convenience and facilitation of servicing

and to reduce closing costs, the Assignments of Mortgage shall not be required

to be completed and submitted for recording with respect to any Mortgage Loan

(i) if the Trustee and each Rating Agency have received an Opinion of Counsel,

satisfactory in form and substance to the Trustee and each Rating Agency to the

effect that the recordation of such Assignments of Mortgage in any specific

jurisdiction is not necessary to protect the Trustee's interest in the related

Mortgage Note, (ii) if such Mortgage Loan is a MERS Designated Mortgage Loan or

(iii) if the Rating Agencies have each notified the Depositor in writing that

not recording any such Assignments of Mortgage would not cause the initial

ratings on any LIBOR Certificates to be downgraded or withdrawn; provided,

however, that the Servicer shall not be held responsible or liable for any loss

that occurs because an Assignment of Mortgage was not recorded, but only to the

extent such Servicer does not have prior knowledge of the act or omission that

causes such loss. However, with respect to the Assignments of Mortgage referred

to in clauses (i) and (ii) above, if foreclosure proceedings occur against a

Mortgaged Property, the Depositor shall notify the applicable Servicer and such

Servicer shall record such Assignment of Mortgage at the expense of the related

Originator as required pursuant to the related Purchase Agreement. If the

Assignment of Mortgage is to be recorded, the Mortgage shall be assigned to

"Deutsche Bank National Trust Company, as trustee under the Pooling and

Servicing Agreement dated as of January 1, 2005, Morgan Stanley Home Equity Loan

Trust 2005-1". In the event that any such Assignment of Mortgage is lost or

returned unrecorded because of a defect therein, the Depositor shall promptly

cause to be delivered a substitute Assignment of Mortgage to cure such defect

and thereafter cause each such assignment to be duly recorded. If there is such

a defect with respect to a Meritage Mortgage Loan or a Wilmington Finance

Mortgage Loan, the Trustee shall take such actions, with the Depositor's

consent, to enforce the rights of the Trust as "Purchaser" under the Meritage

Agreements or the Wilmington Finance Agreements, as applicable.

On or prior to the Closing Date, the Depositor shall deliver to the

Trustee a copy of the Data Tape Information in an electronic, machine readable

medium in a form mutually acceptable to the Trustee. Within twenty (20) Business

Days of the Closing Date, the Depositor shall deliver copies of the complete

Mortgage Loan Schedule, the Purchase Agreements, the Wilmington Finance

Assignment Agreement and the Meritage Assignment Agreement to the Trustee and

each Servicer, and the Trustee and each Servicer shall promptly acknowledge

receipt thereof.

(c) The Depositor does hereby establish, pursuant to the further

provisions of this Agreement and the laws of the State of New York, an express

trust (the "Trust") to be known, for convenience, as "MORGAN STANLEY HOME EQUITY

LOAN TRUST 2005-1" and Deutsche Bank National Trust Company is hereby appointed

as Trustee in accordance with the provisions of this Agreement. The parties

hereto acknowledge and agree that it is the policy and intention of the Trust to

acquire only Mortgage Loans meeting the requirements set forth in this

Agreement, including without limitation, the representations and warranties set

forth in paragraph (aaa) of Schedule V and paragraph (ff) of Schedule VI to this

Agreement.

(d) The Trust shall have the capacity, power and authority, and the

Trustee on behalf of the Trust is hereby authorized, to accept the sale,

transfer, assignment, set over and conveyance by the Depositor to the Trust of

all the right, title and interest of the Depositor in and to the Trust Fund

(including, without limitation, the Mortgage Loans, the Meritage Agreements and

the Wilmington Finance Agreements) pursuant to Section 2.01(a). The Trustee on

behalf of the Trust is hereby authorized to enter into the Interest Rate Cap

Agreements.

Section 2.02 Acceptance by the Trustee of the Mortgage Loans. The

Trustee shall acknowledge, on the Closing Date, receipt by the Trustee of the

documents identified in the Initial Certification in the form annexed hereto as

Exhibit E, and declares that it holds and will hold such documents and the other

documents delivered to it pursuant to Section 2.01, 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 shall maintain possession of the related Mortgage Notes in the State of

California, unless otherwise permitted by the Rating Agencies.

In connection with the Closing Date, the Trustee shall be required

to deliver via facsimile (with original to follow the next Business Day) to the

Depositor and the Servicers an Initial Certification prior to the Closing Date,

or, as the Depositor agrees to, on the Closing Date, certifying receipt of a

Mortgage Note and Assignment of Mortgage for each Mortgage Loan. The Trustee

shall not be responsible to verify the validity, sufficiency or genuineness of

any document in any Custodial File.

Within 90 days after the Closing Date, the Trustee shall, for the

benefit of the Holders of the Certificates, ascertain that all documents

identified in the Document Certification and Exception Report in the form

attached hereto as Exhibit F are in its possession, and shall deliver to the

Depositor and the Servicers a Document Certification and Exception Report, in

the form annexed hereto as Exhibit F, to the effect that, as to each Mortgage

Loan listed in the Mortgage Loan Schedule (other than any Mortgage Loan paid in

full or any Mortgage Loan specifically identified in such certification as an

exception and not covered by such certification): (i) all documents identified

in the Document Certification and Exception Report and required to be reviewed

by it are in its possession; (ii) such documents have been reviewed by it and

appear regular on their face and relate to such Mortgage Loan; (iii) based on

its examination and only as to the foregoing documents, the information set

forth in items (1), (2), (7) and (9) of the Mortgage Loan Schedule and items

(1), (9) and (17) of the Data Tape Information respecting such Mortgage Loan

accurately reflects the information set forth in the Custodial File; and (iv)

each Mortgage Note has been endorsed as provided in Section 2.01 of this

Agreement. The Trustee shall not be responsible to verify the validity,

sufficiency or genuineness of any document in any Custodial File.

Within 90 days after the Closing Date, the Trustee shall, for the

benefit of the Holders of the Certificates, based solely on the list of MERS

Designated Loans and screen printouts from the MERS System provided to the

Trustee by each Responsible Party (such to be provided to the Trustee no later

than 45 days from the Closing Date), the Trustee shall confirm, on behalf of the

Trust, that the Trustee is shown as the Investor with respect to each MERS

Designated Mortgage Loan on such screen printouts. If the Trustee is not shown

as the Investor with respect to any MERS Designated Mortgage Loans on such

screen printouts, the Trustee shall promptly notify the related Responsible

Party of such fact and the related Responsible Party shall then either cure such

defect or repurchase such Mortgage Loan in accordance with Section 2.03.

The Trustee shall retain possession and custody of each Custodial

File in accordance with and subject to the terms and conditions set forth

herein. The applicable Servicer shall promptly deliver to the Trustee, upon the

execution or receipt thereof, the originals of such other documents or

instruments constituting the Custodial File as come into the possession of the

Servicer from time to time.

Each Responsible Party shall deliver (or the Depositor, as

applicable, shall use reasonable efforts to cause Meritage and Wilmington

Finance to deliver) to the applicable Servicer copies of all trailing documents

required to be included in the Custodial File at the same time the original or

certified copies thereof are delivered to the Trustee, including but not limited

to such documents as the title insurance policy and any other Mortgage Loan

documents upon return from the public recording office. Such documents shall be

delivered by the applicable Responsible Party at the Responsible Party's expense

(or the Depositor, as applicable, shall use reasonable efforts to cause Meritage

and Wilmington Finance to deliver such documents at Meritage's expense or

Wilmington Finance's expense, as applicable, pursuant to the Meritage Agreements

or the Wilmington Finance Agreements, as applicable) to such Servicer.

Section 2.03 Representations and Warranties; Remedies for Breaches

of Representations and Warranties with Respect to the Mortgage Loans. (a) Chase

hereby makes the representations and warranties set forth in Schedule II hereto

to the Depositor and the Trustee as of the date set forth in such Schedule,

HomEq hereby makes the representations and warranties set forth in Schedule III

hereto to the Depositor and the Trustee as of the dates set forth in such

Schedule. Upon discovery by any of the parties hereto of a breach of any of the

foregoing representations and warranties, the party discovering such breach

shall give prompt written notice to the other.

(b) The Depositor hereby makes the representations and warranties

set forth in Schedule IV hereto to the Trustee as of the dates set forth in such

Schedule.

(c) First NLC hereby makes the representations and warranties set

forth in Schedule V hereto to the Depositor, the Servicers and the Trustee as of

the dates set forth in such Schedule. MILA hereby makes the representations and

warranties set forth in Schedule VI hereto to the Depositor, the Servicers and

the Trustee as of the dates set forth in such Schedule.

(d) It is understood and agreed by the parties hereto that the

representations and warranties set forth in this Section 2.03 shall survive the

transfer of the Mortgage Loans by the Depositor to the Trustee, and shall inure

to the benefit of the parties to whom the representations and warranties were

made notwithstanding any restrictive or qualified endorsement on any Mortgage

Note or Assignment of Mortgage or the examination or failure to examine any

Mortgage File.

(e) Upon discovery by any of the parties hereto of a breach of a

representation or warranty made by the Depositor, First NLC or MILA, as

applicable, under this Agreement, that materially and adversely affects the

value of any Mortgage Loan or the interests of the Trustee or the

Certificateholders therein, the party discovering such breach shall give prompt

written notice thereof to the other parties. Upon receiving written notice of a

breach of a representation and warranty or written notice that a Mortgage Loan

does not constitute a "qualified mortgage" within the meaning of Section

860G(a)(3) of the Code, the Trustee shall in turn notify First NLC or MILA, as

applicable, in writing to correct or cure, in accordance with this Agreement,

any such breach of a representation or warranty made by First NLC or MILA under

this Agreement, within sixty (60) days from the date of notice from the Trustee

or the discovery by First NLC or MILA of the breach, and if First NLC or MILA

fails or is unable to correct or cure the defect or breach within such period,

the Trustee shall notify the Depositor of such failure to correct or cure.

Unless otherwise directed by the Depositor within five (5) Business Days after

notifying the Depositor of such failure by First NLC or MILA to correct or cure,

the Trustee shall notify First NLC or MILA to repurchase the Mortgage Loan (a

"Deleted Mortgage Loan") at the Repurchase Price or substitute a Substitute

Mortgage Loan for such Mortgage Loan, in each case, pursuant to this Agreement,

as applicable. Notwithstanding the foregoing, in the event that the Trustee

receives notice of a breach by (i) First NLC of any of the representations and

warranties set forth in paragraphs (rr), (zz), (aaa), (ccc), (jjj), (kkk),

(lll), (mmm), (nnn), (ooo) and (ppp) of Schedule V or (ii) MILA of any of the

representations and warranties set forth in paragraphs (ff), (qq), (rr), (tt),

(uu), (vv), (ww), (xx), (yy), (zz), (aaa) or (ccc) of Schedule VI, the Trustee

shall notify First NLC or MILA to repurchase the Mortgage Loan at the Repurchase

Price within sixty (60) days of First NLC's or MILA's receipt of such notice.

If, within ten (10) Business Days of receipt of such notice by First NLC or

MILA, First NLC or MILA fails to repurchase such Mortgage Loan, the Trustee

shall notify the Depositor of such failure. The Trustee shall pursue all legal

remedies available to the Trustee against First NLC or MILA under this

Agreement, if the Trustee has received written notice from the Depositor

directing the Trustee to pursue such remedies.

(f) In the event any Mortgage Loan does not conform to the

requirements as determined in the Trustee's review of the related Custodial

File, the Trustee shall notify the applicable Originator, the applicable

Servicer and the Depositor in writing, and request that such Originator correct

or cure such defect as required under this Agreement, the Wilmington Finance

Agreements or the Meritage Agreements, as applicable, and if such Originator

fails or is unable to correct or cure the defect within the period set forth in

this Agreement, the Wilmington Finance Agreements or the Meritage Agreements, as

applicable, the Trustee shall notify the Depositor of such failure to correct or

cure. Unless otherwise directed by the Depositor within five (5) Business Days

after notifying the Depositor of such failure by such Originator to correct or

cure, the Trustee shall notify the applicable Originator to repurchase the

Mortgage Loan at the Repurchase Price or substitute a Substitute Mortgage Loan

for such Mortgage Loan, in each case, pursuant to the terms of this Agreement

(or if applicable, the Wilmington Finance Agreements or the Meritage

Agreements), as applicable. If, within ten (10) Business Days of receipt of such

notice by such Originator, such Originator fails to repurchase such Mortgage

Loan, the Trustee shall notify the Depositor of such failure. The Trustee shall

pursue all legal remedies available to the Trustee against such Originator under

this Agreement (or if applicable, the Wilmington Finance Agreements or the

Meritage Agreements), as applicable, if the Trustee has received written notice

from the Depositor directing the Trustee to pursue such remedies.

(g) Within 90 days of the earlier of either discovery by or notice

to the Depositor of any breach of a representation or warranty set forth on

Schedule IV hereto that materially and adversely affects the value of any

Mortgage Loan or the interest of the Trustee or the Certificateholders therein,

the Depositor shall use its best efforts to promptly cure such breach in all

material respects and, if such defect or breach cannot be remedied, the

Depositor shall purchase such Mortgage Loan at the Repurchase Price or

substitute a Substitute Mortgage Loan for such Mortgage Loan.

(h) Within 90 days of the earlier of either discovery by or notice

to the applicable Responsible Party of any breach of a representation or

warranty set forth on Schedule V or Schedule VI, as applicable, that materially

and adversely affects the value of any Mortgage Loan or the interest of the

Trustee or the Certificateholders therein, the applicable Responsible Party

shall use its best efforts to promptly cure such breach in all material respects

and, if such defect or breach cannot be remedied, the applicable Responsible

Party shall, at the Depositor's option, purchase such Mortgage Loan at the

Repurchase Price or substitute a Substitute Mortgage Loan for such Mortgage

Loan, if applicable.

(i) Any substitution of a Substitute Mortgage Loan by a Responsible

Party shall be made in accordance with the substitution procedures set forth in

the applicable Purchase Agreement, which provisions shall be as set forth in

such agreements as if they were set forth herein. With respect to any Substitute

Mortgage Loan or Loans substituted by the Depositor or any Responsible Party,

the Depositor or such Responsible Party, as applicable, shall deliver to the

Trustee for the benefit of the Certificateholders the Mortgage Note, the

Mortgage, the related Assignment of Mortgage, 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. With respect to any

Substitute Mortgage Loan or Loans substituted by Meritage or Wilmington Finance,

the Depositor shall use reasonable efforts to cause Meritage or Wilmington

Finance, as applicable, to deliver to the Trustee for the benefit of the

Certificateholders the Mortgage Note, the Mortgage, the related Assignment of

Mortgage, 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 Mortgage Loans in the Due Period of substitution shall not be part

of the Trust Fund and will be retained by the Depositor or the applicable

Responsible Party on the next succeeding Distribution Date. For the Due Period

of substitution, distributions to Certificateholders will include the Scheduled

Payment due on any Deleted Mortgage Loan for such Due Period and thereafter the

Depositor or the applicable Responsible Party shall be entitled to retain all

amounts received in respect of such Deleted Mortgage Loan.

(j) In connection with any repurchase or substitution of a Mortgage

Loan pursuant to this Section 2.03 or Section 2.07, the applicable Servicer,

based upon information provided by the Depositor or the applicable Originator,

as applicable, shall amend the Mortgage Loan Schedule for the benefit of the

Certificateholders to reflect the removal of such Deleted Mortgage Loan and the

substitution of the Substitute Mortgage Loan or Loans and the Servicer shall

deliver the amended Mortgage Loan Schedule to the Trustee. Upon such

substitution, the Substitute Mortgage Loan or Loans shall be subject to the

terms of this Agreement in all respects, and, if the substitution is made by the

Depositor or the applicable Originator, as applicable, such Person shall be

deemed to have made with respect to such Substitute Mortgage Loan or Loans, as

of the date of substitution, the representations and warranties made pursuant to

Section 2.03(b) with respect to such Mortgage Loan. Upon any such substitution

and the deposit into the related Collection Account of the amount required to be

deposited therein in connection with such substitution as described in Section

2.03(k), the Trustee shall release the Mortgage File held for the benefit of the

Certificateholders relating to such Deleted Mortgage Loan to the Depositor or

the applicable Originator, as applicable, and shall execute and deliver at the

direction of the Depositor or the applicable Originator, as applicable, such

instruments of transfer or assignment prepared by the Depositor or the

applicable Originator, as applicable, in each case without recourse, as shall be

necessary to vest title in the Depositor or the applicable Originator, as

applicable, of the Trustee's interest in any Deleted Mortgage Loan substituted

for pursuant to this Section 2.03.

(k) For any month in which the Depositor substitutes one or more

Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the applicable

Servicer will determine the amount (if any) by which the aggregate unpaid

principal balance of all such Substitute Mortgage Loans as of the date of

substitution is less than the aggregate unpaid principal balance of all such

Deleted Mortgage Loans. The amount of such shortage, plus an amount equal to the

sum of (i) any accrued and unpaid interest on the Deleted Mortgage Loans and

(ii) all unreimbursed Servicing Advances with respect to such Deleted Mortgage

Loans, or the amount of any similar shortage with respect to a Substitute

Mortgage Loan substituted by a Responsible Party under this Agreement

(collectively, the "Substitution Adjustment Amount"), shall be remitted by the

Depositor to the applicable Servicer for deposit into the related Collection

Account on or before the Distribution Account Deposit Date for the Distribution

Date following the Prepayment Period during which the related Mortgage Loan

became required to be purchased or replaced hereunder. The Depositor shall use

reasonable efforts to cause Meritage or Wilmington Finance, as the case may be,

to remit to the applicable Servicer for deposit into the related Collection

Account any Substitution Adjustment Amount on or before the Distribution Account

Deposit Date for the Distribution Date following the Prepayment Period during

which the related Mortgage Loan became required to be purchased or replaced

hereunder.

(l) Any Mortgage Loan repurchased pursuant to this Section 2.03 will

be removed from the Trust Fund. The applicable Servicer shall amend the Mortgage

Loan Schedule for the benefit of the Certificateholders to reflect the removal

of any Mortgage Loan repurchased and such Servicer shall deliver the amended

Mortgage Loan Schedule to the Trustee. For purposes of determining the

applicable Repurchase Price, any such repurchase shall occur or shall be deemed

to occur as of the last day of the applicable Prepayment Period.

(m) In the event that the Depositor or any Responsible Party shall

have repurchased a Mortgage Loan pursuant to this Agreement, the Repurchase

Price therefor shall be deposited by the Servicer in the Collection Account of

the related Servicer pursuant to Section 3.10 on or before the Distribution

Account Deposit Date for the Distribution Date following the Prepayment Period

during which the Depositor or such Responsible Party, as applicable, repurchased

such Mortgage Loan and upon such deposit of the Repurchase Price and receipt of

a Request for Release in the form of Exhibit J hereto, the Trustee shall release

the related Custodial File held for the benefit of the Certificateholders to

such Person as directed by the applicable Servicer, and the Trustee shall

execute and deliver at such Person's direction such instruments of transfer or

assignment prepared by such Person, in each case without recourse, as shall be

necessary to transfer title from the Trustee.

(n) In addition to any repurchase or substitution obligation by any

Responsible Party under this Agreement, each Responsible Party shall indemnify

the Depositor and its Affiliates, the Servicers, the Purchaser, the Trustee and

the Trust for any breach of any representation and warranty of such Responsible

Party set forth in this Agreement, in accordance with the indemnification

provisions relating to breaches of representations and warranties (including

without limitation, the representations and warranties set forth in paragraph

(aaa) of Schedule IV, paragraph (46) of Schedule V and paragraph (50) of

Schedule VI to this Agreement) and defective Mortgage Loans set forth in the

First NLC Purchase Agreement or the MILA Purchase Agreement, as applicable, as

if such indemnification provisions were set forth herein for the benefit of the

Depositor and its Affiliates, the Servicers, the Purchaser, the Trustee and the

Trust. Each of Meritage and Wilmington Finance is obligated to make certain

indemnification payments for material breaches of representations and warranties

as further set forth in the Meritage Agreements and the Wilmington Finance

Agreements, as applicable.

(o) It is understood and agreed by the parties hereto that the

obligation of the Depositor, any Responsible Party under this Agreement,

Meritage under the Meritage Agreements, or Wilmington Finance under the

Wilmington Finance Agreements, to cure, repurchase or substitute any Mortgage

Loan as to which a breach of a representation and warranty has occurred and is

continuing, together with any related indemnification obligations set forth

therein or herein, shall constitute the sole remedies against such Persons

respecting such breach available to Certificateholders, the Depositor (if

applicable) or the Trustee on their behalf.

(p) Upon discovery by any of the parties hereto of a breach of a

representation or warranty made by Meritage or Wilmington Finance pursuant to

the Meritage Agreements or the Wilmington Finance Agreements, as applicable, the

party discovering such breach shall give prompt written notice thereof to the

other parties to this Agreement and Meritage or Wilmington Finance, as

applicable. The Trustee shall take such action, with the Depositor's consent,

with respect to such breach under the Meritage Agreements or Wilmington Finance

Agreements, as the case may be, as may be necessary or appropriate to enforce

the rights of the Trust with respect thereto.

The provisions of this Section 2.03 shall survive delivery of the

respective Custodial Files to the Trustee for the benefit of the

Certificateholders.

Section 2.04 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, 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 Holders of the Certificates.

Section 2.05 REMIC Matters. The Preliminary Statement sets forth the

designations 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 "latest possible maturity date" is the Distribution Date occurring in

December 2034 which is the Distribution Date following the latest Mortgage Loan

maturity date.

Section 2.06 Representations and Warranties of the Depositor. The

Depositor hereby represents, warrants and covenants to the Trustee and the

Servicers that as of the date of this Agreement or as of such date specifically

provided herein:

(a) The Depositor is a corporation duly organized, validly existing

and in good standing under the laws of the State of Delaware;

(b) The Depositor has the corporate power and authority to convey

the Mortgage Loans and to execute, deliver and perform, and to enter into and

consummate the transactions contemplated by, this Agreement;

(c) This Agreement has been duly and validly authorized, executed

and delivered by the Depositor, all requisite corporate action having been

taken, and, assuming the due authorization, execution and delivery hereof by the

other parties hereto, constitutes or will constitute the legal, valid and

binding agreement of the Depositor, enforceable against the Depositor in

accordance with its terms, except as such enforcement may be limited by

bankruptcy, insolvency, reorganization, moratorium or other similar laws

relating to or affecting the rights of creditors generally, and by general

equity principles (regardless of whether such enforcement is considered in a

proceeding in equity or at law);

(d) No consent, approval, authorization or order of or registration

or filing with, or notice to, any governmental authority or court is required

for the execution, delivery and performance of or compliance by the Depositor

with this Agreement or the consummation by the Depositor of any of the

transactions contemplated hereby, except as have been made on or prior to the

Closing Date;

(e) None of the execution and delivery of this Agreement, the

consummation of the transactions contemplated hereby or thereby, or the

fulfillment of or compliance with the terms and conditions of this Agreement,

(i) conflicts or will conflict with or results or will result in a breach of, or

constitutes or will constitute a default or results or will result in an

acceleration under (A) the charter or bylaws of the Depositor, or (B) of any

term, condition or provision of any material indenture, deed of trust, contract

or other agreement or instrument to which the Depositor or any of its

subsidiaries is a party or by which it or any of its subsidiaries is bound; (ii)

results or will result in a violation of any law, rule, regulation, order,

judgment or decree applicable to the Depositor of any court or governmental

authority having jurisdiction over the Depositor or its subsidiaries; or (iii)

results in the creation or imposition of any lien, charge or encumbrance which

would have a material adverse effect upon the Mortgage Loans or any documents or

instruments evidencing or securing the Mortgage Loans;

(f) There are no actions, suits or proceedings before or against or

investigations of, the Depositor pending, or to the knowledge of the Depositor,

threatened, before any court, administrative agency or other tribunal, and no

notice of any such action, which, in the Depositor's reasonable judgment, might

materially and adversely affect the performance by the Depositor of its

obligations under this Agreement, or the validity or enforceability of this

Agreement;

(g) The Depositor is not in default with respect to any order or

decree of any court or any order, regulation or demand of any federal, state,

municipal or governmental agency that may materially and adversely affect its

performance hereunder; and

(h) Immediately prior to the transfer and assignment by the

Depositor to the Trustee on the Closing Date, the Depositor had good title to,

and was the sole owner of each Mortgage Loan, free of any interest of any other

Person, and the Depositor has transferred all right, title and interest in each

Mortgage Loan to the Trustee. The transfer of the Mortgage Note and the Mortgage

as and in the manner contemplated by this Agreement is sufficient either (i)

fully to transfer to the Trustee, for the benefit of the Certificateholders, all

right, title, and interest of the Depositor thereto as note holder and mortgagee

or (ii) to grant to the Trustee, for the benefit of the Certificateholders, the

security interest referred to in Section 10.04.

It is understood and agreed that the representations, warranties and

covenants set forth in this Section 2.06 shall survive delivery of the

respective Custodial Files to the Trustee and shall inure to the benefit of the

Trustee.

ARTICLE III

ADMINISTRATION AND SERVICING

OF MORTGAGE LOANS

Section 3.01 Servicers to Service Mortgage Loans. (a) For and on

behalf of the Certificateholders, the Servicers shall service and administer the

Mortgage Loans in accordance with the terms of this Agreement and the respective

Mortgage Loans and, to the extent consistent with such terms, in the same manner

in which it services and administers similar mortgage loans for its own

portfolio, giving due consideration to customary and usual standards of practice

of mortgage lenders and loan servicers administering similar mortgage loans but

without regard to:

(i) any relationship that such Servicer, any Subservicer or any

Affiliate of such Servicer or any Subservicer may have with the related

Mortgagor;

(ii) the ownership or non-ownership of any Certificate by such

Servicer or any Affiliate of such Servicer;

(iii) such Servicer's obligation to make P&I Advances or Servicing

Advances; or

(iv) such Servicer's or any Subservicer's right to receive

compensation for its services hereunder or with respect to any particular

transaction.

To the extent consistent with the foregoing, each Servicer shall

seek to maximize the timely and complete recovery of principal and interest on

the Mortgage Notes. Subject only to the above-described servicing standards and

the terms of this Agreement and of the respective Mortgage Loans, each Servicer

shall have full power and authority, acting alone or through Subservicers as

provided in Section 3.02, to do or cause to be done any and all things in

connection with such servicing and administration which it may deem necessary or

desirable. Without limiting the generality of the foregoing, each Servicer in

its own name or in the name of a Subservicer is hereby authorized and empowered

by the Trustee when the Servicer believes it appropriate in its best judgment in

accordance with Accepted Servicing Practices, to execute and deliver 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 Mortgage

Loans and the Mortgaged Properties and to institute foreclosure proceedings or

obtain a deed-in-lieu of foreclosure so as to convert the ownership of such

properties, and to hold or cause to be held title to such properties, on behalf

of the Trustee. Each Servicer shall service and administer the Mortgage Loans in

accordance with applicable state and federal law and shall provide to the

Mortgagors any reports required to be provided to them thereby. Each Servicer

covenants that its computer and other systems used in servicing the Mortgage

Loans operate in a manner such that the Servicer can service the Mortgage Loans

in accordance with the terms of this Pooling and Servicing Agreement. Each

Servicer shall also comply in the performance of this Agreement with all

reasonable rules and requirements of each insurer under any standard hazard

insurance policy. Subject to Section 3.16, the Trustee shall execute, at the

written request of a Servicer, and furnish to such Servicer and any Subservicer

such documents provided to the Trustee as are necessary or appropriate to enable

such Servicer or any Subservicer to carry out its servicing and administrative

duties hereunder, and the Trustee hereby grants to each Servicer, and this

Agreement shall constitute, a power of attorney to carry out such duties,

including a power of attorney in the form of Exhibit O hereto to take title to

Mortgaged Properties after foreclosure in the name of and on behalf of the

Trustee. The Trustee shall execute a separate power of attorney in favor of each

Servicer for the purposes described herein to the extent necessary or desirable

to enable each Servicer to perform its duties hereunder. The Trustee shall not

be liable for the actions of any Servicer or any Subservicers under such powers

of attorney. Notwithstanding anything contained herein to the contrary, no

Servicer or Subservicer shall without the Trustee's consent: (i) initiate any

action, suit or proceeding solely under the Trustee's name without indicating

such Servicer's or Subservicer's, as applicable, representative capacity, or

(ii) take any action with the intent to, or which actually does cause, the

Trustee to be registered to do business in any state.

(b) Subject to Section 3.09(b), in accordance with the standards of

the preceding paragraph, each Servicer shall advance or cause to be advanced

funds as necessary for the purpose of effecting the timely payment of taxes and

assessments on the Mortgaged Properties, which advances shall be Servicing

Advances reimbursable in the first instance from related collections from the

Mortgagors pursuant to Section 3.09(b), and further as provided in Section 3.11.

Any cost incurred by the Servicer or by Subservicers in effecting the timely

payment of taxes and assessments on a Mortgaged Property shall not be added to

the unpaid principal balance of the related Mortgage Loan, notwithstanding that

the terms of such Mortgage Loan so permit.

(c) Notwithstanding anything in this Agreement to the contrary, a

Servicer may not make any future advances with respect to a Mortgage Loan

(except as provided in Section 4.01) and none of the Servicers shall (i) permit

any modification with respect to any Mortgage Loan that would change the

Mortgage Rate, reduce or increase the principal balance (except for reductions

resulting from actual payments of principal) or change the final maturity date

on such Mortgage Loan (except for a reduction of interest payments resulting

from the application of the Servicemembers Civil Relief Act or any similar state

statutes) or (ii) permit any modification, waiver or amendment of any term of

any Mortgage Loan that would both (A) effect an exchange or reissuance of such

Mortgage Loan under Section 1001 of the Code (or final, temporary or proposed

Treasury regulations promulgated thereunder) and (B) cause either the Upper Tier

REMIC or the Lower Tier REMIC to fail to qualify as a REMIC under the Code or

the imposition of any tax on "prohibited transactions" or "contributions after

the startup date" under the REMIC Provisions, or (iii) except as provided in

Section 3.07(a), waive any Prepayment Charges.

(d) Each Servicer may delegate its responsibilities under this

Agreement; provided, however, that no such delegation shall release that

Servicer from the responsibilities or liabilities arising under this Agreement.

(e) In the event that the Mortgage Loan Documents relating to any

Mortgage Loan contain provisions requiring the related Mortgagor to submit to

binding arbitration any disputes arising in connection with such Mortgage Loan,

the applicable Servicer shall be entitled to waive any such provisions on behalf

of the Trust and to send written notice of such waiver to the related Mortgagor,

although the Mortgagor may still require arbitration of such disputes at its

option.

Section 3.02 Subservicing Agreements between a Servicer and

Subservicers. (a) Each Servicer may enter into subservicing agreements with

subservicers (each, a "Subservicer"), for the servicing and administration of

the Mortgage Loans ("Subservicing Agreements"). The applicable Servicer shall,

within a reasonable period of time, give notice to the Trustee of any such

Subservicing Agreement. The Trustee shall not be required to review or consent

to such Subservicing Agreements and shall have no liability in connection

therewith.

(b) Each Subservicer shall be (i) authorized to transact business in

the state or states in which the related Mortgaged Properties it is to service

are situated, if and to the extent required by applicable law to enable the

Subservicer to perform its obligations hereunder and under the Subservicing

Agreement, (ii) an institution approved as a mortgage loan originator by the

Federal Housing Administration or an institution that has deposit accounts

insured by the FDIC and (iii) a Freddie Mac or Fannie Mae approved mortgage

servicer. Each Subservicing Agreement must impose on the Subservicer

requirements conforming to the provisions set forth in Section 3.08 and provide

for servicing of the Mortgage Loans consistent with the terms of this Agreement.

Each Servicer will examine each Subservicing Agreement to which it is a party

and will be familiar with the terms thereof. The terms of any Subservicing

Agreement will not be inconsistent with any of the provisions of this Agreement.

Each Servicer and the respective Subservicers may enter into and make amendments

to the Subservicing Agreements or enter into different forms of Subservicing

Agreements; provided, however, that any such amendments or different forms shall

be consistent with and not violate the provisions of this Agreement, and that no

such amendment or different form shall be made or entered into which could be

reasonably expected to be materially adverse to the interests of the Trustee,

without the consent of the Trustee. Any variation without the consent of the

Trustee from the provisions set forth in Section 3.08 relating to insurance or

priority requirements of Subservicing Accounts, or credits and charges to the

Subservicing Accounts or the timing and amount of remittances by the

Subservicers to such Servicer, are conclusively deemed to be inconsistent with

this Agreement and therefore prohibited. Each Servicer shall deliver to the

Trustee and the Depositor copies of all Subservicing Agreements, and any

amendments or modifications thereof, promptly upon such Servicer's execution and

delivery of such instruments.

(c) As part of its servicing activities hereunder, each Servicer

(except as otherwise provided in the last sentence of this paragraph), for the

benefit of the Trustee, shall enforce the obligations of each Subservicer under

the related Subservicing Agreement to which such Servicer is a party, including,

without limitation, any obligation to make advances in respect of delinquent

payments as required by a Subservicing Agreement. Such enforcement, including,

without limitation, the legal prosecution of claims, termination of Subservicing

Agreements, and the pursuit of other appropriate remedies, shall be in such form

and carried out to such an extent and at such time as such Servicer, in its good

faith business judgment, would require were it the owner of the related Mortgage

Loans. Each Servicer shall pay the costs of such enforcement at its own expense,

and shall be reimbursed therefor only (i) from a general recovery resulting from

such enforcement, to the extent, if any, that such recovery exceeds all amounts

due in respect of the related Mortgage Loans or (ii) from a specific recovery of

costs, expenses or attorneys' fees against the party against whom such

enforcement is directed.

Section 3.03 Successor Subservicers. Each Servicer shall be entitled

to terminate any Subservicing Agreement to which such Servicer is a party and

the rights and obligations of any Subservicer pursuant to any such Subservicing

Agreement in accordance with the terms and conditions of such Subservicing

Agreement. In the event of termination of any Subservicer, all servicing

obligations of such Subservicer shall be assumed simultaneously by the

applicable Servicer party to the related Subservicing Agreement without any act

or deed on the part of such Subservicer or such Servicer, and such Servicer

either shall service directly the related Mortgage Loans or shall enter into a

Subservicing Agreement with a successor Subservicer which qualifies under

Section 3.02.

Any Subservicing Agreement shall include the provision that such

agreement may be immediately terminated by the Depositor or the Trustee without

fee, in accordance with the terms of this Agreement, in the event that the

Servicer party to the related Subservicing Agreement shall, for any reason, no

longer be a Servicer (including termination due to an Event of Default).

Section 3.04 Liability of the Servicers. Notwithstanding any

Subservicing Agreement, any of the provisions of this Agreement relating to

agreements or arrangements between a Servicer and a Subservicer or reference to

actions taken through a Subservicer or otherwise, such Servicer shall remain

obligated and primarily liable to the Trustee for the servicing and

administering of the Mortgage Loans in accordance with the provisions of Section

3.01 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

such Servicer alone were servicing and administering such Mortgage Loans. Each

Servicer shall be entitled to enter into any agreement with a Subservicer for

indemnification of such Servicer by such Subservicer and nothing contained in

this Agreement shall be deemed to limit or modify such indemnification.

Section 3.05 No Contractual Relationship between Subservicers and

the Trustee. Any Subservicing Agreement that may be entered into and any

transactions or services relating to the Mortgage Loans involving a Subservicer

in its capacity as such shall be deemed to be between the Subservicer and the

related Servicer alone, and the Trustee (or any successor to such Servicer)

shall not be deemed a party thereto and shall have no claims, rights,

obligations, duties or liabilities with respect to the Subservicer except as set

forth in Section 3.06. Each Servicer shall be solely liable for all fees owed by

it to any Subservicer, irrespective of whether such Servicer's compensation

pursuant to this Agreement is sufficient to pay such fees.

Section 3.06 Assumption or Termination of Subservicing Agreements by

Trustee. In the event a Servicer at any time shall for any reason no longer be a

Servicer (including by reason of the occurrence of an Event of Default), the

Trustee, or its designee, or the successor Servicer if the successor is not the

Trustee, shall thereupon assume all of the rights and obligations of such

Servicer under each Subservicing Agreement that such Servicer may have entered

into, with copies thereof provided to the Trustee, or the successor Servicer if

the successor is not the Trustee, prior to the Trustee, or the successor

Servicer if the successor is not the Trustee, assuming such rights and

obligations, unless the Trustee elects to terminate any Subservicing Agreement

in accordance with its terms as provided in Section 3.03.

Upon such assumption, the Trustee, its designee or the successor

Servicer shall be deemed, subject to Section 3.03, to have assumed all of such

Servicer's interest therein and to have replaced such Servicer as a party to

each Subservicing Agreement to which the predecessor Servicer was a party to the

same extent as if each Subservicing Agreement had been assigned to the assuming

party, except that (i) such Servicer shall not thereby be relieved of any

liability or obligations under any such Subservicing Agreement that arose before

it ceased to be a Servicer and (ii) none of the Depositor, the Trustee, their

designees or any successor to such Servicer shall be deemed to have assumed any

liability or obligation of such Servicer that arose before it ceased to be a

Servicer.

Such Servicer at its expense shall, upon request of the Trustee, its

designee or the successor Servicer deliver to the assuming party all documents

and records relating to each Subservicing Agreement to which it is a party and

the Mortgage Loans then being serviced by it and an accounting of amounts

collected and held by or on behalf of it, and otherwise use its best efforts to

effect the orderly and efficient transfer of the Subservicing Agreements to the

assuming party.

Section 3.07 Collection of Certain Mortgage Loan Payments. (a) Each

Servicer shall make reasonable efforts to collect all payments called for under

the terms and provisions of the Mortgage Loans, and shall, to the extent such

procedures shall be consistent with this Agreement and the terms and provisions

of any applicable Insurance Policies, follow such collection procedures as it

would follow with respect to mortgage loans comparable to the Mortgage Loans and

held for its own account. Consistent with the foregoing and Accepted Servicing

Practices, each Servicer may (i) waive any late payment charge or, if

applicable, any penalty interest, or (ii) extend the due dates for the Scheduled

Payments due on a Mortgage Note for a period of not greater than 180 days;

provided that any extension pursuant to clause (ii) above shall not affect the

amortization schedule of any Mortgage Loan for purposes of any computation

hereunder, except as provided below. In the event of any such arrangement

pursuant to clause (ii) above, the Servicer shall make timely advances on such

Mortgage Loan during such extension pursuant to Section 4.01 and in accordance

with the amortization schedule of such Mortgage Loan without modification

thereof by reason of such arrangements, subject to Section 4.01(d) pursuant to

which the Servicer shall not be required to make any such advances that are

Nonrecoverable P&I Advances. Notwithstanding the foregoing, the Servicer may

waive, in whole or in part, a Prepayment Charge only under the following

circumstances: (i) such waiver relates to a default or a reasonably foreseeable

default and would, in the reasonable judgment of the Servicer, maximize recovery

of total proceeds taking into account the value of such Prepayment Charge and

the related Mortgage Loan, (ii) such Prepayment Charge is not permitted to be

collected by applicable federal, state or local law or regulation or (iii) the

collection of such Prepayment Charge would be considered "predatory" pursuant to

written guidance published or issued by any applicable federal, state or local

regulatory authority acting in its official capacity and having jurisdiction

over such matters. If a Prepayment Charge is waived other than as permitted by

the prior sentence, then the applicable Servicer is required to pay the amount

of such waived Prepayment Charge, for the benefit of the Holders of the Class P

Certificates, by depositing such amount into the related Collection Account

together with and at the time that the amount prepaid on the related Mortgage

Loan is required to be deposited into the Collection Account; provided, however,

that the applicable Servicer shall not have an obligation to pay the amount of

any uncollected Prepayment Charge if the failure to collect such amount is the

direct result of inaccurate or incomplete information on the Mortgage Loan

Schedule in effect at such time.

(b) (i) The Trustee shall establish and maintain the Excess Reserve

Fund Account, on behalf of the Class X Certificateholders, to receive any Basis

Risk Payment and any Interest Rate Cap Payment and to secure their limited

recourse obligation to pay to the LIBOR Certificateholders Basis Risk

CarryForward Amounts.

(ii) On each Distribution Date, the Trustee shall deposit the amount

of any Basis Risk Payment and any Interest Rate Cap Payment for such date

into the Excess Reserve Fund Account.

(c) (i) On each Distribution Date on which there exists a Basis Risk

CarryForward Amount on any Class of Certificates, the Trustee shall (1) withdraw

from the Distribution Account and deposit in the Excess Reserve Fund Account, as

set forth in Section 4.02(a)(iii)(S), the lesser of (x) the Class X

Distributable Amount (without regard to the reduction in the definition thereof

with respect to the Basis Risk Payment) (to the extent remaining after the

distributions specified in Sections 4.02(a)(iii)(A)-(R)) and (y) the aggregate

Basis Risk CarryForward Amounts for such Distribution Date and (2) withdraw from

the Excess Reserve Fund Account amounts necessary to pay to such Class or

Classes of Certificates the Basis Risk CarryForward Amount. Such payments shall

be allocated to those Classes on a pro rata basis based upon the amount of Basis

Risk CarryForward Amount owed to each such Class and shall be paid in the

priority set forth in Sections 4.02(a)(iii)(T)-(U).

(ii) The Trustee shall account for the Excess Reserve Fund Account

as an asset of a grantor trust under subpart E, Part I of the subchapter J

of the Code and not an asset of any REMIC created pursuant to this

Agreement. The beneficial owners of the Excess Reserve Fund Account are

the Class X Certificateholders. For all federal tax purposes, amounts

transferred by the Upper Tier REMIC to the Excess Reserve Fund Account

shall be treated as distributions by the Trustee to the Class X

Certificateholders.

(iii) Any Basis Risk CarryForward Amounts paid by the Trustee to the

LIBOR Certificateholders shall be accounted for by the Trustee as amounts

paid first to the Holders of the Class X Certificates and then to the

respective Class or Classes of LIBOR Certificates. In addition, the

Trustee shall account for the LIBOR Certificateholders' rights to receive

payments of Basis Risk CarryForward Amounts as rights in a limited

recourse interest rate cap contract written by the Class X

Certificateholders in favor of the LIBOR Certificateholders.

(iv) Notwithstanding any provision contained in this Agreement, the

Trustee shall not be required to make any payments from the Excess Reserve

Fund Account except as expressly set forth in this Section 3.07(c) and

Sections 4.02(a)(iii)(T)-(V).

(d) The Trustee shall establish and maintain the Distribution

Account on behalf of the Certificateholders. The Depositor shall cause the

Closing Date Deposit Amount to be deposited into the Distribution Account on the

Closing Date. The Trustee shall, promptly upon receipt, deposit in the

Distribution Account and retain therein the following:

(i) the aggregate amount remitted by the Servicers to the Trustee

pursuant to Section 3.11;

(ii) any amount deposited by the Servicers pursuant to Section

3.12(b) in connection with any losses on Permitted Investments; and

(iii) any other amounts deposited hereunder which are required to be

deposited in the Distribution Account.

In the event that any Servicer shall remit any amount not required

to be remitted, it may at any time direct the Trustee in writing to withdraw

such amount from the Distribution Account, any provision herein to the contrary

notwithstanding. Such direction may be accomplished by delivering notice 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 in trust for the Certificateholders until disbursed in accordance with

this Agreement or withdrawn in accordance with Section 4.02.

(e) The Trustee may invest the funds in the Distribution Account, in

one or more Permitted Investments, in accordance with Section 3.12. Each

Servicer shall direct the Trustee to withdraw from the Distribution Account and

to remit to such Servicer no less than monthly, all income and gain realized

from the investment of the portion of funds deposited in the Distribution

Account by such Servicer (except during the Trustee Float Period). The Trustee

may withdraw from the Distribution Account any income or gain earned from the

investment of funds deposited therein during the Trustee Float Period for its

own benefit.

(f) Each Servicer shall give notice to the Trustee of any proposed

change of the location of the related Collection Account within a reasonable

period of time prior to any change thereof and the Trustee shall forward such

notice to the Rating Agencies and the Depositor.

(g) In order to comply with its duties under the USA Patriot Act of

2001, the Trustee shall obtain and verify certain information and documentation

from the other parties to this Agreement including, but not limited to, each

such party's name, address, and other identifying information.

Section 3.08 Subservicing Accounts. In those cases where a

Subservicer is servicing a Mortgage Loan pursuant to a Subservicing Agreement,

the Subservicer will be required to establish and maintain one or more accounts

(collectively, the "Subservicing Account"). The Subservicing Account shall be an

Eligible Account and shall otherwise be acceptable to the related Servicer. The

Subservicer shall deposit in the clearing account (which account must be an

Eligible Account) in which it customarily deposits payments and collections on

mortgage loans in connection with its mortgage loan servicing activities on a

daily basis, and in no event more than one Business Day after the Subservicer's

receipt thereof, all proceeds of Mortgage Loans received by the Subservicer less

its servicing compensation to the extent permitted by the Subservicing

Agreement, and shall thereafter deposit such amounts in the Subservicing

Account, in no event more than two Business Days after the deposit of such funds

into the clearing account. The Subservicer shall thereafter deposit such

proceeds in the Collection Account of the related Servicer or remit such

proceeds to the related Servicer for deposit in the Collection Account of the

related Servicer not later than two Business Days after the deposit of such

amounts in the Subservicing Account. For purposes of this Agreement, such

Servicer shall be deemed to have received payments on the Mortgage Loans when

the Subservicer receives such payments.

Section 3.09 Collection of Taxes, Assessments and Similar Items;

Escrow Accounts. (a) Each Servicer shall enforce the obligations under each

paid-in-full, life-of-the-loan tax service contract in effect with respect to

each First Lien Mortgage Loan (each, a "Tax Service Contract") serviced by such

Servicer. Each Tax Service Contract shall be assigned to the Trustee, or a

successor Servicer at the applicable Servicer's expense in the event that the

Servicer is terminated as Servicer of the related Mortgage Loan.

(b) To the extent that the services described in this paragraph (b)

are not otherwise provided pursuant to the Tax Service Contracts described in

paragraph (a) above, each Servicer undertakes to perform such functions with

respect to the Mortgage Loans serviced by such Servicer. To the extent the

related Mortgage provides for Escrow Payments, the related Servicer shall

establish and maintain, or cause to be established and maintained, one or more

accounts (the "Escrow Accounts"), which shall be Eligible Accounts. Each

Servicer shall deposit in the clearing account (which account must be an

Eligible Account) in which it customarily deposits payments and collections on

mortgage loans in connection with its mortgage loan servicing activities on a

daily basis, and in no event more than one Business Day after the Servicer's

receipt thereof, all collections from the Mortgagors (or related advances from

Subservicers) for the payment of taxes, assessments, hazard insurance premiums

and comparable items for the account of the Mortgagors ("Escrow Payments")

collected on account of the Mortgage Loans and shall thereafter deposit such

Escrow Payments in the Escrow Accounts, in no event more than two Business Days

after the deposit of such funds in the clearing account, for the purpose of

effecting the payment of any such items as required under the terms of this

Agreement. Withdrawals of amounts from an Escrow Account may be made only to (i)

effect payment of taxes, assessments, hazard insurance premiums, and comparable

items; (ii) reimburse such Servicer (or a Subservicer to the extent provided in

the related Subservicing Agreement) out of related collections for any advances

made pursuant to Section 3.01 (with respect to taxes and assessments) and

Section 3.13 (with respect to hazard insurance); (iii) refund to Mortgagors any

sums as may be determined to be overages; (iv) pay interest, if required and as

described below, to Mortgagors on balances in the Escrow Account; (v) clear and

terminate the Escrow Account at the termination of such Servicer's obligations

and responsibilities in respect of the Mortgage Loans under this Agreement or

(vi) recover amounts deposited in error. As part of its servicing duties, such

Servicer or Subservicers shall pay to the Mortgagors interest on funds in Escrow

Accounts, to the extent required by law and, to the extent that interest earned

on funds in the Escrow Accounts is insufficient, to pay such interest from its

or their own funds, without any reimbursement therefor. To the extent that a

Mortgage does not provide for Escrow Payments, the applicable Servicer shall

determine whether any such payments are made by the Mortgagor in a manner and at

a time that avoids the loss of the Mortgaged Property due to a tax sale or the

foreclosure of a tax lien. The applicable Servicer assumes full responsibility

for the payment of all such bills within such time and shall effect payments of

all such bills irrespective of the Mortgagor's faithful performance in the

payment of same or the making of the Escrow Payments and shall make advances

from its own funds to effect such payments; provided, however, that such

advances are deemed to be Servicing Advances.

Section 3.10 Collection Accounts. (a) On behalf of the Trustee, each

Servicer shall establish and maintain, or cause to be established and

maintained, one or more separate Eligible Accounts (each such account or

accounts, a "Collection Account"), held in trust for the benefit of the Trustee.

On behalf of the Trustee, each Servicer shall deposit or cause to be deposited

in the clearing account (which account must be an Eligible Account) in which it

customarily deposits payments and collections on mortgage loans in connection

with its mortgage loan servicing activities on a daily basis, and in no event

more than one Business Day after such Servicer's receipt thereof, and shall

thereafter deposit in the related Collection Account, in no event more than two

Business Days after the deposit of such funds into the clearing account, as and

when received or as otherwise required hereunder, the following payments and

collections received or made by it subsequent to the Cut-off Date (other than in

respect of principal or interest on the related Mortgage Loans due on or before

the Cut-off Date), or payments (other than Principal Prepayments) received by it

on or prior to the related Cut-off Date but allocable to a Due Period subsequent

thereto:

(i) all payments on account of principal, including Principal

Prepayments, on the Mortgage Loans;

(ii) all payments on account of interest (net of the related

Servicing Fee) on each Mortgage Loan;

(iii) all Insurance Proceeds and Condemnation Proceeds to the extent

such Insurance Proceeds and Condemnation Proceeds are not to be applied to

the restoration of the related Mortgaged Property or released to the

related Mortgagor in accordance with the express requirements of law or in

accordance with Accepted Servicing Practices and Liquidation Proceeds;

(iv) any amounts required to be deposited pursuant to Section 3.12

in connection with any losses realized on Permitted Investments with

respect to funds held in the related Collection Account;

(v) any amounts required to be deposited by such Servicer pursuant

to the second paragraph of Section 3.13(a) in respect of any blanket

policy deductibles;

(vi) all proceeds of any Mortgage Loan repurchased or purchased in

accordance with this Agreement; and

(vii) all Prepayment Charges collected or paid (pursuant to Section

3.07(a)) by such Servicer.

The foregoing requirements for deposit in the Collection Accounts

shall be exclusive, it being understood and agreed that, without limiting the

generality of the foregoing, payments in the nature of late payment charges, NSF

fees, reconveyance fees, assumption fees and other similar fees and charges need

not be deposited by each Servicer in the related Collection Account and shall,

upon collection, belong to the applicable Servicer as additional compensation

for its servicing activities. In the event a Servicer shall deposit in the

related Collection Account any amount not required to be deposited therein, it

may at any time withdraw such amount from its Collection Account, any provision

herein to the contrary notwithstanding.

(b) Funds in the Collection Accounts may be invested in Permitted

Investments in accordance with the provisions set forth in Section 3.12. Each

Servicer shall give notice to the Trustee of the location of the related

Collection Account maintained by it when established and prior to any change

thereof in accordance with Section 3.07(f).

Section 3.11 Withdrawals from the Collection Accounts. (a) Each

Servicer shall, from time to time, make withdrawals from the related Collection

Account for any of the following purposes or as described in Section 4.01:

(i) on or prior to each Remittance Date, to remit to the Trustee (A)

the Trustee Fee with respect to such Distribution Date and (B) all

Available Funds in respect of the related Distribution Date together with

all amounts representing Prepayment Charges from the Mortgage Loans

received during the related Prepayment Period;

(ii) to reimburse such Servicer for P&I Advances, but only to the

extent of amounts received which represent Late Collections (net of the

related Servicing Fees) of Scheduled Payments on Mortgage Loans with

respect to which such P&I Advances were made in accordance with the

provisions of Section 4.01 (such Servicer's right for recovery or

reimbursement has priority over the Trust);

(iii) to pay such Servicer or any Subservicer (a) any unpaid

Servicing Fees or (b) any unreimbursed Servicing Advances with respect to

each Mortgage Loan serviced by such Servicer or Subservicer, but only to

the extent of any Late Collections, Liquidation Proceeds, Condemnation

Proceeds, Insurance Proceeds or other amounts as may be collected by the

Servicer from a Mortgagor, or otherwise received with respect to such

Mortgage Loan (or the related REO Property) (such Servicer's right for

recovery or reimbursement has priority over the Trust);

(iv) to pay to such Servicer as servicing compensation (in addition

to the Servicing Fee) on the Remittance Date any interest or investment

income earned on funds deposited in its Collection Account;

(v) to pay to the applicable Responsible Party or the Depositor, as

applicable, with respect to each Mortgage Loan that has previously been

repurchased or replaced pursuant to this Agreement, all amounts received

thereon subsequent to the date of purchase or substitution, as further

described herein;

(vi) to reimburse such Servicer for (A) any P&I Advance or Servicing

Advance previously made which such Servicer has determined to be a

Nonrecoverable P&I Advance or Nonrecoverable Servicing Advance in

accordance with the provisions of Section 4.01 and (B) any unpaid

Servicing Fees related to any Second Lien Mortgage Loan to the extent not

recoverable from Liquidation Proceeds, Insurance Proceeds or other amounts

received with respect to the related Second Lien Mortgage Loan under

Section 3.11(a)(iii) (such Servicer's right for recovery or reimbursement

has priority over the Trust);

(vii) to pay, or to reimburse such Servicer for advances in respect

of, expenses incurred in connection with any Mortgage Loan serviced by

such Servicer pursuant to Section 3.15 (such Servicer's right for recovery

or reimbursement has priority over the Trust);

(viii) to reimburse such Servicer or the Depositor for expenses

incurred by or reimbursable to such Servicer or the Depositor, as the case

may be, pursuant to Section 6.03 (such Servicer's right for recovery or

reimbursement has priority over the Trust);

(ix) to reimburse such Servicer or the Trustee, as the case may be,

for expenses reasonably incurred in respect of the breach or defect giving

rise to the repurchase obligation of any Responsible Party or the

Depositor, as applicable, that were included in the Repurchase Price of

the Mortgage Loan, including any expenses arising out of the enforcement

of the repurchase obligation, to the extent not otherwise paid pursuant to

the terms hereof (such Servicer's right for recovery or reimbursement has

priority over the Trust);

(x) to withdraw any amounts deposited in the related Collection

Account in error;

(xi) to withdraw any amounts held in the related Collection Account

and not required to be remitted to the Trustee on the Remittance Date

occurring in the month in which such amounts are deposited into such

Collection Account, to reimburse such Servicer for unreimbursed P&I

Advances;

(xii) to invest funds in Permitted Investments in accordance with

Section 3.12; and

(xiii) to clear and terminate the related Collection Account upon

termination of this Agreement;

(b) Each Servicer shall keep and maintain separate accounting, on a

Mortgage Loan by Mortgage Loan basis, for the purpose of justifying any

withdrawal from the related Collection Account, to the extent held by or on

behalf of it, pursuant to subclauses (a)(ii), (iii), (v), (vi), (vii), (viii)

and (ix) above. Each Servicer shall provide written notification (as set forth

in Section 4.01(d)) to the Trustee, on or prior to the next succeeding

Remittance Date, upon making any withdrawals from the related Collection Account

pursuant to subclause (a)(vi) above.

Section 3.12 Investment of Funds in the Collection Accounts and the

Distribution Account. (a) Each Servicer may invest the funds in the related

Collection Account and the Trustee may (but is not obligated to) invest funds in

the Distribution Account during the Trustee Float Period, and, with respect to

the portion of funds in the Distribution Account deposited by a Servicer, shall

(except during the Trustee Float Period) invest such funds in the Distribution

Account at the direction of such Servicer (for purposes of this Section 3.12,

such Accounts are referred to as an "Investment Account"), in one or more

Permitted Investments bearing interest or sold at a discount, and maturing,

unless payable on demand no later than the Business Day immediately preceding

the date on which such funds are required to be withdrawn from such account

pursuant to this Agreement; provided, however, that the Trustee shall have no

obligation to invest funds deposited into the Distribution Account by a Servicer

on the Remittance Date later than 10:00 a.m. (Pacific Standard Time). If no

investment instruction is given in a timely manner, the Trustee shall hold the

funds in the Distribution Account uninvested. All such Permitted Investments

shall be held to maturity, unless payable on demand. Any investment of funds in

an Investment Account (other than investments made during the Trustee Float

Period) shall be made in the name of the applicable Servicer. The applicable

Servicer shall be entitled to sole possession (except with respect to investment

direction of funds and any income and gain realized on any investment in the

Distribution Account during the Trustee Float Period) over each such related

investment, and any certificate or other instrument evidencing any such

investment shall be delivered directly to the applicable Servicer (with a copy

to the Trustee or its agent if related to investment of funds in the

Distribution Account not during the Trustee Float Period), or with respect to

investments during the Trustee Float Period, the Trustee or its agent, together

with any document of transfer necessary to transfer title to such investment to

the applicable Servicer, or with respect to investments during the Trustee Float

Period, the Trustee or its agent. In the event amounts on deposit in an

Investment Account are at any time invested in a Permitted Investment payable on

demand, the applicable Servicer, or with respect to investments during the

Trustee Float Period, the Trustee may:

(x) consistent with any notice required to be given thereunder,

demand that payment thereon be made on the last day such

Permitted Investment may otherwise mature hereunder in an

amount equal to the lesser of (1) all amounts then payable

thereunder and (2) the amount required to be withdrawn on such

date; and

(y) demand payment of all amounts due thereunder that such

Permitted Investment would not constitute a Permitted

Investment in respect of funds thereafter on deposit in an

Investment Account.

(b) All income and gain realized from the investment of funds

deposited in the related Collection Account held by or on behalf of the related

Servicer, shall be for the benefit of such Servicer and shall be subject to its

withdrawal in the manner set forth in Section 3.11. Such Servicer shall deposit

in its Collection Account the amount of any loss of principal incurred in

respect of any such Permitted Investment made with funds in such accounts

immediately upon realization of such loss.

(c) All income and gain realized from the investment of the portion

of funds deposited in the Distribution Account by a Servicer and held by the

Trustee, shall be for the benefit of such Servicer (except for any income or

gain realized from the investment of funds on deposit in the Distribution

Account during the Trustee Float Period, which shall be for the benefit of the

Trustee) and shall be subject to the Trustee's withdrawal in the manner set

forth in Section 3.07(e). Each Servicer shall deposit in the Distribution

Account (except with respect to losses incurred during the Trustee Float Period)

the amount of any loss of principal incurred in respect of any such related

Permitted Investment made with funds in such accounts immediately upon

realization of such loss.

(d) Except as otherwise expressly provided in this Agreement, if any

default occurs in the making of a payment due under any Permitted Investment, or

if a default occurs in any other performance required under any Permitted

Investment, the Trustee shall take such action as may be appropriate to enforce

such payment or performance, including the institution and prosecution of

appropriate proceedings.

(e) The Trustee shall not be liable for the amount of any loss

incurred with respect of any investment or lack of investment of funds held in

any Investment Account or the Distribution Account (except that if any losses

are incurred from the investment of funds deposited in the Distribution Account

during the Trustee Float Period, the Trustee shall be responsible for

reimbursing the Trust for such loss) if made in accordance with this Section

3.12.

(f) The Trustee or its Affiliates shall be permitted to receive

additional compensation that could be deemed to be in the Trustee's economic

self-interest for (i) serving as investment adviser, administrator, shareholder,

servicing agent, custodian or sub-custodian with respect to certain of the

Permitted Investments, (ii) using Affiliates to effect transactions in certain

Permitted Investments and (iii) effecting transactions in certain Permitted

Investments. Such compensation shall not be considered an amount that is

reimbursable or payable pursuant to this Agreement.

Section 3.13 Maintenance of Hazard Insurance and Errors and

Omissions and Fidelity Coverage. (a) Each Servicer shall cause to be maintained

for each Mortgage Loan serviced by such Servicer fire insurance with extended

coverage on the related Mortgaged Property in an amount which is at least equal

to the least of (i) the outstanding principal balance of such Mortgage Loan,

(ii) the amount necessary to fully compensate for any damage or loss to the

improvements that are a part of such property on a replacement cost basis and

(iii) the maximum insurable value of the improvements which are a part of such

Mortgaged Property, in each case in an amount not less than such amount as is

necessary to avoid the application of any coinsurance clause contained in the

related hazard insurance policy. Each Servicer shall also cause to be maintained

fire insurance with extended coverage on each REO Property serviced by such

Servicer in an amount which is at least equal to the lesser of (i) the maximum

insurable value of the improvements which are a part of such property and (ii)

the outstanding principal balance of the related Mortgage Loan at the time it

became an REO Property, plus accrued interest at the Mortgage Rate and related

Servicing Advances. Each Servicer will comply in the performance of this

Agreement with all reasonable rules and requirements of each insurer under any

such hazard policies. Any amounts to be collected by any Servicer under any such

policies (other than amounts to be applied to the restoration or repair of the

property subject to the related Mortgage or amounts to be released to the

Mortgagor in accordance with the procedures that such Servicer would follow in

servicing loans held for its own account, subject to the terms and conditions of

the related Mortgage and Mortgage Note) shall be deposited in the related

Collection Account, subject to withdrawal pursuant to Section 3.11. Any cost

incurred by the Servicer in maintaining any such insurance shall not, for the

purpose of calculating distributions to the Trustee, be added to the unpaid

principal balance of the related Mortgage Loan, notwithstanding that the terms

of such Mortgage Loan so permit. It is understood and agreed that no earthquake

or other additional insurance is to be required of any Mortgagor 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

or REO Property is at any time in an area identified in the Federal Register by

the Federal Emergency Management Agency as having special flood hazards and

flood insurance has been made available, the applicable Servicer will cause to

be maintained a flood insurance policy in respect thereof. Such flood insurance

shall be in an amount equal to the lesser of (i) the unpaid principal balance of

the related Mortgage Loan and (ii) the maximum amount of such insurance

available for the related Mortgaged Property under the national flood insurance

program (assuming that the area in which such Mortgaged Property is located is

participating in such program).

In the event that any Servicer shall obtain and maintain a blanket

policy with an insurer either (i) acceptable to Fannie Mae or Freddie Mac or

(ii) having a General Policy Rating of A:X or better from Best's (or such other

rating that is comparable to such rating) insuring against hazard losses on all

of the Mortgage Loans, it shall conclusively be deemed to have satisfied its

obligations as set forth in the first two sentences of this Section 3.13, it

being understood and agreed that such policy may contain a deductible clause, in

which case the Servicer shall, in the event that there shall not have been

maintained on the related Mortgaged Property or REO Property a policy complying

with the first two sentences of this Section 3.13, and there shall have been one

or more losses which would have been covered by such policy, deposit to the

related Collection Account from its own funds the amount not otherwise payable

under the blanket policy because of such deductible clause. In connection with

its activities as administrator and servicer of the Mortgage Loans, each

Servicer agrees to prepare and present, on behalf of itself and the Trustee

claims under any such blanket policy in a timely fashion in accordance with the

terms of such policy.

(b) Each Servicer shall keep in force during the term of this

Agreement a policy or policies of insurance covering errors and omissions for

failure in the performance of such Servicer's obligations under this Agreement,

which policy or policies shall be in such form and amount that would meet the

requirements of Fannie Mae or Freddie Mac if it were the purchaser of the

Mortgage Loans, unless such Servicer has obtained a waiver of such requirements

from Fannie Mae or Freddie Mac. Each Servicer shall also maintain a fidelity

bond in the form and amount that would meet the requirements of Fannie Mae or

Freddie Mac, unless the Servicer has obtained a waiver of such requirements from

Fannie Mae or Freddie Mac. Each Servicer shall provide the Trustee upon request

with copies of any such insurance policies and fidelity bond. Each Servicer

shall be deemed to have complied with this provision if an Affiliate of the

Servicer has such errors and omissions and fidelity bond coverage and, by the

terms of such insurance policy or fidelity bond, the coverage afforded

thereunder extends to such Servicer. Any such errors and omissions policy and

fidelity bond shall by its terms not be cancelable without thirty days' prior

written notice to the Trustee. Each Servicer shall also cause each Subservicer

to maintain a policy of insurance covering errors and omissions and a fidelity

bond which would meet such requirements.

Section 3.14 Enforcement of Due-on-Sale Clauses; Assumption

Agreements. Each Servicer will, to the extent it has knowledge of any conveyance

or prospective conveyance of any Mortgaged Property by any Mortgagor (whether by

absolute conveyance or by contract of sale, and whether or not the Mortgagor

remains or is to remain liable under the Mortgage Note and/or the Mortgage),

exercise its rights to accelerate the maturity of such Mortgage Loan under the

"Due-on-Sale" clause, if any, applicable thereto; provided, however, that no

Servicer shall be required to take such action if, in its sole business

judgment, the Servicer believes it is not in the best interests of the Trust

Fund and shall not exercise any such rights if prohibited by law from doing so.

If a Servicer reasonably believes it is unable under applicable law to enforce

such "Due-on-Sale" clause or if any of the other conditions set forth in the

proviso to the preceding sentence apply, such Servicer will enter into an

assumption and modification agreement from or with the person to whom such

property has been conveyed or is proposed to be conveyed, pursuant to which such

person becomes liable under the Mortgage Note and, to the extent permitted by

applicable state law, the Mortgagor remains liable thereon. Each Servicer is

also authorized 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 the Mortgagor and becomes liable under the

Mortgage Note; provided, that no such substitution shall be effective unless

such person satisfies the underwriting criteria of such Servicer and such

substitution is in the best interest of the Certificateholders as determined by

such Servicer. In connection with any assumption, modification or substitution,

such Servicer shall apply such underwriting standards and follow such practices

and procedures as shall be normal and usual in its general mortgage servicing

activities and as it applies to other mortgage loans owned solely by it. No

Servicer shall take or enter into any assumption and modification agreement,

however, unless (to the extent practicable in the circumstances) it shall have

received confirmation, in writing, of the continued effectiveness of any

applicable hazard insurance policy, or a new policy meeting the requirements of

this Section is obtained. Any fee collected by a Servicer in respect of an

assumption or substitution of liability agreement will be retained by such

Servicer as additional servicing compensation. In connection with any such

assumption, no material term of the Mortgage Note (including but not limited to

the related Mortgage Rate and the amount of the Scheduled Payment) may be

amended or modified, except as otherwise required pursuant to the terms thereof.

Each Servicer shall notify the Trustee that any such substitution, modification

or assumption agreement has been completed by forwarding to the Trustee the

executed original of such substitution or assumption agreement, which document

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.

Notwithstanding the foregoing paragraph or any other provision of

this Agreement, a Servicer shall not be deemed to be in default, breach or any

other violation of its obligations hereunder by reason of any assumption of a

Mortgage Loan by operation of law or by the terms of the Mortgage Note or any

assumption which such Servicer may be restricted by law from preventing, for any

reason whatsoever. For purposes of this Section 3.14, the term "assumption" is

deemed to also include a sale (of the Mortgaged Property) subject to the

Mortgage that is not accompanied by an assumption or substitution of liability

agreement.

Section 3.15 Realization upon Defaulted Mortgage Loans. Each

Servicer shall use its best efforts, consistent with Accepted Servicing

Practices, to foreclose upon or otherwise comparably convert (which may include

an acquisition of REO Property) the ownership of properties securing such of the

Mortgage Loans as come into and continue in default and as to which no

satisfactory arrangements can be made for collection of delinquent payments

pursuant to Section 3.07, and which are not released from this Agreement

pursuant to any other provision hereof. Each Servicer shall use reasonable

efforts to realize upon such defaulted Mortgage Loans in such manner as will

maximize the receipt of principal and interest by the Trustee, taking into

account, among other things, the timing of foreclosure proceedings; provided,

however, with respect to any Second Lien Mortgage Loan for which the related

first lien mortgage loan is not included in the Trust Fund, if, after such

Mortgage Loan becomes 180 days or more delinquent, the applicable Servicer

determines that a significant net recovery is not possible through foreclosure,

such Mortgage Loan may be charged off and the Mortgage Loan will be treated as a

Liquidated Mortgage Loan giving rise to a Realized Loss. The foregoing is

subject to the provisions that, in any case in which Mortgaged Property shall

have suffered damage from an uninsured cause, a Servicer shall not be required

to expend its own funds toward the restoration of such property unless it shall

determine in its sole discretion (i) that such restoration will increase the net

proceeds of liquidation of the related Mortgage Loan to the Trustee, after

reimbursement to itself for such expenses, and (ii) that such expenses will be

recoverable by such Servicer through Insurance Proceeds, Condemnation Proceeds

or Liquidation Proceeds from the related Mortgaged Property, as contemplated in

Section 3.11. Each 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 related property, as

contemplated in Section 3.11.

The proceeds of any liquidation or REO Disposition, as well as any

recovery resulting from a partial collection of Insurance Proceeds, Condemnation

Proceeds or Liquidation Proceeds or any income from an REO Property, will be

applied in the following order of priority: first, to reimburse the applicable

Servicer or any Subservicer for any related unreimbursed Servicing Advances,

pursuant to Section 3.11 or 3.17; second, to reimburse the applicable Servicer

for any related unreimbursed P&I Advances, pursuant to Section 3.11; third, to

accrued and unpaid interest on the Mortgage Loan or REO Imputed Interest, at the

Mortgage Rate, to the date of the liquidation or REO Disposition, or to the Due

Date prior to the Remittance Date on which such amounts are to be distributed if

not in connection with a liquidation or REO Disposition; and fourth, as a

recovery of principal of the Mortgage Loan. If the amount of the recovery so

allocated to interest is less than a full recovery thereof, that amount will be

allocated as follows: first, to unpaid Servicing Fees; and second, as interest

at the Mortgage Rate (net of the Servicing Fee Rate). The portion of the

recovery so allocated to unpaid Servicing Fees shall be reimbursed to the

applicable Servicer or any Subservicer pursuant to Section 3.11 or 3.17. The

portions of the recovery so allocated to interest at the Mortgage Rate (net of

the Servicing Fee Rate) and to principal of the Mortgage Loan shall be applied

as follows: first, to reimburse the applicable Servicer or any Subservicer for

any related unreimbursed Servicing Advances in accordance with Section 3.11 or

3.17, and second, to the Trustee in accordance with the provisions of Section

4.02, subject to the last paragraph of Section 3.17 with respect to certain

excess recoveries from an REO Disposition.

Notwithstanding anything to the contrary contained herein, in

connection with a foreclosure or acceptance of a deed in lieu of foreclosure, in

the event a Servicer has received actual notice of, or has actual knowledge of

the presence of, hazardous or toxic substances or wastes on the related

Mortgaged Property, or if the Trustee otherwise requests, such Servicer shall

cause an environmental inspection or review of such Mortgaged Property to be

conducted by a qualified inspector. Upon completion of the inspection, such

Servicer shall promptly provide the Trustee and the Depositor with a written

report of the environmental inspection.

After reviewing the environmental inspection report, the Depositor

shall determine how the applicable Servicer shall proceed with respect to the

Mortgaged Property. In the event (a) the environmental inspection report

indicates that the Mortgaged Property is contaminated by hazardous or toxic

substances or wastes and (b) the Depositor directs such Servicer to proceed with

foreclosure or acceptance of a deed in lieu of foreclosure, such Servicer shall

be reimbursed for all reasonable costs associated with such foreclosure or

acceptance of a deed in lieu of foreclosure and any related environmental

clean-up costs, as applicable, from the related Liquidation Proceeds, or if the

Liquidation Proceeds are insufficient to fully reimburse such Servicer, such

Servicer shall be entitled to be reimbursed from amounts in the related

Collection Account pursuant to Section 3.11. In the event the Depositor directs

a Servicer not to proceed with foreclosure or acceptance of a deed in lieu of

foreclosure, such Servicer shall be reimbursed from general collections for all

Servicing Advances made with respect to the related Mortgaged Property from the

related Collection Account pursuant to Section 3.11.

In the event that HomEq elects to charge-off a Second Lien Mortgage

Loan 180 days or more delinquent pursuant to this Section 3.15, no Second Lien

Mortgage Loan shall be characterized as a Liquidated Mortgage Loan, unless the

Depositor consents in writing to such characterization after HomEq has provided

the Depositor with a combined equity analysis of such Second Lien Mortgage Loan

and the related first lien mortgage loan; provided, that if the Depositor has

failed to notify HomEq within 3 Business Days of receipt of such combined equity

analysis, then the Depositor shall be deemed to have consented to such

characterization. Chase may elect to charge-off a Second Lien Mortgage Loan

pursuant to this Section 3.15 without such written consent, so long as such

Second Lien Mortgage Loan is 180 days or more delinquent.

Section 3.16 Release of Mortgage Files. (a) Upon the payment in full

of any Mortgage Loan, or the receipt by a Servicer of a notification that

payment in full shall be escrowed in a manner customary for such purposes, such

Servicer will, on or before the last day of the month in which such payment in

full occurs, notify the Trustee by a certification (which certification shall

include a statement to the effect that all amounts received or to be received in

connection with such payment which are required to be deposited in the related

Collection Account pursuant to Section 3.10 have been or will be so deposited)

of a Servicing Officer and shall request delivery to it of the Custodial File by

submitting a Request for Release to the Trustee. Upon receipt of such

certification and Request for Release, the Trustee shall promptly release the

related Custodial File to such Servicer within two (2) Business Days. No

expenses incurred in connection with any instrument of satisfaction or deed of

reconveyance shall be chargeable to the related Collection Account.

(b) From time to time and as appropriate for the servicing or

foreclosure of any Mortgage Loan, including, for this purpose, collection under

any Insurance Policy relating to the Mortgage Loans, the Trustee shall, upon

request of such Servicer and delivery to the Trustee of a Request for Release,

release the related Custodial File to such Servicer, and the Trustee shall, at

the direction of such Servicer, execute such documents as shall be necessary to

the prosecution of any such proceedings and the Servicer shall retain the

Mortgage File in trust for the benefit of the Trustee. Such Request for Release

shall obligate the applicable Servicer to return each and every document

previously requested from the Custodial File to the Trustee when the need

therefor by such Servicer no longer exists, unless the Mortgage Loan has been

charged-off or liquidated and the Liquidation Proceeds relating to the Mortgage

Loan have been deposited in the related Collection Account or the Mortgage File

or such document has been delivered to an attorney, or to a public trustee or

other public official as required by law, for purposes of initiating or pursuing

legal action or other proceedings for the foreclosure of the Mortgaged Property

either judicially or non-judicially, and such Servicer has delivered to the

Trustee a certificate of a Servicing Officer certifying as to the name and

address of the Person to which such Mortgage File or such document was delivered

and the purpose or purposes of such delivery. Upon receipt of a certificate of a

Servicing Officer stating that such Mortgage Loan was charged-off or liquidated

and that all amounts received or to be received in connection with such

liquidation that are required to be deposited into the related Collection

Account have been so deposited, or that such Mortgage Loan has become an REO

Property, a copy of the Request for Release shall be released by the Trustee to

the applicable Servicer or its designee upon request therefor. Upon receipt of a

Request for Release under this Section 3.16, the Trustee shall deliver the

related Custodial File to the requesting Servicer by regular mail, unless such

Servicer requests that the Trustee deliver such Custodial File to such Servicer

by overnight courier (in which case such delivery shall be at such Servicer's

expense); provided, however, that in the event the Servicer has not previously

received copies of the relevant Mortgage Loan Documents necessary to service the

related Mortgage Loan in accordance with Accepted Servicing Practices, the

applicable Responsible Party shall reimburse the applicable Servicer for any

overnight courier charges incurred for the requested Custodial Files.

Upon written certification of a Servicing Officer, the Trustee shall

execute and deliver to the applicable Servicer copies of any court pleadings,

requests for trustee's sale or other documents reasonably necessary to the

foreclosure or trustee's sale in respect of a Mortgaged Property or to any legal

action brought to obtain judgment against any Mortgagor on the Mortgage Note or

Mortgage or to obtain a deficiency judgment, or to enforce any other remedies or

rights provided by the Mortgage Note or Mortgage or otherwise available at law

or in equity, or shall exercise and deliver to such Servicer a power of attorney

sufficient to authorize such Servicer to execute such documents on its behalf.

Each such certification shall include a request that such pleadings or documents

be executed by the Trustee and a statement as to the reason such documents or

pleadings are required and that the execution and delivery thereof by the

Trustee will not invalidate or otherwise affect the lien of the Mortgage, except

for the termination of such a lien upon completion of the foreclosure or

trustee's sale.

Section 3.17 Title, Conservation and Disposition of REO Property.

(a) This Section shall apply only to REO Properties acquired for the account of

the Trustee and shall not apply to any REO Property relating to a Mortgage Loan

which was purchased or repurchased from the Trustee pursuant to any provision

hereof. In the event that title to any such REO Property is acquired, the

applicable Servicer shall cause the deed or certificate of sale to be issued in

the name of the Trustee, on behalf of the Certificateholders. Upon written

request by the applicable Servicer, the Trustee shall provide such Servicer with

a power of attorney prepared by such Servicer with respect to such REO Property.

(b) Each Servicer shall manage, conserve, protect and operate each

REO Property for the Trustee solely for the purpose of its prompt disposition

and sale. Each Servicer, either itself or through an agent selected by such

Servicer, shall manage, conserve, protect and operate the REO Property in the

same manner that it manages, conserves, protects and operates other foreclosed

property for its own account, and in the same manner that similar property in

the same locality as the REO Property is managed. Each Servicer shall attempt to

sell the same (and may temporarily rent the same for a period not greater than

one year, except as otherwise provided below) on such terms and conditions as

such Servicer deems to be in the best interest of the Trustee. The Trustee shall

have no obligations with respect to any REO Dispositions.

(c) Each Servicer shall segregate and hold all funds collected and

received in connection with the operation of any REO Property separate and apart

from its own funds and general assets and shall deposit such funds in the

related Collection Account.

(d) Each Servicer shall deposit net of reimbursement to such

Servicer for any related outstanding Servicing Advances and unpaid Servicing

Fees provided in Section 3.11, or cause to be deposited, on a daily basis in the

related Collection Account all revenues received with respect to the related REO

Property and shall withdraw therefrom funds necessary for the proper operation,

management and maintenance of the REO Property.

(e) Each Servicer, upon an REO Disposition, shall be entitled to

reimbursement for any related unreimbursed Servicing Advances as well as any

unpaid Servicing Fees from proceeds received in connection with the REO

Disposition, as further provided in Section 3.11.

(f) Any net proceeds from an REO Disposition which are in excess of

the unpaid principal balance of the related Mortgage Loan, plus all unpaid REO

Imputed Interest thereon through the date of the REO Disposition, shall be

retained by the applicable Servicer as additional servicing compensation.

(g) Each Servicer shall use its reasonable best efforts to sell, or

cause its Subservicer to sell, in accordance with Accepted Servicing Practices,

any REO Property serviced by such Servicer or Subservicer as soon as possible,

but in no event later than the conclusion of the third calendar year beginning

after the year of its acquisition by the Lower Tier REMIC unless (i) such

Servicer applies for an extension of such period from the Internal Revenue

Service pursuant to the REMIC Provisions and Code Section 856(e)(3), in which

event such REO Property shall be sold within the applicable extension period, or

(ii) such Servicer obtains for the Trustee an Opinion of Counsel, addressed to

the Depositor, the Trustee and such Servicer, to the effect that the holding by

the Lower Tier REMIC of such REO Property subsequent to such period will not

result in the imposition of taxes on "prohibited transactions" as defined in

Section 860F of the Code or cause the Lower Tier REMIC or Upper Tier REMIC to

fail to qualify as a REMIC under the REMIC Provisions or comparable provisions

of relevant state laws at any time. Each Servicer shall manage, conserve,

protect and operate each REO Property serviced by such Servicer for the Trustee

solely for the purpose of its prompt disposition and sale in a manner which does

not cause such REO Property to fail to qualify as "foreclosure property" within

the meaning of Section 860G(a)(8) or result in the receipt by the Lower Tier

REMIC of any "income from non-permitted assets" within the meaning of Section

860F(a)(2)(B) of the Code or any "net income from foreclosure property" which is

subject to taxation under Section 860G(a)(1) of the Code. Pursuant to its

efforts to sell such REO Property, the applicable Servicer shall either itself

or through an agent selected by such 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 Trustee on behalf of the Certificateholders,

rent the same, or any part thereof, as such Servicer deems to be in the best

interest of the Trustee on behalf of the Certificateholders for the period prior

to the sale of such REO Property; provided, however, that any rent received or

accrued with respect to such REO Property qualifies as "rents from real

property" as defined in Section 856(d) of the Code.

Section 3.18 Notification of Adjustments. With respect to each

Adjustable Rate Mortgage Loan, the applicable Servicer shall adjust the Mortgage

Rate on the related Adjustment Date and shall adjust the Scheduled Payment on

the related mortgage payment adjustment date, if applicable, in compliance with

the requirements of applicable law and the related Mortgage and Mortgage Note.

In the event that an Index becomes unavailable or otherwise unpublished, the

applicable Servicer shall select a comparable alternative index over which it

has no direct control and which is readily verifiable. Each Servicer shall

execute and deliver any and all necessary notices required under applicable law

and the terms of the related Mortgage Note and Mortgage regarding the Mortgage

Rate and Scheduled Payment adjustments. Each Servicer shall promptly, upon

written request therefor, deliver to the Trustee such notifications and any

additional applicable data regarding such adjustments and the methods used to

calculate and implement such adjustments. Upon the discovery by a Servicer or

the receipt of notice from the Trustee that a Servicer has failed to adjust a

Mortgage Rate or Scheduled Payment in accordance with the terms of the related

Mortgage Note, such Servicer shall deposit in the related Collection Account

from its own funds the amount of any interest loss caused as such interest loss

occurs.

Section 3.19 Access to Certain Documentation and Information

Regarding the Mortgage Loans. The applicable Servicer shall provide, or cause

the Subservicer to provide, to the Depositor, the Trustee, the OTS or the FDIC

and the examiners and supervisory agents thereof, access to the documentation

regarding the Mortgage Loans in its possession required by applicable

regulations of the OTS. Such access shall be afforded without charge, but only

upon five (5) Business Days' prior written request and during normal business

hours at the offices of the applicable Servicer, the Depositor, the Trustee or

any Subservicer. Nothing in this Section shall derogate from the obligation of

any such party to observe any applicable law prohibiting disclosure of

information regarding the Mortgagors and the failure of any such party to

provide access as provided in this Section as a result of such obligation shall

not constitute a breach of this Section.

Section 3.20 Documents, Records and Funds in Possession of the

Servicers to Be Held for the Trustee. Each Servicer shall account fully to the

Trustee for any funds received by such Servicer or which otherwise are collected

by such Servicer as Liquidation Proceeds, Condemnation Proceeds or Insurance

Proceeds in respect of any Mortgage Loan serviced by such Servicer. All Mortgage

Files and funds collected or held by, or under the control of, the Servicer in

respect of any Mortgage Loans, whether from the collection of principal and

interest payments or from Liquidation Proceeds, including, but not limited to,

any funds on deposit in its Collection Account, shall be held by such 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.

Each Servicer also agrees that it shall not create, incur or subject any

Mortgage File or any funds that are deposited in any Collection Account, the

Distribution Account or any Escrow 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 Mortgage Loan, except, however, that such Servicer shall

be entitled to set off against and deduct from any such funds any amounts that

are properly due and payable to such Servicer under this Agreement.

Section 3.21 Servicing Compensation. (a) As compensation for its

activities hereunder, the Servicer shall, with respect to each Mortgage Loan

serviced by it, be entitled to retain from deposits to its Collection Account

and from Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds and REO

Proceeds related to such Mortgage Loan, the Servicing Fee with respect to each

Mortgage Loan (less any portion of such amounts retained by any Subservicer). In

addition, each Servicer shall be entitled to recover unpaid Servicing Fees out

of related late collections to the extent permitted in Section 3.11. The right

to receive the Servicing Fee may not be transferred in whole or in part except

in connection with the transfer of all of a Servicer's responsibilities and

obligations under this Agreement; provided, however, that each Servicer may pay

from the Servicing Fee any amounts due to a Subservicer pursuant to a

Subservicing Agreement entered into under Section 3.02.

(b) Additional servicing compensation in the form of assumption or

modification fees, late payment charges, NSF fees, reconveyance fees and other

similar fees and charges (other than Prepayment Charges) shall be retained by a

Servicer only to the extent such fees or charges are received by such Servicer.

Each Servicer shall also be entitled pursuant to Section 3.11(a)(iv) to withdraw

from the related Collection Account, and pursuant to Section 3.07(e), to direct

the Trustee to withdraw from the Distribution Account and remit to the

applicable Servicer (except for monies invested during the Trustee Float

Period), as additional servicing compensation, interest or other income earned

on the related portions of deposits therein. HomEq shall also be entitled to

retain net Prepayment Interest Excesses (to the extent not require