POOLING AND SERVICING AGREEMENT

Pooling and Servicing Agreement

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Meritage Mortgage Loan Tr | FINANCIAL ASSET SECURITIES CORP., | SAXON MORTGAGE SERVICES, INC. | DEUTSCHE BANK NATIONAL TRUST COMPANY

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Title: POOLING AND SERVICING AGREEMENT
Governing Law: New York Date: 2/11/2005

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FINANCIAL ASSET SECURITIES CORP.,

Depositor

SAXON MORTGAGE SERVICES, INC.

Servicer

and

DEUTSCHE BANK NATIONAL TRUST COMPANY,

Trustee

POOLING AND SERVICING AGREEMENT

Dated as of January 1, 2005

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

Meritage Mortgage Loan Trust 2005-1

Asset-Backed Certificates, Series 2005-1

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<PAGE>

<TABLE>

TABLE OF CONTENTS

Page

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ARTICLE I

DEFINITIONS

<S> <C>

Section 1.01. Defined Terms.............................................................................7

Section 1.02. Accounting...............................................................................57

Section 1.03. Allocation of Certain Interest Shortfalls................................................57

ARTICLE II

CONVEYANCE OF MORTGAGE LOANS;

ORIGINAL ISSUANCE OF CERTIFICATES

Section 2.01. Conveyance of Mortgage Loans.............................................................59

Section 2.02. Acceptance by Trustee....................................................................62

Section 2.03. Repurchase or Substitution of Mortgage Loans by the Originator or the Seller.............64

Section 2.04. Intentionally Omitted....................................................................66

Section 2.05. Representations, Warranties and Covenants of the Servicer................................66

Section 2.06. Representations and Warranties of the Depositor..........................................68

Section 2.07. Issuance of Certificates.................................................................70

Section 2.08. Conveyance of Subsequent Mortgage Loans..................................................70

Section 2.09. Conveyance of REMIC Regular Interests and Acceptance of REMIC 2, REMIC 3, REMIC 4

and REMIC 5 by the Trustee; Issuance of Certificates.....................................73

ARTICLE III

ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS

Section 3.01. Servicer to Act as Servicer..............................................................76

Section 3.02. Sub-Servicing Agreements Between Servicer and Sub-Servicers..............................78

Section 3.03. Successor Sub-Servicers..................................................................79

Section 3.04. Liability of the Servicer................................................................79

Section 3.05. No Contractual Relationship Between Sub-Servicers and the Trustee or Certificateholders..80

Section 3.06. Assumption or Termination of Sub-Servicing Agreements by Trustee.........................80

Section 3.07. Collection of Certain Mortgage Loan Payments.............................................81

Section 3.08. Sub-Servicing Accounts...................................................................81

Section 3.09. Collection of Taxes, Assessments and Similar Items; Escrow Accounts......................82

Section 3.10. Collection Account and Distribution Account..............................................82

Section 3.11. Withdrawals from the Collection Account and Distribution Account.........................85

Section 3.12. Investment of Funds in the Collection Account, the Distribution Account, the

Pre-Funding Accounts and the Interest Coverage Accounts..................................87

Section 3.13. [Reserved]...............................................................................88

<PAGE>

Section 3.14. Maintenance of Hazard Insurance and Errors and Omissions and Fidelity Coverage...........88

Section 3.15. Enforcement of Due-On-Sale Clauses; Assumption Agreements................................90

Section 3.16. Realization Upon Defaulted Mortgage Loans................................................91

Section 3.17. Trustee to Cooperate; Release of Mortgage Files..........................................93

Section 3.18. Servicing Compensation...................................................................94

Section 3.19. Reports to the Trustee; Collection Account Statements....................................94

Section 3.20. Statement as to Compliance...............................................................95

Section 3.21. Independent Public Accountants' Servicing Report.........................................95

Section 3.22. Access to Certain Documentation; Filing of Reports by Trustee............................95

Section 3.23. Title, Management and Disposition of REO Property........................................98

Section 3.24. Obligations of the Servicer in Respect of Prepayment Interest Shortfalls................101

Section 3.25. [Reserved]..............................................................................101

Section 3.26. Obligations of the Servicer in Respect of Mortgage Rates and Monthly Payments...........101

Section 3.27. [Reserved]..............................................................................101

Section 3.28. [Reserved]..............................................................................101

Section 3.29. Advance Facility........................................................................101

ARTICLE IV

FLOW OF FUNDS

Section 4.01. Distributions...........................................................................104

Section 4.02. Reserved................................................................................110

Section 4.03. Statements..............................................................................110

Section 4.04. Remittance Reports; Advances............................................................113

Section 4.05. The Pre-Funding Accounts................................................................115

Section 4.06. The Interest Coverage Accounts..........................................................118

Section 4.07. Net WAC Rate Carryover Reserve Account..................................................118

Section 4.08. Distributions on the REMIC 1 Regular Interests..........................................119

Section 4.09. Allocation of Realized Losses...........................................................122

ARTICLE V

THE CERTIFICATES

Section 5.01. The Certificates........................................................................125

Section 5.02. Registration of Transfer and Exchange of Certificates...................................125

Section 5.03. Mutilated, Destroyed, Lost or Stolen Certificates.......................................131

Section 5.04. Persons Deemed Owners...................................................................131

Section 5.05. Appointment of Paying Agent.............................................................131

ARTICLE VI

THE SERVICER AND THE DEPOSITOR

Section 6.01. Liability of the Servicer and the Depositor.............................................133

<PAGE>

Section 6.02. Merger or Consolidation of, or Assumption of the Obligations of, the Servicer

or the Depositor........................................................................133

Section 6.03. Limitation on Liability of the Servicer and Others......................................133

Section 6.04. Servicer Not to Resign..................................................................134

Section 6.05. Delegation of Duties....................................................................134

Section 6.06. Reserved................................................................................135

Section 6.07. Inspection..............................................................................135

ARTICLE

VII DEFAULT

Section 7.01. Servicer Events of Termination..........................................................136

Section 7.02. Trustee to Act; Appointment of Successor................................................138

Section 7.03. Waiver of Defaults......................................................................139

Section 7.04. Notification to Certificateholders......................................................139

Section 7.05. Survivability of Servicer Liabilities...................................................140

ARTICLE

VIII THE TRUSTEE

Section 8.01. Duties of Trustee.......................................................................141

Section 8.02. Certain Matters Affecting the Trustee...................................................142

Section 8.03. Trustee Not Liable for Certificates or Mortgage Loans...................................144

Section 8.04. Trustee May Own Certificates............................................................144

Section 8.05. Trustee Fee and Expenses................................................................145

Section 8.06. Eligibility Requirements for Trustee....................................................145

Section 8.07. Resignation or Removal of Trustee.......................................................146

Section 8.08. Successor Trustee.......................................................................146

Section 8.09. Merger or Consolidation of Trustee......................................................147

Section 8.10. Appointment of Co-Trustee or Separate Trustee...........................................147

Section 8.11. Limitation of Liability.................................................................148

Section 8.12. Trustee May Enforce Claims Without Possession of Certificates...........................148

Section 8.13. Suits for Enforcement...................................................................149

Section 8.14. Waiver of Bond Requirement..............................................................149

Section 8.15. Waiver of Inventory, Accounting and Appraisal Requirement...............................149

ARTICLE IX

REMIC ADMINISTRATION

Section 9.01. REMIC Administration....................................................................150

Section 9.02. Prohibited Transactions and Activities..................................................152

Section 9.03. Indemnification with Respect to Certain Taxes and Loss of REMIC Status..................152

ARTICLE X

TERMINATION

iii

<PAGE>

Section 10.01. Termination.............................................................................154

Section 10.02. Additional Termination Requirements.....................................................156

ARTICLE XI

MISCELLANEOUS PROVISIONS

Section 11.01. Amendment...............................................................................157

Section 11.02. Recordation of Agreement; Counterparts..................................................158

Section 11.03. Limitation on Rights of Certificateholders..............................................158

Section 11.04. Governing Law; Jurisdiction.............................................................159

Section 11.05. Notices.................................................................................159

Section 11.06. Severability of Provisions..............................................................160

Section 11.07. Article and Section References..........................................................160

Section 11.08. Notice to the Rating Agencies...........................................................160

Section 11.09. Further Assurances......................................................................161

Section 11.10. Benefits of Agreement...................................................................161

Section 11.11. Acts of Certificateholders..............................................................161

</TABLE>

<PAGE>

Exhibits:

--------

Exhibit A-1 Form of Class I-A1 Certificates

Exhibit A-2 Form of Class I-A2 Certificates

Exhibit A-3 Form of Class II-A1 Certificates

Exhibit A-4 Form of Class II-A2 Certificates

Exhibit A-5 Form of Class II-A3 Certificates

Exhibit A-6 Form of Class M-1 Certificates

Exhibit A-7 Form of Class M-2 Certificates

Exhibit A-8 Form of Class M-3 Certificates

Exhibit A-9 Form of Class M-4 Certificates

Exhibit A-10 Form of Class M-5 Certificates

Exhibit A-11 Form of Class M-6 Certificates

Exhibit A-12 Form of Class M-7 Certificates

Exhibit A-13 Form of Class M-8 Certificates

Exhibit A-14 Form of Class M-9 Certificates

Exhibit A-15 Form of Class M-10 Certificates

Exhibit A-16 Form of Class M-11 Certificates

Exhibit A-17 Form of Class B-1 Certificates

Exhibit A-18 Form of Class B-2 Certificates

Exhibit A-19 Form of Class C Certificates

Exhibit A-20 Form of Class P Certificates

Exhibit A-21 Form of Class R Certificates

Exhibit A-22 Form of Class R-X Certificates

Exhibit B [Reserved]

Exhibit C Form of Mortgage Loan Purchase Agreement

Exhibit D Mortgage Loan Schedule

Exhibit E Request for Release

Exhibit F-1 Form of Trustee's Initial Certification

Exhibit F-2 Form of Trustee's Final Certification

Exhibit F-3 Form of Receipt of Mortgage Note

Exhibit G Form of Compliance Certificate

Exhibit H Form of Lost Note Affidavit

Exhibit I [Reserved]

Exhibit J Form of Investment Letter

Exhibit K Form of Transfer Affidavit for Residual Certificates

Exhibit L Form of Transferor Certificate

Exhibit M Form of ERISA Representation Letter

Exhibit N-1 Form of Depositor's Certification

Exhibit N-2 Form of Trustee's Certification

Exhibit N-3 Form of Servicer's Certification

Exhibit O Form of Cap Contract

Exhibit P Form of Addition Notice

Exhibit Q Form of Subsequent Transfer Instrument

Schedule I Prepayment Charge Schedule

<PAGE>

This Pooling and Servicing Agreement is dated as of January 1,

2005 (the "Agreement"), among FINANCIAL ASSET SECURITIES CORP., as depositor

(the "Depositor"), SAXON MORTGAGE SERVICES, INC., as servicer (the "Servicer")

and DEUTSCHE BANK NATIONAL TRUST COMPANY, as trustee (the "Trustee").

PRELIMINARY STATEMENT:

The Depositor intends to sell pass-through certificates

(collectively, the "Certificates"), to be issued hereunder in multiple classes,

which in the aggregate will evidence the entire beneficial ownership interest in

the Trust Fund created hereunder. The Certificates will consist of twenty-two

classes of certificates, designated as (i) the Class I-A1 Certificates, (ii) the

Class I-A2 Certificates, (iii) the Class II-A1 Certificates, (iv) the Class

II-A2 Certificates, (v) the Class II-A3 Certificates, (vi) the Class M-1

Certificates, (vii) the Class M-2 Certificates, (viii) the Class M-3

Certificates, (ix) the Class M-4 Certificates, (x) the Class M-5 Certificates,

(xi) the Class M-6 Certificates, (xii) the Class M-7 Certificates, (xiii) the

Class M-8 Certificates, (xiv) the Class M-9 Certificates, (xv) the Class M-10

Certificates, (xvi) the Class M-11 Certificates, (xvii) the Class B-1

Certificates, (xviii) the Class B-2 Certificates, (xix) the Class C

Certificates, (xx) the Class P Certificates, (xxi) the Class R Certificates and

(xxii) the Class R-X Certificates.

<PAGE>

REMIC 1

-------

As provided herein, the Trustee will make an election to treat

the segregated pool of assets consisting of the Group I Mortgage Loans, the

Group II Mortgage Loans and certain other related assets subject to this

Agreement (exclusive of the Pre-Funding Accounts, the Interest Coverage

Accounts, any Subsequent Mortgage Loan Interest, the Net WAC Rate Carryover

Reserve Account, any Servicer Prepayment Charge Payment Amounts and the Cap

Contract) as a real estate mortgage investment conduit (a "REMIC") for federal

income tax purposes, and such segregated pool of assets will be designated as

"REMIC 1." The Class R-1 Interest will represent the sole class of "residual

interests" in REMIC 1 for purposes of the REMIC Provisions (as defined herein)

under federal income tax law. The following table irrevocably sets forth the

designation, the Uncertificated REMIC 1 Pass-Through Rate, the initial

Uncertificated Principal Balance, and for purposes of satisfying Treasury

Regulation Section 1.860G-1(a)(4)(iii), the "latest possible maturity date" for

each of the REMIC 1 Regular Interests. None of the REMIC 1 Regular Interests

will be certificated.

<TABLE>

UNCERTIFICATED REMIC 1 INITIAL UNCERTIFICATED ASSUMED FINAL

DESIGNATION PASS-THROUGH RATE PRINCIPAL BALANCE MATURITY DATE(1)

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

LT1 Variable(2) $ 239,341,292.38 May 2035

LT2 Variable(2) $ 174,077,689.56 May 2035

LT1PF Variable(2) $ 148,542,814.99 May 2035

LT2PF Variable(2) $ 108,038,103.07 May 2035

LTP Variable(2) $ 100.00 May 2035

</TABLE>

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

(1) For purposes of Section 1.860G-1(a)(4)(iii) of the Treasury regulations,

the Distribution Date in the month immediately following the maturity date

for the Mortgage Loan with the latest possible maturity date has been

designated as the "latest possible maturity date" for each REMIC 1 Regular

Interest.

(2) Calculated in accordance with the definition of "Uncertificated REMIC 1

Pass-Through Rate" herein.

<PAGE>

REMIC 2

-------

As provided herein, the Trustee will make an election to treat the

segregated pool of assets consisting of the REMIC 1 Regular Interests as a REMIC

for federal income tax purposes, and such segregated pool of assets will be

designated as "REMIC 2." The Class R-2 Interest will represent the sole class of

"residual interests" in REMIC 2 for purposes of the REMIC Provisions (as defined

herein) under federal income tax law. The following table irrevocably sets forth

the designation, the Uncertificated REMIC 2 Pass-Through Rate, the initial

Uncertificated Principal Balance, and for purposes of satisfying Treasury

Regulation Section 1.860G-1(a)(4)(iii), the "latest possible maturity date" for

each of the REMIC 2 Regular Interests. None of the REMIC 2 Regular Interests

will be certificated.

<TABLE>

UNCERTIFICATED REMIC 2 INITIAL UNCERTIFICATED ASSUMED FINAL

DESIGNATION PASS-THROUGH RATE PRINCIPAL BALANCE MATURITY DATE(1)

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

LTAA Variable(2) $ 656,599,902.00 May 2035

LTA1 Variable(2) $ 2,400,000.00 May 2035

LTA2 Variable(2) $ 600,000.00 May 2035

LTA3 Variable(2) $ 797,000.00 May 2035

LTA4 Variable(2) $ 1,200,000.00 May 2035

LTA5 Variable(2) $ 188,800.00 May 2035

LTM1 Variable(2) $ 237,850.00 May 2035

LTM2 Variable(2) $ 217,750.00 May 2035

LTM3 Variable(2) $ 130,650.00 May 2035

LTM4 Variable(2) $ 117,250.00 May 2035

LTM5 Variable(2) $ 117,250.00 May 2035

LTM6 Variable(2) $ 113,900.00 May 2035

LTM7 Variable(2) $ 107,200.00 May 2035

LTM8 Variable(2) $ 80,400.00 May 2035

LTM9 Variable(2) $ 83,750.00 May 2035

LTM10 Variable(2) $ 67,000.00 May 2035

LTM11 Variable(2) $ 73,700.00 May 2035

LTB1 Variable(2) $ 70,350.00 May 2035

LTB2 Variable(2) $ 50,250.00 May 2035

LTZZ Variable(2) $ 6,746,898.00 May 2035

LTP Variable(2) $ 100.00 May 2035

</TABLE>

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

(1) For purposes of Section 1.860G-1(a)(4)(iii) of the Treasury regulations,

the Distribution Date in the month immediately following the maturity date

for the Mortgage Loan with the latest possible maturity date has been

designated as the "latest possible maturity date" for each REMIC 2 Regular

Interest.

(2) Calculated in accordance with the definition of "Uncertificated REMIC 2

Pass-Through Rate" herein.

<PAGE>

REMIC 3

-------

As provided herein, the Trustee shall make an election to

treat the segregated pool of assets consisting of the REMIC 2 Regular Interests

as a REMIC for federal income tax purposes, and such segregated pool of assets

will be designated as "REMIC 3." The Class R-3 Interest represents the sole

class of "residual interests" in REMIC 3 for purposes of the REMIC Provisions.

The following table sets forth (or describes) the Class

designation, Pass-Through Rate and Original Class Certificate Principal Balance

for each Class of Certificates that represents one or more of the "regular

interests" in REMIC 3 created hereunder and REMIC 3 Regular Interests C and P:

<TABLE>

ORIGINAL CLASS CERTIFICATE ASSUMED FINAL

CLASS DESIGNATION PRINCIPAL BALANCE PASS-THROUGH RATE MATURITY DATE(1)

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

Class I-A1.............. $ 240,000,000.00 Variable(2) May 2035

Class I-A2.............. $ 60,000,000.00 Variable(2) May 2035

Class II-A1............. $ 79,700,000.00 Variable(2) May 2035

Class II-A2............. $ 120,000,000.00 Variable(2) May 2035

Class II-A3............. $ 18,880,000.00 Variable(2) May 2035

Class M-1............... $ 23,785,000.00 Variable(2) May 2035

Class M-2............... $ 21,775,000.00 Variable(2) May 2035

Class M-3............... $ 13,065,000.00 Variable(2) May 2035

Class M-4............... $ 11,725,000.00 Variable(2) May 2035

Class M-5............... $ 11,725,000.00 Variable(2) May 2035

Class M-6............... $ 11,390,000.00 Variable(2) May 2035

Class M-7............... $ 10,720,000.00 Variable(2) May 2035

Class M-8............... $ 8,040,000.00 Variable(2) May 2035

Class M-9............... $ 8,375,000.00 Variable(2) May 2035

Class M-10.............. $ 6,700,000.00 Variable(2) May 2035

Class M-11.............. $ 7,370,000.00 Variable(2) May 2035

Class B-1............... $ 7,035,000.00 Variable(2) May 2035

Class B-2............... $ 5,025,000.00 Variable(2) May 2035

Class C Interest........ $ 4,689,900.00 (3) Variable(2) May 2035

Class P Interest........ $ 100.00 N/A(4) May 2035

</TABLE>

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

(1) For purposes of Section 1.860G-1(a)(4)(iii) of the Treasury regulations,

the Distribution Date in the month immediately following the maturity date

for the Mortgage Loan with the latest maturity date has been designated as

the "latest possible maturity date" for each Class of Certificates that

represents one or more of the "regular interests" in REMIC 3.

(2) Calculated in accordance with the definition of "Pass-Through Rate" herein.

(3) The Class C Interest will accrue interest based only on clause (i) of the

then applicable Pass-Through Rate on the Notional Amount of the Class C

Interest outstanding from time to time which shall equal the aggregate of

the Uncertificated Principal Balances of the REMIC 2 Regular Interests

(other than REMIC 2 Regular Interest LTP) and at the Net WAC Rate on

$100.00. The Class C Interest will not accrue interest on its Certificate

Principal Balance. The Class C Interest will also be entitled to the

Subsequent Mortgage Loan Interest, as a right with respect to a component

of the Class C Interest that will not be treated as a REMIC Regular

Interest but rather as separate interest strips from the Subsequent

Mortgage Loans for a specified period of time.

(4) The Class P Interest will not accrue interest.

<PAGE>

REMIC 4

-------

As provided herein, the Trustee shall make an election to

treat the segregated pool of assets consisting of the Class C Interest as a

REMIC for federal income tax purposes, and such segregated pool of assets will

be designated as "REMIC 4." The Class R-4 Interest represents the sole class of

"residual interests" in REMIC 4 for purposes of the REMIC Provisions.

The following table sets forth (or describes) the Class

designation, Pass-Through Rate and Original Class Certificate Principal Balance

for the indicated Class of Certificates that represents a "regular interest" in

REMIC 4 created hereunder:

<TABLE>

INITIAL

AGGREGATE CERTIFICATE ASSUMED FINAL

CLASS DESIGNATION PRINCIPAL BALANCE PASS-THROUGH RATE MATURITY DATE(1)

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

Class C Certificates $ 4,689,900.00 Variable(2) May 2035

</TABLE>

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

(1) For purposes of Section 1.860G-1(a)(4)(iii) of the Treasury regulations,

the Distribution Date immediately following the maturity date for the

Mortgage Loans with the latest maturity date has been designated as the

"latest possible maturity date" for the Class C Certificates.

(2) The Class C Certificates will receive 100% of amounts received in respect

of the Class C Interest. The Class C Certificates will also be entitled to

Subsequent Mortgage Loan Interest, as a right with respect to a component

of the Class C Certificates that will not be treated as a REMIC regular

interest but rather as separate interest strips from the Subsequent

Mortgage Loans for a specified period of time.

<PAGE>

REMIC 5

-------

As provided herein, the Trustee shall make an election to

treat the segregated pool of assets consisting of the Class P Interest as a

REMIC for federal income tax purposes, and such segregated pool of assets will

be designated as "REMIC 5." The Class R-5 Interest represents the sole class of

"residual interests" in REMIC 5 for purposes of the REMIC Provisions.

The following table sets forth (or describes) the Class

designation, Pass-Through Rate and Original Class Certificate Principal Balance

for the indicated Class of Certificates that represents a "regular interest" in

REMIC 5 created hereunder:

<TABLE>

INITIAL

AGGREGATE CERTIFICATE ASSUMED FINAL

CLASS DESIGNATION PRINCIPAL BALANCE PASS-THROUGH RATE MATURITY DATE(1)

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

Class P Certificates $100.00 Variable(2) May 2035

</TABLE>

----------

(1) For purposes of Section 1.860G-1(a)(4)(iii) of the Treasury regulations,

the Distribution Date immediately following the maturity date for the

Mortgage Loans with the latest maturity date has been designated as the

"latest possible maturity date" for the Class P Certificates.

(2) The Class P Certificates will receive 100% of amounts received in respect

of the Class P Interest.

<PAGE>

ARTICLE I

DEFINITIONS

Section 1.01. Defined Terms.

Whenever used in this Agreement or in the Preliminary

Statement, the following words and phrases, unless the context otherwise

requires, shall have the meanings specified in this Article. Unless otherwise

specified, all calculations in respect of interest on the Class A Certificates,

the Mezzanine Certificates and the Class B Certificates shall be made on the

basis of the actual number of days elapsed and a 360-day year and all other

calculations of interest described herein shall be made on the basis of a

360-day year consisting of twelve 30-day months. The Class P Certificates and

the Residual Certificates are not entitled to distributions in respect of

interest and, accordingly, will not accrue interest.

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

"Account": Either of the Collection Account or the

Distribution Account.

"Accrual Period": With respect to the Class A Certificates,

the Mezzanine Certificates and the Class B Certificates and each Distribution

Date, the period commencing on the preceding Distribution Date (or in the case

of the first such Accrual Period, commencing on the Closing Date) and ending on

the day preceding the current Distribution Date. With respect to the Class C

Certificates and each Distribution Date, the calendar month prior to the month

of such Distribution Date.

"Addition Notice": With respect to the transfer of Subsequent

Mortgage Loans to the Trust Fund pursuant to Section 2.08, a notice of the

Depositor's designation of the Subsequent Mortgage Loans to be sold to the Trust

Fund and the aggregate principal balance of such Subsequent Mortgage Loans as of

the Subsequent Cut-off Date. The Addition Notice shall be given not later than

three Business Days prior to the related Subsequent Transfer Date and shall be

substantially in the form attached hereto as Exhibit P.

"Adjustable-Rate Mortgage Loan": A first lien Mortgage Loan

which provides at any period during the life of such loan for the adjustment of

the Mortgage Rate payable in respect thereto.

"Adjusted Net Maximum Mortgage Rate": With respect to any

Mortgage Loan (or the related REO Property), as of any date of determination, a

per annum rate of interest equal to the applicable Maximum Mortgage Rate for

such Mortgage Loan (or the Mortgage Rate in the case of any Fixed-Rate Mortgage

Loan) as of the first day of the month preceding the month in which the related

Distribution Date occurs minus the sum of (i) the Trustee Fee Rate and (ii) the

Servicing Fee Rate.

"Adjustment Date": With respect to each Adjustable-Rate

Mortgage Loan, each adjustment date on which the Mortgage Rate of such

Adjustable-Rate Mortgage Loan changes

<PAGE>

pursuant to the related Mortgage Note. The first Adjustment Date following the

Cut-off Date as to each Adjustable-Rate Mortgage Loan is set forth in the

Mortgage Loan Schedule.

"Advance": As to any Mortgage Loan or REO Property, any

advance made by the Servicer in respect of any Distribution Date pursuant to

Section 4.04.

"Advance Facility": As defined in Section 3.29 hereof.

"Advance Facility Trustee": As defined in Section 3.29 hereof.

"Advancing Person": As defined in Section 3.29 hereof.

"Advance Reimbursement Amounts": As defined in Section 3.29

hereof.

"Adverse REMIC Event": As defined in Section 9.01(f) hereof.

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

controlling, controlled by or under common control with such Person. For

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

and policies of a Person, directly or indirectly, whether through ownership of

voting securities, by contract or otherwise and "controlling" and "controlled"

shall have meanings correlative to the foregoing.

"Agreement": This Pooling and Servicing Agreement and all

amendments hereof and supplements hereto.

"Allocated Realized Loss Amount": With respect to any

Distribution Date and the Class I-A2 Certificates, any Class of Mezzanine

Certificates or the Class B Certificates, the sum of (i) any Realized Losses

allocated to such Class of Certificates on such Distribution Date and (ii) the

amount of any Allocated Realized Loss Amounts for such Class of Certificates

remaining unpaid from the previous Distribution Date and reduced by the amount

of any Subsequent Recoveries added to the Certificate Principal Balance of such

Class of Certificates.

"Assignment": An assignment of Mortgage, notice of transfer or

equivalent instrument, in recordable form, which is sufficient under the laws of

the jurisdiction wherein the related Mortgaged Property is located to reflect or

record the sale of the Mortgage.

"Assumed Final Maturity Date": As to each Class of

Certificates, the date set forth as such in the Preliminary Statement.

"Available Funds": With respect to any Distribution Date, an

amount equal to the excess of (i) the sum of (a) the aggregate of the related

Monthly Payments received on the Mortgage Loans on or prior to the related

Determination Date, (b) Net Liquidation Proceeds, Insurance Proceeds, Principal

Prepayments, Subsequent Recoveries, proceeds from repurchases of and

substitutions for such Mortgage Loans and other unscheduled recoveries of

principal and interest in respect of the Mortgage Loans received during the

related Prepayment Period, (c) the aggregate of any amounts received in respect

of a related REO Property withdrawn from any REO Account and deposited in the

Collection Account for such Distribution Date, (d) the aggregate of any amounts

deposited in the Collection Account by the Servicer in respect of

<PAGE>

related Prepayment Interest Shortfalls for such Distribution Date, (e) the

aggregate of any Advances made by the Servicer for such Distribution Date in

respect of the Mortgage Loans, (f) the aggregate of any related advances made by

the Trustee in respect of the Mortgage Loans for such Distribution Date pursuant

to Section 7.02; (g) the amount of any Prepayment Charges collected by the

Servicer in connection with the full or partial prepayment of any of the

Mortgage Loans and any Servicer Prepayment Charge Payment Amount; (h) with

respect to the Distribution Date immediately following the end of the Funding

Period, any amounts in the Pre-Funding Accounts (exclusive of any investment

income therein) after giving effect to any purchase of Subsequent Mortgage Loans

and (i) with respect to each Distribution Date during the Funding Period and on

the Distribution Date immediately following the end of the Funding Period, any

amounts withdrawn by the Trustee from the Interest Coverage Accounts for

distribution on the Certificates on such Distribution Date over (ii) the sum of

(a) amounts reimbursable or payable to the Servicer pursuant to Section 3.11(a)

or the Trustee pursuant to Section 3.11(b), (b) amounts deposited in the

Collection Account or the Distribution Account pursuant to clauses (a) through

(g) above, as the case may be, in error, (c) the amount of any Prepayment

Charges collected by the Servicer in connection with the full or partial

prepayment of any of the Mortgage Loans and any Servicer Prepayment Charge

Payment Amount, (d) the Trustee Fee payable from the Distribution Account

pursuant to Section 8.05 and (e) any indemnification payments or expense

reimbursements made by the Trust Fund pursuant to Section 6.03 or Section 8.05.

"Balloon Mortgage Loan": A Fixed-Rate Mortgage Loan that

provides for the payment of the unamortized Stated Principal Balance of such

Mortgage Loan in a single payment at the maturity of such Fixed-Rate Mortgage

Loan that is substantially greater than the preceding monthly payment.

"Balloon Payment": A payment of the unamortized Stated

Principal Balance of a Fixed-Rate Mortgage Loan in a single payment at the

maturity of such Fixed-Rate Mortgage Loan that is substantially greater than the

preceding Monthly Payment.

"Bankruptcy Code": The Bankruptcy Reform Act of 1978 (Title 11

of the United States Code), as amended.

"Base Rate": For any Distribution Date and the Class A

Certificates, the Mezzanine Certificates and the Class B Certificates, the sum

of (i) LIBOR plus (ii) the related Certificate Margin.

"Book-Entry Certificates": Any of the Certificates that shall

be registered in the name of the Depository or its nominee, the ownership of

which is reflected on the books of the Depository or on the books of a Person

maintaining an account with the Depository (directly, as a "Depository

Participant", or indirectly, as an indirect participant in accordance with the

rules of the Depository and as described in Section 5.02 hereof). On the Closing

Date, the Class A Certificates, the Mezzanine Certificates and the Class B

Certificates shall be Book-Entry Certificates.

"Business Day": Any day other than a Saturday, a Sunday or a

day on which banking or savings institutions in the State of Delaware, the State

of New York, the State of

<PAGE>

California or in the city in which the Corporate Trust Office of the Trustee is

located are authorized or obligated by law or executive order to be closed.

"Cap Amount": The Cap Amount for the Class A Certificates, the

Mezzanine Certificates and the Class B Certificates is equal to (i) the

aggregate amount received by the Trust from the Cap Contract multiplied by (ii)

a fraction equal to (a) the Certificate Principal Balance of such Class

immediately prior to the applicable Distribution Date divided by (b) the

aggregate Certificate Principal Balance of the Class A Certificates, the

Mezzanine Certificates and the Class B Certificates immediately prior to the

applicable Distribution Date.

"Cap Contract": The Cap Contract between the cap counterparty

and the Trustee, a form of which is attached hereto as Exhibit O.

"Certificate": Any Regular Certificate or Residual

Certificate.

"Certificateholder" or "Holder": The Person in whose name a

Certificate is registered in the Certificate Register, except that a

Disqualified Organization or non-U.S. Person shall not be a Holder of a Residual

Certificate for any purpose hereof and, solely for the purposes of giving any

consent pursuant to this Agreement, any Certificate registered in the name of

the Depositor or the Servicer or any Affiliate thereof shall be deemed not to be

outstanding and the Voting Rights to which it is entitled shall not be taken

into account in determining whether the requisite percentage of Voting Rights

necessary to effect any such consent has been obtained, except as otherwise

provided in Section 11.01. The Trustee may conclusively rely upon a certificate

of the Depositor or the Servicer in determining whether a Certificate is held by

an Affiliate thereof. All references herein to "Holders" or "Certificateholders"

shall reflect the rights of Certificate Owners as they may indirectly exercise

such rights through the Depository and participating members thereof, except as

otherwise specified herein; provided, however, that the Trustee shall be

required to recognize as a "Holder" or "Certificateholder" only the Person in

whose name a Certificate is registered in the Certificate Register.

"Certificate Margin": With respect to each of the

Certificates, the following percentage:

MARGIN

------

CLASS (%)(1) (%)(2)

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

I-A1 0.240% 0.480%

I-A2 0.310% 0.620%

II-A1 0.130% 0.260%

II-A2 0.270% 0.540%

II-A3 0.380% 0.760%

M-1 0.470% 0.705%

M-2 0.500% 0.750%

M-3 0.530% 0.795%

M-4 0.750% 1.125%

M-5 0.780% 1.170%

M-6 0.820% 1.230%

M-7 1.250% 1.875%

M-8 1.400% 2.100%

M-9 2.250% 3.375%

M-10 3.000% 4.500%

<PAGE>

M-11 3.000% 4.500%

B-1 3.250% 4.875%

B-2 3.250% 4.875%

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

(1) On or prior to the Optional Termination Date.

(2) After the Optional Termination Date.

"Certificate Owner": With respect to each Book-Entry

Certificate, any beneficial owner thereof.

"Certificate Principal Balance": With respect to any Class of

Regular Certificates (other than the Class C Certificates) immediately prior to

any Distribution Date plus any Subsequent Recoveries added to the Certificate

Principal Balance of such Certificate pursuant to Section 4.01, will be equal to

the Initial Certificate Principal Balance thereof reduced by the sum of all

amounts actually distributed in respect of principal of such Class and, in the

case of a Mezzanine Certificate or a Class B Certificate, Realized Losses

allocated thereto on all prior Distribution Dates. With respect to the Class C

Certificates as of any date of determination, an amount equal to the excess, if

any, of (A) the then aggregate Uncertificated Principal Balance of the REMIC 2

Regular Interests over (B) the then aggregate Certificate Principal Balance of

the Class A Certificates, the Mezzanine Certificates, the Class B Certificates

and the Class P Certificates then outstanding.

"Certificate Register" and "Certificate Registrar": The

"Class": Collectively, Certificates which have the same

priority of payment and bear the same class designation and the form of which is

identical except for variation in the Percentage Interest evidenced thereby.

"Class A Certificates": Any Class I-A1 Certificate, Class I-A2

Certificate, Class II-A1 Certificate, Class II-A2 Certificate or Class II-A3

Certificate.

"Class B Certificates": Any Class B-1 Certificate or Class B-2

Certificate.

"Class B-1 Certificate": Any one of the Class B-1 Certificates

executed by the Trustee, and authenticated and delivered by the Certificate

Registrar, substantially in the form annexed hereto as Exhibit A-17,

representing the right to distributions as set forth herein and therein and

evidencing a regular interest in REMIC 3.

"Class B-1 Principal Distribution Amount": The excess of (x)

the sum of (i) the aggregate Certificate Principal Balance of the Class A

Certificates (after taking into account the distribution of the Senior Principal

Distribution Amount on such Distribution Date), (ii) the Certificate Principal

Balance of the Class M-1 Certificates (after taking into account the

distribution of the Class M-1 Principal Distribution Amount on such Distribution

Date), (iii) the Certificate Principal Balance of the Class M-2 Certificates

(after taking into account the distribution of the Class M-2 Principal

Distribution Amount on such Distribution Date), (iv) the Certificate Principal

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

distribution of the Class M-3 Principal Distribution Amount on such Distribution

Date), (v) the Certificate Principal Balance of the Class M-4 Certificates

(after taking into account the

<PAGE>

distribution of the Class M-4 Principal Distribution Amount on such Distribution

Date), (vi) the Certificate Principal Balance of the Class M-5 Certificates

(after taking into account the distribution of the Class M-5 Principal

Distribution Amount on such Distribution Date), (vii) the Certificate Principal

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

distribution of the Class M-6 Principal Distribution Amount on such Distribution

Date), (viii) the Certificate Principal Balance of the Class M-7 Certificates

(after taking into account the distribution of the Class M-7 Principal

Distribution Amount on such Distribution Date), (ix) the Certificate Principal

Balance of the Class M-8 Certificates (after taking into account the

distribution of the Class M-8 Principal Distribution Amount on such Distribution

Date), (x) the Certificate Principal Balance of the Class M-9 Certificates

(after taking into account the distribution of the Class M-9 Principal

Distribution Amount on such Distribution Date), (xi) the Certificate Principal

Balance of the Class M-10 Certificates (after taking into account the

distribution of the Class M-10 Principal Distribution Amount on such

Distribution Date), (xii) the Certificate Principal Balance of the Class M-11

Certificates (after taking into account the distribution of the Class M-11

Principal Distribution Amount on such Distribution Date) and (xiii) the

Certificate Principal Balance of the Class B-1 Certificates immediately prior to

such Distribution Date over (y) the lesser of (A) the product of (i) 97.10% and

(ii) the aggregate Stated Principal Balance of the Mortgage Loans as of the last

day of the related Due Period (after giving effect to scheduled payments of

principal due during the related Due Period, to the extent received or advanced,

and unscheduled collections of principal received during the related Prepayment

Period) and (B) the aggregate Stated Principal Balance of the Mortgage Loans as

of the last day of the related Due Period (after giving effect to scheduled

payments of principal due during the related Due Period, to the extent received

or advanced, and unscheduled collections of principal received during the

related Prepayment Period) minus the related Overcollateralization Floor.

"Class B-2 Certificate": Any one of the Class B-2 Certificates

executed by the Trustee, and authenticated and delivered by the Certificate

Registrar, substantially in the form annexed hereto as Exhibit A-18,

representing the right to distributions as set forth herein and therein and

evidencing a regular interest in REMIC 3.

"Class B-2 Principal Distribution Amount": The excess of (x)