AAMES FINANCIAL CORP/DE
EXHIBIT 10.32(B)
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<TYPE>EX-10.32(B)
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<DESCRIPTION>EXHIBIT 10.32(B)
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<P ALIGN="RIGHT"><FONT SIZE=2><A
NAME="km2307_exhibit_10.32(b)"> </A>
<A NAME="toc_km2307_1"> </A>
<BR></FONT><FONT SIZE=2><B>EXHIBIT 10.32(b)    <BR>  </B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="km2307_second_amendment_to_master_rep__sec03859"> </A>
<A NAME="toc_km2307_2"> </A>
<BR></FONT><FONT SIZE=2><B>SECOND AMENDMENT TO MASTER REPURCHASE AGREEMENT<BR>  GOVERNING PURCHASES AND SALES OF MORTGAGE LOANS    <BR>  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;This Amendment, dated as of June&nbsp;21, 2001 (the "</FONT><FONT SIZE=2><I>Amendment</I></FONT><FONT SIZE=2>"), to the Master Repurchase Agreement
Governing Purchases and Sales of Mortgage Loans dated as of December&nbsp;1, 2000 (as amended, the "</FONT><FONT SIZE=2><I>Agreement</I></FONT><FONT SIZE=2>"), is made by and between LEHMAN
BROTHERS BANK, FSB ("</FONT><FONT SIZE=2><I>Buyer</I></FONT><FONT SIZE=2>") and AAMES CAPITAL CORPORATION ("</FONT><FONT SIZE=2><I>Seller</I></FONT><FONT SIZE=2>" and, together with the Buyer, the
"</FONT><FONT SIZE=2><I>Parties</I></FONT><FONT SIZE=2>"). </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>RECITALS </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS,
the Seller and the Buyer are parties to the Agreement, pursuant to which the Buyer has agreed, subject to the terms and conditions set forth in the Agreement, to purchase
certain Mortgage Loans owned by the Seller, including, without limitation, all rights of Seller to service and administer such Mortgage Loans. Terms used but not defined herein shall have the
respective meanings ascribed to such terms in the Agreement, as amended hereby. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS,
the Parties wish to amend the Agreement to modify certain of the terms and conditions governing the purchase and sale of the Mortgage Loans. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree as follows: </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>Section 1.</B></FONT><FONT SIZE=2>&nbsp;&nbsp;</FONT><FONT SIZE=2><B><I>Amendment</I></B></FONT><FONT SIZE=2>. </FONT></P>

<UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;1.1&nbsp;The
definitions of "</FONT><FONT SIZE=2><I>Final Repurchase Date</I></FONT><FONT SIZE=2>", "</FONT><FONT SIZE=2><I>Pricing Spread</I></FONT><FONT SIZE=2>" and
"</FONT><FONT SIZE=2><I>Purchase Price</I></FONT><FONT SIZE=2>" in Section&nbsp;2 of the Agreement are hereby deleted in their entirety and replaced with the following: </FONT></P>

<P><FONT SIZE=2>"</FONT><FONT
SIZE=2><I>Final Repurchase Date</I></FONT><FONT SIZE=2>" means June&nbsp;30, 2002 or such earlier date on which all Purchased Mortgage Loans are required to be immediately repurchased
pursuant to Section&nbsp;14(a). </FONT></P>

<P><FONT SIZE=2>"</FONT><FONT
SIZE=2><I>Pricing Spread</I></FONT><FONT SIZE=2>" means the rate specified in the Confirmation, which shall be equal to (i)&nbsp;on each date prior to the delivery to the Custodian of
the complete Mortgage Files with respect to the related Purchased Mortgage Loans, 1.75% and (ii)&nbsp;on each date on and after the delivery to the Custodian of such Mortgage Files, 1.00%. </FONT></P>

<P><FONT SIZE=2>"</FONT><FONT
SIZE=2><I>Purchase Price</I></FONT><FONT SIZE=2>" means on each Purchase Date, the price at which Purchased Mortgage Loans are transferred by Seller to Buyer or its designee (including
the Custodian) which shall be equal to, with respect to each Purchased Mortgage Loan, the lowest of (x)&nbsp;95.5% of the Market Value of such Purchased Mortgage Loan as determined by the Buyer in
its sole discretion, (y)&nbsp;97.0% of the Securitization Value of such Purchased Mortgage Loan as determined by the Buyer in its sole discretion and (z)&nbsp;98.5% (or, with respect to any
Purchased Loan which is a Wet Ink Mortgage Loan, 95.0%) of the outstanding principal amount of such Purchased Mortgage Loan. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;1.2&nbsp;Seller
represents and warrants to Buyer that, at all times while the Agreement is in full force and effect, any and all obligations on the part of the Seller or the
Guarantor to make payments on its respective preferred shares shall in all cases be subordinate to Seller's obligations to make payments under the Agreement and Guarantor's obligations to make
payments under the Guaranty, dated as of December&nbsp;1, 2000, for the benefit of the Buyer. </FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>Section&nbsp;2.</B></FONT><FONT SIZE=2>&nbsp;&nbsp;</FONT><FONT SIZE=2><B><I>Covenants, Representations and Warranties of the
Parties</I></B></FONT><FONT SIZE=2>. </FONT></P>

<UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;2.1&nbsp;Except
as expressly amended by Section&nbsp;1 hereof, the Agreement remains unaltered and in full force and effect. Each of the Parties hereby reaffirms all terms
and covenants made in the Agreement as amended hereby. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;2.2&nbsp;Each
of the Parties hereby represents and warrants to the other that (a)&nbsp;this Amendment constitutes the legal, valid and binding obligation of such Party,
enforceable against such Party in accordance with its terms, and (b)&nbsp;the execution and delivery by such Party of this Amendment has </FONT></P>

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been duly authorized by all requisite corporate action on the part of such Party and will not violate any provision of the organizational documents of such Party. </FONT></P>

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<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>Section&nbsp;3.</B></FONT><FONT SIZE=2>&nbsp;&nbsp;</FONT><FONT SIZE=2><B><I>Effect upon the Agreement</I></B></FONT><FONT SIZE=2>. </FONT></P>

<UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;3.1&nbsp;Except
as specifically set forth herein, the Agreement shall remain in full force and effect and is hereby ratified and confirmed. All references to the "Agreement"
in the Master Repurchase Agreement Governing Purchases and Sales of Mortgage Loans shall mean and refer to the Master Repurchase Agreement Governing Purchases and Sales of Mortgage Loans as modified
and amended hereby. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;3.2&nbsp;The
execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of any Party under the Agreement, or any
other document, instrument or agreement executed and/or delivered in connection therewith. </FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>Section&nbsp;4.</B></FONT><FONT SIZE=2>&nbsp;&nbsp;</FONT><FONT SIZE=2><B><I>Governing Law</I></B></FONT><FONT SIZE=2>. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;THIS
AMENDMENT SHALL BE CONSTRUED, INTERPRETED AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>Section&nbsp;5.</B></FONT><FONT SIZE=2>&nbsp;&nbsp;</FONT><FONT SIZE=2><B><I>Counterparts</I></B></FONT><FONT SIZE=2>. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;This
Amendment may be executed in any number of counterparts, and all such counterparts shall together constitute the same agreement. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>[SIGNATURE
PAGE FOLLOWS] </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>2</FONT></P>

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<P><FONT SIZE=2>
&nbsp;&nbsp;&nbsp;&nbsp;IN WITNESS WHEREOF, the Parties hereto have caused this Amendment to be executed as of the day and year first above written. </FONT></P>

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<TD WIDTH="47%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2><FONT SIZE=2><B>SELLER:</B></FONT></TD>
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&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
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AAMES CAPITAL CORPORATION, as Seller</FONT></TD>
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&nbsp;</FONT></TD>
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By:</FONT></TD>
<TD WIDTH="46%"><BR><HR NOSHADE><FONT SIZE=2> Name:<BR>
Title:</FONT></TD>
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&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=2><BR><FONT SIZE=2><B>BUYER:</B></FONT></TD>
</TR>
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<TD WIDTH="47%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=2><FONT SIZE=2><BR>
LEHMAN BROTHERS BANK, FSB, as Buyer</FONT></TD>
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&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2><BR>
By:</FONT></TD>
<TD WIDTH="46%"><BR><HR NOSHADE><FONT SIZE=2> Name:<BR>
Title:</FONT></TD>
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<P ALIGN="CENTER"><FONT SIZE=2>3</FONT></P>

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<FONT SIZE=2><A HREF="#toc_km2307_1">EXHIBIT 10.32(b)</A></FONT><BR>
<FONT SIZE=2><A HREF="#toc_km2307_2">SECOND AMENDMENT TO MASTER REPURCHASE AGREEMENT GOVERNING PURCHASES AND SALES OF MORTGAGE LOANS</A></FONT><BR>
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